# Economic Analysis for the Proposed Revised Total Coliform Rule

### Office of Water (4607-M) EPA 815-R-10-001 June 2010 www.epa.gov/safewaterEconomic Analysis for the Proposed RTCR i June 2010 

## Table of Contents

Table of Contents ............................................................................................................. .............. i Appendices .................................................................................................................... ............. v Exhibits ..................................................................................................................... ........... vi List of Acronyms .............................................................................................................. ........... xii Health Risk Reduction and Cost Analysis ................................................................................ xv

Executive Summary ............................................................................................................. ... ES-1 ES.1 Need for the Rule ........................................................................................................ . ES-1 ES.2 Consideration of Regul atory Alternatives .................................................................... ES-4 ES.3 Summary of the Proposed RTCR Requirements .......................................................... ES-5
ES.4 Systems Subject to th e Proposed RTCR ...................................................................... ES-9 ES.5 National Benefits and Costs of the Proposed RTCR .................................................... ES-9
ES.5.1 Derivation of Benefits ......................................................................................... ES-10
ES.5.2 Derivation of Costs .............................................................................................. ES-19 ES.6 Projected Impacts on Household Costs ...................................................................... ES-20
ES.7 Comparison of Benefits and Costs, and Re gulatory Alternatives of the Proposed
RTCR ......................................................................................................................... ES-22
ES.8 Conclusion .................................................................................................................. E S-26

1. Introduction ............................................................................................................... ............. 1-1
1.1 Summary of the Proposed Revised To tal Coliform Rule (RTCR) .................................... 1-1
1.2 Document Organization ..................................................................................................... 1-4
1.3 Calculations and Citations ................................................................................................. 1- 5

2. Statement of Need for the Rule ............................................................................................. 2-1
2.1 Introduction .................................................................................................................. ...... 2-1
2.1.1 Description of the Issue ............................................................................................... 2-1 2.2 Public Health Concerns, Fecal Contam ination, and Waterborne Pathogens ..................... 2-3
2.2.1 Rule Objectives and Public Health Concerns ............................................................. 2-3
2.2.2 Total Coliforms as Indicators of Treatment Effectiveness and Integrity of the Distribution System ........................................................................................................... .. 2-8 2.2.3 Sanitary Defects ........................................................................................................ .. 2-9
2.2.4 Occurrence of Fecal Contamination a nd/or Waterborne Pathogens ........................... 2-9 2.3 Statutory Authority for Promulgating the Rule ............................................................... 2-10
2.4 Economic Rationale ......................................................................................................... 2- 11

3. Consideration of Regulatory Options .................................................................................. 3-1
3.1 Introduction .................................................................................................................. ...... 3-1
3.2 Total Coliform Rule/Distribution System Advisory Committee ....................................... 3-1 3.3 Regulatory Options Considered ......................................................................................... 3-2
3.3.1 Comparative Summary of Regulatory Options ........................................................... 3-5
3.4 Proposed Rule Requirements ........................................................................................... 3-12

4. Baseline Conditions ........................................................................................................... ..... 4-1 4.1 Introduction .............................................................................................................. .......... 4-1Economic Analysis for the Proposed RTCR ii June 2010 

### 4.1.1 Background and Purpose ............................................................................................ 4-1
4.1.2 Chapter Organization .................................................................................................. 4-1
4.2 Data Sources .................................................................................................................. .... 4-2
4.2.1 Background on SDWIS/FED Data ............................................................................. 4-2
4.2.2 Background on 2005 Six-Year Review 2 Data ........................................................... 4-6
4.2.3 Background on Other Data and Information Used ..................................................... 4-9
4.3 Baseline Profile .............................................................................................................. .. 4-11 4.3.1 Pre-GWR Baseline .................................................................................................... 4-1 2
4.3.2 Post-GWR Baseline .................................................................................................. 4-15
4.3.3 Baseline Population Served ...................................................................................... 4-16
4.3.4 Baseline Water Quality ............................................................................................. 4-18
4.4 Sensitive Sub-populations ................................................................................................ 4-22
4.5 Summary of Baseline Assumptions ................................................................................. 4-23

5.Occurrence and Predictive Model ......................................................................................... 5-1 5.1 Introduction .............................................................................................................. .......... 5-1 5.2 Modeling of Current Total Coliform and E. coli Occurrence for Systems Serving up to 4,100 People .................................................................................................................. ........... 5-3
5.2.1 Distributional Model and Notation ............................................................................. 5-3
5.2.2 Data Reduction ............................................................................................................ 5-4
5.2.3 Basic Subsets of Systems ............................................................................................ 5-4 5.2.4 Estimation Methodology ............................................................................................. 5-6
5.2.5 Results ....................................................................................................................... .. 5-9 5.3 Predictive Modeling of Occurrence for Systems Serving Up to 4,100 People ................ 5-13
5.3.1 Summary of GWR factors and timing aff ecting the TCR and Proposed RTCR ...... 5-14
5.3.2 Summary of Predictive Model .................................................................................. 5-16
5.3.3 Predictive Model Results .......................................................................................... 5-24
5.4 Occurrence Analysis for Systems Se rving More Than 4,100 People .............................. 5-48
5.4.1 Model ................................................................................................................... ..... 5-49 5.4.2 Model Results ........................................................................................................... 5-50
5.4.3 Model Uncertainty .................................................................................................... 5-50
5.5 Summary of Key Drivers for Benefit and Cost Analyses Output from the Predictive
Model ....................................................................................................................... ..... 5-54

6. Benefits Analysis .......................................................................................................... .......... 6-1 6.1 Introduction .............................................................................................................. .......... 6-1
6.2 Qualitative Benefits Analyses ............................................................................................ 6-2
6.2.1 Implementation Activities ........................................................................................... 6-2 6.2.2 Routine Monitoring ..................................................................................................... 6-2 6.2.3 Repeat Monitoring ...................................................................................................... 6-5 6.2.4 Additional Routine Monitoring ................................................................................... 6-6
6.2.5 Annual Site Inspections .............................................................................................. 6-7
6.2.6 Assessments ................................................................................................................ 6- 8
6.2.7 Corrective Actions ...................................................................................................... 6-9
6.2.8 Public Notification .................................................................................................... 6-10
6.2.9 Summary of Qualitative Be nefits Analyses .............................................................. 6-17
6.3 Assessment of Predictive Analysis Results ..................................................................... 6-17Economic Analysis for the Proposed RTCR iii June 2010 

### 6.3.1 Assessment of Predictive Analysis Results for Small (Serving ≤ 4,100 People) and Large (Serving >4,100 People) Systems ..................................................................... 6-19
6.4 Uncertainty and Sensitivity Analyses .............................................................................. 6-28
6.5 Other Potential Benefits ................................................................................................... 6- 33
6.5.1 Increased System Knowledge ................................................................................... 6-33
6.5.2 Accelerated Infrastructure Repair/Replacement ....................................................... 6-34
6.5.3 Reduction in Averting Behavior ............................................................................... 6-34
6.5.4 Reduction of Co-Occurring and Other Contaminants ............................................... 6-34
6.5.5 Reduction in Outbreak Risk and Response Costs ..................................................... 6-35

7. Cost Analysis ................................................................................................................. ......... 7-1 7.1 Introduction .............................................................................................................. .......... 7-1
7.2 General Cost Assumpti ons and Methodology ................................................................... 7-1
7.2.1 Labor Rates ................................................................................................................. 7 -2 7.2.2 TCR Monitoring Co sts per Sample............................................................................. 7-3 7.2.3 Technology Unit Costs and Compliance Forecasts .................................................... 7-3
7.2.4 Cost Model .................................................................................................................. 7 -4
7.2.5 Modeled Variability and Uncertainty in National Costs ............................................. 7-4
7.3 Projecting and Discounting National Costs ....................................................................... 7-5
7.4 Derivation of Costs for PWSs and States ........................................................................... 7-5
7.4.1 Rule Implementation and Annual Administration ...................................................... 7-6
7.4.2 Revising Sampling Plans ............................................................................................ 7-9
7.4.3 Monitoring ................................................................................................................ 7-1 1
7.4.4 Annual Site Visits ..................................................................................................... 7-17
7.4.5 Assessments .............................................................................................................. 7-18
7.4.6 Corrective Actions .................................................................................................... 7-26
7.4.7 Public Notification .................................................................................................... 7-31
7.4.8 Uncertainty in Unit Costs .......................................................................................... 7-36
7.5 Household Costs .............................................................................................................. 7-36
7.6 Nonquantified Costs ......................................................................................................... 7 -38
7.7 Uncertainty Analysis ........................................................................................................ 7 -39
7.8 Comparison of Total and Net Annualized Cost s for All Regulatory Alternatives .......... 7-42

8. Economic Impact Analysis .................................................................................................... 8 -1
8.1 Introduction .................................................................................................................. ...... 8-1
8.2 Executive Order 12866: Regulatory Planning and Review ............................................... 8-2
8.3 Paperwork Reduction Act .................................................................................................. 8-2
8.4 The Regulatory Flexibility Act .......................................................................................... 8-5
8.5 Unfunded Mandates Reform Act ....................................................................................... 8-9
8.6 Executive Order 13132: Federalism ................................................................................ 8-10
8.7 Executive Order 13175: Consultation and C oordination with Indian Tribal
Governments ................................................................................................................... ....... 8-11
8.8 Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks .............................................................................................................. ....... 8-12
8.9 Executive Order 13211: Action Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use........................................................................... 8-12
8.10 National Technology Transfer and Advancement Act .................................................. 8-13Economic Analysis for the Proposed RTCR iv June 2010 

### 8.11 Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low -Income Populations ............................................................. 8-14
8.12 Consultations with the Science Advisory Board, National Drinking Water Advisory Council, and the Secretary of H ealth and Human Services as Required by Section 1412 (d) and (e) of the SDWA .................................................................................. 8-14
8.13 Impacts on Sensitive Subpopulations as Required by Section 1412(b)(3)(c)(i) of the 1996 Amendments to the Safe Drinking Water Act (SDWA) .................................... 8-15
8.14 Plain Language as Required by Executive Order 12866 ............................................... 8-16

9. Comparison of Benefits and Costs ........................................................................................ 9-1 9.1 National Benefits and Costs of the AIP Option Considered in Comparison to the
Current Total Coliform Rule and Alternative Option .............................................................. 9-1
9.1.1 National Benefits of the Re gulatory Options Considered........................................... 9-3
9.1.2 National Cost Summary ............................................................................................ 9-19
9.1.3 Comparison of National Benefits and Costs of the Regulatory Options
Considered .................................................................................................................... ..... 9-27
9.2 Effect of Uncertainties and Nonquantified Benefit/Cost Estimates on the Estimation
of National Benefits and Costs .............................................................................................. 9 -27
9.2.1 Summary of Major Uncertainties in EA Analyses .................................................... 9-27
9.2.2 Summary of Nonquantified Costs and Benefits ........................................................ 9-29
9.3 Comparison of the Regulatory Options Considered ........................................................ 9-30
9.3.1 Incremental Costs and Benefits ................................................................................. 9-30
9.3.2 Cost Effectiveness Measures .................................................................................... 9-32
9.3.3 Break-Even Analysis ................................................................................................. 9-34
9.3.4 Summary of Conclusions .......................................................................................... 9-39

10. References .................................................................................................................... ....... 10-1Economic Analysis for the Proposed RTCR v June 2010 

## Appendices

Appendix A: Detailed Predictive Model Results

Appendix B: Graphs of Predicted Occurrence Over Time

Appendix C: Detailed Cost Model Results

Appendix D: Detailed Compliance Forecast and Unit Costs Estimates

Appendix E: Break-Even Analysis

Appendix F: Alternative Strategi es for Combining Basic Subsets

Appendix G: Evaluation of Representa tiveness of Six-Year Review 2 Data

Appendix H: Analysis of Repeat Sample R ecords from the Six-Year Review 2 Data

Appendix I: Supporting Information for Regulat ory Flexibility Act Screening AnalysisEconomic Analysis for the Proposed RTCR vi June 2010 

## Exhibits

Executive Summary Exhibit ES.1 Implementation Schedule...............................................................................ES-8
Exhibit ES.2 GW Transient Noncomm unity Water System Total Coliform
Occurrence ................................................................................................ES-12 Exhibit ES.3 Potential Changes in Risk under the AIP and Alternative Options
Relative to the Current TCR ..........................................................................ES-13 Exhibit ES.4 Predicted Average Annual Acute (current TCR) or E. coli MCL (AIP and Alternative Options) Violations by Regulatory Option and System Type ............................................................................................ES-18 Exhibit ES.5 Comparison of Total and Ne t Change from Current TCR in Annualized Present Value Costs ($Millions, 2007$) ........................................................ES-20 Exhibit ES.6 Summary of Net Annual Per-Household Costs for the Proposed RTCR (2007$) ...............................................................................................ES-22
Exhibit ES.7 Estimated Annual Breake ven Threshold for Avoided Cases of
STEC O157 ................................................................................................ES-24 Exhibit ES.8 Estimated Annual Breakeven Threshold for Avoided
Cases of Salmonella .......................................................................................ES-24
Exhibit ES.9 Total Net Annual Cost Per Corrective Action Implemented under AIP and Alternative Opti ons, Annualized Using 3% and 7% Discount Rates ($2007) ...........................................................................ES-25
Exhibit ES.10 Incremental Rule Cost Per Corrective Action Implemented under AIP and Alternative Options, Annualized Using 3 and 7 Percent Discount Rates ($2007) ..................................................................................ES-26 Exhibit ES.11 Incremental Rule Cost Per Corrective Action for TNCWSs using GW (Serving <100 People) Implemented under AIP and Alternative options, Annualized Using 3 and 7 Percent Discount Rates ($2007) ............ES-26

1. Introduction Exhibit 1.1 Proposed RTCR Monitoring Fr equency Requirements (AIP Option) ...........1-3

2. Statement of Need for the Rule

3. Consideration of Regulatory Options Exhibit 3.1 Comparison of Propos ed RTCR Regulatory Options ....................................3-6

4. Baseline Conditions Exhibit 4.1 Pre-GWR Baseline Number of GW Systems ................................................4-13 Exhibit 4.2 Baseline Number of SW Systems ..................................................................4-13 Exhibit 4.3 Pre-GWR Baseline Population Served by GW Systems ...............................4-14
Exhibit 4.4 Percent Distributi on of Ground Water PWS Monitoring Frequencies by PWS Size and Type for Current TCR ..................................4-14 Exhibit 4.5 Post-GWR Baseline Number of GW Systems ...............................................4-16 Exhibit 4.6 Post-GWR Baseline Popul ation Served by GW Systems ..............................4-17 Exhibit 4.7 Baseline Population Served by SW Systems .................................................4-17Economic Analysis for the Proposed RTCR vii June 2010 

### Exhibit 4.8 Household Baseline .......................................................................................4-18 Exhibit 4.9 Total Coliform and E. coli Percent Positive by System Size and Type .........4-19
Exhibit 4.10 Baseline Number of TCR Viola tions by System Size and Type (2005) ........4-21
Exhibit 4.11 Number of PW Ss with Violations by System Type (2001 – 2007) ...............4-22 Exhibit 4.12 Estimates of Sensitive Subpopulations in the United States ..........................4-23 Exhibit 4.13 Summary of Baseline Assu mptions Influencing RTCR Estimates ................4-24

5. Occurrence and Predictive Model Exhibit 5.1 Basic Classifications of PW Ss Used for Occurrence Modeling ....................5-5 Exhibit 5.2 Directed Graph of Model Used for RTTC Occurrence .................................5-7
Exhibit 5.3 Maximum Likelihood a and b Para meter Estimates for RTTC and RPTC ...5-10
Exhibit 5.4 Maximum Likelihood a and b Para meter Estimates for RTEC and RPEC ...5-11
Exhibit 5.5 α and β Parameter Estimates for RTTC and RPTC ......................................5-12
Exhibit 5.6 α and β Parameter Estimates for RTEC and RPEC ......................................5-13 Exhibit 5.7 Simulated Impacts of the AIP and Alternative Options on Systems Serving ≤ 4,100 People – Surface Water Systems ..........................................5-20 Exhibit 5.8 Simulated Impacts of the AI P and Alternative Options on Systems Serving ≤ 4,100 People – Ground Water Systems ..........................................5-21 Exhibit 5.9a Percent of GW Systems Assu med to be on Monthly, Quarterly, and Annual (M/Q/A) Monitoring by System Category under Current TCR (Baseline) – Initial Estimates (Post GWR Implementation) .................5-22 Exhibit 5.9b Percent of GW Systems Predicted to be on M/Q/A Monitoring by System Category under AIP Option – Adjusted Estimates (Post RTCR Impl ementation) ........................................................................5-23 Exhibit 5.9c Percent of GW Sy stems on M/Q/A Monitoring by System Category under Alternative option – Adjusted Estimates (Post RTCR Impl ementation) ........................................................................5-24 Exhibit 5.10 Ground Water Community Water System Model Output Cumulative Endpoints ................................................................................................5-28
Exhibit 5.11 Ground Water Nontransient Noncommunity Water System Model Output Cumulative Endpoints ....................................................................................5-28
Exhibit 5.12 Ground Water Transient Nonc ommunity Water System Model Output Cumulative Endpoints ....................................................................................5-29 Exhibit 5.13 Surface Water Community Water System Model Output Cumulative Endpoints ................................................................................................5-29 Exhibit 5.14 Surface Water Nontransient Noncommunity Water System Model Output Cumulative Endpoints ....................................................................................5-30
Exhibit 5.15 Surface Water Transient N oncommunity Water System Model Output Cumulative Endpoints ....................................................................................5-30 Exhibit 5.16 Ground Water Community Water System TC Occurrence ...........................5-31
Exhibit 5.17 Ground Water Nontransie nt Noncommunity Water System TC
Occurrence ................................................................................................5-32 Exhibit 5.18 Ground Water Transien t Noncommunity Water System TC
Occurrence ................................................................................................5-33 Exhibit 5.19 Surface Water Community Water System TC Occurrence ...........................5-34Economic Analysis for the Proposed RTCR viii June 2010 

### Exhibit 5.20 Surface Water Nontransient Noncommunity Water System TC
Occurrence ................................................................................................5-35 Exhibit 5.21 Surface Water Transien t Noncommunity Water System TC
Occurrence ................................................................................................5-36 Exhibit 5.22a Summary of Model Parameters Influencing RTCR Baseline and Options ................................................................................................5-38 Exhibit 5.22b Summary of Model Parameters Influencing Proposed RTCR Options Only ................................................................................................5-39 Exhibit 5.23 Sensitivity Analysis Assumptions for Frequency and Effectiveness of Corrective Actions following Level 1 or 2 Assessments ...............................5-42 Exhibit 5.24a Cumulative Effect of Alternative Assumptions for Corrective Action Effectiveness and Duration on AIP Option Model Results (Nondisinfecting TNCWS Serving ≤ 500 People over 25 Years) ..................5-42
Exhibit 5.24b Cumulative Effect of 50% Assumption for Corrective Action Implementation Rate on AIP Op tion Model Results (Nondisinfecting TNCWS Serving ≤ 500 People over 25 Years) .............................................5-44 Exhibit 5.25 Effect of Seasonality on Occurrence Analysis Endpoints .............................5-45 Exhibit 5.25 Comparison of TC+ Occu rrence Predicted as a 25-Year Annual Average under the Current TCR with 2005 Six-Year Review Data ..............5-47 Exhibit 5.26 Comparison of SDWIS Data for Nonacute and Acut e Violations with
Predictive Model Annual Results for the Current TCR .................................5-48 Exhibit 5.27 Results for Systems Servi ng more than 4,100 People – Current TCR ..........5-51 Exhibit 5.28 Results for Systems Serving more than 4,100 People – AIP option ..............5-52 Exhibit 5.29 Results for Systems Serving more than 4,100 People – Alternative option ..........................................................................................5-53

6. Benefits Analysis Exhibit 6.1 Potential Changes in Risk under the AIP and Alternative Option
Relative to the Current TCR ..........................................................................6-13 Exhibit 6.2 Predicted Outcomes (25-Year Period of Analysis) under Current TCR ........6-23 Exhibit 6.3 Predicted Outcomes (25-Y ear Period of Analysis) for AIP ...........................6-24 Exhibit 6.4 Predicted Outcomes (25-Year An alysis Period) for Alternative Option .......6-25 Exhibit 6.5 Predicted Average Annual Acute Violations by Reg. Option and System Type ................................................................................................6-26 Exhibit 6.6 Predicted Change in Average Annual Acute Violations1 by Regulatory Option and System Type .............................................................6-27 Exhibit 6.7 Relative Impacts Analysis for TNCWS Serving <101 People for the Range of Corrective Action and Sampling Regimens Predicted .......6-31

7. Cost Analysis Exhibit 7.1 Labor Rates by PWS Size (2007$) ................................................................7-2 Exhibit 7.2 Monitoring Costs per Sample (2007$) ...........................................................7-3 Exhibit 7.3 Net Change in PWS Unit Burden and Cost Estimates for Rule Implementation (2007$).................................................................................7-7 Exhibit 7.4 Net Change in State Unit Burden and Cost Estimates for Rule Implementation (2007$).................................................................................7-8Economic Analysis for the Proposed RTCR ix June 2010 

### Exhibit 7.5 Annualized Cost Estimates for Rule Implementation ($Millions, 2007$) .........................................................................................7-9 Exhibit 7.6 Net Change in PWS and State Burden and Cost Estimates for Revising Sampling Plans (2007$) ..................................................................7-10
Exhibit 7.7 Annualized Cost Estimates to Revise (PWSs) and Review (States) Sampling Plans ($Millions, 2007$) ...............................................................7-11 Exhibit 7.8 Summary of Monitoring Re quirements Under the TCR, AIP, and Alternative Options ........................................................................................7-12 Exhibit 7.9 Cumulative Number of Samp les over 25-Year Period of Analysis ...............7-16
Exhibit 7.10 Annualized PWS and Stat e Cost Estimates for Monitoring Costs ($Millions, 2007$) .........................................................................................7-17
Exhibit 7.11 PWS Unit Costs Estimates for Assessment Activities under Current TCR (2007$) .....................................................................................7-20
Exhibit 7.12 PWS Unit Costs Estimate s for Level 1 and Level 2 Assessments (AIP and Alternativ e Option) (2007$) ...........................................................7-21
Exhibit 7.13 Number of Level 1 a nd Level 2 Assessments over the 25-Year Compliance Period .........................................................................................7-22 Exhibit 7.14 State Unit Cost Estimat es for Review of Level 1 and Level 2 Assessments under TCR, AIP, and Alternative Options (2007$) ..................7-25
Exhibit 7.15 Annualized PWS and State Cost Estimates for Level 1 and Level 2 Assessments ($Millions, 2007$) ....................................................................7-26 Exhibit 7.16a Compliance Forecast for Corrective Actions based on Level 1 and
Level 2 Assessments ......................................................................................7-28 Exhibit 7.16b Detailed PWS Compliance Forecast for Corrective Actions based on
Level 1 and Level 2 Assessments ..................................................................7-29 Exhibit 7.17 Net Change in PWS and St ate Unit Costs Estimates for Reporting and Recordkeeping for Corrective Actions (2007$) .............................................7-30
Exhibit 7.18 Annualized PWS and State Cost Estimates for Corrective Actions
based on Level 1 and Level 2 A ssessments ($Millions, 2007$) ....................7-31
Exhibit 7.19 PWS Unit Cost Estimates for Public Notification (2007$) ...........................7-33 Exhibit 7.20 State Unit Costs Estimates for Public Notification (TCR, AIP, Alternative Options).......................................................................................7-34
Exhibit 7.21 Number of Tier 1 and Ti er 2 Public Notifications over the 25-Year Compliance Period .........................................................................................7-35
Exhibit 7.22 Annualized PWS and State Cost Estimates for Public Notification ($Millions, 2007$) .........................................................................................7-36 Exhibit 7.23 Summary of Net Annual Per-Household Costs for the Proposed RTCR (2007$) ...............................................................................................7-38 Exhibit 7.24 Sensitivity Analysis – A nnualized Net Change in Costs based on Changes in Compliance For ecast ($Millions, 2007$) ....................................7-41 Exhibit 7.25 Cost Uncertainty Summary ............................................................................7-42 Exhibit 7.26 Comparison of Total and Net Change from Current TCR in Annualized Present Value Costs ($Millions, 2007$) .....................................7-43 Exhibit 7.27 Comparison of Total an d Net Change in Annualized Present Value Costs by Rule Component ($Millions, 2007$) ....................................7-44 Exhibit 7.28 Total and Net Change in Annualized Costs to PWSs by PWS Size and Type ($Millions, 2007$) ........................................................7-45Economic Analysis for the Proposed RTCR x June 2010 

### Exhibit 7.29 Total and Net Cha nge in Annualized Per PWS Costs by
PWS Size and Type (2007$) .........................................................................7-46

8. Economic Impact Analysis Exhibit 8.1 Average Annual Net Change Burden and Costs for the Proposed RTCR Information Collection Request .....................................................................8-4 Exhibit 8.2 Average Annualized Reve nue by System Size and Percent of Systems with Costs Exceeding On e Percent and Three Percent of Revenue (Three Percent Discount Rate) ........................................................8-6 Exhibit 8.3 Average Costs per Syst em and as Percentage of Revenue (2007$) ................................................................................................8-7
Exhibit 8.4 Annualized Net Rule Costs Predicted for Small Entities (PWSs serving ≤ 10,000) by Rule Component Using Three
Percent and Seven Percent Discount Rates (2007$) ......................................8-8

9. Comparison of Benefits and Costs Exhibit 9.1a Ground Water (GW) Tran sient Noncommunity Water System
TC Occurrence ...............................................................................................9-5 Exhibit 9.1b Potential Changes in Ri sk under the AIP and Alternative Options
Relative to the Current TCR ..........................................................................9-6 Exhibit 9.2 Estimates of Non-Acute Vi olations (TCR) and Level 1 Assessment Triggers (AIP and Alternative Options) ........................................................9-13
Exhibit 9.3 Estimates of Acute Viola tions (TCR) and E. coli MCL Violations (AIP and Alternative Options) .......................................................................9-14
Exhibit 9.4 Estimates of Corrective Actions ....................................................................9-15
Exhibit 9.5 Discounted Estimates of Non-Acute Violations (TCR) and Level 1 Assessment Triggers (AIP and Altern ative Options) (3% Discount Rate) ....9-16
Exhibit 9.6 Discounted Estimates of Acute Violations (TCR) and E. coli MCL Violations (AIP and Alterna tive Options) (3% Discount Rate) ...........9-17
Exhibit 9.7 Discounted Estimates of Corrective Actions (3% Discount Rate) ................9-18
Exhibit 9.8 Net Costs to PWSs (2007$) ...........................................................................9-21
Exhibit 9.9 Discounted Net Costs to PWSs Over Time (3% Discount Rate) (2007$) .....9-22
Exhibit 9.10 Discounted Net Costs to PWSs (7% Discount Rate) (2007$) .......................9-23 Exhibit 9.11 Comparison of Total an d Net Change in Annualized Present Value Costs ($Millions, 2007$) .....................................................................9-24 Exhibit 9.12 Comparison of Total and Net Change in Annualized Present Value Costs by Rule Component ($Millions, 2007$) ..............................................9-25 Exhibit 9.13 Total and Net Change in Annualized Costs to PWSs by PWS Size and Type ($Millions, 2007$) .........................................................................9-26 Exhibit 9.14 Incremental Net Change in Annualized Present Value Costs ($Millions, 2007$) and Benefits (N umber of Corrective Actions) ................9-31
Exhibit 9.15 Total Net Annual Cost Per Corrective Action Implemented under AIP option and Alternative Opti ons, Annualized Using 3% and 7% Discount Rates ($2007) ..................................................................................9-32 Exhibit 9.16 Incremental Rule Cost Per Corrective Action (CA) Implemented for
All PWSs under AIP and Altern ative Options, Annualized Using 3% and 7% Discount Rates ($2007) ..............................................................9-33Economic Analysis for the Proposed RTCR xi June 2010 

### Exhibit 9.17 Incremental Rule Cost Per CA Implemented for GW TNCWSs under AIP and Alternative Opti ons, Annualized Using 3% and 7% Discount Rates ($2007) ...........................................................................9-33 Exhibit 9.18 Average Estimated Value Per STEC O157 Case Avoided (2007$) ..............9-36 Exhibit 9.19 Average Estimated Value Per Salmonella Case Avoided (2007$) ................9-37
Exhibit 9.20 Estimated Annual Break -Even Threshold for Avoided Cases
of STEC O157................................................................................................9-37
Exhibit 9.21 Estimated Annual Break -Even Threshold for Avoided Cases
of Salmonella ................................................................................................9-38

10. ReferencesEconomic Analysis for the Proposed RTCR xii June 2010 

## List of Acronyms

A/CA Assessment and corrective action if necessary
AGI Acute Gastrointestinal Illness AIDS Acquired Immune Deficiency Syndrome AIP Agreement in Principle
ASDWA Association of State Dr inking Water Administrators BMPs Best Management Practices
CAs Corrective Actions CCR Consumer Confidence Report
CDC Centers for Disease Control and Prevention
COI Cost of Illness CWS Community Water System DBP Disinfection Byproduct DBPR Disinfection Byproducts Rule DisGW disinfected ground water
DisinfSW disinfected surface water
DV Data Verification EA Economic Analysis
EC E. coli bacteria
EC+ E. coli -positive ECI Employee Cost Index
EO Executive Order EPA United States Environmental Protection Agency
ERS Economic Research Service FAC Federal Advisory Committee FACA Federal Advisory Committee Act
FC Fecal coliform bacteria FC+ Fecal Coliform-positive FDA U.S. Food and Drug Administration
FR Federal Register GW Ground Water
GWR Ground Water Rule GWSs Ground Water Systems GWUDI Ground Water Under the Direct Influence of Surface Water
HAA5 Five Haloacetic Acids HAV Hepatitis A Virus HEV Hepatitis E Virus HUS Hemolytic Uremic Syndrome
ICR Information Collection Rule ICR Information Collection Request IDSEs Initial Distribution System Evaluations
IESWTR Interim Enhanced Surface Water Treatment Rule KRPEC Number of repeat TC positive samples assayed that tested positive
for EC KRPTC Number positive repeat samples during yearEconomic Analysis for the Proposed RTCR xiii June 2010 

### KRTEC Number of routine TCpositive samples assayed that tested positive
for EC KRTTC Number positive routine samples during year LRAAs Locational Running Annual Averages LT1ESWTR Long Term 1 Enhanced Surface Water Treatment Rule LT2ESWTR Long Term 2 Enhanced Surface Water Treatment Rule M/DBP Microbial/Disinfection By-Product M/Q/A Monthly, Quarterly, and Annual
MAC Mycobacterium avium Complex
MCL Maximum Contaminant Level
MCLG Maximum Contaminant Level Goal MCMC Bayesian Markov Chain Monte Carlo
MLEs Maximum Likelihood Estimates
MRDLGs Maximum Residual Disinfectant Level Goals
MRDLs Maximum Residual Disinfectant Levels NAICS North American Industry Classification System NCWS Non-Community Water System NDPWR National Primary Dr inking Water Regulation NondisGW Nondisinfected ground water NPDWRs National Primary Drinking Water Regulations NRPEC Number of repeat TCpositive samples that were assayed for EC NRPTC Total number repeat samples assayed NRTEC Number of routine TCpositive samples that were assayed for EC NRTTC Number routine samples assayed NTNC Nontransient Noncommunity NTNCWS Nontransient Noncommunity Water Systems NTTAA National Technology Transfer and Advancement Act NTUs Nephelometric Turbidity Units O&M Operations and Maintenance OMB Office of Management and Budget PAM Primary Amoebic Meningioencephalitis
PN Public Notification POU Point of Use pRPEC Repeat probability that a TC positive repeat sample will also test ECpositive pRPTC Probability that a rep eat sample will test positive pRTEC Probability that a TCpositiv e routine sample will also test ECpositive pRTTC Probability that a rou tine sample will test positive PWSs Public Water Systems RAA Running Annual Average RFA Regulatory Flexibility Act RPEC Repeat E. coli RPTC Repeat TC RTCR Revised Total Coliform Rule
RTEC Routine E. coli RTTC Routine TCEconomic Analysis for the Pro posed RTCR xiv June 2010 

### SAB Science Advisory Board
SBA Small Business Administration SBREFA Small Business Regulatory Enforcement Fairness Act SDWA Safe Drinking Water Act SDWIS Safe Drinking Water Information System SDWIS/FED Safe Drinking Water Info rmation System Federal Version
Six Year Review Six Year Review of Na tional Primary Drinking Water Regulations SS Sanitary survey STEC Shiga toxin-producing E. coli SW Surface Water SWTR Surface Water Treatment Rule
TC Total Coliform bacteria TC+ Total Coliform-positive
TCR Total Coliform Rule
TCRDSAC Total Coliform Rule/Distrib ution System Advisory Committee TMF Technical, Managerial, and Financial TNC Transient Noncommunity
TNCWS Transient Nonco mmunity Water Systems TT Treatment Technique
TTHM Total Trihalomethane TWG Technical Work Group UMRA Unfunded Mandates Reform Act UV Ultraviolet light
VSL Value of a Statistical LifeEconomic Analysis for the Proposed RTCR xv June 2010 

## Health Risk Reduction and Cost Analysis

Under the Safe Drinking Water Act (SDW A) Amendments of 1996, when proposing a national primary drinking water regulation that includes a maximum contaminant level (MCL), the U.S. Environmental Protection Agency (EPA) must conduct a health risk reduction and cost analysis (HRRCA). A HRRCA addre sses seven requirements, all of which are addressed in this Economic Analysis (EA) for the proposed Revised Total Coliform Rule (RTCR).

HRRCA Crosswalk Summary

HRRCA Requirement Addressed in Economic Analysis

Quantifiable and nonquantifiable health risk reduction benefits Chapter 6 (all sections) Chapter 8 (sections 8.8 and 8.12) Chapter 9 (sections 9.1.2, 9.2.2, and 9.3)

Quantifiable and nonquantifiable health risk reduction benefits from co-occurring contaminants Chapter 6 (section 6.5.1, 6.5.4) Chapter 9 (section 9.2.2)

Quantifiable and nonquantifiable costs Chapter 7 (all sections) Chapter 8 (sections 8.3 - 8.6, 8.9, and 8.13 - 8.15) Chapter 9 (sections 9.1.3, 9.2.2, and 9.3)

Incremental costs and benefits associated with regulatory alternatives Chapter 6 (sections 6.2 and 6.3) Chapter 7 (sections 7.4, 7.5, and 7.8) Chapter 9 (sections 9.1, 9.3.1, and 9.3.2)

Effects of the contaminants on the general population and sensitive subpopulations Chapter 2 (section 2.2) Chapter 6 (all sections) Chapter 8 (section 8.12) Chapter 9 (sections 9.1.2, 9.2.2, and 9.3)

Increased health risk that may occur as a result of compliance Chapter 6 (section 6.2) Chapter 9 (section 9.1.2)

Other relevant factors (quality and uncertainty of information) Chapter 4 (sections 4.2 and 4.3) Chapter 5 (section 5.3.3.1) Chapter 6 (section 6.4) Chapter 7 (section 7.7) Chapter 9 (section 9.2.1)Economic Analysis for the Proposed RTCR ES-1 June 2010 

## Executive Summary

This Economic Analysis (EA) presents the ev aluation of the benefits and costs of the proposed Revised Total Coliform Rule (RTCR). Th e analysis is performed in compliance with Executive Order 12866, Regulatory Planning and Review (58 Federal Register (FR) 51735, September 1993), which requires the United States Environmental Protection Agency (EPA or Agency) to estimate the economic impact of rule s that have an annual effect on the economy of over $100 million. The Order further requires agencies to make the analysis for an “economically significant” rule available to the public in conjunction wi th publication of the final rule. Although EPA's analysis of the propos ed RTCR has determined that its annual costs are below this threshold, EPA has chosen to publish a complete EA for this rule.

In the Six-Year Review determination publis hed in July 2003, EPA gave notice of its intent to review the current Total Coliform Rule (current TCR). EPA has since developed the proposed RTCR in collaboration with states, ot her interested stakeholders, and the Total Coliform Rule/Distribution System Advisory Committee (TCRDSAC). The Agency’s primary reasons for revising the 1989 Total Coliform Ru le are implementation-related issues. The proposed revisions offer a meaningful opportunity for greater public heal th protection against fecal contamination and waterborne pathogens in the distribution systems of public water systems (PWSs) beyond the current Total Colif orm Rule. These proposed revisions are in accordance with the Safe Drinking Water Act (S DWA) as amended, which requires EPA to review and revise, as appropria te, each national primary drinki ng water regulation promulgated under the SDWA at least every six years. As with the current Total Coliform Rule, the proposed Revised Total Coliform Rule applies to all PWSs.



## ES.1 Need for the Rule

EPA promulgated the 1989 TCR to decrease th e risk of waterborne illness. Among all SDWA rules promulgated for preventing waterbor ne illness, only the TCR applies to all PWSs, making the rule an essential component of the multi -barrier approach in pu blic health protection against endemic (or epidemic) dis ease. In combination with the other SDWA rules, the proposed RTCR will better address the TCR objectives a nd enhance the multi-barrier approach to protecting public health, es pecially with respect to small ground water PWSs.

In recent years, the number of violations unde r the current TCR have remained relatively steady, as shown in Exhibit 4.11 and discusse d in Appendix G of the RTCR EA. EPA believes that this is reflective of a steady state among PWSs complying with the current TCR; improvements likely to occur unde r that rule have largely been achieved. In outlining recommendations for further reductions in occurrence, EPA and the TCRDSAC developed the Agreement in Principle (AIP), which has become the structure of the proposed RTCR.

The proposed RTCR maintains the objectives of the current TCR and is consistent with the recommendations in the AIP. The objectives are: (1 ) to evaluate the effectiveness of treatment, (2) to determine the integrity of the distribution system, and (3) to signal the possible presence of fecal contamination. The proposed rule better addresses these objectives by requiring systems that may be vulnerable to fecal contamination (as indicated by their monitoring results) to do an assessment, to identify whether any sanitary defect(s ) is (are) present, and to correct the defects.Economic Analysis for the Proposed RTCR ES-2 June 2010 

### Therefore, greater public health protection is anticipated under the proposed RTCR compared to the current TCR because of its more preventive approach to identifying and fixing problems that affect or may affect public health. The key provi sions of the proposed rule are summarized in
Section ES.3.

Public health concerns, fecal cont amination, and waterborne pathogens

The proposed RTCR aims to increase public health protection th rough the reduction of potential pathways of entry for fecal contamin ation into the distribution system. Since these potential pathways represent vulnerabilities in the distribution system whereby fecal contamination and/or waterborne pathogens, incl uding bacteria, viruses, and parasitic protozoa could possibly enter the system, the reduction of these pathways in general should lead to reduced exposure and associated risk from the contaminants. Fecal contamination and waterborne pathogens can cause a variety of illne sses, including acute gastrointestinal illness (AGI) with diarrhea, abdominal discomfort, nausea, vomiting, and other symptoms. Most AGI cases are of short duration and result in mild illness. Other more severe illnesses caused by waterborne pathogens include hemolytic uremic syndrome (HUS) (kidney fa ilure), hepatitis, and bloody diarrhea (WHO 2004). Chronic disease such as irritable bowel syndrome, reduced kidney function, hypertension and reactive arthritis can result from infection by a waterborne agent (Clark et al. 2008).

When humans are exposed to and infected by an enteric pathogen, the pathogen becomes capable of reproducing in the gastrointestinal trac t. As a result, healthy humans shed pathogens in their feces for a period ranging from days to weeks. This shedding of pathogens often occurs in the absence of any signs of clinical illness. Regardless of whether a pathogen causes clinical illness in the person who sheds it in his or her feces, the pathogen being shed may infect other people directly by person-to-pers on spread, contact with contaminated surfaces, and other means which are referred to as secondary spread. As a result, initially waterborne pathogens may subsequently infect other people through a variety of routes (WHO 2004). Sensitive subpopulations are at greater risk from waterborne disease than the general population (Gerba et al. 1996a).

Indicators

Total coliforms are a group of closely related bacteria that, with few exceptions, are not
harmful to humans. Coliforms are abundant in th e feces of warm-blooded animals, but can also be found in aquatic environments, in soil, a nd on vegetation. Colif orm bacteria may be transported to surface water by run-off or to gr ound water by infiltration. Total coliforms are common in ambient water and may be injured by environmental stresses such as lack of nutrients, and water treatments such as chlorine disinfection, in a manner similar to most bacterial pathogens and many viral enteric pathog ens (including fecal pathogens). EPA considers
total coliforms to be a useful indicator that a potential pathway exists through which fecal contamination can enter the distribution system . The absence (versus the presence) of total coliforms in the distribution system indicates a reduced likelihood that fecal contamination and/or waterborne pathogens are oc curring in the distribution system.

Under the current TCR, each total coliform-pos itive sample is assayed for either fecal
coliforms or E. coli . Fecal coliform bacteria are a subgroup of total coliforms that traditionally
have been associated with fecal contaminati on. Since the promulgation of the TCR, moreEconomic Analysis for the Proposed RTCR ES-3 June 2010 

### information and understanding of the su itability of fecal coliform and E. coli as indicators have become available. Study has shown that the f ecal coliform assay is imprecise and too often captures bacteria that do not originate in the hum an or mammal gut (Edberg et al. 2000). On the other hand, E. coli is a more restricted group of coliform b acteria that almost always originate in the human or animal gut (Edberg et al. 2000). Thus, E. Coli is a better indicator of fecal
contamination than fecal coliforms.

Presence of fecal contamination

Fecal contamination is a very general term th at includes all of the organisms found in feces, both pathogenic and nonpathogenic. Fecal cont amination can occur in drinking water both through use of contaminated source water as well as direct intrus ion of fecal contamination into the drinking water distribution system. Biofilms in distribution systems ma y harbor waterborne bacterial pathogens and accumulate enteric viruse s and parasitic protozoa (Skraber et al. 2005; Helmi et al. 2008). Waterborne pathogens in biof ilms may have entered the distribution system
as fecal contamination from humans or animals.

Co-occurrence of indicators and waterborne pathogens is difficu lt to measure. The analytical methods approved by EPA to assay for E. coli do not specifically identi fy most of the pathogenic
E. coli strains. There are at least 700 recognized E. coli strains (Kaper et al. 2004). About 10 percent of recognized E. coli strains are pathogenic to human s (Feng 1995; Hussein 2007; Kaper et al. 2004). Pathogenic E. coli include E. coli O157:H7, which is the primary cause of HUS in the United States (Rangel et al. 2005). The US Centers for Disease Control and Prevention (CDC) estimates that there are 73,000 cases of illness each year in the US due to E. coli O157:H7 (Mead et al. 1999). The CDC estim ates that about 15 percent of all reported E. coli O157:H7 cases are due to water contamination (Rangel et al. 2005). Active surveillance by CDC shows that 6.3 percent of E. coli O157:H7 cases progress to HUS (Griffin and Tauxe 1991; Gould et al. 2009) and about 12 percent of HUS cases result in death within four years (Garg et al. 2003). 

### About 4 to 15 percent of cases are transmitted within households by secondary transmission (Parry and Salmon 1998).

Because EPA-approved standard methods for E. coli do not typically identify the presence of the pathogenic E. coli strains, an E. coli -positive monitoring result is an indicator of fecal
contamination but is not necessa rily a measure of waterborne pathogen occurrence. Specialized assays and methods are used to identify waterborne pathogens, including pathogenic E. coli

.

One notable exception are the data reported by Cooley et al. (2007), which showed high concentrations of pathogenic E. coli strains in samples containing high concentrations of fecal
indicator E. coli . These data are from streams and ot her poor quality surface waters surrounding California spinach fields associated with the 2006 E. coli O157:H7 foodborne outbreak. Data equivalent to these samples are not available from drinking water samples collected under the
TCR.

Thus, based on the above discussion, EPA believes that E. coli is a meaningful indicator for fecal contamination and the potential pres ence of associated pathogen occurrence.Economic Analysis for the Proposed RTCR ES-4 June 2010 

### Waterborne disease outbreaks

The CDC defines a waterborne disease outbreak as occurring when at least two persons (or one with amoebic meningoencephalitis) experien ce a similar illness after ingesting a specific drinking water contaminated with pathogens (or chemicals) (Kramer et al. 1996). The CDC
maintains a database on waterborne disease outbr eaks in the United States. The database is based upon responses to a voluntary and confidential survey form that is completed by state and local public health officials.

The National Research Council strongly suggests that the number of identified and reported outbreaks in the CDC database for surface and ground waters represents a small percentage of
actual number of waterborne disease outbreaks (NRC 1997; Bennett et al. 1987; Hopkins et al. 1985 for Colorado data). Under-reporting occurs because most waterborne outbreaks in community water systems are not recognized until a sizable proportion of the population is ill (Perz et al. 1998; Craun 1996), perhaps 1 percen t to 2 percent of th e population (Craun 1996).

EPA drinking water regulations are designed to protect agains t endemic waterborne disease
and to minimize waterborne outbreaks. In contrast to epidemic, endemic refers to the persistent low to moderate level or the unusual ongoing oc currence of illness in a given population or geographic area (Craun et al. 2006).



## ES.2 Consideration of Re gulatory Alternatives

EPA evaluated the following three regulatory options as part of this revised rule proposal: (1) the current TCR option, (2) the AIP option, a nd (3) an Alternative option. EPA discusses the three regulatory options briefly in this executive summary and in greater detail in Chapter 3.

First, the current TCR option reflects EP A’s understanding of how the current TCR (USEPA 1989a, 54 FR 27544, June 29, 1989) is cu rrently being implemented. That is, the current TCR option is assumed to include “sta tus quo” PWS and state implementation practices. Next, the AIP option is a revised TCR based on th e recommendations of the advisory committee. The provisions of this proposed rule are based on the AIP option and are described in detail in section III of the preamble of the proposed RTCR . Third, the Alternative option parallels the AIP in most ways but includes variations of some of the provisions that were discussed by the advisory committee before consensus was reached on the AIP. Under the Alternative option, at the compliance date all PWSs are required to samp le monthly for an initial period until they meet the eligibility criteria for reduced monitori ng. EPA assumes that eligibility for reduced monitoring is determined during the next sanitary survey following the RTCR compliance date (corresponding to year 11 of the model runs presen ted later on in this EA). This more stringent approach differs from the AIP option that allows PWSs to continue to monitor at their current frequencies (with an additional annual site vis it or voluntary Level 2 assessment requirement for PWSs wishing to remain on annual monitoring) until they are triggered into an increased sampling frequency. Under the Alternative option, no PWSs are allowed to reduce monitoring to an annual basis. EPA defined the Alternative option this way and included it in this EA to assess the relative impacts of a more stringent rule and to better understand the balance between costs and public health protection.Economic Analysis for the Proposed RTCR ES-5 June 2010 

### To understand the relative impacts of the op tions, EPA gathered available data and information to develop and provide input in to an occurrence and predictive model. EPA
estimated both baseline conditions and changes to these conditions anticipated to occur over time as a result of these revised rule options. The analysis is described in more detail in the remainder
of this EA.



## ES.3 Summary of the Pr oposed RTCR Requirements

The proposed RTCR maintains and strengthens the objectives of the current TCR and is consistent with the recommendations in the AIP. The objectives are: (1) to evaluate the effectiveness of treatment, (2) to determine the integrity of the distribution system, and (3) to signal the possible presence of fecal contaminat ion. The proposed rule better addresses these objectives by requiring systems that may be vulne rable to fecal contamination (as indicated by their monitoring results) to do an assessment, to identify whether any sanitary defect(s) is (are) present, and to correct the defects. Therefore, greater public health prot ection is anticipated under the proposed RTCR compared to the current TCR because of its more preventive approach to identifying and fixing problems that affect or may affect public health. The following is an overview of the key provisions of the proposed RTCR:

MCLG and MCL for E. coli and coli form treatment technique fo r protection against potential fecal contamination

The proposed RTCR establishes a maximum contaminant level goal (MCLG) and maximum contaminant level (MCL) for E. coli . It takes a preventive approach to protecting public health by establishing a coliform treatment technique for protection against potential fecal contamination. The treatment technique uses both total coliforms and E. coli monitoring results to start an evaluation process that, where neces sary, will require the PWS to conduct follow-up and corrective action that could prevent further incidences of contamination and exposure to fecal contamination and/or waterborne pathog ens. See section III.A.2 of the proposed RTCR preamble (USEPA, 2010c) for a detailed discu ssion on the MCLG, MCL, and coliform treatment technique requirements.

Monitoring

As with the current TCR, PWSs will con tinue to monitor for total coliforms and E. coli according to a sample siting plan an d schedule specific to the system.

Sample siting plans under the proposed RTCR must continue to be representative of the water throughout the distribution system. Under the pr oposed RTCR, systems will have the flexibility to propose repeat sample locations that will best verify and de termine the extent of potential contamination of the distribution system rather than having to sample within five connections upstream and downstream of the total coliform-positive sample location. For some systems, most likely those that have limited or no distributi on systems, the repeat samples may satisfy the requirement for source water samples. Because this represents a reduction in monitoring in addition to costs, state approval is required. EP A believes that this reduction in monitoring is appropriate only if the state determines that the dual purpose sample provides public health protection equivalent to that pr ovided by separate repeat and s ource water samples. EPA believes that many ground water systems serving 1,000 or fewer, such as systems with extensiveEconomic Analysis for the Proposed RTCR ES-6 June 2010 

### distribution systems, will not be able to show th at this reduction in monitoring (i.e. a loss of repeat sample that is near the total coliform-positive routine sample site, but not near the source water sample site) will provide public health protection equivalent to separate samples.

As with the current TCR, the proposed RTCR allows reduced monitoring for some small ground water systems. The proposed RTCR is exp ected to improve public health protection compared to the current TCR by requiring small ground water systems that are on or wish to move to reduced monitoring to meet certain eligibili ty criteria. Examples of the criteria include a sanitary survey showing that the system is fr ee of sanitary defects, a clean TCR compliance history for 12 months, and a recurring annual s ite visit by the state a nd/or a voluntary Level 2 assessment by a party approved by the state or m eeting criteria established by the state for systems wishing to remain on or reduce to annual monitoring

For small ground water systems, the proposed RTCR requires increased monitoring for higher-risk systems that meet certain criteria such as unacceptable compliance history under the RTCR. The proposed RTCR specifies conditions unde r which systems will no longer be eligible for reduced monitoring and be requ ired to return to routine m onitoring or to monitor at an increased frequency.

The proposed RTCR requires systems on a qua rterly or annual monitoring frequency (applicable only to ground water systems servin g 1,000 or fewer people) to conduct additional routine monitoring the month following one or mo re total coliform-positive samples. Under the proposed RTCR, systems must collect at least three routine samples dur ing the next month,
unless the state waives the additional routine mo nitoring. This is a reduction in the required number of additional routine samples from the cu rrent TCR, which requires at least five routine samples in the month following a total coliform-positive sample for all systems serving 4,100 or fewer people.

The current TCR requires all systems serving 1,000 or fewer people to collect at least four repeat samples while PWSs serving 1,000 peopl e or greater to collect three repeat samples. The proposed rule requires three repeat sample s after a routine total coliform-positive sample, regardless of the system type and size.

Sections III.A.3 and III.A.4 of the proposed RTCR preamble provide detailed discussions of the routine monitoring and repeat sampling requirements of the proposed RTCR.

Seasonal systems

The proposed RTCR establishes special monito ring requirements for seasonal systems for the first time. Seasonal systems represent a special case in that the shutdown and start-up of these water systems present additional opportunities for contamination to enter or spread through the distribution system. Seasonal systems must demons trate completion of a state-approved start-up procedure. In addition, they must designate the time period(s) for monitoring based on sitespecific considerations (such as during periods of highest demand or highest vulnerability to contamination) in their state-approved sample siting plan. Section III.A.3 of the proposed RTCR preamble provides a detailed discussion of seasonal systems.Economic Analysis for the Proposed RTCR ES-7 June 2010 

### Assessment and corrective action

As part of a treatment technique, all PWSs are required to assess their systems when monitoring results show that the system may be vulnerable to contamination. Systems must conduct a simple self-assessment (Level 1) or a more detailed assessment (Level 2) depending on the severity and frequency of contamination. The system is responsib le for correcting any sanitary defect(s) found through e ither a Level 1 or Level 2 asse ssment. Section III.A.5 of the proposed RTCR preamble provides more discussi on of the treatment tech nique requirement of the proposed RTCR.

Violations and public notification

The proposed RTCR establishes an E. coli MCL violation, a treatment technique violation, a monitoring violation, and a reporting violation. Public notification is required for each type of violation, depending on the degree of potential public health concern consistent with EPA’s current public notification requirements under 40 CFR part 141, subpart Q. The proposed RTCR also modifies the public notification and Consumer Confidence Report language to reflect the construct of the proposed rule. Sections III.A.6 and III.A.7 of the proposed RTCR preamble provide detailed discussions of violations and public notification under the proposed RTCR.

Transition to the RTCR

The proposed RTCR allows all systems to transi tion to the new rule at their current TCR monitoring frequency, including systems on redu ced monitoring under the current TCR. States will then evaluate the monitoring frequency dur ing each sanitary survey conducted after the compliance effective date of the RTCR. This pr ocess reduces state burde n by not requiring the state to determine appropriate monitoring frequency at the same time as when the state is trying to adopt primacy, develop policies, and train th eir own staff and the PWSs in the state.

Exhibit ES.1 shows the implementation schedule, from year 1 through year 10, for the proposed RTCR. PWSs will begin sampling under the RTCR in the fourth year after RTCR promulgation 1



### .

1 Chapter 4 of the RTCR EA describes the baseline schedule under which systems would begin sampling following the RTCR effective date; Chapter 5 describes how the baseline schedule is adjusted, based on acute and non-acute violations incurred during an initial assessment period, to determine the steady state distribution of systems on monthly, quarterly, and annual sampling.Economic Analysis for the Proposed RTCR ES-8June 2010Exhibit ES.1 Implementation ScheduleYearYear 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10StateImplementationRevising Sampling PlanRoutine monitoring, Additional routine monitoring, Repeat MonitoringSite InspectionsLevel 1 and Level 2 Site AssessmentsCorrection Actions Based on Level 1 and Level 2 Site AssessmentsPublic NotificationPWSImplementationRevising Sampling PlanRoutine monitoring, Additional routine monitoring, Repeat MonitoringSite InspectionsLevel 1 and Level 2 Site AssessmentsCorrection Actions Based on Level 1 and Level 2 Site AssessmentsPublic NotificationSource: Draft Information Collection Request for the Proposed Revised Total Coliform Rule, Figure 4.3.Note: Activities occurring in Year 10 continue throughout the remaining years of analysisEconomic Analysis for the Proposed RTCR ES-9 June 2010 

## ES.4 Systems Subject to the Proposed RTCR

The proposed RTCR will apply to all PWSs in the United States. The baseline inventory
for the EA is derived from EPA’s Safe Drinki ng Water Information System (SDWIS), fourth quarter 2007 data 2 

### (USEPA, 2007b), which contains information reported by primacy agencies on the approximately 155,000 active PWSs. The sy stems are subdivided by water source (ground water or surface water), type (community wa ter systems (CWS), nontransient noncommunity water systems (NTNCWS), and transient noncommunity water systems (TNCWS)), and size (nine size categories ranging from those serving fewer than 100 people to those serving more than 1 million people).

EPA developed the baseline water quality us ed in the RTCR EA from the Six-Year
Review 2 data collected between 1998 and 2005, which include coliform monitoring data voluntarily provided to EPA by 37 primacy agencies (35 states and 2 tribes). The database
consists of over nine million TCR records co llected between 1998 and 2005. In addition, EPA incorporated information from the GWR, the U.S. Census, and the current TCR to develop assumptions for the model.

EPA used the available data and the requireme nts of the regulatory options considered to develop a model that predicts the number of systems in each category that experience TC+ and EC+ assays over the 25-year peri od of analysis. The results of the occurrence model and cost model indicate the number of systems that conduc t the various activities under three regulatory options (TCR and AIP and Alternative options). Th ese results are discussed in terms of benefits of the current rule (changes in acute viol ations incurred and corre ctive actions to be implemented) and rule costs in Section ES.5 below.



## ES.5 National Benefits and Costs of the Proposed RTCR

The consensus resulting from TCRDSAC delib erations was that a proposed RTCR that
was consistent with the AIP would achieve a net risk reduction compared to the current TCR. The committee applied best professional judgmen t in determining that the increased protection provided by the new requirements for implem enting focused assessments and appropriate corrective actions would more than offset any potential increase in risk introduced by the reduction in samples or other changes resulting from the proposed RTCR.

Based on limitations in available data (describ ed further in Chapter 6, Section 6.3), EPA
determined that benefits could not be calculated in terms of avoide d cases of (or costs related to) morbidity or mortality. Since E. coli is an indicator of fecal cont amination, EPA assumed that a
decrease in E. coli occurrence in the distribution system w ould be associated with a decrease in fecal contamination in the distribution system. In general, this decrease in fecal contamination should reduce the potential risk to human health for PWS customers. Thus, any reduction in E. coli occurrence is considered a benefit of the pr oposed RTCR. EPA’s qualitative analysis in
Section 6.2 of this EA considers the overall changes in occurrence of contaminant indicators under the proposed RTCR as compared to the curr ent TCR, and predicts a net decrease in risk.

2 SDWIS-Federal Version (SDWIS/FED) is a database created by EPA containing data submitted by States and regions regarding inventory as well as compliance with SDWA.Economic Analysis for the Proposed RTCR ES-10 June 2010 

### As discussed in Chapter 6, this reduction in risk is an indicator of the benefits of the proposed
RTCR.

Sections ES.5.1 and ES.5.2 summarize the qua litative benefits anal ysis and the methods used to derive the costs of the rule, respectively. Section ES.5.1 describes the qualitative analyses of net changes in TC and EC occurrence an ticipated to occur under the proposed RTCR compared to the current TCR. As found in Secti on ES.5.2, EPA’s national cost estimates include cost to implement the rule; revise sampling plan s; conduct routine monito ring, additional routine monitoring, and repeat monitoring; perform Level 1 and Level 2 assessments; implement corrective actions; and provide public notification in the case of violations. Estimates for present value and annualized national costs are presented using a 3 percent and 7 percent discount rate. 3 

### Chapters 6 (benefits), 7 (costs), and 9 (compa rison of benefits and costs), as well as the appendices, provide a more detail ed discussion of all the analys es discussed in the sections
below.

Changes in risk associated with propose d RTCR activities are ch aracterized by their anticipated effects on potential pathways of contam ination into PWS, as indicated by their effects on such pathways for TC/ E. coli . These activities are consider ed under each rule component presented in Exhibit ES.3.

ES.5.1 Derivation of Benefits

In promulgating the RTCR, EPA expects to fu rther reduce the risk of contamination of public drinking water from the current baselin e risk under the existing TCR. The options considered during development of this proposed rule and analyzed as part of this EA (see Chapters 6, 7, and 9) are designed to achieve this reduction while maintaining public health protection in a cost-effective manner.

The EA examines the benefits in terms of tr ade-offs between compliance with the current TCR and the other options considered (AIP and Alternative options ). Because there are insufficient data reporting the co-occurrenc e in a single sample of fecal indicator E. coli and pathogenic organisms and because the available f ecal indicator E. coli data from the Six-Year Review 2 dataset were limited to presence-abse nce data, EPA was unable to quantify health benefits for the proposed RTCR. EPA used several methods to qualitatively evaluate the benefits of the proposed AIP and Alternative options. Th e qualitative evaluation uses both the judgment of EPA as informed by the TCRDSAC deliberations as well as quantitative estimates of changes
in total coliform occurrence and counts of systems implementing corrective actions. The evaluation characterizes, in relative terms, the reduction in risk for each regulatory scenario as compared to baseline conditions.

3 There is much discussion among economists of the proper social discount rate to use for policy analysis. For RTCR cost analyses, calculations are made using two social discount rates (3 and 7 percent) thought to best represent current policy evaluation methodologies. Historically, the use of 3 percent is based on rates of return on relatively risk-free investments, as described in the Guidelines for Preparing Economic Analyses (USEPA, 2000c). The rate of 7 percent is a recommendation of the Office of Management and Budget (OMB) as an estimate of
“before-tax rate of return to incremen tal private investment” (USEPA, 1996b).Economic Analysis for the Proposed RTCR ES-11 June 2010 

### As presented in the descript ion of the baseline (see Chap ter 4), the percentages of samples that are positive for total coliform and E. coli are generally higher for PWSs serving 4,100 or fewer people than those serving more than 4,100 people. PWSs with higher total
coliform and E. coli occurrence are more likely to be tri ggered into assessments and corrective action. As discussed previously, EPA believes that the assessments and corrective action will
lead to a decrease in total coliform and E. coli occurrence. Because the PWSs serving 4,100 people or fewer have a higher initial E. coli occurrence and will be triggered into more assessments and corrective actions than larger PWSs, the increase in benefits for these small systems will likely be more evident as compared to the larger systems. In particular, model results suggest that customers of small ground water TNCWSs serving 100 or fewer people, which constitute approximately 40 percent of PW Ss, experience the most improvement in water quality under the proposed RTCR. That is, the occurrence of E. Coli is predicted to decrease more for these systems that for other systems types.

When revising an existing drinking water regul ation, one of the main concerns is to ensure that backsliding on water quality and public health protection does not occur. SDWA requires that EPA at least maintain or improve public health protection for any rule revision. EPA believes that the proposed RTCR is more st ringent than the current TCR with regard to protecting public health. The basis for this perspective is provided in chapters 6 and 9 of this EA.

Risk reduction for the proposed RTCR is char acterized by the activities performed that are presumed to reduce risk of exposing the public to contaminated wate r. These activities are considered under each rule compone nt presented in Exhibit ES-3.

More frequent monitoring has the potential to decrease the risk of contamination in PWSs based on an enhanced ability to diagnose and m itigate system issues in a more timely fashion. Conversely, less frequent monito ring has the potential to increase risk. Real-time continuous sampling would mitigate the most risk possible based on sampling schedule; however, it would cost prohibitively more than the periodic samp ling practiced under the cu rrent TCR and included in the AIP and the Alternative options. EPA’ s objective in proposing the sampling schedules included in the AIP and Alternative options wa s to find an appropriate balance between the factors of risk mitigation and cost management.

Under the AIP and Alternative options, the reduction in the number of repeat samples and additional routine samples for some PWSs has the potential to contribute to increased risk for PWS customers. However, this increase in risk is expected to be more than offset by potential
decreases in risk from increased routine and th e addition of the assessments and corrective action provisions that find and fix problems indicated by monitoring. Exhibit ES-2 illustrates the predicted reduced frequency at which total colifo rms occur subsequent to the implementation of the AIP and Alternative options. As discusse d previously, the proposed RTCR uses total
coliform and E. coli occurrence as an indicator of potentia l pathways for possible contamination to enter the distribution system. Exhibit ES-2 illustrates the combined effects on total coliform occurrence resulting from changes in monitoring and the effects of assessments and corrective actions for the different rule options illustrated. The relative trends indicated in Exhibit ES-2 for transient noncommunity water systems also pert ain to other PWS categories as illustrated in Chapter 5. EPA chose to include the characteri zation for TNCWSs because they represent the system category of largest influence on the national impacts.Economic Analysis for the Proposed RTCR ES-12 June 2010 

### Exhibit ES.2 GW Transient Noncomm unity Water System Total Coliform Occurrence

0 0.005

0.01 0.015

0.02 0.025

0.03 0.035

0.04 0.045

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR No GWR

TCR

AIP

Alt

Note: 1) Six Year 2005 total coliform-positive occurrence is representative of all GW TNCWS. The rate presented may underestimate the occurrence for systems serving 25 -4,100 individuals. 2) Graph shows the 30-year modeled period discussed in Ch. 5. Model years 3 – 27 represent th e 25-year period of analysis for this EA. Model year 11 begins the steady state, during whic h systems that qualified for reduced monitoring are now sampling on their reduced schedules. The criteria and timing of this monitoring adj ustment is discussed in Sect ion 5.3.2.2 of this EA. 3) The results represented by the curves for TCR and AIP and Alternative options all inco rporate the effects of the GWR.



### The effect that the proposed changes to publ ic notification requirements for monthly/nonacute MCL violations have on risk is difficult to predict. Some factors, such as reduction in available public information and possible PWS comp lacency, lead to a potential increase in risk and other factors, such as less confusion (PN more in line with potential health risks) and PWSs resources used more efficiently, lead to a poten tial decrease, as discussed in Chapter 9. This change to PN is addressing a key concern expressed by various stakeholders in the advisory committee and during the Six-Year Review 1 comme nt solicitation process. By eliminating the requirement and replacing it with assessment a nd corrective action requirements, the Agency expects less public confusion, more effective use of resources, and increased transparency. Other proposed rule components are expected to have a negligible effect on ri sk. However, the overall effect of the proposed RTCR is expected to be a further reduction in risk from the current baseline risk under the current TCR. Chapter 6 presents a detailed disc ussion of the potential influence on health risk for each proposed rule component.Economic Analysis for the Proposed RTCR ES-13June 2010Exhibit ES.3 Potential Changes in Risk under the AIP and Alternative Options Relative to the Current TCRProposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskAIP optionAlternativeoption AIP optionAlternativeoption AIP optionAlternativeoptionImplementationActivitiesNone None None None No change No changeRoutineMonitoring(IncludingReducedMonitoring)None NoneIncreased stringencyin requirements toqualify for reducedmonitoring alongwith requirement toreturn to baselinemonitoring upon lossof these criteria isexpected to result indecreased risk (i.e.,fewer PWSs willqualify and thereforemore will monitormore frequently).PWSs all monitormonthly in the first fewyears of implementationof the RTCR, which isan increase in samplingfrequency for systemsthat monitor quarterly orannually under thecurrent TCR. After thefirst few years, systemsmay reduce toquarterly, but none mayreduce to annualmonitoring, creating adecrease in risk forsystems on annualmonitoring under thecurrent TCR.Decrease DecreaseRepeatMonitoringRequired repeatsamples reducedfrom 4 to 3 forsystems serving<1,000 peopleRequiredrepeat samplesreduced from 4to 3 for systemsserving <1,000peopleNone None Increase IncreaseAdditional Additional routine None None Increase IncreaseEconomic Analysis for the Proposed RTCR ES-14June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskRoutineMonitoringsamples are nolonger requiredfor PWSsmonitoringmonthly.Ground waterPWSs serving≤1,000 peoplewould reduceadditional routinesamples from 5to 3.Additionalroutine samplesare no longerrequired forPWSsmonitoringmonthly.Ground waterPWSs serving≤1,000 peoplewould reduceadditionalroutine samplesfrom 5 to 3.AnnualInspectionsNone (only statescurrentlyperformingannualinspections areexpected tocontinue)Based ondiscussionswithstakeholders,states thatcurrentlyconduct annualsiteassessmentsunder thecurrent TCRmay no longerhave theresources tocontinue theinspections andconductquarterlymonitoringunder theNone (only statescurrently performingannual inspectionsare expected tocontinue)None No change IncreaseEconomic Analysis for the Proposed RTCR ES-15June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskAlternativeoption.Assessments None NoneMandatoryassessments are anew requirement.Mandatoryassessments are a newrequirement.Decrease DecreaseCorrectiveActionsNone NoneMandatorycorrective actionsare a newrequirement.Mandatory correctiveactions are a newrequirement.Decrease DecreasePublicNotification –Monthly/NonAcute MCLViolationsReduction inavailable publicinformationPossible PWScomplacencyReduction inavailable publicinformationPossible PWScomplacencyLess confusion (PNmore in line withpotential healthrisks)PWS resourcesused more efficientlyLess confusion (PNmore in line withpotential health risks)PWS resources usedmore efficientlyUnknown UnknownPublicNotification –Monitoring andReportingViolationsNone NoneIncreased stringencyof PNs motivatesPWSs to conductrequired sampling.Increased stringency ofPNs motivates PWSs toconduct requiredsampling.Decrease DecreaseOverall Decrease DecreaseNote: Detailed discussion of the rationale for determinations of potential risk for each rule component is presented in Ch. 6(Section 6.2) of this EA.Implementation activities consist of administrative activities by PWSs and states to implement the rule.Assessment of potential changes in risk for monitoring components is anoverallassessment. Potential changes (or static state) of risk for particular systemsizes and types differ according to individual regulatory requirements and are discussed in Section 6.2. Chapter 3 provides a detailed description of theregulatory components for all three regulatory scenarios, and the preamble to the RTCR provides additional discussion of the TCRDSAC process and therationale underlying the structure of the regulatory options considered.Economic Analysis for the Proposed RTCR ES-16 June 2010 

### Although a qualitative analysis is the prim ary method employed for analyzing potential changes in risk, some quantitative measures are considered in the overall assessment of the proposed RTCR, as presented in Chapter 9 of the RTCR EA. In particular, EPA developed a
model to describe TC and EC occurrence in wate r systems for the current TCR (baseline for this EA) and the proposed RTCR alternatives. The mode l generates estimates of reduced TC and EC occurrence based on requirements of the AIP and Alternative options to perform assessments and corrective actions not explicitly required in the current TCR. In addition, the model takes into
account in the baseline for the current TCR the re ductions attributable to the implementation of the GWR, which was effective as of December 2009. The predictive occurrence model and analyses results are discussed furt her in Chapters 5, 6, and 9.

Exhibit ES.4 presents the number of acute violations (current TCR) or E. coli MCL (AIP and Alternative options) violations predicted by the RTCR occurrence model to occur under each regulatory option considered. These estimates repres ent the period of analysis beginning in year six after promulgation, which begi ns the steady state following the initial five years during which results are skewed by a strong influence from the “All Monthly” sampling under the Alternative option. EPA did not quantify change s in violation or trigger rates for systems serving more than 4,100 people among the current TCR, proposed RTCR, and Alternative opti ons because of: (1) limited Six-Year Review data to characterize these systems, (2) the essentially unchanged monitoring requirements across optio ns for these systems, and (3) the level of effort already occurring to implement the current TCR.

The estimates of acute violations have two major drivers: the total number of samples taken over time (including routine, additional ro utine, and repeat) and the impact of corrective actions taken. When looking at the comparis ons between the current TCR option with the proposed RTCR across all PWSs, the overall impact of the total numbers of samples taken is negligible because the total number of samples predicted to be taken throughout the period of analysis is almost the same (approximately 82 million samples) under both the current TCR option and the AIP option

. 

### For the Alternative option, the analysis predicts that almost 88 million total samples will be taken over the period of analysis.

The changes in the steady state estimates of annual acute violations from the current TCR option to the AIP and Alternative options are show n in Exhibit 6.5. The steady state in the model refers to the period beginning in years 7 (CWSs) and 9 (NCWSs) following promulgation, after the proportions of systems sampling on monthly, quarterly, or annual regimens are adjusted following a period of assessment 4 

### . Systems that qualify for reduced monitoring will begin their new regimens in years 7 and 9 after promulga tion, respectively, for CWSs and NCWSs. The estimates shown in Exhibit ES.4 for small systems are from the predictive model and reflect the average annual estimates for the 25-year peri od of analysis, which includes 3 years of implementation followed by 22 years in which new rule requirements are in effect.

The steady state reductions in the number of annual acute violations found under the proposed RTCR and Alternative option primarily re flect the benefits of corrective actions under these two alternatives in preven ting many of the acute violations that would otherwise occur over this period. Under the proposed RTCR, reductions (or no increases) are predicted for all PWS sizes and types, while under the Alternative opti on, reductions (or no increases) are predicted for

4 The effective date of the proposed RTCR occurs after 3 years of implementation, at the start of year 4 post promulgation. For CWSs, years 4 - 6 post promulgation are the period of assessment for considering potential to move to reduced monitoring for systems; for NCWSs, years 4 - 8 are the period of assessment.Economic Analysis for the Proposed RTCR ES-17 June 2010 

### all PWSs except TNCWSs serving < 1,000 people. For these small TNCWSs under the Alternative option, increased monitoring is expect ed to lead to an ove rall increase in annual acute violations (and is also the driver of th e greater total number of annual acute violations predicted). The interplay of th e reducing effect on acute viol ations that re quired corrective actions induce and the increasing effect from reductions in some mon itoring requirements are explored in Section 6.4 of this EA. The step-w ise analysis presented in Section 6.4 shows how
acute violations could increase under the Alternat ive option and concludes that, on balance, more acute events are prevented than are missed.Economic Analysis for the Proposed RTCR ES-18 June 2010 

### Exhibit ES.4 Predicted Average Annual Acute (current TCR) or E. coli MCL (AIP and Alternative Options) Violations by Regulatory Option and System Type 1

PWS Type PWS Size (Population

Served) Number of Systems TCR AIP Option Alternative Option

< 100 1,170 7 5 5

101-500 2,150 8 5 5

501-1,000 1,173 5 3 3

1,001-4,100 2,938.0 7.4 6.6 6.6

4,101-33,000 3,164 9 9 9

33,001-96,000 720 3 3 3

96,001-500,000 308 1 1 1

500,001-1 Million 31 0 0 0

> 1 Million 17 0 0 0

Totals 11,671 39 33 33

< 100 11,938 52 39 42

101-500 13,892 47 32 34

501-1,000 4,467 13 9 9

1,001-4,100 6,443 22 16 16

4,101-33,000 3,156 12 12 12

33,001-96,000 335 2 2 2

96,001-500,000 63 0 0 0

500,001-1 Million 4 0 00

> 1 Million 3 0 00

Totals 40,301 148 109 116

< 100 250 2 1 1

101-500 253 1 1 1

501-1,000 88 0 0 0

1,001-4,100 72 1 1 1

4,101-33,000 22 0 0 0

33,001-96,000 2 0 00

96,001-500,000 1 0 00

500,001-1 Million 0 0 00

> 1 Million 0 0 00

Totals 688 4 3 3

< 100 8,826 39 25 33

101-500 6,613 20.31 14.31 20.29

501-1,000 1,718 4.31 3.61 4.51

1,001-4,100 812 8 5 5

4,101-33,000 70 0 0 0

33,001-96,000 2 0 00

96,001-500,000 0 0 00

500,001-1 Million 0 0 00

> 1 Million 0 0 00

Totals 18,041 72 49 63

< 100 1,339 20 11 11

101-500 497 8 4 4

501-1,000 88.00 1.25 0.79 0.79

1,001-4,100 67.0 2.3 1.3 1.3

4,101-33,000 18 0 0 0

33,001-96,000 0 0 00

96,001-500,000 0 0 00

500,001-1 Million 0 0 00

> 1 Million 1 0 00

Totals 2,010 31 18 18

< 100 60,200 302 249 354

101-500 19,275 94.93 73.11 110.96

501-1,000 1,963 10.07 8.04 10.47

1,001-4,100 617 8 5 5

4,101-33,000 67 0 0 0

33,001-96,000 2 0 00

96,001-500,000 1 0 00

500,001-1 Million 1 0 00

> 1 Million 0 0 00

Totals 82,126 416 336 481

All Systems Grand Total 154,837 710 547 713

TNC GW CWS SW

CWS GW

NTNC SW

NTNC GW

TNC SW

Source: Output from Proposed RTCR models (described in Sections 5.3 and 5.4 of this EA).

1 Average violation estimates are for the 22-year period following the effective date of the RTCR and 3 y ears of implementation activities.Economic Analysis for the Proposed RTCR ES-19 June 2010 

### ES.5.2 Derivation of Costs

Costs are estimated for different PWS types and size categories (nine size categories are used based on population served) us ing unit costs developed in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d). Cost analyses for PWSs include estimates to implement the rule; to revise sampling plans; to conduct routine monitoring, additional routine monitoring, and re peat monitoring; to perform Level 1 and Level 2 assessments and implement corrective actions; and to provide public notification in the case of violations. State cost analyses include estimates of the labor burdens that states would incur, including staff training on proposed RTCR requ irements, conducting annual administration, reviewing monitoring reports, reviewing a nd approving corrective action plans, and for recordkeeping. Chapter 7 of this EA provides detailed discussion on the underlying cost-buildup for each rule component included in the cost model.

National costs are estimated using a cost m odel specifically developed for the proposed
RTCR. The model builds on the occurrence model de scribed in Chapter 5. Within the modeling structure, costs for PWSs serving 4,100 or more retail customers are analyzed differently from smaller PWSs to capture differing baseline struct ures and to account for di fferences in available occurrence data as described in Chapter 4 of th is EA. The resulting national cost estimates for the RTCR regulatory options considered are shown in Exhibit ES.5. To evaluate the impact of costs under the proposed RTCR, emphasis in this EA is placed on the net changes in costs of the AIP or Alternative options compared to the current TCR, also shown in Exhibit ES.5.

As noted throughout the RTCR EA, there is variability among many of the input parameters to the proposed cost model and se veral rule compliance assumptions based on PWS size and type (e.g., population served, labor rates, TC hit rates, and occurrence distributions are different for different sizes and types of PWSs). However, there is insufficient information to fully characterize the distribution of variability (i.e., calculating confidence bounds) within each of these PWS classifications on a national scale; th erefore, EPA uses mean values for these input parameters.

EPA also recognizes that there is uncertainty in the national cost estimates. Many of the uncertainties have the same impact on both the TCR and AIP and Alte rnative options (e.g., baseline assumptions and effects of GWR impl ementation). Because the EA analyses focus on net changes between the TCR and the AIP and Alternative options, these common sources of uncertainty do not impact conclusions based on the net change analyses. For assumptions that are major drivers of the analyses and differ between the TCR and AIP and Alternative options (e.g., corrective action compliance forecast), EPA has ev aluated uncertainty and performed sensitivity analyses to qualitatively and quantitatively charact erize the potential impact s of alternative input parameters. Chapters 4 and 5 present a comp rehensive discussion of factors contributing uncertainty to the occurrence analysis. Chapter 5 presents a sensitivity analysis pertaining to the predictive occurrence model results, which also impact the cost ca lculations. Section 7.7 of the EA discusses uncertainty and provi des sensitivity analysis results as they specifically pertain to the cost analyses.Economic Analysis for the Proposed RTCR ES-20 June 2010 

### Exhibit ES.5 Comparison of Total and Net Change from Current TCR in Annualized Present Value Costs ($Millions, 2007$)

Source: Proposed RTCR cost model. Notes: 1) Detail may not add due to independent rounding. 2) Annualized costs are greater using t he 7% than 3% discount rate for the Alte rnative option. This occurs because the costs under the Alternative option are front-loaded in the 25-year time period due to the all-monthly sampling requirement (which doesn’t occur under the AIP option). Di scounting a given stream using 3% and 7% will always result in a higher present value using 3%; annualization of an identical value (any value) using 3% and 7% would result in a higher value under 7%. Depending on how cost s accrue over the period, and how long the period is, one effect will be stronger than the other. Generally, the discou nting effect is stronger, res ulting in the pa ttern commonly seen where the 3% annualized amount is greater than the 7% one. However, in cases like the Alternative option where the costs accrue faster early in the time period, t he annualization effect can more than compensate for the discounting effect, resulting in a higher annualized value under 7% compared to 3%.



## ES.6 Projected Impacts on Household Costs

The household cost analysis considers the imp act that the costs incurred by CWSs have on the households they serve. This analysis c onsiders the potential incr ease in a household’s water bill if a CWS passed the entire cost increase resulting from the proposed rule on to their customers. This analysis is a tool to gauge potential impacts and should not be construed as a precise estimate of potential changes to househol d water bills. State costs and costs to TNCWSs
and NTNCWSs are not included in th is analysis since th eir costs are not typically passed through directly to households. Exhibit ES.6 presents the mean expected increases in annual household costs for all CWSs, including those systems that do not have to take corrective action. Exhibit ES.6 also presents the same information for CW Ss that must take corrective action. Household costs tend to decrease as system size increases , due mainly to the economies of scale for the
corrective actions.

The first section of Exhibit ES.6 presen ts net costs per household under the AIP and Alternative options for a ll rule components spread across all CWSs. In this scenario, comparison to the current TCR shows a cost savings for some households. For those households that are expected to see a cost increase, the average annu al water bill would be expected to increase by less than ten cents on average.

While the average increase in annual househol d water bills to implement the proposed RTCR is less than a dollar, customers served by a small CWS that have to take corrective actions as a result of the proposed rule would incur slight ly larger increases in their water bills. The subsequent sections of the exhibit present net costs per household for three different subsets of CWSs (e.g., CWSs that perform assessments but no corrective actions, CWSs that do perform corrective actions, and CWSs that do not perform assessments or corrective actions). As shown in the second section of Exhibit ES.6, approxi mately 67% of households are served by CWSs that perform assessments but do not perform corrective actions over the 25-year period of PWSs State Total PWSs State Total

TCR - Total 185 $ 0.9 $ 186 $ 178 $ 0.9 $ 179 $

AIP - Total 199 $ 1.1 $ 200 $ 191 $ 1.3 $ 192 $ AIP - Net Change 14 $ 0.1 $ 14 $ 13 $ 0.4 $ 14 $ AIP - Percent Change 7% 16% 7% 7% 48% 8% Alternative Option - Total 212 $ 1.2 $ 213 $ 207 $ 1.5 $ 209 $ Alternative Option - Net Change 27 $ 0.3 $ 27 $ 29 $ 0.6 $ 30 $ Alternative Option - Percent Change 15% 32% 15% 16% 67% 17% 3% Discount Rate 7% Discount RateEconomic Analysis for the Proposed RTCR ES-21 June 2010 

### analysis. The 9% of households belonging to CWSs that would pe rform corrective actions would experience an increase in annual net househol d costs of less than $1 on average for CWSs serving >4,100 people to approximately $23 for CWSs serving 100 people or fewer.

The final section of the exhibi t presents the 24% of househol ds belonging to CWSs that would not perform assessments or corrective actions. Households of this category would experience an increase in cost savings comparable to those performing corrective actions, and a decrease in cost savings compared to those performing assessments but no corrective actions. This decrease in costs savings is because no PN costs are associated with systems not performing assessments. Overall, the main driver of a dditional household costs under the proposed RTCR is
whether or not additional corre ctive actions are performed.Economic Analysis for the Proposed RTCR ES-22 June 2010 

### Exhibit ES.6 Summary of Net Annual Per-Household Costs for the Proposed RTCR (2007$)

AIP Net AIP Net Cost per

Houshold Alternative Option Net Alternative Option Net Cost per

Household AIP Net AIP Net Cost per

Houshold Alternative Option Net Alternative Option Net Cost per

Household

A B C D=C/A E F=E/B G H=G/A I J=I/B

≤ 100 307,243 307,243 68,433 $ 0.223 $ 180,905 $ 0.589 $ 170,417 $ 0.555 $ 310,914 $ 1.012 $

101-500 1,589,510 1,589,510 323,373 $ 0.203 $ 417,352 $ 0.263 $ 430,801 $ 0.271 $ 557,863 $ 0.351 $

501-1,000 1,624,853 1,624,853 35,455 $ 0.022 $ 75,901 $ 0.047 $ 86,936 $ 0.054 $ 138,624 $ 0.085 $

1,001-4,100 7,816,592 7,816,592 335,846 $ 0.043 $ 335,846 $ 0.043 $ 390,122 $ 0.050 $ 390,122 $ 0.050 $

4,101-33,000 27,997,647 27,997,647 2,295,169 $ 0.082 $ 2,295,169 $ 0.082 $ 2,007,071 $ 0.072 $ 2,007,071 $ 0.072 $

33,001-96,000 21,933,438 21,933,438 1,547,791 $ 0.071 $ 1,547,791 $ 0.071 $ 1,284,124 $ 0.059 $ 1,284,124 $ 0.059 $

96,001-500,000 26,770,609 26,770,609 1,463,800 $ 0.055 $ 1,463,800 $ 0.055 $ 1,199,384 $ 0.045 $ 1,199,384 $ 0.045 $

500,001-1 Million 9,764,979 9,764,979 153,975 $ 0.016 $ 153,975 $ 0.016 $ 122,635 $ 0.013 $ 122,635 $ 0.013 $

> 1 Million 16,309,853 16,309,853 (4,876) $ (0.000) $ (4,876) $ (0.000) $ (4,023) $ (0.000) $ (4,023) $ (0.000) $

Total 114,114,724 114,114,724 6,218,966 $ 0.054 $ 6,465,863 $ 0.057 $ 5,687,467 $ 0.050 $ 6,006,714 $ 0.053 $

≤ 100 125,340 124,920 (187,747) $ (1.498) $ (151,107) $ (1.210) $ (126,913) $ (1.013) $ (77,760) $ (0.622) $

101-500 460,577 464,568 (138,181) $ (0.300) $ (104,157) $ (0.224) $ (83,851) $ (0.182) $ (41,251) $ (0.089) $

501-1,000 394,643 401,009 (132,431) $ (0.336) $ (122,868) $ (0.306) $ (110,140) $ (0.279) $ (97,592) $ (0.243) $

1,001-4,100 2,341,578 2,341,578 (261,760) $ (0.112) $ (261,760) $ (0.112) $ (212,565) $ (0.091) $ (212,565) $ (0.091) $

4,101-33,000 24,827,588 24,827,588 (207,674) $ (0.008) $ (207,674) $ (0.008) $ (88,472) $ (0.004) $ (88,472) $ (0.004) $

33,001-96,000 19,232,570 19,232,570 (187,918) $ (0.010) $ (187,918) $ (0.010) $ (156,652) $ (0.008) $ (156,652) $ (0.008) $

96,001-500,000 23,912,325 23,912,325 (162,082) $ (0.007) $ (162,082) $ (0.007) $ (146,737) $ (0.006) $ (146,737) $ (0.006) $

500,001-1 Million 5,524,188 5,524,188 (45,790) $ (0.008) $ (45,790) $ (0.008) $ (42,392) $ (0.008) $ (42,392) $ (0.008) $

> 1 Million - - - $ - $ - $ - $ - $ - $ - $ - $

Total 76,818,809 76,828,746 (1,323,584) $ (0.017) $ (1,243,356) $ (0.016) $ (967,721) $ (0.013) $ (863,420) $ (0.011) $

≤ 100 13,927 13,880 325,679 $ 23.385 $ 347,280 $ 25.020 $ 296,928 $ 21.321 $ 318,549 $ 22.950 $

101-500 51,175 51,619 469,264 $ 9.170 $ 462,084 $ 8.952 $ 412,574 $ 8.062 $ 410,784 $ 7.958 $

501-1,000 43,849 44,557 164,754 $ 3.757 $ 167,578 $ 3.761 $ 143,922 $ 3.282 $ 146,752 $ 3.294 $

1,001-4,100 260,175 260,175 556,364 $ 2.138 $ 556,364 $ 2.138 $ 484,508 $ 1.862 $ 484,508 $ 1.862 $

4,101-33,000 3,170,059 3,170,059 2,526,599 $ 0.797 $ 2,526,599 $ 0.797 $ 2,132,792 $ 0.673 $ 2,132,792 $ 0.673 $

33,001-96,000 2,700,868 2,700,868 1,736,797 $ 0.643 $ 1,736,797 $ 0.643 $ 1,446,819 $ 0.536 $ 1,446,819 $ 0.536 $

96,001-500,000 2,858,284 2,858,284 1,624,577 $ 0.568 $ 1,624,577 $ 0.568 $ 1,345,503 $ 0.471 $ 1,345,503 $ 0.471 $

500,001-1 Million 613,799 613,799 194,889 $ 0.318 $ 194,889 $ 0.318 $ 161,003 $ 0.262 $ 161,003 $ 0.262 $

> 1 Million - - - $ - $ - $ - $ - $ - $ - $ - $

Total 9,712,136 9,713,240 7,598,924 $ 0.782 $ 7,616,167 $ 0.784 $ 6,424,050 $ 0.661 $ 6,446,711 $ 0.664 $

≤ 100 167,976 168,442 (69,499) (0.414) $ (15,268) (0.091) $ 402 0.002 $ 70,124 0.416 $

101-500 1,077,758 1,073,324 (7,710) (0.007) $ 59,425 0.055 $ 102,079 0.095 $ 188,331 0.175 $

501-1,000 1,186,361 1,179,288 3,132 0.003 $ 31,191 0.026 $ 53,154 0.045 $ 89,464 0.076 $

1,001-4,100 5,214,839 5,214,839 41,242 0.008 $ 41,242 0.008 $ 118,178 0.023 $ 118,178 0.023 $

4,101-33,000 - - - - $ - - $ - - $ - - $

33,001-96,000 - - - - $ - - $ - - $ - - $

96,001-500,000 - - - - $ - - $ - - $ - - $

500,001-1 Million 3,626,992 3,626,992 - - $ - - $ - - $ - - $

> 1 Million 16,309,853 16,309,853 - - $ - - $ - - $ - - $

Total 27,583,779 27,572,738 (32,836) $ (0.001) $ 116,591 $ 0.004 $ 273,813 $ 0.010 $ 466,097 $ 0.017 $

Source:
(C), (E), (G), (I) Exhibit 7.28. Community Water Systems (CWSs) not performing Level 1/Level 2 Assessments, or Corrective Actions Number of

Households (Alternative

Option)

Community Water Systems (CWSs) performing Level 1/Level 2 Assessments (and no Corrective Actions)

Community Water Systems (CWSs) performing Corrective Actions 7% Discount Rate

PWS Size (Population

Served) 3% Discount Rate

Number of

Households (AIP)

All Community Water Systems (CWSs)

Source: Exhibit 7.23



## ES.7 Comparison of Benefi ts and Costs, and Regula tory Alternatives of the Proposed RTCR

As required by the SDWA, EPA has determined that the benefits of the proposed RTCR justify the costs. In making this determina tion, EPA considered quantified and nonquantified
benefits and costs as well as the other co mponents of the HRRCA outlined in section 1412 (b)(3)(C) of the SDWA.Economic Analysis for the Proposed RTCR ES-23 June 2010 

### Additionally, EPA used several other techniques to compare benefits and costs including a break-even analysis and a cost effectiveness analysis. The break-even analysis (see Chapter 9 of the proposed RTCR EA) was conducted using tw o example pathogens responsible for some (unknown) proportion of waterborne illness in th e United States. The analysis shows that a relatively small number of cases (based on E. coli O157:H7 or Salmonella ) would need to be
avoided for the rule to break-even with the best estimates of net costs.

Under the AIP option, just two deaths woul d need to be avoided annually using a 3%
discount rate based on consideration of the b acterial pathogen STEC O157. Alternatively, approximately 3,000 or 8,000 non-fatal cases, usi ng the enhanced or traditional benefits valuations approaches 5 

### , respectively, would need to be avoide d to break even with rule costs. As expected based on its costs, the Alternative op tion would require that a higher number of cases be avoided annually for that option to break ev en (approximately 60% to 100% more than the AIP option under the traditional and enha nced approaches, respectively).

As Exhibit 9.21 shows, approximately 2 d eaths would need to be avoided from a
Salmonella infection for the rule to break even . The estimated number of non-fatal Salmonella
cases that would need to be avoided to break even is approximately 10,000 or 65,000 cases under
the enhanced and traditional benefits valuations approaches, respectively.

As the discussion presented in Chapter 2 of this EA describes, disease and deaths are attributable to drinking water contamination acro ss the country. The CDC has found that 15% of
outbreak cases of STEC 0157:H7 are waterborne (Rangel et al., 2005); if that rate applies as well to endemic cases, then approximately 11,000 cases would be due to waterborne exposure to STEC 0157:H7 and could be mitigated. Based on that assumption, up to 11,000 cases annually may be avoided by measures that mitigate pathways of contamination into PWSs for just this one potential contaminant. That amount of reduction in terms of STEC 0157:H7 would be enough for
the rule to break even based on either the enhanced or traditional cost of illness approaches. If more than one contaminant was reduced or preven ted from occurring in PWSs, the rule would be that much more likely to break even. Avoided il lness and death from secondary transmission of infection could also be significant. Additionally, fe wer cases would need to be avoided if all the
benefits of the rule as descri bed in chapter 6 were included in the analysis. If increased
assessments and corrective actions result in a le vel of knowledge of the system that enables earlier mitigation of potential pathways of contamination, then additional illnesses or deaths may be avoided beyond those suggested by the decrease in acute events that the model predicts. In the
case of the outbreak of Salmonella infections in Alamosa, Colorado, as described in Chapter 9 of the EA, some of the key factors that contributed to the outbrea k include significant levels of sediment and the presence of breaches to the integrity of the storage tank.

Chapter 9 of the proposed RTCR EA has a complete discussion of the break-even analysis and how costs per case were calculated.

5 Both traditional and enhanced COI approaches count the value of the direct medical costs and of time lost that would been spent working for a wage, but differ in their assessment of the value of time lost that would be spent in nonmarket work (e.g. housework, yardwork, and raising children) and leisure (e.g. recreation, family time, and sleep). They also differ in their valuation of (other) di sutility, which encompasses a rang e of factors of well being, including both inconvenience and any pain and suffering. A complete discussion of the traditional and enhanced COI approaches can be found in Appendix E.Economic Analysis for the Proposed RTCR ES-24 June 2010 

### Exhibit ES.7 Estimated Annual Breakeven Threshold for Avoided Cases of STEC O157

Non

‐ fatal

cases only Fatal cases only 1 

### Non

‐ fatal

cases only Fatal cases only 1



### 3% 8,000 1.6 16,000 3.1

7% 8,000 1.5 17,000 3.4

3% 3,000 1.6 5,000 3.1

7% 3,000 1.5 6,000 3.4 COI Methodology Discount

Rate AIP Option Alternative Option

Traditional

COI

Enhanced COI

1 Calculations for fatal cases include the no n-fatal COI component for the underlying illness prior to death. Notes: The number of cases needed to reach break-even threshold calculated by dividing the net change in costs for the RTCR (Exhibit 9.5) by the average estimated value of avoided cases (Exhibit 9.18). Threshold esti mates based on a weighted average of the cost of “all cases” that includes both fat al and non-fatal cases is shown in Appendix E. STEC O157 is only an example of a pathogenic endpoint that could have been used for this analysis. Use of additional pathogenic cont aminants in addition to this single endpoint would result in lower threshold values. Detail may not add due to independent rounding.

The break-even threshold is higher using a 7% discount rate than a 3% discount rate under the Alternative option. This result is consistent with the annualized costs of the Alternative option being higher using the 7% discount rate, which is caused by the frontloading of costs in the period of analysis , as explained further in Chapter 7 of the EA.



### Exhibit ES.8 Estimated Annual Breakev en Threshold for Avoided Cases of Salmonella

Non

‐ fatal

cases only Fatal cases only 1 

### Non

‐ fatal

cases only Fatal cases only 1



### 3% 65,000 1.6 130,000 3.1

7% 65,000 1.6 141,000 3.4

3% 10,000 1.6 20,000 3.1

7% 10,000 1.6 21,000 3.4 AIP Option Alternative Option

Traditional

COI

Enhanced COI COI Methodology Discount

Rate

1 Note: Calculations for fatal cases include t he non-fatal COI component for the underlying illness prior to death.

Note: The number of cases needed to reach break-even threshold calculated by dividing the net change in costs for the RTCR (Exhibit 9.5) by the average estimated value of avoided cases (Exhibit 9.19). Threshold esti mates based on a weighted average of the cost of “all cases” that includes both fata l and non-fatal cases is shown in Appendix E. Salmonella is only an example of a pathogenic endp oint that could have been used for this analysis. Use of additional pathogenic co ntaminants in addition to this single endpoint would result in lower threshold values. Detail may not add due to independent rounding.

The break-even threshold is higher using a 7% discount rate than a 3% discount rate under the Alternative option. This result is consistent with the annualized costs of the Alternative option being higher using the 7% discount rate, which is caused by the frontloading of costs in the period of analys is, as explained further in Chapter 7 of the EA.Economic Analysis for the Proposed RTCR ES-25 June 2010 

### Cost effectiveness is another way of examin ing the benefits and costs of the proposed rule. ES.9 shows the cost of the rule per corr ective action implemented. The cost effectiveness analysis, as with the net benefits, is limited b ecause EPA was able to only partially quantify and monetize the benefits of the proposed RTCR. The AIP option achieves the lowest cost per corrective action implemented am ong the options considered.

Exhibit ES.9 Total Net Annual Cost Per Corrective Action Implemented under AIP

and Alternative Options, Annualized Us ing 3% and 7% Discount Rates ($2007)

Regulatory Scenario 3% Discount Rate 7% Discount Rate

AIP Net Cost 13.7 $ 13.7 $ AIP Net Corrective Actions (L1 & L2) 598 555 AIP CEA (net rule cost/CA) 22,899 $ 24,610 $ Alternative Option Net Cost 27.2 $ 29.7 $
Alternative Option Net Corrective Actions (L1 & L2) 785 765 Alternative Option CEA (net rule cost/CA) 34,718 $ 38,812 $ Notes: Exhibit includes only the number of correctiv e actions predicted by the RTCR occurrence model to be implemented in addition to those implemented under the cu rrent TCR. Includes both L1 & L2 corrective actions. Total net costs for each option and total CAs (not incremental) are shown in Exhibit 9.15. Detailed benefits and cost information is provided in Appendices A and C, respectively, of this EA.



### EPA also considered the incremental cost eff ectiveness of the AIP option as compared to the Alternative option to determine the additional be nefit associated with that portion of cost for the Alternative option that exceed s the cost of the proposed RTCR. Exhibit ES.9 shows that in incremental terms for all PWSs, the AIP option has a far lower unit cost per unit benefit than the Alternative option. EPA furthe r considered the group of 60,20 0 TNCWSs using GW, which are the largest subset of systems by size and type, and which are expected to bear the highest burden under the AIP option. ES.10 shows that in incremen tal terms, the cost effectiveness of the AIP far exceeds that of the Alternative options usi ng either a 3% or 7% discount rate. The two incremental analyses (ES.9 and ES.10) together i ndicate that the AIP option is significantly more cost effective than the Alternative option for the most burdened subset of systems and for the all PWSs together. Additional information about this analysis and other methods used to compare
benefits and costs can be found in Chapter 9 of the proposed RTCR EA.Economic Analysis for the Proposed RTCR ES-26 June 2010 

### Exhibit ES.10 Incremental Rule Cost Per Corrective Action Implemented under AIP and Alternative Options, Annualized Using 3 and 7 Percent Discount Rates ($2007)

Regulatory Scenario 3% Discount Rate 7% Discount Rate AIP Incremental Net Costs ($ millions) 1 13.7 $ 13.7 $
AIP Incremental Net Corrective Actions (L1 & L2) 1 598 555 AIP Incremental Cost per CA ($) 22,902 $ 24,613 $ Alternative Option Incremental Net Costs ($ millions) 2 13.5 $ 16.0 $
Alternative Option Incremental Net Corrective Actions (L1 & L2) 2 187 210 Alternative Option Incremental Cost per CA ($) 72,582 $ 76,299 $ Notes: Exhibit includes only the number of correctiv e actions predicted by the RTCR occurrence model to be implemented in addition to those implemented under the cu rrent TCR. Includes both L1 & L2 corrective actions. Total net costs for each option and total CAs (not incremental) are shown in Exhibit 9.15. Detailed benefits and cost information is provided in Appendices A and C, respectively, of this EA.

1 Represents the incremental increase of the AIP option over the current TCR.

2 Represents the incremental increase of the Alternative option over AIP optio n. Add incremental net values for Alternative option to incremental net va lues for AIP option to calculate total net values of Alternative option over current TCR.



### Exhibit ES.11 Incremental Rule Cost Per Corrective Action for TNCWSs using

GW (Serving < 100 People) Implemented under AIP and Alternative options, Annualized Using 3 and 7 Percent Discount Rates ($2007)

Regulatory Scenario 3% Discount Rate 7% Discount Rate AIP Incremental Net Costs ($ millions) 1 5.1 $ 5.1 $
AIP Incremental Corrective Actions (L1 & L2) (TNCWS <101 only) 1 279 257 AIP Incremental Cost per CA ($) 18,219 $ 19,965 $ Alternative Option Incremental Net Costs ($ millions) 2 8.3 $ 9.8 $

Alternative Option Incremental Corrective Actions (L1 & L2) (TNCWS <101 only) 2 128 145 Alternative Option Incremental Cost per CA ($) 64,731 $ 67,762 $ Notes: Detail may not add due to independent rounding. Incremental Net Costs are based on TNCWS serving <101 people. Detailed benefits and cost in formation is provided in Appendices A and C, respectively, of this EA.

1 Represents the incremental increase of the AIP option over the current TCR.

2 Represents the incremental increase of the Alternative option over AIP optio n. Add incremental net values for Alternative option to incremental net va lues for AIP option to calculate total net values of Alternative option over current TCR.



## ES.8 Conclusion

EPA is proposing the RTCR as described by th e AIP option to further reduce occurrence of TC and EC (and any waterborne pathogens that may co-occur) be yond the reductions achieved under the TCR. EPA’s goal is to increa se public health protection from potential fecal contamination and/or waterborne pathogen exposu re, while continuing to pursue the objectives of the current TCR. Although EPA's analysis of the proposed RTCR has determined that its annual costs are most likely below the thresh old stated in Executive Order 12866 of $100 million, EPA has chosen to publish a complete EA for this rule.

EPA has developed the proposed RTCR based on the AIP because it will not allow for backsliding from current levels of protection of public health and will likely reduce risk from
waterborne disease further while costing relatively little on a net basis. This conclusion isEconomic Analysis for the Proposed RTCR ES-27 June 2010 

### consistent with recommendations of the TCRDSAC. As required by the SDWA, EPA has determined that the benefits of the proposed RTCR justify the costs. In making this determination, EPA considered quantified and no nquantified benefits and costs as well as the other components of the HRRCA outlined in section 1412 (b)(3)(C) of the SDWA.

As shown in the uncertainty analysis presente d in Chapter 6 (section 6.4), reducing repeat samples and additional samples both have the poten tial to increase risk for some PWSs (see also sections III.A.3 and III.A.4 of the proposed RTCR preamble for discussions on the repeat sample and additional routine sample provi sions respectively). However, this increase in risk is expected to be more than offset by potential decreases in risk from increased routine monitoring and the
addition of the assessments and corrective action provisions that find and fix problems indicated by monitoring. That is, based on the analyses presen ted in this EA, EPA concludes that the effect of the corrective actions outweighs that of re duced sampling; both the AIP and the Alternative options are expected to result in a net decrease in risk as comp ared to the current TCR. Although the Alternative option decreases risk to a grea ter degree than the AIP option (proposed RTCR),
this additional reduction is achie ved at a higher cost, both in abso lute terms and in terms of costeffectiveness. The estimated net cost of th e AIP option is small (approximately $14 million annually using either a 3% or 7% discount rate ) compared to the Alternative option ($27 – $30 million using a 3% and 7% discount rate, respecti vely). This cost differential is especially important considering the potenti al concentration of impacts on the smallest TNCWSs and the potential front loading of costs under the Alternative option. In addition, the net benefits are expected to be positive under the AIP option and no backsliding in overall risk is predicted.
While the number of corrective actions under the Alternative option would be greater than under the AIP option, the achievement of these benefits is not as cost effective as under the AIP option.

The analyses performed as part of this EA support the collective judgment and consensus of the TCRDSAC that the proposed RTCR require ments provide for effective and efficient
revisions to current TCR regulatory requirements.Economic Analysis for the Proposed RTCR 1-1 June 2010 

## 1. Introduction

This Economic Analysis (EA) presents the ev aluation of the benefits and costs of the proposed Revised Total Coliform Rule (RTCR). Th e analysis is performed in compliance with Executive Order 12866, Regulatory Planning and Review (58 FR 51735), which requires the United States Environmental Protection Agency (EPA) to estimate the economic impact of rules that have an annual effect on the economy of over $100 million and make that analysis available to the public in conjunction with publication of the final rule. Although EPA's analysis of the proposed RTCR has determined that its annual co sts are most likely belo w this threshold, EPA has chosen to publish a complete EA for this rule.

EPA developed the proposed RTCR in colla boration with states, other interested stakeholders, and the Total Coliform Rule/Distribution System Advisory Committee (TCRDSAC). In the Six-Year Review determinati on published in July 2003, EPA gave notice of its intent to review the Total Coliform Rule (TCR). The Agency’s primary reasons for revising
the 1989 Total Coliform Rule are im plementation-related issues. Th e proposed revisions offer a meaningful opportunity for greater public health protection agains t waterborne pathogens in the distribution systems of public water syst ems beyond the current Total Coliform Rule.

This chapter provides a summary of the pr oposed RTCR in Section 1.1. Section 1.2 outlines the organization of this EA, and Sec tion 1.3 provides information regarding supporting
calculations and citations.



## 1.1 Summary of the Proposed Revise d Total Coliform Rule (RTCR)

The proposed RTCR applies to all community and noncommunity Public Water Systems (PWSs). The proposed RTCR takes a proactive appr oach to protect public health, maintaining a Maximum Contaminant Level Goal (MCLG) and Maximum Contaminant Level (MCL) for E. coli and using both E. coli and Total Coliform (TC) monitori ng to establish a framework for PWSs to assess for sanitary defects and to correct them as appropriate.

Like the requirements of the current TCR, the requirements of the proposed RTCR ensure that PWSs address the following objectives:

y Evaluate the effectiveness of treatment

y Determine the integrity of the distribution system; and

y Signal the possible presence of fecal contamination.Economic Analysis for the Proposed RTCR 1-2 June 2010 

### To accomplish the above objectives, the propos ed RTCR will use TC as an indicator to start an evaluation process that, where necessa ry, will require the PWS to correct sanitary defects, defined in the proposed RTCR as:

A defect that could provide a pathway of entry for microbial contamination into the distribution system or that is i ndicative of a failure or imminent failure in a barrier that is already in place.

Under the proposed RTCR, E. coli will remain a regulated contaminant with an MCLG of
zero and an MCL of zero. All fecal coliform provisions (inclu ding the MCLG and MCL) are removed in the proposed RTCR. There will no long er be an MCL for TC: instead, TC will be used as an indicator as part of a coliform treatment technique.

For all PWSs serving >4,100 people, mon itoring requirements under the proposed RTCR remain essentially unchanged from existing TCR requirements. However, PWSs serving ≤ 4,100 people may face changes in their required mon itoring schemes depending on specific size, type, and source water categorizations. Changes for these PWSs may be for routine, additional routine or repeat monitoring as summarized in Exhibit 1.1 below.

Under the proposed RTCR, PWSs must comp lete Level 1 or Level 2 assessments to identify the presence of “sanitary defects” and defects in distribution system coliform monitoring practices if sampling results in one of the following triggers listed below.

Level 1 Assessment Triggers

y For PWSs taking 40 or more samples per month, the PWS exceeds 5.0% TC-positive samples for the month; or

y For PWSs taking fewer than 40 samples per month, the PWS has two or more TC positive samples in the same month; or

y Failure to take every required repeat samp le after a single routine TC-positive sample.

Level 2 Assessment Triggers

y The PWS has an E. coli violation (See Section II I.A.6 of the proposed RTCR preamble for a description of what constitutes an E. coli MCL violation.); or

y The PWS has a second Level 1 treatment trigger within a rolling 12-month period,
unless the first Level 1 treatment tri gger was based on exceeding the allowable number of total coliform-positive samples, the State has determined a likely reason for the total coliform-positive samples that caused the initial Level 1 treatment trigger, and the State establishes that the system has fully corrected the problem;

y For PWSs with approved reduced annual monitoring, a Level 1 treatment technique trigger in two consecutive years.Economic Analysis for the Proposed RTCR 1-3 June 2010 

### Exhibit 1.1 Proposed RTCR Monitoring Fr equency Requirements (AIP Option)

PWS Type Source Population Se rved Monitoring Requirements

Routine Monitoring 1

Noncommunity (NCWS) Ground water ≤ 1,000 people Quarterly monitoring for TC 2 Additional requirements to qualify for reduced monitoring apply 3

Community (CWS) Ground water ≤ 1,000 people Monthly monitoring for TC Additional requirements to qualify for reduced monitoring apply 4

All (CWS & NCWS) Surface water All Same requirements as under current TCR (Monthly monitoring for TC)

Ground water > 1,000 people Same requirements as under current TCR (Monthly monitoring for TC)

Additional Routine Monitoring

All (CWS & NCWS) Ground water ≤ 1,000 people Additional routine monitoring no longer required if monitoring monthly Number of additional routine samples required reduced from five to three if monitoring quarterly or annually

Ground water 1,101 – 4,100 people Additional routine monitoring no longer required

Surface water ≤ 4,100 people Additional routine monitoring no longer required

Ground and surface water > 4,100 people Same requirements as under current TCR (Additional routine monitoring not required)

Repeat Monitoring

All (CWS & NCWS) Ground and surface water ≤ 1,000 people Number of repeat samples required reduced from four to three

Ground and surface water >1,000 people Same requirements as under current TCR (Three repeat samples required)

1 Seasonal PWSs serving ≤ 1000 people are required to sample monthly while in service but may qualify for reduced monitoring.

2 PWSs may be increased to monthly monitoring based on compliance with rule. Examples include system with Level 2 assessment violation, an E. coli MCL violation, an RTCR treatment tec hnique violation, and /or two routine monitoring violations in a rolling 12-month period.

3 PWSs may qualify for annual monitoring based on compliance record, the existence of enhancements to water system barriers to contamination, and co mpletion of an initial and recurring annua l site visit conducted by the state or an annual voluntary Level 2 assessment by a party approved by the state.

4 PWSs may qualify for quarterly monitoring based on com pliance record and either t he existence of enhancements to water system barriers to contamination or the complet ion of an annual site visit conducted by the state or an annual voluntary Level 2 assessment by a party approved by the state.Economic Analysis for the Proposed RTCR 1-4 June 2010 

### The PWS shall be responsible for correcting sanitary defects found through either Level 1 or Level 2 assessments as defined above by impl ementing appropriate corre ctive actions. Failure to complete a required assessment or take nece ssary corrective action constitutes a Treatment Technique violation under the proposed RTCR.

The proposed RTCR requires public notificati on for three events that are tiered as
follows:

Tier 1. E. coli MCL violation
Tier 2. Treatment tec hnique (TT) violation Tier 3. Routine monitoring violation

The proposed RTCR also provides the primacy agency with the discretion to reduce the monitoring frequency for well operated ground water PWSs serving ≤ 1,000 people, if the PWS
can demonstrate that it meets th e criteria for reduced monitoring stipulated in the rule. The specific criteria to qualify for reduced m onitoring are described in Chapter 3.

Ground Water Rule (GWR) implementation will occur prior to the transition from the TCR to the proposed RTCR. Compliance with the GWR requirements, including sanitary surveys and site visits, can be used to help de termine the level of monitoring required for ground water PWSs serving ≤ 1,000 people.



## 1.2 Document Organization

The remainder of this EA is organized into the following chapters:

y Chapter 2 summarizes the technical, regulator y, and public health issues addressed by the proposed rule. It also explains the st atutory authority for the proposed RTCR and the economic rationale for the regulatory approach.

y Chapter 3 reviews various regulatory opti ons that EPA considered during the development of the rule and presents the rationale for selecting the proposed rule requirements.

y Chapter 4 characterizes baseline conditions that exist (including PWS inventory, treatment, and water quality data) before PWSs make changes to meet the proposed RTCR requirements.

y Chapter 5 summarizes TC and EC occurrence analysis, providing a description of the occurrence model, the sources used, and the li mitations or constraints to the analysis
based on the nature of the da ta provided by those sources.

y Chapter 6 presents the relative risk evaluation performed to estimate the potential benefits of the proposed RTCR relative to the baseline and other regulatory options
considered.Economic Analysis for the Proposed RTCR 1-5 June 2010 

### y Chapter 7 presents an estimate of the net costs of implementing the proposed RTCR to industry, households, and states. The net co sts of all regulatory options considered are compared.

y Chapter 8 discusses distributional analyses performed to evaluate the effects of the rule on different segments of the populati on, and considers various executive orders and requirements, including the Regulato ry Flexibility Act (RFA) and Unfunded Mandates Reform Act (UMRA).

y Chapter 9 compares the benefits and costs of the proposed RTCR to evaluate the potential net benefits and cost-effectivene ss. The results are discussed and compared to other regulatory options considered.

y Chapter 10 includes a detailed list of references.



## 1.3 Calculations and Citations

This EA involves detailed and complex anal yses, and the following are provided to help
the reader:

y The detailed reference section provided in Chapter 10.

y Appendices containing supporting spreadsheets and analyses:

– Appendix A – Detailed Predictive Model Results,

– Appendix B – Graphs of Predicted Hit Rates Over Time,

– Appendix C – Detailed Cost Model Results,

– Appendix D – Detailed Compliance Forecast and Unit Costs Estimates,

– Appendix E – Supporting information for Value of Statistical Life and Cost of Illness estimates used in break even analyses,

– Appendix F – Detailed analysis of pot ential uncertainty and variability in occurrence estimates,

– Appendix G – Evaluation of representati veness of Six Year Review data, and

– Appendix H – Analysis of potential impacts of reduced repeat sampling.

– Appendix I – Supporting Information for Regulatory Flexibility Act Screening Analysis

y Exhibits. Most tabular exhibits include a row that provides the formulas used to compute the contents of each column.

y Sources for values used if they were not calculated within the exhibits.

y Supporting electronic file outputs (i.e., RT CR occurrence and cost model output).

y Flowcharts that illustrate methodologies of analyses as well as proposed rule requirements.Economic Analysis for the Proposed RTCR 2-1 June 2010 

## 2. Statement of Need for the Rule

2.1 Introduction

The United States Environmental Protection Agency (EPA) is proposing to revise the 1989 Total Coliform Rule (TCR) to better protect public health. EPA noticed its intent to revise the TCR as part of its Six-Year Review de termination published in 2003 (USEPA 2003b, 68 FR 42907, July 18, 2003). In July 2007 EPA convened a Total Coliform Rule/Distribution System Federal Advisory Committee (TCRDSAC or adviso ry committee) charged with evaluating how well the objectives of the TCR are met and r ecommending possible revisions to the rule. The TCRDSAC completed its analysis and provided recommendations for revising the TCR in an Agreement in Principle (AIP) (USEPA, 2009) that was signed by advisory committee members in September 2008. EPA committed to proposing a rule that was consistent with the recommendations in the AIP (see Chapter 3 of th is Economic Analysis (EA) for more details on the TCRDSAC).

The proposed RTCR maintains and strengthens the objectives of the current TCR and is consistent with the recommendations in the AIP. The objectives are: (1) to evaluate the effectiveness of treatment, (2) to determine the integrity of the distribution system, and (3) to signal the possible presence of fecal contaminat ion. The proposed rule better addresses these objectives by requiring systems that may be vulne rable to fecal contamination (as indicated by their monitoring results) to do an assessment, to identify whether any sanitary defect(s) is (are) present, and to correct the defects. Therefore, greater public health prot ection is anticipated under the proposed RTCR compared to the current TCR because of its more preventive approach to identifying and fixing problems that affect or may affect public health (see Chapter 3 of this EA for more details on the AIP and the provisions of the proposed RTCR).

This chapter summarizes the technical, regulatory, and public health issues addressed by the proposed rule. It also explains the stat utory authority for the proposed RTCR and the economic rationale for choosing a proposed regula tory approach rather than non-regulatory
alternatives.

2.1.1 Description of the Issue

EPA is required to review each existing national primary drinking water regulation (NPDWR) every six years. In 2003, EPA complete d its review of the TCR and 68 NPDWRs for chemicals that were established prior to 1997. Th e purpose of the review was to identify current health risk assessments, changes in technology, a nd other factors that would provide a health or technological basis to support a re gulatory revision that will main tain or improve public health protection. In the 2003 announcement of the comp letion of the Six Year Review, EPA provided public notice of its intent to revise the TCR (USEPA 2003b, 68 FR 42907, July 18, 2003). Implementation-related issues are the primary reason for EPA’s decision to revise the TCR. Since promulgation of the TCR, EPA has receiv ed comments from a number of stakeholders suggesting modifications to reduce the burden of implementing the TCR. These comments included, among others, suggestions to modify the TCR’s monitoring requirements (e.g., with regards to sampling locations and repeat sa mples) (USEPA 2002b, 67 FR 19030, April 17, 2002 and USEPA 2003b, 68 FR 42907, July 18, 2003).Economic Analysis for the Proposed RTCR 2-2 June 2010 

### The 1989 TCR was promulgated to decrease th e risk of waterborne illness. Among all rules promulgated for preventing waterborne illn ess, only the TCR applies to all PWSs, so the rule is an essential component of the multiple ba rrier approach in public health protection against endemic and epidemic disease. However, improvements to the current TCR construct and requirements can better protect public health as shown in the following discussions.

In recent years, violation rates under th e TCR have remained relatively steady (see Chapter 4, Exhibit 4.11 of this Economic Analysis (EA)). EPA believes that this is reflective of a steady state among PWSs complying with the cu rrent TCR, suggesting the possibility that improvements likely to occur unde r the current TCR have largely been achieved. Potential exposure to waterborne pathogens continues to be a health risk. Within the United States, disease is caused by a relatively small variety of bacteria l, viral, and parasitic protozoan pathogens in drinking water. Nevertheless, the number of pot ential waterborne pathog ens and the number of potential waterborne illnesses are significant. Humans can be exposed via fecal-oral, inhalation or dermal exposure, with fecal-oral exposure bei ng the most significant and prevalent pathway.

The current TCR established a maximum contaminant level goal (MCLG) and a maximum contaminant level (MCL) for total co liforms (including fecal coliforms (FC) and E. coli (EC)). A TC MCL violation re quires public notification. Ho wever, many of the organisms detected by total coliform and fecal coliform methods are not of fecal origin and do not have any direct public health implication. Information has also become available since promulgation of the
current TCR in 1989 that indicates that measur ement of fecal coliforms sometimes detects organisms that may not have any connection to fecal contamination (Edberg et al . 2000). Attributing greater public health significance to the presence of to tal coliforms or fecal coliforms could result in public confusion. On the other hand, EPA believes that E. coli is a meaningful indicator of fecal contamination and of the pot ential presence of associated pathogens (see Section 2.2.4.1 of this chapter).

The proposed RTCR aims to maintain and stre ngthen the objectives of the current TCR more effectively and efficiently. E. coli remains a regulated contaminant with a defined maximum contaminant level goal (MCLG) and a maximum contaminant level (MCL) while TC (including fecal coliforms) no longer has an MC LG and an MCL. Instead, the proposed RTCR uses TC as an indicator as part of a coliform treatment technique. The treatment technique uses
both total coliforms and E. coli monitoring results to start an evaluation process that, where necessary, will require the PWS to conduct asse ssments and corrective actions. The proposed rule also takes into account the capacity of sma ll systems (especially for PWSs serving 1,000 or fewer people) and primacy agencies to effectiv ely implement the proposed rule requirements.

Modeling results show that the assessment and corrective action provisions of the RTCR
result in a decrease in E. coli occurrence (see Exhibit 6.7) whic h is anticipated to lead to a decrease in the potential exposure of the public to fecal contamination and its associated pathogens. In general, this decrease in fecal c ontamination should reduce the potential risk to human health of PWS customers. Thus, any reduction in E. coli occurrence is considered a benefit of the proposed RTCR. Also, since f ecal contamination can contain waterborne pathogens including bacteria, viruses, and parasi tic protozoa, in general a reduction in fecal contamination should also reduce the potenti al risk from these other contaminants.Economic Analysis for the Proposed RTCR 2-3 June 2010 

## 2.2 Public Health Concerns, Fecal Co ntamination, and Wa terborne Pathogens

2.2.1 Rule Objectives and Public Health Concerns

The proposed RTCR aims to increase public health protection through a reduction of potential pathways of entry for fecal contamin ation into the distribution system. Since these potential pathways represent vulnerabilities in the distribution system whereby fecal contamination and/or waterborne pathogens, incl uding bacteria, viruses, and parasitic protozoa could possibly enter the system, the reduction of these pathways in general should lead to reduced exposure and associated risk from thes e contaminants. Waterborne pathogens that can be associated with fecal contamination may cause a variety of illnesses, including Acute Gastrointestinal Illness (AGI) with diarrhea, abdominal discomfort, nausea, vomiting, and other symptoms. Most AGI cases are of short duration and result in mild illness. Consuming water contaminated with waterborne pathogens can also result in acute illnesses such as hepatitis, hemolytic uremic syndrome (kidney failure), and bloody diarrhea; milder, acute illnesses such as conjunctivitis; and severe chronic illnesses such as diabetes and dilated cardiomyopathy. Other examples of potential chronic diseases resul ting from infection by a waterborne agent include irritable bowel syndrome, hypertension, and react ive arthritis; chronic illnesses are generally costly to treat. 1



### Sensitive subpopulations are at greater risk from waterborne disease than the general population. These sensitive subpopu lations include children (esp ecially the ve ry young); the elderly; the malnourished; pregnant women; chronically ill patients (e.g., those with diabetes or cystic fibrosis); and a broad category of thos e with compromised immune systems, such as Acquired Immunodeficiency Syndrome (AIDS) patient s, those with autoimmune disorders (e.g., rheumatoid arthritis, lupus erythematosus, and multiple sclerosis), organ transplant recipients, and those receiving chemotherapy (Rose, 1997). Sensitive subpopulations represent almost 20 percent of the population in the United States (Gerba et al . 1996). The severity and duration of illness is often greater in se nsitive subpopulations than in healthy individuals, and may occasionally result in death.

When humans are exposed to and infected by an enteric pathogen, the pathogen becomes capable of reproducing in the gastrointestinal trac t. As a result, healthy humans shed pathogens in their feces for a period ranging from days to weeks. This shedding of pathogens often occurs in the absence of any signs of clinical illness. Regardless of whether a pathogen causes clinical illness in the person who sheds it in his or her feces, the pathogen being shed may infect other people directly by person-to-pers on spread, contact with contaminated surfaces, and other means which are referred to as secondary spread. As a result, waterborne pathog ens that are initially waterborne may subsequently infect other people through a variety of routes (WHO 2004).

Waterborne pathogens include pathogens of both fecal and non-fecal origin. Non-fecal pathogens are found in the soil a nd soil water interface and include Legionella, Naegleria fowleri and probably Helicobacter pylori , or are components of the distribution system environment and
can include Mycobacterium avium complex (MAC). Examples of common fecal bacterial pathogens include pathogenic E. coli

, Salmonella

, Shigella , and Campylobacter jejuni . Some

1 Lifetime costs associated with a new case of diabetes, for example, assuming an average illness duration of 30 years, are estimated at $255,8 33 using a three percent discount rate and $161,967 using a seven percent discount rate (year 2007 dollars). For dilated cardiomyopathy, the life time (21 year average) cost is $68,870 (seven percent discount rate, year 2007 dollars).Economic Analysis for the Proposed RTCR 2-4 June 2010 

### waterborne bacterial pathogens cause dis ease by rapid growth and dissemination (e.g.,
Salmonella ) while others primarily cause di sease via toxin production (e.g., Shigella

, E. coli O157, Campylobacter jejuni ) . Campylobacter jejuni

, E. coli , and Salmonella have a host range that includes both animals and humans; Shigella is associated only with humans (Geldreich, 1996). Unlike viruses, bacter ia are able to reprodu ce outside of the host.

Because a positive TC assay is an indicator of ambient water entry into or growth within the distribution system, it represents an indi cation of potential for both fecal and non-fecal
contamination. Because E. coli originates in the gut of warm-bl ooded animals, it is an indication
of fecal contaminati on. Together, the TC/ E. coli indicator system can be used to identify the potential for fecal contamination by monitori ng. Since fecal contamination can contain waterborne pathogens including ba cteria, viruses, and parasitic protozoa, in general a reduction in fecal contamination should also reduce the po tential risk from these other contaminants.

The group of bacteria known as E. coli contains both pathogenic and non-pathogenic isolates. The methods approved by EPA to assay for E. coli do not identify most of the pathogenic E. coli strains. The most dangerous E. coli bacteria contain the gene for producing shiga-toxins. E. coli O157:H7 is the most widesp read shiga-toxin producing E. coli but at least 81 serotypes have been identified (Prager et al . 2005). Release of toxins in the body can result in kidney failure, shock and death in otherwise heal thy individuals, especially small children. Typically, kidney failure occurs in 2-7% of illnesse s. Death or end-stage renal disease occurs in about 12% of patients four years after diarrhea-associa ted kidney failure (Garg et al . 2003). Twenty five percent of kidney failure survivors demonstrate long-term re nal consequences (Garg
et al . 2003). For patients with moderate and severe gastroenteritis caused by E. coli , long-term study shows that they have an increased risk of irritable bowel syndrome, hypertension and reduced kidney function (Garg et al . 2005). The Centers for Dis ease Control and Prevention (CDC) indicates that drinking water is responsi ble for a portion of the 73,000 illnesses each year
from E. coli O157:H7 (Mead et al. 1999).

Ground water outbreaks due to E. coli O157:H7 are prominent because of the fatal
outcomes associated with those outbreaks. In Wa lkerton, Ontario, 6 individuals died and 27 developed kidney failure from ground water contaminated with E. coli O157:H7 (and Campylobacter jejuni) (Health Canada, 2000). The outbr eak coincided with a reduction in chlorination treatment coincident with a large f ecal contamination event. In Washington County, NY, two individuals (including an otherwise healthy two year old child) died from E. coli O157:H7 contamination of a county fair water supply system. (The fair ground’s water supply system was not recognized as a PWS because it wa s used for less than 60 days each year.) Four individuals died in Cabool, MO due to E. coli O157:H7 (Swerdlow et al . 1992) in an outbreak that was likely due to source water contamination. Another E. coli O157:H7 outbreak occurred in ground water in Minnesota but no kidney failures resulted.

Although manure is often considered to be the source of sh iga-toxin producing E. coli

, they have also been isolated from municipal sewage (Holler et al . 1999). E. coli O157:H7 was found to survive on a pasture surf ace for almost 4 months. About 4-15% of cases are acquired via secondary transmission (Parry and Salmon, 1998). In addition to the shiga-toxin producing E. coli , there are a substantial number of other E. coli bacteria that are pathogenic, mostly through production of other toxins. Little data are availa ble on the hazard associated with waterborne
transmission for most of the pathogenic E. coli other than E. coli O157:H7.Economic Analysis for the Proposed RTCR 2-5 June 2010 

### As the result of a seven year long study of individuals infected or ill during the Walkerton, Ontario waterbor ne disease outbreak due to E. coli O157 and Campylobacter jejuni

, researchers noted an increased incidence in chro nic disease sequellae. Within a few years after the outbreak, irritable bowel syndrome, hyperten sion, reactive arthritis and reduced kidney function increased 33-38% (Clark et al . 2008).

Shigella bacteria are distinct because they ar e often associated with bloody diarrhea (bacillary dysentery). The enterohemorraghic E. coli bacteria acquired the capability to produce toxins by exchanging plasmids with Shigella (Murray et al., 2007). Thus, Shigella often also causes kidney failure and chronic kidney disease. Shigella contamination only results from human fecal contamination and thus it is probably less common than E. coli contamination,
which has both human and animal sources.

Campylobacter (like Salmonella ) are very common contaminants of food and water. Campylobacter is commonly associated with animal manure, especially cow and chicken

manure. Campylobacter and Salmonella are associated with many common source (food or water) exposure deaths, probably in large part because there are a larg e number of illnesses. More deaths may be associated with Campylobacter and Salmonella than with viruses. Uniquely, Campylobacter is often associated with Guillain-Barre paralysis that can last for weeks or months. About 1 paralysis case occurs for ev ery 1000 cases of campylobacteriosis (Altekruse et al . 1999). About 20% of paralysis patients are left with some disability and approximately 5% die. Campylobacterosis is also associated with Reiter syndrome (reactive arthritis). Approximately 1% of patients with camplybacterosis have arthritis onset in one or more joints (especially the knee) in the 7 to 10 days after diarrheal onset (Altekruse et al . 1999). Arcobacter (now a separate genus from Campylobacter ) was responsible for a ground water outbreak at a camp in Coeur d'Alene, Idaho (McMillan, 1996).

Salmonella causes typhoid fever, once a common and dangerous waterborne disease. Typhoid is no longer a problem in the United States, and in recent years, Salmonella has become increasingly less common as a common source outbreak agent while campylobacterosis outbreaks have correspondingly incr eased. The reasons for this change are unclear. Seven deaths
that occurred due to Salmonella contamination in a ground water PWS in Gideon, Missouri were due to bird entry into a storage tank (Angulo et al . 1997). Salmonella resulted in a very large outbreak in a ground water utility in Riverside, California duri ng the 1960s (16,000 illnesses, 70 hospitalizations and 3 deaths) prior to the advent of the Total Coliform Rule (Boring et al . 1971). A 2008 waterborne outbreak in Alamosa, Colorado was due to Salmonella

. Salmonella -positive samples were collected from the distribution system but no E. coli was identified in other distribution sa mples collected on the same day.

Legionella are opportunistic bacterial pathogens that colonize water distributions systems. An estimated 8,000-10,000 cases of Legi onaires disease and Pontiac fever occur in the U.S. each year due to Legionella . Twenty-one of 48 known species are able to infect humans.

Helicobacter pylori is often associated with ground water (Hegarty et al .1999; RolleKampzczyk et al . 2004) and is known to cause gastric ulcers. However, Helicobacter is not
culturable and so occurrence da ta are fairly uncertain. Impr oved hygiene and water treatment have together reduced the number of ulcers cause d by this organism over the last few decades but it is impossible to quantify that decrease.Economic Analysis for the Proposed RTCR 2-6 June 2010 

### Most of the waterborne bacterial pathogens cau se gastrointestinal illness, but some can cause other severe illnesses as well. For example, Legionella causes Legionnaires Disease, a form of pneumonia that has a fatality rate of a bout 15 percent. It can also cause Pontiac Fever, which is a milder respiratory infection form of Legionnaires Disease. Several strains of E. coli can cause severe disease, incl uding kidney failure. Some bacter ial pathogens are opportunistic (i.e., they are only infectious in the presence of another, preexisti ng condition or weakness). Opportunistic pathogens usually cause illness on ly in immunocompromised persons or in other sensitive subpopulations, such as the very young or the elderly. Other pathogens, such as
Salmonella

, Shigella

, and Campylobacter jejuni , are not entirely opportu nistic but result in certain diseases with greater frequency and se verity in immunocompromised persons (Framm and Soave, 1997).

Examples of common viral pathogens in clude norovirus and the enteroviruses (coxsackievirus, echovirus, poliovirus, enteroviru s 70 and 71). The virus can cause a spectrum of mild to severe clinical illness, including paraly tic disease and death. There is considerable information that Type 1 diabetes may be asso ciated with enteroviru s infection, including infection with coxsackievirus and echoviruses (Maria et al . 2005; Vreugdenhil et al . 2000). Dilated cardiomyopathy can follow myocarditis caused by echovirus and other enterovirus infection.



### Mild enteroviral illness includes nonspeci fic febrile illness, respiratory illness, photophobia or sensitivity, stiff neck, and gastrointe stinal illness. Asepti c meningitis may or may not require a doctor’s visit, but mo re severe illnesses such as vi ral encephalitis, myocarditis, and non-polio flaccid paralysis are likely to require hosp italization. Most likely to be hospitalized are infants less than 3 months old with non-specific febr ile illnesses that require treatment to rule out and expectantly treat serious bacterial illness. Dilated cardiomyopathy can follow myocarditis caused by echovirus and other enterovirus infection.

The health effects of noroviru s illness include ac ute onset of nausea, vomiting, abdominal cramps and diarrhea. Vomiting is more prev alent among children. Many adults experience vomiting as well as diarrhea. Constitutional sy mptoms (e.g., headache, fever, chills, and myalgia) are frequently re ported. Although rare, severe dehydration caused by norovirus gastroenteritis can be fatal, with this outcome occurring among susceptible persons (e.g., older persons with debilitating health conditions). No long-term seque lae of norovirus infection have been reported (CDC, 2001a). Durati on of illness is typically 12–60 hours.

Hepatitis A (HAV) virus is the only waterborne virus that is reportable to CDC. About 28,000 HAV cases are reported to CDC each year, although that number is expected to decline with time because children are currently vaccin ated for HAV in high risk states and newer
recommendations are for increased vaccination coverage. More generally, however, because HAV is more severe as an adult disease, an aging U.S. population may have greater disease
burden. Mead et al. (1999) estimate about 83,000 HAV cases each year, with a hospitalization rate of 13% and a mortality rate of 0.3%.

Hepatitis E (HEV) virus is another fecal oral virus that is potentially waterborne. Using serology and case histories of individual patients , HEV is established as endemic within the United States (Tsang et al . 2000). However, the data suggest th at only one or a few percent of the population has been infected. Unlike HAV, no wa terborne outbreaks of HEV have occurred in the United Sates, although they have occurred in China and Somalia. The disease is severe, with up to 20% mortality among pregnant women in developing countries.Economic Analysis for the Proposed RTCR 2-7 June 2010 

### The adenoviruses are a large group of viruses that produce diverse symptoms. Two adenovirus serotypes, adenovirus 40 and 41, pr oduce primarily enteric symptoms, but several other adenoviruses are also cap able of producing such symptoms . Some cause conjunctivitis. Most significantly, adenoviruse s caused a fatal outcome in ot herwise healthy young males in military settings (CDC, 2001b). All adenoviruses, no matter the infection site and characteristic illness, are shed copiously through the gut. Thus, th e adenoviruses are feca l\oral viruses (Carter, 2005) potentially transmissible via water to inf ection sites in the gut or, for the respiratory adenoviruses, in the lung, via waterborne aerosol drops.

Astrovirus is commonly acquired in child ca re settings and causes mild disease in children. Most children are exposed at an early age. However, a small percentage of that large population may suffer more significant health e ffects and may require in-patient care. The disease burden in older children and adult popula tions is underestimated because the disease is mild (Carter, 2005). Astroviruses are shed in st ool at large numbers. In France, prospective epidemiology studies have implicated water as a route of infec tion (Gofti-Laroche, et al . 2003).

The Centers for Disease Control and Preventi on (CDC) has determined that the incidence of rotavirus diarrhea can reach 0.30 episodes/child /year by age two, with a cumulative incidence approaching 0.80 episodes/child by age five (Glass et al . 1996). Hospitalizations for rotavirus
diarrhea are most common in children 6 months to 3 years of age (Parashar et al . 1998), while self-limiting norovirus infec tions are prevalent in school-age children (LeBaron et al . 1990). Although deaths from infectious diarrhea have generally declined among U.S. children since 1965 because of re-hydration therapy, newborn ch ildren, especially infants born prematurely, remain at risk of death from severe diarrheal illness (Kilgore et al . 1995). Common strain rotaviruses typically affect young children, particularly those le ss than 3 years old, but other strains (G1, G2 and G9) have been found to be common in adults and the elderly in nursing homes, and found to be responsible for mo re severe illness in children (Griffin et al . 2000). In 2006, the U.S. Food and Drug Administration (FDA) approved a new pentavalent vaccine for rotavirus (Vesikari et al . 2006) in children. The vaccine pr otects against the most common rotaviruses now found in the U.S. (serotypes G1, G2, G3, G4, G9) but does not protect again all
rotaviruses found in the U.S. or all rotaviruses.

Reovirus is recovered in environmental samples using the BGM cell line and is commonly found co-occurring with the en teroviruses in PWS wells. Carducci et al . (2002) found that, in some cases, enterovirus detection wa s limited because reovirus reproduction was so highly favored. Reovirus is more closely relate d to rotavirus and thus has some similar characteristics. Reovirus is now recognized as a human pathogen in children (Tyler et al . 2004).

Cryptosporidium is of particular concern to EPA because, unlike pathogens such as viruses and bacteria, Cryptosporidium oocysts are resistant to inactivation by many common disinfection methods. Since the oocysts are especial ly resistant to chlorine disinfection, simply increasing existing chlorination dosage levels or contact time above those most commonly practiced in the United States is not effective. Emerging disinfectant-resistant pathogens, such as Microsporidia

, Cyclospora , and Toxoplasma, are also a concern for similar reasons.

Cryptosporidiosis is a protozoal infection that usually causes 7 to14 days of diarrhea, possibly accompanied by low-grade fever, nausea , and abdominal cramps in individuals with healthy immune systems (Juranek, 1998). It is caused by the inges tion of infectious Cryptosporidium oocysts, which are readily carried in water. The most common source ofEconomic Analysis for the Proposed RTCR 2-8 June 2010 

### oocysts in water is the feces of infected hosts (Perz et al .1998; Rose, 1997). Although cryptosporidiosis often occurs th rough ingestion of contaminated food or water, it may also
result from direct or indirect contact with in fected people or animals (Casemore 1990; Juranek 1998; Rose 1997). Infected humans and other an imals excrete oocysts, which can then be transmitted to others. Cryptosporidiosis can also cause non-gastrointestinal symptoms, such as eye and joint pain, headaches, dizziness, and fatigue (Hunter et al . 2004). There is no treatment
that can eliminate a Cryptosporidium infection, and only a few an tiparasite or antimicrobial agents have shown even a slight ability to re duce a patient’s parasite load (Guerrant 1997).

In some occurrences, cryptosporidiosis can be fatal, particul arly among subpopulations such as AIDS patients, the elderly with other underlying illnesses, and other immunocompromised individuals. In a Cryptosporidium outbreak in Milwaukee in 1994, 54 people died who had cryptosporidiosis listed on their death certificate. Of those, 46 also had AIDS listed as an underlying cause of death (Hoxie et al . 1997). The Milwaukee out break had an estimated 403,000 cases of illness (Kramer et al . 1996).

Giardiasis is a protozoal infection that us ually causes a diarrhea , possibly accompanied by fever, nausea and abdominal cramps in individua ls with healthy immune systems. It is caused by ingestion of Giardia cysts.

In 2003, two five-year old boys living in the same water service area near Phoenix AZ died in the same week from Primary Amoebi c Meningioencephalitis (P AM) (Marciano-Cabral et al. 2003). Both boys lived in homes supplied by unt reated PWS wells. Atypically, the wells in that area provide water at elevated temperatures, re presenting the elevated geothermal gradient in the subsurface. Seventeen samples taken from the boys homes were positive for Naegleria fowleri and N. fowleri was also responsible for the boy's deaths from PAM. It is likely that the elevated ground water temperatur e provided a suitable habitat for N. fowleri colonization and growth either in the aquifer, the well, the distribution system or the household plumbing.

2.2.2 Total Coliforms as Indicators of Treatment Effectiveness and Integrity of the Distribution System

TC is a group of closely rela ted bacteria that, with a few exceptions, are not harmful to humans. Many bacteria in the TC group are soil bacteria but some, such as E. coli , originate in the gut of warm-blooded animals. Coliform bacter ia may be transported to surface water by runoff or to ground water by infiltration. Total co liforms are common in ambient water and may be injured by environmental stresses such as lack of nutrients, and water treatment chlorine disinfection, in a manner similar to most bact erial pathogens and many viral enteric pathogens (including fecal pathogens). EPA considers TC to be a useful indicator of a potential pathway through which fecal contamination can enter the distribution system. The absence (versus the presence) of total coliforms in the distribution system indicates a reduced likelihood that fecal contamination and/or waterborne pathogens are occurring in the distribution system.

Under the current TCR, each TC-positive sample is assayed for either fecal coliform or E. coli . Fecal coliform bacteria are a subgroup of TC that traditionally has been associated with fecal contamination. Since the promulgation of th e TCR, more information and understanding of the suitability of fecal coliform and E. coli as indicators have become available. Study has shown that the fecal coliform assay is imprecise and t oo often captures bacteria that do not originate inEconomic Analysis for the Proposed RTCR 2-9 June 2010 

### the human or mammal gut (Edberg et al. 2000). On the other hand, E. coli is a more restricted group of coliform bacteria that almost always orig inate in the human or animal gut (Edberg et al. 2000). Thus, E. Coli is a better indicator of fecal c ontamination than fecal coliforms.

2.2.3 Sanitary Defects

As part of the proposed RTCR, TC will be us ed as an indicator to start an evaluation process that, where necessary, will require the PWS to correct sanitary def ects, which are defined as “a defect that could provide a pathway of entry for micr obial contamination into the distribution system or that is indi cative of a failure or imminent failure in a barrier that is already in place.” “Sanitary defect” is a term specific to the TCR assessment and correction provisions. Sanitary defects are not intended to be linked dire ctly to the “significant deficiencies” under the SWTR and GWR, although some problems could m eet either definition. The proposed RTCR is not intended to limit the existing authorities of primacy agencies under other regulations.

2.2.4 Occurrence of Fecal Contamination and/or Waterborne Pathogens

2.2.4.1 Presence of Fecal Contamination

Fecal contamination is a very general term that includes all of the organisms found in feces, both pathogenic and nonpathogenic. Fecal c ontamination can occur in drinking water both through use of contaminated source water as well as direct intrusion into the drinking water distribution system. Biofilms in distribution sy stems may harbor wate rborne pathogens and accumulate enteric viruses and parasitic protozoa (Skraber et al . 2005; Helmi et al . 2008). Waterborne pathogens in biofilms may have entered the distribution system as fecal
contamination from humans or animals.

Co-occurrence of indicators and waterborne pathogens is difficu lt to measure. The analytical methods approved by EPA to assay for E. coli do not specifically identi fy most of the pathogenic
E. coli strains. There are at least 700 recognized E. coli strains. About 10% of the recognized E. coli strains are pathogenic to humans (Feng 1995, Hussein 2007, Kaper et al. 2004). Pathogenic
E. coli include E. coli O157:H7, which is the primary cause of hemolytic uremic syndrome (HUS) in the United States (Rangel et al. 2005). The CDC estimates that there are 73,000 cases of illness each year in the U.S. due to E. coli O157:H7 (Mead et al. 1999). The CDC estimates that about 15% of all reported E. coli O157:H7 cases are due to wa ter contamination (Rangel et al. 2005). Active surveillance by CDC shows that 6.3 percent of E. coli O157:H7 cases progress to HUS (Griffin and Tauxe 1991; Gould et al. 2009) and about 12% of HUS cases result in death within four years (Garg et al. 2003). About 4 to 15% of STEC O 157 cases are transmitted within households by secondary transmission (Parry and Salmon 1998).

EPA believes that E. coli is a meaningful indicator for fecal contamination and the potential presence of associated pathogen occu rrence. Because EPA-approved standard methods
for E. coli do not typically identify th e presence of the pathogenic E. coli strains, an E. coli

positive monitoring result is an indicator of fecal c ontamination but is not necessarily a definitive measure of waterborne pathogen occurrence. Specialized assays and methods must be used to identify waterborne pathoge ns, including pathogenic E. coli and all others. These specializedEconomic Analysis for the Proposed RTCR 2-10 June 2010 

### assays and methods are generally considered too costly and time consuming to be effective for routine monitoring of drinking water distribution systems.

One notable exception are the data reported by Cooley et al. (2007), which showed high concentrations of pathogenic E. coli strains in samples containing high concentrations of fecal
indicator E. coli . These data are from streams and ot her poor quality surface waters surrounding California spinach fields associated with the recent E. coli O157:H7 foodborne outbreak. Data equivalent to these are not available from dr inking water samples collected under the TCR.

2.2.4.2 Waterborne Disease Outbreaks

The CDC defines a waterborne disease outbrea k as occurring when at least two persons experience a similar illness, or one person is ill with amoebic meningioencephalitis, after the ingestion of drinking water or following exposure to water used for recreational purposes, in cases where the epidemiologic evidence implicates water as the probable source of the illness (Kramer et al. 1996). The CDC maintains a database on wa terborne disease outbreaks in the United States. The database is based upon response s to a voluntary and co nfidential survey form that is completed by state and local public health officials.

The National Research Council strongly sugge sts that the number of identified and reported outbreaks in the CDC database for su rface and ground waters represents a small percentage of the actual number of waterborne disease outbreaks (Safe Water From Every Tap, National Research Council 1997; Bennett et al. 1987, Hopkins et al. 1985 for Colorado data). Under-reporting occurs because most waterborne outbreaks in community water systems are not recognized until a sizable proportion of the population is ill (Perz et al. 1998; Craun 1996), perhaps 1% to 2% of the population (Craun 1996).

EPA drinking water regulations are designed to protect against endemic waterborne
disease and to minimize waterborne outbreaks. E ndemic waterborne disease may be defined as any waterborne disease not associated with an outbreak.



## 2.3 Statutory Authority fo r Promulgating the Rule

As mentioned previously, SDWA requires EPA to review and revise , as appropriate, each existing NPDWR at least once every six year s (SDWA section 1412(b)(9), 42 U.S.C. § 300g1(b)(9)). Section 1412(b)(9 ) of SDWA states:

The Administrator shall, not less often than every 6 years, review and revise, as appropriate, each national primary drinking wa ter regulation promulgated under this title. Any revision of a national primary drinki ng water regulation sha ll be promulgated in accordance with this section, except that each revision shall maintain, or provide for greater, protection of the health of persons.

In 2003, EPA completed its review of the T CR and 68 NPDWRs for chemicals that were established prior to 1997 (USEPA 2002b, 67 FR 19030, April 17, 2002). In the Six-Year Review determination published in July 2003, EPA stated its intent to revise the 1989 TCR (USEPA 2003b, 68 FR 42907, July 18, 2003).Economic Analysis for the Proposed RTCR 2-11 June 2010 

## 2.4 Economic Rationale

As a revision to an existing regulation, the primary goal of the proposed RTCR is to achieve the objectives of the 1989 TCR more effec tively and efficiently, ta king into account the changes in regulatory framework for implem enting the SDWA over the past 20 years and experience with the TCR since it was promul gated in 1989. In this context, the overall economic rationale behind the promulgation of the proposed RT CR is the same as the rationale for the promulgation of the original TCR. This secti on addresses the economic rationale for choosing a regulatory approach under the proposed RTCR (and TCR) rather than non regulatory options.

An economic rationale for the rule is required by Executive Order 12866, Regulatory Planning and Review (58 FR 51735, October 1993), which states:

“[E]ach agency shall identify the problem th at it intends to address (including, where applicable, the failures of the private mark ets or public institutions that warrant new agency action) as well as assess the signifi cance of that problem.” (Section 1, b(1))

In addition, Office of Management and B udget (OMB) guidance, dated January 11, 1996,
states that “in order to establ ish the need for the proposed acti on, the analysis should discuss whether the problem constitutes a signif icant market failure” (USEPA, 1996b).

In a perfectly competitive market, prices and quantities are determined solely by the aggregated decisions of buyers and sellers. Su ch a market occurs when many producers of a product are selling to many buyers, and where both producers and consumers have perfect information on the characteristics and prices of each firm’s products. Barriers to entry in the industry cannot exist, and indivi dual buyers and sellers must be “price takers” (i.e., their individual decisions cannot affect the price). Se veral properties of the public water supply do not satisfy the conditions for a perfectly competitive ma rket and thus lead to market failures that require regulation.

Many PWSs are natural monopolies. A natural monopoly exists when it is impossible for
more than one firm in each area to recover the costs of production and survive. There are high
fixed costs associated with reservoirs and wells , transmission and distribution systems, treatment plants, and other facilities. For ot her potential suppliers to enter the market, they would have to provide the same extensive infrastructure to realize similar economies of scale and be competitive. A splitting of the market with increa sed fixed costs (e.g., two supplier networks in a single market) usually makes this situation unprofitable. The resu lt is a market suitable for a single supplier and hostile to alternative supplie rs. In such natural monopolies, suppliers have fewer incentives for providing quality services or maintaining competitive prices. In these situations, governments often intervene to help protect the public interest.

For example, because PWSs are legal, as we ll as natural, monopolies, they are often subject to price controls, if not outright public ownership. While customers may demand improvements in water quality, the regulatory struct ure may not facilitate the transmission of that demand to the water supplier or allow the supplier to raise its price to re cover the cost of the improvements. If consumers do not believe that th eir drinking water is safe enough, they cannot simply switch to another water utility. Other opt ions for obtaining safe drinking water (e.g., buying bottled water or installing point of use filtra tion) most often represent a higher water costEconomic Analysis for the Proposed RTCR 2-12 June 2010 

### to consumers than the purchase from PWSs. Th erefore, the water supp lier may have little incentive to improve water quality.

The public may also not understand the health and safety issues associated with poor drinking water quality. Understand ing the health risks posed by trace quantitie s of drinking water contaminants involves analysis and synthesis of complex toxicological and health sciences data. Therefore, the public may not be aware of the risks it faces. EPA has implemented a Consumer Confidence Report (CCR) Rule (63 FR 44512, August 1998) that makes water quality information more easily available to consumers. This rule requires CWSs to publish an annual report on local drinking water qua lity. Consumers, however, s till have to analyze this information for its health risk implications. Furthermore, even if informed consumers are able to engage PWSs in a dialogue about health issu es, the transaction cost s of such interaction (measured in personal time and monetary outla ys) present another significant impediment to consumer expression of ri sk reduction preferences.

SDWA regulations are intended to provide a level of protection from exposure to drinking water contaminants. The regulations se t minimum performance requirements to protect consumers from exposure to contaminants. SDWA regulations are not intended to restructure market mechanisms or to establish competition in supply; rather, they establish the level of service to be provided that best reflects public preference for safety. The federal regulations reduce the high information and transaction costs by acting on behalf of consumers in balancing
risk reduction and the social costs of achieving this risk reduction.Economic Analysis for the Proposed RTCR 3-1 June 2010 

## 3. Consideration of Regulatory Options

3.1 Introduction

This chapter describes the regulatory options considered during the development of the proposed Revised Total Coliform Rule (RTCR) and evaluated as part of this Economic Analysis (EA).



## 3.2 Total Coliform Rule/Distribut ion System Advisory Committee

In the July 2003 NPDWR review decision, EP A provided public notice of its intent to revise the TCR. In 2007, EPA decided to esta blish a committee under the Federal Advisory Committee Act (FACA) called the Total Colifo rm Rule/Distribution System Advisory Committee (TCRDSAC) (USEPA, 2007a). The advisory committee was charged with developing an Agreement in Principle (AIP) w ith recommendations for the TCR revision. The advisory committee was to also provide EPA w ith recommendations needed to understand and address possible public health impacts from poten tial degradation of dri nking water quality in distribution systems. Specifically, the major obj ectives of the advisory committee were to provide advice and recommendations on:

• Revisions to the TCR that would improve implementation while maintaining or improving public health protection and distri bution system water quality. Examples of the issues the TCRDSAC considered include: the TCR monitoring framework, sanitary survey provision s, definition of Maximum Contaminant Level (MCL) violations and potential follow-up correc tive actions, and pub lic notification of
violations.

• What data should be collected, research conduc ted, and/or risk management strategies evaluated to better project di stribution system contaminant occurrence and associated public health risks in the dist ribution systems. This was in tended to “initiate a process for addressing cross connection control a nd backflow prevention requirements and consider additional distribution system requirements related to significant health risks” recommended by the M/DBP Federal Advisory Committee.

EPA held a series of 13 meetings of th e advisory committee between July 2007 and September 2008. The 15 committee members, along with other stakeholders, discussed options for revising the TCR and began the process of developing the AIP by discussing the purpose, efficacy and applicability of the current TCR as well as data collection a nd research needed to better understand potential distribution system risk s. The advisory committee formed a Technical Work Group (TWG) to provide data analysis and information to inform the advisory committee’s discussions. The advisory committee al so discussed the relevant provisions of the Ground Water Rule (GWR) and discussed the exte nt to which other rules contribute to the objectives of the current TCR. All advisory committee members signed the AIP in September 2008. All of the recommendations of the AIP, on which all the members of the committee agreed, are found in the signed AIP (USEPA 200 9, 74 FR 1683, January 13, 2009). The AIP andEconomic Analysis for the Proposed RTCR 3-2 June 2010 

### details about the advisory committee can be found at EPA’s website at: http://www.epa.gov/safewater/disinfec tion/tcr/regulati on_revisions.html

.


## 3.3 Regulatory Opt ions Considered

EPA evaluated three regulatory options as pa rt of the development of the RTCR proposal – the current TCR option, the AIP option, and the Alternative option. The following discussion provides an overview of the three regulatory options considered followed by a detailed table comparing specific regulatory components. A deta iled evaluation and compar ison of the benefits and costs of each of the three regulatory op tions for the proposed RTCR is found in later chapters of this EA.

Baseline Option: Current Total Coliform Rule

The baseline option for the proposed RTCR EA represents the current TCR as written, with adjustments made to reflect the effects of the GWR which PWSs need to comply with by December 1, 2009. Analysis of this option is prim arily based on data collected under the TCR, as described in Chapter 4 (Baseline Conditions) of this EA.

The current TCR requires Public Water System s (PWSs) to monitor routinely for Total Coliform (TC) and fecal coliforms or E. coli. Monitoring requirements are based on system type, population served by the PWS and source water type. Each PWS must sample according to a written sample siting plan. Plans are s ubject to state review and revision.

The current TCR specifies a Maximum Contam inant Level Goal (MCLG) of zero for TC (including fecal coliforms and E. coli) as well as an MCL where compliance is based on the presence or absence of TC and/or fecal coliforms or E. coli in the samples. A PWS is required to take repeat samples following a Total Coliform-positive (TC+) sample and to test the TC+ sample for E. coli . A monthly MCL violation is triggered if: (1) a PWS collecting fewer than 40 samples per month has > 1 routine/repeat samp le per month which is TC+; or (2) a PWS collecting at least 40 samples per month has > 5.0% of the routine/repeat samples in a month are TC+. An acute MCL violation is triggere d if any PWS has any Fecal Coliform- or E. coli

- positive (FC+ / EC+) repeat sample or has a FC+ or EC+ routine sample followed by a TC+ repeat sample. A PWS must demonstrate compliance with the MCL for total coliforms each month it serves water to the public (or each cale ndar month that sampling occurs for PWSs on reduced monitoring). MCL violations must be repor ted to the state no later than the end of the next business day after the PWS learns of the violation. The public must also be notified depending on the severity of the MCL violation (within 30 days for monthly MCL violations and within 24 hours for acute MCL violations).

Agreement in Principle Option (as developed by the advisory committee, reflecting the proposed RTCR language)

The AIP option is designed to trigger PWSs that exceed specified levels of TC / E. coli in their finished water to do an assessment, to iden tify whether sanitary defect(s) is (are) present, and to correct such defects accordingly. The ad visory committee believed that the AIP option is an improvement over the current TCR framework b ecause it takes a more preventive approach to identifying and fixing problems with public he alth implications. Under this option, EPAEconomic Analysis for the Proposed RTCR 3-3 June 2010 

### establishes an MCLG of zero for E. coli , an MCL for E. coli based on TC and E. coli monitoring results, and a coliform treatment technique for protecti on against potential fecal contamination.

The AIP option maintains the current TCR requirement for all PWSs to monitor for TC
and E. coli according to a sample siting plan and sc hedule specific to the PWS. PWSs are required to take repeat samples and to test for E. coli following a TC+ sample.

Under the AIP option, the PWS monitoring frequencies take into account the unique characteristics of various PWS types and sizes. Small, well-operated PWSs using ground water may be able to reduce monitoring frequencies by meeting specific criteria, thus reducing their monitoring and reporting burden. Cr iteria for reduced monitoring include monitoring results that reflect a clean compliance history as well as preventive practices th at are designed to continue to maintain the integrity of the distribution system.

The AIP option requires PWSs to complete either Level 1 or Level 2 assessments following certain triggers (see Exhibit 3.1). Th e purpose of Level 1 and 2 assessments is to identify the presence of sanitary defects and defects in distribution system coliform monitoring practices. The minimum elements of both Leve l 1 and 2 assessments include review and
identification of:

• Inadequacies in sample sites, samp ling protocol, and sample processing;

• Atypical events that may affect distributed water quality or indicate that distributed water quality was impaired;

• Changes in distribution system maintenance and operation that ma y affect distributed water quality includi ng water storage;

• Source and treatment considerations that bear on distributed water quality, where appropriate (e.g. small ground water PWSs); and

• Existing water quality monitoring data.

A Level 1 assessment (completed by the PWS) consists of a simple examination of the system and relevant operational practices. The PWS must complete the assessment form and submit it to the state for review within 30 days after determination that the PWS has exceeded the Level 1 trigger. The completed assessment form must includeassessments conducted, all sanitary defects identified (or indicate if no sanitary defect was found), corrective actions completed, and a timetable for any corrective actions not already completed. Upon completion and submission of the assessment form by the PWS, the state will determine if the PWS has identified a likely cause for the Level 1 trigge r and determine whether the PWS has corrected the problem, or has included a schedule acceptable to the state for correcting the problem. If the state determines the assessment insufficient, it will consult with the PWS. If necessary after consultation, the PWS must submit a revised a ssessment form to the state on an agreed-upon schedule not to exceed 30 days from the date of consultation. Upon completion and submission of the assessment form by the PWS, the state must determine if the PWS has identified a likely cause for the Level 1 trigger and, if so, establis h that the PWS has correct ed the problem, or has included a schedule acceptable to th e state for correcting the problem.

The Level 2 assessment must be conducted e ither by the state, a third party approved by the state, or the PWS where the PWS has the sta ff or management with the required certificationEconomic Analysis for the Proposed RTCR 3-4 June 2010 

### or qualifications specified by the state. A Level 2 assessment is a more detailed examination of the system’s monitoring and operatio nal practices than a Level 1 assessment. As with the Level 1 assessment, the completed assessment form for a Level 2 assessment must also be submitted to
the state for review within 30 days after determination that the PWS has exceeded the Level 2 trigger. The PWS must also indicate in the co mpleted assessment form the sanitary defects detected (or indicate if no sanitary defect was found), corr ective actions completed, and a timetable for any corrective actions not alrea dy completed. Upon completion and submission of the assessment form by the PWS, the state will dete rmine if the PWS has identified a likely cause for the Level 2 trigger and determine whethe r the PWS has corrected the problem, or has included a schedule acceptable to the state for co rrecting the problem. If th e state determines the assessment insufficient, it will consult with the PWS. If necessary afte r consultation, the PWS
must submit a revised assessment form to the state on an agreed-upon schedule not to exceed 30 days from the date of consultation. Upon comp letion and submission of the assessment form by the PWS, the state must determine if the PWS has identified a likely cause for the Level 2 trigger and, if so, establish that the PWS has corre cted the problem, or has included a schedule acceptable to the state for correcting the problem.

The AIP option requires PWSs to correct sa nitary defects found through either a Level 1
or Level 2 assessment. The current TCR does not re quire PWSs that have TC MCL violations to perform corrective actions. For corrections that are not completed by the time the PWS submits the completed assessment form to the state, the PWS must complete the corrective action(s) on a schedule determined by the state in consultati on with the PWS. The PWS must notify the state when each scheduled corrective action is completed.

The AIP option specifies violations correspondin g to different degrees of potential public health concern and public notif ication. A violation of an E. coli MCL occurs when:

• A routine sample is TC+ and one of its associated repeat samples is EC+; or

• A routine sample is EC+ and one of its associated repeat samples is TC+ (or as a corollary to this condition, a routine sample is EC+ and one of its associated repeat samples is EC+); or

• A system fails to test for E. coli when any repeat sample is TC+; or

• A system fails to take all required repeat samples following a routine sample that is
EC+.

An E. coli MCL violation requires a Tier 1 public notif ication. A coliform treatment technique
violation occurs when the PWS exceeds a treatment technique trigger (see Exhibit 3.1) and then fails to conduct the required a ssessment or corrective action within the required timeframes. A coliform treatment technique viol ation requires a Tier 2 public no tification. If the system does conduct the assessment and satisfies the requir ements of the coliform treatment technique (including corrective action when a sanitary defe ct is identified), no public notification is required. A monitoring violation oc curs when a PWS fails (1) to take every required routine or additional routine sample in a compliance period, or (2) to analyze for E. coli following a TC+ sample. A reporting violation occurs when (1 ) a PWS properly conducts monitoring or anEconomic Analysis for the Proposed RTCR 3-5 June 2010 

### assessment but fails to submit a monitoring report or a completed assessment form, or (2) a PWS fails to notify the state following an EC+ sa mple. Both monitoring violation and reporting violation require a Tier 3 public notification.

The provisions of the AIP consider the implication and linkages to other rules promulgated by EPA under SDWA (e.g., GWR, Surface Water Treatment Rules (SWTRs), and
the Disinfectant/ Disinfection B yproduct (DBP) Rules). Compliance activities for other rules, such as the sanitary survey, are used under the proposed RTCR as cr iteria to assess the integrity of the PWS and to implement the reduced mon itoring provisions in a cost-effective manner. Ground water PWSs will have completed the sanita ry survey component of the GWR at least once no later than January 2015 so sanitary surv ey findings can be used by states in the determination of the monitoring frequency.

Alternative Option: All PWSs Initiall y Sample for TC/EC on Monthly Basis

The third option is the Alternative option which parallels the AIP in most ways but includes variations of some of the provisions that were discussed by the advisory committee before consensus was reached on the AIP. Under the Alternative option, at the compliance date, all PWSs would be required to sample monthly fo r an initial period until they meet the eligibility criteria for reduced monitoring. This more stri ngent approach differs from the AIP option which
would allow PWSs to continue to monitor at thei r current frequencies (wit h an additional annual site visit / voluntary Level 2 assessment requi rement for PWSs wishing to remain on annual monitoring) until they are triggered into an incr eased sampling frequency. Under the Alternative option, no PWSs would be allowed to reduce m onitoring to an annual basis. EPA defined the Alternative option this way a nd included it in the economic an alysis to assess the relative impacts of a more stringent rule and to better understand the balance between costs and public health protection.

3.3.1 Comparative Summary of Regulatory Options

Exhibit 3.1 below summarizes the components of each regulatory option considered for the proposed RTCR.Economic Analysis for the Proposed RTCR 3-6June 2010Exhibit 3.1 Comparison of Proposed RTCR Regulatory OptionsElementCurrent TCR optionAIP optionAlternative optionRule construct•MCLG of zero for TC (including FCand EC).•TC monthly MCL based on thenumber/percent of TC+ samples ina month.•FC /EC acute MCL based onFC+/EC+ samples.•Tier 1 Public Notification (PN)required for MCL violations.•No MCLG/MCL for TC, FC no longer used.•EC MCLG of zero, and an EC MCL and a coliform treatmenttechnique (TT) based on TC and/or EC results.•Assessment (and corrective action if necessary) required if PWShas a coliform treatment technique trigger.•Tier 1 PN not required for only TC occurrence.Same as AIP.Transition to theNew RuleN/A•PWSs continue on their existing TCR monitoring scheduleprovided they meet criteria.•Noncommunity Water Systems (NCWSs) on quarterly/annualmonitoring remain on that schedule unless/until they have anevent that triggers increased monitoring.•Community Water Systems (CWSs) on reduced monitoringremain on that schedule unless/until they have an event thattriggers return to routine monitoring.•Monitoring schedules will be evaluated during the “specialmonitoring evaluation” conducted by the state as part of theperiodic sanitary survey to determine if the monitoring frequencyis appropriate.No transition. PWSsstart new requirementsas soon as the rule iseffective.RoutineMonitoring•1 sample per quarter for NCWS≤1,000 Ground Water (GW).•1 sample per month for NCWS≤1,000 Surface Water (SW) andall CWS≤1,000.•For all PWS >1,000, the number ofsamples per month is based onpopulation served.•Same as current TCR, with more explicit criteria to qualify forreduced monitoring (see “Reduced Monitoring”).•1 sample per month for seasonal systems2with criteria to qualifyfor reduced monitoring. Seasonalsystems must also demonstratecompletion of astate-approved start-up procedure.A minimum frequencyof monthly monitoringfor all PWSs.Economic Analysis for the Proposed RTCR 3-7June 2010ElementCurrent TCR optionAIP optionAlternative optionReducedMonitoring•NCWS≤1,000 (GW) can reduce to1 sample per year if system is freeof sanitary defects.•CWS≤1,000 (GW) can reduce to 1sample per quarter if no history ofTC contamination, no sanitarydefects, and protected GW source.•No other systems are eligible forreduced monitoring.•NCWS≤1,000 (GW) – same as in current TCR, but more criteriato qualify and remain on reduced annual monitoring.oMost recent sanitary surveyshows that system is free ofsanitary defects1, has a protected water source, and meetsapproved construction standards;oClean compliance history for a minimum of 12 months;oLevel 2 assessment by party approved bystatewithin the last12 months and correction of all identified sanitary defects.System must also have an annual site visit every yearthereafter to remain on annual monitoring.•Seasonal systems can be eligible for reduced monitoring byhaving an approved sample site plan that designates the timeperiod for monitoring based on demand and vulnerabilityoFor quarterly monitoring the system must also have a sanitarysurvey or site visit or Level 2 assessment within last 12 months;a protected water source; a clean compliance history for aminimum of 12 months, and be free of sanitary defects.oTo reduce to 1 sample per year, the system must meet thecriteria specified above for quarterly monitoring and have inplace or adopt one or more additional enhancements to barriersto contamination (cross connection control, certified operator,meet disinfection criteria, maintenance of at least 4-log removalor inactivation of viruses, other equivalent enhancements).•CWS≤1,000 (GW) - same as in current TCR, but more criteria toqualify and remain on reduced quarterly monitoring.oState certified operator;oMost recent sanitary surveyshows that system is free ofsanitary defects (or has an approved plan and schedule tocorrect them), has a protected water source, and meetsapproved construction standards;oClean compliance history for a minimum of 12 months;•NCWS≤1,000 (GW)(including seasonalsystems) – reducedquarterly monitoring(criteria same asAIP). Reducedannual monitoring isnot allowed.•CWS≤1,000 (GW) –same as AIP.•No other systemsare eligible forreduced monitoring.Economic Analysis for the Proposed RTCR 3-8June 2010ElementCurrent TCR optionAIP optionAlternative optionoMeets at least one of the following criteria: annual site visit bythestateor a voluntary Level 2 assessment by a partyapproved by the state or meetingcriteria established by thestate; cross connection control; meet disinfection criteria;maintenance of at least 4-log removal or inactivation of viruses;other equivalent enhancements to water systems as approvedby thestate.•No other systems are eligible for reduced monitoring.IncreasedMonitoring(NCWS) andReturn to RoutineMonitoring (CWS)•N/A (none specified) – NCWS.•N/A (none specified) – CWS•NCWS≤1,000 (GW only) increases from quarterly or annualmonitoring to monthly monitoring if one of the following occurs:oTriggered Level 2 assessment or a 2ndLevel 1 assessment in12 months;oECMCL violation;oColiform TT violation; oroTwo monitoring violations within 12 months if on quarterlymonitoring or one monitoring violation if on annual.•CWS≤1,000 (GW only) on quarterly monitoring return to monthlymonitoring based on same criteria above.Same as AIP with theexception that reducedannual monitoring isnot allowed under thisoption.Economic Analysis for the Proposed RTCR 3-9June 2010ElementCurrent TCR optionAIP optionAlternative optionReturn toReducedMonitoring (AfterBeing Triggeredto IncreasedMonitoring)N/A•NCWS≤1,000 (GW) must meet the following criteria to return toroutine quarterly monitoring after being triggered to increasedmonitoring:oWithin the last 12 months, system must have completed asanitary survey or a site visit by thestateor a voluntary Level 2assessment, must be free of sanitary defects, and must have aprotected water source; andoClean compliance history for a minimum of 12 months.•NCWS≤1,000 (GW) must meet the following criteria to return toreduced annual monitoring in addition to meeting the criteria forreturning to routine quarterly monitoring:oAn annual site visit by thestateor a voluntary Level 2assessment and correction of all identified sanitary defects; andoAdoption of one or more additional enhancements to the watersystem barriers to contamination (cross connection control,certified operator, meet disinfection criteria, maintenance of atleast 4-log removal or inactivation of viruses, other equivalentenhancements).•CWS≤1,000 (GW) must meet the same criteria for qualifying forreduced quarterly monitoring.Same as AIP with theexception that reducedannual monitoring isnot allowed under thisoption.RepeatMonitoring•PWS serving > 1,000 people musttake 3 repeat samples after a TC+sample.•PWS serving≤1,000 must take 4repeat samples after a TC+sample.•For GWS PWS, 1 sample can be asource water sample to complywith the GWR.•All PWSs must take 3 repeat samples after a TC+ sample.•PWS≤1,000, the number of repeat samples is reduced from 4samples to 3.•GW PWS must still take an additional source sample to complywith the GWR.•For GW PWS≤1,000, a single sample can meet both thetriggered source water requirements of the GWR and the repeatsample requirements of the AIP option, but only if thestateapproves the use of the single sample to meet both rulerequirements and the use of EC as the fecal indicator.Same as AIP.Economic Analysis for the Proposed RTCR 3-10June 2010ElementCurrent TCR optionAIP optionAlternative optionAdditionalRoutineMonitoringPWS taking < 5 routine samples permonth (PWS serving≤4,100) musttake at least 5 routine samples themonth after a TC+ sample.•For PWS taking samples less than monthly, the number ofsamples required after a TC+ is reduced from 5 to 3.•For PWS taking at least 1 sample per month, the additionalroutine sample requirement is eliminated (they take their usualnumber of samples the following month).Same as AIP.Sample SitingPlan•Sampling must occur at sitesrepresentative of water quality inthe distribution system.•Sample siting plans are subject tostatereview/ revision.•Special purpose samples are notused for determining compliance.•Take at least one repeat samplewithin 5 connections up- anddownstream of the TC+ site.Same as current except:•Specifically allows for dedicated sampling stations.•Provides more flexibility for systems in determining the locationsfor taking repeat samples.•States may allow entry point sampling at ground water systems ifthe overall plan remains representative of water quality in thedistribution system.Same as AIP.AssessmentN/A – none required in the currentTCR.•The PWS must conduct a Level 1(self-assessment)if it exceedsany of the following triggers:oFor systems taking≥40 samples per month, the PWS exceeds5.0% TC+ samples for the month; oroFor systems taking < 40 samples per month, the PWS has≥2TC+ samples for the month; oroThe PWS fails to take every required repeat sample after anysingle routine TC+ sample.•The PWS must ensure that aLevel 2 assessment is conductedeither by thestateor astate-approved 3rdparty (includingqualified PWS employee) if it exceeds any of the followingtriggers:oThe PWS has anE. coliMCL violation.oThe PWS has a second Level 1 trigger within a rolling 12-monthperiod, or in 2 consecutive years for systems on annualSame as AIP.Economic Analysis for the Proposed RTCR 3-11June 2010ElementCurrent TCR optionAIP optionAlternative optionmonitoring.•Assessment results and description of corrective action taken willbe submitted to thestatewithin 30 days.Corrective ActionN/A – none required in the currentTCR.•System must correct all sanitary defects found in the assessment.•If none found,statemust be satisfied with the assessment.•For corrections not completed by the time the assessment form issubmitted, the systems must be in compliance with astatedetermined schedule and must notify thestatewhen completed.Same as AIP.Violations andPublicNotification (PN)•EC/FC MCL violation – acuteviolation, Tier 1 PN.•Monthly TC MCL violation – Tier 2PN.•Monitoring or reporting violation –Tier 3 PN.•PWS must notifystateregardingsingle EC+/FC+ result.•EC MCL violation – Tier 1 PN. Failure to take repeat samplesfollowing an EC+ is also an EC MCL violation.•Monthly TC MCL violation is dropped – conditions that trigger amonthly TC MCL violation under the TCR trigger assessment andcorrective action instead.•Coliform TT violation occurs when a PWS fails to conduct requiredassessment and corrective action – Tier 2 PN.•Monitoring and reporting violations will be tracked separately –Tier 3 PN.Same as AIP.1The advisory committee recommended the following definition of “sanitary defect”-“a defect thatcould provide a pathway of entry for microbialcontamination into the distribution system or that is indicativeof a failure or imminent failure in a barrier that is alreadyin place”2As described in the preamble of the proposed RTCR, the AIP defines a seasonal system as “one which operates less than four calendar quarters peryear.” (AIP, p 10) EPA has interpreted this to mean that a seasonal system isone that is shut down for at least one full calendar quarter (i.e., operates“in” three or fewer calendar quarters).Economic Analysis for the Proposed RTCR 3-12 June 2010 

## 3.4 Proposed Rule Requirements

Through coordination and consultation with th e advisory committee and stakeholders as described in Section 3.2, EPA selected the AI P option as the preferred option for proposal. The AIP option was developed by the advisory comm ittee with the primary goal of achieving the objectives of the 1989 TCR more effectively and e fficiently, taking into account the changes in regulatory framework for implementing the SDWA over the past 20 years and experience with the TCR since it was promulgated in 1989. Add itional discussion supporting the selection of the AIP option as the preferred regulatory option in terms of benefits and costs is provided in Chapters 6 (benefits), 7 (costs ), and 9 (benefits and costs).Economic Analysis for the Proposed RTCR 4-1 June 2010 

## 4. Baseline Conditions

4.1 

## Introduction

A primary step in the development of the Economic Analysis (EA) for the proposed Revised Total Coliform Rule (RTCR) was to estimate the baseline conditions. The U.S. Environmental Protection Agency (EPA) used av ailable data to develop an occurrence and predictive model for Public Water Systems (PWSs) serving 4,100 people or fewer based primarily on the 2005 Six-Year Review 2 data to predict total coliform and E. coli occurrence, Level 1 and Level 2 assessment triggers, corrective actions, and violations , both at the baseline and over time. EPA developed another, simpler, predictive model for PWSs serving more than 4,100 people based primarily on the 2005 Safe Dr inking Water Information System-Federal Version (SDWIS/FED) violation data (USEPA, 2005a) that predicts triggers, assessments, corrective actions, and violations both at the baseline and over time, but not total coliform and E. coli occurrence. Because five years of Ground Wa ter Rule (GWR) implementation prior to the effective date of the proposed RTCR are expect ed to cause changes to Ground Water Systems (GWSs), the baseline conditions that EPA devel oped for the EA account for the effects of the GWR, as described in this chapter and Chapter 5. The remainder of this chapter describes the data sources used to develop the baselines and ho w the data were used. The resulting estimate of baseline conditions serves as a reference point for understanding net impacts of the proposed rule revisions, as discussed in Chapte rs 6, 7, and 9 of this EA.

4.1.1 Background and Purpose

The baseline analysis is a characterization of the water industry and its current operations in effect before systems make changes to meet requirements of the proposed RTCR. This chapter presents estimates of the number of systems, the population affected, water quality measures, and subpopulations affected. The data collected for this profile will serve as th e baseline used in the proposed RTCR EA. The development of the baseline analysis consists of the following steps:

• Compilation of a profile of water systems – identifying and collecting information on all
PWSs.

• Characterization of current monitoring requi rements, including testing requirements, sample siting plans, routine and repeat sampling requirements, and sanitary surveys.

• Characterization of current PWS compliance information, including acute and monthly Maximum Contaminant Level (MCL) viola tions, triggered monitoring, and public notification reporting.

4.1.2 Chapter Organization

The remainder of this document is organized into three general sections:

Section 4.2 Describes general information on data sources.Economic Analysis for the Proposed RTCR 4-2 June 2010 

### Section 4.3 Describes the baseline conditions.

Section 4.4 Estimates baseline impact on sensitive populations

Section 4.5 Presents a summary of assumptions used to develop baseline estimates, associated uncertainty and variabilit y, and potential impacts on the results
of the RTCR EA.

4.2 

## Data Sources

Several primary data sources were used for the EA to characterize the proposed RTCR baseline to create system and population base lines, including the SDWIS/FED (USEPA, 2007b), the 2005 Six-Year Review of National Primary Drinking Water Regulations (Six-Year Review 2), the Ground Water Rule EA, and the U.S. Cens us. Each of these data sources is further explained in Sections 4.2.1 – 4.2.3 below.

4.2.1 Background on SDWIS/FED Data

SDWIS/FED 1 

### is EPA’s national regulatory complia nce database for the drinking water program and is the main source of PWS invent ory and violation data for the proposed RTCR
baseline. SDWIS/FED contains information on each of the approximately 155,000 active PWSs as reported by primacy agencies 2 

### , EPA Regions, and EPA headquarters personnel. SDWIS/FED does not include sample results, but does include identification of Maximum Contaminant Level (MCL) violations and monitoring and reporting vi olations (both routine and repeat and minor and major) 3 

### . It also contains information to charac terize the U.S. inventory of PWSs, namely:

1 Further information on SDWIS/FED can be found on EPA’s website: http://www.epa.gov/safewater/ databases/sdwis/index.html

. 2 States and Indian Tribes are given primary enforcemen t responsibility (primacy) for regulations pertaining to public water systems in their State/jurisdiction if they meet certain requirements specified under the primacy regulations at 40CFR142, Subpart B (revised most recently in 1998).

3 Under the current TCR, a non-acute (monthly) MCL violation occurs when >1 routine and/or repeat sample are Total Coliform-positive (TC+) for systems that take fewer than 40 samples monthly, or greater than 5.0% of monthly samples are TC+ for systems that take at least 40 samples. An acute MCL violation is triggered if a PWS has a positive fecal coliform (FC) or E. coli (EC) REPEAT sample (following a TC+) or has a positive FC/EC ROUTINE sample followed by a TC+ REPEAT sample. Monitoring violations occur when a system 1) does not satisfy the sample siting plan requirement; 2) does not sample in accordance with its required schedule; 3) does not analyze a positive TC ROUTINE sample for FC or EC; 4) does not collect REPEAT samples within 24 hours and analyze for TC following a ROUTINE positive TC; and 5) does not test REPEAT samples that are positive for TC for FC or EC. If a system fails to conduct some of the required routine samples in a compliance period, the system incurs a Minor Routine Monitoring Violation. Equivalently, a system that fails to conduct some or all of its required repeat samples following a positive TC routine sample incurs a Minor Repeat MR Violation or a Major Repeat MR Violation, respectively. Reporting violations occur when a PWS does not report to the state or to the public according to the schedule for each viola tion type. For Acute MCL violations, a PW S must report to the state by end of day and to the public within 24 hours (by posting, hand delivery, or mass media subject to primacy agency approval). For Monthly MCL violations, a PWS must report to the state by end of next day, and to the public within 30 days by mail, hand delivery, or other methods approved by the primacy agency. For Monitoring violations, a PWS must notify the public with 1 year in accordance with general public notification requirements approved by the primacy agency.Economic Analysis for the Proposed RTCR 4-3 June 2010 

### system name and location; reta il population served; source wa ter type (i.e., Ground Water (GW), Surface Water (SW), or Ground Water Under the Di rect Influence of Surface Water (GWUDI)); whether or not systems disinfect the wate r; and PWS type, as described below.

EPA defines a PWS as a system that provides water for human consumption through pipes or other constructed conveyances if such a system has at least 15 service connections or regularly serves an average of at least 25 individu als per day for at least 60 days per year. PWSs are categorized as follows:

• Community Water Systems (CWS) are PWSs that supply water to the same population year-round.

• Noncommunity Water Systems (NCWS) are PWSs that supply water to a varying population or one that is served less than year-round. They are sub-categorized as
follows:

- Nontransient Noncommunity Water Systems (NTNCWS) are public water systems that are not community water syst ems and that regularly supply water to at least 25 of the same people at least si x months per year, for example, schools.

- 

### Transient Noncommunity Water Systems (TNCWS) are NCWSs that provide water in places such as gas stations or campgrounds where people do not remain for long periods of time.

Additionally, PWS are analyzed in this EA according to categories defined by the number of people they serve. The follo wing nine categories of populatio ns served by PWSs are used throughout this document:

• ≤ 100.

• 101-500.

• 501-1,000.

• 1,001-4,100.

• 4,101-33,000.

• 33,001-96,000.

• 96,001-500,000.

• 501,001-1 Million.

• Over 1 Million.

These population categories are mostly consiste nt with those analyzed for other rules and consider the distinctions in cost and system ope ration that are meaningful when considering the economic effects of rule requirements. In pa rticular, under the current Total Coliform Rule (TCR), PWSs serving more than 1,000 people all test for Total Coliform (TC) monthly; PWSs serving fewer than 1,000 people may monitor quar terly or even annually and (assuming that they collect fewer than 5 samples per month) must ha ve a sanitary survey every 5 years. The 33,000 threshold is significant as it corresponds with sampling requirements (at least 40 samples per month are taken) that affect how compliance w ith the rule is calcul ated. (PWSs with >33,000 persons served must take 40 or more samples in a month, and may trigger an MCL violation based on the percentage of TC+ samples, in this case, >5.0 percent.) Finally, the size categoryEconomic Analysis for the Proposed RTCR 4-4 June 2010 

### thresholds of 1,000; 4,100; 33,000; and 96,000 are cons istent with the size categories used in the TCR to determine the monitoring regimen.

4.2.1.1 Data Used from SDWIS/FED

To create the system and population baseli ne, EPA obtained the most current PWS inventory data by downloading data from the 4 th 

### quarter of 2007 from SDWIS/FED (USEPA, 2007b). These data represent a ll current, active PWSs and the population served by these systems. This information composes the PWS inve ntory baseline for this EA, and is summarized
in Section 4.3.

EPA also used MCL violations data from SDWIS/FED to validate model predictions for systems serving ≤ 4,100 people as described in Section 5.3.3.2, and to predict E. coli (acute) MCL violations (current TCR, the Agreement in Principle or AIP, and Alternative option), total coliform (non-acute or monthly) MCL violati ons (current TCR) and Level 1 and Level 2 assessment triggers (AIP option and Alternativ e option) for systems serving more than 4,100 people, as described in Section 4.3.4.2.

4.2.1.2 Data Cleaning

Data obtained from SDWIS/FED compri sed PWS inventory data for the 4 th 

### quarter of
2007 and violations data from 3 rd 

### quarter 2005. The 4 th 

### quarter inventory data included the number of each type of PWS and the retail population served by each system for all active PWSs, and was used from SDWIS/FED without ma nipulation for the purpos e of this analysis. For the SDWIS/FED violations dataset, EPA did exclude some data representing OH, tribes, and
territories as described in Section 4.3.4.2. Th e data set taken from the 2005 Six-Year Review 2
database was cleaned as describe d in Section 4.2.2 of this EA.

4.2.1.3 Representativeness and Quality of SDWIS/FED Data

As noted above, SDWIS/FED is the sour ce of PWS inventory data, and includes information on all of the approximately 155,000 PWSs to the extent that such data was entered by primacy agencies, EPA Regions, and EPA h eadquarters personnel. In 1998, EPA began a major effort to assess the quality of the drinki ng water data in SDWIS, including performance of a data quality assessment that has been published triennially since 2002. The most recent report from this periodic assessment, the 2006 Drinking Water Data Reliability Analysis and Action Plan (2006 report) (USEPA, 2008a), evalua ted data for 2002 – 2004 and found the PWS inventory data quality to be high (87%) and the TCR violations data quality to be moderately high (81%). For the PWS inventory data used in this analysis, EPA f ound specifically that:

“... The overall data quality of the eight inventory (water system identification) parameters assessed was 87%. In other words, 87% of PWSs from Data Verification 4 

### (DV) states

4 EPA routinely evaluates stat e programs by conducting Data Verification (DV) audits, which evaluate the accuracy of a state’s decisions regarding PWS compliance with SD WA regulations and the accuracy with which inventory and compliance data is reported (entered or uploaded into) SDWIS/FED.Economic Analysis for the Proposed RTCR 4-5 June 2010 

### between 2002 and 2004 had consistent data for all eight inventory data elements between their state files and SDWIS/FED database, or 13% of PWSs had at least one data element reported with a discrepancy. The highest discrepancy rate was for the administrative contact address element.”



### The report’s assessment indicates a high degree of completeness and accuracy in inventory data submitted by states to SDWIS/FED, and suggests that the information is largely representative of the PWSs in the Unite d States. Although the proposed RTCR EA uses inventory data from 2007, the assessment above applies to the most recent period analyzed in this report (2002-2004); thus EPA believes that th e inventory data from SDWIS/FED in 2007 is also likely to be representative of the approxi mately 155,000 PWSs and that uncertainty in the data with respect to numbers of systems, water source type 5 

### , and size classification is low.

For the TCR MCL violations data, the overall data quality estimate was 81%, based on a rating of 84% for completeness of data and 97% accuracy of the data in SDWIS/FED as compared to data observed in states’ databases during the verification process 6 

### . As described in the report, the 84% completeness assessment indicates that for approximately 16% of those systems found by EPA to have TCR MCL violations, states did not report the data in SDWIS/FED. Additionally, data completeness for monitoring and reporting violations as a whole for all SDWA rules in SDWIS/FED is low at 29%, although this metric specific to the TCR is not provided in the report. Low compliance with monitoring and reporting may occur if systems would rather incur an M/R violation rather than risk an MCL violation by sampling. These factors together suggest that violation rates would likely be higher if systems were fully in compliance with monitoring and reporting requirements, and if states were fully reporting those results to SDWI S/FED. Despite this potential downward bias in the MCL violations data, 

### the TCRDSAC was still able to note systematic trends in the data (across time and among PWS types and sizes) and informed its decisions based on key observations:

• 

### Most systems with violations are NCWSs.

• 

### Lower violation rates observed among larger systems.

• 

### Higher violation rates observed among GWSs than SWSs.

• 

### Lower violation rates among disinf ecting GWSs than other GWSs.

An additional concern with the representativeness of the violations data in SDWIS/FED that would not be accounted for in the data quality esti mate from the 2006 report is the potential bias introduced by oversampling. In a recent paper by (Bennear et al., 2009), the authors attempt to

5 In particular, in the 2006 report the source water type (disinfecting, nondisinfecting, or status unknown) inventory item was assessed at 99.3%, indicating that less than 1% of systems from DV states analyzed between 2002 and 2004 had a discrepancy in this information between State files and SDWIS/FED. For the purpose of the RTCR EA, systems with status listed as “unknown” were included in the nondisinfecting group.
6 The Overall Data Quality Estimate in SDWIS/FED measures how many noncompliance determinations arecorrectly reported in SDWIS/FED among all noncompliance determinations (that are either violations or falsepositive violations). This quantity is estimated based on the violations confirmed by EPA and correctly reported to SDWIS/FED out of all violations found by EPA or in the st ate files and SDWIS/FED. When the false positive rate is 0%, this measure is the product of Completeness and Accuracy. The False Positive rate of the violation data in SDWIS/FED describes how much of the reported violation data in SDWIS are, in fact, false violations, expressed as a percentage. Further description can be found in the 20 06 Drinking Water Data Reliability Analysis and Action Plan (2006 report) (USEPA, 2008a).Economic Analysis for the Proposed RTCR 4-6 June 2010 

### determine how often oversampling is an effort to “sample out” of a potential violation versus just overcompliance - taking additional samples to in crease the PWS’s diagnostic power is assessing the quality of the water. The authors did find ev idence that strategic oversampling was occurring in the one state included in their analysis 7 

### ; some systems were reducing their probability of incurring monthly violations (on the basis of TC positives as a percent of total monthly samples taken) by increasing th e total number of samples taken. Although the study was not broad enough in scope to warrant adjusting the data us ed from SDWIS/FED, the issue is included in the discussion of net benefits in Chapter 9 of this EA. Moving forward, removal of the public notification requirement for monthly violations should help to reduce some of the incentive for strategic sampling of this kind.

4.2.2 Background on 2005 Six-Year Review 2 Data

Through an Information Collection Request (USEPA, 2006b), EPA requested that states voluntarily submit monitoring data (sample result s) that were collected between January 1998
and December 2005 that were available electronica lly for specified chemical, radiological, and microbiological contaminants. This request includ ed data collected in compliance with the TCR regarding the presence/absence of TC, E. coli , and/or fecal coliforms (FC) and any disinfection data collected at TCR monitoring sites. (Surf ace water systems are required to monitor for the presence of a disinfectant residual when collec ting coliform samples in th e distribution system.)

These data are an important component in supporting EPA’s second Six-Year Review of National Primary Drinking Water Regulations (NPDWRs). EPA encouraged each primacy agency to submit its contaminant occurrence info rmation because these data directly contribute to EPA’s understanding of national contaminant occurrence, populations exposed to regulated contaminants, and exposure reductions a ssociated with the current regulations.

EPA requested the TCR monitoring results wi th the intent of conducting analyses and developing models to assess the potential impacts of changes to the rule. Models of the
occurrence of TC and E. coli were developed using the TCR data to assess revisions to monitoring requirements and compliance decisions for different types of PWSs as suggested by the stakeholders during the TCR Distribution Sy stem Advisory Committee (TCRDSAC) process, described further in Chapter 3 of this EA.

For the RTCR EA, EPA used the 2005 Six Year Re view data to develop the key parameters used in the RTCR predictive model to fo recast water quality (in terms of TC and E. coli occurrence) under the current TCR, the AIP optio n, and the Alternative option. Additionally,
2005 Six Year Review data was used to inform EPA’s assumptions regarding the proportion of GWSs serving 1,000 or fewer people that sample monthly, quarterly, or annually (presented in Exhibit 4.4).

7 Bennear et al. found that violations in the state of Massachusetts may have been approximately 30% greater had the oversampling not taken place.Economic Analysis for the Proposed RTCR 4-7 June 2010 

### 4.2.2.1 2005 Six-Year Review 2 Data Used

As described in the Total Coliform Rule Compliance Monitoring Data Quality and Completion Report (USEPA, 2010e) (Data Quality Report) prep ared during the TCRDSAC process prior to this EA, the 2005 Six-Year Review 2 data is based on coliform monitoring data voluntarily provided to EPA by 37 prim acy agencies (35 states and 2 tribes). The data consist of
over nine million TCR records collected between 1998 and 2005. The data elements include the following:

• PWS information - system type , population, source water type.

• Sampling types- routine, repeat, special, unknown.

• Sampling locations - entry point to the dist ribution system, distribution system, and, for repeat samples, original locati on, downstream, upstream, and other.

• Methods - for testing for TC and E. coli.

• Monitoring results – presence/absence for total coliforms, fecal coliforms, and E. coli.

EPA prepared a tool that states using the SDWIS/state database system could use to easily extract data from their databases and subm it it to EPA. The data extraction tool was a query that collected the data elements requested in the letter to the states. Th e states that used this extraction tool are categorized as Tier 1 states. States submitting data in formats not compatible with the EPA extraction tool are categorized as Ti er 2 states. States that submitted incomplete or problematic data are categorized as Tier 3, and st ates that did not provide data are categorized as Tier 4 (e.g., California and Pennsyl vania). The complete lists of st ates included in each of the Tiers 1 – 4 are provided in the Data Quality Report.

EPA used 2005 data exclusively in developi ng this EA. This decision was made for
several reasons:

• The 2005 data, being the most recent in the Si x-Year Review, were judged to be more representative of present condi tions than the less recent da ta, especially in terms of the percent of TC records that were positive.

• There were fewer data in the years befo re 2005, especially 2001 and earlier, and therefore data in earlier years was judged to be too sparse to be comparable with the
2005 data. The difference in the base of PWSs studied year-to-year might have
introduced an unknown bias.

• As noted earlier, the 2005 data had more records than other years, and enough to represent the full spectrum of PWSs w ithin states that provided the data.

• Using only a single year of data was benefici al in that is simplified the analysis to include a fairly static set of PWSs, and did not require interpretation of the meaning of differences in occurrence data observed across multiple years. Understanding these types of differences would involve analys is of changing environmental factors,Economic Analysis for the Proposed RTCR 4-8 June 2010 

### program participation and administration factor s, and possibly other factors before the
data could be used as a baseline in the m odel. Additionally, a full year (and not less) of observed data was required for cons istency with the basic unit of time in occurrence estimates, which is one year; a nd a period of 12 consecutive months is assumed to capture seasonal variation normally experienced in water quality.

• A single year of data would allow for use of a single database to store all the data for easier analysis.

4.2.2.2 Data Cleaning of 2005 Six-Year Review 2 Data

The Data Quality Report (USEPA, 2010e) de scribes how TCR monitoring data were obtained, evaluated, and modified where necessary to make the database internally consistent and usable for analysis. Exhibit 2.1 in the Data Quality Report provides a complete list of states
or territories that submitted data and a description of the use of these data.

To determine whether a PWS’s sampling data we re complete in the 2005 Six-Year Review 2 dataset, a representative month for a system was defined as having at least 50 percent of the number of samples expected based on the size of system and current TCR requirements. Using this 50% criterion, months that were not repr esentative of a PWS were excluded; this cleaning resulted in a decrease of only 2% of submitted data, and is unlikely to have skewed occurrence results, as shown by Exhibits 3.1 and 3.2, re spectively, of the Data Quality Report. EPA determined that a 50% criterion systematically eliminated systems that were only reporting positive results or otherwise not reporting many of its samples, while retaining data for systems that had increased from one size category to the next (and were therefore expected to have, for example, 15 samples per month instead of 10). The Technical Work Group of the Federal Advisory Committee agreed with this approach, wh ich is explained further in Section 3.2 of the Data Quality Report.

4.2.2.3 Representativeness of 2005 Six-Year Review 2 Data

In the course of cleaning the 2005 Six-Year Re view 2 data, EPA examined data from the 10 largest PWSs in each state and found, by matc hing with SDWIS inventory information, that many larger systems were not included in the data submitted by the states. For the largest systems that are represented in the 2005 Six- Year Review 2 data, EPA also compared the expected number of samples based on population se rved (i.e., the TCR requires a system serving a million people to sample 300 times per month) to the number of samples in the actual data to evaluate completeness. In some cases it was found that only data from the state laboratory were included. Since many large PWSs have their own laboratory and do not use the state laboratories, data for these large systems were not available. In many cases, states handled large PWSs with negative samples in a special way, and those data were not captured by the data extraction tool. The end result was that large PWSs had a lower pe rcentage of samples included in the data than did smaller systems; therefore, data for systems serving more than 4,100 were not used from this database. Instead, as described in Section 4.3. 4.2, EPA used SDWIS/FED violations data to model changes in the number of corrective actions to be implemented and incremental costs under the proposed RTCR for PWSs serv ing greater than 4,100 people.Economic Analysis for the Proposed RTCR 4-9 June 2010 

### Based on the number of smaller PWSs (serving fewer than 4,101 people) in states whose data were excluded for data quality/quantity issu es or for non-submittal of data, approximately 39 percent of systems were excluded from the an alysis. Specifically, the following states or territories submitted data but were excluded because of issues with the quality or quantity of data submitted: AL, American Somoa, DC, ME, MD , NJ, SC, SD, TN, and the Navajo Nation. Additionally, the following states/territories di d not submit data: CA, Guam, HI, LA, MA, MS, Northern Mariana Islands, PA, Puerto Rico, TX, Virgin Islands, and WA. The remaining 70 percent of PWSs’ data were used to simulate occurrence of TC and E. coli under the current TCR and AIP option regulatory alternatives and to de velop parameters for use in the RTCR predictive model, described in Chapter 5 of this EA.

Although approximately 61 percent of the systems are represente d in the analysis, only an estimated 32% of the population served by PWSs is represented due to the omission of some large population states (i.e., CA, PA, and TX) 8 

### . However, since EPA is not predicting changes in ocurrence for the largest systems (i.e., the majo rity of the population is served by very large CWSs) the under-representation of population served in the data is not expected to have a significant impact on the analyses performed.

4.2.3 Background on Other Data and Information Used

SDWIS/FED data and 2005 Six-Year Review 2 data represent the largest portion of information used for the proposed RTCR baselin e analysis. In addition, EPA incorporated information from the GWR, the U.S. Census, and the current TCR to develop assumptions for the model. EPA also relied upon the knowledge a nd experience of stakeh olders representing industry, states, small systems, and the public to inform the process throughout development of the proposed RTCR.

4.2.3.1 Current TCR

Under the current TCR, PWSs experienced reduced occurrence of fecal indicator
contamination after the effective date in 1989 as a result of incr eased sampling, reporting, and to some degree corrective actions. In recent years u nder the TCR, the occurrence of fecal indicators has reached a steady state, as reflected in SD WIS/FED violation data (see Section 4.3.4.2 for discussion). Additional reductions in occurr ence are expected prior to proposed RTCR implementation that reflect water quality improvements due to implementation of the GWR. Because the water quality data used in this anal ysis is the Six-Year Review 2 data for 2005, adjustments are made to the 2005 data in the modeling to reflect this GWR impact. Further reductions in occurrence of fecal indicators under the proposed RTCR can then be properly
modeled based on more focused assessments and corrective actions in re sponse to TC+ or EC+ samples.

8 As described further in the Data Quality Report, submission of the data was voluntary; CA, PA, and TX did not
submit data.Economic Analysis for the Proposed RTCR 4-10 June 2010 

### 4.2.3.2 GWR data

The GWR was promulgated to address micr obial contamination of ground water sources used to supply drinking water and, specifically , to address the concer n about potential adverse health risks that may be associated with fecal contamination. Before the GWR was promulgated, there were no federal regulations to require filtr ation or disinfection of ground water sources to remove microbial contaminants. The GWR requir ements include sanitary surveys, triggered monitoring in response to TCR samples testing po sitive for contaminant indicators, source water monitoring for indicators of fecal contamination such as E. coli

, 9 

### and corrective actions which may include disinfection.

Both the GWR and the proposed RTCR seek to decrease the level of fecal contamination in drinking water. Since the proposed RTCR app lies to all public wa ter systems including systems that use ground water sources, the im plementation of the GWR (requiring compliance by December 1, 2009) in advance of the proposed RTCR is expected to modify the TCR baseline (see Sections 4.3.1 – 4.3.2 below) taken from the 2007 SDWIS/FED (4 th 

### quarter) and 2005 Six Year Review data (see Sections 4.2.1 and 4.2.2 for discussion of SDWIS/FED and 2005 Six Year Review data, respectively). The numbe r of disinfecting and non-disinfecting public groundwater systems prior to the start of GW R implementation in October 2009 (based on 4 th 

### quarter 2007 SDWIS/FED data) is 54,469 and 85, 999, respectively. By October 2012 when the GWR is fully implemented, EPA predicts that the number of systems disinfecting will have
increased from the 2007 4 th 

### quarter baseline. The proposed RTCR occurrence model estimates and incorporates the estimated change in the num ber of systems with disinfection into this EA baseline (Section 5.3.1).

The RTCR occurrence model (described in fu rther detail in Secti on 5.3 of this EA) accounts for GWR implemention in the following ways:

• The baseline number of disinfecting sy stems in the 4th quarter 2007 data of
SDWIS/FED will be increased to account for the additional systems that are estimated to begin disinf ecting under the GWR.

• Sanitary surveys, as required by th GWR, will be phased in for applicable PWSs in the model (over five years for systems on a fi ve year sanitary survey cycle; and over three years for systems on a three year cycle), resulting in reduced occurrence for these systems indefinitely to represent that systems are correcting deficiencies identified in the survey. Further detail on th is component of the model is provided in Chapter 5 of this EA.

• GWR compliance monitoring will be incorporated with an additional decrease in probability of occurrence to represent anti cpated efforts by systems to identify and correct problems.

9 Standridge, J. (2008) discusses the use of E. coli as an indicator of drinking water quality.Economic Analysis for the Proposed RTCR 4-11 June 2010 

### • The baseline estimates will account for the decreased levels of TC occurrence and fecal contamination achieved under the GWR. This decrease will be reflected in model output for the following proposed RTCR rule components:

- Repeat monitoring

- Additional routine monitoring

- Triggers for level 1 and 2 assessments

- Corrective actions

- Public notification

• Under the GWR, if a PWS experiences a TC+ while conducting TCR monitoring, the system must sample the source water for the presence of a fecal indicator ( E. coli

, enterococci, or coliphage, as determined by the state). Ground water PWSs that have a positive initial fecal indicator sample from the source are required to take five repeat fecal indicator samples if they are not required by the state to take corrective action. Under the proposed RTCR, PWSs having less than 4-log treatment and serving 1,000 people or fewer would only be required to take 3 repeat samples. To meet GWR requirements, these systems would need to take one additional sample at
the source.

4.2.3.3 U.S. Census Data

The baseline analysis incorporates data from the U.S. Census that are publically available and include surveys of the U.S. population, economics, industry, and geography. Census 2000 data were used in the baseline analyses to es timate the sensitive subpopulations in the U.S. who may be more susceptible to illn ess as a result of poor drinking water quality, as explained in
Section 4.4 of this EA. Add itionally, the Census 2008 Annual Social and Economic Supplement
was used in the estimates of household si ze as described in Section 4.3.3.

4.3 

## Baseline Profile

The proposed RTCR applies to all PWSs, rega rdless of their size, water source (ground water or surface water), or type (commun ity, noncommunity non-transient, noncommunity transient). This section estimates the baseline number of PWSs and th e size of the population subject to the proposed RTCR in each of these subcategories. EPA used 4 th 

### quarter 2007 data from SDWIS to develop this inventory baseline because. At the time when the TCRDSAC began discussing the proposed rule and its analysis, 20 07 data were the most recent inventory data available. As described in Section 4.2, the best available occurrence data for smaller PWSs was collected in 2005. For larger systems (serving >4 ,100 people) as Section 4.3.4.2 describes, EPA used SDWIS-FED violations data for modeling be nefits and costs for PWSs serving more than 4,100 people because the 2005 Six-Year Review 2 dataset (containing sampling data) for larger systems was not as robust. Third quarter 2005 SDWIS/FED data is used for the violation baseline since EPA compiles violation data in the 3 rd 

### quarter every year (as opposed to the 4 th 

### quarter freeze used for annual compilation inventor y data) and was the most recently available data at the time that this analysis was begun. Us e of the most recent year of data was deemed toEconomic Analysis for the Proposed RTCR 4-12 June 2010 

### be equivalent to an average of multiple years due to the steady numbers of violations seen in the data over the past several years.

The baseline described in the following sections is used as a reference point for informing
net costs and benefits as described in Chapters 6 and 7 of this EA.

4.3.1 Pre-GWR Baseline

Estimates of the number of ground water PWSs subject to the proposed RTCR are presented in Exhibit 4.1 below. These numbers reflect SDWIS/FED inventory from the fourth quarter of 2007, prior to implementation of th e GWR. Ground water system inventories indicate
disinfection status as disinfecti ng or unreported; since reporting is voluntary, the status of a system that did not report di sinfection is actually unknown, although EPA assumes in this EA that the system is not disinfecting. The numbe r of disinfecting PWSs includes those achieving less than 4-log disinfection, wh ich matches the categorization of systems used to estimate the underlying distributions of occurrence of TC and E. coli modeled, as described in Chapter 5.

Exhibit 4.2 presents the number of surface water PWSs subject to the proposed RTCR,
also derived from the SDWIS/FED database . GWR implementation does not affect the
disinfection status of surface water systems. Exhibit 4.3 presents the population associat ed with each PWS category of system size and type prior to incorporati ng the effects of the GWR into the model; this is the pre-GWR baseline affected population. Af ter incorporating GWR effects, some number of systems shift into the disinfecting category, and some of the population shifts accordingly.

Lastly, Exhibit 4.4 presents the distribu tion of PWSs by frequency of sampling – monthly, quarterly, or annually – under the cu rrent TCR for those systems that qualify for reduced monitoring (all other systems are required to sample monthly). This is the baseline distribution of sampling frequencie s used for analyses in this EA . This distribution was derived as part of the work done by the Technical Workgroup (TWG) supporting the TCRDSAC, and validated by the Association of state Dri nking Water Administrators (ASDWA). Workgroup members analyzed 2005 Six Year Review and other readily available state data to derive the
estimates shown in Exhibit 4.4.Economic Analysis for the Proposed RTCR 4-13 June 2010 

### Exhibit 4.1 Pre-GWR Baseline Number of GW Systems

Disinfecting Non-Disinfecting Disinfecting Non -Disinfecting Disinfect ing Non-Disinfecting

< 100 6,132 5,806 2,907 5,919 13,558 46,642

101-500 9,260 4,632 2,753 3,860 5,341 13,934

501-1,000 3,502 965 868 850 673 1,290

1,001-4,100 5,405 1,038 542 270 269 348

4,101-33,000 2,798 358 56 14 27 40

33,001-96,000 307 28 2 - - 2

96,001-500,000 62 1 - - - 1

500,001-1 Million 4 - - - - 1

> 1 Million 3 - - - - - Total 27,473 12,828 7,128 10,913 19,868 62,258

Combined Total Number of GW PWSs (Pre-GWR) PWS Size CWS NTNCWS TNCWS

40,301 18,041 82,126 Source: Data extracted from SDWIS/FED PWS Inventory, 2007 4th Quarter Data based on listed disinfection status. PWSs listed as “unknown” disinfection status in SDWIS/FED are counted as non-disinfecting.



### Exhibit 4.2 Baseline Number of SW Systems

CWS NTNCWS TNCWS

< 100 1,170 250 1,339

101-500 2,150 253 497

501-1,000 1,173 88 88

1,001-4,100 2,938 72 67

4,101-33,000 3,164 22 18

33,001-96,000 720 2 - 96,001-500,000 308 1 - 500,001-1 Million 31 - -
> 1 Million 17 - 1
Total 11,671 688 2,010 PWS Size Number of SW PWSs

Source: Da ta extracted from SDWIS/FED PWS Inventory, 2007 4 th Quarter Data. SW count includes GWUDI systems.Economic Analysis for the Proposed RTCR 4-14 June 2010 

### Exhibit 4.3 Pre-GWR Baseline Population Served by GW Systems

Disinfecting Non-Disinfecting Disinfecting No n-Disinfecting Disinfect ing Non-Disinfecting

< 100 387,558 342,243 168,482 326,342 645,949 2,139,529

101-500 2,375,507 1,085,555 708,424 948,500 1,231,077 3,005,703

501-1,000 2,570,662 703,562 630,071 600,643 516,707 956,781

1,001-4,100 11,307,740 2,074,139 991,971 456,985 449,757 599,171

4,101-33,000 29,346,057 3,627,365 418,368 122,865 194,136 353,290

33,001-96,000 15,587,186 1,527,861 89,405 - - 119,700

96,001-500,000 9,935,500 107,323 - - - 100,000

500,001-1 Million 2,670,841 - - - - 725,000

> 1 Million 4,389,948 - - - - - Total 78,570,999 9,468,048 3,006,721 2,455,335 3,037,626 7,999,174

Combined Total PWS Size Population Served by GW PWSs (Pre-GWR)

CWS NTNCWS TNCWS

88,039,047 5,462,056 11,036,800 Source: Data extracted from SDWIS/FED PWS Inventory, 20 07 4th Quarter Data based on listed disinfection status. Populations for PWSs listed as “unknown” disinfection status in SDWIS/FED are co unted as non-disinfecting.



### Exhibit 4.4 Percent Distribution of Gr ound Water PWS Monitoring Frequencies by PWS Size and Type for Current TCR

Disinf? GW or
SW? PWS Type Size No. PWSs Monthly Quarterly Annual

Y GW TNCWS ≤ 100 13,558 4.8% 62.9% 32.3%

Y GW TNCWS 101-1000 6,014 7.9% 66.9% 25.2%

Y GW TNCWS 1001-4100 269 100.0% 0.0% 0.0%

Y GW NTNCWS ≤ 100 2,904 19.3% 64.6% 16.0%

Y GW NTNCWS 101-1000 3,621 18.5% 66.7% 14.7%

Y GW NTNCWS 1001-4100 542 100.0% 0.0% 0.0%

Y GW CWS ≤ 100 6,132 86.6% 13.4% 0.0%

Y GW CWS 101-1000 12,762 88.5% 11.5% 0.0%

Y GW CWS 1001-4100 5,405 100.0% 0.0% 0.0%

N GW TNCWS ≤ 100 46,642 4.8% 62.9% 32.3%

N GW TNCWS 101-1000 15,224 7.8% 66.8% 25.3%

N GW TNCWS 1001-4100 348 100.0% 0.0% 0.0%

N GW NTNCWS ≤ 100 5,913 19.3% 64.6% 16.0%

N GW NTNCWS 101-1000 4,710 18.5% 66.7% 14.8%

N GW NTNCWS 1001-4100 270 100.0% 0.0% 0.0%

N GW CWS ≤ 100 5,806 86.6% 13.4% 0.0%

N GW CWS 101-1000 5,597 88.6% 11.4% 0.0%

N GW CWS 1001-4100 1,038 100.0% 0.0% 0.0%
Note: All other system sizes and types are required to sample monthly. Source: Based on EPA and TWG analysis of 2005 Six-Year data and individual 

### state statutes during the TCRDSAC and review by ASDWA.Economic Analysis for the Proposed RTCR 4-15 June 2010 

### 4.3.2 Post-GWR Baseline

PWSs must comply with requirements of th e GWR by December 1, 2009, which will be approximately five years prior to the effective date of the proposed RTCR. To account for the impact of the GWR on baseline occurrence for those public water systems using a ground water source, EPA performed a number of adjustments to the 2005 data prior to its use in this EA.

Using 2007 SDWIS inventory data (as explai ned in Section 4.3.1) as a pre-GWR inventory baseline, EPA a pplied probabilities of P sample 

### and P well 10 

### to determine the probability of a positive sample for a fecal i ndicator in non-disinfecting PWSs. A fraction of those systems with a positive sample is expected to move to a disinfecting status in the five years prior to proposed RTCR implementation. This modification ensured that systems in the analysis that disinfect drew from the probability distribution for TC+ and EC+ for disinfecting systems, which
is different from the distribution for those that do not disinfect. The m odel continues to apply
P well 

### and P sample 

### throughout the proposed RTCR period of analysis (the 25 years following promulgation). The application of this model parame ter, as it is applied in the context of other aspects of the predictive occurrence model, is explained in further detail in Chapter 5 of this EA.
Exhibit 4.5 shows the baseline i nventory of ground water systems by disinfection status in model year 5, which is the year immediately prior to the effective date of the proposed RTCR. The estimates in Exhibit 4.5 of non-disinfecting PWSs include a number of systems that selected a corrective action other than converting to a disinfecting system in response to fecal
contamination at the source.

As explained in Chapter 5 of this EA, a num ber of PWSs will undertake sanitary surveys (for all GW systems) and compliance monitori ng (for disinfecting GW systems) prior to implementation of the proposed RTCR; although the costs are not considered in this EA (they were considered in the GWR EA), the system s are assigned a reduced occurrence, which is reflected in the proposed RTCR baseline. The pred ictive model incorporates the contribution of sanitary survey results to the qualification of systems for reduced monitoring by assuming a 10% reduction in the number of systems finding a TC+, which is applied to a portion of systems each year and retained throughout the period of analysis. For nonc ommunity water systems, the reduction is applied to one-fifth of systems per year for the five years of GWR implementation prior to the RTCR effective date; for community water systems, it is applied to one-third of systems in each of the first three years of the GWR implementation period. Similarly, the system incorporates the effect of compliance monito ring by disinfecting GW systems by applying an additional 10% reduction for systems that are disi nfecting as of the RTCR effective date, and additionally to those determined in the model to select disinfection as a corrective action; the compliance monitoring reduction in occurrence is a ssumed to apply in all remaining years of the analysis once a system qualifies for the reduction.

As described in Section 5.3.2.2 of this EA, model output was generated for a 30-year period to encompass 5 years of th e effects of GWR implementation and 25 years of the effects of RTCR implementation. Chapter 5 presents this out put for the 30-year period. For the purpose of

10 The term “P well ” refers to the probability that a randomly sel ected well across the United States will ever test positive in its source water for a virus or indicator species, such as TC; “P sample ” is the probability that given a contaminated well, a random sample at the well will test positive for a virus or indicator. The GWR EA (November 2006) (USEPA, 2006a), and in particular the Baseline Chapte r of that document, provides a detailed explanation of the analysis used to generate these P well and P sample estimates.Economic Analysis for the Proposed RTCR 4-16 June 2010 

### the benefit-cost analysis, years 3 through 27 of th is period are included in the calculations and presented in the results shown in Chapter 6 (Benefits Analysis), Chapter 7 (Cost Analysis), and Chapter 9 (Comparison of Benefits and Costs). In itially in the modeled period, all systems under the current TCR option and the AIP option ar e assumed to sample based on the sampling regimen applicable to their system type, size, type of water source, and whether or not the system disinfects(Exhibit 4.4). 11 

### Under the Alternative option, all systems are assumed to sample monthly for the first five years after the RTCR effective date. Following an assessment period as described in Section 5.3.2.2, monitoring frequenc ies are adjusted from baseline for GW systems serving for fewer than 1,000 people. All other systems remain on monthly monitoring.

The estimates for distribution of PWSs across the M/Q/A monitoring schedules as adjusted from the baseline distribution are pres ented in Chapter 5 for the current TCR, AIP option, and Alternative option (Exhibits 5.10a – 5.10c).

Exhibit 4.5 Post-GWR Baseline Number of GW Systems

Disinfecting Non-Disinfecting Disinfecting Non -Disinfecting Disinfec ting Non-Disinfecting

≤ 100 6,308 5,630 2,937 5,889 13,781 46,419

101 - 500 9,326 4,566 2,777 3,836 5,459 13,816

501-1,000 3,516 951 873 845 685 1,278

1,001-4,100 5,423 1,020 547 265 274 343

4,101-33,000 2,798 358 56 14 27 40

33,001-96,000 307 28 2 - - 2

96,001-500,000 62 1 - - - 1

500,001-1 Million 4 - - - - 1

> 1 Million 3 - - - - - Total 27,746 12,555 7,192 10,849 20,226 61,900

Combined Total PWS Size Number of GW PWSs (Post-GWR)

40,301 18,041 82,126

CWS NTNCWS TNCWS

Source: proposed RTCR Predictive Occurrence Model Output.



### 4.3.3 Baseline Population Served

PWS population characteristics ar e important to this analysis for determining the number of people, both prior to and following implemen tation of the GWR, for which risk changes under each component of the proposed RTCR, as discu ssed in Chapter 6 of this EA. These population
estimates are based on SDWIS/FED 2007 4 th 

### quarter data as describe d in Section 4.2.1, and stratified by PWS size, type, whether the system disinfects or not and whether the system uses GW or SW sources. The estimates represent the number of systems which disinfect water and their populations served; both esti mates are adjusted upward base d on predicted impacts of the GWR in the five years prior to the effective date of proposed RTCR requirements, as shown in Exhibits 4.6 and 4.7 below. (See Exhibits 4. 1 and 4.3 for PWS counts and population served by disinfection status prio r to affects of GWR.)

11 Based on EPA and TWG analysis of Six-Year data and individual state statutes during the TCRDSAC and review by ASDWA.Economic Analysis for the Proposed RTCR 4-17 June 2010 

### Exhibit 4.6 Post-GWR Baseline Population Served by GW Systems

Disinfecting Non-Disinfecting Disinfecting Non- Disinfecting Disinfecting Non-Disinfecting

≤ 100 397,933 331,868 170,149 324,675 656,169 2,129,309

101 - 500 2,390,906 1,070,156 714,232 942,692 1,256,597 2,980,183

501-1,000 2,580,602 693,622 633,813 596,901 525,325 948,163

1,001-4,100 11,343,429 2,038,450 999,929 449,027 458,707 590,221

4,101-33,000 29,346,057 3,627,365 418,368 122,865 194,136 353,290

33,001-96,000 15,587,186 1,527,861 89,405 - - 119,700

96,001-500,000 9,935,500 107,323 - - - 100,000

500,001-1 Million 2,670,841 - - - - 725,000

> 1 Million 4,389,948 - - - - - Total 78,642,402 9,396,645 3,025,896 2,436,160 3,090,935 7,945,865

Combined Total PWS Size Population Served by Post-GWR PWSs

88,039,047 5,462,056 11,036,800 CWS NTNCWS TNCWS

Source: Estimates calculated based on the proportion of PWSs changing disinfection status, which is an output from the predictive occurrence model, as described in Chapter 5 of this EA.



### Exhibit 4.7 Baseline Population Served by SW Systems

CWS NTNCWS TNCWS

< 100 56,740 13,297 57,454

101-500 608,084 68,083 116,529

501-1,000 885,400 67,958 70,147

1,001-4,100 6,628,597 140,168 143,347

4,101-33,000 38,700,554 174,408 147,423

33,001-96,000 39,034,554 121,446 - 96,001-500,000 58,489,936 203,000 - 500,001-1 Million 22,327,506 - - > 1 Million 37,363,275 - 2,000,000
Total 204,094,646 788,360 2,534,900 PWS Size Population Served by SW PWSs

Source: Data extracted from SDWIS/FED PWS Inventory, 2007 4th Quarter Data. Population figures for SW systems include GWUDI systems.



### Number of Households Served

Because PWS costs are often passed onto customer s in the form of water rate increases, the proposed RTCR EA also includes analyses to assess the impact of the rule provisions at a
household level. The number of households serv ed by CWSs expected to be subject to the proposed RTCR is estimated by dividing the popul ation for each PWS size category (Exhibits 4.6 and 4.7 above) by the average number of pe ople per household, which was estimated as 2.56 for the year 2007 ( U.S. Census Bureau Annual Social and Economic Supplement , 2008). Exhibit
4.8 below shows the number of households serv ed in groundwater and surface water systems, respectively.Economic Analysis for the Proposed RTCR 4-18 June 2010 

### Exhibit 4.8 Household Baseline

SW CWSs Disinfecting Non-Disinfecting Disinfecting

< 100 151,390 133,689 22,164

101-500 927,932 424,045 237,533

501-1,000 1,004,165 274,829 345,859

1,001-4,100 4,417,086 810,211 2,589,296

4,101-33,000 11,463,304 1,416,939 15,117,404

33,001-96,000 6,088,745 596,821 15,247,873

96,001-500,000 3,881,055 41,923 22,847,631

500,001-1 Million 1,043,297 - 8,721,682

> 1 Million 1,714,823 - 14,595,029
Total 30,691,796 3,698,456 79,724,471 GW CWSs Number of Households

PWS Size

Sources: U.S. Census Bureau, Current Population Survey, 2008 Annual Social and Economic Supplement; SDWIS/FED PWS Inventory, 2007 4th Quarter Data



### 4.3.4 Baseline Water Quality

The following sections provide an overview of summary statistics relating to baseline water quality. The source data from which these su mmary statistics are derived form the basis of further analysis in the proposed RTCR occurrence and risk assessment models as described in later chapters of the EA.

4.3.4.1 Percent of TC and EC Positive Samp les Based on 2005 Six-Year Review 2
Data

Exhibit 4.9 below shows the percent of TC + and EC+, samples based on PWS type and size. As described in Section 4.2.2.2, the 2005 Six-Year Review 2 data was cleaned using a criterion that a given system-month of data s hould include a minimum of 50% of the expected number of samples based on the system’s popul ation served and water system category.

The “TC+ samples” column was calculated by taking the total num ber of routine TC+ samples and dividing by the number of routine TC samples. For small PWSs, additional routine TC samples in the month following a TC+ were included in the denominator. To calculate the EC+ rate, the total number of EC+ samples was divided by the total number of TC- samples 12 

### plus the number of TC+ samples that were tested for E. coli . This EC+ computation did not include additional routine samp les taken in the month following a TC+ because a significant number of PWSs did not provide data on EC+ or EC- samples, and some systems tested for FC
and not E. coli

.

12 EPA assumes that a PWS will not test for EC if the TC assay is negative.Economic Analysis for the Proposed RTCR 4-19 June 2010 

### Exhibit 4.9 Total Coliform and E. coli Percent Positive by System Size and Type

PWS
Type Source

Water Population

Served TC (# Samples) TC (+ Samples) TC (% Positive) EC
(# Samples) 1 EC (+ Samples) EC
(% Positive) 2

≤ 100 93,105 2,479 2.66% 1,172 72 0.08%

101 - 500 125,490 2,500 1.99% 1,639 61 0.05%

501-1,000 48,265 736 1.52% 483 20 0.04%

1,001-4,100 110,391 1,176 1.07% 732 21 0.02%

4,101-33,000 183,721 877 0.48% 458 22 0.01%

33,001-100,000 96,361 214 0.22% 44 2 0.00%

>100,000 64,965 289 0.44% 34 1 0.00%

Total GW 722,298 8,271 1.15% 4,562 199 0.03%

≤ 100 6,735 95 1.41% 64 6 0.09%

101 - 500 19,716 227 1.15% 159 10 0.05%

501-1,000 12,828 90 0.70% 70 7 0.05%

1,001-4,100 55,310 314 0.57% 233 17 0.03%

4,101-33,000 175,758 525 0.30% 399 41 0.02%

33,001-100,000 112,894 157 0.14% 106 5 0.00%

>100,000 112,143 235 0.21% 99 2 0.00%

Total SW 495,384 1,643 0.33% 1,130 88 0.02%
GW & SW Total CWS 1,217,682 9,914 0.81% 5,692 287 0.02%

≤ 100 163,730 7,820 4.78% 5,820 316 0.20%

101 - 500 52,891 2,418 4.57% 1,869 99 0.19%

501-1,000 6,952 299 4.30% 217 4 0.06%

>1,000 7,062 143 2.02% 85 2 0.03%
Total GW 230,635 10,680 4.63% 7,991 421 0.18%

≤ 100 6,723 150 2.23% 141 17 0.25%

101 - 500 2,854 75 2.63% 69 13 0.46%

501-1,000 523 19 3.63% 19 - 0.00%

>1,000 988 6 0.61% 37 - 0.00%

Total SW 11,088 250 2.25% 266 30 0.27%

GW & SW Total TNCWS 241,723 10,930 4.52% 8,257 451 0.19%

≤ 100 46,505 1,476 3.17% 1,061 34 0.07%

101 - 500 33,084 893 2.70% 628 19 0.06%

501-1,000 9,531 166 1.74% 103 2 0.02%

>1,000 13,138 177 1.35% 103 5 0.04%
Total GW 102,258 2,712 2.65% 1,895 60 0.06%

≤ 100 1,668 32 1.92% 30 4 0.24%

101 - 500 2,304 9 0.39% 9 2 0.09%

501-1,000 932 6 0.64% 5 - 0.00%

>1,000 1,316 1 0.08% 1 - 0.00%

Total SW 6,220 48 0.77% 45 6 0.10%

GW & SW Total NTNCWS 108,478 2,760 2.54% 1,940 66 0.06% NTNCWS GW

SW CWS GW

SW

TNCWS GW

SW

Source: Derived using 2005 Six-Year Review 2 Data, which was filtered by including a month of data for a given system (system-month) only if it represented at least 50% of the expected number of samples for a month based on the system’s size. The Total Coliform Rule Compliance Monitoring Data Quality and Completion Report (USEPA, 2010e) includes a detailed description of this data cleaning process.

Notes: 1 “#EC samples” is the denominator of the EC% positiv e calculation, and includes # TC- samples plus #TC+ samples that were tested for EC. 2 Percent EC+ was calculated as (# EC+ samples)/(“# EC samples”)Economic Analysis for the Proposed RTCR 4-20 June 2010 

### 4.3.4.2 Violation Levels Based on SDWIS/FED Data

Non-acute violations are triggered under the current TCR by water quality violations. They are defined as >1 routine or repeat mon itoring sample testing positive for TC in a given compliance period (month, quarter, or year) for PWSs serving fewer than 33,001 people, or by >5.0 percent of samples being positive for sy stems taking >40 samples per month (typically those systems serving greater than 33,000 people) . Acute violations are triggered when any PWS has a repeat sample with an EC+ or FC+ or has an FC+ or EC+ routine sample followed by a TC+ repeat sample in a given month.

Exhibit 4.10 below presents an assessment of water quality prior to the proposed RTCR promulgation in terms of the number of acute and non-acute violations incurred by PWSs. The
number of violations from this data are directly input into the cost model for PWSs serving more than 4,100 people to derive estimates of the num ber of assessments and corrective actions that will be undertaken under the proposed RTCR. As not ed in Exhibit 4.10, the data used is from
2005 3 rd 

### quarter. Exhibit 4.11 presents the seven years of PWS violation data 13 

### evaluated by the TWG. Appendix G presents further detail on th is assessment, including queries used in SDWIS/FED and the resulting datasets downloaded.

In addition to the acute and non-acute system violation data, Exhibit 4.11 also presents
data on the numbers of PWSs w ith monitoring and reporting viol ations (minor and major for routine and repeat monitoring and reporting). Although PWS monitoring a nd reporting violation data is not used directly in the quantitativ e anlyses performed for the EA, the TCRDSAC did consider the data in its deliberations on the imp act of the regulation. In particular, the TCRDSAC determined that the proposed revisions to th e RTCR may significantly reduce the high numbers of monitoring and reporting viola tions by reducing the numbers of additional routine and repeat samples required and providing more flexibility in development of sampling site plans.

The data verification process was used to revi ew individual states’ da ta in comparison to SDWIS/FED data and to compare violations ra tes across states. This process revealed many differences between states in their implementati on of the TCR, and allowed EPA to identify and
review outliers in the national database. Specifically, EPA di d not include violation data from Ohio, U.S. territories, or tribal PWSs in the summaries presented in Exhibits 4.10 and 4.11.
Review of the data verification information rev ealed that Ohio’s broad interpretation of what constitutes a violation led to abnormally high vi olation counts compared (on average) to other states. For U.S. territories and tribal systems, it was established that unique environmental factors and operating conditions contribute to abnormally high TC+ results and associated violations. Thus, inclusion of th ese results would skew the national averages used for analysis,
and were therefore excluded.

13 Exhibit 4.11 presents PWS counts (PWSs with at least one violation during the year) to be consistent with the metric evaluated by the TCRDSAC TWG. Exhibit 4.10 presen ts total violation counts, wh ich are used as inputs to the predictive modeling for the EA.Economic Analysis for the Proposed RTCR 4-21 June 2010 

### Exhibit 4.10 Baseline Number of TCR Viol ations by System Size and Type (2005)

Non-Acute Acute Non-Acute Acute

ABC D E F

CWSs

< 100 905 52 16 3 11,709 1,133

101-500 809 34 50 7 13,508 2,067
501-1,000 203 13 16 3 4,299 1,112
1,001-3,300 272 8 55 7 5,490 2,406
3,301-10,000 171 8 75 3 2,628 2,015
10,001-50,000 125 8 78 4 1,247 1,752
50,001-100,000 11 2 5 4 147 362
100,001-250,000 1 1 3 1
250,001-500,000 - - - - 500,001-1 Million - - 1 - > 1 Million - - - - 3 15
Total 2,497 126 299 32 39,092 11,168

NTNCWSs

< 100 514 34 7 2 8,392 249

101-500 346 20 4 - 6,294 246
501-1,000 57 6 2 - 1,622 87
1,001-3,300 58 4 - - 726 66
3,301-10,000 9 2 1 - 102 23
10,001-50,000 1 - - - 11 4
50,001-100,000 - - - - - 1
100,001-250,000 - - - - - 250,001-500,000 - - - - - 500,001-1 Million - - - - - > 1 Million - - - - - -
Total 985 66 14 2 17,147 677

TNCWSs

< 100 2,665 278 19 5 58,396 1,334

101-500 833 76 11 1 18,184 492
501-1,000 133 11 4 - 1,868 85
1,001-3,300 58 2 1 - 578 57
3,301-10,000 5 - 1 - 77 22
10,001-50,000 - - - - 11 3
50,001-100,000 - - - - 3 - 100,001-250,000 - - - - 250,001-500,000 - - - - 500,001-1 Million - - - - > 1 Million - - - - - 1
Total 3,694 367 36 6 79,118 1,994 1 - 61 306 Number of Violations in GW
PWSs Number of Violations in SW
PWSs Total Number
of GW PWSs (without OH & PR) Total Number
of SW PWSs (without OH & PR)

1

Source: SDWIS/FED annual data for period ending 3 rd quarter 2001 – 2007 . OH, U.S. territories, tribal PWS data excluded. Data was not available for 4 th quarter (it is posted in the 3 rd quarter annually).Economic Analysis for the Proposed RTCR 4-22 June 2010 

### Exhibit 4.11 Number of PWSs with Violations by System Type (2001 – 2007 )

2001 2002 2003 2004 2005 2006 2007

CWS 143 144 185 171 151 171 171

NTNCWS 51 53 70 58 65 68 45

TNCWS 261 278 322 351 349 361 295

All 455 475 577 580 565 600 511

CWS 2,074 2,110 2,204 2,314 2,196 2,095 1,996

NTNCWS 601 679 725 750 753 735 655

TNCWS 2,707 2,934 3,036 3,132 3,039 3,244 3,209

All 5,382 5,723 5,965 6,196 5,988 6,074 5,860

CWS 3,312 3,327 3,900 3,924 3,760 3,659 3,415

NTNCWS 1,503 1,561 1,676 1,679 1,588 1,468 1,377

TNCWS 10,360 10,531 11,230 11,043 10,426 10,630 10,389

All 15,175 15,419 16,806 16,646 15,774 15,757 15,181

CWS 1,218 1,257 1,389 1,445 1,302 1,285 1,244

NTNCWS 187 182 200 233 194 214 183

TNCWS 701 842 883 903 875 843 839

All 2,106 2,281 2,472 2,581 2,371 2,342 2,266 PWS Type Year

Acute MCL Violations

Non-Acute MCL Violations

Major Monitoring and Reporting Violations (Routine and Repeat)

Minor Monitoring and Reporting Violations (Routine and Repeat)

Note: PWSs counts are of systems that had at least one violation during the year.

Source: SDWIS/FED annual data for period ending 3 rd quarter 2001 – 2007. OH, U.S. territories, tribal PWS data excluded. Data was not available for 4 th quarter (it is posted in the 3 rd quarter annually).



### 4.4 

## Sensitive Sub-populations

Under the Safe Drinking Water Act (S DWA) Amendments of 1996 (PL 104-182), EPA must analyze health impacts of rulemaking on sensitive subpopulations. Sensitive populations include “infants, children, pregnant women, the elderly, individuals with a history of serious illness, and other subpopulations that are identified as likely to be at a gr eater risk of adverse health effects due to exposure to contaminants in drinking water than the general population.” (USEPA, 1996a)

Exhibit 4.12 presents the EPA’s estimates of the number of U.S. individuals who are at increased risk of developing more severe symptoms from illnesses caused by waterborne pathogens. Persons suffering from certain diseases and/or conditions are believed to be sensitive to microbes and chemicals in drinking water. These subgroups of the population include pregnant women, the very young, the elderly, and the immunocompromised. In total, these subgroups represent approximately 20 percent of the current population of the United States.Economic Analysis for the Proposed RTCR 4-23 June 2010 

### Exhibit 4.12 Estimates of Sensiti ve Subpopulations in the United States

Sensitive Population Individuals Approximate Percent of U.S. Population 1 Citation/Notes

Pregnant women and neonates

Pregnant Women 6,240,000 2.2 Vital and Health Statistics, CDC (Ventura et al., 2000)

Neonates (under one month) 2 317,137 0.1 U.S. 2000 Census (US Census Bureau, 2001a)

Age-based sensitive populations

Children (< 5 years old) 19,175,798 6.8 U.S. 2000 Census (US Census Bureau, 2001a)

Elderly (> 65 years old) 34,991,753 12.4 U.S. 2000 Census (US Census Bureau, 2001a)

Compromised immune status

Bone marrow transplant Recipients 20,000 0.01 National Marrow Donor Program
http://.marrow.org/MEDIA/facts_figures.pdf

AIDS Patients 816,149 0.3 HIV/AIDS Surveill ance Report, cases through 2001 (CDC, 2002)

Organ transplant recipients 23,143 0.01 U.S. Census Bureau, St atistical Abstract of the U.S., based on 1998 data (2001b)

Total 61,583,980 21.8

1 Based on U.S. Census estimate (July 2000).

2 1/12 of the 2000 census population for age <1 year.



### 4.5 

## Summary of Baseline Assumptions

In Section 4.3 (Data Sources), EPA discusses the representative ness and quality of the data
used from the 2005 Six-Year Review 2 data and SDWIS/FED. An a dditional source of uncertainty is introduced into the baseline in th e monitoring frequencies estimated for systems,
shown in Exhibit 4.4. As described in that sect ion, to arrive at this distribution EPA and the Technical Workgroup conducted an analysis of 2005 Si x-Year Data and indivi dual state statutes, and had the results validated by ASDW A during the TCRDSAC deliberations.

Exhibit 4.13 below presents a summary of the assumptions made in developing the RTCR EA baseline. These assumptions may introduce uncertainty into the predictive model and its outcomes in terms of benefits and costs. However, all of the assumptions influencing the EA baseline (current TCR) do so in the same way as for the proposed RTCR and Alternative option. Therefore, EPA does not expect the net results of the analyses presented in this EA to be significantly influenced by the uncertainty in the assumptions applied in developing the RTCR
EA baseline.Economic Analysis for the Proposed RTCR 4-24 June 2010 

### Exhibit 4.13 Summary of Baseline Assumptions Influencing RTCR Estimates

Underestimate Overestimate Unknown Impact Underestimate Overestimate Unknown Impact

Pre-GWR baseline distribution of systems across sampling frequency categories (M/Q/A) Varies per system category as
shown in Ex. 4.4 4.3.1 Variability, Uncertainty X X

Selection of 2005 data from Six
Year Review for use as baseline Data are adequately representative of U.S. PWSs and

of sufficient quality. (Note 2) 4.2.2 Variability, Uncertainty X X

Use of SDWIS/FED for inventory data (2007 Q3) and violations data (2001 - 2007 Q3) Data are adequately representative of U.S. PWSs and of sufficient quality. 4.2.1 Variability, Uncertainty X X
Distribution of systems across sampling frequency categories (M/Q/A) following implementation of GWR sanitary surveys prior to RTCR implemlentation Varies per system category as
shown in Ex. 5.14a - 5.14c 5.3.2.2 Variability, Uncertainty X X

Pwell - the portion of GWSs having viral pathogens in their source waters (adopted from GWR EA) 21.58% 5.3.1 Constant, Uncertainty X X

Psample - the probability that a random sample will test positive for viral pathogens given a
contaminated source water (adopted from GWR EA) Variable drawn from a beta distribution with a range of alpha

and beta estimates having a median value of 5.8 percent and

an expected value of 12.4 percent. 5.3.1 Variability, Uncertainty X X

Reduced occurrence for sanitary surveys performed under the
GWR 90% of baseline occurrence; applied to equal number of systems annually over the sanitary survey cycle (20% each year of 5 years for CWSs; 33.3% each year for 3 years for NCWSs) 5.3.1 Constant, Uncertainty X X

Reduced occurrence for GWR compliance monitoring (applies
to subset of GWSs that disinfect). 90% of baseline occurrence 5.3.1 Constant, Uncertainty X X

% of non-disinfecting GWSschoosing disinfection CA vs nondisinfection CA in response to source water quality issue (adopted from GWR) Range: High end is the percentage of CWS entry points employing disinfection by system size, low end assumed
to be 10% based on discussions

with State representatives. 5.3.1 Constant, Uncertainty X X

Population and sensitive sub population estimates Varies by category 4.2.3.3 and

4.4 Variability, Uncertainty X X Uncertainty Factor Current Assumption Section with
Full
Discussion
of Uncertainty
or Factor Contributes Variability, Uncertainty,
or Constant? Most Likely Effect on Benefits (Note 1) Most Likely Effect on Costs (Note 1)

Notes: 1) All baseline variables or factors were incorporated into the predictive model in the same way for the Current TCR (baseline option) and the other two regulatory options considered in this EA (AIP option and Alternative option); therefore, EPA expects that any under- or over-estimation would affect the baseline and other options similarly, resulting in no signficant net effect on the results of the analysis. 2) A co mplete discussion of the data cleaning and assumption used in preparing 6 Year Review data for use in the RTCR baseline is provided in the Total Coliform Rule Compliance Monitoring Data Quality and Completion Report (USEPA, 2010e).Economic Analysis for the Proposed RTCR 5-1 June 2010 

## 5. Occurrence and Predictive Model

5.1 

## Introduction

Based on evaluation of the Safe Drinking Wa ter Information System-Federal Version (SDWIS/FED) violation da ta, the U.S. Environmental Protection Agency (EPA) assumes that the
national occurrence of to tal coliform (TC) and E. coli (EC) has reached a steady state in recent years under the current Total Coliform Rule (T CR). Cycles of normal deterioration and repair/replacement appear to be occurring at th e individual system level, while the numbers of
violations at the national level remain relativel y unchanged. Chapter 4 (Exhibit 4.11) presents the number of Public Water Systems (PWSs) with T CR violations over the last several years, which
shows that national violation rates have remained relatively steady. Revisions to the TCR would affect this steady state, likely resulting in a re duction of the underlying occurrence and associated violations. However, prior to the propos ed Revised Total Coliform Rule (RTCR) implementation, the Ground Water Rule (GWR), which became effective December 2009, would also have an effect on the steady state. This ch apter explains the development of a model that both reproduces the steady-state occurrence cond itions under the current TCR and predicts the effects of both the proposed RTCR and the GWR in further reducing occurrence from current
estimated levels.

The occurrence and predictive model was used for PWSs serving 4,100 people or fewer and it has two components. Occurrence and pred ictive modeling focuses on small PWSs (those serving ≤ 4,100 people) because (a) there are adequa te data to support development of the
occurrence distributions that are needed for th e predictive components of the model, (b) these systems are known to have higher occurrence levels than larger systems, and (c) these systems, in particular, are subject to changes in the monitoring requirements under the proposed RTCR. The first component of the model characterizes ho w the presence or positive rates of TC and EC detections vary across the population of sma ll (serving 4,100 people or fewer) public water systems in the U.S. These rates vary by the type of sample (routine or repeat), by analyte (TC or EC), and by system type (Community Water System (CWS), Noncommunity Water System NCWS, or Transient Noncommunity Water Syst ems (TNCWS)) and size. EPA determined from
the Six-Year Review data 1 

### that systems differ considerably with respect to the observed
occurrence of TC and EC in both routine and repeat sampling. Some of this variability can be explained by the type, size, wate r source, and disinfection practic es of the systems. However, even among systems having the same characteristics, some systems were found to rarely experience positive assays, while others often di d. The second component of the model uses the
TC and EC occurrence distri butions, together with the various sampling and response requirements, to simulate a set of nationally-representative systems within the context of the three regulatory options (current TCR, Agreemen t in Principle or AIP, and Alternative) to predict changes in TC and EC occurrence, tri ggers, assessments, corrective actions over time, and violations. The model gene rates estimates of reduced TC and EC occurrence based on requirements of the proposed RTCR to perform a ssessments and corrective actions not explicitly required in the current TCR. (In addition, the mode ls take into account reduc tions attributable to the implementation of the GWR, the eff ective date of which is December 2009.)

1 A discussion of the use of data from the Six-Year Review of SDWA regulations is presented in Chapter 4 of this
EA.Economic Analysis for the Proposed RTCR 5-2 June 2010 

### The occurrence model produces outputs over a 30-year time horizon 2 

### that include
national estimates of TC and EC occurrence in PWSs across the U.S., and the resulting Level 1
and Level 2 assessments 3 

### and corrective actions performed. These outputs are used to characterize reduced exposure to the potential contamination under each regulatory scenario considered, as presented in Chapter 6 of this EA, and to estimate incremental costs for PWSs across the U.S., as described in Chapter 7 of this EA.

The two major components of the occurren ce and predictive mode l used for systems serving ≤ 4,100 people are described in Secti ons 5.2 and 5.3 of this chapter.

For systems serving more than 4,100 people, EPA estimated violation and trigger rates using SDWIS/FED (USEPA, 2005a) because the Six- Year Review data for PWSs serving more than 4,100 people were not as robust as the Six- Year Review data for systems serving 4,100 or fewer people. EPA did not quantify changes in viol ation or trigger rates for systems serving more than 4,100 people among the current TCR, AIP option, and Alternative option because of: (1) limited Six-Year Review data to characterize these systems, (2) the essentially unchanged monitoring requirements across optio ns for these systems, and (3) the level of effort already occurring to implemen t the current TCR.

A complete description of the methods fo r developing the occu rrence estimates as
described above is found in the remain ing sections of this chapter:

Section 5.2 Describes development of parameter estimates α
, β based on empirical occurrence data for use in the model developed for the proposed
RTCR.

Section 5.3 Describes the occurrence mode l developed for systems serving ≤ 4,100 people (Sections 5.3.1-5.3.2), predictions from the model (5.3.3) and uncertainty in the model (5.3.3.1), including a comprehensive list of assumptions contributing to uncertainty, a sensitivity analysis, and a
discussion of model validation.

Section 5.4 Describes how outcomes were predicted for systems serving more than 4,100 people.

2 The model includes an additional 5 years prior to the commencement of AIP option monitoring to account for effects of the GWR after it is fully implemented, plus 25 years of RTCR analysis, for a total of 30 modeled years.
3 The AIP and Alternative option require PWSs to complete either a Level 1 or Level 2 assessment following triggers specified in Exhibit 3.1 of this EA. The purpose of Level 1 and 2 assessments is to identify the presence of sanitary defects and deficiencies in distribution system coliform monitoring practices, similar to an annual inspection but more focused on determining the cause of a contamination event. In order to complete a Level 2 assessment the PWS must perform a more detailed examin ation of the system than for a Level 1 assessment, including its monitoring and operational practices.Economic Analysis for the Proposed RTCR 5-3 June 2010 

### 5.2 

## Modeling of Current To tal Coliform and E. coli Occurrence for Systems Serving up to 4,100 People

This section describes the development of pa rameters used to define variability across and within groups of similar PWSs with regard to occurrence of TC and EC. Details related to this section are provided in Appendix F to this EA.

5.2.1 Distributional Model and Notation

The Six-Year Review data demonstrate th at, even among systems of similar size and type, there are some PWSs that rarely find rou tine samples to be TC-positive and others that often find TC-positive samples. For example, among the very small (serving <101) TNCWSs using nondisinfected ground water, 47 systems reported ten or more routine TC positives while assaying 40 or fewer samples during 2005. Am ong the same set of small TNCWSs with nondisinfected ground water are 60 that assayed 20 or more routine samples, finding all of them TC-negative. Clearly, routine TC-positive rates vary considerably within this set of systems. Significantly different fractions positive can be found among any basic subsets of systems (defined by system type, water type, and population served, as described in Section 5.2.2 of this EA) and for any type of assay (both routine and repeat TC and both routine and repeat E. coli ).

Within a group of similar systems, pRTTC i 

### , which is defined as the probability that a routine sample taken from system i will test positive, is assumed to vary as a beta random
variable. The beta distribution is commonly used to model vary ing probabilities because it is limited to values between 0 and 1 and can assume a wide variety of shapes. EPA used a beta
distribution to describe ho w probabilities of virus-positiv e samples vary among viruscontaminated wells in the Economic Analysis for the Ground Water Rule (USEPA 2006a).

Samples that test negative for TC are generally not tested further for the presence of EC, as are TC-positive samples. The probability that a TC-positive routine (RT) sample taken from system i will also test EC-positive, pRTEC i 

### , is assumed to vary among similar systems as another beta random variable, but with parameters that can be quite different from those of the routine TC samples. Although systems with freque nt routine TC positives necessarily generated more EC assays, the EC positive rates for these systems did not appear to be significantly different than the EC positive rates of systems with rare TC positives. The variables pRTTC and pRTEC are therefore modeled as independent beta-distributions.

Similar assumptions are extended to th e repeat positive probabilities, pRPTC i 

### and pRPEC i 

### . Like pRTTC i 

### and pRTEC i 

### , these are assumed to be i ndependently beta-distributed among sets of similar systems. A process for dete rmining “sets of similar systems” is described in Sections 5.2.3 and 5.2.4. The process is in formed by system-specific data that are reduced from the sample-specific data described in Chap ter 4 of this EA, as discussed in the following
section.Economic Analysis for the Proposed RTCR 5-4 June 2010 

### 5.2.2 Data Reduction

The occurrence model assumes that positive routine TC measurements for system i result from some unobserved probability (pRTTC i 

### ). This probability may vary from month-to-month and season-to-season. However, in this model each result, whether positive or negative, is assumed to be an independent tr ial with positive probability pRTTC i 

### . Each of these is called a Bernoulli trial. The total number positive observed for system i during a year (KRTTC i 

### ) is therefore a binomial random variable, whose parameters are the system’s positive probability (pRTTC i 

### ) and the total number of samples assayed (NRTTC i 

### ). What is observed for the system are the number of positive samples (KRTTC i 

### ) and the number of samples assayed (NRTTC i 

### ). The order of the positives and negatives is unim portant, so the routine TC data needed for any system can be reduced to these two values: NRTTC i 

### and KRTTC i 

### . The leading character “N” designates the number of samples tested and “K” designates the number positive.

Similarly, the routine EC data for system i can be reduced to the number of routine TCpositive samples that were assayed for EC (NRTEC i 

### ) and, of those, the number testing positive (KRTEC i 

### ). For many systems, both NR TEC and KRTEC will be zero because they encountered no routine TC positives during 2005 (KRTTC = 0), and EPA assumes that in the case of a TCnegative, no EC a ssay is performed.

Finally, the data for repeat samples for syst em i can be reduced to four numbers: NRPTC,
KRPTC i 

### , NRPEC i 

### , and KRPEC i 

### . Again, the leading characters, “N” and “K”, designate numbers of samples assayed and numbers positive, respec tively. “RP” designates that these are repeat samples, while “TC” and “EC” designate assays for TC and EC, respectively. For many systems, all four of these numbers are zero because no routine samples were TC positive.

It is important to note that only TC-positive samples are assayed for EC. The positive probabilities for EC are therefore conditional, that is, they apply only to samples that have tested TC positive. All TC-negative samples are assumed to be EC negative. The overall (unconditional) probability that a routine sample from system i will be EC positive is the product pRTTC i 

### *pRTEC i 

### and the overall (unconditional) probability that a repeat sample from the system will be EC-positive is the product pRPTC i 

### *pRPEC i



### .

The reduced dataset includes eight integer values (for NRTTC, KRTTC, NRTEC, KRTEC, NRPTC, KRPTC, NRPEC, KRPEC) for each of approximately 93,000 systems. Although none of the NRTTC are zero (all system s assayed at least one routine TC sample during 2005), the great majority of the other values are zeros.

5.2.3 Basic Subsets of Systems

The 92,747 systems serving ≤ 4,100 people in the Six-Year Review dataset (which represent the approximately 147,000 total systems that ex ist in this size range) can be classified by system type, source water type and disinfectio n status, and population served. The three types of systems are CWS, TNCWS and nontransient noncommunity (NTNCWS). The three source water types are surface water (SW), which is always disinfected, nondi sinfected ground water (NondisGW) and disinfected ground water (DisGW). Three important size categories are small systems (serving ≤ 100 people), systems serving 101 to 1, 000 people, and systems serving 1,001 to 4,100 people. Systems serving more than 4, 100 people are not incl uded here, for reasonsEconomic Analysis for the Proposed RTCR 5-5 June 2010 

### discussed in Chapter 4 of this EA and earlier in this chapter. In total, there are 27 possible categories that each PWS may belong to (3 syst em types x 3 source water types x 3 population served sizes). Each PWS may only be in one of the 27 categories. Exhibit 5.1 lists the 27 basic subsets and corresponding numbers of systems in the dataset.

Exhibit 5.1 Basic Classifications of PWSs Used for Occurrence Modeling

Subset System Type Water Type Population Served Group Number of Systems in 6- Year Review Data

1 TNCWS SW ≤ 100 838

2 TNCWS SW 101-1000 358

3 TNCWS SW 1001-4100 30

4 NTNCWS SW ≤ 100 114

5 NTNCWS SW 101-1000 172

6 NTNCWS SW 1001-4100 33

7 CWS SW ≤ 100 484

8 CWS SW 101-1000 2,034

9 CWS SW 1001-4100 1,699

10 TNCWS DisGW ≤ 100 8,112

11 TNCWS DisGW 101-1000 3,007

12 TNCWS DisGW 1001-4100 119

13 NTNCWS DisGW ≤ 100 1,577

14 NTNCWS DisGW 101-1000 1,780

15 NTNCWS DisGW 1001-4100 252

16 CWS DisGW ≤ 100 3,662

17 CWS DisGW 101-1000 7,678

18 CWS DisGW 1001-4100 2,707

19 TNCWS NondisGW ≤ 100 32,028

20 TNCWS NondisGW 101-1000 10,217

21 TNCWS NondisGW 1001-4100 217

22 NTNCWS NondisGW ≤ 100 4,026

23 NTNCWS NondisGW 101-1000 3,264

24 NTNCWS NondisGW 1001-4100 152

25 CWS NondisGW ≤ 100 3,788

26 CWS NondisGW 101-1000 3,755

27 CWS NondisGW 1001-4100 644

TOTAL 92,747 Note: Water Type inclu des disinfection status, as informed by in formation from SDWIS-FED. Systems with no indication of disinfection status in SDWI S-FED were assumed to not disinfect (Nondis).Economic Analysis for the Proposed RTCR 5-6 June 2010 

### 5.2.4 Estimation Methodology

The methodology described in this section applies to all four kinds of measurements, routine TC (RTTC), routine E. coli (RTEC), repeat TC (RPTC) and repeat E. coli (RPEC). However, to simplify the presentation, the descrip tion will be expressed only in terms of RTTC. Results presented in Section 5.2.5 show that the final system classifications used to model TC (both routine and repeat) are quite different from the final su bsets used to model EC occurrence.

For any individual subset of systems from E xhibit 5.1 or grouping of these subsets, two methods were used to estimate parameters of the beta-distributed RTTC: maximum likelihood estimation and Bayesian Markov Chain Monte Carlo (MCMC) sampling. The MCMC samples are used to test whether two basic subsets have equal average positive rates and to check the maximum likelihood estimates (MLEs). This check was conducted to ensu re that the algorithm used to find the MLE had not stopped too soon.

Both the MLE and MCMC methodologies requ ire computation of the likelihood function, L(data | α,β ), where α and β are parameters of beta-distributed pRTTC. For a specific system in a set of similar systems, the number of positive RTTC samples is a binomial random variable with parameters NRTTC and pRTTC, which are the numbers of RTTC samples assayed by the system and the system’s unobserved probability of a positive, respectively. The probability of a positive, pRTTC, is a beta random variable, whose parameters are α and β. Exhibit 5.2 is a directed graph showing the model structure. At the top are the two hi gh-level parameters ( α and β) and arrows from them showing their influenc e on the distribution of the system-specific parameters, the positive probabi lities or pRTTCs. Finally, the exhibit shows how the pRTTCs, together with the numbers of samples assayed (NRTTCs), influenced the numbers estimated to be positive (KRTTCs).Economic Analysis for the Proposed RTCR 5-7 June 2010 

### Exhibit 5.2 Directed Graph of Model Used for RTTC Occurrence

This same model could have been equally well re presented with all of the arrows pointing up to
show the direction of inferen ce, starting with the data (NR TTCs and KRTTCs), which inform estimates of the unobserved positiv e probabilities (pRTTCs), and then those informing estimates of the high level parameters ( α and β).

5.2.4.1 Maximum Likelihood Estimation

NOTE: From this point through the end of this chapter, the approach for estimating parameters for routine total coliform occurrence (RTTC) is the same approach used for repeat total coliform (RPTC) and both routine and repe at E. coli occurrence (RTEC and RPEC). To simplify the notation, the designation of measur ement type (e.g., RTTC) will be dropped. For example, KRTTC is reduced to K, NRTTC is reduced to N, and pRTTC is reduced to p. Subscript i is used to denote a particular system in a basic subset of systems.

For a single system in a subset, if p i 

### were known, the likelihood of the system’s RTTC data (K i 

### positives observed among N i 

### routine samples) would be given by the binomial probability
mass function:



## ( ) ( ) ( ) i i i K N i K i i i i i i i i p 1 p ! K N ! K ! N p , N

, K dbinom −

− × ⎥ ⎦ ⎤ ⎢ ⎣ ⎡

− =



### But p i 

### is not known, nor can it be observed explic itly. It is, therefore, treated as a beta random variable. The expected value of the lik elihood function is obtained by integrating theEconomic Analysis for the Proposed RTCR 5-8 June 2010 

### product of the beta probability density function and the binomial probability mass function. The beta probability density function is:

Γα β + ( )

Γ α

( ) Γ β ( )

⋅ p i 

# ( ) α 1

−

⋅ 1 p i − 

# ( ) β 1

−

⋅



### And the expected likelihood is:

0 1

p N i !

K

i ! N i K i − 

# ( ) !

⋅ Γα β + ( )

Γ α

( ) Γ β ( )

⋅ ⋅ p ( ) α 1

− K i

+

⋅ 1 p

− ( ) β 1

− N i

+ K i −

⋅ ⌠ ⎮ ⎮ ⎮ ⌡ d



### Because both N i 

### and K i 

### are constant (observed data), the function only depends on the factors involving p, α , and β , so the factorial terms in the abov e may be ignored when seeking to maximize the likelihood function. This simplif ies the computation considerably, and the resulting integral has a closed-form solution, which is:

Γα β + ( ) Γ α K i + 

# ( )

⋅ Γ β N i + K i − 

# ( )

⋅

Γ α

( ) Γ β ( )

⋅ Γα β + N i + 

# ( )

⋅ Beta α K i + β N i + K i − , 

# ( )

Beta α β

, ( ) =



### The total likelihood for a set of systems is th e product of the system-specific likelihoods:

Likelihood α β

, ( )

i Beta α K i + β N i + K i − , 

# ( )

Beta α β + ( ) 

# ∏

In order to find maximum likelihood parameter estimates of parameters α , and β , some additional steps were taken:

1. Log likelihood, rather than likelihood, was computed to avoid the problems of
numerical overflow and underflow. Because the log transformation is positive and monotonic, parameters found to maximize the log likelihood function will also
maximize the untransformed likelihood function:

LogLikelihood α β

, ( )

i ln Beta α K i + β N i + K i − , 

# ( )

Beta α β + ( ) 

### ⎛ ⎜ ⎝ ⎞ ⎠ 

# ∑

2. Parameters of the Beta distribution were expressed in terms of the mean (a= α/(α+β) 

### ) and dispersion (b=1/sqrt( α+β 

### )). In terms of these new parameters, the log likelihood function is:

LogLikelihood a b

, ( )

i ln Beta a

b 2 K i + 1 a

−

b 2 N i + K i − , 

### ⎛ ⎜ ⎝ ⎞
⎠

Beta a

b 2 1 a

−

b 2 + 

### ⎛ ⎜ ⎝ ⎞
⎠ ⎛ ⎜ ⎜ ⎜ ⎜ ⎝ ⎞
⎟ ⎟

⎠ 

# ∑

3. Bayesian MCMC estimation, as described in Appendix F was used to check the MLEs and to support decisions about combin ing (pooling) different categories or subsets of systems.

4. Where subsets of systems were found to ha ve insufficient data to support maximum likelihood estimation, engineering judgment was used to decide if combining withEconomic Analysis for the Proposed RTCR 5-9 June 2010 

### other subsets made sense, for the purpos e of parameter estimation. Rationale and strategies for this are described in Appendix F.

5.2.5 Results

Appendix F of this EA describes how system s and their data were combined, or pooled, for the purpose of RTTC, RTEC, RPTC, and RPEC modeling. Section 5.2.5.1 and 5.2.5.2 report the resulting MLEs in terms of a, b and α
, β

.

RTTC data were addressed first because a) so much more data were available for RTTC than for the other three measurement types (RTEC , RPTC, and RPEC); and b) summary statistics suggested that systematic differences due to sy stem size and other factors were larger for TC
than for EC measurements.

When evaluating data for any one type of m easurement, system size was evaluated first because it was expected to be important for a numb er of reasons, primarily: a) Larger systems have more resources and are more likely to em ploy full-time professional operators than smaller systems; and b) Having more resources, the la rger systems may provide better treatment and distribution systems. System type and water type were evaluated after system size, but the order
in which these were evaluated does no t appear to have been important.

5.2.5.1 Maximum Likelihood Estimates

Exhibit 5.3 provides MLEs for routine and repeat TC, while Exhibit 5.4 provides MLEs for routine and repeat EC. Note that both of these exhi bits present the a and b parameters as defined in Section 5.2.4.Economic Analysis for the Proposed RTCR 5-10 June 2010 

### Exhibit 5.3 Maximum Likelihood a and b Parameter Estimates for RTTC and RPTC

Disinf? GW or SW? Sys Type Size No. Systems aRTTC bRTTC aRPTC bRPTC

Y SW TNCWS ≤ 100 838 0.02312 0.2992 0.1439 1.108

Y SW TNCWS 101

‐ 100 0 358 0.02312 0.2992 0.1439 1.108

Y SW TNCWS 1001

‐ 4100 3 0 0.02312 0.2992 0.1439 1.108

Y SW NTNCWS ≤ 100 114 0.0158 4 0.3576 0.106 4 1.078

Y SW NTNCWS 101

‐ 100 0 172 0.01127 0.2458 0.106 4 1.078

Y SW NTNCWS 1001

‐ 4100 33 0.01127 0.2458 0.106 4 1.078

Y SW CWS ≤ 100 484 0.01502 0.2090 0.0646 4 0.6107

Y SW CWS 101

‐ 100 0 2034 0.009458 0.1490 0.0646 4 0.6107

Y SW CWS 1001

‐ 4100 1699 0.005864 0.1275 0.0343 0 0.2721

Y GW TNCWS ≤ 100 8112 0.02312 0.2992 0.1439 1.108

Y GW TNCWS 101

‐ 100 0 3007 0.02312 0.2992 0.1439 1.108

Y GW TNCWS 1001

‐ 4100 119 0.02312 0.2992 0.1439 1.108

Y GW NTNCWS ≤ 100 1577 0.0158 4 0.3576 0.106 4 1.078

Y GW NTNCWS 101

‐ 100 0 1780 0.01127 0.2458 0.106 4 1.078

Y GW NTNCWS 1001

‐ 4100 252 0.01127 0.2458 0.106 4 1.078

Y GW CWS ≤ 100 3662 0.01592 0.2243 0.09415 0.8493

Y GW CWS 101

‐ 100 0 7678 0.01243 0.2142 0.09415 0.8493

Y GW CWS 1001

‐ 4100 2707 0.007767 0.1841 0.05221 0.4916

N GW TNCWS ≤ 100 3202 8 0.04758 0.3990 0.278 8 1.068

N GW TNCWS 101

‐ 100 0 10217 0.04758 0.3990 0.2487 0.9359

N GW TNCWS 1001

‐ 4100 217 0.02467 0.3121 0.169 4 0.4052

N GW NTNCWS ≤ 100 4026 0.03658 0.4044 0.2575 0.9319

N GW NTNCWS 101

‐ 100 0 3264 0.0269 0 0.2840 0.2575 0.9319

N GW NTNCWS 1001

‐ 4100 152 0.0269 0 0.2840 0.2575 0.9319

N GW CWS ≤ 100 3788 0.03147 0.2680 0.189 8 0.8407

N GW CWS 101

‐ 100 0 3755 0.0269 0 0.2840 0.189 8 0.8407

N GW CWS 1001

‐ 4100 644 0.0269 0 0.2840 0.1312 0.6938 Note: Disinfection status (“Disinf?”) is from informati on downloaded from SDWIS/FED. Systems with no indication of disinfection status in SDWIS/ FED are assumed to not disinfect.Economic Analysis for the Proposed RTCR 5-11 June 2010 

### Exhibit 5.4 Maximum Likelihood a and b Parameter Estimates for RTEC and RPEC

Disinf? GW or SW? Sys Type Size No. Systems aRTEC bRTEC aRPEC bRPEC

Y SW TNCWS ≤ 100 838 0.1291 0.6287 0.05175 1.153

Y SW TNCWS 101

‐ 1000 358 0.1291 0.6287 0.05175 1.153

Y SW TNCWS 1001

‐ 4100 30 0.1291 0.6287 0.05175 1.153

Y SW NTNCWS ≤ 100 114 0.1291 0.6287 0.05175 1.153

Y SW NTNCWS 101

‐ 1000 172 0.1291 0.6287 0.05175 1.153

Y SW NTNCWS 1001

‐ 4100 33 0.1291 0.6287 0.05175 1.153

Y SW CWS ≤ 100 484 0.1291 0.6287 0.05175 1.153

Y SW CWS 101

‐ 1000 2034 0.1291 0.6287 0.05175 1.153

Y SW CWS 1001

‐ 4100 1699 0.07514 0.8767 0.05175 1.153

Y GW TNCWS ≤ 100 8112 0.08599 0.879 6 0.07063 1.19 6

Y GW TNCWS 101

‐ 1000 3007 0.08599 0.879 6 0.07063 1.19 6

Y GW TNCWS 1001

‐ 4100 119 0.08599 0.879 6 0.07063 1.19 6

Y GW NTNCWS ≤ 100 1577 0.08599 0.879 6 0.07063 1.19 6

Y GW NTNCWS 101

‐ 1000 1780 0.08599 0.879 6 0.07063 1.19 6

Y GW NTNCWS 1001

‐ 4100 252 0.08599 0.879 6 0.07063 1.19 6

Y GW CWS ≤ 100 3662 0.05449 0.6387 0.03950 1.168

Y GW CWS 101

‐ 1000 7678 0.05449 0.6387 0.03950 1.168

Y GW CWS 1001

‐ 4100 2707 0.05449 0.6387 0.03950 1.168

N GW TNCWS ≤ 100 32028 0.04223 0.8129 0.0357 1.059

N GW TNCWS 101

‐ 1000 10217 0.04223 0.8129 0.03569 1.059

N GW TNCWS 1001

‐ 4100 217 0.04223 0.8129 0.03569 1.059

N GW NTNCWS ≤ 100 402 6 0.04223 0.8129 0.03569 1.059

N GW NTNCWS 101

‐ 1000 3264 0.04223 0.8129 0.03569 1.059

N GW NTNCWS 1001

‐ 4100 152 0.04223 0.8129 0.03569 1.059

N GW CWS ≤ 100 3788 0.04223 0.8129 0.03569 1.059

N GW CWS 101

‐ 1000 3755 0.04223 0.8129 0.03569 1.059

N GW CWS 1001

‐ 4100 644 0.04223 0.8129 0.03569 1.059 Note: Disinfection status (“Disinf?”) is from informat ion downloaded from SDWIS/FED. Systems with no indication of disinfection status in SDWIS/FE D are assumed to not disinfect.



### 5.2.5.2 Derivation of α , β from Maximum Likelihood Estimates

Using the estimates of a and b presented in Exhibits 5.3 and 5.4, EPA derived α
, β estimates of the variation in PWSs within groups of systems, and incorp orated these into the
occurrence model as descri bed in Section 5.2.4.

These parameters are derived from a and b as follows:

α 

### = a / b 2



### β 

### = (1- a) / b 2



### Exhibits 5.5 and 5.6 present the estimates of α
, β corresponding to estimates of a and b in
exhibits 5.3 and 5.4.Economic Analysis for the Proposed RTCR 5-12 June 2010 

### Exhibit 5.5 α and β Parameter Estimates for RTTC and RPTC

Disinf? GW or SW? Sys Type Size No. Systems α RTTC β RTTC α RPTC β RPTC

Y SW TNCWS ≤ 100 838 0.258 4 10.92 0.117 0.6972

Y SW TNCWS 101

‐ 100 0 358 0.258 4 10.92 0.117 0.6972

Y SW TNCWS 1001

‐ 4100 3 0 0.258 4 10.92 0.117 0.6972

Y SW NTNCWS ≤ 100 114 0.1239 7.697 0.092 0.7697

Y SW NTNCWS 101

‐ 100 0 172 0.1866 16.37 0.092 0.7697

Y SW NTNCWS 1001

‐ 4100 33 0.1866 16.37 0.092 0.7697

Y SW CWS ≤ 100 484 0.343 8 22.5 4 0.173 2.508

Y SW CWS 101

‐ 100 0 2034 0.4262 44.63 0.173 2.508

Y SW CWS 1001

‐ 4100 1699 0.360 8 61.17 0.463 13.0 4

Y GW TNCWS ≤ 100 8112 0.258 4 10.92 0.1172 0.6972

Y GW TNCWS 101

‐ 100 0 3007 0.258 4 10.92 0.1172 0.6972

Y GW TNCWS 1001

‐ 4100 119 0.258 4 10.92 0.1172 0.6972

Y GW NTNCWS ≤ 100 1577 0.1239 7.697 0.0916 4 0.7697

Y GW NTNCWS 101

‐ 100 0 1780 0.1866 16.37 0.0916 4 0.7697

Y GW NTNCWS 1001

‐ 4100 252 0.1866 16.37 0.0916 4 0.7697

Y GW CWS ≤ 100 3662 0.3166 19.57 0.1305 1.256

Y GW CWS 101

‐ 100 0 7678 0.2709 21.53 0.1305 1.256

Y GW CWS 1001

‐ 4100 2707 0.2291 29.26 0.216 0 3.922

N GW TNCWS ≤ 100 3202 8 0.2989 5.983 0.244 4 0.6323

N GW TNCWS 101

‐ 100 0 10217 0.2989 5.983 0.2839 0.8577

N GW TNCWS 1001

‐ 4100 217 0.2532 10.01 1.03175 5.059

N GW NTNCWS ≤ 100 4026 0.2236 5.89 0 0.2965 0.8550

N GW NTNCWS 101

‐ 100 0 3264 0.3336 12.07 0.2965 0.8550

N GW NTNCWS 1001

‐ 4100 152 0.3336 12.07 0.2965 0.8550

N GW CWS ≤ 100 3788 0.4381 13.49 0.2685 1.146

N GW CWS 101

‐ 100 0 3755 0.3336 12.07 0.2685 1.146

N GW CWS 1001

‐ 4100 644 0.3336 12.07 0.2726 1.805 Note: Disinfection status (“Disinf?”) is from informat ion downloaded from SDWIS/FED. Systems with no indication of disinfection status in SDWIS/FE D are assumed to not disinfect.Economic Analysis for the Proposed RTCR 5-13 June 2010 

### Exhibit 5.6 α and β Parameter Estimates for RTEC and RPEC

Disinf? GW or SW? Sys Type Size No. Systems α RTEC β RTEC α RPEC β RPEC

Y SW TNCWS ≤ 100 838 0.326 6 2.203 0.03891 0.7129

Y SW TNCWS 101

‐ 1000 358 0.326 6 2.203 0.03891 0.7129

Y SW TNCWS 1001

‐ 4100 30 0.326 6 2.203 0.03891 0.7129

Y SW NTNCWS ≤ 100 114 0.326 6 2.203 0.03891 0.7129

Y SW NTNCWS 101

‐ 1000 172 0.326 6 2.203 0.03891 0.7129

Y SW NTNCWS 1001

‐ 4100 33 0.326 6 2.203 0.03891 0.7129

Y SW CWS ≤ 100 484 0.326 6 2.203 0.03891 0.7129

Y SW CWS 101

‐ 1000 2034 0.326 6 2.203 0.03891 0.7129

Y SW CWS 1001

‐ 4100 1699 0.0978 1.203 0.03891 0.7129

Y GW TNCWS ≤ 100 8112 0.1112 1.181 0.0493 6 0.649 6

Y GW TNCWS 101

‐ 1000 3007 0.1112 1.181 0.0493 6 0.649 6

Y GW TNCWS 1001

‐ 4100 119 0.1112 1.181 0.0493 6 0.649 6

Y GW NTNCWS ≤ 100 1577 0.1112 1.181 0.0493 6 0.649 6

Y GW NTNCWS 101

‐ 1000 1780 0.1112 1.181 0.0493 6 0.649 6

Y GW NTNCWS 1001

‐ 4100 252 0.1112 1.181 0.0493 6 0.649 6

Y GW CWS ≤ 100 3662 0.133 6 2.318 0.0289 6 0.7041

Y GW CWS 101

‐ 1000 7678 0.133 6 2.318 0.0289 6 0.7041

Y GW CWS 1001

‐ 4100 2707 0.133 6 2.318 0.0289 6 0.7041

N GW TNCWS ≤ 100 32028 0.0639 1.449 0.03184 0.8602

N GW TNCWS 101

‐ 1000 10217 0.0639 1.449 0.03184 0.8602

N GW TNCWS 1001

‐ 4100 217 0.0639 1.449 0.03184 0.8602

N GW NTNCWS ≤ 100 402 6 0.0639 1.449 0.03184 0.8602

N GW NTNCWS 101

‐ 1000 3264 0.0639 1.449 0.03184 0.8602

N GW NTNCWS 1001

‐ 4100 152 0.0639 1.449 0.03184 0.8602

N GW CWS ≤ 100 3788 0.0639 1.449 0.03184 0.8602

N GW CWS 101

‐ 1000 3755 0.0639 1.449 0.03184 0.8602

N GW CWS 1001

‐ 4100 644 0.0639 1.449 0.03184 0.8602 Note: Disinfection status (“Disinf?”) is from informat ion downloaded from SDWIS/FED. Systems with no indication of disinfection status in SDWIS/FE D are assumed to not disinfect.



### 5.3 

## Predictive Modeling of Occurrence for Sy stems Serving Up to 4,100 People

For the purpose of understanding both the pot ential to reduce exposure to potential contamination and for estimating incremental co sts that may be incurred under the proposed RTCR, EPA developed a model to predict the changes in TC and EC occurrence over the modeled period with respect to requirements of the proposed RTCR regulatory scenarios. This predictive occurrence model takes into account the requirements of ex isting regulations (TCR and GWR) and develops estimates of changes in occurrence (as well as the frequency of the new
Level 1 and Level 2 assessments and corrective actions) based on requirements of the regulatory alternatives considered under the proposed RTCR . The resulting estimates are used to generate cost estimates that can be compared across the three regulatory scenarios 4 

### – the current TCR

4 The three regulatory scenarios considered in the RTCR EA (current TCR option, AIP option, and Alternative option) are described in detail in Chapter 3 of this EA. Br iefly, the AIP and Alternative options both differ from the current TCR primarily in the requirements for Level 1 and Level 2 assessments and corrective actions and for reduced monitoring eligibility. The AIP allows a continuati on of current monitoring frequency while the AlternativeEconomic Analysis for the Proposed RTCR 5-14 June 2010 

### option, the AIP option, and the Alte rnative option, as described in Chapter 7 of this EA. Potential benefits are compared in terms of changes in the level of occurrence associated with each regulatory scenario, as presented in Chapter 6 of this EA.

The occurrence model focuses on a 30-year pe riod beginning with full implementation of the GWR and covering a 25-year period of anal ysis from the anticipated proposed RTCR effective date of 2015. The predictive model is implemented as a Monte Carlo simulation and currently uses 10,000 iterations (s imulated systems) within each of the 27 type, source and size categories to predict the effect s of changes to the current rule over the modeling period.

The PWSs included in this model are those serving ≤ 4,100 people primarily because these are the systems that will experience the ma jor changes in monitoring frequency and other requirements that will affect their TC and EC occurrence. For systems serving more than 4,100 people, which will not have significant monitoring frequency changes, a separate analysis was performed based on historical violations rates inst ead of occurrence rates, as explained in Section 5.4 of this EA. The characteristics of all system s are described in Section 4.3 of this EA.

5.3.1 Summary of GWR factors and timing a ffecting the TCR and Proposed RTCR

The triggered and compliance monitoring requirements of the GWR must be implemented by December 2009, which will be approxi mately five years prior to the anticipated compliance date of the proposed RTCR. Sanitary survey (SS) requirements must be implemented by states by December 2012 for most CWSs, and not until December 2014 for higher performing CWSs and NCWSs. To account for the impact of the GWR requirements on baseline occurrence for those public water systems us ing a ground water source (and serving ≤ 4,100 people), the model performs a number of adjustments to the ex isting data prior to its application in the model
as a baseline.

Using 2005 SDWIS data (as explained in S ection 4.3.1 of this EA) as a pre-GWR inventory baseline, EPA a pplies probabilities of P sample 

### and P well 5 

### to determine the number of nondisinfecting systems that are expected to move to a disinfecting status in the five years prior to proposed RTCR implementation. EPA derived P sample 

### and P well 6 

### in the GWR EA (November 2006); P well 

### is a fixed value of 21.58 percent, and P sample 

### is drawn from a beta distribution with a range of alpha and beta estimates having a median value for each system of 5.8 percent and an expected value of 12.4 percent. Incorporation of these factors into the model ensures that the corrective actions anticipated to be perfor med under the GWR are reflected in reduced

option requires systems to sample monthly for an initial period. Both allow reduced monitoring for qualified systems, but only the AIP allows annual monitoring. Systems on annual would require an annual site visit or an annual voluntary Level 2 assessment.

5 The term “P well ” refers to the probability that a randomly selected well across the United States will test positive for a virus or fecal indicator species, such as EC, in its source water; “P sample ” is the probability that given a contaminated well, a random sample at the well will eventually test positive for a virus or fecal indicator. The GWR EA (November 2006), and in particular the Baseline Chapter of that document, provide a detailed explanation of the analysis used to generate these P well and P sample estimates.

6 Under the GWR, GWSs with less than 4 log of treatment fo r viruses must sample their source for a fecal indicator (e.g., E. coli ) when they incur a TC+ under the TCR (or AIP option). If sample water is fecal indicator positive, the system may be required to implement remedial actions at the source, one of which achieves disinfection to 4 log for
viruses.Economic Analysis for the Proposed RTCR 5-15 June 2010 

### occurrence for systems implementing them. In th e predictive model, si mulated nondisinfecting ground water systems having a Total Coliform-pos itive (TC+) take one or more source water samples per the GWR triggered monitoring requirement and test the samples for fecal indicator presence (EC is assumed to be the fecal indicator used) 7 

### . The probability of observing an E. coli

positive (EC+) is based on the product of P well 

### and the P sample 

### value drawn for that system. If positive, a second assessment is done to determine if that system implements disinfection or a
nondisinfection corrective action based on the estimated propor tion choosing those options as
defined in the GWR EA for the va rious types and sizes of systems. 8



### The simulation model keeps track of system s that begin as nondi sinfecting ground water systems at the start of the analysis period and el ect disinfection at some point during the 30-year period from the effective date of the GWR (December 2009) through the end of the analysis period for the proposed RTCR. The inventory for disinfecting and nondisinfecting ground water systems are then adjusted accordingly fo r subsequent stages of the analysis.

Exhibit 4.4 in Chapter 4 of this EA presen ts the baseline inventory of ground water systems by disinfection status at the begi nning of proposed RTCR implementation. Those Ground Water Systems (GWSs) achieving < 4 log di sinfection must sample at their source. Sampling costs were accounted for in the GWR EA (USEPA 2006a).

Throughout the modeling period, Ground Water (GW) systems that do not currently disinfect or add disinfection may have EC+ source water samples and implement a
nondisinfection corrective act ion. Modeling in the GWR EA did not incorporate estimates of the effectiveness of implementing GWR requirement s because the GWR was only effective as of December 2009. Absent this data, EPA applied best professional judgment in assuming that
these corrective actions would have approximately the same effec tiveness as a Level 2 corrective action since they are similar in na ture to an acute viol ation under TCR. As shown in Exhibit 5.8, if a nondisinfecting system performs a nondisinfec ting corrective action, the model assumes that occurrence is 0% for the remainder of that year and 2 full years after that. As a result of this assumption, baseline occurrence will be significantly reduced as a function of movement from non-disinfecting to disinfecting status. The m odeling then assumes the P values are only 25 percent of baseline values for an additional five years. The model assumes the system returns to baseline P values after that (app roximately) seven year period.

Additionally, the model incorporates the eff ect of SSs performed under the GWR as of January 2010, which is estimated by EPA to re duce TC and EC occurrence by 10 percent for the remainder of the period of analysis. For tran sient PWSs, which are on a 5 year SS cycle under the GWR, this reduction is initia lly applied to 20 percent of qua lifying systems for each of the 5 years from 2010 to 2015. For CWSs, which are on a 3 year cycle, this reduction is initially applied to 1/3 of systems annually from 2010 to 2012. EPA considers the estimate of 10 percent
in reduction of occurrence to be a conservative estimate of the effectiveness of the sanitary survey provision of the GWR based on best prof essional judgment of the TCRDSAC. However, absent empirical information to assume othe rwise and because the factor is similarly incorporated by the model into the estimates of occurrence for all three regulatory scenarios,
EPA assumes that this conservatism does not si gnificantly affect the net results for the AIP option or Alternative option, which are calculat ed by comparison to the current TCR (baseline).

7 Edberg, R. (2000) discusses the use of E. coli as an indicator of drinking water quality.

8 Costs for compliance with the GWR we re considered in the GWR EA (November 2006) and are not included in the RTCR EA.Economic Analysis for the Proposed RTCR 5-16 June 2010 

### A third GWR requirement that the model incorporates is compliance monitoring by the subset of GWSs that disinfect, for which the model assigns a 10 percent reduction in occurrence in effect throughout the period of analysis. Ag ain, this GWR effectiveness estimate may be conservative, but EPA assumes that because it is incorporated by the model into occurrence estimates for all three regulatory scenarios, th e net effect on results of the AIP option and Alternative options (in comparison to the current TCR) is unlikely to be significant. Taking into account the effect of both SS and compliance reduc tions, the disinfecting GWSs are expected to ultimately have TC and EC occurrence rates that are 81 percent of the values derived from the occurrence distributions (from 90 percent for sanitary surveys x 90 percent for compliance monitoring).

A fourth and last GWR requirement that th e model incorporates concerns the repeat number of samples following a TC positive. The GWR allows PWSs to use of one of the required four repeat samples for sour ce water testing (for GWSs serving ≤ 1,000 people for EC following a case of a TC+ assay) under the current TCR. By co mparison, under the AIP option, Alternative option, and the current TCR scenar ios for systems serving >1,000 people, only 3 repeat samples are required and in these cases an additional, separate sample is used for the GWR source water EC assay.

As mentioned above with regard to SS a nd disinfecting system GWR compliance, the actual reductions in occurrence that will result from implementation of GWR requirements may differ from those predicted based on assumptions used in this model. EPA believes this would affect neither the net analysis nor how the AIP or Alternative options compare to each other, since both would be affected similarly. Sec tion 5.3.3.1 describes the various sources of uncertainty and variability considered in this EA and presents analys is of key variables.

5.3.2 Summary of Predictive Model

As the following Sections 5.3.2.1 – 5.3.2.2 de scribe, EPA modeled th e expected trend in occurrence of TC and EC positive assays over a pre-RTCR monitoring period of 5 years (to capture applicable GWR effects), and a subseque nt 25-year period of analysis for the three regulatory scenarios: continua tion of the current TCR, AIP option, and Alternative option 9 

### . EPA sought to capture the changes in occurrence from the implementation of the GWR requirements, and in turn, the implementation of requirements of the AIP option and th e Alternative option. Along with changes in TC and EC occurrence, the model predicts behavioral changes: the number of Level 1 and Level 2 assessments (a nd associated number of Level 1 or Level 2 corrective actions) to be performed and further resulting adju stments to occurrence, and changes in sampling regimens as systems qualify for reduced monitoring requirements.

5.3.2.1 Approach to Estimating Parameters

As described in Section 5.2 of this chapter, EPA derived Beta dist ributions, characterized by their α
, β parameters, based on analyses of the variation in TC and EC positive assays that occurred both between and within 27 groupings of systems (as defined in Section 5.2.); the

9 Footnote 4 briefly describes the three regulatory scenarios.Economic Analysis for the Proposed RTCR 5-17 June 2010 

### resulting α
, β parameter estimates are presented in Exhi bits 5.5 and 5.6. Based on an initial analysis, the 27 groups were condensed into the groups presented in Appendix F of this EA. The
final Beta distributions were base d on these groupings to make the best use of the available data, combining groups of systems when their occurren ce levels were similar to avoid having small sample size in any of the final groups.

5.3.2.2 Description of Predictive Model

Model output in this chapter (E xhibits 5.10 – 5.21) was generated for a 30-year period to encompass 5 years of the effects of GWR implem entation and 25 years of the effects of RTCR implementation. For the purpose of the benefit-co st analysis, years 3 through 27 of this period are included in the calculations and presented in the results shown in Chapter 6 (Benefits Analysis), Chapter 7 (Cost Analysis), and Ch apter 9 (Comparison of Benefits and Costs). Initially in the modeled period, all systems unde r the current TCR option and the AIP option are assumed to sample based on the sampling regimen a pplicable to their system type, size, type of water source, and whether or not the system disinfects. 10 

### Under the Alternative option, all systems are assumed to sample monthly for the first five years after the RTCR effective date.

For the AIP option, the model adjusts these monitoring frequencies for ground water systems serving fewer than 1,000 people in years 9 and 11 of the 30-year period, or 3 and 5 years after the RTCR effective date, respectively, fo r CWSs and NCWSs. The adjustments are made
based on the acute and non-acute violations incurred during these 3 and 5 year periods, 11 

### and the period of assessment coincides with the sanitary survey for CWSs and NCWSs. The adjusted monitoring frequencies then apply from years 9 – 30 and years 11 – 30 of the analysis for CWSs and NCWSs, respectively.

For the Alternative option, the model adjust s the monitoring frequencies from the allmonthly regimen based on the acute and non-acute violations 12 

### predicted during the assessment period, which is the first five years after th e RTCR effective date, during which all systems sample monthly. The model applies the schedule thus adjusted in years 11 -30 of the analysis.

The timing for the adjustments made to the m onitoring frequency schedules – effective in years 9 and 11 for CWSs and NCWSs, respectiv ely, following GWR implementation under the AIP and Alternative options – are consistent with the length of time of the respective sanitary survey cycles. Although EPA uses the sanitary cycle to define the period of assessment for updating the schedule, the results of the surveys are not predicted in this model and are not directly incorporated into the calculations in a ny way. Assumptions for th e percentage of systems

10 Based on EPA and TWG analysis of Six-Year data and individual state statutes duri ng the TCRDSAC and review by ASDWA.

11 Systems incurring 1 or more acute or non-acute violations in this period are assumed to be on monthly monitoring. For the AIP option, the remaining systems (incurring no acute or non-acute violations) are distributed between quarterly and annual monitoring according to th e percentage distribution from the initial M/Q/A estimates prior to GWR implementation (Exhibit 4.4). Constraints to these adjustments include: 1) The final estimates of the proportion of community disinfecting systems on monthly monitoring should not decrease from the current baseline estimate. 2) For the noncommunity systems, there are caps on the % that move to annual monitoring under the AIP: TNCWS <500: 13.8%; TNCWS >500: 8.6%; NTNCWS < 500: 7.3%; NTNCWS>500: 3.0%.

12 Systems incurring 1 or more acute or non-acute violations in this period are assumed to be on monthly monitoring. For the Alternative option, all of the remaining systems (incurring no acute or non-acute violations) move to quarterly monitoring.Economic Analysis for the Proposed RTCR 5-18 June 2010 

### on monthly, quarterly, or annual monitoring upon proposed RTCR implementation are shown in
Exhibit 5.9a – 5.9c.

Using the monitoring frequencies described above, the model applies the baseline
occurrence associated with each ca tegory of PWS at the start of each modeled year (i.e., the level
of occurrence in 2005 under th e current TCR updated to reflect GWR implementation, as described in Section 5.3.1), as described in E xhibits 5.7 and 5.8 for surface and ground water systems, respectively. The TC and EC occurrenc e (both from routine and repeat samples) are modeled by combining the Beta distributions desc ribed previously with the binomial distribution to simulate TC and EC positives (i.e., successes) given the number of samples (i.e., trials) each
month.

For each simulated system in the model, a pr obability (P) is drawn randomly for each of the RTTC, RPTC, RTEC, and RPEC types of samples from their corresponding Beta
distributions. These P values are used in the bino mial distribution, together with the number of samples taken each month, to predict the number of TC and EC positives. In the absence of any corrective actions being performed under the pro posed RTCR, those P values remain the same for that system for the entire modeling period. If TC or EC occurrence is found that results in a specific corrective action under th e proposed RTCR, temporary reductions in these P values are made as described further below. In addition, when a system has a TC+ in a particular month that does not result in a specific co rrective action, it is assumed, (for both the current TCR and the proposed RTCR), that the RTTC rate in the follow ing month will change to reflect either some worsening of the problem or an improvement base d on some other actions taken that are not part of the specific corrective actions being considered . This was carried out by selecting at random a
different RTTC P value in those months followi ng a TC+ for which explicit corrective actions
were not initiated. In the second month followi ng a TC+ that does not result in a corrective action, the RTTC rate reverts to the rate app licable in the month in which the TC+ occurred. EPA determined that this approach provide d overall results for the current TCR that approximated what was observed in the 6-Year Revi ew data and SDWIS data as discussed in the Section 5.3.3.2 (model validation) below.

Based on the frequency of sampling and the o ccurrence probabilities fo r each system, the model determines what percentage of these sy stems will be required to take an action (i.e., perform a Level 1 or Level 2 assessment in re sponse to exceeding the threshold of multiple TC positive assays or one EC positive assay, and, in some cases, implement a corrective action).

For the percentage of systems predicted to require a Level 1 assessment following the requisite number of TC positives, the model assumes that 10 percent will find and address the exact source of the problem under the AIP option and Alternative option. This represents an incremental increase over the number expected to implement such a corrective action under the current TCR. The model assumes that systems that successfully identify and correct the problem will not have a positive assay for the remainder of that year nor 1 additional full year after the assessment, after which the probability of a TC or EC positive will be 50 percent that of the baseline P value for 3 additional years. 13 

### After this period of re duced occurrence, the model

13 Using best professional judgment informed by deliberations within the TCRDSAC, EPA assumes that some systems will have 0% occurrence for some number of years longer than one year, and some will have occurrence levels that are >0% within the first year. The assumption used in the analysis (systems will have 1 year with 0% occurrence, plus 2 to 3 years of reduced occurrence from their baseline occurrence) is m eant to represent an average system that experiences occurrence th at is between these two scenarios.Economic Analysis for the Proposed RTCR 5-19 June 2010 

### assumes that occurrence probabilities for this subset of systems return to those that were initially assigned. Because the Level 1 a nd Level 2 assessments are a new requirement, empirical data on their effectiveness in determining an appropriate corrective action is not available. Absent this evidence, EPA has applied best professional ju dgment in choosing what it believes to be a significant but conservative success rate – 10% of assessments will result in determining the root of the problem and effectively implemen ting an appropriate corrective action.

Similarly, for the systems predicted to re quire a Level 2 assessment based on observing the requisite number of TC and/or EC positives , under the AIP option and Alternative options an incremental 10 percent more of those systems th an under the current TCR are assumed to then implement a corrective action that addresses the cause of the problem. For those systems, the model assumes that occurrence is 0% for the remai nder of that year and then for 2 full years after that. The modeling then assumes the P values are only 25 percent of baseline values for an additional five years. The model assumes the syst em returns to baseline P values after that (approximately) seven year period.

For nondisinfecting GWSs, a percentage of positive samples is estimated (from the P well 

### and P sample 

### parameters) to be related to a source water problem. All nondisinfecting GWSs having sourcewater EC positives 14 

### will implement disinfection or nondisinfecting corrective action. Those adding disinfection essentially ge t removed from the nondisinfecting category and are reassigned to the disinfecting category for the remainder of the modeling period. For the portion of this subset that are assumed to implement a nondisinfec ting corrective action 15 

### , the systems are assumed to experience the same reduced occurrence levels as those addressing Level 2 Assessments (i.e., 0% occurrence for 2 years, th en occurrence at 25 percent of baseline for an additional 5 years). As Chapter 7 of this EA e xplains, no costs are attributed to the proposed RTCR for any corrective action rela ted to source water EC occurrence since such costs have already been considered in the GWR EA (November 2006).

Outputs generated from this predictive si mulation model (for PWSs serving 4,100 or fewer people) include the following for each mo deled year: occurrence of TC and EC positive assays, the number of Level 1 and Level 2 asse ssments conducted, and the number of Level 1 and Level 2 corrective actions implemented. Ba sed on these model outputs and the criteria for reduced monitoring, the model also provides estim ates of the number of systems on monthly, quarterly, and annual sampling regimes (and by im plication the number of routine, repeat, and additional routine samples take n annually) under the AIP option and Alternative option. These requirements are detailed in Chapter 3 of this EA.

The results of the proposed RTCR predictiv e occurrence model ar e presented in the following Section, 5.3.3.

14 The model determines source water occurrence separately based on the subset of nondisinfecting GW systems, as described in Section 5.3.1 (2 nd paragraph) of this chapter.

15 Estimates of the number of systems implementing a n ondisinfection corrective actio n are taken from Exhibit 6.21b ("Estimated Distribution of Source Water Contamination Corrective Actions") of the GWR EA (USEPA 2006x). The GWR EA estimated the number of systems choosing a nondisinfection corrective action based on a range; the high end was the percentage of CWS entry points employing disinfection at that time by system size , and the low end was assumed to be 10% based on discussions with st ate representatives.Economic Analysis for the Proposed RTCR 5-20 June 2010 

### Exhibit 5.7 Simulated Imp act of the AIP and Altern ative Options on Systems Serving ≤ 4,100 People – Surface Water SystemsEconomic Analysis for the Proposed RTCR 5-21 June 2010 

### Exhibit 5.8 Simulated Impact of the AIP and Alternative Options on Systems Serving ≤ 4,100 People – Ground Water SystemsEconomic Analysis for the Proposed RTCR 5-22 June 2010 

### Exhibit 5.9a Percent of GW Systems A ssumed to be on Monthly, Quarterly, and Annual (M/Q/A) Monitoring by System Ca tegory under Current TCR (Baseline) – Initial Estimates (Pos t GWR Implementation)

Disinf? GW or SW? Sys Type Size No. Systems Monthly Quarterly Annual

Y GW TNCWS ≤ 100 13,558 4.8% 62.9% 32.3%

Y GW TNCWS 101-1000 6,014 7.9% 66.9% 25.2%

Y GW TNCWS 1001-4100 269 100.0% 0.0% 0.0%

Y GW NTNCWS ≤ 100 2,904 19.3% 64.6% 16.0%

Y GW NTNCWS 101-1000 3,621 18.5% 66.7% 14.7%

Y GW NTNCWS 1001-4100 542 100.0% 0.0% 0.0%

Y GW CWS ≤ 100 6,132 86.6% 13.4% 0.0%

Y GW CWS 101-1000 12,762 88.5% 11.5% 0.0%

Y GW CWS 1001-4100 5,405 100.0% 0.0% 0.0%

N GW TNCWS ≤ 100 46,642 4.8% 62.9% 32.3%

N GW TNCWS 101-1000 15,224 7.8% 66.8% 25.3%

N GW TNCWS 1001-4100 348 100.0% 0.0% 0.0%

N GW NTNCWS ≤ 100 5,913 19.3% 64.6% 16.0%

N GW NTNCWS 101-1000 4,710 18.5% 66.7% 14.8%

N GW NTNCWS 1001-4100 270 100.0% 0.0% 0.0%

N GW CWS ≤ 100 5,806 86.6% 13.4% 0.0%

N GW CWS 101-1000 5,597 88.6% 11.4% 0.0%

N GW CWS 1001-4100 1,038 100.0% 0.0% 0.0%

Notes: 1) EPA assumes that the frequencies noted in this exhi bit for the current TCR would also apply under the AIP option in the first 10 years of the anal ysis period. Under the Alternative opti on, all systems would monitor monthly for the first 5 years after the RTCR effective date.

2) Estimates for the size categories presented in this exhibit are produced from weighted averages from the following size categories (and corresponding estimates of proportion sampling monthly, quarterly, or annually):

≤ 100, 101-500, 501-1000, 1001-2500, 2501-3300, and 3301-4100. Water Type includes disinfection status, as informed by information from SDWIS-FED.

3) Systems with no indication of disi nfection (“Disinf?”) status in SDWIS-FED were assumed to not disinfect.

4) Some figures may not add due to rounding in the model.Economic Analysis for the Proposed RTCR 5-23 June 2010 

### Exhibit 5.9b Percent of GW Systems Pr edicted to be on M/Q/A Monitoring by System Category under AIP Option – Adjusted Estimates (Post RTCR Implementation)

Disinf? GW or SW? Sys Type Size No. Systems Monthly Quarterly Annual

Y GW TNCWS ≤ 100 13,558 6.4% 79.8% 13.8%

Y GW TNCWS 101-1000 6,014 6.5% 80.2% 13.2%

Y GW TNCWS 1001-4100 269 100.0% 0.0% 0.0%

Y GW NTNCWS ≤ 100 2,907 3.0% 89.7% 7.3%

Y GW NTNCWS 101-1000 3,621 2.5% 91.2% 6.3%

Y GW NTNCWS 1001-4100 542 100.0% 0.0% 0.0%

Y GW CWS ≤ 100 6,132 86.6% 13.4% 0.0%

Y GW CWS 101-1000 12,762 88.5% 11.5% 0.0%

Y GW CWS 1001-4100 5,405 100.0% 0.0% 0.0%

N GW TNCWS ≤ 100 46,643 14.4% 71.8% 13.8%

N GW TNCWS 101-1000 15,225 16.1% 70.5% 13.4%

N GW TNCWS 1001-4100 348 100.0% 0.0% 0.0%

N GW NTNCWS ≤ 100 5,919 15.1% 77.6% 7.3%

N GW NTNCWS 101-1000 4,711 11.4% 82.0% 6.5%

N GW NTNCWS 1001-4100 270 100.0% 0.0% 0.0%

N GW CWS ≤ 100 5,806 86.6% 13.4% 0.0%

N GW CWS 101-1000 5,597 88.6% 11.4% 0.0%

N GW CWS 1001-4100 1,038 100.0% 0.0% 0.0%

Notes: 1) M/Q/A percentage estimates are based on model predictions of acute and non-acute viol ations from years 6 – 10 (NCWSs) and 6 – 8 (CWSs) of the 30-year modeled period. Systems incurring 1 or more acutes or non-acutes in this period are assumed to be on monthly monitoring for years 11 – 25 of the analysis; the remaining systems are distributed between quarterly and annual monitoring accord ing to the percentage distribu tion from the initial M/Q/A estimates (Exhibit 5.9a). Other constraints apply to t he determination of the M/Q/ A distribution of systems as described in Section 5.3.2 above.

2) Estimates for the size ca tegories presented in this exhibit are pr oduced from weighted averages from the following size categories (and corresponding estimates of proportion sampling monthly, quarterly, or annually):

≤ 100, 101-500, 501-1000, 1001-2500, 2501-3300, and 3301-4100.

3) Systems with no indication of disi nfection (“Disinf?”) status in SDWIS-FED were assumed to not disinfect.

4) Some figures may not add due to rounding in the model.Economic Analysis for the Proposed RTCR 5-24 June 2010 

### Exhibit 5.9c Percent of GW Systems on M/Q/A Monitoring by System Category

under Alternative option – Adjusted Es timates (Post RTCR Implementation)

Disinf? GW or SW? Sys Type Size No. Systems Monthly Quarterly Annual

Y GW TNCWS ≤ 100 13,558 13.0% 87.0% 0.0%

Y GW TNCWS 101-1000 6,014 12.4% 85.7% 0.0%

Y GW TNCWS 1001-4100 269 100.0% 0.0% 0.0%

Y GW NTNCWS ≤ 100 2,907 4.9% 95.1% 0.0%

Y GW NTNCWS 101-1000 3,621 4.5% 95.5% 0.0%

Y GW NTNCWS 1001-4100 542 100.0% 0.0% 0.0%

Y GW CWS ≤ 100 6,132 86.6% 13.4% 0.0%

Y GW CWS 101-1000 12,762 88.5% 11.5% 0.0%

Y GW CWS 1001-4100 5,405 100.0% 0.0% 0.0%

N GW TNCWS ≤ 100 46,642 25.6% 74.4% 0.0%

N GW TNCWS 101-1000 15,224 25.9% 74.1% 0.0%

N GW TNCWS 1001-4100 348 100.0% 0.0% 0.0%

N GW NTNCWS ≤ 100 5,919 22.9% 77.1% 0.0%

N GW NTNCWS 101-1000 4,710 17.2% 82.8% 0.0%

N GW NTNCWS 1001-4100 270 100.0% 0.0% 0.0%

N GW CWS ≤ 100 5,806 86.6% 13.4% 0.0%

N GW CWS 101-1000 5,597 88.6% 11.4% 0.0%

N GW CWS 1001-4100 1,038 100.0% 0.0% 0.0%

Notes:
1) M/Q/A percentage estimates are based on model predicti ons from years 6 – 10 (NCWSs) and 6 – 8 (CWSs) of the period of analysis. Systems incurring 1 or more ac utes or non-acutes in this period are assumed to be on monthly monitoring for years 11 – 25 of the analysis; the remaining systems are assumed to be on quarterly monitoring. Other constraints apply to t he determination of the M/Q/A distributi on of systems as described in Section 5.3.2 above.
2) Estimates for the size ca tegories presented in this exhibit are pr oduced from weighted averages from the following size categories (and corresponding estimates of proportion sampling monthly, quarterly, or annually):

≤ 100, 101-500, 501-1000, 1001-2500, 2501-3300, and 3301-4100.
3) Systems with no indication of disi nfection (“Disinf?”) status in SDWIS-FED were assumed to not disinfect.
4) Some figures may not add due to rounding in the model.



### 5.3.3 Predictive Model Results

As noted above, the predictive model produces output that includes national estimates of sampling and occurrence in PWSs across the Un ited States, the resulting Level 1 and Level 2 assessments, corrective actions resulting from Le vel 1 and Level 2 assessments, and reductions in sampling and occurrence for these systems in accordance with requirements under the current TCR option, the AIP option, and the Alternativ e option. In Exhibits 5.10 through 5.15, output includes the model years 1 – 30 described in Sect ion 5.3.2.2. Years 1 - 5 are summed for the current TCR only and represent the period prior to the start of monitoring under the proposed RTCR, including 5 years after the GWR effec tive date and 3 overlapping years of RTCR implementation prior to the RTCR effective date. Year 5 in the analysis (also for just the currentEconomic Analysis for the Proposed RTCR 5-25 June 2010 

### TCR) is also shown separately because it represen ts the baseline year, reflecting conditions just prior to the start of monito ring under the proposed RTCR. Model years 6 through 30 are summed for the current TCR, the AIP option, and the Al ternative option because they represent the 25- year period of analysis following promulgation of the proposed RTCR.

For all types of PWSs, the model output is pr esented for the current TCR option (i.e., the baseline regulatory scenario for this EA), the AIP option, and the Alternative option. The TCR with the GWR effects incorporated serves as th e appropriate baseline for comparisons with the AIP option.

EPA’s general expectations for TC occurren ce for GW systems shown in Exhibits 5.16 –
5.18 are as follows:

1. Years 1-5 show a decline in the TC+ rates due to GWR implementation effects. These include expected reductions in RTTC rates for all GW systems related to sanitary surveys, for disinfecting GW systems related to the compliance monitoring, and for nondisinfecting GW systems due to corrective actions taken following a source water EC+ sample.

2. Years 6-30 reflect additional reductions (be yond GWR effects) in TC+ rates due to the AIP option or Alternative option. The AIP op tion and Alternative option occurrence rates are generally lower than those for TCR with the GWR primarily because of the additional corrective actions (Level 1 and Level 2). In some subgroups, some counts are higher under the Alternative option than under the current TCR due to the increased sampling e.g., routine TC and routine EC positives fo r GW NTNCWSs (Ex. 5. 11). The balance of the two effects of reduced sampling (reduced additional and repeat samples) and the additional assessments and corrective act ions, which move the counts in opposite directions, is explored in the sensitivity an alysis in Section 5.3.3.1 of this chapter.

3. In Years 6 through 10 and years 11 – 30 differe nces in TC+ rates between the AIP option and Alternative option are due to different proportions of systems that are performing monthly, quarterly, or annual monitoring. In general, more monitoring (e.g., more doing monthly than quarterly, or more doing quarterly than annual) – in conjunction with the

corrective actions – will push the TC occurrence leve ls down (more samples are expected to be taken and fewer are likely to be positive).

a. In years 6 – 10, the Altern ative option has a lower TC+ rate than the AIP option because all systems under the Alternativ e option begin the five year period on monthly sampling.

b. By year 11, the systems are sampling according to their “steady state” regimens, when all of the systems that qualifi ed for reduced mon itoring during their respective periods of assessment (as descri bed in Section 5.3.2.2) are assigned to their reduced regimens in the model. For the AIP option, the proportions of systems on M/Q/A sampling is identical to those under the current TCR; under the Alternative option, however, system s that would qualify under the current TCR for annual monitoring can only reduce to quarterly monitoring.Economic Analysis for the Proposed RTCR 5-26 June 2010 

### In Exhibit 5.16 (Community GW systems), the graph shows the expected drop in TC rates for years 1-5 as the GWR is implemented prior to AIP option. There are only very small differences between AIP option and Alternative options, and these are not observable on this graph. A comparison of the estimates in Exhibit 5.10 clarifies these small differences. Most of these systems are already on monthly sampling, so there is no significant difference seen between the AIP and Alternative options in y ears 6-8 for those few not on monthly and it is assumed that the monthly/quarterly distribution af ter this period returns to that under the current TCR. Therefore, the TC+ rates over the 25 y ear period for these systems show no difference between the AIP and Alternative options.

In Exhibit 5.17 (Non-transient Noncommunity (NTNC) GW systems), the graph also shows the expected drop in TC+ rates for years 1-5 as the GWR is implemented prior to the proposed RTCR. For the years 6-10 the occurren ce rates decrease due to the implementation of corrective actions, and the rates for the Alternative option are lower than for the AIP option since all systems are on monthly sampling under the Al ternative option for th is period (having the effect of reducing the occurrence level as noted above). However, from year 11 to 30, the M/Q/A distributions for these two are essentially the same and therefore the TC occurrence levels are the same over this period.

In Exhibit 5.18 (TNCWS GW), the graph also shows the expected drop in TC+ rates for years 1-5 as the GWR is implemented prior to the proposed RTCR. For the years 6-10, the TC rates drop further as the correc tive actions implemented in response to Level 1 and Level 2 assessments are begun for both the AIP and Alte rnative options. TC occurrence is markedly lower during this period for the Alternative option where all are on monthly, whereas the majority of systems under the AIP option are on quar terly. Beginning in Year 11, there is a shift under the AIP option toward more systems on mont hly than under the TCR, and more systems on quarterly than under the TCR, and hence the overall TC+ rate drops. For the AIP option, beginning in Year 11, a substant ial portion move from the all monthly sampling during years 6- 10 to quarterly sampling (but none on annual). Because there are slight ly more systems under Alternative option that end up on monthly and quarterly than un der the AIP option for years 11- 30, the TC+ rate for the AIP option is sligh tly higher than for the Alternative option.

EPA’s general expectations for TC+ rates for SW systems shown in Exhibits 5.19 – 5.21
are as follows:

1. The current TCR is provided as the baseline for comparison with the proposed RTCR (the GWR does not apply to surface water system s and therefore its effect is not included in these graphs).

2. Because all surface water syst ems of all sizes do monthly monitoring (no systems are on quarterly or annual monitoring), the app licable provisions of the proposed RTCR are identical for the AIP and Alternative options.

3. The reductions in TC+ rates shown by the proposed RTCR relative to the current TCR therefore reflect solely the e ffects of the correct ive actions implemented in response to

Level 1 and Level 2 assessments.Economic Analysis for the Proposed RTCR 5-27 June 2010 

### In Exhibit 5.19 (Community SW systems), th e graph shows little difference in TC+ rates between the current TCR and proposed RTCR. This is primarily because the current TC+ rate is very low for these systems, and therefore ther e are few corrective actions implemented over the 25 year period.

In Exhibit 5.20 (NTNC SW), the graph shows that there is a slightly greater difference between the current TCR and the proposed RT CR for the NTNC SW systems than for the community systems shown in Exhibit 5.19. This is because the baseline TC+ rate is slightly higher and, therefore, more co rrective actions are performed.

In Exhibit 5.21 (TNCWS SW), the graph i ndicates that this group exhibits the most significant change between the current TCR and proposed RTCR since the baseline TC+ rate for these systems is approximately twice that of the NTNC and community systems.

A comparison of results for SW versus GW sy stems reveals a pattern of lower occurrence for SW systems; this is explained by the unifo rm requirement that SW systems disinfect. Many GW systems are not required to disinfect, and the result is a level of occurrence that is periodically elevated in some systems, raising th e overall average in GW system categories. This difference is larger in the noncommunity GW systems than for the community water systems based on the relatively large proportion of nonco mmunity water systems that do not disinfect. The difference is largest among the transient nonc ommunity water systems, a category in which the largest proportion of GW systems do not disinfect.

Complete results from the model (by year and system size) and additional graphs are shown in Appendices A and B, respectively. The implications of these results in terms of changes in the level of risk a ssociated with contamination of PWS water supplies are discussed in Chapter 6 of this EA. Model results are used to calculate national estimates of incremental costs for PWSs in Chapter 7 of this EA.Economic Analysis for the Proposed RTCR 5-28 June 2010Exhibit 5.10 Ground Water Community WaterSystem Model Output Cumulative EndpointsPeriodRegulatoryScenarioReg RoutSamplesReg RoutSamplesif AddlsTakenRepeatSamplesGWRSamplesRTTC+ RPTC+ RTEC+ RPEC+GWREC +Nonacutes AcutesL1AssmtL2Assmt L1 CA L2 CAGWRNDGWRD12,712,859 1,052,957 816,079 0 215,787 111,640 10,267 4,344 0 55,639 5,773 34,556 30,657 0 0 0 0TCR 12,761,616 864,605 588,252 93,331 176,379 66,797 7,236 2,106 872 39,769 3,335 26,947 18,545 0 0 714 158AIP 12,984,469 19,027 488,523 83,140 162,841 48,053 6,438 1,347 816 30,271 2,362 22,112 11,667 2,220 1,155 665 151Alt 13,073,297 16,686 490,683 83,299 163,561 47,829 6,562 1,595 781 29,955 2,511 21,917 11,660 2,242 1,175 622 1602,542,182 254,662 197,228 0 52,150 27,053 2,471 1,033 0 13,486 1,391 8,410 7,393 0 0 0 0TCR 2,550,295 180,676 122,391 19,799 36,791 14,208 1,532 460 312 8,358 711 5,542 4,103 0 0 203 109508,401 42,520 32,969 0 8,719 4,613 402 176 0 2,259 240 1,415 1,241 0 0 0 0TCR 510,266 35,345 24,060 3,864 7,231 2,655 297 70 48 1,605 130 1,107 731 0 0 31 17sum years6-30TCR No GWRTCR No GWRsum years1-5TCR No GWRYear 5Source: RTCR predictive model.Note: Years 1 – 5 in the model reflect incorporation of GWR effects (explained in Section 5.3.3) into pre-GWR baseline data; Year 5 in the model reflects baselineconditions immediately prior to the effective date of the RTCR;and Years 6 – 30 represent a period of 25 years after monitoring begins under the RTCR.Exhibit 5.11 Ground Water Nontransient Noncommunity Water SystemModel Output Cumulative EndpointsPeriodRegulatoryScenarioReg RoutSamplesReg RoutSamplesif AddlsTakenRepeatSamplesGWRSamplesRTTC+ RPTC+ RTEC+ RPEC+GWREC +Nonacutes AcutesL1AssmtL2Assmt L1 CA L2 CAGWRNDGWRD2,661,114 328,889 264,574 0 68,232 59,455 3,484 2,338 0 24,614 2,723 14,759 14,021 0 0 0 0TCR 2,668,723 271,756 178,204 42,339 55,965 34,716 2,534 1,269 446 17,922 1,778 11,658 8,991 0 0 351 95AIP 2,564,440 90,884 145,401 37,384 48,467 25,164 2,115 841 435 13,642 1,213 10,157 5,088 1,015 499 350 85Alt 3,274,430 67,297 181,342 47,000 60,447 30,963 2,566 1,058 484 16,967 1,506 11,673 7,422 1,161 745 378 105532,239 66,134 53,191 0 13,714 11,904 693 446 0 4,925 531 2,956 2,794 0 0 0 0TCR 533,205 58,599 38,489 9,192 12,094 7,867 574 288 150 3,924 403 2,477 2,084 0 0 99 52106,453 13,330 10,711 0 2,760 2,425 137 89 0 1,001 102 603 555 0 0 0 0TCR 106,725 10,980 7,219 1,717 2,267 1,416 95 48 23 729 68 473 362 0 0 16 6TCR No GWRYear 5sum years1-5TCR No GWRsum years6-30TCR No GWRSource: RTCR predictive model.Note: Years 1 – 5 in the model reflect incorporation of GWR effects (explained in Section 5.3.3) into pre-GWR baseline data; Year 5 in the model reflects baselineconditions immediately prior to the effective date of the RTCR;and Years 6 – 30 represent a period of 25 years after monitoring begins under the RTCR.Economic Analysis for the Proposed RTCR 5-29 June 2010Exhibit 5.12 Ground Water Transient NoncommunityWater System Model Output Cumulative EndpointsPeriodRegulatoryScenarioReg RoutSamplesReg RoutSamplesif AddlsTakenRepeatSamplesGWRSamplesRTTC+ RPTC+ RTEC+ RPEC+GWREC +Nonacutes AcutesL1AssmtL2Assmt L1 CA L2 CAGWRNDGWRD7,508,835 1,766,220 1,489,330 0 374,523 373,849 17,881 14,195 0 143,238 15,757 87,899 79,745 0 0 0 0TCR 7,524,239 1,458,180 966,919 253,032 305,814 213,958 12,859 7,416 2,651 105,646 10,326 70,031 51,552 0 0 2,134 517AIP 9,780,374 674,328 981,521 283,807 327,174 191,401 13,121 5,792 2,993 99,961 8,421 71,817 39,668 7,188 4,039 2,455 538Alt 13,983,988 459,373 1,309,762 378,723 436,587 245,373 17,405 7,559 3,417 128,639 11,120 82,133 63,375 8,039 6,253 2,837 5801,501,831 350,417 295,149 0 74,227 73,576 3,577 2,709 0 28,251 3,150 17,357 15,692 0 0 0 0TCR 1,503,848 311,414 206,844 54,227 65,441 47,969 2,873 1,791 942 22,651 2,360 14,769 11,528 0 0 610 332300,376 70,103 59,023 0 14,844 14,766 686 612 0 5,627 610 3,545 3,008 0 0 0 0TCR 300,923 59,747 39,565 10,447 12,536 8,813 506 331 129 4,269 429 2,821 2,101 0 0 87 42TCR No GWRYear 5sum years6-30TCR No GWRTCR No GWRsum years1-5Source: RTCR predictive model.Note: Years 1 – 5 in the model reflect incorporation of GWR effects (explained in Section 5.3.3) into pre-GWR baseline data; Year 5 in the model reflects baselineconditions immediately prior to the effective date of the RTCR;and Years 6 – 30 represent a period of 25 years after monitoring begins under the RTCR.Exhibit 5.13 Surface Water Community Water System Model Output Cumulative EndpointsPeriodRegulatoryScenarioReg RoutSamplesReg RoutSamplesif AddlsTakenRepeatSamplesGWRSamplesRTTC+ RPTC+ RTEC+ RPEC+GWREC +Nonacutes AcutesL1AssmtL2AssmtL1CAL2CAGWRNDGWRDTCR3,516,224 137,063 98,139 0 27,729 5,244 2,909 293 0 3,322 666 2,829 1,237 0 0 0 0AIP 3,565,200 0 81,187 0 27,062 3,860 2,866 180 0 2,755 502 2,415 901 243 93 0 0Alt 3,565,200 0 81,187 0 27,062 3,860 2,866 180 0 2,755 502 2,415 901 243 93 0 0sum years1-5TCR703,236 27,458 19,651 0 5,550 1,066 584 57 0 675 137 573 255 0 0 0 0Year 5 TCR 140,622 5,559 3,956 0 1,117 224 119 13 0 138 29 115 55 0 0 0 0sum years6-30Source: RTCR predictive model.Note: Years 1 – 5 in the model reflect incorporation of GWR effects (explained in Section 5.3.3) into pre-GWR baseline data; Year 5 in the model reflects baselineconditions immediately prior to the effective date of the RTCR;and Years 6 – 30 represent a period of 25 years after monitoring begins under the RTCR.Economic Analysis for the Proposed RTCR 5-30 June 2010Exhibit 5.14 Surface Water Nontransient Noncommunity Water SystemModel Output Cumulative EndpointsPeriodRegulatoryScenarioReg RoutSamplesReg RoutSamplesif AddlsTakenRepeatSamplesGWRSamplesRTTC+ RPTC+ RTEC+ RPEC+GWREC +Nonacutes AcutesL1AssmtL2AssmtL1CAL2CAGWRNDGWRDTCR222,494 13,728 10,670 0 2,796 1,127 360 51 0 458 105 292 294 0 0 0 0AIP 225,900 0 8,183 0 2,728 675 350 37 0 330 76 232 187 24 19 0 0Alt 225,900 0 8,183 0 2,728 675 350 37 0 330 76 232 187 24 19 0 0sum years1-5TCR44,500 2,740 2,131 0 558 221 72 10 0 90 21 57 59 0 0 0 0Year 5 TCR 8,898 554 429 0 113 43 15 2 0 17 4 11 12 0 0 0 0sum years6-30Source: RTCR predictive model.Note: Years 1 – 5 in the model reflect incorporation of GWR effects (explained in Section 5.3.3) into pre-GWR baseline data; Year 5 in the model reflects baselineconditions immediately prior to the effective date of the RTCR;and Years 6 – 30 represent a period of 25 years after monitoring begins under the RTCR.Exhibit 5.15 Surface Water Transient NoncommunityWater System Model Output Cumulative EndpointsPeriodRegulatoryScenarioReg RoutSamplesReg RoutSamplesif AddlsTakenRepeatSamplesGWRSamplesRTTC+ RPTC+ RTEC+ RPEC+GWREC +Nonacutes AcutesL1AssmtL2AssmtL1CAL2CAGWRNDGWRDTCR609,514 71,280 57,424 0 14,612 8,365 1,855 398 0 3,148 765 1,893 2,214 0 0 0 0AIP625,200 0 39,905 0 13,302 4,311 1,679 218 0 2,037 437 1,357 1,200 130 118 0 0Alt 625,200 0 39,905 0 13,302 4,311 1,679 218 0 2,037 437 1,357 1,200 130 118 0 0sum years1-5TCR121,900 14,265 11,476 0 2,920 1,671 382 81 0 628 152 370 449 0 0 0 0Year 5 TCR 24,373 2,891 2,314 0 589 331 77 17 0 124 30 74 88 0 0 0 0sum years6-30Source: RTCR predictive model.Note: Years 1 – 5 in the model reflect incorporation of GWR effects (explained in Section 5.3.3) into pre-GWR baseline data; Year 5 in the model reflects baselineconditions immediately prior to the effective date of the RTCR;and Years 6 – 30 represent a period of 25 years after monitoring begins under the RTCR.Economic Analysis for the Proposed RTCR 5-31 June 2010 

### Exhibit 5.16 Ground Water Communi ty Water System TC Occurrence

0 0.002 0.004 0.006 0.008

0.01 0.012 0.014 0.016 0.018

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR No GWR

TCR

AIP

Alt

Source: RTCR Predictive Model

Notes:
TCR No GWR: Represents the predicted TC occurrence, absent the effects of GWR implementation, under the current TCR requirements. The current TCR is the baseline regulatory scenario for the RTCR EA.
TCR: Represents the projected TC occurrence under t he current TCR requirements, including the effect of GWR implementation. The TCR is the base line regulatory scenario for the EA.
AIP: Represents the projected TC occurrence under AIP requirements, including the effects of GWR implementation.
Alt: Represents the projected TC occurrence under the Al ternative option requirements, including the effects of GWR implementation.
Steady state: By Year 11, all system s that qualify for reduced monitoring during their assessm ent period (Section 5.3.2.2) have moved to their reduced sampling schedule under the AIP and Alternative options. This period in the model (from years 11 – 30) reflects a steady state with regard to proportions of systems sampling on monthly, quarterly, or annual regimens.Economic Analysis for the Proposed RTCR 5-32 June 2010 

### Exhibit 5.17 Ground Water Nontransie nt Noncommunity Water System TC Occurrence

0 0.005

0.01 0.015

0.02 0.025

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR No GWR

TCR

AIP

Alt

Source: RTCR Predictive Model

Notes:
TCR No GWR: Represents the predicted TC occurrence, absent the effects of GWR implementation, under the current TCR requirements. The current TCR is the baseline regulatory scenario for the RTCR EA.
TCR: Represents the projected TC occurrence under the current TCR requirements, including the effect of GWR implementation. The TCR is the bas eline regulatory scenario for the EA.
AIP: Represents the projected TC occurrence under AIP requirements, including the effects of GWR implementation.
Alt: Represents the projected TC occurrence under the Al ternative option requirements, including the effects of GWR implementation.
Steady state: By Year 11, all system s that qualify for reduced monitoring during their assessment period (Section 5.3.2.2) have moved to their reduced sampling schedule un der the AIP and Alternative options. This period in the model (from years 11 – 30) reflects a steady state with regard to proportions of systems sampling on monthly, quarterly, or annual regimens.Economic Analysis for the Proposed RTCR 5-33 June 2010 

### Exhibit 5.18 Ground Water Transient Noncommunity Water System TC Occurrence

0 0.005

0.01 0.015

0.02 0.025

0.03 0.035

0.04 0.045

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR No GWR

TCR

AIP

Alt

Source: RTCR Predictive Model

Notes: TCR No GWR: Represents the predicted TC oc currence, absent the effect s of GWR implementation, under the current TCR requirements. The current TCR is the baseline regulatory scenario for the RTCR EA.
TCR: Represents the projected TC occurrence under the current TCR requirements, including the effect of GWR implementation. The TCR is the bas eline regulatory scenario for the EA.
AIP: Represents the projected TC occurrence under AIP requirements, including the effects of GWR implementation.
Alt: Represents the projected TC occurrence under the Al ternative option requirements, including the effects of GWR implementation.
Steady state: By Year 11, all system s that qualify for reduced monitoring during their assessment period (Section 5.3.2.2) have moved to their reduced sampling schedule un der the AIP and Alternative options. This period in the model (from years 11 – 30) reflects a steady state with regard to proportions of systems sampling on monthly, quarterly, or annual regimens.Economic Analysis for the Proposed RTCR 5-34 June 2010 

### Exhibit 5.19 Surface Water Communi ty Water System TC Occurrence

0 0.002 0.004 0.006 0.008

0.01 0.012 0.014

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR

AIP and Alt

Source: RTCR Predictive Model

Notes:
TCR: Represents the projected TC occurrence under the current TCR requirement s. The TCR is the baseline regulatory scenario for the EA.
AIP and Alt: Represents the projected TC occurrence und er the AIP and Alternativ e option, which have the same requirements for SW systems, resulting in the same TC occurrence under the two options.Economic Analysis for the Proposed RTCR 5-35 June 2010 

### Exhibit 5.20 Surface Water Nontransie nt Noncommunity Water System TC Occurrence

0 0.002 0.004 0.006 0.008

0.01 0.012 0.014

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR

AIP and Alt

Source: RTCR Predictive Model

Notes:
TCR: Represents the projected TC occurrence under the current TCR requirements, which compose the baseline regulatory scenario for the RTCR EA.
AIP and Alt: Represents the projected TC occurrence und er the AIP and Alternativ e option, which have the same requirements for SW systems, resulting in the same TC occurrence under the two options.Economic Analysis for the Proposed RTCR 5-36 June 2010 

### Exhibit 5.21 Surface Water Transient Noncommunity Water System TC Occurrence

0 0.005

0.01 0.015

0.02 0.025

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR

AIP and Alt

Source: RTCR Predictive Model

Notes:
TCR: Represents the projected TC occurrence under the current TCR requirements. The TCR is the baseline regulatory scenario for the EA.
AIP and Alt : Represents the projected TC occurrence under the AIP and Alternativ e option, which have the same requirements for SW systems, resulting in the same TC occurrence under the two options.



### 5.3.3.1 Uncertainty and Sensitivity Anal ysis in Occurrence Modeling

There are two primary sources of uncer tainty in the proposed RTCR occurrence modeling: uncertainty related to the baseline occurrence model due to the limited data on which the model is based, and uncertainty regarding the frequency and effectiveness of corrective
actions and their effects on subse quent TC and EC occurrence.

Data limitations in part derive from a lack of observed data on the effects of the requirements of the GWR, for which implementati on began as of December 2009. In the absence of this data, EPA made assumptions regardin g the effectiveness of each of the relevant requirements, as described in Section 5.3.1 of this chapter. Each of these assumptions affects the modeled current TCR, which is the baseline for this EA. The predictive model uses this same baseline (current TCR) in determining the net influence of both the AIP option and Alternative option requirements on occurrence. Therefore, although the actual reduc tions in occurrence resulting from GWR implementation may differ from the assumptions used in this model, thisEconomic Analysis for the Proposed RTCR 5-37 June 2010 

### difference would likely not affect the net results of the AIP option and Alternative option relative to the current TCR, or their performance rela tive to each other. Ot her data limitations are
discussed in Section 4.2 of this EA.

Many other assumptions incorporated into the predictive model also have no net effect on results. More generally, assumptions that contribu te to uncertainty in the predictive model results can be separated into two categories: those that have no net effect on results and those that may bias results downward or upward. Exhibit 5.22a below presents assumptions that influence the baseline (current TCR) and the RTCR options cons idered (AIP option and Alternative option) in the same way, and therefore are expected to have no significant effect on net results. Exhibit 22b presents those assumptions that may have a si gnificant effect on net results because they influence only the AIP and Alternative options, but not the current TCR option. Exhibits 5.22a
and 5.27b also include EPA’s best estimate ofwhether the assumption would tend to overestimate, under-estimate, or have an unknown impact.

Based on a lack of empirical data, EPA did not include in the model an estimate for the number of systems that might be required to re turn to more frequent monitoring after having been operating on a reduced schedule. A result of more frequent monitoring when combined with assessments and corrective actions as requi red under the AIP option (o r Alternative option), as described elsewhere in this chapter, is expected to be an increase in TC and EC hits, and a corresponding increase in assessments and Co rrective Actions (CAs), resulting in improved water quality. EPA expects that the result of not accounting for m ovement of systems back to a more rigorous monitoring schedule will tend to unde restimate benefits and costs for the AIP and Alternative options relative to the current TCR option. It may have more of an impact on net results for the AIP option than for the Alternativ e option because the AIP option is expected to have a larger proportion of system s on more reduced monitoring.Economic Analysis for the Proposed RTCR 5-38 June 2010 

### Exhibit 5.22a Summary of Model Parameters Influencing RTCR Baseline and Options

Underestimate Overestimate Unknown Impact Underestimate Overestimate Unknown Impact

Distribution of systems across sampling frequency categories. Varies per system category as shown in Ex.
5.14a - 5.14c 5.3.2.2 Variability, Uncertainty X (Note 1) X (Note 1)

Alpha, beta parameters developed as model inputs describing distribution of
occurrence based on Six Year Data (2005) Varies per system category as shown in Ex. 5.10 - 5.11 Appendix F Variability, Uncertainty X (Note 1) X (Note 1)

Pwell - the portion of GWSs having viral pathogens in their source waters (adopted from GWR EA) 21.58% 5.3.1 Constant, Uncertainty X (Note 1) X (Note 1)

Psample - the probab ility that a random sample w ill test positive for viral pathogens given a contaminated source water (adopted from GWR EA) Variable drawn from a beta distribution with a range of alpha and beta estimates having a median value of

5.8 percent and an expected value of 12.4 percent. 5.3.1 Variability, Uncertainty X (Note 1) X (Note 1)

Reduced occurrence for sanitary surveys performed under the GWR. 90% of baseline occurrence; applied to equal number of systems annually over the sanitary survey cycle (20% each year of 5 years for CWSs;

33.3% each year for 3

years for NCWSs) 5.3.1 Constant, Uncertainty X (Note 1) X (Note 1)

Reduced occurrence for GWR compliance monitoring (applies to subset of GWSs that disinfect). 90% of baseline
occurrence 5.3.1 Constant, Uncertainty X (Note 1) X (Note 1)

% of non-disinfecting GWSs choosing
disinfection CA vs non-disinfection CA in response to source water quality issue (adopted from GWR) Range: High end is the percentage of CWS entry points employing disinfection by system size, low end assumed to
be 10% based on
discussions with State

representatives. 5.3.1 Constant, Uncertainty X (Note 1) X (Note 1)

Seasonal variation in TC hit rates. TC hit rates are assumed
to be constant over the

course of the year. 5.3.1 Variability, Uncertainty X (Note 1) X (Note 1)

The RTTC rate in the month following TC+ not resulting in CA assumed to change to reflect either some worsening of the problem or an improvement based on some other actions taken that are not part of the specific corrective actions being
considered. This was carried out by selecting at random a different pRTTC value in those months following a

TC+ without explicit corrective actions being
initiated. 5.3.2.2 Variability, Uncertainty X (Note 1) X (Note 1) Applies to Current TCR, AIP Option, and Alternative Option Most Likely Effect on Benefits Section with
Full
Discussion of Uncertainty or
Factor Model Parameter Current Assumption Most Likely Effect on Costs Contributes Variability, Uncertainty, or

Constant?

Note: For variables or factors that were incorporated into the predictive model in the same way for the Current TCR (baseline) and the other two regulatory options considered in this EA (AIP and Alternative options), EPA expects that any under- or over-estimation would affect the baseline and other options in the sa me way, resulting in no significant effect on the net results for t he AIP or Alternative option.Economic Analysis for the Proposed RTCR 5-39 June 2010 

### Exhibit 5.22b Summary of Model Parameters Influencing Proposed RTCR Options Only

Underestimate Overestimate Unknown Impact Underestimate Overestimate Unknown Impact

% Implementing an Effective
Corrective Action after a Level 1 or

Level 2 Assessment 10% 5.3.3.1 Constant, Uncertainty X X

Hit rate immediately following CA implementation for period of 3 or 5 years (Level 1 and 2, respectively) (ornon-disinfecting GWS choosing a nondisinfection CA) 0% 5.3.3.1 Constant, Uncertainty X X

Duration of initial phase of reduced hit rate (0%) following CA implementation Remainder of year + 1 or 2 years (Level 1 and 2, respectively) 5.3.3.1 Constant, Uncertainty X X

Hit rate in second phase following CA implementation (after initial phase of 0% hit rate) 50% or 25% of baseline

occurrence (Level 1 and 2, respectively) 5.3.3.1 Constant, Uncertainty X X

Duration of reduced hit rate in second phase following CA implementation 3 or 5 years (Level 1 and 2, respectively) 5.3.3.1 Constant, Uncertainty X X D ura ti on o f re d uce d hit ra t e (0%) i n initial phase following CAimplementation (applies to nondisinfecting GWSs choosing nondisinfecting CA) Remainder of year + 2 years reference
discussion in

5.3.3.1 Constant, Uncertainty X X
Hit rate in second phase following CA implementation (after initial phase of0% hit rate) (applies to nondisinfecting GWSs choosing nondisinfecting CA) 25% of baseline

occurrence reference
discussion in

5.3.3.2 Constant, Uncertainty X X

Duration of reduced hit rate in second phase following CA implementation (applies to non-disinfecting GWSs choosing non-disinfecting CA) 5 years reference
discussion in

5.3.3.3 Constant, Uncertainty X X

For systems serving more than 4,100 people: Application of a rate that varies by type of system and water source but is held constant through time (does not change over the 25 years of analysis) Assumption that these groups would incur the
same number of violations annually throughout the 25 years of the analysis (i.e.,
no reduction in violations in

the years immediately following CA implementation.) This
number of violations is
used to calculate the
number of Level 1 and Level
2 assessments and corrective actions by PWS category that systems w ill

implement under the

proposed RTCR

alternatives. 5.4.1 Variability, Uncertainty X X Applies Only to AIP Option and Alternative Option Model Parameter Most Likely Effect on Costs

Current Assumption Section with
Full
Discussion of Uncertainty or
Factor Contributes Variability, Uncertainty, or

Constant? Most Likely Effect on Benefits

Note: For variables and factors that affect the options considered (AIP and Alternative options) but do not have a parallel influence on the current TCR (baseline), EPA expect s that any under- or over-estimation will have an effect as noted in the above exhibit on the net resu lts for the AIP or Alternative option.Economic Analysis for the Proposed RTCR 5-40 June 2010 

### Key Factors Driving Analysis Uncertainty

The remainder of this section focuses on thos e assumptions identified in Exhibit 5.22b as contributing the most uncertainty to the net results of the analysis: the frequency and effectiveness of corrective actions (i.e., % redu ction in occurrence and duration of reduction period resulting from correction actions) applied in the predictive model. These are the key drivers in determining net results, that is, the difference between the AIP option or Alternative options and the current TCR option.

As described previously in Section 5.3, EPA incorporated the following assumptions (also shown in Exhibits 5.12 and 5.13) for the frequency and effectiveness of the corrective actions that systems will implement follo wing a Level 1 or a Level 2 assessment:

Level 1 : Following a Level 1 Assessment in a pa rticular year, 10 percent of the systems performing the assessment will implement correctiv e actions that will reduce the TC and EC occurrence levels to 0% for the remainder of that year and for one full year after that. Then, for an additional 3 full years, the TC and EC occurrence levels for each of these systems will be reduced to 50 percent of their initial values. Afte r that, the TC and EC occurrence levels return to
their initial values.

Level 2 : Following a Level 2 Assessment in a pa rticular year, 10 percent of the systems performing the assessment will implement correctiv e actions that will reduce the TC and EC occurrence levels to 0% for the re mainder of that year and for 2 full years after that. Then, for an additional 5 full years, the TC and EC occurre nce levels for each of these systems will be reduced to 25 percent of their initial values. Afte r that, the TC and EC occurrence levels return to
their initial values.

Also, for the nondisinfecting ground water syst ems that are found in the simulation to
have an EC+ in their source water but do not mo ve to disinfection, the assumptions for the
effectiveness of the nondisinfecti ng corrective actions ar e identical to thos e above for Level 2 corrective actions. (However, not e that all nondisinfecting syst ems that discover EC+ source water that do not go to disinfection will impl ement these corrective actions (under GWR), not just 10 percent as assumed for sy stems that already disinfect.)

To assess the influence of these assumpti ons on the model results, EPA ran the model with alternative assumptions reflecting correctiv e actions that are less effective (50% of the assumption of efficacy in the primary analysis in this EA) and corrective actions that are more effective (2x the assumption of efficacy in the primary analysis). The assumptions made in the primary analysis, and the alternative assumptions made in this sensitivity analysis, do not represent a sum of the effectiv eness of all individual CAs, bu t indicate the average frequency across all systems with which a given system w ill correctly diagnose and effectively implement a corrective action, mitigating the source of the problem. The alternative assumptions assume this frequency will be half or twice that used in the primary analysis. Using these alternative assumptions, key model outputs that can serve as proxy indicators of the costs and benefits of the proposed RTCR were compared with those same outputs from the main model assumptions for the proposed RTCR.Economic Analysis for the Proposed RTCR 5-41 June 2010 

### For the less effective corrective actions, the a lternative assumptions for Level 1 and Level
2 are:

Level 1 : Following a Level 1 Assessment in a pa rticular year, 5 percent of the systems performing the assessment will implement corr ective actions that reduce the TC and EC occurrence levels to 0% for the remainder of that year only. Then, for an additional 2 full years,
the TC and EC occurrence levels for each of thes e systems will be reduced to 50 percent of their initial values. After that, the TC and EC occu rrence levels return to their initial values.

Level 2 : Following a Level 2 Assessment in a pa rticular year, 5 percent of the systems performing the assessment will implement a corre ctive action that will reduce the TC and EC occurrence levels to 0% for the re mainder of that year and for 1 full year after that. Then, for an additional 3 full years, the TC and EC occurrence levels for that system will be reduced to 25 percent of their initial values. After that, the TC and EC occurrence levels return to their initial values. (These alternative Leve l 2 durations were also app lied to the nondisinfecting GWR corrective actions.)

For the more effective corrective actions, th e alternative assumptions for Level 1 and
Level 2 are:

Level 1 : Following a Level 1 Assessment in a pa rticular year, 20 percent of the systems performing the assessment will implement correctiv e actions that will reduce the TC and EC occurrence levels to 0% for the remainder of that year and for two full years after that. Then, for an additional 6 full years, the TC and EC occurren ce levels for that system will be reduced to 50 percent of their initial values. After that, the TC and EC occurrence levels return to their initial
values.

Level 2 : Following a Level 2 Assessment in a pa rticular year, 20 percent of the systems performing the assessment will implement correctiv e actions that will reduce the TC and EC occurrence levels to 0% for the re mainder of that year and for 4 full years after that. Then, for an additional 10 full years, the TC and EC occurren ce levels for that system will be reduced to 25 percent of their initial values. After that, the TC and EC occurrence levels return to their initial values. (Again, these al ternative Level 2 durations were al so applied to the nondisinfecting GWR corrective actions.)

A summary of the assumptions used in these alternative analyses is provided in Exhibit 5.22a – 5.22b. The analyses were run in the predictive model for the AIP option for the approximately 60,000 nondisinfecting transient noncommunity groundwater systems serving
≤ 500 people. This subgroup contains the largest number of systems and has on average the largest number of violations of all subgroups; as a group they st and to experien ce the largest change in activity under the proposed rule because , unlike the larger systems that have more resources at their disposal, these systems ar e not generally going beyond requirements of the current TCR, and generally have less frequent requirements for sampling under the current TCR, than the larger systems. To conduc t the sensitivity analysis describe d in this section, EPA applied to the predictive model the alternative assumptions that are presented in Exhibit 5.23 along with assumptions applied in the primary analysis for comparison.Economic Analysis for the Proposed RTCR 5-42 June 2010 

### Exhibit 5.23 Sensitivity Analysis A ssumptions for Frequency and Effectiveness of Corrective Actions follow ing Level 1 or 2 Assessments

Type of
Assess

ment % performing
Corrective Action
after a Level 1 or

Level 2 1

Assessment Reduced hit rate immediately after
Corrective Action Period of time for

reduced hit rate 2 Additional period of
reduced hit rate (yrs) Reduction from
initial hit rate in
additional reduced period

Level 1 10% 0% Remainder + 1 3 50%

Level 2 10% 0% Remainder + 2 5 25% Level 1 5% 0% Remainder only 2 50%

Level 2 5% 0% Remainder + 1 3 25%

Level 1 20% 0% Remainder + 2 6 50%

Level 2 20% 0% Remainder + 4 10 25% Predictive Model
Sensitivity 1 -
Less Effective
Sensitivity 2 -
More effective
Notes:

1 Level 2 assumptions for the predictive model and sensitivit y analyses are also applied to 100% of nondisinfecting ground water systems that incur an EC+ in the source water and implement a nondisinfecting corrective action.

2 "Remainder" refers to the balance of the year f ollowing implementation of a corrective action.



### Exhibit 5.24a Cumulative Effect of Alte rnative Assumptions for Corrective Action Effectiveness and Duration on AIP Option Model Results (Nondisinfecting TNCWS Serving ≤ 500 People over 25 Years)

RTTC+ RTTC+

as rate RPTC+ RTEC+ RPEC+ GWR EC + Nonacutes Acutes L1 Assmt L2 Assmt L1 CA L2 CA

Low CAs 1 300,209 3.81% 204,124 11,585 6,613 3,364 104,161 9,162 68,941 48,658 3,539 2,395

AIP 2 277,776 3.55% 174,200 9,937 5,038 2,906 90,389 7,170 64,275 36,090 6,448 3,671
High CAs 3 240,248 3.11% 124,822 8,271 3,942 2,240 67,662 5,352 53,823 20,710 10,664 3,918

Low CAs 1 8.1% 7.42% 17.2% 16.6% 31.2% 15.8% 15.2% 27.8% 7.3% 34.8%

‐ 45.1%

‐ 34.7%
High CAs 3

‐ 13.5%

‐ 12.43%

‐ 28.3%

‐ 16.8%

‐ 21.8%

‐ 22.9%

‐ 25.1%

‐ 25.4%

‐ 16.3%

‐ 42.6% 65.4% 6.7%

Low CAs 1 1.08 1.08 1.17 1.17 1.31 1.16 1.15 1.28 1.07 1.35 0.55 0.65
High CAs 3 0.86 0.83 0.72 0.83 0.78 0.77 0.75 0.75 0.84 0.57 1.65 1.07 % Change from AIP

Relative Change

Notes:

1 "Low CAs" uses half of the primary analysis estimate, or 5% incremental increase in CAs beyond the current TCR (50% decrease in the assumption).

2 "AIP" refers to the AIP option under assumptions used in the primary analysis, which includes an assumption that 10% more CAs adddressing the root cause of a TC/EC event will be implemented than under the current TCR (0% change in the assumption).

3 "High CAs" doubles the primary analysis CAs estimate from 10% to 20% (100% increase in the assumption). Model Output Corrective

Actions Assumption

Note: Cumulative effects shown in this exhibit are bas ed on application in the predictive occurrence model of the alternative assumptions for frequency and effectiveness of co rrective actions following Le vel 1 or 2 Assessments, as presented in Ex. 5.23. The effectiveness of corrective actions is based both on t he effectiveness of the Level 1 or Level 2 assessments performed in diagnosing the correct system deficiency(ies) and upon the e ffectiveness of implementation of the intended corrective action.



### The results of these runs indicate that, as would be expected, the less frequent and less effective corrective action assumptions result in finding more TC+ and EC+ samples and having
more nonacute and acute events than the main assumptions. In addition, more L1 and L2 assessments are conducted in response to those additional events, but fewer corrective actions are performed.Economic Analysis for the Proposed RTCR 5-43 June 2010 

### Conversely, the more frequent and more eff ective corrective action assumptions lead to fewer TC+, EC+, nonacute, and acute events occurring and more L1 and L2 CAs being performed.

The fewer number of TC+, EC+, nonacute and acute events occurring with the more effective corrective action assumptions relative to the main assumptions can be viewed as events that are prevented from occurring as a result of those more effective actions relative to the main assumptions. Similarly, the increased number of those events occurring with the less effective
corrective actions can be viewed as those that would not be prevented relative to the main assumptions.

It is important to note that this sensitivity analysis is not intended as a rigorous, quantitative comparison of the alternatives but rath er as a general indicator of the magnitude and direction of change in these out puts relative to the magnitude and direction of the changes in these inputs. Broadly speaking, since the i nput assumptions reflect changes that are approximately (but not precisely) factors of one half (0.5) and twice (2.0) the main assumptions, outputs that have ratios that are substantially less than 0.5 or si gnificantly greater than 2.0 could be considered to be very sensitive to the cha nges in these input assumptions. Outputs with ratios
that fall between 0.5 and 2.0 can be considered to be much less sensitive to the input assumptions (ratios equal to or approaching 1.0 indicate that the output is essentially not sensitive to changes in the input assumptions.

As indicated in Exhibit 5.24, all of the ratios for outputs fall within the 0.5 to 2.0 range, indicating that these outputs do not appear to be highly sensitive to these alternative assumptions
for corrective action effectiveness.

The outputs that could serve as indicators of the sensitivity of the benefits on these assumptions are the numbers of TC and EC po sitives predicted as well as the number of nonacute and acute events predicted. These outputs have factors that generally fall well within the 0.5 to 2.0 range, indicating that these changes in the inputs assumptions appear to result in relatively small changes in these outputs. That is, the less effective corrective action assumptions do not appear to result in “missing” a dispropor tionately greater number of these events, and the
more effective corrective actions appear to result in “finding” a disproportionately greater
number of these events.

The outputs that could serve as indicators of the sensitivity of the costs on these assumptions are the Level 1 and Level 2 assessm ents and the Level 1 and Level 2 corrective actions. The assessments have ratios that, like thos e for the outputs like TC and EC positives, are generally well within the 0.5 to 2.0 range. The ra tios for the corrective actions are also within this range but tend to be close to the 0.5 and 2.0 values. The input assumptions used for the
number of corrective actions done is directly proportional to the number of assessments performed, so these changes would be expected to be more directly linear (closer to 0.5 or 2.0). For example, using the more effective corr ective action assumptions, the number of TC+ samples predicted is reduced, as are the number of Level 1 assessments that are related to TC+
events. The ratio for Level 1 assessments under th e more effective correct ive action assumptions is 0.84, indicating that under th ese assumptions systems will only need to perform about 85% of the Level 1 assessments over the 25 year period (t hat is, the others are prevented by the more effective actions). However, this set of alternative assumptions includes a factor that 20% ofEconomic Analysis for the Proposed RTCR 5-44 June 2010 

### those doing Level 1 assessments go on to do Level 1 corrective actions (which is twice the 10% assumption in the main model). Therefore, we s ee that almost twice as many of these Level 1 corrective actions are performed as under the main model. More specifically, the ratio for Level 1 corrective actions is 1.65 which is approxi mately 2x the 0.84 ratio noted for Level 1 assessment predicted.

An additional analysis was run to test the model's sensitivity to the primary analysis assumption that 10% more CAs addressing the root cause of a TC/EC event will be implemented than under the current TCR. The additional sensitivity analysis investigates the implications of a much greater rate of CA implementation – 50% rather than 10%, or a 400% increase from the primary analysis assumption. All other parame ters in this sensitivity test, including the effectiveness and duration of the CAs, are iden tical to those of the AIP primary analysis.

Exhibit 5.24b Cumulative Effect of 50% Assumption for Corrective Action Implementation Rate on AI P Option Model Results (Nondisinfecting TNCWS Serving ≤ 500 People over 25 Years)

RTTC+ RTTC+

as rate RPTC+ RTEC+ RPEC+ GWR EC + Nonacutes Acutes L1 Assmt L2 Assmt L1 CA L2 CA

AIP 1 277,776 3.55% 174,200 9,937 5,038 2,906 90, 389 7,170 64,275 36,090 6,448 3,671

50% Option 2 229,270 2.97% 110,839 7,887 3,225 2,641 61, 424 4,534 53,896 12,506 27,227 6,288

50% Option 2

‐ 17.5%

‐ 16.22%

‐ 36.4%

‐ 20.6%

‐ 36.0%

‐ 9.1%

‐ 32.0%

‐ 36.8%

‐ 16.1%

‐ 65.3% 322.3% 71.3%

50% Option 2 0.83 0.77 0.64 0.79 0.64 0.91 0.68 0.63 0.84 0.35 4.22 1.71 Model Output Corrective

Actions Assumption

% Change from AIP

Relative Change

Notes:

1 "AIP" refers to the AIP option under assumptions used in the primary analysis, which includes an assumption that 10% more CAs addressing the root cause of a TC/EC event will be implemented than under the current TCR (0% change in the assumption).

2 "50% option" uses a CAs estimate of 50% instead of the primary analysis assumption of 10% (400% increase in the assumption).



### As might be expected, this modification cau ses rates of Level 1 and Level 2 CAs to increase. This in turn decreases the RTTC+ rate and other levels of occurrence, including the
number of Level 1 and Level 2 assessments. It is interesting to note that the rate of Level 1 CAs increases much more dramatically than the rate of Level 2 CAs. One possi ble explanation for this is that with the higher CA implementation rate, more systems move to a reduced TC occurrence level during the first year s of RTCR. Thereafter thes e systems are more likely to trigger Level 1 assessments than Level 2 assessments, causing the ratio of Level 1 CAs to Level 2 CAs to shift substantially from that predicted in the primary analysis.

Since this analysis involves changing a parame ter by a factor of five, changes in model output greater than a factor of five would indicate a high degree of sensitivity to the parameter. In the table it is evident that no changes on th at scale occur. Nonetheless, the analysis does
indicate that an increase in the rate of implementation of CAs would reduce the long-run
incidence of TC/EC events and that it woul d increase the number of Level 1 CAs more dramatically than it would incr ease the number of Level 2 CAs.Economic Analysis for the Proposed RTCR 5-45 June 2010 

### Additional Factors Assessed

As described in the introduction to this section, there were assumptions in addition to the frequency and effectiveness of corrective actions that EPA co nsidered might influence the analysis. These assumptions were categorized as those that were unlikely to have an impact on net results (5.22a), and those th at affected the RTCR options differently than the current TCR (5.22b), thus having the potenti al to impact net results.

Because the effect of seasonality on occu rrence is commonly a concern when using annual average occurrence rates in an analysis , and because RTTC occu rrence rates were found to be twice as high in the summer and fall as in the winter and spring, EPA ran a sensitivity analysis on the influence of seasonal trends. This analysis was performed on the subset including transient non-disinfecting groundwater systems serving fewer than 101 people because of its relatively large number of systems and high occurrence rate. For simplicity, the sensitivity analysis was limited to only the AIP option.

EPA performed the sensitivity analysis thr ough two runs of the RTCR AIP model. The first run established a baseline, and the sec ond multiplied the assigned baseline pRTTC values by a factor of 0.67 during December-May and by a factor of 1.33 during June-November. (No seasonality factors were applied for systems on annual sampling.)

Summary results in Table 5.25 show expected yearly averages for selected occurrence metrics during the first 25 years under full implem entation of the RTCR. Overall the differences between the model results are small. Also, they are not consistently higher for one model (e.g. when accounting for seasonality, total TC occurrence is slightly higher but the number of L2 Corrective Actions is slightly lowe r). These variations are likely within the range of Monte Carlo error. Therefore, EPA determined that not incorp orating seasonality into the occurrence model is an acceptable simplification.

Exhibit 5.25 Effect of Seasonality on Occurrence Analysis Endpoints

RTCR AIP Metric No Seasonality Seasonality

Total TC Positives 8524 8556 Total Level 1 Triggers 2742 2784

Total Acutes 1 240 240

L1 Corrective Actions 200 194

L2 Corrective Actions 107 104 Note: Estimates represent a yearly aver age during the first 25 years under full implementation of the RTCR.

1 Includes those Level 2 Triggers resulting from an EC+ (does not include those resulting from a second Level 1 trigger occurring within a 12-month rolling period).



### 5.3.3.2 Model Validation

There are a limited number of ways in wh ich outputs from the predictive model for the systems serving ≤ 4,100 people can be compared to observed data. EPA has identified two types of analyses where comparisons can be made. One of these is to compare the model’s predictionsEconomic Analysis for the Proposed RTCR 5-46 June 2010 

### of average annual TC and EC occurrence levels for various types and sizes of systems under the current TCR against the observations from the 2005 Six-Year Review data used to parameterize the model. The other is to compare the model’s predictions for the current TCR against those reported in SDWIS/FED.

It is necessary to keep in mind that the primary purpose of the modeling effort for the systems serving ≤ 4,100 people was not to exactly match observed results but to provide a framework for comparing relative changes acro ss regulatory options. Nevertheless, it is important that, to the extent possible, the m odel outputs for conditions that can be checked against observed data compare reasonably well. This provides assurance that the model is operating in a manner that is a reasonable si mulation of how the TCR currently operates and provides some measure of confidence that the re lative changes seen for the rule options are meaningful.

Exhibit 5.25 provides a comparison of the m odel results for average annual TC+ assays
under the current TCR with those observed in the 2005 Six-Year Review data.Economic Analysis for the Proposed RTCR 5-47 June 2010 

### Exhibit 5.25 Comparison of TC+ Occu rrence Predicted as a 25-Year Annual Average under the Current TCR with 2005 Six-Year Review Data

TC (% Positive) EC (% Positive) TC (% Positive) EC (% Positive)

<=100 2.66% 0.08% 2.24% 0.10%

101

‐ 500 1.99% 0.05% 1.64% 0.08%

501

‐ 1,000 1.52% 0.04% 1.52% 0.07%
1,001

‐ 4,100 1.07% 0.02% 0.92% 0.05%

<=100 1.41% 0.09% 1.46% 0.18%

101

‐ 500 1.15% 0.05% 0.91% 0.12%

501

‐ 1,000 0.70% 0.05% 0.90% 0.12%
1,001

‐ 4,100 0.57% 0.03% 0.57% 0.04%

<=100 4.78% 0.20% 2.18% 0.19%

101

‐ 500 4.57% 0.19% 2.18% 0.19%

501

‐ 1,000 4.30% 0.06% 3.92% 0.20%
1,001

‐ 4,100 2.02% 0.03% 2.14% 0.13%

<=100 2.23% 0.25% 2.19% 0.28%

101

‐ 500 2.63% 0.46% 2.18% 0.28%

501

‐ 1,000 3.63% 0.00% 2.19% 0.28%
1,001

‐ 4,100 0.61% 0.00% 1.98% 0.26%

<=100 3.17% 0.07% 2.89% 0.14%

101

‐ 500 2.70% 0.06% 1.99% 0.10%

501

‐ 1,000 1.74% 0.02% 1.90% 0.10%
1,001

‐ 4,100 1.35% 0.04% 1.46% 0.09%

<=100 1.92% 0.24% 1.42% 0.18%

101

‐ 500 0.39% 0.09% 1.05% 0.13%

501

‐ 1,000 0.64% 0.00% 1.08% 0.14%
1,001

‐ 4,100 0.08% 0.00% 1.03% 0.13% Predictive Model

TNCWS GW

SW CWS GW

SW System

Type Source

Wate r Six Year review

NTNCWS GW

SW Population

Served

Source: Six Year Review data from Exhibit 4.9. Current TCR data from model output.



### The comparison of the predictive model outpu t with the Six-Year data for TC and EC occurrence levels (based on number of TC routine samples taken) shows a reasonable concordance for all types and sizes of systems. With respect to the differences, the model does not appear to be either systematically overest imating or underestimating the occurrence levels compared with the Six-Year Review data (ex cept where the Six-Year Review data show 0% observed, the model does show a low level of occurrence).

Exhibit 5.26 provides a comparison of the m odel results of the average annual nonacute
and acute violations for the current TCR with the same metric from SDWIS data for 2005 3Q. (Violations data are downloaded from SDWIS on an annual basis in 3 rd 

### quarter only, and are not disaggregated by month.)Economic Analysis for the Proposed RTCR 5-48 June 2010 

### Exhibit 5.26 Comparison of SDWIS Data for Nonacute and Acute Violations with Predictive Model Annual Results for the Current TCR

SDWIS No GWR (Avg) SDWIS No GWR (Avg) SDWIS No GWR (Avg) SDWIS No GWR (Avg)

CWSs

< 100 905 955 16 31 52 97 3 7

101-500 809 733 50 34 34 81 7 8
501-1,000 203 191 16 19 13 19 3 5
1,001-4,100 338 347 83 49 12 35 6 7
Totals 2,255 2,226 165 133 111 231 19 27

NTNCWSs

< 100 514 560 7 7 34 60 2 2

101-500 346 265 4 6 20 30 - 1
501-1,000 57 61 2 2 6 7 - 0
1,001-4,100 62 98 1 3 6 12 - 1

Totals 979 985 14 18 66 109 2 4

TNCWSs

< 100 2,665 4,109 19 81 278 445 5 19

101-500 833 1,371 11 31 76 156 1 8
501-1,000 133 144 4 5 11 16 - 1
1,001-4,100 58 105 2 9 2 13 - 2
Totals 3,689 5,730 36 126 367 630 6 31

Grand Total 6,923 8,940 215 277 544 970 27 61 SW Non-Acute Violations Acute Violations

GW SW GW

Source: SDWIS 2005 Q3 download and occurrence and predictive model results.



### The comparison of the predictive model out put with the SDWIS violations data also shows a reasonable concordance for all types and sizes of systems. EPA believes there is some under-counting of actual violations in SDWIS due to monitoring and reporting violations, which the model does not incorporate. Therefore, EPA ge nerally expects that th e model would generate results that are higher than the observed SDWIS data. While a comparison reveals that some of
the model estimates are lower than the SDWIS st atistics, the grand totals for the model are consistently higher than those observed in SDWIS.

5.4 

## Occurrence Analysis for Systems Serving More Than 4,100 People

Systems serving populations greater than 4,100 are similar in many ways. In particular, these systems generally have the resources and ar e managed in ways that lead to generally high expectations for the integrity of the distribution systems and the ab ility of the systems to identify and correct problems. Some of these differences include:

• 

### Most of these systems operate with certified op erators, are staffed at all operating times, and usually operate continuously.

• 

### Most of these systems have operators for wh om producing water is their primary activity, and most are owned by communities rather than run as ancillary businesses.Economic Analysis for the Proposed RTCR 5-49 June 2010 

### • 

### As a result of the professional operations, these systems have a much lower incidence of monitoring and reporting violations.

• 

### Many of these systems have their own laboratory for analyzing samples.

• 

### Many more of these system s disinfect their water.

• 

### These systems take at least 5 samples per month. The largest of these systems take hundreds of samples per month. There is no requirement for “additional next month samples” as there is for smaller systems because these larger systems already take at least 5 samples each month.

• 

### The proposed monitoring changes to the TCR mostly do not affect systems serving more than 4,100 people; all take at least 5 samples per month.

For systems serving more than 4,100 people, EPA assumes that occurrence may change based on the extra distribution system awareness cr eated by: a) applying the Level 1 and Level 2 assessments in lieu of prior assessments that may, in some cases, have been less structured, and b) reporting the assessmen t results. Therefore, EPA developed a simple model to predict the effects of the AIP and Alternative options on PW Ss and to compare those data to the baseline data predicted for the current TCR. EPA did not qua ntify changes in violati on or trigger rates for systems serving more than 4,100 people among the current TCR, AIP option, and Alternative options because of: (1) limited Six-Year Review data to characterize these systems, (2) the essentially unchanged monitoring requirements acr oss options for these systems, and (3) the level of effort already occurring to implement the current TCR.

5.4.1 Model

As input for this model, EPA first considered 2005 TCR data on sampling and positive assays that were compiled under the Six-Year Re view, as was incorporated into the model for smaller systems. However, as di scussed in Section 4.2.2.3, detailed sampling results from the Six Year Review data were not repr esentative of the universe of la rger systems. EPA instead found that violations data were adequate ly representative of the universe of large sy stems. This input to the model, based on 2005 SDWIS data (see Exhib it 4.10), was used to predict violations that systems serving more than 4,100 people will incu r in the 25-year period of AIP option analysis, and the behavioral responses (Level 1 and Le vel 2 assessments and Corrective Actions) that
would result.

The model uses the same stratification as smaller systems – by system type (CWS, TNCWS, or NTNCWS) and by water source (SW or GW). For each system in a given category the model applies the 2005 SDWIS violations rate fo r that category. This rate is applied in each year of the analysis, that is, the violations rate is a constant in the model. For estimating the
effects on violations under the AIP and Alternative option, the model estimates that 10 percent of the assessments resulting from violations will re sult in corrective actions, the same value applied in the analysis of the smaller systems. This 10% represents the incremental increase in efficacy of addressing the root cause of system contamin ation under either regulato ry alternative for the proposed RTCR as compared to the current TCR.Economic Analysis for the Proposed RTCR 5-50 June 2010 

### Repeat samples are reduced in the model unde r both regulatory al ternatives from the current TCR. They are calculated by applying the ratios of repeat samples to routine samples from the smaller system category (serving 1,001 – 4,100 people) to the systems serving more than 4,100 people.

The model output, shown in Section 5.4.2, in cludes predictions of the annual number of violations (non-acute = Level 1, acute = Level 2), and the number of Level 1 and Level 2 assessments and corrective actions to be implemented.

5.4.2 Model Results

Exhibits 5.27 through 5.29 present model results for systems serving more than 4,100 people by size category.

5.4.3 Model Uncertainty

As explained in Section 5.4.1 of this ch apter, EPA does not expect systems serving >4,100 people to experience changes in routine monitoring or repeat sample regimes under the regulatory alternatives; furthermore, all system s in this size range are on monthly sampling. Therefore, the larger systems model was relativ ely simple compared to that for the smaller systems, and EPA did not develop an uncerta inty analysis for this group of systems.Economic Analysis for the Proposed RTCR 5-51 June 2010 

### Exhibit 5.27 Results for Systems Serving more than 4,100 People – Current TCR

A BC D E FGH I

Community Water Systems (CWSs) - SW
4,101-33,000 10,636,296 - 186,781 - 2,152 - 197 - - 33,001-96,000 11,058,960 - 194,204 - 534 - 56 - - 96,001-500,000 10,190,400 - 178,951 - 233 - 24 - - 500,001-1 Million 2,019,600 - 35,466 - 22 - - - - > 1 Million 1, 686,960 - 29,624 - - - - - - Community Water Systems (CWSs) - GW
4,101-33,000 9,145,224 - 230,201 - 4,545 - 263 - - 33,001-96,000 4,884,000 - 122,938 - 656 - 53 - - 96,001-500,000 1,945,680 - 48,976 - 129 - 10 - - 500,001-1 Million 253,440 - 6,380 - - - - - - > 1 Million 269,280 - 6,778 - - - - - - Nontransient Noncommunity Water Systems (NTNCWSs) - SW
4,101-33,000 50,424 - 1,632 - 5 - - - - 33,001-96,000 34,320 - 1,111 - - - - - - 96,001-500,000 31,680 - 1,025 - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Nontransient Noncommunity Water Systems (NTNCWSs) - GW
4,101-33,000 153,648 - 5,936 - 123 - 9 - - 33,001-96,000 23,760 - 918 - 4 - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Transient Noncommunity Water Systems (TNCWSs) - SW
4,101-33,000 40,656 - - - 8 - - - - 33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million 102,960 - - - - - - - - Transient Noncommunity Water Systems (TNCWSs) - GW
4,101-33,000 156,288 - 8,909 - 116 - 4 - - 33,001-96,000 34,320 - 1,956 - - - - - - 96,001-500,000 26,400 - 1,505 - - - - - - 500,001-1 Million 63,360 - 3,612 - - - - - - > 1 Million - - - - - - - - - Number of

Non-Acute

Violation

Assessments (Single Violations) Number of

Corrective

Actions (based onSingle NonAcute

Violation Assessment) Number of

Acute

Violation

Assessments Number of

Non-Acute

Violation

Assessments

(Multiple Violations) Number of

Corrective

Actions (based on

Acute andMultiple NonA cute Violation Assessments) PWS Size (Population

Served) Number of

Routine Monitoring Samples Number of

Additional

Routine Monitoring Samples Number of Repeat Monitoring Samples PWSs Performing

Additional
Annual Site Inspections

Note: Corrective actions output from the model are incr emental additions to those already performed under the current TCR (baseline conditions); theref ore, columns F and I (corrective actions) are blank (zero) for the current TCR.Economic Analysis for the Proposed RTCR 5-52 June 2010 

### Exhibit 5.28 Results for Systems Serv ing more than 4,100 People – AIP option

A BC D E F GH I

Community Water Systems (CWSs) - SW
4,101-33,000 10,636,296 - 175,689 - 2,152 215 197 - 20
33,001-96,000 11,058,960 - 182,671 - 534 53 56 - 6
96,001-500,000 10,190,400 - 168,324 - 233 23 24 - 2
500,001-1 Million 2,019,600 - 33,360 - 22 2 - - - > 1 Million 1,686,960 - 27,865 - - - - - - Community Water Systems (CWSs) - GW
4,101-33,000 9,145,224 - 217,321 - 4,545 454 263 - 26
33,001-96,000 4,884,000 - 116,060 - 656 66 53 - 5
96,001-500,000 1,945,680 - 46,236 - 129 13 10 - 1
500,001-1 Million 253,440 - 6,023 - - - - - - > 1 Million 269,280 - 6,399 - - - - - - Nontransient Noncommunity Water Systems (NTNCWSs) - SW
4,101-33,000 50,424 - 1,395 - 5 0 - - - 33,001-96,000 34,320 - 950 - - - - - - 96,001-500,000 31,680 - 877 - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Nontransient Noncommunity Water Systems (NTNCWSs) - GW
4,101-33,000 153,648 - 5,157 - 123 12 9 - 1
33,001-96,000 23,760 - 797 - 4 0 - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Transient Noncommunity Water Systems (TNCWSs) - SW
4,101-33,000 40,656 - 2,040 - 8 1 - - - 33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million 102,960 - 5,167 - - - - - - Transient Noncommunity Water Systems (TNCWSs) - GW
4,101-33,000 156,288 - 7,188 - 116 12 4 - 0
33,001-96,000 34,320 - 1,578 - - - - - - 96,001-500,000 26,400 - 1,214 - - - - - - 500,001-1 Million 63,360 - 2,914 - - - - - - > 1 Million - - - - - - - - - Number of

Routine Monitoring Samples Number of

Additional

Routine Monitoring Samples Number of

Level 2

Assessments (based on Non

Acute Violations) Number of

Corrective

A ctions (based

on Level 2 Assessments) Number of

Corrective Actions (based

on Level 1 Assessments) Number of

Level 2

A ssessments

(based on

Acute Violations) Number of

Repeat Monitoring Samples PWSs Performing

Additional
Annual Site Inspections Number of

Level 1

Assessments PWS Size (Population

Served)

Note: Estimates of the number of assessments and corrective actions are incremental increases in activity predicted to occur under the AIP and Alternative opt ion relative to the current TCR; estima tes of “zero” reflect that no additional such activity occurs as compared to baseline (the current TCR).Economic Analysis for the Proposed RTCR 5-53 June 2010 

### Exhibit 5.29 Results for Systems Serv ing more than 4,100 People – Alternative option

A BC D E F GH I

Community Water Systems (CWSs) - SW
4,101-33,000 10,636,296 - 175,689 - 2,152 215 197 - 20
33,001-96,000 11,058,960 - 182,671 - 534 53 56 - 6
96,001-500,000 10,190,400 - 168,324 - 233 23 24 - 2
500,001-1 Million 2,019,600 - 33,360 - 22 2 - - - > 1 Million 1,686,960 - 27,865 - - - - - - Community Water Systems (CWSs) - GW
4,101-33,000 9,145,224 - 217,321 - 4,545 454 263 - 26
33,001-96,000 4,884,000 - 116,060 - 656 66 53 - 5
96,001-500,000 1,945,680 - 46,236 - 129 13 10 - 1
500,001-1 Million 253,440 - 6,023 - - - - - - > 1 Million 269,280 - 6,399 - - - - - - Nontransient Noncommunity Water Systems (NTNCWSs) - SW
4,101-33,000 50,424 - 1,395 - 5 0 - - - 33,001-96,000 34,320 - 950 - - - - - - 96,001-500,000 31,680 - 877 - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Nontransient Noncommunity Water Systems (NTNCWSs) - GW
4,101-33,000 153,648 - 5,157 - 123 12 9 - 1
33,001-96,000 23,760 - 797 - 4 0 - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Transient Noncommunity Water Systems (TNCWSs) - SW
4,101-33,000 40,656 - 2,040 - 8 1 - - - 33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million 102,960 - 5,167 - - - - - - Transient Noncommunity Water Systems (TNCWSs) - GW
4,101-33,000 156,288 - 7,188 - 116 12 4 - 0
33,001-96,000 34,320 - 1,578 - - - - - - 96,001-500,000 26,400 - 1,214 - - - - - - 500,001-1 Million 63,360 - 2,914 - - - - - - > 1 Million - - - - - - - - - PWS Size (Population

Served) PWSs Performing

Additional

Annual Site Inspections Number of

Routine Monitoring Samples Number of

Additional

Routine Monitoring Samples Number of Repeat Monitoring Samples Number of

Level 1

Assessments Number of

Corrective Actions (based

on Level 1 Assessments) Number of

Level 2

Assessments

(based on

Acute Violations) Number of

Level 2

Assessments (based on Non

Acute Violations) Number of

Corrective

A ctions (based

on Level 2 Assessments)

Note: Estimates of the number of assessments and corrective actions are incremental increases in activity predicted to occur under the AIP and Alternative opt ion relative to the current TCR; estima tes of “zero” reflect that no additional such activity occurs as compared to baseline (the current TCR).Economic Analysis for the Proposed RTCR 5-54 June 2010 

### 5.5 

## Summary of Key Drivers for Benefit and Cost An alyses Output from the
Predictive Model

As presented in Exhibits 5.10– 5.15, the model for small systems (serving ≤ 4,100 people) produces estimates of the number of samples, th e number of Level 1 and Level 2 assessments, and the number of corrective actions implemented as a result of Level 1 and Level 2 assessments under each regulatory scenario. For the AIP and Alternative options, th e model calculates the CAs performed as a net increase from those performed under the current TCR. Those being performed under the current TCR are described in Chapter 7 in the discussion of current TCR costs. The net change in each of the model outputs, in particular sampling regimens and implementation of assessments a nd corrective actions, relative to the baseline (current TCR) under both alternative regulations co nsidered provides the basis for estimating the benefits in the rule, described in Chapter 6 of this EA. Similarly, the cost model applies unit costs to the activities described by these outputs to produce net costs for each regulatory scenario, as described in Chapter 7.

As described in the uncertainty discussion a nd sensitivity analysis presented in Section 5.3.3.1, these key drivers represent the most si gnificant source of uncertainty in the analysis. However, the sensitivity analysis showed th at a 100% increase in the implementation and effectiveness assumptions for CAs (the propor tional increase in the number of effective corrective actions implemented a nd the duration and extent of re duced occurrence) implemented under the AIP option would result in only appr oximately a 30% decreas e in acute events. Conversely, a 50% reduction in CA implementation and effectiveness was estimated to induce less than an 18% increase in acute events. These results are expected to apply similarly to all categories of systems. Based on these results, EPA concludes that changing the assumptions within the likely range (a doubling or halvi ng of current assumptions) would not have a significant effect on the conclusions drawn from th is EA. Similarly, varying the assumptions by size and type of system within a likely range would not be expected to have a significant effect
on the results.

For larger systems (serving >4,100 people) , incremental costs are estimated for the additional reporting activity required under the rule, as well as a slig ht increase in the number of corrective actions implemented for systems serv ing more than 4,100 people. As described in Section 5.4, however, the sampling regimens are not expected to change for these systems, and they’ll experience minimal changes in risk and co st, as described in Chapter 6 and Chapter 7 of this EA, respectively.Economic Analysis for the Proposed RTCR 6-1 June 2010 

## 6. Benefits Analysis

6.1 

## Introduction

This chapter considers the overall change in risk of contamination to Public Water Systems (PWSs), as indicated by the pr esence of total coliforms (TC) and E. coli, associated with compliance with the current Tota l Coliform Rule (current TCR option) and with the proposed Revised Total Coliform Rule (RTCR) (Agreement in Principle or AIP) and the Alternative option. Since E. coli is an indicator of fecal contamination, EPA assumed that a decrease in E. coli occurrence in the distributi on system would be associated with a decrease in fecal contamination in the distribution system. In genera l, this decrease in feca l contamination should reduce the potential risk to human health for PWS customers. Thus, any reduction in E. coli occurrence is considered a benefit of the propos ed Revised Total Coliform Rule (RTCR). Also, since fecal contamination may contain waterborne pathogens including bacteria, viruses, and parasitic protozoa, in general, a reduction in fecal cont amination should also reduce the risk from
these other contaminants.

Based on limitations in available data as descri bed further in Section 6.3 of this chapter,
EPA determined that benefits could not be ca lculated in terms of avoided costs or other quantified benefits related to avoided morbidity or mortality. Therefore, this Economic Analysis (EA) focuses on a qualitative analysis of risk, which is supported by quantitative analysis of predicted outcomes for each regulatory option. The quantitative discussion focuses on net changes in occurrence of contaminant indicator s under both regulatory options considered as compared to the current TCR option. The quali tative analysis consid ers the direction of anticipated changes in risk related to change s in sampling and corrective action regimens under each regulatory scenario (Section 6.2). EPA considered the results of the qualitative and quantified assessments to determine how the current TCR option compares to the AIP and Alternative option in terms of overall change in risk to the population se rved by PWSs across the United States.

The remainder of this chapter is organized as follows:

6.2 Qualitative Benefits Analyses 6.3 Assessment of Predictive Analysis Results 6.4 Uncertainty Sensitivity Analyses
6.5 Other Potential BenefitsEconomic Analysis for the Proposed RTCR 6-2 June 2010 

### 6.2 

## Qualitative Benefits Analyses

When revising an existing drinking water regul ation, one of the main concerns is to ensure that backsliding on water quality and public health protection does not occur. Risk reduction for the AIP is characterized by the acti vities performed that are presumed to reduce risk of exposing the public to contaminated wate r. These activities are considered under each rule component discussed in Sections 6.2.1 – 6.2.8 and summarized in Figure 6.1 below. The discussion in Section 6.2.9 considers how expected overall decreases in this risk for some rule components are offset by expected overall in creases resulting from other components, and provides a net assessment of the di rection in change of risk for the regulatory options considered.

The qualitative analysis uses the best professional judgment of EPA as informed by Total
Coliform Rule Distribution System Advisory Committee (TCRDSAC) deliberations 1 

### , as well as certain quantitative estimates, to estimate the di rectional change in risk for each regulatory component of the AIP and the Alternative option. Quantitative estimates considered include the changes in total coliform o ccurrence and counts of systems conducting assessments and implementing corrective actions shown in Exhibits 6.2 – 6.6 below. Exhibit 6.1 below presents a summary of this evaluation for the AIP and Alte rnative option as compared to the current TCR option. The qualitative analysis discusses the influence of the indivi dual regulatory components under each regulatory option considered on the occurrence of Total Coliform-positive (TC+) and
E. coli -positive (EC+) samples. Since a dose-response relationship between exposure to the fecal
indicator E. coli and adverse health effects from waterbor ne pathogens that can be present with fecal contamination is not adequate ly quantified, the resulting risk to human health is discussed only in terms of the anticipated change in direction of risk.

6.2.1 Implementation Activities

Rule implementation activities are expected to be similar under the AIP and Alternative option. These activities are primarily administrativ e in nature and include items such as reading and understanding the rule, training, and developmen t of reporting and recordkeeping protocols. Because of the similarities in expected impl ementation activities under the regulatory options, they are not expected to have an observably different affect on overall risk relative to current regulations. Both PWSs and states would incur additional burden and costs for transitioning to operations under the AIP or Alternative option re quirements. Because the activities undertaken to make the transition are primarily administrativ e, the additional activities are not expected to have any direct impact on risk.

6.2.2 Routine Monitoring

EPA expects that more frequent monitoring w ould decrease the risk of contamination in PWSs based on an enhanced ability to diagnose and mitigate system issues in a more timely fashion. Conversely, EPA assumes that a less frequent monitoring schedule would result in increased risk. Real-time continuous sampling w ould mitigate the most risk possible based on

1 TCRDSAC deliberations are described in Chapter 3 of this EA.Economic Analysis for the Proposed RTCR 6-3 June 2010 

### sampling schedule; however, it would cost prohibitively more than the periodic sampling practiced under the current T CR and included in the AIP and the Alternative option. EPA’s objective in proposing the sampling schedules incl uded in the AIP and Alternative option was to find an appropriate balance between the factor s of risk mitigation and cost management.

Current TCR Option

The current TCR option requires that a large portion (approximately 40%) of water systems (including all ground wate r and surface water systems) to perform monthly monitoring for total coliforms. Some systems are elig ible for reduced monitoring, as follows.

• Ground water Noncommunity Water Systems (NCWSs) serving ≤ 1,000 people are required to monitor quarterly . States may allow annual monitoring if a sanitary survey conducted in the past five year s shows the system is supplied solely by protected Ground Water (GW) sources and is free of sanitary defects.

• Ground water Community Water Systems (CWSs) serving ≤ 1,000 people may monitor quarterly if they ha ve no history of total colif orm contamination in their current configurations and a sanitary su rvey conducted in the past five years shows that the system is supplied solely by a protected GW source and has no sanitary defects.

AIP

The eligibility requirements for ground water systems to qualify for reduced monitoring under the AIP are more stringent than under the current TCR option, leading to a higher total number of routine samples being taken over the 26-year period of analysis. The primacy agency has the discretion to reduce monitoring fre quency for well operated ground water NCWSs and ground water CWSs serving ≤ 1,000 people. Under the AIP, eligibility for reduced monitoring for NCWSs and CWSs, respectively, is discussed as follows:

NCWSs

To be eligible to qualify for and rema in on annual monitoring after the compliance effective date, noncommunity ground water systems serving ≤ 1,000 people must meet each of the following criteria:

• The most recent sanitary survey shows the sy stem is free of sanitary defects and has a protected water source and meets approved construc tion standards;

• The system must have a clean (TCR) comp liance history (no MCL violations, Level 1 triggers, Level 2 triggers, treatment technique violations or monitoring violations) for a minimum of 12 months;

• An annual site visit (recurring ) by the primacy agency within the last 12 months and correction of all identified sanitary defect s. A voluntary Level 2 assessment by a party approved by the primacy agency may be substituted for the primacy agency annual site visit; andEconomic Analysis for the Proposed RTCR 6-4 June 2010 

### • The primacy agency should encourage additional enhancements to the barriers protecting the distribu tion system from contamination. These measures could include but are not limited to the following: - Cross connection control, as approved by the primacy agency; - An operator certified by an appropr iate primacy agency certification program, which may include regular vi sits by a circuit rider;
- Continuous disinfec tion entering the distribution sy stem and a residual in the distribution system in accordance with criteria specified by the primacy agency; and - Maintenance of at least a 4-log in activation of viruses ea ch day of the month based on daily monitoring as specified in the Ground Water Rule (GWR) (with allowance for a 4-hour exception). - Other equivalent enhancements to water system barriers as approved by the primacy agency.

CWSs

To be eligible for quarterly reduced monitoring, community ground water systems serving ≤ 1,000 people on monthly monitoring after th e compliance effective date must be in compliance with primacy agency certified operator provisions and meet each of the following
criteria:

• The most recent sanitary survey shows the system is free of sanitary defects (or has an approved plan and schedule to correct them), has a protected water source, and meets approved construction standards;

• The system must have a clean (TCR) comp liance history (no MCL violations, Level 1 or Level 2 triggers, treatment technique vi olations or monitoring violations) for a minimum of 12 months; and

• Meet at least one of the following criteria:

- An annual site visit by the primacy agen cy or a voluntary Level 2 assessment by a party approved by the primacy agen cy and correction of all identified sanitary defects (or an approved plan and schedule to correct them), or

- A cross connection control program, as approved by the primacy agency, or

- The system must maintain continuous disinfection enteri ng the distribution system and a residual in the distribut ion system in accordance with criteria specified by the primacy agency, or

- The system must maintain at least a 4- log inactivation of viruses each day of the month based on daily monitoring as specified in the GWR (with allowance for a 4-hour exception); orEconomic Analysis for the Proposed RTCR 6-5 June 2010 

### - Other equivalent enhancements to wa ter systems as approved by the primacy

agency.

Based on the additional protecti on provided by the more stringent criteria to qualify for reduced monitoring, the AIP is expected to re duce risk for Ground Water Systems (GWSs) that qualify for reduced monitoring compared to the eligibility requirement s under the current TCR option. In addition, those systems that no longer qualify for reduced mon itoring are expected to
have a reduced risk as a function of th e increased numbers of samples taken.

Seasonal systems (noncommunity water systems that are operating three or fewer quarters per calendar year) that sample on a re duced schedule under the current TCR option may
retain their current schedules unless a state determines that more frequent sampling is appropriate. For seasonal systems required to move to an increased monitoring schedule, risk
would decrease as a function of the increase in m onitoring. In addition, more explicit procedural requirements related to monitoring under the AIP option (i.e., samples must be taken during the period of highest vulnerability or peak usage) w ould also be expected to reduce risk for seasonal systems.

Alternative option

Under the Alternative option, all systems must initially collect total coliform samples monthly regardless of size or type (i.e., water so urce), which is more frequent for those systems on reduced monitoring schedules under the curren t TCR option or AIP option. Over time, in the second year of rule implementation and beyond, the Alternative option would allow some ground water PWSs to reduce to quarterly monitoring if the systems meet the same qualifications required for quarterly monitoring under the AIP option. Reduced monitoring on an annual schedule is not allowed under the Alternative option, creating a fu rther increase in samples taken over the current TCR option and AIP option. Overa ll, the more frequent monitoring requirements (i.e., all PWSs monitor monthly in the first fe w years after promulgation and no annual reduced monitoring is allowed) would reduce risk as co mpared to the current TCR option to a greater extent than under the AIP option.

6.2.3 Repeat Monitoring

Under the current TCR option, PWS serving ≤ 1,000 people take 4 repeat samples at and within five service connections upstream and do wnstream of the initial total coliform positive (TC+) occurrence event over the course of 24 hour s following the event. Three repeat samples are required for PWSs serving >1,000 people, incl uding one sample at the site of the initial TC+ and two additional samples within five service connections up or downstream of that site.

Under the AIP option and Alternative option, PWSs serving ≤ 1,000 people are only required to take three repeat samples. The reduc tion in the number of repeat samples required could increase risk for any individual sampli ng event. However, the effect of the reduced sampling is expected to be minor. Analysis of the data (see Appendix H for the complete analysis) shows that for all PWSs serving 1,000 people or fewer, two or more of the repeatEconomic Analysis for the Proposed RTCR 6-6 June 2010 

### samples are positive in 75 percent of those instances in which there are any positive repeat samples. For those 75 percent of instances, reduci ng the number of repeat samples from four to three would have no effect on the number of sy stems that would be triggered to conduct an assessment of the system under the AIP option. In these cases, at least one of the remaining repeat samples would still be total coliform- positive, and only one positive repeat sample is required to trigger an assessment.

The data show that one repeat sample is positive in 25 percent of the instances in which any of the four repeat samples is positive. For these instances, EPA estimates that if only three repeat samples had been taken instead of four, three out of four (or 75 percent) of these positive samples would still have been encountered. The analysis indicates that if the number of required repeats were reduced from four to three, ther e would still be almost as many (approximately 94 percent) situations lead ing to an assessment being triggered for the system (0.75 + 0.75*0.25 = 0.94).

Although dropping the required number of repeat samples from four to three means that some fraction of triggers may be missed representing an increase in risk, EPA believes that the other provisions of the AIP opti on as described in this chapter compensate for that change and that, taken as a whole, the provisions of the AI P option provide for great er protection of public
health.

6.2.4 Additional Routine Monitoring

Under the current TCR option, PWSs serving ≤ 4,100 people must conduct additional routine monitoring in the month following a TC+ sample. All systems must collect and test a minimum of five samples in the month following the TC+ sample, unless the primacy agency finds that additional sampling is unnecessary or the primacy agency determines the cause of the TC+ sample and establishes that the system has corrected or would correct the problem.

EPA is proposing to retain the requirement of taking additional routine samples the month following a TC+ sample for systems on qu arterly or annual monitoring. The advisory committee recognized both the benefits and the limitations of additional routine monitoring. Under the AIP option, a system that has a Level 1 trigger must conduct an assessment, and if a problem is found, the system must take corr ective action. Under such circumstances, the advisory committee believed that additional samples collected the following month are appropriate to help to recognize the problem if it still persists. W ithout the provision of additional monitoring, systems on annual or quarter ly monitoring would not take any samples the following month. Systems having a Level 2 assessm ent are triggered into a monthly monitoring
and therefore have less need for additional routine monitoring to i ndicate if a problem persists.

For systems required to take the additiona l routine samples the following month (i.e., systems on quarterly or annual monitoring), the AIP option changes the requirement from taking a total of five routine samples to a requirement of just three routine samples. The advisory committee recognized that it is appropriate to drop from five to three samples the following month to reduce monitoring costs while still main taining a substantial lik elihood of identifying aEconomic Analysis for the Proposed RTCR 6-7 June 2010 

### problem if a problem persists. EPA recognizes th at a reduction in the number of samples taken
could also mean a reduction in the number of positive samples found. However, the reduction in the number of additional routine samples in conj unction with the new assessment and corrective action provisions of the proposed RTCR (discu ssed in section III.A.5 of the proposed RTCR preamble (USEPA, 2010c) leads to a rule that is ultimately more pr otective of public health (i.e.,

more E. coli MCL violations being prevented) and impr ovement in water quality (i.e., decrease
in the total coliform and E. coli -positive hit rates observed as shown by EA occurrence modeling results).

For systems taking at least one sample m onthly, the advisory committee recommended no additional routine samples for these systems for the following reason. Taking no additional routine samples the following m onth substantially reduces monito ring costs. The assessment and corrective action provisions will give systems the ability to identify and prevent the occurrence of problems. EA modeling results show that al though there is a decrease in the number of E. coli MCL violations found with the decrease in the nu mber of additional routine samples taken (i.e., going from five samples to one during the mont h following a TC+ sample), the assessment and corrective action provisions leads to more E. coli MCL violations being prevented compared to the current TCR (see Exhibit 6.7 for more details).

In addition, whenever a TC+ sample occurs during routine sampling, there is also a requirement to conduct repeat samp ling to clarify if potential path ways to contamination persist. For small systems serving 1,000 people or fewer, if a repeat sample is TC+, at least a Level 1 assessment will be triggered. If a sanitary defect(s) is (are) f ound, the system is required to correct the sanitary defect(s). The absence of any repeat positive sample provides some indication that the problem is not persisting. For systems on monthly monitoring, these two conditions mitigate the need for additional routine sampling for the following month.

Although the changes to the additional rou tine monitoring provisions mean that some fraction of triggers may be missed representing an increase in risk, EPA believes that the other provisions of the proposed RTCR as described in this chapter compensate for that change and that, taken as a whole, the provisions of the RTCR provide for greater protection of public
health.

6.2.5 Annual Site Inspections

The current TCR option does not include any requirements for annual site inspections. However, based on discussions with stakeholders, some states do perform annual site visits for any systems on an annual sampling schedule.

Under the AIP, ground water NCWSs serving ≤ 1,000 people must, within one year of the compliance effective date, have an initial (and annua lly thereafter) visit by the state or an annual voluntary Level 2 assessment by a party approved by the state to remain on an annual monitoring
schedule. Because of the cost differential between conducting a nnual site inspections and the alternative (quarterly monitoring), EPA has es timated that only those states that already voluntarily conduct annual site in spections under the current TCR option would also do so underEconomic Analysis for the Proposed RTCR 6-8 June 2010 

### the AIP. Therefore, no risk reduction is expected for these systems (and thus overall) from this regulatory component under the AIP.

The Alternative option does not allow syst ems to reduce to a frequency of annual monitoring and therefore does not include an annual site inspec tion requirement. However, based on discussions with stakeholders, those states that currently conduct an nual site assessments under the current TCR option may no longer have th e resources to continue the inspections and conduct quarterly monitoring under the Alternativ e option. For NCWSs on annual monitoring, the TCRDSAC believed that requiring a system to have an annual site visit or a Level 2 assessment provides at least an equivalent level of diagnosis of problems and vulnerabilities that might exist as compared to quarterly monitoring without an annual site visit. This trade-off between annual monitoring with site inspecti ons and three additional routine samples (i.e., quarterly monitoring with no site inspections) would potentially result in an increased risk for the Alternative option compared to the AIP.

6.2.6 Assessments

Under the current TCR option, although there is no explicit “assessment” required, some level of investigation is necessary to evaluate th e cause of a problem. In particular, a system must investigate a problem and is required to notif y the public and state under different scenarios. Specifically, a PWS must:

• Report any acute MCL violation to the state no later than the end of the business after the system learns of a violation;

• Notify the public within 24 hours of an acute MCL violation.

• Notify the public within 30 days of a monthly/non-acute MCL violation;

Under the AIP and Alternative option 2 

### , PWSs are required to perform and submit a
Level 1 assessment if:

• Systems taking 40 or more samples per month have more than 5.0% total coliform positive samples;

• Systems taking less than 40 samples per m onth have two or more total coliform positive samples in one month; or

• A system fails to take all required repeat samples after a single total coliform positive sample.

2 Requirements for the current TCR, pr oposed RTCR, and Alternative option are described in detail in Chapter 3 of this EA.Economic Analysis for the Proposed RTCR 6-9 June 2010 

### A more detailed examination of the syst em, including its monitoring and operational practices (a Level 2 assessment), is required if a system has:

• An E. coli MCL violation;

• An E. coli monitoring violation; or

• A second Level 1 trigger within a rolling 12 month period.

Mandatory assessments are a new requiremen t under the AIP and Alte rnative option, and also represent an increased focus on problem solving from the less defined investigations conducted under the current TCR option. Because of the more explicit requirements of the assessments, it is expected that more problems would be identified and resolved. As a result, the risk relative to the current TCR option is assumed to decrease.

6.2.7 Corrective Actions

Corrective actions are not explicitly require d under the current TCR option. However, systems do perform corrective actions based on inves tigations they perform (see Section 6.2.6) in response to positive samples.
Under the AIP and Alternative option, PWSs are responsible for co rrecting any sanitary defects found during either a Leve l 1 or Level 2 assessment. For corrections not completed by the time of submission of the assessment form, systems must complete the corrective action(s) on a schedule determined by the state in cons ultation with the system. Systems would be required to notify the state when they have completed each corrective action. Failure to implement a corrective action is considered a tr eatment technique viola tion, subject to public
notification.

EPA does not have data on the existing rates at which corrective actions are taken under the current TCR option, so an assumption of the incremental percentage of assessments resulting in corrective action (10 percent) 3 

### is made as part of this EA and subsequent evaluation of changes in risk. Overall, increased protection provid ed by this net increase in corrective action as a result of requiring systems to implement a co rrection action through an enforceable mechanism
would reduce risk under both the AIP and Alternative option.

3 The 10 percent assumption is based on EPA discussions with stakeholders regarding experiences with implementing the current TCR and the expected impact of proposed RTCR revisions. A sensitivity analysis evaluating alternative assumptions was conducted. Results of these analyses are discussed in Chapter 5 (section 5.3.3.1).Economic Analysis for the Proposed RTCR 6-10 June 2010 

### 6.2.8 Public Notification

Monthly/Non-acute MCL Violations

The current TCR option requires public notific ation within 30 days of a monthly/nonacute MCL violation or 24 hours of an acute MCL violation.

Both the AIP and Alterna tive option would require:

• Tier 1 public notificatio n within 24 hours of an E. coli MCL violation;

• Tier 2 public notification within 30 days of a treatment tech nique (TT) violation; and;

• Tier 3 public notification within a year following either a routine monitoring violation or a reporting violation.

However, under either option, th e public notification requiremen ts for monthly/non-acute MCL violations would no longer be required (the AIP and Alternative options do not include monthly/non-acute MCL violati ons). Since monthly/non-acute vi olations account for a large
number of violations under the cu rrent TCR option, there is expected to be a large decrease in the number of notices presented to the public. If it is assumed that such notices provide information that aid in risk avoidance by water customers, risk may increase as a result of reducing this public notification requirement to the extent th at a risk exists. Because PWSs are no longer required to send out notices for monthly/non-acu te MCL violations or the monitoring results 4 

### that triggered them under the current TCR, ther e is also the potentia l that some PWSs may become less responsive in addressing TC hits or preventing them from occurring in the first place.

The TCRDSAC evaluation of the current TCR option public notification also concluded that the numbers of monthly/non-acute MCL viol ation notices that go out to the public are confusing. Unlike acute MCL violat ions associated with positive E. coli samples, monthly/nonacute MCL violations may have no connection to a dire ct health risk because TC+ samples do not indicate a direct threat to pub lic health. To the extent that a high number of notices issued for monthly/non-acute MCL violations result in false alarms, consum ers may not appreciate a notice of an acute MCL violation. Therefore, the EP A concluded, using best professional judgment informed by TCRDSAC’s evaluation, that risk may decrease through th e elimination of the Public Notification (PN) requirement for mont hly/non-acute MCL violations under the AIP and Alternative option. Additionally, resources used to issue high numbers of monthly/non-acute MCL violations and (as well as the time spen t responding to customer inquiries about the violations) may be better employed on other PWS issues which could result in further reduced
risk.

As discussed above, the influences on risk of eliminating the PN requirements for monthly/non-acute MCL violations may move risk in both directions. A decrease in the overall

4 Under the current TCR option, for systems taking fewer than 40 samples per month, an acute violation occurs if 2 or more samples are TC+; for systems taking 40 or more samples per month, an acute violation is triggered by >5% of TC+ samples.Economic Analysis for the Proposed RTCR 6-11 June 2010 

### information received by consumers may result in reduced ability to undert ake averting behaviors necessary to avoid potentially contaminated drinking water when appropriate, increasing potential risk. Conversely, overl y abundant notices may cause conf usion or indifference that may result in consumers not taking averting actions wh en appropriate (i.e., ignoring an acute violation notice). Thus focusing on fewer, yet more “serio us” notices may result in a decrease in potential risk. Risk may also decrease as a result of PWSs being able to better employ resources currently used on notice issuance and follow-up.

EPA also considered the effect of Tier 2 PN requirements for TT violations, which allow for up to a 30-day time delay between incurrence of the violation and not ification to the public. This time delay could equate to some increased risk for the public relative to a scenario where an immediate notification was require d. However, the change in risk relative to the current TCR option, which does not require assessments or corrective actions, is a decrease in risk. In allowing PWSs the flexibility to take up to a month before issuing PN, EPA is attempting to balance the potential public health benefits associated with having prompt notification for all TT violations with the potential inefficiency and extr a costs related to cases where the same level of expedience may not be necessary.

In summary, EPA assumes that there would not be an overall change in risk by changing PN requirements for monthly/non -acute MCL violations under the proposed RTCR, but given the contradictions in potential risk reductions the potential change in risk is best characterized as
"unknown."

Monitoring and Reporting Violations

The TCRDSAC also evaluated the effects of revised PN requirements for monitoring and reporting violations under the AIP and Altern ative option and concl uded that significant reductions in monitoring and reporting violations and associated costs may be realized through the revised regulatory framework of the AIP. For the current TCR option, monitoring and reporting violations result in Tier 3 PN. Unde r the AIP and Alternative option, monitoring violations are separate from the reporting viol ations, and the monitori ng PN requirements are more stringent as compared to the monitoring and reporting violations under the current TCR.

For repeat sampling, a PWS that fails to ta ke every required repeat sample following a routine EC+ sample must:

• Initiate Tier 1 PN within 24 hours;

• Initiate consultation with the state no later than 24 hours after learning of the violation, to determine additional PN requirements, if any;

• Perform a level 2 assessme nt/corrective action: and

• Increase to a minimum of monthly monitoring.

For a PWS that fails to take every required repe at sample after any single TC+ sample, the PWS must perform a level 1 assessment/corrective act ion. Failure to perform a required assessmentEconomic Analysis for the Proposed RTCR 6-12 June 2010 

### and/or corrective action results in a treatment technique violation (Tier 2) and a minimum of monthly monitoring.

For routine and additional ro utine monitoring, a PWS that does not take every required routine sample, or every required additional routine sample, in a compliance period is still subject to Tier 3 PN; noncompliance with sampling requirements does not necessarily increase
the likelihood that a PWS will be contaminated with fecal contamination and/or a waterborne pathogen and so does not present a direct or immediate public heal th risk. However, if the PWS has monitoring violations in 2 of 4 quarters (for systems on quarterly monitoring) or misses its required annual sample (for systems on annual m onitoring), the PWS must revert to monitoring no less than monthly.

Overall, the added PN stringency for monito ring violations is expected to decrease potential risk under the AIP and Alternative opti on as PWSs opt to perform required sampling to avoid transition to increased monitoring re quirements or other additional actions.

Summary Exhibit

The component discussions in Sections 6.2. 1 through 6.2.8 above address the individual effects under each rule component on the various sy stem types and sizes. The terms “increase,” “decrease,” and “no change” in Exhibit 6.1 indicate the direction of change in risk under the AIP and Alternative option relative to the current TCR option. Risk may change for some system sizes or types and not for others under a given ru le component. In such cases, Exhibit 6.1 reflects the overall change in risk direction and does not necessarily apply to all types and sizes of systems.Economic Analysis for the Proposed RTCR 6-13June 2010Exhibit 6.1 Potential Changes inRisk under the AIP and Alternative Option Relative to the Current TCRProposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskAIP optionAlternativeoption AIP optionAlternativeoption AIP optionAlternativeoptionImplementationActivitiesNone None None None No change No changeRoutineMonitoring(IncludingReducedMonitoring)None NoneIncreased stringencyin requirements toqualify for reducedmonitoring along withrequirement to returnto baselinemonitoring upon lossof these criteria isexpected to result indecreased risk (i.e.,fewer PWSs willqualify and thereforemore will monitormore frequently).PWSs all monitormonthly in the first fewyears of implementationof the RTCR, which is anincrease in samplingfrequency for systemsthat monitor quarterly orannually under thecurrent TCR. After thefirst few years, systemsmay reduce to quarterly,but none may reduce toannual monitoring,creating a decrease inrisk for systems onannual monitoring underthe current TCR.Decrease DecreaseEconomic Analysis for the Proposed RTCR 6-14June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskRepeatMonitoringRequired repeatsamples reducedfrom 4 to 3 forsystems serving<1,000 peopleRequired repeatsamplesreduced from 4to 3 for systemsserving <1,000peopleNone None Increase IncreaseAdditionalRoutineMonitoringAdditional routinesamples are nolonger required forPWSs monitoringmonthly.Ground waterPWSs serving≤1,000 peoplewould reduceadditional routinesamples from 5 to3.Additionalroutine samplesare no longerrequired forPWSsmonitoringmonthly.Ground waterPWSs serving≤1,000 peoplewould reduceadditionalroutine samplesfrom 5 to 3.None None Increase IncreaseAnnualInspectionsNone (only statescurrentlyperforming annualinspections areexpected tocontinue)Based ondiscussions withstakeholders,states thatcurrentlyconduct annualsiteassessmentsunder thecurrent TCRmay no longerhave theNone (only statescurrently performingannual inspectionsare expected tocontinue)None No change IncreaseEconomic Analysis for the Proposed RTCR 6-15June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskresources tocontinue theinspections andconductquarterlymonitoringunder theAlternativeoption.Assessments None NoneMandatoryassessments are anew requirement.Mandatory assessmentsare a new requirement.Decrease DecreaseCorrectiveActionsNone NoneMandatory correctiveactions are a newrequirement.Mandatory correctiveactions are a newrequirement.Decrease DecreasePublicNotification –Monthly/NonAcute MCLViolationsReduction inavailable publicinformationPossible PWScomplacencyReduction inavailable publicinformationPossible PWScomplacencyLess confusion (PNmore in line withpotential health risks)PWS resources usedmore efficientlyLess confusion (PNmore in line withpotential health risks)PWS resources usedmore efficientlyUnknown UnknownEconomic Analysis for the Proposed RTCR 6-16June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskPublicNotification –Monitoring andReportingViolationsNone NoneIncreased stringencyof PNs motivatesPWSs to conductrequired sampling.Increased stringency ofPNs motivates PWSs toconduct requiredsampling.Decrease DecreaseOverall Decrease DecreaseNote: Detailed discussion of the rationale for determinations of potential risk for each rule component is presented in Ch. 6 (Section 6.2) of this EA. Implementationactivities consist of administrative activitiesby PWSs and states to implement the rule.Assessment of potential changes in risk for monitoring components is anoverallassessment. Potential changes (or static state) of risk for particular system sizesand types differ according to individual regulatory requirementsand are discussed in Section 6.2. Chapter 3 provides a detailed description of the regulatorycomponents for all three regulatory scenarios, and the Preamble to the RTCR provides additional discussion of the TCRDSAC process and the rationale underlyingthe structure of the regulatory options considered.Economic Analysis for the Proposed RTCR 6-17 June 2010 

### 6.2.9 Summary of Qualitative Benefits Analyses

The discussions above describe relative risk s in terms of individual components of the regulatory options. Based on the discussions pres ented above, EPA has used best professional judgment informed by the TCRDSAC to qualita tively estimate the re lative risk of each regulatory option. These assessments were made with contributions fr om a wide range of drinking water experts, including public health scientists, en gineers, administrators, and regulatory experts. The overall chan ge in risk relative to the current TCR baseline is a result of the complex interactions of a ll regulatory components. As th e discussion above shows, under repeat and additional routine monitoring provisions for the AIP and Alternative option, there is a potential for increased risk for PWS customers because total coliform monitoring frequency may be reduced for some PWSs. However, this increase is expected to be more than offset by potential decreases in risk from increased rou tine monitoring and the addition of the assessments and corrective action provisions that will find and fix problems identified by monitoring.

The consensus opinion resulting from the TCRD SAC deliberations was that the proposed RTCR, as described in the AIP, would achieve a net risk reduction compared to the current TCR option. The committee applied best professional judgment in determining that the increased protection provided by the new requirements for implementing focused assessments and implementing appropriate corrective actions would mo re than offset any potential increase in risk introduced by the reduction in samples and othe r changes resulting from the AIP. The committee considered that the Alternative option presents po tential for further reduction in risk due to the increased numbers of samples taken, especially in the first several years of implementation. However, the additional burden 5 

### of requiring all PWSs to initially monitor on a monthly basis (regardless of PWS size or type ) and limiting reduced monitoring to quarterly (disallowing annual monitoring) would fall disp roportionately on small systems based on their proportionately large increase in ac tivity under the AIP.

6.3 

## Assessment of Predictive Analysis Results

Based on discussions in and informati on developed for the TCRDSAC meetings (described in Chapter 3 of this EA), EPA anticip ated prior to beginning th is EA that the proposed RTCR would not be a significant rule in terms of costs (i.e., less than $100 million annually). However, EPA considered the feasibility of performing a traditional risk assessment that would produce quantified estimates of cost s, benefits, and net costs and be nefits, as outlined in section 1412 (b)(3)(C) of the Safe Drinking Water Act (SDW A). For this type of analysis, the minimum information requirements comprise data on cont aminant occurrence; exposure rates in the population defined for the various pathways (i.e ., water consumption, inhalation, and dermal contact); potential health effects associated with exposure to contaminated water; and a doseresponse relationship. A quantified benefits analys is would use this information to estimate the
number of avoided cases of morbid ity or mortality associated with the rule, which would then be valued in terms of saved lives and pres erved quality of life and work capacity.

5 Additional costs under the Alternative option are discussed Chapter 7 of this EA.Economic Analysis for the Proposed RTCR 6-18 June 2010 

### For the proposed RTCR EA, the available info rmation includes data on the incidence of positive TC+ samples collected under the curren t TCR option over the 6 year period from 1998 – 2005, from which EPA selected one complete year (2005) to use for anal yses in this EA, as explained in Section 4.2 of this EA. For the ye ar 2005, EPA also has data on TC+ samples that subsequently test positive for E. coli (using EPA-approved standard methods available at that time). No other national occurrence data are available.

As discussed in Chapter 2 of this EA, the presence of E. coli is an indication that the
water contains fecal contamination. Some E. coli strains (or serotypes) such as E. coli O157:H7, for example, are pathogens. However, EPA recogni zes that the EPA-approved standard methods
available for E. coli do not typically identify the presence of the pathogenic E. coli strains, such

as E. coli O157:H7. Thus, E. coli occurrence, as used in this EA, serves as an indication of fecal
contamination but not necessari ly pathogenic contamination. E. coli occurrence does not confer any significant quantitative information about the likelihood of health effects (e.g. acute gastrointestinal illness or chronic illnesses as de scribed in Chapter 2 of this EA) from consuming drinking water contaminated with fecal indicator organisms.

There are few data reporting the co-occurren ce in a single sample of fecal indicator E. coli (assayed using EPA-approved standard methods) and pathogenic E. coli strains. One notable exception are the data reported by Cooley et al . (2007), which showed high concentrations of pathogenic E. coli strains in samples containing high concentrations of fecal indictor E. coli

. These data are from streams and other poor quality surface waters surrounding California spinach fields associated with the recent E. coli O157:H7 foodborne outbreak . Data equivalent to these are not available from drinking water samples collected under the current TCR option

.

Absent any definitive data on co-occurrence of fecal indicator ( E. coli ) and pathogenic E. coli, EPA did not estimate the cases of morbidity or mortality avoided. Instead, EPA estimated changes in occurrence and the resulting changes in assessments and corrective actions performed for systems serving ≤ 4,100 people. For systems serving >4,100 people, EPA applied the 2007
violations data to estimate the increase in e ffective corrective actions implemented. Discussion of reductions in risk, then, considers the ch ange in occurrence and corrective actions implemented for systems serving < 4,100 and the changes in corrective actions implemented for systems serving >4,100. 6



### For all systems, EPA also estimated the beha vioral response of the regulated community based on projected occurrence rates or violations under the AIP and Altern ative option, including the frequency of Level 1 or Level 2 assessments and the type and number of corrective actions implemented by PWSs to address the problems iden tified. EPA expects that the effects of these changes on risk will be varied, as described in Section 6.3.1.

6 The rationale for using different metrics as proxies for risk reduction in systems serving ≤ 4,100 people and those serving > 4,100 is explained in Chapters 4 and 5 of this EA.Economic Analysis for the Proposed RTCR 6-19 June 2010 

### 6.3.1 Assessment of Predictive Analys is Results for Small (Serving ≤ 4,100 People) and Large (Serving >4,100 People) Systems

Because the PWSs serving 4,100 people or fewer have a higher initial E. coli occurrence and will be triggered into more assessments and corrective actions than larger PWSs, the increase in benefits for these small systems will be more evident as compared to the larger systems. In particular, model results suggest that customers of small ground water TNCWSs serving 100 or fewer people, which constitute appr oximately 40 percent of PWSs, experience the most improvement in water quality under the proposed RTCR. That is, the occurrence of E. Coli is predicted to decrease more for these systems that for other systems types.

6.3.1.1 Small Systems (Serving ≤ 4,100 People)

For small systems 7 

### (serving ≤ 4,100 people), EPA developed a model to simulate regulatory responses for a 30-ye ar period of analysis, includi ng years 1 – 5 in which GWR 8 

### is in effect, years 3 – 5 in which RTCR is being implemented, and years 6 - 30 during which RTCR requirements are in effect. The 30-year modele d time period includes a total of 28 years of RTCR impacts post promulgation. Although this EA considers benefits and costs for only 25 years post promulgation, the 30-ye ar period was presented in Chap ter 5 for broader consideration of the appropriateness of the model in terms of its results. The 25 years post promulgation that are considered in this EA encompass years 3 – 27 of the 30-year modeled period. A complete description of the model is provided in Chapter 5 of this EA, and data sources used are described in Chapter 4.

Output from the smaller system simulation model includes the following estimates for each year of analysis:

- Samples taken (routine, additi onal routine, and repeat);

- Number of positive results (TC+ and/or EC+)

- Level 1 and Level 2 assessments conduc ted based on non-acute violations;

- Level 2 assessments conducted ba sed on acute violations; and

- Corrective actions based on Level 1 a ssessments and Level 2 assessments.

The results of analyses in terms of expected changes in hit rates (positive samples/totals samples taken) over time are presented in chapte r 5 (Section 5.3.3) and Appendix B. Predicted
TC+ hit rate results reflect the overall increase in water quality expected over time under the AIP and Alternative option. Exhibits 6.2 – 6.4 present a summary of the additional endpoints listed above for the 25-year period of anal ysis following rule promulgation.

7 The threshold for defining PWSs as “small” varies depending on the context. For the purpose of this EA, small systems are defined as those serving < 4,100 people.

8 Reductions in EC+ occurrence or violations are only attributable to the proposed RTCR if they result from requirements of the proposed RTCR alte rnatives; reductions resulting from the GWR are not attributable to the proposed RTCR and are not considered further in this chapter. As described in sections 4.2, 4.3, and 5.2 of this EA, GWR effects are incorporated to adjust source data to the appropriate baseline for this EA.Economic Analysis for the Proposed RTCR 6-20 June 2010 

### As discussed earlier in this section, because a dose-response relationship between EC+ occurrence (i.e., acute violations) and illness is no t available, EPA is focusing on changes in EC+
occurrence. EPA assumes that reduced occurrence in PWSs should generally correlate with a
reduction in risk of contamination to PWS drinki ng water. Therefore, the acute violation rates predicted under the AIP and Altern ative option (Exhibits 6.3 – 6.4) represent a level of risk of contamination that is reduced from that pred icted under the current TCR option (Exhibit 6.2). The numbers of predicted acute violations have two major drivers. First, improvements in water quality are predicted to result in fewer acute violations. Second, the monitoring frequency impacts the number of acute viol ations found, regardless of wa ter quality. Both decreases in acute violations attributable to water qualit y improvements and increases due to additional diagnostic ability of more samples taken result in reduced risk. The combination of these two influences in the predictive model means that th e risk is expected to be lower even though the number of predicted acute violat ions may actually be higher or lo wer than under the current TCR option as reflected in exhibits 6.2 – 6.4. This c oncept is discussed in the uncertainty analysis in Section 6.4 of this chapter.

The changes in the steady state estimates of annual acute violations from the current TCR option to the AIP and Alternative option are show n in Exhibit 6.5 and 6.6 in absolute numbers and as a percentage change fr om the TCR, respectively. The steady state in the model refers to the period beginning in years 7 (CWSs) and 9 (NCWSs) following promulgation, after the proportions of systems sampling on monthly, qua rterly, or annual regimens are adjusted following a period of assessment. 9 

### Systems that qualify for reduced monitoring will begin their new regimens in years 7 and 9 after promulga tion, respectively, for CWSs and NCWSs. The estimates shown in Exhibit 6.5 for small systems are from the predictive model and reflect the average annual estimates for the 25-year peri od of analysis, which includes 3 years of implementation followed by 22 years in which new ru le requirements are in effect. To accurately reflect the results under this sc hedule, the model output for the 22 years of post-implementation activity is divided by 22, rather than the enti re 25 years, which woul d distort the results downward. The steady state reductions in the nu mber of annual acute violations found under the AIP and Alternative option primarily reflect the benefits of corrective actions under these two options in preventing many of the acute violations that would otherwise occur over this period.

These results show that under the AIP, no subgroups are predicted to experience an
increase in annual acute viola tions. While most categories of systems/sizes would experience a decrease in predicted numbers of violations under the Alterna tive option, six categories would actually experience an increase (a positive percen t value in this exhibit): NTNC ground water

9 The effective date of the proposed RTCR occurs after 3 years of implementation, at the start of year 4 post promulgation. For CWSs, years 4 - 6 post promulgation are the period of assessment for considering potential to move to reduced monitoring for systems; for NCWSs, years 4 - 8 are the period of assessment. In Chapter 5 of this EA, these transitions are presented on the 30-year scale of the modeling period rather than the 25-year scale of the RTCR EA period of analysis. In Chapter 5, Ex. 5.16 – 5.21 show that the steady state begins in model year 9 (CWSs) and model year 11 (NCWSs). Under the Alternative option, the period of assessment occurs in years 4 – 8 post promulgation; this represents model years 6 – 10. PWSs under the Alternative option begin their steady state regarding reduced monitoring schedules in year 9 post promulgation (model year 11). Chapter 5 provides a description of the criteria used to determine the percent of systems qualifying for reduced monitoring under the proposed RTCR and Alternative option. This assessment is not made for simulating systems operating under the current TCR; they are assumed to remain on the initial schedule presented in Chapter 4 (baseline).Economic Analysis for the Proposed RTCR 6-21 June 2010 

### systems serving 501-1,000 people and Transien t Noncommunity (TNC) ground water systems serving ≤ 100, 101-500, and 501-1,000 people. It is importa nt to note that in all cases except two,
the absolute increases in annual acute violations pred icted under either option is very small ( ≤ 1 annual acute violation as shown in Exhibit 6.5), but translate into observable percentage changes in Exhibit 6.6. The two categories with an increas e of greater than one annual acute violation are the TNC GW systems serving ≤ 100 people and those servin g 101-500 people, for which increases of approximately 52 and 16 annual acute violations, respectively, are predicted. For
these small TNCWSs under the Alte rnative option, increased monitoring is expected to lead to an overall increase in annual acute violations (and is also the driver of the greater total number of annual acute violations predicted).

As discussed earlier, a decrease in acute vi olations may be caused by an improvement in water quality, which in this model would result fr om an increased number of effective corrective actions being implemented (i.e., occurrence even ts are “prevented”). An increase in acute
violations can be attributable to a decrease in water quality or a PWS improving its ability to diagnose more issues (e.g., through more sampling). Alternatively, a decreas e in acute violations could be caused by a decreased ability in PWSs to diagnose the occurrence of TC/EC because of a reduced sampling schedule, resu lting in undetected or “missed” occurrence events. Section 6.4 of this chapter presents a stepwise analysis to discern the relative signifi cance of the effects of reduced additional routine samples and increased corrective action efficacy as shown by predictions of “prevented”, “found”, and “mi ssed” acute violations under the AIP.

6.3.1.2 Large Systems (Serving >4,100 People)

The number of acute and non-acute MCL viola tions for a given group (based on system type and water source) of PWSs serving >4, 100 people was estimated using 2005 Safe Drinking Water Information System-Federal Version (SDWIS/FED) data (USEPA 2005a). These
estimates were used to determine the number of Level 1 and Level 2 assessments and associated corrective actions triggered for large systems in the period of analysis. EPA made a simplifying assumption that for PWSs serving >4,100 peopl e the number of annual assessment triggers would remain constant throughout the 22 years following proposed RTCR implementation. As does the occurrence model for smaller systems, this analysis assumes that systems responding to a Level 2 assessment trigger (i.e., an acute MCL violation under the current TCR option) would identify and specifically address the cause of th e contamination at a rate increased by 10 percent
under the AIP and Alterna tive option compared to the current TCR option 10



### .

Exhibits 6.2 – 6.4, described in Section 6.3. 1.1 for small systems, also include the number of activities (assessments and co rrective actions) EPA expects PWSs to implement under each of the regulatory options considered for large system s. Any reduction in risk is estimated to derive from the additional corrective actions predicted per the explanation above. Exhibit 6.5 also reflects that EPA is not quantifying any poten tial change in the number of annual acute violations for PWSs serving >4,100 people durin g the period. This assumption simplifies the analysis and is consistent with EPA’s understa nding based on TCRDSAC deliberations and best professional judgment that larger systems are at a relatively steady st ate with regard to

10 See footnote 3.Economic Analysis for the Proposed RTCR 6-22 June 2010 

### operations. Larger systems have been in a positi on relative to smaller systems to diagnose more and address the cause of acute violations more, a nd they have likely had more resources to apply in maintaining and updating their systems on a re gular basis. Therefore, EPA does not believe that larger systems will make many changes base d on RTCR implementation, or that they will experience large changes in their occurrence ra tes for TC and EC after RTCR promulgation.Economic Analysis for the Proposed RTCR 6-23 June 2010 

### Exhibit 6.2 Predicted Outcomes (25-Year Period of Analysis) under Current TCR

A BC DE F G H I J=E+G+H
Community Water Systems (CWSs) - SW

≤ 100 1,170 304,098 23,747 19,160 541 - 156 168 - 864
101 - 500 2,150 562,214 26,578 21,338 621 - 181 112 - 913
501-1,000 1,173 306,733 14,501 11,641 339 - 99 61 - 498
1,001-4,100 2,938 1,920,789 55,202 33,730 931 - 149 123 - 1,203
4,101-33,000 3,164 10,636,296 - 186,781 2,152 - 197 - - 2,349
33,001-96,000 720 11,058,960 - 194,204 534 - 56 - - 590
96,001-500,000 308 10,190,400 - 178,951 233 - 24 - - 257
500,001-1 Million 31 2,019,600 - 35,466 22 - - - - 22

> 1 Million 17 1,686,960 - 29,624 - - - - - - Totals 11,671 38,686,051 120,028 710,896 5,373 - 861 463 - 6,697
Community Water Systems (CWSs) - GW

≤ 100 11,938 2,815,951 286,073 194,462 9,772 - 1,141 5,383 - 16,295
101 - 500 13,892 3,344,578 243,895 171,252 8,169 - 1,025 4,214 - 13,408
501-1,000 4,467 1,072,202 70,803 51,673 2,250 - 284 1,050 - 3,584
1,001-4,100 6,443 3,997,293 160,710 100,618 3,545 - 477 2,808 - 6,831
4,101-33,000 3,156 9,145,224 - 230,201 4,545 - 263 - - 4,807
33,001-96,000 335 4,884,000 - 122,938 656 - 53 - - 709
96,001-500,000 63 1,945,680 - 48,976 129 - 10 - - 139
500,001-1 Million 4 253,440 - 6,380 - - - - - - > 1 Million 3 269,280 - 6,778 - - - - - - Totals 40,301 27,727,648 761,481 933,279 29,066 - 3,253 13,455 - 45,773
Nontransient Noncommunity Water Systems (NTNCWSs) - SW

≤ 100 250 65,009 4,918 4,005 93 - 38 67 - 197

101 - 500 253 66,038 3,734 3,008 80 - 29 39 - 148
501-1,000 88 22,970 1,299 1,046 28 - 10 14 - 52
1,001-4,100 72 41,740 2,147 1,351 43 - 16 33 - 91
4,101-33,000 22 50,424 - 1,632 5 - - - - 5
33,001-96,000 2 34,320 - 1,111 - - - - - - 96,001-500,000 1 31,680 - 1,025 - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million - - - - - - - - - - Totals 688 312,182 12,097 13,179 248 - 92 153 - 493
Nontransient Noncommunity Water Systems (NTNCWSs) - GW

≤ 100 8,826 971,538 128,775 84,992 5,581 - 856 3,829 - 10,267
101 - 500 6,613 725,785 66,525 43,597 3,130 - 447 1,273 - 4,849
501-1,000 1,718 190,649 16,037 10,680 744 - 95 298 - 1,136
1,001-4,100 812 460,470 28,214 17,790 818 - 169 974 - 1,961
4,101-33,000 70 153,648 - 5,936 123 - 9 - - 132
33,001-96,000 2 23,760 - 918 4 - - - - 4
96,001-500,000 - - - - - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million - - - - - - - - - - Totals 18,041 2,525,850 239,551 163,913 10,400 - 1,577 6,373 - 18,350
Transient Noncommunity Water Systems (TNCWSs) - SW

≤ 100 1,339 345,443 39,654 32,349 1,277 - 508 943 - 2,728

101 - 500 497 128,109 15,365 12,541 487 - 202 372 - 1,062
501-1,000 88 22,683 2,720 2,220 86 - 36 66 - 188
1,001-4,100 67 39,816 3,990 2,590 102 - 52 122 - 276
4,101-33,000 18 40,656 - - 8 - - - - 8
33,001-96,000 - - - - - - - - - - 96,001-500,000 - - - - - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million 1 102,960 - - - - - - - - Totals 2,010 679,667 61,730 49,700 1,960 - 797 1,504 - 4,262
Transient Noncommunity Water Systems (TNCWSs) - GW

≤ 100 60,200 4,493,808 905,554 600,315 44,730 - 6,649 25,425 - 76,805
101 - 500 19,275 1,614,924 316,238 210,714 14,530 - 2,089 8,864 - 25,483
501-1,000 1,963 177,264 32,730 22,064 1,477 - 221 896 - 2,595
1,001-4,100 617 335,283 29,957 19,113 927 - 186 1,138 - 2,251
4,101-33,000 67 156,288 - 8,909 116 - 4 - - 120
33,001-96,000 2 34,320 - 1,956 - - - - - - 96,001-500,000 1 26,400 - 1,505 - - - - - - 500,001-1 Million 1 63,360 - 3,612 - - - - - - > 1 Million - - - - - - - - - - Totals 82,126 6,901,647 1,284,478 868,188 61,780 - 9,149 36,324 - 107,253

Grand Total 154,837 76,833,044 2,479,366 2,739,154 108,828 - 15,728 58,272 - 182,828 Number of
Corrective

Actions (based on

Acute andMultiple NonAcute Violation Assessments) Number of

Non-Acute

Violation

A ssessments

(Single Violations) Number of

Acute

Violation

Assessments Number of

Non-Acute

Violation

Assessments

(Multiple Violations) Number of
Corrective

Actions (based onSingle NonAcute Violation Assessment) Number of

Routine Monitoring Samples Number of

Additional

Routine Monitoring Samples Tier 2 PNs PWS Size (Population Served) PWSs Subject
to Current

TCR Number of Repeat Monitoring Samples

Notes: 1) Predicted outcomes for systems serving ≤ 4,100 are output from the occurrence model detailed in Ch. 5 of this EA; those for systems serving >4,100 people are from the larger systems model based on 2007 SDWIS violations data. 2) Zero corrective actions are indicated in the two Number of Corrective Actions columns (F and I) because these columns represent incremental changes from the level of corrective actions that EPA estimates would be implemented under the current TCR option. 3)Results differ slightly from those presented in Ex. 5.10 – 5.15 because they’re capturing slightly different time peri ods of the 30 modeled years. For completeness in discussing the simulation model, Chapter 5 exhibi ts show 30 years of results, beginning with 5 years of GWR in effect, the last 3 of which also include RTCR implementation, followed by 25 years of RTCR in effect. Alternatively, Ex. 6.2 – 6.4 include the modeled period that encompasses the 3 years of proposed RTCR implementation and the 22 years that follow of RTCR in effect (Years 3 – 28 of the 30-year period). During the 3 years of RTCR implementation, under either the AIP or Alternative option, systems are still wo rking under the requirements of the GWR while incurring costs for implementing the new rule requirements.Economic Analysis for the Proposed RTCR 6-24 June 2010 

### Exhibit 6.3 Predicted Outcomes (25-Y ear Period of Analysis) for AIP

A BC DE F G H I J=E+H
Community Water Systems (CWSs) - SW

≤ 100 1,170 308,849 - 12,875 363 39 112 73 17 437
101 - 500 2,150 567,486 - 15,333 465 43 135 55 20 520
501-1,000 1,173 309,610 - 8,366 254 23 74 30 11 284
1,001-4,100 2,938 1,950,717 - 32,222 846 83 161 96 23 942
4,101-33,000 3,164 10,636,296 - 175,689 2,152 215 197 - 20 2,152
33,001-96,000 720 11,058,960 - 182,671 534 53 56 - 6 534
96,001-500,000 308 10,190,400 - 168,324 233 23 24 - 2 233
500,001-1 Million 31 2,019,600 - 33,360 22 2 - - - 22

> 1 Million 17 1,686,960 - 27,865 - - - - - - Totals 11,671 38,728,879 - 656,704 4,869 482 758 253 100 5,122
Community Water Systems (CWSs) - GW

≤ 100 11,938 2,870,075 8,760 156,897 8,004 791 853 3,523 398 11,527
101 - 500 13,892 3,391,200 6,127 136,906 6,502 669 696 2,399 335 8,901
501-1,000 4,467 1,085,730 1,844 39,659 1,780 168 188 626 85 2,406
1,001-4,100 6,443 4,079,328 - 96,939 3,208 318 342 1,705 206 4,913
4,101-33,000 3,156 9,145,224 - 217,321 4,545 454 263 - 26 4,545
33,001-96,000 335 4,884,000 - 116,060 656 66 53 - 5 656
96,001-500,000 63 1,945,680 - 46,236 129 13 10 - 1 129
500,001-1 Million 4 253,440 - 6,023 - - - - - - > 1 Million 3 269,280 - 6,399 - - - - - - Totals 40,301 27,923,956 16,731 822,439 24,824 2,480 2,405 8,253 1,056 33,077
Nontransient Noncommunity Water Systems (NTNCWSs) - SW

≤ 100 250 65,986 - 2,840 69 7 27 33 6 102

101 - 500 253 66,766 - 2,073 66 7 24 21 4 87
501-1,000 88 23,223 - 721 23 2 8 7 2 30
1,001-4,100 72 42,751 - 1,183 38 4 12 18 3 56
4,101-33,000 22 50,424 - 1,395 5 0 - - - 5
33,001-96,000 2 34,320 - 950 - - - - - - 96,001-500,000 1 31,680 - 877 - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million - - - - - - - - - - Totals 688 315,151 - 10,038 201 20 72 79 15 280
Nontransient Noncommunity Water Systems (NTNCWSs) - GW

≤ 100 8,826 932,025 48,142 68,123 4,797 493 559 2,010 254 6,807
101 - 500 6,613 678,688 25,630 35,860 2,794 271 315 757 107 3,552
501-1,000 1,718 180,145 6,166 8,601 675 66 79 168 24 843
1,001-4,100 812 473,352 - 15,887 690 68 114 530 65 1,221
4,101-33,000 70 153,648 - 5,157 123 12 9 - 1 123
33,001-96,000 2 23,760 - 797 4 0 - - - 4
96,001-500,000 - - - - - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million - - - - - - - - - - Totals 18,041 2,441,617 79,938 134,426 9,084 912 1,077 3,466 450 12,550
Transient Noncommunity Water Systems (TNCWSs) - SW

≤ 100 1,339 353,461 - 20,787 1,004 99 336 426 80 1,430

101 - 500 497 131,149 - 7,816 372 34 125 165 28 537
501-1,000 88 23,222 - 1,384 66 6 22 29 5 95
1,001-4,100 67 42,209 - 2,118 90 9 32 62 9 152
4,101-33,000 18 40,656 - 2,040 8 1 - - - 8
33,001-96,000 - - - - - - - - - - 96,001-500,000 - - - - - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million 1 102,960 - 5,167 - - - - - - Totals 2,010 693,657 - 39,312 1,541 149 515 682 122 2,222
Transient Noncommunity Water Systems (TNCWSs) - GW

≤ 100 60,200 6,076,163 446,166 631,105 47,190 4,755 5,477 20,628 2,593 67,818
101 - 500 19,275 1,940,946 135,822 194,697 13,780 1,363 1,608 5,694 799 19,474
501-1,000 1,963 206,130 14,078 20,078 1,396 143 177 585 76 1,982
1,001-4,100 617 348,480 - 16,027 773 77 117 638 76 1,412
4,101-33,000 67 156,288 - 7,188 116 12 4 - 0 116
33,001-96,000 2 34,320 - 1,578 - - - - - - 96,001-500,000 1 26,400 - 1,214 - - - - - - 500,001-1 Million 1 63,360 - 2,914 - - - - - - > 1 Million - - - - - - - - - - Totals 82,126 8,852,088 596,065 874,801 63,256 6,349 7,383 27,546 3,544 90,801

Grand Total 154,837 78,955,347 692,734 2,537,720 103,775 10,391 12,210 40,278 5,287 144,053 PWS Size (Population Served) PWSs Subject
to RTCR Number of Repeat Monitoring Samples Number of

Routine Monitoring Samples Number of

Additional

Routine Monitoring Samples Level 1 and Level 2 (based

on non-acute

triggers)

Assessments Number of
Corrective

A ctions (based

on Level 2 Assessments) Number of

Level 1

Assessments Number of

Level 2

Assessments

(based on

Acute Violations) Number of

Level 2

Assessments (based on non

acute triggers) Number of
Corrective Actions (based

on Level 1 Assessments)

Notes: 1) Predicted outcomes for systems serving ≤ 4,100 are output from the occurrence model detailed in Ch. 5 of this EA; those for systems serving >4 ,100 people are from the larger systems model based on 2007 SDWIS violations data. 2) The two Number of Co rrective Actions columns (F and I) represent the incremental changes in the level of corrective ac tions that EPA estimates would be implemented under the regulatory option in comparison to the current T CR option. 3) Results differ slightly from those presented in Ex. 5.10 – 5.15 because they’re capturing slightly different time periods of the 30 modeled years. For completeness in discussi ng the simulation model, Chapter 5 exhibits show 30 years of results, beginning with 5 years of GWR in effect, the last 3 of which also include RTCR implementation, followed by 25 years of RTCR in effect. Alternatively, Ex. 6.2 – 6.4 include the modeled period that encompasses the 3 years of proposed RTCR implementation and the 22 years that follow of RTCR in effect (Years 3 – 28 of the 30-year period). During the 3 years of RTCR implementation, under either the AIP or Alternative option, systems are still working under t he requirements of the GWR while incurring costs for implementing the new rule requirements.Economic Analysis for the Proposed RTCR 6-25 June 2010 

### Exhibit 6.4 Predicted Outcomes (25-Year An alysis Period) for Alternative Option

A BC DE F G H I J=E+H
Community Water Systems (CWSs) - SW

≤ 100 1,170 308,880 - 13,764 400 36 100 102 21 501
101 - 500 2,150 567,600 - 15,660 539 56 119 75 20 615
501-1,000 1,173 309,672 - 8,708 277 27 75 40 12 317
1,001-4,100 2,938 1,951,224 - 33,326 920 95 146 132 29 1,052
4,101-33,000 3,164 10,636,296 - 181,661 2,152 215 197 - 20 2,152
33,001-96,000 720 11,058,960 - 188,880 534 53 56 - 6 534
96,001-500,000 308 10,190,400 - 174,046 233 23 24 - 2 233
500,001-1 Million 31 2,019,600 - 34,493 22 2 - - - 22

> 1 Million 17 1,686,960 - 28,812 - - - - - - Totals 11,671 38,729,592 - 679,350 5,076 507 717 349 110 5,425
Community Water Systems (CWSs) - GW

≤ 100 11,938 2,908,469 7,545 158,439 7,871 812 926 3,272 432 11,143
101 - 500 13,892 3,428,876 5,264 137,959 6,495 667 747 2,543 322 9,038
501-1,000 4,467 1,098,488 1,616 39,580 1,772 174 203 607 83 2,379
1,001-4,100 6,443 4,079,328 - 96,939 3,208 318 342 1,705 206 4,913
4,101-33,000 3,156 9,145,224 - 217,321 4,545 454 263 - 26 4,545
33,001-96,000 335 4,884,000 - 116,060 656 66 53 - 5 656
96,001-500,000 63 1,945,680 - 46,236 129 13 10 - 1 129
500,001-1 Million 4 253,440 - 6,023 - - - - - - > 1 Million 3 269,280 - 6,399 - - - - - - Totals 40,301 28,012,784 14,425 824,956 24,675 2,504 2,544 8,127 1,077 32,802
Nontransient Noncommunity Water Systems (NTNCWSs) - SW

≤ 100 250 66,000 - 3,040 75 8 28 41 7 116

101 - 500 253 66,792 - 2,169 69 7 19 24 4 93
501-1,000 88 23,232 - 756 24 2 6 9 2 33
1,001-4,100 72 42,768 - 1,228 37 4 13 23 4 59
4,101-33,000 22 50,424 - 1,448 5 0 - - - 5
33,001-96,000 2 34,320 - 985 - - - - - - 96,001-500,000 1 31,680 - 910 - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million - - - - - - - - - - Totals 688 315,216 - 10,536 209 22 67 98 17 306
Nontransient Noncommunity Water Systems (NTNCWSs) - GW

≤ 100 8,826 1,314,175 36,965 91,416 5,673 562 723 3,390 399 9,063
101 - 500 6,613 976,627 19,382 48,269 3,551 356 446 1,333 183 4,884
501-1,000 1,718 249,760 4,802 11,817 814 81 99 298 41 1,112
1,001-4,100 812 473,352 - 15,887 690 68 114 530 65 1,221
4,101-33,000 70 153,648 - 5,157 123 12 9 - 1 123
33,001-96,000 2 23,760 - 797 4 0 - - - 4
96,001-500,000 - - - - - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million - - - - - - - - - - Totals 18,041 3,191,322 61,149 173,343 10,855 1,080 1,393 5,551 689 16,406
Transient Noncommunity Water Systems (TNCWSs) - SW

≤ 100 1,339 353,496 - 23,122 796 76 250 425 66 1,221

101 - 500 497 131,208 - 8,192 278 27 90 154 25 432
501-1,000 88 23,232 - 1,533 50 5 17 25 4 75
1,001-4,100 67 42,240 - 2,312 73 7 29 69 10 142
4,101-33,000 18 40,656 - 2,225 8 1 - - - 8
33,001-96,000 - - - - - - - - - - 96,001-500,000 - - - - - - - - - - 500,001-1 Million - - - - - - - - - - > 1 Million 1 102,960 - 5,636 - - - - - - Totals 2,010 693,792 - 43,020 1,204 116 386 674 105 1,878
Transient Noncommunity Water Systems (TNCWSs) - GW

≤ 100 60,200 9,524,123 333,524 912,589 57,597 5,737 7,796 37,532 4,450 95,129
101 - 500 19,275 3,021,771 104,732 282,740 17,358 1,616 2,441 10,924 1,337 28,282
501-1,000 1,963 304,534 10,412 27,932 1,661 163 230 1,015 123 2,676
1,001-4,100 617 348,480 - 16,027 773 77 117 638 76 1,412
4,101-33,000 67 156,288 - 7,188 116 12 4 - 0 116
33,001-96,000 2 34,320 - 1,578 - - - - - - 96,001-500,000 1 26,400 - 1,214 - - - - - - 500,001-1 Million 1 63,360 - 2,914 - - - - - - > 1 Million - - - - - - - - - - Totals 82,126 13,479,275 448,667 1,252,181 77,506 7,605 10,589 50,109 5,986 127,615

Grand Total 154,837 84,421,981 524,241 2,983,387 119,526 11,834 15,695 64,908 7,983 184,433 Number of
Corrective Actions (based

on Level 2 Assessments) Number of

Level 2

Assessments

(based on

Acute Violations) Number of

Level 2

Assessments (based on non

acute triggers) Number of
Corrective Actions (based

on Level 1 Assessments) Number of

Routine Monitoring Samples Number of

Additional

Routine Monitoring Samples Number of

Level 1

Assessments Level 1 and Level 2 (based

on non-acute

triggers)

Assessments PWS Size (Population Served) PWSs Subject
to RTCR Number of Repeat Monitoring Samples

Notes: 1) Predicted outcomes for systems serving ≤ 4,100 are output from the occurrence model detailed in Ch. 5 of this EA; those for systems serving >4 ,100 people are from the larger systems model based on 2007 SDWIS violations data. 2) The two Number of Co rrective Actions columns (F and I) represent the incremental changes in the level of corrective ac tions that EPA estimates would be implemented under the regulatory option in comparison to the current T CR option. 3) Results differ slightly from those presented in Ex. 5.10 – 5.15 because they’re capturing slightly different time periods of the 30 modeled years. For completeness in discussi ng the simulation model, Chapter 5 exhibits show 30 years of results, beginning with 5 years of GWR in effect, the last 3 of which also include RTCR implementation, followed by 25 years of RTCR in effect. Alternatively, Ex. 6.2 – 6.4 include the modeled period that encompasses the 3 years of proposed RTCR implementation and the 22 years that follow of RTCR in effect (Years 3 – 28 of the 30-year period). During the 3 years of RTCR implementation, under either the AIP or Alternative option, systems are still working under t he requirements of the GWR while incurring costs for implementing the new rule requirements.Economic Analysis for the Proposed RTCR 6-26 June 2010 

### Exhibit 6.5 Predicted Average Annual Acute Violations by Reg. Option and System Type 1

PWS Type PWS Size (Population

Served) Number of Systems TCR AIP Option Alternative Option

< 100 1,170 7 5 5

101-500 2,150 8 5 5

501-1,000 1,173 5 3 3

1,001-4,100 2,938.0 7.4 6.6 6.6

4,101-33,000 3,164 9 9 9

33,001-96,000 720 3 3 3

96,001-500,000 308 1 1 1

500,001-1 Million 31 0 0 0

> 1 Million 17 0 0 0

Totals 11,671 39 33 33

< 100 11,938 52 39 42

101-500 13,892 47 32 34

501-1,000 4,467 13 9 9

1,001-4,100 6,443 22 16 16

4,101-33,000 3,156 12 12 12

33,001-96,000 335 2 2 2

96,001-500,000 63 0 0 0

500,001-1 Million 4 0 00

> 1 Million 3 0 00

Totals 40,301 148 109 116

< 100 250 2 1 1

101-500 253 1 1 1

501-1,000 88 0 0 0

1,001-4,100 72 1 1 1

4,101-33,000 22 0 0 0

33,001-96,000 2 0 00

96,001-500,000 1 0 00

500,001-1 Million 0 0 00

> 1 Million 0 0 00

Totals 688 4 3 3

< 100 8,826 39 25 33

101-500 6,613 20.31 14.31 20.29

501-1,000 1,718 4.31 3.61 4.51

1,001-4,100 812 8 5 5

4,101-33,000 70 0 0 0

33,001-96,000 2 0 00

96,001-500,000 0 0 00

500,001-1 Million 0 0 00

> 1 Million 0 0 00

Totals 18,041 72 49 63

< 100 1,339 20 11 11

101-500 497 8 4 4

501-1,000 88.00 1.25 0.79 0.79

1,001-4,100 67.0 2.3 1.3 1.3

4,101-33,000 18 0 0 0

33,001-96,000 0 0 00

96,001-500,000 0 0 00

500,001-1 Million 0 0 00

> 1 Million 1 0 00

Totals 2,010 31 18 18

< 100 60,200 302 249 354

101-500 19,275 94.93 73.11 110.96

501-1,000 1,963 10.07 8.04 10.47

1,001-4,100 617 8 5 5

4,101-33,000 67 0 0 0

33,001-96,000 2 0 00

96,001-500,000 1 0 00

500,001-1 Million 1 0 00

> 1 Million 0 0 00

Totals 82,126 416 336 481

All Systems Grand Total 154,837 710 547 713

TNC GW CWS SW

CWS GW

NTNC SW

NTNC GW

TNC SW

Source: Output from Proposed RTCR models as described in Sections 5.3 and 5.4 of this EA for smaller systems and larger systems, respectively. Notes: 1 Average violation estimates are for the 22-year period following the effective date of the RTCR and 3 years of implementation activities.Economic Analysis for the Proposed RTCR 6-27 June 2010 

### Exhibit 6.6 Predicted Change in Average Annual Acute Violations 1 

### by Regulatory Option and System Type

PWS Type PWS Size (Population

Served) AIP Option Alternative Option

< 100 -36% -36%

101-500 -29% -29%

501-1,000 -27% -27%

1,001-4,100 -10% -10%

Totals -17% -17%

< 100 -25% -19%

101-500 -32% -27%

501-1,000 -34% -29%

1,001-4,100 -28% -28%

Totals -26% -22%

< 100 -20% -20%

101-500 -35% -35%

501-1,000 -32% -32%

1,001-4,100 -30% -30%

Totals -28% -28%

< 100 -35% -15%

101-500 -30% 0%

501-1,000 -16% 5%

1,001-4,100 -32% -32%

Totals -32% -12%

< 100 -42% -42%

101-500 -47% -47%

501-1,000 -37% -37%

1,001-4,100 -43% -43%

Totals -43% -43%

< 100 -18% 17%

101-500 -23% 17%

501-1,000 -20% 4%

1,001-4,100 -37% -37%

Totals -19% 16%

All Systems Grand Total -23% 1%

TNC GW CWS SW

CWS GW

NTNC SW

NTNC GW

TNC SW

Source: Exhibit 6.5. Percentages may not match results calculated directly from exhibit 6.5 due to rounding in exhibit 6.5. Notes: 1 Average violation estimates are for the 22 year period (following 3 years of implementation) after systems have fully implemented their new sampling regimes. Negative changes indicate reductions in the number of acute violations under either option in comparison to the current TCR option; positive changes indicate increases in acute violations. As described further in Section 6.4, a net increase in acute violations is caused by increased diagnostic power from increased sampling. Systems serving >4,100 were omitted from this table because there were no changes predicted in the number of violations to be incurred.Economic Analysis for the Proposed RTCR 6-28 June 2010 

### 6.3.1.3 Overall Assessment of Predictive Analysis Results

For PWSs serving ≤ 4,100 people, EPA expects risk to decrease under the AIP and Alternative option as compared to the current TCR option. As shown by the year by year detail of the output provided in Appendix A of this EA and summarized in Exhibits 5.21 – 5.26, risk is
further reduced for PWSs under th e Alternative option relative to baseline (the current TCR option) for the first 5 years after the effective date as compared to the AIP relative to baseline.
This additional reduction in risk under the Al ternative option is driven by the increase in additional sampling that would occur while all systems were still on monthly sampling. Over time, some of these systems could qualify to move from monthly to quarterly under either option, or from quarterly to annual sampling under the AIP. Unlike the AIP, no systems under the Alternative option would be able to sample annually. However, additional costs are incurred under the Alternative option for th is increased monitoring, esp ecially for the systems most impacted by the AIP (TNCWSs serving ≤ 500 people). Chapter 7 presents the full discussion of costs associated with implementation of the regulatory options considered.

When considering the period beginning in Year 9 after RTCR promulgation through the end of the period of analysis (model year 11 in Exhibits 5.21 – 5.26), the AIP and Alternative option generally have similar estimates of occurrence. Year 9 after RTCR promulgation represents the first year of the steady state for monitoring regimens, when all PWSs that qualified for reduced monitoring are following their new regimens. However, for some categories and sizes of PWSs the AIP actually has a lower rate of occurrence than the Alternative option. This may occur because PWSs under the AIP may have more resources available to perform the annual inspection more regularly based on states needing fewer resources for monitoring than under the Alternative option. Appendix B includes gr aphs of predicted occu rrence for each of the size and PWS categories considered in this analysis.

EPA does not expect changes in risk for the PWSs serving >4,100 people under the AIP to be as obvious as for the smaller systems. The larger systems are starting from a smaller baseline level of occurrence than smaller syst ems and have a correspondingly lower level of triggered assessment and correction action activity. This suggests that percentage increases in
these activities will result in less obvious cha nges. Additionally, monitoring requirements for PWSs serving >4,100 people would remain essentially unchanged under either the AIP or Alternative option as compared to the curr ent TCR option. Thus the observed overall net increase in benefits (and costs) for PWSs servi ng >4,100 people is driven by the requirements to conduct assessments and to correct any sanitary de fects that are found. The increase of 10% from baseline in effective CAs implemented applies to these larger systems just as it does to systems serving ≤ 4,100 people; however, as shown in Chapter 4 (Exhibit 4.8), the larger systems have a
much smaller level of violations than smaller systems, based on reasons discussed in Chapter 5 (Section 5.4). Therefore, increases in CAs will be le ss evident in absolute (not percentage) terms.

6.4 

## Uncertainty and Sensitivity Analyses

Key sources of uncertainty in the estimates pr ovided in this EA include the data used to develop baseline estimates and the assumptions made regarding model input variables, asEconomic Analysis for the Proposed RTCR 6-29 June 2010 

### described in Chapters 4 and 5 of this EA, respec tively. The quality and representativeness of the
data used in this EA are discussed in Section 4. 2, while uncertainty in model input variables is discussed in Section 5.3.3.1. A summary of a ssumptions made in developing the baseline and input parameters to the predictive model that contribute uncerta inty to the analys is are included in Chapters 4 and 5 (Exhibits 4.13 and 5.22a-b). By definition, those uncertainty factors that are incorporated into the baseline will have a similar effect on the current TCR option, the AIP and Alternative option; therefore, EPA believes that they will not significantly affect the net results of the EA. These assumptions are shown in Ex. 5.22a, and include the estimates representing GWR effects. Although EPA believes its GWR efficacy estimates are conservative, the estimates are applied in similar fashion to the baseline (current TCR option) and AIP and Alternative option, therefore any bias that c ould be introduced is essentially canceled out in the net analysis. By contrast, the assumptions listed in Ex. 5.22b include those assumptions that will affect only the AIP and Alternative option, such as the as sumed increase in the number of effective CAs implemented as compared to the current TCR option. These types of assumptions are not canceled out in the net analysis, a nd are expected to have some e ffect on net results. Therefore, EPA has identified the key drivers of the analys is among this type of assumption and performed a sensitivity analysis on their values (Chapter 5, Section 5.3.3.1).

This discussion focuses on the provisions of the AIP and Alternative option for conducting corrective actions based on the results of Level 1 and Level 2 assessments performed, and the reductions in repeat samples following TC positives and in the additional routine samples required in the month following a TC positive. Th e analyses performed and presented here are intended to provide insight into the overall imp act of these two changes in rule provisions under the proposed RTCR, each of which moves risk (a s defined in this EA) in opposite directions. Unlike the uncertainty analysis presented in Ch apter 5 (Occurrence and Predictive Model), this analysis does not consider variat ions on the assumptions related to corrective actions, but instead tests the relative impact of changes in the samp ling regimen given the assumptions for corrective actions applied in the primary analysis of this EA (and summarized in Section 5.3).

The primary benefit of the proposed RTCR is a potential reduction in exposure to microbial contaminants from drinking water prov ided by public water systems. Two features of the proposed RTCR are expected to influe nce the exposure reduction.

The first feature is the requirement to perf orm corrective actions ba sed on the results of the Level 1 and Level 2 assessments performe d in response to their individual triggers. Implementation of additional corrective acti ons beyond the level currently implemented under the TCR will reduce exposure to microbial contamination both by addressing the immediate problem identified by the Level 1 or Level 2 assessment and by preventing some additional future exposures to fecal contamination.

The second feature, which primarily affects the smaller systems, is the reduction in the
numbers of additional routine a nd repeat samples that systems are required to take whenever routine samples are found to be TC positive. This reduction in sampling may contribute to increased exposure and risk because fewer samp les provide fewer opportunities to identify and address TC and EC exposures.Economic Analysis for the Proposed RTCR 6-30 June 2010 

### The analyses that were performed used the predictive model with the occurrence input parameters for the nondisinfecting ground wate r TNCWS serving <101 people. This set of systems was chosen because 1) it contains th e largest number of systems of the 27 occurrence sets (46,642 systems in this set); 2) it is subjec t to all of the changes in sampling requirements; and 3) it has the highest routine TC hit rate so that effects on this set of systems are likely to be more pronounced (and therefore more clearly obse rvable) than other sets. The analysis was carried out by running simulations of 10,000 sy stems each for monthly, quarterly, or annual monitoring schedules.

There were 5 sampling and corrective action “r egimens” considered in the model. As shown in Exhibit 6.7, Regimens 1 through 3 assu me a routine sampling regimen equivalent to the current TCR option (i.e., 1 regular routine samp le and a minimum of 5 routine samples in the month following a TC positive). Regimen 1 is the only one of the 5 regimens that assumes there
are no corrective actions (incremental beyond those alrea dy conducted under the current TCR option); regimens 2 through 5 all assume correct ive actions are conducted in accordance with requirements under the AIP. Regimens 3 through 5 decrease the repeat samples from 4 to 3. Regimen 4 also decreases the minimum number of routine samples in the month following a TC positive from 5 to 3; Regimen 5 uses the sampling requirements of the RTCR where systems doing monthly sampling need only take their 1 regul ar routine sample in a month following a TC positive, while for those that monitor quarterly and annually, the requirement remains for a minimum of 3 additional routine samples in the month following a TC positive.

In this analysis, Regimen 1 describes the current TCR option and Regimen 5 describes the AIP. Going from Regimen 1 to Regimen 2, where corrective actions are brought in without any change in sampling, provides key insights to the benefits (reduction in exposure) derived from the corrective action aspect of the AIP. Going from Regimen 2 through Regimen 5 provides some insight into how much of those corrective action benefits might be foregone because of the small reductions in the number of TC samples required.

The metric used for comparing the relative impacts of these 5 regimens was the number of acute violations based on EC-positive assays (referred to as “acutes” throughout this section),
because this was considered to be the most re levant measure of the potential microbial health
risk-based benefits of the proposed RTCR. The numbers pres ented are the average annual
numbers of acute violations.

It is important to note that in order to is olate the effects of th e proposed RTCR corrective actions and sampling changes, this analysis excluded any effect of the GWR. To further understand the effects of sampling regimen, this anal ysis also presents the results separately for monthly, quarterly, and annual sampling since on e of the changes in the proposed RTCR applies only to those on monthly sampling. Exhibit 6.7 provides a summary of the results of this analysis.Economic Analysis for the Proposed RTCR 6-31 June 2010 

### Exhibit 6.7 Relative Impacts Analysis for TNCWS Serving <101 People for the Range of Corrective Action and Sampling Regimens Predicted

MQA M Q A M Q A M Q A M Q A
1 5 5 5 4 No 168,252 60,980 15,317 279 106 25
2 5 5 5 4 Yes 160,394 59,693 15,103 198 92 26 80 14

‐ 10 0 0
3 5 5 5 3 Yes 156,779 57,851 14,894 172 79 25 70 12

‐ 1 37 14 2
4 3 3 3 3 Yes 151,500 189 77 13
5 1 3 3 3 Yes 146,129 175 71 32

Ratios of Prevented to Found: 0.41 0.15

‐ 0.05 L1 & L2

CAs? Average Acutes Per Year

Found

5 Average Acutes

Per Year

Missed Regimen Minimum Samples in

Month Following a TC+ Repeat Samples Average Total

TC Samples per Yea r

55,411 13

‐ 1 14,031 82 Average Acutes

Per Year

Prevented

21 11

Key: (CA) = correction action; L1 and L2 = Level 1 and Level 2; M = monthly; Q = quarterly; and A = annual.

Definitions: Acutes “found” are acute vi olations the model predicts will be ident ified; acutes “prevented” are those avoided by implementation of CAs; acut es “missed” are those found under t he sampling regimen of the current TCR option (Regimen 1) that were not f ound under the reduced sampling of Regi mens 3, 4, and 5 (calculated by subtracting acutes found under Regimens 3, 4, and 5 from those found under Regimen 1).

Notes:

- Results shown are averages based on simulations of 10,000 systems each for monthly, quarterly, and annual monitoring using occurrence inputs for nondisinfecting GW TNCWS serving <101 people.

- Assumptions for L1 and L2 corrective action efficacy and resulting duration of reduced occurrence are those used in the primary analysis.

- For the purpose of isolating the relative impacts of changes in monitoring regimens and implementation of L1 and L2 corrective actions, no GWR effects (includin g GWR corrective actions) are modeled in these runs.

- Ratios of acutes “prevented” to those “found” are bas ed on Regimen 2 results, which reflect the current TCR option sampling regimen but includes implement ation of L1 and L2 correction actions.



### Regimen 1, representing the current TCR op tion, provides a “baseline” against which the other regimens can be compared. Although arguabl y more acute violations could be found if more routine and repeat samples were taken, th e numbers of acute violations shown here as “found” (monthly = 279, quarterly = 106, and a nnual = 25) represent the maximum number that can be found given the amount of sampling done. Th is finding is based on analysis using 10,000 simulated systems each for monthly, quarterly, and annual; the sampling scheme under the current TCR option; and no additional corrective actions being performed.

Regimen 2 uses the exact same sampling scheme as Regimen 1, but includes the performance of Level 1 and Level 2 corrective actions consistent w ith the AIP. Here there is a
reduction observed in the number of acutes found for monthly and quarterly sampling although not for annual sampling. Since there is no change in the sampling requirements, differences (and similarities) between Regimen 1 and Regimen 2 numbers are due to: a) the implementation of corrective actions under Regimen 2; and b) and random variation that is endemic to the Monte
Carlo simulation.

For monthly sampling, which requires a larg e number of TC samples per year, Monte Carlo variation is relatively small with respect to the effect of the parameter adjustments. Thus, 80 acute violations occur under monthly samp ling for Regimen 1 (279 acutes) but not under Regimen 3 (198 acutes) as the result of co rrective actions. Quarterly and annual samplingEconomic Analysis for the Proposed RTCR 6-32 June 2010 

### regimens require far fewer TC samples per year , and therefore the Monte Carlo variation may
obscure the salient data trends in those model results. For instance, the increase in the number of acutes under annual sampling under Regimen 1 from 25 to 26 under Regimen 2, which is not consistent with the trend seen in the larger samp le size in the simulation of monthly systems, is likely to be reflective of stochastic noise from the Monte Carlo simulation peformed rather than of the impact of corrective actions. For this r eason most of the discussion that follows on the trends across these regimens focuses on the monthly sampling results.

Regimen 3 reflects the reduction in repeat sampling requirements of 4 to 3 following a TC+. As would be expected, this also results in a small reduction in the number of acutes found. For example, in the monthly sampling group this fa lls from 198 to 172. Using an assumption that the ratio of acutes prevented to acutes found observed in Regimen 2 apply to the other regimens as well, then results for the monthly samp ling group (where 80/198 = 0.41) indicate that 70 acutes are still prevented. The sum of those found (179) and those prevented (70) for the monthly group totals 249. This implies, then, that as a resu lt of the reduction in repeat sampling from 4 to 3, 37 acutes are missed (279 “found” under the cu rrent TCR option sampling regimen - 172 - 70 = 37). That is, they are neither found nor prev ented, but are assumed to occur unobserved.

Regimen 4 reduces the number of routines in a month following a TC positive from 5 to 3, but retains the 3 repeats and the corrective action requirements. The number of acutes now “missed” changes to 13, 11, and 5 respectivel y for those on monthly, quarterly, and annual sampling.

Regimen 5, which represents the proposed RTCR as described by the AIP, excludes any additional routine samples in the month followi ng a TC+ for those on monthly sampling. Here the number of “missed” acutes for those on monthly increases from 13 to 32. There are no changes for those on quarterly or annual sampli ng relative to Regimen 4 since systems sampling quarterly and annually are treated identically in both scenarios.

In addition to displaying the changes in the number of annual average acutes for these 5 regimens, Exhibit 6.6 also shows the average an nual number of TC samples (regular routine, additional routines and repeat samples) taken. The number of samples declines considerably across the regimens due both to the reduction in actual sampling requirements and to reduced number of additional routines and repeats that ne ed to be taken because of the prevention of TC occurrence by the corrective actions taken.

This analysis points first and foremost to the highly positive public health benefits of including the corrective actions as part of the proposed RTCR (b ased on the modest assumptions regarding their effectiveness used in the occurrence analysis detail in Chapter 5 of this EA). This is seen not only in the number of acutes th at are found for which corrective actions may be performed, but also – and perhaps more importa ntly – in the large number of additional acutes that are prevented from occurring again in thos e systems as a result of the corrective actions.

While some of these potential benefits are “m issed” as a result of the reductions in additional routine and repeat samp ling requirements, these numbers (shown in Exhibit 6.7) seem small when compared to the numbers found and prevented. This is particularly important whenEconomic Analysis for the Proposed RTCR 6-33 June 2010 

### considering the potential cost savi ngs from reducing the number of TC samples that are taken, as discussed in Chapter 9 (Net Benefits) of this EA.

The group of 46,642 TNCWSs serving ≤ 100 currently has, and will continue to have, a vast majority of systems on either quarterly or annual sampling in the steady state of the analysis period, beginning in approximately Year 9 afte r RTCR promulgation. Since quarterly and annual estimates of acutes are less stable, predictions for this specific subset of systems are less reliable. Nonetheless, since the vast majority of syst ems affected by RTCR are on monthly sampling, the trends in the monthly numbers ci ted above should be indicative of trends for other types and sizes of systems included in this model (those se rving fewer than 4,100 peopl e). That is, relative to the current TCR option, the inclusion of the Level 1 and Level 2 corrective actions will always result in more benefit accruing from correctiv e actions being performed and acute violations being avoided than the relatively small reduction s in sample numbers will result in “missing”
acute violations.

Because all of the other system types have lower overall TC and EC hit rates than the nondisinfecting ground water TNCWS serving <101 peopl e, on a “per system basis” their missed
acute violations would be fewer than those estim ated for the set of systems addressed in this analysis. Furthermore, for the systems servi ng 1,001 to 4,100 people where the proposed RTCR change in the minimum number of samples to be taken in the month following a TC+ is smaller,
the number of “missed” acute violations would be less than that seen in this analysis for the smaller systems. For example, for systems se rving 3,301 to 4,100 (which are all on monthly sampling), the minimum number of next month samples is reduced from 5 to 4 compared with a reduction from 5 to 1 for the systems serving fe wer than 1,001 people that perform monthly sampling. Thus this analysis presents an estima te that is near the hi gher end of the range for various system types in expected “missed” acute violations due to reduced sampling requirements under the proposed RTCR. In spite of th is conservative estimate, the effect of the proposed RTCR requirements for corrective actions more than balances this effect with a larger change in risk in the opposite (reducing) direction, as shown by the relatively large number of “prevented” to “missed” acute violations.

6.5 

## Other Potential Benefits

A number of benefits may accrue to PWS and their populations served that are not included in the qualitative relative risk compar ison or reductions in occurrence discussed in Sections 6.1 – 6.4 (above), they are de scribed in the following sections.

6.5.1 Increased System Knowledge

By requiring additional assessments fo cused on isolating and identifying system problems in response to TC+ or EC+ samples, the proposed RTCR will increase the likelihood that PWS operators, in particular those of sy stems triggered to conduct assessments, will develop further general understanding of system operatio ns and potential issues. This heightened familiarity with the system may increase preventive maintenance, or may increase the efficiencyEconomic Analysis for the Proposed RTCR 6-34 June 2010 

### with which future problems are identified, decr easing risk to the PWS pop ulation served in both cases. Delaying system component replacement costs or avoiding an increase in treatment costs may also result in cost savings for some communities.

6.5.2 Accelerated Infrastructure Repair/Replacement

As described in 6.5.1 (above), the increased familiarity of operators with their systems may encourage an increase in preventive mainte nance, preempting some potential contaminationissues and decreasing risk for the PWS population served. Some systems may see additional nonquantified benefits associated wi th the acceleration of their cap ital replacement fund investments in response to early identification of impe nding problems with large capital components. Although such capital investment would have oc curred anyway, earlier investment may ensure that problems are addressed in a preventive manner and may preclude some decrease in protection that may have occurred otherwise. At the very least, the increased operator awareness
should reduce the occurrence of unplanned capital expe nditures in any given year. However, because of the difficulty of projecting when capital replacements would occur, EPA has not costed this acceleration of capita l replacement, so there would also be a non-quantified cost of making such investments sooner.

6.5.3 Reduction in Averting Behavior

As the risk of contamination is reduced in PWSs over time following RTCR promulgation, EPA expects that th e public will eventually become aware of increased quality, and consistency of quality, of their water. This may lead to PWS customers becoming increasingly comfortable with drinking tap wa ter and cause them to exercise less averting behavior (e.g., drinking bottled water or using Point of Use (POU) filtration devices). Such averting behaviors are costly relative to consuming tap water.

6.5.4 Reduction of Co-Occurring and Other Contaminants

In addition to the specific E. coli endpoint targeted by the proposed RTCR, there are many potentially co-occurring and emerging pathogens (such as viruses, parasitic protozoa and/or other bacteria) that may be avoided as pa rt of any avoided contamination event. To the
extent that E. coli co-occurs with pathogens sufficiently in abundance to result in health affects, the proposed RTCR offers the potential for addi tional morbidity and mortality prevention.

Potential benefits from the proposed RTCR in clude avoidance of a full range of health effects, including acute and chronic illness, ende mic and epidemic disease, associated outbreaks and death that may occur from the consumption of fecally contaminated drinking water. Also since fecal contamination may contain waterborne pathogens including bacteria, viruses, and parasitic protozoa, in general, a reduction in fecal cont amination should also reduce the risk from
these other contaminants.Economic Analysis for the Proposed RTCR 6-35 June 2010 

### Systems may choose corrective actions th at also address other drinking water contaminants. For example, correcting for a pathway of potential c ontamination into the distribution system can mitigate a variety of potential contaminants. Due to a lack of contamination co-occurrence data that quantify th e effect that treatment corrective action may have on contamination entering through distribut ion system pathways, EPA has not quantified such potential benefits.

6.5.5 Reduction in Outbreak Risk and Response Costs

Besides reducing the endemic risk of illnesses from waterborne pathogens, the proposed RTCR would reduce the likelihood of major outbreak s from occurring. These avoided illnesses
and other costs are not estimated or included in the proposed RTCR analyses and would be difficult to quantify. The economic value of redu cing the risk of outbreaks could be quite high when the magnitude of potential costs is cons idered. The Agency was unable to quantify or
monetize the cost associated with acute and chronic illnesses or death acquired from consuming water contaminated with waterborne pathogens b ecause cases avoided could not be calculated, as described in Section 6.2. Examples of potential i llnesses associated with ingestion of waterborne pathogens and their potential costs are described in Chapter 2 of this EA.

Other types of costs associated with out breaks include spending by local, state, and national public health agencies; emergency corrective actions by utilities; and possible legal costs if liability is a factor . Affected water systems and local governments may incur costs through provisions of alternativ e water supplies and i ssuing customer water use warnings and health alerts. Commercial establishments (e.g., restaurants) and their cu stomers may incur costs due to interrupted and lost serv ice. Local businesses, instituti ons, and households may incur costs associated with undertaking averti ng and defensive actions. Thus, to the extent that the proposed
RTCR reduces the likelihood of waterborne di sease outbreaks, avoide d response costs are potentially numerous and significant. For example, an analysis of the economic impacts of a waterborne disease outbreak in Walkerton, Ontario (population 5,000) estimated the economic impact excluding medically relate d costs to be over $45.9 million 11 

### in Canadian dollars (approximately 42.8 million U.S. dollars) 12 

### (Livernois, 2002). The author believed that this was a
conservative estimate.

11 Households and businesses in the town of Walkerton were unable to use municipal water for eight months following the contamination event. The re sponse involved a massive effort at all levels of government in terms of public health response and investigation of the cause. The paper asserts that the impact of the crisis extended beyond Walkerton to nearby towns and the c ountryside, resulting in economic costs that the author expects were at a minimum equal to the costs presented in the paper (of which only the non-medical costs are included here).
12 Updated from $43 million in Canadian dollars, $32 million U.S. dollars in 2000. Costs updated from 2000 dollars to 2007 dollars using the Canadian core CPI (= 95.71667 ÷ 109.8167 = 1.14731) and the 2007 exchange rate (1.0734 Canadian dollars /1.0 U.S. dollars).Economic Analysis for the Proposed RTCR 7-1 June 2010 

## 7. Cost Analysis

7.1 

## Introduction

This chapter presents estimates of the tota l national and household costs of the proposed Revised Total Coliform Rule (RTCR). To estimate the national costs of the proposed RTCR, the United States Environmental Protection Agency (EPA or Agency) calculated the net change in costs of rule components associated with state 1 

### practices and activities required under the proposed revised rule compared to the current Total Coliform Rule (TCR). The remainder of this chapter provides detailed discus sion of the methodology used and results from the cost analyses and is organized as follows:

• Section 7.2 describes the cost model and genera l costing and compliance assumptions
used to estimate national costs of the proposed RTCR.

• Section 7.3 describes the methodology of project ing costs over a 25-year period (discounted at 3 and 7 percent, respec tively) according to the proposed RTCR compliance schedule, estimating the present value of each cost, and annualizing each over a 25-year period.

• Section 7.4 describes the methodology for developi ng costs for all rule activities.

• Section 7.5 presents household cost estimates.

• Section 7.6 presents a discussion of nonquantified costs.

• Section 7.7 presents a discussion of uncer tainties in cost estimates.

• Section 7.8 presents a comparison of cost esti mates for all regulatory alternatives.

7.2 

## General Cost Assumpti ons and Methodology

The proposed RTCR cost model builds on the baseline data, occurrence analysis, and benefits model results described in Chapters 4 – 6. Based on these analyses, the annual and cumulative numbers of Public Water Systems (PWSs) that would be required to comply with each rule component of the proposed RTCR over the 25-year compliance period are provided in Appendix A (Exhibits 6.2 – 6.4 provide a summary of this information). In general, the numbers of PWSs presented in Appendix A are multiplied by the unit cost assumptions described in this chapter to calculate total annual costs.

There are also several general costing assumptions that are un ique to the costing process and are used as inputs to the cost model. The de rivation of these inputs is discussed in detail
below.

1 The term “state” in the context of this chapter refers to any state or other primacy agency that has oversight authority for drinking water programs.Economic Analysis for the Proposed RTCR 7-2 June 2010 

### 7.2.1 Labor Rates

For costing purposes, EPA estimates the labor needs and hourly labor rates of PWSs and states. EPA recognizes that there may be signifi cant variation in labo r rates across all PWSs. However, for purposes of this Economic Analysis (EA), and to implement national policy, EPA
uses national-level estimates from Labor Costs for National Drinking Water Rules (USEPA, 2003a) (as used in the Ground Water Rule Economic Analysis (USEPA, 2006a)). For the proposed RTCR cost analyses, these labor rates we re inflated to 2007$ using the Employee Cost Index (ECI), and weighted based on the PWS size categories used in the proposed RTCR EA. To account for the general composition of staff at PW Ss of smaller sizes (e.g., PWSs serving 3,300 or fewer), EPA uses only the technical rate. For PWSs serving more than 3,300 people, EPA uses a ratio of 80 percent technical labor to 20 percent manageri al labor to arrive at a labor cost, or weighted labor rate. The actual ratio between technica l and managerial rates employed may vary by PWS and among the different compliance acti vities under the proposed RTCR. However, for simplicity, the 80/20 ratio is used as a general assumption for costing purposes in this EA. A full description of the deriva tion of the labor rates used is provided in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d). The weighted labor rates ($2007) are show n in Exhibit 7.1.

Exhibit 7.1 Labor Rates by PWS Size (2007$)

PWS Size (population served) Weighted Labor Rate ($/hour)

< 100 $ 25.10 101 - 500 $ 27.03
501 - 1,000 $ 28.96
1,001 - 4,100 $ 29.73
4,101 - 33,000 $ 36.00 33,001 - 96,000 $ 36.39 96,001 - 500,000 $ 41.01 500,001-1 Million $ 41.01 > 1 Million $ 41.01

Source: Proposed RTCR T&C Document Note: Labor rates for each size category are assumed to be the same regardless of system type (CWS, NTNCWS, and TNCWS).



### For states, the administrative and fi eld engineer labor rates from the 2001 State Drinking Water Needs Analysis (ASDWA, 2001) are used in the pr oposed RTCR EA (as used in the Ground Water Rule (GWR) EA (USEPA, 2006a)). These rates include a 60 percent overhead rate and were inflated to 2007$ using the ECI. EPA recognizes that there may be significant
variation in labor rates across all states. Th e state labor rates in 2007$ are $39.22 for an administrative state employee and $43.58 for a stat e field engineer. EPA assumes that the state field engineer would conduct annual site visits , and the administrative state employee would work with PWSs on all remaining aspects of the proposed RTCR. Because this separation between field engineer and administrative empl oyee is used, the 80/20 weighting ratio between technical and managerial rates is not used to develop state costs.Economic Analysis for the Proposed RTCR 7-3 June 2010 

### 7.2.2 TCR Monitoring Costs per Sample

A cost per sample is associated with dist ribution system monitoring. For the purpose of this cost analysis, PWSs would perform tota l coliform (TC) monitoring, supplemented by E.coli analyses as required. EPA estimated the sample analysis cost for both in-house and commercial laboratory analysis. The weighted unit costs for monitoring provided in Exhibit 7.2 are based on the percentage of PWSs conducting in-house and commercial laboratory analysis based on
conversations of the Total Coliform Rule Dist ribution System Advisory Committee (TCRDSAC) Technical workgroup (TWG). For in-house samp le analysis, the estimated burden includes sample collection and analysis and also accounts for Operations and Maintenance (O&M) costs such as equipment and maintenance. For commercial laboratory analysis, the estimated burden includes sample collection, shipping and deliv ery, and the laboratory analysis fee. These estimates reflect a national average; however, individual PWSs may realize collection burden that is either less than or great er than this average depending on the locations of sampling points in a particular PWS.

Rates may vary due to regional variations in laboratory fees, the number of samples processed (quantity discounts), a nd laboratory capacity. As shown in Exhibit 7.2, the cost per sample decreases as more samples are taken, a nd as PWSs take advantage of savings from bulk shipping. A full description of the derivation of the monitoring costs per sample is provided in
the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d).

Exhibit 7.2 Monitoring Costs per Sample (2007$)

12 3 4 > 5

< 100 $ 50.54 $ 42.64 $ 40.01 $ 38.69 $ 37.90 101 - 500 $ 51.55 $ 43.63 $ 40.99 $ 39.67 $ 38.87 501 - 1,000 $ 59.81 $ 51.86 $ 49.21 $ 47.88 $ 47.09 1,001 - 4,100 $ 60.40 $ 52.45 $ 49.79 $ 48.47 $ 47.67 4,101 - 33,000 $ 65.26 $ 57.23 $ 54.55 $ 53.21 $ 52.40 33,001 - 96,000 $ 60.57 $ 56.55 $ 55.21 $ 54.54 $ 54.14 96,001 - 500,000 $ 72.38 $ 71.57 $ 71.30 $ 71.17 $ 71.09 500,001-1 Million $ 72.38 $ 71.57 $ 71.30 $ 71.17 $ 71.09 > 1 Million $ 72.38 $ 71.57 $ 71.30 $ 71.17 $ 71.09 PWS Size (population served) Numbers of Samples Taken and Delivered at the Same Time

Note: Per sample monitoring costs for each size category are assumed to be the same regardless of PWS type (CWS, NTNCWS, and TNCWS). Source: Proposed RTCR T&C Document



### 7.2.3 Technology Unit Costs and Compliance Forecasts

EPA has assumed that PWSs may use a variet y of existing Best Management Practices (BMPs) and technologies to addres s distribution system deficienci es discovered during Level 1
and Level 2 assessments. These BMPs and tec hnologies include a combination of flushing programs, training of personnel to collect samp les, replacing valves/pipes/hydrants/meters, installing new water mains, modifying operation of storage facilities , booster disinfection, physical security devices, etc. For a full list of technologies and BMPs that are anticipated to be used to meet rule requirements, see Appendix D. EPA estimated unit costs for these variousEconomic Analysis for the Proposed RTCR 7-4 June 2010 

### components using equipment price lists and quotes , costs associated with BMPs from PWSs, engineering cost data sources (e.g., R.S. Means), consultations with the technical workgroup supporting the TCRDSAC Federal Advisory Committ ee (FAC), and other relevant assumptions used in economic analyses performed for existi ng drinking water rules (e.g., GWR). Detailed explanations of the unit cost derivations for th ese BMPs and technologies are presented in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d).

Compliance forecasts (or technology selec tion forecasts) are estimates of which technologies PWSs undergoing corrective action w ould use. Section 7.4.6 provides details on compliance forecasts for PWSs performing corre ctive actions based on Level 1 and Level 2

assessments.

7.2.4 Cost Model

National costs are estimated using a cost model specifically developed for the proposed
RTCR. The model builds on the occurrence model de scribed in Chapter 5. Within the modeling structure, costs for PWSs servi ng >4,100 retail customers are analyzed differently from smaller PWSs to capture differing baseline structures and to account for differences in available occurrence data as described in Chapter 4.

PWS costs are estimated for different PWS t ypes and size categories (nine size categories are used based on population served, consistent with the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d)). PWS cost analyses include estimates to implement the rule; to revise sampling plans; to conduct routine monito ring, additional routine monitoring, and repeat monitori ng; to perform Level 1 and Leve l 2 assessments and implement corrective actions; and to provide public notificati on. State cost analyses include estimates of the labor burdens that states would face, includi ng staff training on proposed RTCR requirements and conducting annual administration, reviewin g monitoring reports, reviewing and approving corrective action plans, and recordkeeping. Se ction 7.4 provides deta iled discussion on the underlying cost-buildup for each rule compone nt analyzed within the cost model.

7.2.5 Modeled Variability and Uncertainty in National Costs

As noted throughout this EA, there is variab ility among many of the input parameters to the proposed RTCR cost model and several rule compliance assumptions based on PWS size and type (e.g., population served, labo r rates, TC hit rates, and occu rrence distributions are different for different sizes and types of PWSs). However, there is insufficient information to fully characterize the distribution of variability (i .e., calculating confidence bounds) within each of these PWS size and type classifications on a national scale; therefore, EPA uses mean values for these input parameters.

EPA also recognizes that there is uncertainty in the national cost estimates, much of which has the same impact on the modeled resu lts of both the TCR and proposed RTCR options (e.g., baseline assumptions and effects of GWR im plementation). Because the EA analyses focus on net changes between the TCR and the proposed RTCR options, these common sources of uncertainty cancel each other out in the net chan ge analyses. For assumptions that are major drivers of the analysis and differ between th e TCR and proposed RTCR options (e.g., correctiveEconomic Analysis for the Proposed RTCR 7-5 June 2010 

### action compliance forecast), EPA ha s evaluated uncertainty and perf ormed sensitivity analyses to qualitatively and quantitatively char acterize the potential impacts of alternative input parameters. Chapter 5 discusses uncertainty and presents sens itivity analyses pertaining to the predictive occurrence model results, which also impact th e cost calculations. Section 7.7 discusses uncertainty and provides sensitivity analysis resu lts as they specifically pertain to the cost analyses.

7.3 

## Projecting and Discounting National Costs

Costs must be expressed in common units so th ey can be added together to calculate total annual costs and compared to benefits to compute net benefits. For the proposed RTCR, the performance of activities varies over time in response to regulatory requirements and monitoring results. To compare the values of performing thes e activities the year or years in which all costs are expended must be determined and the costs mu st be calculated as a net present value. For the purposes of this EA, one-time and yearly costs were projected over a 25-year time period to allow comparison with other drinking water regula tions using the same analysis period. The net present values of costs are calculated using di scount rates of 3 and 7 percent based on EPA policy and guidance from the Office of Informa tion and Regulatory Affairs of the Office of Management and Budget (OMB). 2 

### A summary of the steps used in making adjustments to the national-level costs presented in this EA is as follows:

• Estimate all costs (noncorrective action, corrective action, an d state) over a 25- year time horizon based on the rule implementation schedule.

• Calculate total net present value costs using 3 and 7 percent discount rates.

• Annualize the costs over 25 years us ing the same discount rates.

Appendix C presents step by step results fo r the projection and di scounting of costs to show how yearly costs for each rule compone nt are accounted for by the cost model for Community Water Systems (CWSs), Nontransient Noncommunity Water Systems (NTNCWSs), Transient Noncommunity Water Systems (TNCWSs) , and states. Exhibits C.1 through C.9 show the nominal costs projected over the rule schedule and the present value of each cost calculated to the expected year of rule implementation for the TCR. Exhibits C.10 through C.45 show the results for the Agreement in Principle (AIP) and the Alternative option.

7.4 

## Derivation of Costs for PWSs and States

This section presents the methodology and un it costs used to derive national costs for PWSs and states to perform TCR- and proposed RTCR -related activities. Chapter 3 contains
detailed summaries of the activities under TCR and the proposed RTCR options (AIP and Alternative option) considered as part of th is EA. The following subsections provide a brief

2 The choice of an appropriate discount rate is a complex and controversial issue among economists and policy makers. Therefore, the Agency compares streams of future national level costs and benefits using two alternative discount rates, 3 and 7 percent. The underlying logic for each discount rate can be found in Guidelines for Preparing Economic Analyses (USEPA, 2000c).Economic Analysis for the Proposed RTCR 7-6 June 2010 

### summary of each activity and the assumptions used to estimate the burden and costs attributable
to both PWSs and states for:

7.4.1 Rule Implementation and Annual Administration 7.4.2 Revising Sampling Plans 7.4.3 Monitoring
7.4.4 Annual Site Visits
7.4.5 Assessments 7.4.6 Corrective Actions
7.4.7 Public Notification

This chapter uses information from the baseli ne analysis in Chapter 4 as a starting point for analysis of PWSs subject to each rule requirement. Additional baseline information and detailed intermediate model outputs are provided in Appendix A.

There are also 57 states and primacy agencies that would incur costs as a result of the proposed rule.

7.4.1 Rule Implementation and Annual Administration

PWSs

Under the AIP and Alternative option, a ll PWSs subject to th e proposed RTCR would
incur one-time costs that include time for staff to read the rule and become familiar with its provisions and to train employees on rule requirements. No additional implementation burden or costs are incurred by PWSs under the TCR to implement the proposed RTCR, as these PWSs have already performed implementation and are continuing to perform annual administration activities under the TCR. Under the AIP and A lternative option, all PWSs subject to the proposed RTCR would perform additional or tran sitional implementation activities. The labor rates presented in Section 7.2.1 are used al ong with estimates of labor hours to generate estimated implementation costs for all PWSs. Based on previous experience with rule implementation and consistent with estimates used in the GWR EA, EPA estimates that PWSs would require a total of 4 hours to read and understand the rule, and a total of 8 hours to plan and mobilize (i.e., assign appropriate personnel and resources to ca rry out rule activities).Economic Analysis for the Proposed RTCR 7-7 June 2010 

### Exhibit 7.3 Net Change in PWS Unit Burden and Cost Estimates for Rule Implementation (2007$)

A B C D=A*(B+C)
Community Water Systems (CWSs)

≤ 100 25.10 $ 4.0 8.0 301.20 $

101-500 27.03 $ 4.0 8.0 324.36 $

501-1,000 28.96 $ 4.0 8.0 347.52 $

1,001-4,100 29.73 $ 4.0 8.0 356.76 $

4,101-33,000 36.00 $ 4.0 8.0 432.00 $

33,001-96,000 36.39 $ 4.0 8.0 436.68 $

96,001-500,000 41.01 $ 4.0 8.0 492.12 $

500,001-1 M illion 41.01 $ 4.0 8.0 492.12 $

> 1 Million 41.01 $ 4.0 8.0 492.12 $

Nontransient Noncommunity Water Systems (NTNCWSs)

≤ 100 25.10 $ 4.0 8.0 301.20 $

101-500 27.03 $ 4.0 8.0 324.36 $

501-1,000 28.96 $ 4.0 8.0 347.52 $

1,001-4,100 29.73 $ 4.0 8.0 356.76 $

4,101-33,000 36.00 $ 4.0 8.0 432.00 $

33,001-96,000 36.39 $ 4.0 8.0 436.68 $

96,001-500,000 41.01 $ 4.0 8.0 492.12 $

500,001-1 M illion 41.01 $ 4.0 8.0 492.12 $

> 1 Million 41.01 $ 4.0 8.0 492.12 $

Transient Noncommunity Water Systems (TNCWSs)

≤ 100 25.10 $ 4.0 8.0 301.20 $

101-500 27.03 $ 4.0 8.0 324.36 $

501-1,000 28.96 $ 4.0 8.0 347.52 $

1,001-4,100 29.73 $ 4.0 8.0 356.76 $

4,101-33,000 36.00 $ 4.0 8.0 432.00 $

33,001-96,000 36.39 $ 4.0 8.0 436.68 $

96,001-500,000 41.01 $ 4.0 8.0 492.12 $

500,001-1 M illion 41.01 $ 4.0 8.0 492.12 $

> 1 Million 41.01 $ 4.0 8.0 492.12 $

Notes:

Sources:
(A) Labor rates for PWSs from Exhibit 7.1.
(B), (C) EPA estimates based on best professional judgement. Unit Cost

PWS burden and cost estimates for implementation activities are assumed to be identical under the AIP and Alternative Option. PWS Size (Population

Served) Labor Cost (per hour) Read and

Understand Rule (hours/system) Planning and

Mobilization (hours/system)Economic Analysis for the Proposed RTCR 7-8 June 2010 

### States

States would incur administrative cost s to implement the proposed RTCR. These implementation costs are not directly require d by specific provisions of the proposed RTCR alternatives but are necessary fo r states to ensure th at the provisions of the proposed RTCR are properly carried out. States would need to allocate time for their staff to establish and maintain the programs necessary to comply with the proposed RTCR, including developing and adopting state regulations and modifying data management systems to track new required PWS reports to
the states. As a one-time burden covered unde r the 520 hours allocated to modifying data management systems, each state would modify their data management system to be able to track the changes in monitoring regimes. Note, on average no on-going annual cost is assumed for modifying data management because the track ing system would already be in place and oversight would be accounted under state review of sampling results, assessments, etc. Time requirements for a variety of state agency activ ities and responses are estimated in this EA. Exhibit 7.4 lists the activities required to re vise the program following promulgation of the proposed RTCR along with their respective costs and burden. Because time requirements for implementation and annual administration activiti es vary among state agencies, EPA recognizes that the burden and cost estimates presented in Exhibit 7.4 may be an over- or under-estimate for

some states.

Exhibit 7.4 Net Change in State Unit Burden and Cost Estimates for Rule Implementation (2007$)

Labor Cost (per hour) Hours FTEs Cost
A B C=B/2,080 D=A*B

39.22 $ 15 0.01 588 $

39.22 $ 260 0.13 10,197 $

39.22 $ - - - $

39.22 $ 520 0.25 20,393 $

39.22 $ 520 0.25 20,393 $

39.22 $ 130 0.06 5,098 $

Per State Total 1,445 56,670 $ National Totals (57 States/Primacy Agencies) 82,365 3,230,201 $ Notes: Detail may not add due to independent rounding.

Sources: (A) Labor rate for state employee from Section 7.2.1.

(C) Full-time equivalent (FTE) assumes individual w orking 40 hours per w eek, 52 w eeks per year. Staff Training

State burden and cost estimates for Implementation activities are assumed to be identical under the AIP and Alternative Option. Read and Understand Rule Compliance Activity

Regulation Adoption and Program Development Initial Laboratory Certification Modify Data Management Systems PWS Training and Technical Assistance

(B) Labor hours for start-up activities are based on GWR estimates. Because the proposed RTCR is a revision of the existing TCR, one fourth of the State unit start up burden from GWR is used in the proposed

RTCR.



### In addition to these one-time costs, st ates would use resources to continue administrative activities. On an annual basis, stat es must coordinate with their particular EPA regional office to be certain that the state’s pr ogram is consistent with federal requirements.
States would also continue to train state and PW S staffs, maintain laboratories’ certifications, and report PWS compliance information to the Safe Drinking Water Information System (SDWIS). However, based on discussions with stakeholders, once the initial implementation activities are complete, the annual burden (on av erage) for general admi nistrative tasks for theEconomic Analysis for the Proposed RTCR 7-9 June 2010 

### proposed RTCR would not be any higher than the burden incurred u nder the current TCR requirements. In some cases, the general administ rative burden for TCR may actually decrease as PWSs experience better performance, and thus re quire less state interac tion, under the proposed RTCR. Therefore, no continuing annual admini strative costs are estimated for the EA.

States would also spend time responding to specific requirements under the proposed RTCR (i.e., review assessment reports, consult with PWSs, etc.). In these cases, the state costs are estimated under the costing for that particular rule requirement.

Implementation Net Cost Summary

Because EPA does not anticipate early im plementation of the proposed RTCR, EPA expects that implementation act ivities would take place in ye ars 1 through 3 of the 25-year compliance period before PWSs begin monitoring activities. Annualized costs estimates for PWSs and states to perform implementation act ivities are estimated by multiplying the number of PWSs or states required to comply with the proposed RTCR (i.e., all PWSs) by the unit costs presented in Exhibits 7.3 and 7.4. Annualized and net change cost estimates for PWSs and states to perform implementation activit ies under the TCR, AIP, and A lternative option are presented
in Exhibit 7.5.

Exhibit 7.5 Annualized Cost Estimates for Rule Implementation ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ AIP - Net Change 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ Alternative Option - Total 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ Alternative Option - Net Change 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $

Notes: 1) Detail may not add due to independent rounding. 2) PWS and state burden and cost estimates for implementation activities are assumed to be identical under the AIP and Alternat ive Option. Source: Proposed RTCR Cost Model. 3% Discount Rate 7% Discount Rate



### 7.4.2 Revising Sampling Plans

PWSs

Under the AIP and Alternative option, a ll PWSs subject to th e proposed RTCR would incur one-time costs to revise existing samp ling plans to identify sampling locations and collection schedules that are repr esentative of water throughout the distribution system. System sample siting plans must include routine and repeat sample sites and any sampling points necessary to meet GWR requirements. Under the TCR, no additional burden or costs are expected to be incurred by PWSs to revise samp ling plans, as these PWSs are already collecting total coliform samples in accordance with a writt en sampling plan. The labor rates presented in Section 7.2.1 are used along with estimates of la bor hours to generate samp ling plan costs for all PWSs. Based on previous experience, EPA estimat es that PWSs would require 2-8 hours for revising their sampling plan, depending on PWS si ze. Estimates of PWS unit costs to revise sampling plans are presented in Exhibit 7.6.Economic Analysis for the Proposed RTCR 7-10 June 2010 

### States

Under the AIP and Alternative option, states are expected to incur one-time costs to review sampling plans and recommend any revi sions to PWSs. Under the TCR, no additional burden or costs are incurred by states to review sampling plans, as these PWSs’ sampling plans have already been reviewed and approved. St ate costs are based on the number of PWSs submitting revised sampling plans to PWSs each year. The state labor rate presented in Section 7.2.1, the number of PWSs in each PWS size cat egory required to revise sampling plans, and estimates of labor hours are used to generate sampling plan costs incu rred by states. Based on previous experience, EPA estimates that stat es would require 1-4 hours to review revised sampling plans and provide any necessary revisi ons to PWSs, depending on PWS size. Estimates of state unit costs to revise sampling plans are presented in Exhibit 7.6.

Exhibit 7.6 Net Change in PWS and State Burden and Cost Estimates for Revising Sampling Plans (2007$)

A B C=A*B D E F=D*E
Community Water Systems (CWSs)

≤ 100 25.10 $ 2.0 50.20 $ 39.22 $ 1.0 39.22 $

101-500 27.03 $ 2.0 54.06 $ 39.22 $ 1.0 39.22 $

501-1,000 28.96 $ 4.0 115.84 $ 39.22 $ 2.0 78.44 $

1,001-4,100 29.73 $ 4.0 118.92 $ 39.22 $ 2.0 78.44 $

4,101-33,000 36.00 $ 6.0 216.00 $ 39.22 $ 3.0 117.65 $

33,001-96,000 36.39 $ 8.0 291.12 $ 39.22 $ 4.0 156.87 $

96,001-500,000 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

500,001-1 Million 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

> 1 Million 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $
Nontransient Noncommunity Water Systems (NTNCWSs)

≤ 100 25.10 $ 2.0 50.20 $ 39.22 $ 1.0 39.22 $

101-500 27.03 $ 2.0 54.06 $ 39.22 $ 1.0 39.22 $

501-1,000 28.96 $ 4.0 115.84 $ 39.22 $ 2.0 78.44 $

1,001-4,100 29.73 $ 4.0 118.92 $ 39.22 $ 2.0 78.44 $

4,101-33,000 36.00 $ 6.0 216.00 $ 39.22 $ 3.0 117.65 $

33,001-96,000 36.39 $ 8.0 291.12 $ 39.22 $ 4.0 156.87 $

96,001-500,000 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

500,001-1 Million 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

> 1 Million 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $
Transient Noncommunity Water Systems (TNCWSs)

≤ 100 25.10 $ 2.0 50.20 $ 39.22 $ 1.0 39.22 $

101-500 27.03 $ 2.0 54.06 $ 39.22 $ 1.0 39.22 $

501-1,000 28.96 $ 4.0 115.84 $ 39.22 $ 2.0 78.44 $

1,001-4,100 29.73 $ 4.0 118.92 $ 39.22 $ 2.0 78.44 $

4,101-33,000 36.00 $ 6.0 216.00 $ 39.22 $ 3.0 117.65 $

33,001-96,000 36.39 $ 8.0 291.12 $ 39.22 $ 4.0 156.87 $

96,001-500,000 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

500,001-1 Million 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

> 1 Million 41.01 $ 8.0 328.08 $ 39.22 $ 4.0 156.87 $

Notes:

Sources:
(A) Labor rates for systems from Exhibit 7.1.
(B) PWS labor hours for review ing and revising sampling plan reflect EPA estimate.
(D) Labor rates for state employee from Section 7.2.1.
(E) State labor hours for review ing and revising sampling plan reflect EPA estimate. PWS and state burden and cost estimates for review ing and revising sampling plans are assumed to be identical under the AIP and Alternative Option. Unit Cost State Labor Cost (per hour) Review and

Revise Sampling Plan (hours/system) Unit Cost PWS Size (Population

Served) PWSs States

PWS Labor Cost

(per hour) Revise Sampling Plan (hours/system)Economic Analysis for the Proposed RTCR 7-11 June 2010 

### Sampling Plan Net Cost Summary

PWSs are expected to revise sampling pl ans before monitoring begins. For modeling purposes costs are split between years 2 and 3 of the 25-year compliance period (monitoring is required starting in year 4). A nnualized cost estimates for PWSs to revise sampling plans and states to review the revised sampling plans (and consult with PWSs if necessary) under the TCR, AIP, and Alternative Option are presented in Exhibit 7.7.

Exhibit 7.7 Annualized Cost Estimates to Revise (PWSs) and Review (States) Sampling Plans ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ AIP - Net Change 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ Alternative Option - Total 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ Alternative Option - Net Change 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $
Note: Detail may not add due to independent rounding. Source: Proposed RTCR Cost Model. 3% Discount Rate 7% Discount Rate



### 7.4.3 Monitoring

PWSs

Monitoring costs for PWSs are calculated by multiplying the total numbers of routine, additional routine, and repeat samples required under the TCR, AIP, and Alternative Option (Exhibit 7.9) by the monitoring costs per sample presented in Exhibit 7.2. Differences in monitoring requirements between the TCR and the AIP and Alternative Option as summarized in
Exhibit 7.8 below drive the differences in mo nitoring costs between the options. Chapters 4 (Exhibit 4.4) and 5 (Exhibit 5.14) show the dist ribution of monitoring frequencies prior to and after rule implementation, respectively, that are used to further inform the analysis. The effects of the differences in monitoring regimes on net ch anges in costs are described in further detail following the exhibit.Economic Analysis for the Proposed RTCR 7-12 June 2010Exhibit 7.8 Summary of Monitoring Requirements Under the TCR,AIP, and Alternative OptionsMonitoring Requirement Current TCR AIP Alternative OptionDefault RoutineMonitoring FrequencyThe default TC monitoring frequency forground water Noncommunity WaterSystems (NCWSs) serving≤1,000 people isquarterlyThe default TC monitoring frequency for allother PWSs is monthly for TCThe default TC monitoring frequency for nonseasonal ground water NCWSs serving≤1,000people is quarterlyThe default TC monitoring frequency for allother PWSs is monthlyPWSs would be permitted to transition to theproposed RTCR at their current TC monitoringfrequencies3The default TC monitoring frequency for allPWSs is monthlyAll PWSs would start on monthly TCmonitoringReduced/IncreasedRoutine MonitoringFrequencyGround water NCWSs serving≤1,000people can reduce to annual monitoring ifno sanitary defects and served only byprotected GW sourcesGround water CWSs serving≤1,000 canreduce to quarterly monitoring if no historyof TC+ in current configuration, no sanitarydefects, and served only by protected GWsourcesAll other PWSs are ineligible for reducedmonitoringPWSs not meeting criteria for reducedmonitoring return to default monitoring (noincreased monitoring provision undercurrent TCR)Ground water NCWSs serving≤1,000 peoplecan reduce to annual monitoring if no sanitarydefects, clean TCR compliance history, andannual site visit or Level 2 assessment, andcorrection of all identified sanitary defectsGround water CWSs serving≤1,000 peoplecan reduce to quarterly monitoring if nosanitary defects, clean TCR compliancehistory, and at least one of the following:1) Annual site visit or Level 2 assessment andcorrection of all identified sanitary defects;2) An approved cross connection controlprogram;3) Continuous disinfection & a residual;4) 4-log inactivation of viruses daily as perGWR (4 hr exception allowed); or5) Other equivalent measures as approved bythe primacy agency.All other PWSs are ineligible for reducedmonitoringGround water NCWSs serving≤1,000 peoplecan reduce to quarterly monitoring if nosanitary defects, clean TCR compliancehistory, and annual site visit or Level 2assessment, and correction of all identifiedsanitary defects.Ground water CWSs serving≤1,000 peoplecan reduce to quarterly monitoring if nosanitary defects, clean TCR compliancehistory, and at least one of the following:1) Annual site visit or Level 2 assessment andcorrection of all identified sanitary defects;2) An approved cross connection controlprogram;3) Continuous disinfection & a residual;4) 4-log inactivation of viruses daily as perGWR (4 hr exception allowed); or5) Other equivalent measures as approved bythe primacy agency.All other PWSs are ineligible for reduced3In order for PWSs to be ableto transition to the proposed RTCRat their current TC monitoringfrequencies, an annual site visit or voluntary Level 2 assessment wouldbe needed in the first year for PWSs on annual monitoring, including those transitioning.Economic Analysis for the Proposed RTCR 7-13 June 2010Monitoring Requirement Current TCR AIP Alternative OptionGround water PWSs serving≤1,000 people onquarterly or annual monitoring that experienceany of the following events will be required tobegin monthly monitoring:1) System triggers a Level 2 assessment (or a2nd Level 1 assessment in a rolling 12 monthperiod);2) System has an E. coliMaximumContaminant Level (MCL) violation;3)System has an RTCR treatment techniqueviolation (either Level 1 or 2); or4) System has two routine monitoringviolations in a rolling 12-month period.monitoringGround water PWSs serving≤1,000 people onquarterly monitoring that experience any of thefollowing events will be required to beginmonthly monitoring (i.e., return to defaultmonitoring frequency):1) System triggers a Level 2 assessment (or a2nd Level 1 assessment in a rolling 12 monthperiod);2) System has an E. coliMCL violation;3)System has an RTCR treatment techniqueviolation (either Level 1 or 2); or4) System has two routine monitoringviolations in a rolling 12-month period.Additional RoutineMonitoring FrequencyAll PWSs serving≤4,100 people must takeat least 5 samples in the month following aTC+ unless state performs site visit anddeems additional sampling unnecessary ORdetermines the reason for the TC+ andPWS has or will correct problem.Not required for PWSs serving >4,100peopleGround water NCWSs serving≤1,000 peopleand monitoring quarterly or annually must takeat least 3 samples in the month following TC+Ground water CWSs serving≤1,000 peopleand monitoring quarterly must take at least 3samples in the month following TC+Not required for PWSs monitoring monthlyGround water PWSs (NCWS and CWS)serving≤1,000 people and monitoringquarterly must take at least 3 samples in themonth following TC+Not required for PWSs monitoring monthlyRepeat MonitoringFrequencyAll PWSs serving≤1,000 people must take4 repeat TC samplesAll PWSs serving >1,000 people must take3 repeat TC samplesAll PWSs must take 3 repeat TC samplesAll PWSs must take 3 repeat TC samplesEconomic Analysis for the Proposed RTCR 7-14 June 2010 

### Routine Monitoring

Under the AIP, the increased stringency to quali fy for reduced monitoring results in more routine samples being taken over time (fewer PWSs are on reduced monitoring) for most PWS sizes and types. The only PWSs predicted to ha ve a decrease in routin e monitoring under the AIP are ground water NTNCWSs serving ≤ 1,000 people due to a more PWSs monitoring quarterly
than under the current TCR. For th e Alternative option, this effect would be combined with the requirement that all PWSs start the implementa tion period on monthly monitoring, resulting in more routine samples being taken for all PWS sizes and types. The Alternative option also prohibits annual monitoring for an even greater in crease in the number of routine samples. The resulting increases in total national costs due to increased monitoring on the national level are
reflected in the routine monitori ng costs shown in Exhibit 7.10.

Additional Routine Monitoring 4



### The overall reductions in additional r outine samples required under the AIP and Alternative option result in reduced costs (Exhib it 7.10). Under the AIP and Alternative options, additional routine monitoring is no longer required for systems that monitor at least monthly, and
when additional routine monitori ng is required, the number of samples required is reduced from five to three. Cost reductions are greater under the Alternative option th an under the AIP because all PWSs start on monthly monitoring and are not required to take additional routine samples during that period.

Repeat Monitoring

Under the AIP and Alternative option, all PW Ss are only required to take three repeat samples. However, EPA assumes that ground water PWSs treating to less than 4-log would still take an additional source water sample to comply with the GWR (no change in cost). Additionally, the number of repeat samples take n is a function of the number of regular and additional routine samples taken, which in turn affects the number of TC+ samples found (i.e., the more samples taken, the greater chance of finding a TC+). Thus, the overall increase in routine sampling under the AIP a nd Alternative option would resu lt in more repeat samples while the decreases in additional routine samples under both of these options would lead to fewer repeat samples.

In most PWS size and type categories, th e large reductions in additional routine monitoring samples is the major driver, leading to decreases in repeat samples. Under the AIP, only groundwater TNCWSs serving ≤ 100 people are predicted to see an increase repeat sampling due to the large increase in routine sampling with in this category. Under the Alternative option, ground water NTNCWSs and TNCWSs serving ≤ 1,000 people are predicted to have increased repeat monitoring as a function of large increases in routine monitoring. The overall effect on the
national level is a reduction in the number (and cost) of require d repeat samples under the AIP
and an increase under the Alte rnative option compared to th e current TCR (Exhibit 7.10).

4 For modeling purposes and discussion throughout the cost chapter, regular routine monitoring samples taken in the month following a total coliform-positive are included in the additional routine monitoring sample counts.Economic Analysis for the Proposed RTCR 7-15 June 2010 

### Cumulative Monitoring Summary

Exhibit 7.9 summarizes the total number of samples taken by PWS size and category for routine, additional, and repeat monitoring under the TCR, AIP, and Alternative option over the entire 25 year period of analysis. Appendix A pr esents additional information on samples taken for each individual year during the analysis period.

States

Under the current TCR, states are estima ted to incur a monthly 15-minute burden to review each PWS’s sample result s. This estimate reflects th e methodology used to calculate reporting and recordkeeping burde n under the current TCR in the Draft Information Collection Request for the Microbial Rules (USEPA, 2008b). Because the existing methodology is calculated on a per PWS basis a nd the total number of PWSs is the same for cost modeling under the TCR and both proposed RTCR options, the net change in costs for reviewing monitoring
results is estimated to be zero for the AIP a nd Alternative option. Specific actions by states related to positive samples are accounted for unde r the actions required in response to those samples. Maintenance of sample results in SDWIS is accounted for under general implementation and administrative activities, which are discussed in Section 7.4.1.

Monitoring Net Cost Summary

The annualized net present value total and net change cost estimates for PWSs and states to perform monitoring under the TCR, AIP, and A lternative option are pres ented in Exhibit 7.10. All monitoring is modeled to begin in y ear 4 of the 25-year analysis period.

The overall estimated increase in monitoring costs seen under the AIP is driven by increases in routine monitoring due to stricter requirements to qualify for reduced monitoring. However, this is mostly offset by reductions in additional routine and repeat monitoring required under the revised regulations . For the Alterna tive option, the requirement for all PWSs to sample on a monthly basis at the beginning of rule im plementation results in a much large cost differential that is only partially offset by reduc ed costs due to reduction s in additional routine monitoring requirements. Although not shown in Exhibit 7.10, cost s for individual PWS categories (size and type) are exp ected to move in the same direction relative to the numbers of samples taken as reflected in Exhibit 7.9. Excep tions to the general trends on the national level are discussed in the subsections describing rout ine, additional routine, and repeat sampling
above.Economic Analysis for the Proposed RTCR 7-16 June 2010 

### Exhibit 7.9 Cumulative Number of Samp les over 25-Year Period of Analysis

Routine Monitoring Samples Additional

Routine Monitoring Samples Repeat Monitoring Samples Routine Monitoring Samples Additional

Routine Monitoring Samples Repeat Monitoring Samples Routine Monitoring Samples Additional

Routine Monitoring Samples Repeat Monitoring Samples
ABCD EFGH I
Community Water Systems (CWSs) - SW

≤ 100 304,098 23,747 19,160 308,849 - 12,875 308,849 - 12,875
101-500 562,214 26,578 21,338 567,486 - 15,333 567,486 - 15,333
501-1,000 306,733 14,501 11,641 309,610 - 8,366 309,610 - 8,366
1,001-4,100 1,920,789 55,202 33,730 1,950,717 - 32,222 1,950,717 - 32,222
4,101-33,000 10,636,296 - 186,781 10,636,296 - 175,689 10,636,296 - 175,689
33,001-96,000 11,058,960 - 194,204 11,058,960 - 182,671 11,058,960 - 182,671
96,001-500,000 10,190,400 - 178,951 10,190,400 - 168,324 10,190,400 - 168,324
500,001-1 Million 2,019,600 - 35,466 2,019,600 - 33,360 2,019,600 - 33,360
> 1 Million 1,686,960 - 29,624 1,686,960 - 27,865 1,686,960 - 27,865
Total 38,686,051 120,028 710,896 38,728,879 - 656,704 38,728,879 - 656,704

≤ 100 2,815,951 286,073 194,462 2,870,075 8,760 156,897 2,908,469 7,545 158,439
101-500 3,344,578 243,895 171,252 3,391,200 6,127 136,906 3,428,876 5,264 137,959
501-1,000 1,072,202 70,803 51,673 1,085,730 1,844 39,659 1,098,488 1,616 39,580
1,001-4,100 3,997,293 160,710 100,618 4,079,328 - 96,939 4,079,328 - 96,939
4,101-33,000 9,145,224 - 230,201 9,145,224 - 217,321 9,145,224 - 217,321
33,001-96,000 4,884,000 - 122,938 4,884,000 - 116,060 4,884,000 - 116,060
96,001-500,000 1,945,680 - 48,976 1,945,680 - 46,236 1,945,680 - 46,236
500,001-1 Million 253,440 - 6,380 253,440 - 6,023 253,440 - 6,023
> 1 Million 269,280 - 6,778 269,280 - 6,399 269,280 - 6,399
Total 27,727,648 761,481 933,279 27,923,956 16,731 822,439 28,012,784 14,425 824,956

≤ 100 65,009 4,918 4,005 65,986 - 2,840 65,986 - 2,840
101-500 66,038 3,734 3,008 66,766 - 2,073 66,766 - 2,073
501-1,000 22,970 1,299 1,046 23,223 - 721 23,223 - 721
1,001-4,100 41,740 2,147 1,351 42,751 - 1,183 42,751 - 1,183
4,101-33,000 50,424 - 1,632 50,424 - 1,395 50,424 - 1,395
33,001-96,000 34,320 - 1,111 34,320 - 950 34,320 - 950
96,001-500,000 31,680 - 1,025 31,680 - 877 31,680 - 877
500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 312,182 12,097 13,179 315,151 - 10,038 315,151 - 10,038

≤ 100 971,538 128,775 84,992 932,025 48,142 68,123 1,281,321 34,581 89,002
101-500 725,785 66,525 43,597 678,688 25,630 35,860 952,008 18,114 46,996
501-1,000 190,649 16,037 10,680 180,145 6,166 8,601 247,132 4,674 11,689
1,001-4,100 460,470 28,214 17,790 473,352 - 15,887 473,352 - 15,887
4,101-33,000 153,648 - 5,936 153,648 - 5,157 153,648 - 5,157
33,001-96,000 23,760 - 918 23,760 - 797 23,760 - 797
96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 2,525,850 239,551 163,913 2,441,617 79,938 134,426 3,131,221 57,369 169,528

≤ 100 345,443 39,654 32,349 353,461 - 20,787 353,461 - 20,787
101-500 128,109 15,365 12,541 131,149 - 7,816 131,149 - 7,816
501-1,000 22,683 2,720 2,220 23,222 - 1,384 23,222 - 1,384
1,001-4,100 39,816 3,990 2,590 42,209 - 2,118 42,209 - 2,118
4,101-33,000 40,656 - - 40,656 - 2,040 40,656 - 2,040
33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million 102,960 - - 102,960 - 5,167 102,960 - 5,167
Total 679,667 61,730 49,700 693,657 - 39,312 693,657 - 39,312

≤ 100 4,493,808 905,554 600,315 6,076,163 446,166 631,105 9,100,613 289,563 867,968
101-500 1,614,924 316,238 210,714 1,940,946 135,822 194,697 2,886,164 91,085 268,893
501-1,000 177,264 32,730 22,064 206,130 14,078 20,078 295,928 9,578 27,084
1,001-4,100 335,283 29,957 19,113 348,480 - 16,027 348,480 - 16,027
4,101-33,000 156,288 - 8,909 156,288 - 7,188 156,288 - 7,188
33,001-96,000 34,320 - 1,956 34,320 - 1,578 34,320 - 1,578
96,001-500,000 26,400 - 1,505 26,400 - 1,214 26,400 - 1,214
500,001-1 Million 63,360 - 3,612 63,360 - 2,914 63,360 - 2,914

> 1 Million - - - - - - - - - Total 6,901,647 1,284,478 868,188 8,852,088 596,065 874,801 12,911,552 390,226 1,192,865
Grand Total 76,833,044 2,479,366 2,739,154 78,955,347 692,734 2,537,720 83,793,244 462,020 2,893,404 Community Water Systems (CWSs) - GW

Nontransient Noncommunity Water Systems (NTNCWSs) - SW

Nontransient Noncommunity Water Systems (NTNCWSs) - GW

Transient Noncommunity Water Systems (TNCWSs) - SW

Transient Noncommunity Water Systems (TNCWSs) - GW

Source: Appendix A - Total PWS Counts (A.1z, A.2z, A.3z)

PWS Size (Population

Served) TCR Alternative Option AIP

Note: (B), (E), (H) For modeling purposes, additional routine sample counts include regular routine samples taken in the same m onth.Economic Analysis for the Proposed RTCR 7-17 June 2010 

### Exhibit 7.10 Annualized PWS and Stat e Cost Estimates for Monitoring Costs ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total 170.59 $ - $ 170.59 $ 163.94 $ - $ 163.94 $

AIP - Total 174.71 $ - $ 174.71 $ 167.74 $ - $ 167.74 $ AIP - Net Change 4.12 $ - $ 4.12 $ 3.80 $ - $ 3.80 $ AIP - Percent Change 2.42% 0.00% 2.42% 2.32% 0.00% 2.32% Alternative Option - Total 186.34 $ - $ 186.34 $ 181.49 $ - $ 181.49 $ Alternative Option - Net Change 15.75 $ - $ 15.75 $ 17.56 $ - $ 17.56 $ Alternative Option - Percent Change 9.23% 0.00% 9.23% 10.71% 0.00% 10.71%

TCR - Total 3.87 $ - $ 3.87 $ 3.72 $ - $ 3.72 $

AIP - Total 1.12 $ - $ 1.12 $ 1.09 $ - $ 1.09 $ AIP - Net Change (2.75) $ - $ (2.75) $ (2.63) $ - $ (2.63) $ AIP - Percent Change -71.09% 0.00% -71.09% -70.74% 0.00% -70.74% Alternative Option - Total 0.68 $ - $ 0.68 $ 0.58 $ - $ 0.58 $ Alternative Option - Net Change (3.18) $ - $ (3.18) $ (3.14) $ - $ (3.14) $ Alternative Option - Percent Change -82.31% 0.00% -82.31% -84.35% 0.00% -84.35%

TCR - Total 5.11 $ - $ 5.11 $ 4.91 $ - $ 4.91 $

AIP - Total 4.82 $ - $ 4.82 $ 4.64 $ - $ 4.64 $ AIP - Net Change (0.29) $ - $ (0.29) $ (0.27) $ - $ (0.27) $ AIP - Percent Change -5.66% 0.00% -5.66% -5.57% 0.00% -5.57% Alternative Option - Total 5.50 $ - $ 5.50 $ 5.45 $ - $ 5.45 $ Alternative Option - Net Change 0.39 $ - $ 0.39 $ 0.54 $ - $ 0.54 $ Alternative Option - Percent Change 7.68% 0.00% 7.68% 10.99% 0.00% 10.99%

TCR - Total 179.57 $ - $ 179.57 $ 172.57 $ - $ 172.57 $

AIP - Total 180.65 $ - $ 180.65 $ 173.46 $ - $ 173.46 $ AIP - Net Change 1.08 $ - $ 1.08 $ 0.90 $ - $ 0.90 $ AIP - Percent Change 0.60% 0.00% 0.60% 0.52% 0.00% 0.52% Alternative Option - Total 192.53 $ - $ 192.53 $ 187.53 $ - $ 187.53 $ Alternative Option - Net Change 12.96 $ - $ 12.96 $ 14.96 $ - $ 14.96 $ Alternative Option - Percent Change 7.22% 0.00% 7.22% 8.67% 0.00% 8.67%

Notes: 1) Detail may not add due to independent rounding. 2) For modeling purposes, additional routine sample counts include regular routine samples taking in the same month.

Source: Proposed RTCR Cost Model. 3) State costs are premised on a per system basis. State costs for monitoring are expected to be identical under the TCR, AIP, and Alternative Option, and are therefore not included in the total costs. Routine Monitoring 3% Discount Rate 7% Discount Rate

Additional Monitoring

Repeat Monitoring

Total



### 7.4.4 Annual Site Visits

Under the AIP, any PWS on an annual mon itoring schedule would be required to also have an annual site visit conducted by the state or state-designated third party. A voluntary Level 2 assessment can also satisfy the annual site vi sit requirement. In many cases a sanitary survey performed during the same year can also be used to satisfy this requirement. 5 

### Although similar

5 In some instances, the performance of an assessment (especially a Level 2 assessment) may overlap with a scheduled sanitary survey. To the extent that the requirem ents for performing a sanitary survey may be satisfied as part of the assessment process, PWSs and states may rea lize a cost savings compared to performing a separate sanitary survey. This potential for indirect cost savings is not captured in the cost model, resulting in a potential overestimate of costs stemming from proposed RTCR implementation.Economic Analysis for the Proposed RTCR 7-18 June 2010 

### annual site visits are not curre ntly required under the existing T CR, discussions with states during the TCRDSAC proceedings revealed that so me do, in fact, conduct such inspections for PWSs on annual monitoring schedules. Because of the high cost for an annual site visit by a state, for this analysis, EPA assumes that no st ates would choose to conduct annual site visits unless they already do so under the current TCR. Therefore, for overall costing purposes, no net change in state or PWS costs are assumed for annual monitoring site visits under the AIP or Alternative option.

7.4.5 Assessments

PWSs

Level 1 Assessments

Under the AIP and Alternative option, all PWSs experiencing a Level 1 trigger must complete a Level 1 assessment of the PWS. A Level 1 trigger under th e AIP and Alternative Option is defined as:

• For PWSs taking ≥ 40 samples per month, TC+ exceeds 5.0% for a given month;

• For PWSs taking <40 samples per month, two or more TC+ in a month; or

• Failure to take all required repeat samples after a single TC+ sample.

The current TCR does not require a specific assessment to be performed in response to events comparable to the Level 1 triggers desc ribed above (i.e., non-acute violations). However, PWSs do perform some level of activity similar to a Leve l 1 assessment in response to
violations. This effort is taken into account in the cost model to accurately assess the net cost of changes attributable to the proposed RTCR.

A Level 1 assessment (or comparable assessment under the current TCR) includes a simple examination of the PWS and relevant operational practices. The Level 1 assessment would be intended as a self-assessment (EPA an ticipates that these would be completed by the PWS and reviewed by the state). If the stat e determines the completed assessment form insufficient, it would consult with the PWS. Additionally, as pa rt of the Level 1 assessment, PWSs would be required to submit to the state a form identifying sanitary defects detected, corrective actions completed, and a timetable fo r any corrective actions not already completed. Additional detail on the requirements of a Level 1 assessment and the derivation of associated unit burden (labor hours) for performance of the assessment is provided in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d).Economic Analysis for the Proposed RTCR 7-19 June 2010 

### Level 2 Assessments

Under the AIP and Alternative option, all PWSs experiencing a Level 2 trigger must complete a Level 2 assessment of the PWS. A Level 2 trigger under th e AIP and Alternative Option is defined as:

• An E. coli MCL violation;

• An E. coli monitoring violation; or

• A second Level 1 trigger, within a rolling 12 month period, unless the primary agency has determined a likely reason that the initial Level 1 samples were TC+ and establishes that the PWS has corrected the problem.

• For PWSs with approved reduced annual monitoring, a Level 1 trigger in two consecutive years.

As with Level 1 assessments, the current TCR does not require a specific assessment to be performed in response to events comparable to the Level 2 triggers described above (i.e., acute violations), but PWSs do currently perfor m some level of activity similar to a Level 2 assessment in response to acute violations. These ac tions are taken into account in the cost model to properly assess the net cost of changes at tributable to the proposed RTCR regulatory
alternatives.

A Level 2 assessment (or comparable assessm ent under the current TCR) would be more
involved than a Level 1 assessment. A Level 2 as sessment would be a more detailed examination of the PWS, its monitoring program and results, and its operational practi ces. It would comprise essentially the same elements as a Level 1 assessment, but each element would be investigated in greater detail. The level of effort and resource s required to implement the Level 2 assessments would be commensurate with a more comprehens ive investigation, a hi gher level review of available information, and may involve the enga gement of additional parties and expertise. Additionally, as part of the Level 2 assessment, PW Ss must submit to the state a form identifying sanitary defects detected, corrective actions completed, and a timetable for completion of any corrective actions that not already completed. Additional detail on the derivation of associated unit burden (labor hours) for performance of the assessment is provided in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d).

The labor rates presented in S ection 7.2.1 are used along with estimates of labor hours as presented in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d) to generate Level 1 and Level 2 assessment unit costs by PWS size and type. Labor hours provided are assumed to include time for reporting and recordkeeping activities.
Estimates of PWS unit costs for Level 1 and Leve l 2 assessments are presented in Exhibits 7.11 and 7.12. Additionally, the numbers of Level 1 and level 2 assessments over the 25-year compliance period (used to calculate total costs) are presented in Exhibit 7.13.Economic Analysis for the Proposed RTCR 7-20 June 2010 

### Exhibit 7.11 PWS Unit Costs Estimat es for Assessment Activities under Current TCR (2007$)

A B C=A*B D E=A*D F G=A*F

≤ 100 25.10 $ 11.0 276.10 $ 14.0 351.40 $ 14.0 351.40 $

101-500 27.03 $ 11.0 297.33 $ 14.0 378.42 $ 14.0 378.42 $

501-1,000 28.96 $ 13.0 376.48 $ 15.0 434.40 $ 15.0 434.40 $

1,001-4,100 29.73 $ 22.0 654.06 $ 29.0 862.17 $ 29.0 862.17 $

4,101-33,000 36.00 $ 30.0 1,080.00 $ 36.0 1,296.00 $ 36.0 1,296.00 $

33,001-96,000 36.39 $ 59.0 2,147.01 $ 75.0 2,729.25 $ 75.0 2,729.25 $

96,001-500,000 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

500,001-1 M illion 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

> 1 Million 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

≤ 100 25.10 $ 11.0 276.10 $ 14.0 351.40 $ 14.0 351.40 $

101-500 27.03 $ 11.0 297.33 $ 14.0 378.42 $ 14.0 378.42 $

501-1,000 28.96 $ 13.0 376.48 $ 15.0 434.40 $ 15.0 434.40 $

1,001-4,100 29.73 $ 22.0 654.06 $ 29.0 862.17 $ 29.0 862.17 $

4,101-33,000 36.00 $ 30.0 1,080.00 $ 36.0 1,296.00 $ 36.0 1,296.00 $

33,001-96,000 36.39 $ 59.0 2,147.01 $ 75.0 2,729.25 $ 75.0 2,729.25 $

96,001-500,000 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

500,001-1 M illion 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

> 1 Million 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

≤ 100 25.10 $ 4.0 100.40 $ 6.0 150.60 $ 6.0 150.60 $

101-500 27.03 $ 4.0 108.12 $ 6.0 162.18 $ 6.0 162.18 $

501-1,000 28.96 $ 4.0 115.84 $ 6.0 173.76 $ 6.0 173.76 $

1,001-4,100 29.73 $ 4.0 118.92 $ 6.0 178.38 $ 6.0 178.38 $

4,101-33,000 36.00 $ 30.0 1,080.00 $ 36.0 1,296.00 $ 36.0 1,296.00 $

33,001-96,000 36.39 $ 59.0 2,147.01 $ 75.0 2,729.25 $ 75.0 2,729.25 $

96,001-500,000 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

500,001-1 M illion 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

> 1 Million 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

≤ 100 25.10 $ 4.0 100.40 $ 6.0 150.60 $ 6.0 150.60 $

101-500 27.03 $ 4.0 108.12 $ 6.0 162.18 $ 6.0 162.18 $

501-1,000 28.96 $ 4.0 115.84 $ 6.0 173.76 $ 6.0 173.76 $

1,001-4,100 29.73 $ 4.0 118.92 $ 6.0 178.38 $ 6.0 178.38 $

4,101-33,000 36.00 $ 30.0 1,080.00 $ 36.0 1,296.00 $ 36.0 1,296.00 $

33,001-96,000 36.39 $ 59.0 2,147.01 $ 75.0 2,729.25 $ 75.0 2,729.25 $

96,001-500,000 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

500,001-1 M illion 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

> 1 Million 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

≤ 100 25.10 $ 4.0 100.40 $ 6.0 150.60 $ 6.0 150.60 $

101-500 27.03 $ 4.0 108.12 $ 6.0 162.18 $ 6.0 162.18 $

501-1,000 28.96 $ 4.0 115.84 $ 6.0 173.76 $ 6.0 173.76 $

1,001-4,100 29.73 $ 4.0 118.92 $ 6.0 178.38 $ 6.0 178.38 $

4,101-33,000 36.00 $ 30.0 1,080.00 $ 36.0 1,296.00 $ 36.0 1,296.00 $

33,001-96,000 36.39 $ 59.0 2,147.01 $ 75.0 2,729.25 $ 75.0 2,729.25 $

96,001-500,000 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

500,001-1 M illion 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

> 1 Million 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

≤ 100 25.10 $ 4.0 100.40 $ 6.0 150.60 $ 6.0 150.60 $

101-500 27.03 $ 4.0 108.12 $ 6.0 162.18 $ 6.0 162.18 $

501-1,000 28.96 $ 4.0 115.84 $ 6.0 173.76 $ 6.0 173.76 $

1,001-4,100 29.73 $ 4.0 118.92 $ 6.0 178.38 $ 6.0 178.38 $

4,101-33,000 36.00 $ 30.0 1,080.00 $ 36.0 1,296.00 $ 36.0 1,296.00 $

33,001-96,000 36.39 $ 59.0 2,147.01 $ 75.0 2,729.25 $ 75.0 2,729.25 $

96,001-500,000 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

500,001-1 M illion 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

> 1 Million 41.01 $ 108.0 4,429.08 $ 117.0 4,798.17 $ 117.0 4,798.17 $

Note:

Sources:
(A) Labor rates for PWSs from Exhibit 7.1.
(B), (D), (F) Proposed RTCR T&C Document. Nontransient Noncommunity Water Systems (NTNCWSs) - GW Unit Cost Non-Acute
Violations (multiple violations) (hours) Unit Cost

Community Water Systems (CWSs) - SW

PWS Size (Population

Served) Labor Cost (per hour)

(F) EPA assumes that the burden incurred by operators to assess their PWSs follow ing a second non-acute violation is equal to t he burden incurred by an assessment follow ing an acute violation. Transient Noncommunity Water Systems (TNCWSs) - GW Transient Noncommunity Water Systems (TNCWSs) - SW Non-Acute
Violations

(single violation) Unit Cost Acute

Violations (hours)

Community Water Systems (CWSs) - GW

Nontransient Noncommunity Water Systems (NTNCWSs) - SWEconomic Analysis for the Proposed RTCR 7-21 June 2010 

### Exhibit 7.12 PWS Unit Costs Estimates for Level 1 and Level 2 Assessments (AIP and Alternative Option) (2007$)

A B C=A*B D E=A*D F G=A*F

≤ 100 25.10 $ 19.0 476.90 $ 23.0 577.30 $ 22.0 552.20 $

101-500 27.03 $ 19.0 513.57 $ 23.0 621.69 $ 22.0 594.66 $

501-1,000 28.96 $ 20.0 579.20 $ 24.0 695.04 $ 23.0 666.08 $

1,001-4,100 29.73 $ 31.0 921.63 $ 48.0 1,427.04 $ 46.0 1,367.58 $

4,101-33,000 36.00 $ 41.0 1,476.00 $ 71.0 2,556.00 $ 69.0 2,484.00 $

33,001-96,000 36.39 $ 68.0 2,474.52 $ 121.0 4,403.19 $ 116.0 4,221.24 $

96,001-500,000 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

500,001-1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

> 1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

≤ 100 25.10 $ 19.0 476.90 $ 23.0 577.30 $ 22.0 552.20 $

101-500 27.03 $ 19.0 513.57 $ 23.0 621.69 $ 22.0 594.66 $

501-1,000 28.96 $ 20.0 579.20 $ 24.0 695.04 $ 23.0 666.08 $

1,001-4,100 29.73 $ 31.0 921.63 $ 48.0 1,427.04 $ 46.0 1,367.58 $

4,101-33,000 36.00 $ 41.0 1,476.00 $ 71.0 2,556.00 $ 69.0 2,484.00 $

33,001-96,000 36.39 $ 68.0 2,474.52 $ 121.0 4,403.19 $ 116.0 4,221.24 $

96,001-500,000 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

500,001-1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

> 1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

≤ 100 25.10 $ 7.0 175.70 $ 21.0 527.10 $ 9.0 225.90 $

101-500 27.03 $ 7.0 189.21 $ 21.0 567.63 $ 9.0 243.27 $

501-1,000 28.96 $ 7.0 202.72 $ 21.0 608.16 $ 9.0 260.64 $

1,001-4,100 29.73 $ 8.0 237.84 $ 29.0 862.17 $ 10.0 297.30 $

4,101-33,000 36.00 $ 41.0 1,476.00 $ 71.0 2,556.00 $ 69.0 2,484.00 $

33,001-96,000 36.39 $ 68.0 2,474.52 $ 121.0 4,403.19 $ 116.0 4,221.24 $

96,001-500,000 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

500,001-1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

> 1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

≤ 100 25.10 $ 7.0 175.70 $ 21.0 527.10 $ 9.0 225.90 $

101-500 27.03 $ 7.0 189.21 $ 21.0 567.63 $ 9.0 243.27 $

501-1,000 28.96 $ 7.0 202.72 $ 21.0 608.16 $ 9.0 260.64 $

1,001-4,100 29.73 $ 8.0 237.84 $ 29.0 862.17 $ 10.0 297.30 $

4,101-33,000 36.00 $ 41.0 1,476.00 $ 71.0 2,556.00 $ 69.0 2,484.00 $

33,001-96,000 36.39 $ 68.0 2,474.52 $ 121.0 4,403.19 $ 116.0 4,221.24 $

96,001-500,000 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

500,001-1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

> 1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

≤ 100 25.10 $ 7.0 175.70 $ 21.0 527.10 $ 9.0 225.90 $

101-500 27.03 $ 7.0 189.21 $ 21.0 567.63 $ 9.0 243.27 $

501-1,000 28.96 $ 7.0 202.72 $ 21.0 608.16 $ 9.0 260.64 $

1,001-4,100 29.73 $ 8.0 237.84 $ 29.0 862.17 $ 10.0 297.30 $

4,101-33,000 36.00 $ 41.0 1,476.00 $ 71.0 2,556.00 $ 69.0 2,484.00 $

33,001-96,000 36.39 $ 68.0 2,474.52 $ 121.0 4,403.19 $ 116.0 4,221.24 $

96,001-500,000 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

500,001-1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

> 1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

≤ 100 25.10 $ 7.0 175.70 $ 21.0 527.10 $ 9.0 225.90 $

101-500 27.03 $ 7.0 189.21 $ 21.0 567.63 $ 9.0 243.27 $

501-1,000 28.96 $ 7.0 202.72 $ 21.0 608.16 $ 9.0 260.64 $

1,001-4,100 29.73 $ 8.0 237.84 $ 29.0 862.17 $ 10.0 297.30 $

4,101-33,000 36.00 $ 41.0 1,476.00 $ 71.0 2,556.00 $ 69.0 2,484.00 $

33,001-96,000 36.39 $ 68.0 2,474.52 $ 121.0 4,403.19 $ 116.0 4,221.24 $

96,001-500,000 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

500,001-1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

> 1 Million 41.01 $ 159.0 6,520.59 $ 252.0 10,334.52 $ 238.0 9,760.38 $

Sources:
(A) Labor rates for PWSs from Exhibit 7.1.
(B), (D), (F) Proposed RTCR T&C Document. Nontransient Noncommunity Water Systems (NTNCWSs) - SW

Nontransient Noncommunity Water Systems (NTNCWSs) - GW Level 2 Triggers (triggered by multiple Level 1s) (hours) Unit Cost

Community Water Systems (CWSs) - SW

Community Water Systems (CWSs) - GW

Transient Noncommunity Water Systems (TNCWSs) - GW Transient Noncommunity Water Systems (TNCWSs) - SW Labor Cost (per hour) PWS Size (Population

Served) Level 2 Assessments Level 1 Assessments

Non-Acute Trigger (single trigger) (hours) Unit Cost Acute

Violations (hours) Unit CostEconomic Analysis for the Proposed RTCR 7-22 June 2010 

### Exhibit 7.13 Number of Level 1 a nd Level 2 Assessments over the 25-Year Compliance Period

Level 1
Assessments Level 1
Assessments Level 1
Assessments

A B C D E F G H I
Community Water Systems (CWSs) - SW

≤ 100 541 156 168 363 112 73 363 112 73

101-500 621 181 112 465 135 55 465 135 55
501-1,000 339 99 61 254 74 30 254 74 30
1,001-4,100 931 149 123 846 161 96 846 161 96
4,101-33,000 2,152 197 - 2,152 197 - 2,152 197 - 33,001-96,000 534 56 - 534 56 - 534 56 - 96,001-500,000 233 24 - 233 24 - 233 24 - 500,001-1 Million 22 - - 22 - - 22 - - > 1 Million - - - - - - - - - Total 5,373 861 463 4,869 758 253 4,869 758 253

≤ 100 9,772 1,141 5,383 8,004 853 3,523 7,871 926 3,272
101-500 8,169 1,025 4,214 6,502 696 2,399 6,495 747 2,543
501-1,000 2,250 284 1,050 1,780 188 626 1,772 203 607
1,001-4,100 3,545 477 2,808 3,208 342 1,705 3,208 342 1,705
4,101-33,000 4,545 263 - 4,545 263 - 4,545 263 - 33,001-96,000 656 53 - 656 53 - 656 53 - 96,001-500,000 129 10 - 129 10 - 129 10 - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 29,066 3,253 13,455 24,824 2,405 8,253 24,675 2,544 8,127

≤ 100 93 38 67 69 27 33 69 27 33

101-500 80 29 39 66 24 21 66 24 21
501-1,000 28 10 14 23 8 7 23 8 7
1,001-4,100 43 16 33 38 12 18 38 12 18
4,101-33,000 5 - - 5 - - 5 - - 33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 248 92 153 201 72 79 201 72 79

≤ 100 5,581 856 3,829 4,797 559 2,010 5,506 703 3,314
101-500 3,130 447 1,273 2,794 315 757 3,450 435 1,307
501-1,000 744 95 298 675 79 168 804 98 295
1,001-4,100 818 169 974 690 114 530 690 114 530
4,101-33,000 123 9 - 123 9 - 123 9 - 33,001-96,000 4 - - 4 - - 4 - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 10,400 1,577 6,373 9,084 1,077 3,466 10,578 1,359 5,447

≤ 100 1,277 508 943 1,004 336 426 1,004 336 426

101-500 487 202 372 372 125 165 372 125 165
501-1,000 86 36 66 66 22 29 66 22 29
1,001-4,100 102 52 122 90 32 62 90 32 62
4,101-33,000 8 - - 8 - - 8 - - 33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 1,960 797 1,504 1,541 515 682 1,541 515 682

≤ 100 44,730 6,649 25,425 47,190 5,477 20,628 54,441 7,386 35,932
101-500 14,530 2,089 8,864 13,780 1,608 5,694 16,390 2,313 10,467
501-1,000 1,477 221 896 1,396 177 585 1,602 224 989
1,001-4,100 927 186 1,138 773 117 638 773 117 638
4,101-33,000 116 4 - 116 4 - 116 4 - 33,001-96,000 - - - - - - - - - 96,001-500,000 - - - - - - - - - 500,001-1 Million - - - - - - - - - > 1 Million - - - - - - - - - Total 61,780 9,149 36,324 63,256 7,383 27,546 73,323 10,043 48,026
Grand Total 108,828 15,728 58,272 103,775 12,210 40,278 115,187 15,291 62,614
Note: Detail may not add due to rounding.

Sources:
(A), (B), (C) - A.1.z
(D), (E), (F) - A.2.z
(G), (H), (I) - A.3.z

PWS Size (Population

Served)

Transient Noncommunity Water Systems (TNCWSs) - GW Community Water Systems (CWSs) - GW

Nontransient Noncommunity Water Systems (NTNCWSs) - SW

Nontransient Noncommunity Water Systems (NTNCWSs) - GW

Transient Noncommunity Water Systems (TNCWSs) - SW Level 2 Triggers (triggered by

multiple Level 1s) Acute
Violations TCR

Non-Acute Trigger (single trigger) Level 2
Assessments AIP Alternative Option

Non-Acute
Violations (multiple violations) Acute
Violations Level 2 Triggers (triggered by

multiple Level 1s) Level 2
Assessments

Non-Acute
V iolations (single

violation) Non-Acute Trigger (single trigger) Acute
Violations Level 2
AssessmentsEconomic Analysis for the Proposed RTCR 7-23 June 2010 

### States

Level 1 and Level 2 Assessments

Under the TCR, AIP and Alternative opti on, states would incur burden to review completed assessment forms required to be filed by PWSs (or similar reports required by states under the current TCR). Although some states may choose to conduct assessments for their PWSs, EPA does not quantify these costs. Stat e costs are based on the number of PWSs submitting assessment reports. The state labor rate presented in Section 7.2.1 and estimates of labor hours are used to generate state Level 1 and Level 2 assessment unit costs. EPA estimates
that state burden to review PWS assessmen t forms would range from one to eight hours depending on PWS size and type, as well as the level of the assessment. This burden includes any time required to consult with the PWS about the assessment report. Es timates of state unit
costs for Level 1 and Level 2 assessme nts are presented in Exhibit 7.14.

Assessment Net Cost Summary

Annualized cost estimates for Level 1 and Le vel 2 assessments under the TCR, AIP, and Alternative Option are calculated by multiplyi ng the number of assessments estimated by the predictive modeling (summarized in Exhibit 7.13) by the unit costs presented in Exhibits 7.11, 7.12, and 7.14. Exhibit 7.13 presents the estimated totals of non-acute and acute MCL violations (current TCR) and Level 1 and Level 2 assessme nts (AIP and Alternative options). The model predicts a total of approximately 109,000 single non-acute MCL violations, 58,000 cases of a second non-acute MCL violation, and 16,000 acute MCL violations for the current TCR under which some PWSs do currently engage in asse ssment activity which may or may not meet the proposed RTCR criteria (see section 7.4.5). For the AIP option, the model predicts approximately 104,000 Level 1 assessments and 52,000 Level 2 assessments. For the Alternative option, the model predicts approximately 115,000 Level 1 assessments and 78,000 Level 2 assessments. (Appendix A provides a detailed br eakout of the number of Level 1 and Level 2 assessments estimated by the occurrence model. ) Annualized cost estimates are presented in
Exhibit 7.15 below.

Under the proposed RTCR, all PWSs are required to conduct assessments of their systems when they exceed Level 1 or Level 2 tr eatment technique triggers. While PWSs are not required to conduct assessments under the current TCR, some PWSs do currently engage in assessment activity (which may or may not meet the proposed RTCR criteria) following
nonacute and acute MCL violations. EPA estim ates both the costs to PWSs to conduct assessments under the proposed RTCR as well as the level of effort that PWSs already put
towards assessment activities under the current TCR; these estimates are based on the work of the stakeholders in the TWG during the proceedi ngs of the TCRDSAC. These estimates allowed EPA to determine the average net costs to c onduct assessments under the proposed RTCR. EPA
assumes that the numbers of nonacute and acute MCL violations would remain steady under a continuation of the current TCR (based on revi ew of SDWIS/FED violation data). Under the proposed RTCR, EPA assumes that the numbers of assessments decreases from the steady state
level seen under the current TCR over time to a new steady state level as a function of reduced
fecal indicator occurrence asso ciated with the effects of re quiring assessments and corrective
action.Economic Analysis for the Proposed RTCR 7-24 June 2010 

### The overall number of assessments increases for under the Alternative option. This is a result of the initial monthly monitoring requi rements for all PWSs under this analysis. The modeling results indicate that the much highe r sampling early in the implementation period, results in more positive samples and associated assessments despite the predicted long term reductions in occurrence. This increase in total assessments performed, combined with the higher unit cost of performing assessments compared to existing practices under the TCR, results in a higher net cost increase than under the AIP. For st ates, the increase in the number of assessments is estimated to translate directly to a cost increa se. The total net change in cost for the Alternative option is estimated to be positive, and greater than under the AIP.Economic Analysis for the Proposed RTCR 7-25 June 2010 

### Exhibit 7.14 State Unit Cost Estima tes for Review of Level 1 and Level 2 Assessments under TCR, AIP, a nd Alternative Options (2007$)

A B C=A*B D E=A*D F G=A*F

≤ 100 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

101-500 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

501-1,000 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

1,001-4,100 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

4,101-33,000 39.22 $ 3.0 117.65 $ 6.0 235.31 $ 6.0 235.31 $

33,001-96,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

96,001-500,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

500,001-1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

> 1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

≤ 100 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

101-500 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

501-1,000 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

1,001-4,100 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

4,101-33,000 39.22 $ 3.0 117.65 $ 6.0 235.31 $ 6.0 235.31 $

33,001-96,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

96,001-500,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

500,001-1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

> 1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

≤ 100 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

101-500 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

501-1,000 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

1,001-4,100 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

4,101-33,000 39.22 $ 3.0 117.65 $ 6.0 235.31 $ 6.0 235.31 $

33,001-96,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

96,001-500,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

500,001-1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

> 1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

≤ 100 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

101-500 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

501-1,000 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

1,001-4,100 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

4,101-33,000 39.22 $ 3.0 117.65 $ 6.0 235.31 $ 6.0 235.31 $

33,001-96,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

96,001-500,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

500,001-1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

> 1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

≤ 100 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

101-500 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

501-1,000 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

1,001-4,100 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

4,101-33,000 39.22 $ 3.0 117.65 $ 6.0 235.31 $ 6.0 235.31 $

33,001-96,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

96,001-500,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

500,001-1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

> 1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

≤ 100 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

101-500 39.22 $ 1.0 39.22 $ 2.0 78.44 $ 2.0 78.44 $

501-1,000 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

1,001-4,100 39.22 $ 2.0 78.44 $ 4.0 156.87 $ 4.0 156.87 $

4,101-33,000 39.22 $ 3.0 117.65 $ 6.0 235.31 $ 6.0 235.31 $

33,001-96,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

96,001-500,000 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

500,001-1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

> 1 Million 39.22 $ 4.0 156.87 $ 8.0 313.74 $ 8.0 313.74 $

Sources:
(A) Labor rates for state employee from Section 7.2.1.
(B), (D), (E) Labor hour assumptions based on best professional judgement. Community Water Systems (CWSs) - GW

Nontransient Noncommunity Water Systems (NTNCWSs) - SW

Nontransient Noncommunity Water Systems (NTNCWSs) - GW Unit Cost Level 2 Triggers (triggered by multiple Level 1s) (hours) Unit Cost

Community Water Systems (CWSs) - SW

Transient Noncommunity Water Systems (TNCWSs) - GW Transient Noncommunity Water Systems (TNCWSs) - SW Labor Cost (per hour) PWS Size (Population

Served) Level 2 Assessments Level 1 Assessments Non-Acute Trigger (single trigger) (hours) Unit Cost Acute
Violations (hours)Economic Analysis for the Proposed RTCR 7-26 June 2010 

### Exhibit 7.15 Annualized PWS and State Cost Estimates for Level 1 and Level 2 Assessments ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total 1.13 $ 0.21 $ 1.34 $ 1.08 $ 0.21 $ 1.29 $

AIP - Total 1.63 $ 0.20 $ 1.84 $ 1.57 $ 0.20 $ 1.77 $ AIP - Net Change 0.50 $ (0.01) $ 0.49 $ 0.49 $ (0.01) $ 0.48 $ Alternative Option - Total 1.73 $ 0.23 $ 1.95 $ 1.69 $ 0.22 $ 1.91 $ Alternative Option - Net Change 0.60 $ 0.01 $ 0.61 $ 0.60 $ 0.02 $ 0.62 $

TCR - Total 0.70 $ 0.26 $ 0.96 $ 0.68 $ 0.25 $ 0.93 $

AIP - Total 0.90 $ 0.19 $ 1.09 $ 0.88 $ 0.18 $ 1.06 $ AIP - Net Change 0.20 $ (0.07) $ 0.12 $ 0.20 $ (0.07) $ 0.13 $ Alternative Option - Total 1.23 $ 0.28 $ 1.51 $ 1.27 $ 0.30 $ 1.57 $ Alternative Option - Net Change 0.52 $ 0.02 $ 0.55 $ 0.60 $ 0.05 $ 0.65 $
Note: Detail may not add due to independent rounding. Source: Proposed RTCR Cost Model. Level 2 Assessment 3% Discount Rate 7% Discount Rate

Level 1 Assessment



### 7.4.6 Corrective Actions

PWSs

Under the AIP and Alternative option, all PW Ss would be required to correct sanitary defects found through the performance of Leve l 1 or Level 2 assessments. For modeling purposes, EPA estimated only the net change in the number of corrective actions performed under the AIP and Alternative option 6 

### compared to the current TCR. Based on discussions with state representatives, EPA estimates that additi onal corrective actions ( on top of those already being performed under the existing TCR) would be performed for only 10% of the assessments undertaken as a result of the proposed RTCR. Becau se only the net change in costs is estimated,
no additional costs for corrective actions are mode led for the existing TCR (it is assumed that PWSs are already performing correctiv e actions under the existing TCR).

To estimate the costs incurred for the correction of sanitary defects, EPA estimated the percent distribution of PWSs that would perf orm different types of corrective actions as presented in the compliance forecast below (Exhi bit 7.16a). The compliance forecast presented below focuses on the higher level categorization of corrective actions anticipated. The categories of anticipated corrective actions were informed by both EPA judgment and discussions of the TCRDSAC TWG and are essentially the same as t hose presented to the advisory committee. For each of the categories listed, a PWS is assumed to take a specific action that falls under that general category. Exhibit 7.16b lists the specific corrective actions that fall under the higher level categorization, along with the percent of PWSs es timated to perform that corrective action based on level 1 and level 2 assessments. Detailed comp liance forecasts showing the specific corrective actions used in the cost analysis are provided in Appendix D, along with summary tables of the unit costs used in the analysis. Each corrective act ion in the detailed compliance forecast is also assigned a representative unit cost. Detailed de scriptions of the derivation of unit costs are

6 Any corrective actions based on a positive source water sample are assumed to be accounted for under the GWR and not under the proposed RTCR.Economic Analysis for the Proposed RTCR 7-27 June 2010 

### provided in Exhibits 5-1 through 5-47 of the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d).

As shown in the compliance forecast in E xhibit 7.16a, EPA estimates that corrective actions found through Level 1 assessments would resu lt in corrective actions that focus more on actions by PWS staff such as flushing or training (columns A and B) than on permanent fixes to the PWS. This reflects the assumption that Leve l 1 assessments would generally be less involved than Level 2 assessments and may not result in finding more complex problems. Corrective
actions taken as a result of Level 2 assessments are expected to find a higher proportion of structural/technical issues (columns C-K) resulting in material fi xes to the PWSs and distribution system. Consistent with the discussions of th e TCRDSAC regarding major structural fixes or replacements, EPA did not include these major costs in the analysis. Distribution system appurtenances such as storage tanks generally have a useful life that is accounted for in water system capital planning and the assessments conducted in response to RTCR triggers could identify when that useful life has ended but are no t solely responsible for the need to correct the
defect. 7



### It is not anticipated that the overall eff ectiveness of corrective actions will differ significantly by the type of correct ive action. Some activities, such as spot flushing, may have a shorter, transient impact on wa ter quality. However, most PWSs are expected to institute ongoing flushing programs that will have a continuing impact on water quality. Other corrective actions in the compliance forecast are expect ed to have ongoing benefits, though the exact duration may be highly variable depending on th e exact conditions at the PWS. The overall
duration of reduced occurrence mode led as a result of corrective act ions initiated in response to
either a Level 1 or Level 2 assessment is inte nded to reflect an aver age effectiveness of corrective actions. Uncertainties and associated sens itivity analyses that inform the effect of the reduced occurrence predicted from corrective acti ons are discussed further in Section 7.7.

PWSs would also incur reporting and reco rdkeeping burden to notify the state upon completion of each corrective actio n. PWSs may also consult with the state or with outside parties to determine the appropriate correctiv e action to be implemented. PWS reporting and recordkeeping costs (including consultations) are derived by multiplying PWSs labor rates (Section 7.2.1) by an EPA-estimated labor burden. Exhibit 7.17 presents the estimated unit costs for this reporting and recordkeeping burden.

States

For each corrective action performed under AI P and Alternative option, states would incur recordkeeping and reporting burden to revi ew and coordinate with PWSs. This includes burden incurred from any optional consultations states may conduct with PWSs or outside parties to determine the appropriate corrective ac tion to be implemented. The state labor rate presented in Section 7.2.1 and estimates of labor hours are used to genera te state un it corrective

7 Additionally, EPA ran two sensitivity analyses to assess the potential impacts of different distributions within the compliance forecast. Results of the sens itivity analyses are presente d in Section 7.7, and in dicate that the low bound estimates of annualized net change in costs at three percent discount rate are approximately $3M for the AIP option and $15M for the Alternative option, and the high bound estimates are approximately $25M for the AIP option and $40M for the Alternative option. Varying the assumptions about the percentage of corr ective actions identified and
the effectiveness of those actions had less than a linear e ffect on outcomes, and the AIP option continues to be less costly than the Alternative option under all scenarios modeled.Economic Analysis for the Proposed RTCR 7-28 June 2010 

### action costs. Exhibit 7.17 presents the estimate d PWS and state reporti ng and recordkeeping unit costs (including consultations) by PWS size.

Exhibit 7.16a Compliance Forecast for Corrective Actions based on Level 1 and Level 2 Assessments

AB C D E F GH IJ K

≤ 100 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%

101-500 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%
501-1,000 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%
1,001-4,100 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%
4,101-33,000 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%
33,001-96,000 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%
96,001-500,000 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%
500,001-1 Million 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%

> 1 Million 39% 15% 12% 9% 8% 6% 4% 1% 3% 1% 2%

≤ 100 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%

101-500 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
501-1,000 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
1,001-4,100 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
4,101-33,000 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
33,001-96,000 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
96,001-500,000 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
500,001-1 Million 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%

> 1 Million 15% 4% 18% 15% 15% 11% 8% 2% 6% 2% 4%
Source: (A) - (K) Percent of PWSs performing corrective actions based on Level 1 and Level 2 assessments reflect EPA estimate. Maintenance of Adequate

Pressure Maintenance of appropriate

Hydraulic

Residence

Time Addition or Upgrade of

On-line Monitoring
and Control Addition of Security

Measures

Level 2 Compliance Forecast

PWS Size (Population

Served) Crossconnection
Control and

Backflow

Prevention Development

and Implementation

of an Operations Plan

Level 1 Compliance Forecast Replace/Repair

of Distribution

System Components PWS Flushing Sampler Training Storage Facility

Maintenance Booster
DisinfectionEconomic Analysis for the Proposed RTCR 7-29 June 2010 

### Exhibit 7.16b Detailed PWS Compliance Forecast for Corrective Actions based on Level 1 and Level 2 Assessments

Specific Corrective Action Level 1 Compliance

Forecast Level 2 Compliance

Forecast Routine Flushing 30% 10%

Spot Flushing 9% 5% Operator Training/Certification 15% 4% Replace Valve 2% 3% Installing a Dedicated Sampling Tap 2% 3% Replace Iron Pipe 2% 3% Replace Fittings 2% 3% Replace Hydrant 2% 3%

Replace Meter 2% 3% New Booster Pump Station 2% 3% Modify/Replace Existing Pumps 2% 3% Install Variable Frequency Drives 2% 3% New Elevated Storage Tank 0% 0%

Install Surge Relief valve 2% 3% Install Surge Control Tank 1% 3% Install Auto Flushing Devices 2% 3%

Modify Inlet/Outlet Piping 1% 2%

Install Mixing Devices 1% 2% Loop Dead Ends 1% 2% Install Appropriate Main Sizes 1% 2%

Modify Storage Operation 1% 2%

Decommission Storage 1% 2% Inspect & Clean Storage Tanks 2% 3% Line Storage Tanks 1% 2% Vent Repair/Replace Vent Screen 1% 2% Repair/Replace Tank Hatch 1% 2% Repair Storage Tank 1% 2%
Install Permanant Cl Booster Station 1% 2% Install Temp Cl Booster Station 1% 2%
Install Permanant NH2Cl Booster Station 1% 2% Install Temp NH2Cl Booster Station 1% 2%

Backflow Prevention Assembly 1% 2% Online Cl Monitoring & Programming 1% 2% Online NH2Cl Monitoring & Programming 1% 2%

Online Pressure Monitoring & Programming 1% 2%

Installation of Additional Security Measures 1% 2%

Develop/Implement/Maintain Operations
Plan 1% 2% Operator Training/Certification 1% 2% Replace/Repair of Distribution System Components

Maintenance of Adequate
Pressure

Maintenance of Adequate
Pressure

Maintenance of appropriate Hydraulic Residence Time

Development and Implementation of an Operations Plan General Corrective Action Category

Storage Facility Maintenance

Storage Facility Maintenance

Booster Disinfection
Cross-connection Control and

Addition or Upgrade of On-line Monitoring and Control

Addition of Security Measures PWS Flushing Sampler TrainingEconomic Analysis for the Proposed RTCR 7-30 June 2010 

### Exhibit 7.17 Net Change in PWS and State Unit Costs Estimates for Reporting and Recordkeeping for Corrective Actions (2007$)

A B C=A*B D E F=D*E

≤ 100 25.10 $ 0.5 12.55 $ 39.22 $ 0.5 19.61 $

101-500 27.03 $ 0.5 13.52 $ 39.22 $ 0.5 19.61 $

501-1,000 28.96 $ 0.5 14.48 $ 39.22 $ 0.5 19.61 $

1,001-4,100 29.73 $ 0.5 14.87 $ 39.22 $ 0.5 19.61 $

4,101-33,000 36.00 $ 0.5 18.00 $ 39.22 $ 0.5 19.61 $

33,001-96,000 36.39 $ 0.5 18.20 $ 39.22 $ 0.5 19.61 $

96,001-500,000 41.01 $ 0.5 20.51 $ 39.22 $ 0.5 19.61 $

500,001-1 Million 41.01 $ 0.5 20.51 $ 39.22 $ 0.5 19.61 $

> 1 Million 41.01 $ 0.5 20.51 $ 39.22 $ 0.5 19.61 $

Notes:

Sources:
(A) Labor rates for PWSs from Exhibit 7.1.
(B) PWS labor hours for corrective action recordkeeping/reporting reflect EPA estimate.
(D) Labor rates for state employee from Section 7.2.1.
(E) State labor hours for corrective action recordkeeping/reporting reflect EPA estimate. PWS and state burden estimates identical for all PWS types under TCR, AIP, and Alternative Option. Systems States

Labor Cost (per hour) Corrective Action Burden (hours/corrective action) Unit Cost Labor Cost (per hour) Corrective Action Burden (hours/corrective action) Unit Cost PWS Size (Population

Served)



### Corrective Action Net Cost Summary

Annualized net cost estimates for PWSs a nd states to perform corrective actions are estimated by multiplying the number of Level 1 and Level 2 corrective actions estimated by the predictive model (i.e., 10 percent of Level 1 and Level 2 assessments representing the net increase in corrective actions found), by the pe rcentages in the compliance forecast and unit costs of corrective actions and associated reporti ng and recordkeeping. The incremental and net change costs of corrective actions are shown in Exhibit 7.18.

Because only the net change in correctiv e actions taken is modeled, no costs are
estimated under the TCR. The differences in th e net change in corrective action costs between the AIP and Alternative Option ar e a function different number of assessments estimated to be performed in the predictive model as discussed in Section 7.4.5 above.Economic Analysis for the Proposed RTCR 7-31 June 2010 

### Exhibit 7.18 Annualized PWS and State Cost Estimates for Corrective Actions based on Level 1 and Level 2 Assessments ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Incremental

- $ - $ - $ - $ - $ - $

AIP - Incremental 9.17 $ 0.01 $ 9.18 $ 7.77 $ 0.01 $ 7.77 $ AIP - Net Change 9.17 $ 0.01 $ 9.18 $ 7.77 $ 0.01 $ 7.77 $ Alternative Option - Incremental 9.39 $ 0.01 $ 9.40 $ 8.01 $ 0.01 $ 8.02 $ Alternative Option - Net Change 9.39 $ 0.01 $ 9.40 $ 8.01 $ 0.01 $ 8.02 $

TCR - Incremental

- $ - $ - $ - $ - $ - $

AIP - Incremental 2.72 $ 0.00 $ 2.72 $ 2.41 $ 0.00 $ 2.41 $ AIP - Net Change 2.72 $ 0.00 $ 2.72 $ 2.41 $ 0.00 $ 2.41 $ Alternative Option - Incremental 3.53 $ 0.01 $ 3.53 $ 3.36 $ 0.01 $ 3.37 $ Alternative Option - Net Change 3.53 $ 0.01 $ 3.53 $ 3.36 $ 0.01 $ 3.37 $
Note: Detail may not add due to independent rounding. Source: Proposed RTCR Cost Model. Corrective Actions based on Level 2 Assessments 3% Discount Rate 7% Discount Rate

Corrective Actions based on Level 1 Assessments



### 7.4.7 Public Notification

PWSs

Tier 1 Public Notification

Acute violations ( E.coli MCL violations) would require Ti er 1 public notification under all regulatory scenarios (TCR, AIP, and Alternat ive option). PWSs with acute violations must report the violation to the stat e by the end of the business day after the PWS learns of the violation and must notify th e public within 24 hours.

Tier 2 Public Notification

PWSs with non-acute violations under the current TCR must report the violation to the state by the end of the business da y after the PWS learns of the vi olation, and must provide Tier 2 public notification within 30 da ys. PWSs with similar violati ons under the AIP and Alternative option are not required to perfor m Public Notification (PN). Thes e PWSs are required to perform
Tier 2 notification for a treatment technique violation (failure to perform Level 1 or 2 assessment if triggered; failure to correct all sanitary defects), but because the cost model assumes full compliance with proposed RTCR requirements, no cost is estimated for these violations. Overall, costs decrease significantly for Tier 2 public notification under the pr oposed RTCR for both the AIP and Alternative option.

Tier 3 Public Notification

Under the TCR, AIP, and Alternative option, Tier 3 public notification for monitoring and reporting violations are assumed to be repo rted once per year as part of the Consumer Confidence Report (CCR). Because of the us e of the CCR to communicate Tier 3 public notification on a yearly basis, no cost differe ntial between the current TCR and the AIP and Alternative option is estimated in the cost mode l. However, although they are not qu antitatively evaluated as part of the EA, the TCRDSAC conc luded that significant re ductions in monitoringEconomic Analysis for the Proposed RTCR 7-32 June 2010 

### and reporting violations may be realized through the revised regulatory framework of the proposed RTCR. Resources used to process m onitoring violation notices for the Consumer Confidence Report (CCR) (as well as the time spen t responding to customer inquiries about the notices) may be reduced if signifi cant reductions are realized. Excl usion of this potential cost savings may lead to an underestimate of the PN cost savings under both the AIP and Alternative option.

Estimates of PWS unit costs for PN are derived by multiplying PWS labor rates from
Section 7.2.1 and burden hour estimates derived from the Draft Information Collection Request for the Public Water System Supervision Program (USEPA, 2008c). PWS PN unit cost estimates are presented in Exhibit 7.19.Economic Analysis for the Proposed RTCR 7-33 June 2010 

### Exhibit 7.19 PWS Unit Cost Esti mates for Public Notification (2007$)

Labor Cost (per hour) Average Number
of Service Connections per System Preparation (labor) (hours/

violation) Distribution (labor) (hours/ violation) Distribution (O&M Cost/

notice) ($/service connection) Unit Cost Preparation (labor) (hours/ violation) Distribution (labor) (hours/

violation) Distribution (O&M Cost/notice) ($/service connection) Unit Cost
A B C D E F=A*(C+D)+(B*E) G H I J=A*(G+H)+(B*I)

≤ 100 25.10 $ 440 8.5 12.0 0.05 $ 536.55 $ 3.5 9.0 0.05 $ 335.75 $

101-500 27.03 $ 387 8.5 12.0 0.05 $ 573.44 $ 3.5 9.0 0.05 $ 357.20 $

501-1,000 28.96 $ 303 8.5 12.0 - $ 593.68 $ 3.5 30.0 0.26 $ 1,049.05 $

1,001-4,100 29.73 $ 850 8.5 12.0 - $ 609.47 $ 3.5 30.0 0.26 $ 1,216.99 $

4,101-33,000 36.00 $ 4,288 9.2 12.0 - $ 763.66 $ 3.5 30.0 0.25 $ 2,259.65 $

33,001-96,000 36.39 $ 17,273 10.0 12.0 - $ 800.58 $ 3.5 30.0 0.23 $ 5,191.88 $

96,001-500,000 41.01 $ 56,465 10.0 12.0 - $ 902.22 $ 3.5 30.0 0.23 $ 14,360.67 $

500,001-1 Million 41.01 $ 205,609 10.0 12.0 - $ 902.22 $ 3.5 30.0 0.23 $ 48,663.97 $

> 1 Million 41.01 $ 448,564 10.0 12.0 - $ 902.22 $ 3.5 30.0 0.23 $ 104,543.57 $

Community Water Systems (CWSs) - GW

≤ 100 25.10 $ 41 8.5 12.0 0.05 $ 516.62 $ 3.5 9.0 0.05 $ 315.82 $

101-500 27.03 $ 99 8.5 12.0 0.05 $ 559.05 $ 3.5 9.0 0.05 $ 342.81 $

501-1,000 28.96 $ 315 8.5 12.0 - $ 593.68 $ 3.5 30.0 0.26 $ 1,052.07 $

1,001-4,100 29.73 $ 756 8.5 12.0 - $ 609.47 $ 3.5 30.0 0.26 $ 1,192.61 $

4,101-33,000 36.00 $ 3,495 9.0 12.0 - $ 757.48 $ 3.5 30.0 0.25 $ 2,076.93 $

33,001-96,000 36.39 $ 16,366 10.0 12.0 - $ 800.58 $ 3.5 30.0 0.23 $ 4,983.17 $

96,001-500,000 41.01 $ 50,564 10.0 12.0 - $ 902.22 $ 3.5 30.0 0.23 $ 13,003.50 $

500,001-1 Million 41.01 $ 209,220 10.0 12.0 - $ 902.22 $ 3.5 30.0 0.23 $ 49,494.49 $

> 1 Million 41.01 $ 473,641 10.0 12.0 - $ 902.22 $ 3.5 30.0 0.23 $ 110,311.34 $

Nontransient Noncommunity Water Systems (NTNCWSs) - SW

≤ 100 25.10 $ 128 8.5 12.0 0.05 $ 520.94 $ 3.5 9.0 0.05 $ 320.14 $

101-500 27.03 $ 21 8.5 12.0 0.05 $ 555.16 $ 3.5 9.0 0.05 $ 338.92 $

501-1,000 28.96 $ 46 8.5 12.0 - $ 593.68 $ 3.5 9.0 0.05 $ 364.29 $

1,001-4,100 29.73 $ 47 8.5 12.0 - $ 609.47 $ 3.5 9.0 0.05 $ 373.97 $

4,101-33,000 36.00 $ 176 8.7 12.0 - $ 745.36 $ 3.5 9.0 0.05 $ 458.08 $

33,001-96,000 36.39 $ 94 10.0 12.0 - $ 800.58 $ 3.5 9.0 0.02 $ 456.75 $

96,001-500,000 41.01 $ 2,181 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 556.25 $

500,001-1 Million 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

> 1 Million 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

Nontransient Noncommunity Water Systems (NTNCWSs) - GW

≤ 100 25.10 $ 4 8.5 12.0 0.05 $ 514.76 $ 3.5 9.0 0.05 $ 313.96 $

101-500 27.03 $ 8 8.5 12.0 0.05 $ 554.52 $ 3.5 9.0 0.05 $ 338.28 $

501-1,000 28.96 $ 11 8.5 12.0 - $ 593.68 $ 3.5 9.0 0.05 $ 362.56 $

1,001-4,100 29.73 $ 42 8.5 12.0 - $ 609.47 $ 3.5 9.0 0.05 $ 373.71 $

4,101-33,000 36.00 $ 130 8.7 12.0 - $ 744.94 $ 3.5 9.0 0.05 $ 456.02 $

33,001-96,000 36.39 $ 75 10.0 12.0 - $ 800.58 $ 3.5 9.0 0.02 $ 456.38 $

96,001-500,000 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

500,001-1 Million 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

> 1 Million 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

Transient Noncommunity Water Systems (TNCWSs) - SW

≤ 100 25.10 $ 9 8.5 12.0 0.05 $ 514.99 $ 3.5 9.0 0.05 $ 314.19 $

101-500 27.03 $ 30 8.5 12.0 0.05 $ 555.62 $ 3.5 9.0 0.05 $ 339.38 $

501-1,000 28.96 $ 49 8.5 12.0 - $ 593.68 $ 3.5 9.0 0.05 $ 364.45 $

1,001-4,100 29.73 $ 58 8.5 12.0 - $ 609.47 $ 3.5 9.0 0.05 $ 374.50 $

4,101-33,000 36.00 $ 57 8.8 12.0 - $ 747.00 $ 3.5 9.0 0.05 $ 452.55 $

33,001-96,000 36.39 $ - 10.0 12.0 - $ 800.58 $ 3.5 9.0 0.02 $ 454.88 $

96,001-500,000 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

500,001-1 Million 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

> 1 Million 41.01 $ 2 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.67 $

Transient Noncommunity Water Systems (TNCWSs) - GW

≤ 100 25.10 $ 5 8.5 12.0 0.05 $ 514.82 $ 3.5 9.0 0.05 $ 314.02 $

101-500 27.03 $ 15 8.5 12.0 0.05 $ 554.87 $ 3.5 9.0 0.05 $ 338.63 $

501-1,000 28.96 $ 30 8.5 12.0 - $ 593.68 $ 3.5 9.0 0.05 $ 363.51 $

1,001-4,100 29.73 $ 43 8.5 12.0 - $ 609.47 $ 3.5 9.0 0.05 $ 373.77 $

4,101-33,000 36.00 $ 39 8.7 12.0 - $ 746.87 $ 3.5 9.0 0.05 $ 451.77 $

33,001-96,000 36.39 $ 14 10.0 12.0 - $ 800.58 $ 3.5 9.0 0.02 $ 455.15 $

96,001-500,000 41.01 $ 9 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.81 $

500,001-1 Million 41.01 $ 1 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.65 $

> 1 Million 41.01 $ - 10.0 12.0 - $ 902.22 $ 3.5 9.0 0.02 $ 512.63 $

(F), (J) used to derived TCR PN costs; (F) used to derive AIP and Alternative Option PN costs.

Sources:
(A) Labor rates for PWSs from Exhibit 7.1.
(B) SDWIS 2007 4th Quarter Freeze.

(E), (I) Distribution cost assumptions based on best professional judgement as carried forw ard from the original PN ICR. Tier 1 (acute) Tier 2 (non-acute)

Community Water Systems (CWSs) - SW

PWS Size (Population

Served)

Notes:
(B) Service connections per system is consistent w ith SDWIS 2007 4th Quarter Freeze data. Data for certain size categories (e.g ., < 100, 101-500, 501-1,000) may seem counterintuitive. EPA is investigating the SDWIS database for any data discrepancies.

(C), (D), (G), (H) Labor hour assumptions based on best professional judgement as carried forw ard from the Draft Information Collection Request for the Public Water System Supervision Program (USEPA, 2008x).Economic Analysis for the Proposed RTCR 7-34 June 2010 

### States

Under the TCR, AIP, and Alternative opti on, states would incur recordkeeping and reporting burden to provide consultation, review the public notification certification, and file the report of the violation. State un it PN costs are based on the state labor rate presented in Section
7.2.1 and burden hour estimates derived from the Draft Information Collection Request for the Public Water System Supervision Program (USEPA, 2008c). Estimates of state unit costs for PN are presented in Exhibit 7.20.

Exhibit 7.20 State Unit Costs Estima tes for Public Notification (TCR, AIP, Alternative Options)

Labor Cost (per hour) Tier 1
Consultation (labor) (hours/violation) Tier 2
Consultation (labor) (hours/violation) Receive/Review PN
Certification (labor) (hours/violation) File Reports (labor) (hours/violation) Tier 1
Unit Cost Tier 2
Unit Cost
A B C D E F=A*(B+D+E) G=A*(C+D+E)

39.22 $ 3.0 1.1 0.20 $ 0.10 $ 129.42 $ 54.91 $

Sources:
(A) Labor rate for state employee from Section 7.2.1.
(B), (C), (D), (E) Labor hour assumptions based on best professional judgement as carried forw ard from the Draft Information Co llection Request for the Public Water System Supervision Program (USEPA, 2008x).



### Public Notification Net Cost Summary

Total and net change in a nnualized net present value co sts for PN are estimated by multiplying the model estimates of PWSs with acute (Tier 1 public notification) and non-acute (Tier 2 public notification) violations by th e PWS and state unit costs for performing PN activities. The proposed RTCR Cost Model assume s that all violations are addressed following initial PN, and no burden would be incurred by PWSs or states for repeat notification. Exhibit
7.21 summarizes the total number of Tier 1 and Tier 2 public notifica tions that would be prepared by PWS size and category for under the TCR, AIP, and Alternative Option over the entire 25 year period of analysis . Annualized total and net cost es timates for PWSs and states to perform public notification under the TCR, AIP, a nd Alternative Option are presented in Exhibit
7.22.

A significant reduction in costs is estimate d due to the elimination of Tier 2 public notification under the AIP and Alternative option. Because state costs are calculated on a perviolation basis, state co sts decline. Under the Alternative opti on, some of this cost decrease is offset by additional Tier 1 public notification.Economic Analysis for the Proposed RTCR 7-35 June 2010 

### Exhibit 7.21 Number of Tier 1 and Tier 2 Public Notifications over the 25-Year Compliance Period

AIP Alternative Option

ABCD Community Water Systems (CWSs) - SW

≤ 100 156 708 112 112

101-500 181 733 135 135
501-1,000 99 400 74 74
1,001-4,100 149 1,055 161 161
4,101-33,000 197 2,152 197 197
33,001-96,000 56 534 56 56
96,001-500,000 24 233 24 24
500,001-1 Million - 22 - - > 1 Million - - - - Total 861 5,836 758 758

≤ 100 1,141 15,155 853 926
101-500 1,025 12,383 696 747
501-1,000 284 3,300 188 203
1,001-4,100 477 6,354 342 342
4,101-33,000 263 4,545 263 263
33,001-96,000 53 656 53 53
96,001-500,000 10 129 10 10
500,001-1 Million - - - - > 1 Million - - - - Total 3,253 42,521 2,405 2,544

≤ 100 38 160 27 27

101-500 29 120 24 24
501-1,000 10 42 8 8
1,001-4,100 16 75 12 12
4,101-33,000 - 5 - - 33,001-96,000 - - - - 96,001-500,000 - - - - 500,001-1 Million - - - - > 1 Million - - - - Total 92 401 72 72

≤ 100 856 9,411 559 703

101-500 447 4,402 315 435
501-1,000 95 1,042 79 98
1,001-4,100 169 1,792 114 114
4,101-33,000 9 123 9 9
33,001-96,000 - 4 - - 96,001-500,000 - - - - 500,001-1 Million - - - - > 1 Million - - - - Total 1,577 16,774 1,077 1,359

≤ 100 508 2,220 336 336

101-500 202 859 125 125
501-1,000 36 152 22 22
1,001-4,100 52 225 32 32
4,101-33,000 - 8 - - 33,001-96,000 - - - - 96,001-500,000 - - - - 500,001-1 Million - - - - > 1 Million - - - - Total 797 3,464 515 515

≤ 100 6,649 70,156 5,477 7,386
101-500 2,089 23,394 1,608 2,313
501-1,000 221 2,373 177 224
1,001-4,100 186 2,065 117 117
4,101-33,000 4 116 4 4
33,001-96,000 - - - - 96,001-500,000 - - - - 500,001-1 Million - - - - > 1 Million - - - - Total 9,149 98,104 7,383 10,043
Grand Total 15,728 167,100 12,210 15,291
Note: Detail may not add due to rounding.

Sources:
(A), (B) - A.1.z
(C) - A.2.z
(D) - A.3.z Tier 2 PN

Transient Noncommunity Water Systems (TNCWSs) - GW Nontransient Noncommunity Water Systems (NTNCWSs) - SW

Nontransient Noncommunity Water Systems (NTNCWSs) - GW

Transient Noncommunity Water Systems (TNCWSs) - SW TCR

PWS Size (Population

Served) Tier 1 PN

Community Water Systems (CWSs) - GW Tier 1 PN Tier 1 PNEconomic Analysis for the Proposed RTCR 7-36 June 2010 

### Exhibit 7.22 Annualized PWS and State Cost Estimates for Public Notification ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total 3.75 $ 0.44 $ 4.19 $ 3.60 $ 0.42 $ 4.03 $

AIP - Total 0.26 $ 0.06 $ 0.33 $ 0.26 $ 0.06 $ 0.32 $ AIP - Net Change (3.49) $ (0.38) $ (3.87) $ (3.35) $ (0.36) $ (3.71) $ AIP - Percent Change -93% -86% -92% -93% -86% -92% Alternative Option - Total 0.34 $ 0.08 $ 0.42 $ 0.35 $ 0.08 $ 0.43 $ Alternative Option - Net Change (3.41) $ (0.36) $ (3.77) $ (3.26) $ (0.34) $ (3.60) $ Alternative Option - Percent Change -91% -82% -90% -90% -80% -89%
Note: Detail may not add due to independent rounding. Source: Proposed RTCR Cost Model. 3% Discount Rate 7% Discount Rate



### 7.4.8 Uncertainty in Unit Costs

As stated in Section 7.2.5, EPA recognizes th at there are both variab ility and uncertainty
in unit cost estimates used to develop national costs for the proposed RTCR. Variability is expected in the actual costs that would be experienced by different PWSs of similar size conducting the same corrective action. Otherwise similar PWSs may experience different capital and/or O&M costs due to site-specific factors. Inputs to unit costs such as water quality conditions, labor rates, and land costs can be high ly variable and increase the system-to-system variability in unit costs. In developing the unit co st estimates, there is insufficient information to fully characterize what the distribution of this va riability would be on a na tional scale; therefore, EPA uses mean values for these input parameters.

The unit costs used in this EA are developed as average or representative estimates of what these unit costs would be nationally, and are not the unit costs of an y particular PWS. Some components of monitoring costs, such as the purchase and wear-and-tear of vehicles, are not quantified because of either limited data or inab ility to attribute these costs directly to the proposed RTCR. Additionally, the PWS and state labor hours for each rule component (specifically for Level 1 and Leve l 2 assessments) are meant to cap ture national averages for the purposes of developing national cost estimates and making comparisons between regulatory alternatives. Thus, the unit cost s presented in this document ma y over- or under-estimate the unit costs of any particular PWS. Detailed informa tion on the derivation of unit costs for each rule component is provided in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d).

7.5 

## Household Costs

The household cost analysis considers the im pact that the costs incurred by CWSs have on the households they serve. This analysis c onsiders the potential incr ease in a household’s annual water bill if a CWS passed the entire cost increase resulting from the proposed rule on to their customers. This analysis is a tool to gauge potential impacts and should not be construed as a precise estimate of potential changes to hous ehold water bills. State costs and costs to
TNCWSs and NTNCWSs are not incl uded in this analysis since their costs are not typically passed through directly to households.Economic Analysis for the Proposed RTCR 7-37 June 2010 

### To calculate household costs (which are in the units of $ per hous ehold per year), the CWS population subject to the proposed RTCR by PWS size is divided by the average number of people per household, estimated as 2.56 for the year 2007 (United States Census Bureau, 2008), to calculate the number of households subj ect to the proposed RTCR by PWS size. The cost of the rule, by size category, is then divi ded by that number of households to determine a per-household cost.

The first section of Exhibit 7.23 presents net costs per househ old under the AIP and Alternative option for all rule components spread across all CWSs. In this scenario, comparison to the current TCR shows a cost savings for hous eholds in the largest size category. For those households that are expected to see a cost in crease, the average annual water bill would be expected to increase by less than ten cents on aver age. Although this aver age cost per household is very low, customers served by PWSs that in cur greater costs to co mply with the proposed RTCR would be higher.

While the average increase in annual househol d water bills to implement the AIP option is less than a dollar, customers served by a sma ll CWS that have to take corrective actions as a result of the proposed rule woul d incur slightly larger increa ses in their water bills. The subsequent sections of the exhibit present net costs per household for different subsections of CWSs (e.g., CWSs that perform assessments but no corrective actions, CWSs that do perform corrective actions, and CWSs that do not perform assessments or corrective actions). As shown in the second section of Exhibit 7.23, approxi mately 67% of households belong to CWSs that would perform assessments but would not perf orm corrective actions (because no sanitary defects are found). These households would experien ce a slight cost savings on an annual basis. The 9% of households belonging to CWSs th at would perform corrective actions would experience an increase in annual net household co sts of less than $1 to approximately $23 on an annual basis. The final section of the exhibit pr esents the 24% of househol ds belonging to CWSs that would not perform assessments or correctiv e actions. Households of this category would experience an increase in cost savings comparable to those performing corrective actions, and a decrease in cost savings compared to those performing assessments but no corrective actions. This decrease in costs savings is because no PN costs are associated with systems not performing assessments. Overall, the main driver of a dditional household costs under the proposed RTCR is
whether or not additional corre ctive actions are performed.Economic Analysis for the Proposed RTCR 7-38 June 2010 

### Exhibit 7.23 Summary of Net Annual Per-Household Costs for the Proposed RTCR (2007$)

AIP Net AIP Net Cost per

Houshold Alternative Option Net Alternative Option Net Cost per

Household AIP Net AIP Net Cost per

Houshold Alternative Option Net Alternative Option Net Cost per

Household

A B C D=C/A E F=E/B G H=G/A I J=I/B

≤ 100 307,243 307,243 68,433 $ 0.223 $ 180,905 $ 0.589 $ 170,417 $ 0.555 $ 310,914 $ 1.012 $

101-500 1,589,510 1,589,510 323,373 $ 0.203 $ 417,352 $ 0.263 $ 430,801 $ 0.271 $ 557,863 $ 0.351 $

501-1,000 1,624,853 1,624,853 35,455 $ 0.022 $ 75,901 $ 0.047 $ 86,936 $ 0.054 $ 138,624 $ 0.085 $

1,001-4,100 7,816,592 7,816,592 335,846 $ 0.043 $ 335,846 $ 0.043 $ 390,122 $ 0.050 $ 390,122 $ 0.050 $

4,101-33,000 27,997,647 27,997,647 2,295,169 $ 0.082 $ 2,295,169 $ 0.082 $ 2,007,071 $ 0.072 $ 2,007,071 $ 0.072 $

33,001-96,000 21,933,438 21,933,438 1,547,791 $ 0.071 $ 1,547,791 $ 0.071 $ 1,284,124 $ 0.059 $ 1,284,124 $ 0.059 $

96,001-500,000 26,770,609 26,770,609 1,463,800 $ 0.055 $ 1,463,800 $ 0.055 $ 1,199,384 $ 0.045 $ 1,199,384 $ 0.045 $

500,001-1 Million 9,764,979 9,764,979 153,975 $ 0.016 $ 153,975 $ 0.016 $ 122,635 $ 0.013 $ 122,635 $ 0.013 $

> 1 Million 16,309,853 16,309,853 (4,876) $ (0.000) $ (4,876) $ (0.000) $ (4,023) $ (0.000) $ (4,023) $ (0.000) $

Total 114,114,724 114,114,724 6,218,966 $ 0.054 $ 6,465,863 $ 0.057 $ 5,687,467 $ 0.050 $ 6,006,714 $ 0.053 $

≤ 100 125,340 124,920 (187,747) $ (1.498) $ (151,107) $ (1.210) $ (126,913) $ (1.013) $ (77,760) $ (0.622) $

101-500 460,577 464,568 (138,181) $ (0.300) $ (104,157) $ (0.224) $ (83,851) $ (0.182) $ (41,251) $ (0.089) $

501-1,000 394,643 401,009 (132,431) $ (0.336) $ (122,868) $ (0.306) $ (110,140) $ (0.279) $ (97,592) $ (0.243) $

1,001-4,100 2,341,578 2,341,578 (261,760) $ (0.112) $ (261,760) $ (0.112) $ (212,565) $ (0.091) $ (212,565) $ (0.091) $

4,101-33,000 24,827,588 24,827,588 (207,674) $ (0.008) $ (207,674) $ (0.008) $ (88,472) $ (0.004) $ (88,472) $ (0.004) $

33,001-96,000 19,232,570 19,232,570 (187,918) $ (0.010) $ (187,918) $ (0.010) $ (156,652) $ (0.008) $ (156,652) $ (0.008) $

96,001-500,000 23,912,325 23,912,325 (162,082) $ (0.007) $ (162,082) $ (0.007) $ (146,737) $ (0.006) $ (146,737) $ (0.006) $

500,001-1 Million 5,524,188 5,524,188 (45,790) $ (0.008) $ (45,790) $ (0.008) $ (42,392) $ (0.008) $ (42,392) $ (0.008) $

> 1 Million - - - $ - $ - $ - $ - $ - $ - $ - $

Total 76,818,809 76,828,746 (1,323,584) $ (0.017) $ (1,243,356) $ (0.016) $ (967,721) $ (0.013) $ (863,420) $ (0.011) $

≤ 100 13,927 13,880 325,679 $ 23.385 $ 347,280 $ 25.020 $ 296,928 $ 21.321 $ 318,549 $ 22.950 $

101-500 51,175 51,619 469,264 $ 9.170 $ 462,084 $ 8.952 $ 412,574 $ 8.062 $ 410,784 $ 7.958 $

501-1,000 43,849 44,557 164,754 $ 3.757 $ 167,578 $ 3.761 $ 143,922 $ 3.282 $ 146,752 $ 3.294 $

1,001-4,100 260,175 260,175 556,364 $ 2.138 $ 556,364 $ 2.138 $ 484,508 $ 1.862 $ 484,508 $ 1.862 $

4,101-33,000 3,170,059 3,170,059 2,526,599 $ 0.797 $ 2,526,599 $ 0.797 $ 2,132,792 $ 0.673 $ 2,132,792 $ 0.673 $

33,001-96,000 2,700,868 2,700,868 1,736,797 $ 0.643 $ 1,736,797 $ 0.643 $ 1,446,819 $ 0.536 $ 1,446,819 $ 0.536 $

96,001-500,000 2,858,284 2,858,284 1,624,577 $ 0.568 $ 1,624,577 $ 0.568 $ 1,345,503 $ 0.471 $ 1,345,503 $ 0.471 $

500,001-1 Million 613,799 613,799 194,889 $ 0.318 $ 194,889 $ 0.318 $ 161,003 $ 0.262 $ 161,003 $ 0.262 $

> 1 Million - - - $ - $ - $ - $ - $ - $ - $ - $

Total 9,712,136 9,713,240 7,598,924 $ 0.782 $ 7,616,167 $ 0.784 $ 6,424,050 $ 0.661 $ 6,446,711 $ 0.664 $

≤ 100 167,976 168,442 (69,499) (0.414) $ (15,268) (0.091) $ 402 0.002 $ 70,124 0.416 $

101-500 1,077,758 1,073,324 (7,710) (0.007) $ 59,425 0.055 $ 102,079 0.095 $ 188,331 0.175 $

501-1,000 1,186,361 1,179,288 3,132 0.003 $ 31,191 0.026 $ 53,154 0.045 $ 89,464 0.076 $

1,001-4,100 5,214,839 5,214,839 41,242 0.008 $ 41,242 0.008 $ 118,178 0.023 $ 118,178 0.023 $

4,101-33,000 - - - - $ - - $ - - $ - - $

33,001-96,000 - - - - $ - - $ - - $ - - $

96,001-500,000 - - - - $ - - $ - - $ - - $

500,001-1 Million 3,626,992 3,626,992 - - $ - - $ - - $ - - $

> 1 Million 16,309,853 16,309,853 - - $ - - $ - - $ - - $

Total 27,583,779 27,572,738 (32,836) $ (0.001) $ 116,591 $ 0.004 $ 273,813 $ 0.010 $ 466,097 $ 0.017 $

Source:
(C), (E), (G), (I) Exhibit 7.28. Community Water Systems (CWSs) not performing Level 1/Level 2 Assessments, or Corrective Actions Number of

Households (Alternative

Option)

Community Water Systems (CWSs) performing Level 1/Level 2 Assessments (and no Corrective Actions)

Community Water Systems (CWSs) performing Corrective Actions 7% Discount Rate

PWS Size (Population

Served) 3% Discount Rate

Number of

Households (AIP)

All Community Water Systems (CWSs)



### 7.6 

## Nonquantified Costs

EPA believes that all of the rule elements that are the major drivers of the net changes in costs of the current TCR have been quantified to the greatest degree possible. However, cost reductions related to fewer monitoring and reporti ng violations are not sp ecifically accounted for in the cost analysis, and their exclusion from co nsideration may result in an overestimate of net change in cost between the TCR a nd the AIP or Alternative option.Economic Analysis for the Proposed RTCR 7-39 June 2010 

### In addition, under the TCR, AIP, and Altern ative option, Tier 3 public notification for monitoring and reporting violations are assumed to be reported once per year as part of the CCR.
Because of the use of the CCR to communicate Ti er 3 public notification on a yearly basis, no
cost differential between the current TCR and the AIP and Alternative option is estimated in the cost model. However, the advisory committ ee concluded that significant reductions in monitoring and reporting violations may be realized through the re vised regulatory framework of the proposed RTCR. These possible reductions have not been quantified. System resources used to process monitoring violation notices for the CCR and respond to customer inquiries about the notices as well as state resources to remind systems to take samples, may be reduced if significant reductions are realized. Exclusion of this potential cost savings may lead to an underestimate of the PN cost savings under both the AIP and Alternative option. Such costs savings to states may be significant given the high occurrence of monitoring and reporting
violations under the current TCR.

Additionally, as an underlying assumption to the costing methodology, EPA has assumed that all PWSs subject to the proposed RTCR requirements are already complying with the current TCR. There may be some PWSs that are not in full compliance with the current TCR, and if so, additional costs would be incurred.

7.7 

## Uncertainty Analysis

There are two primary sources of uncertainty in the proposed RTCR cost modeling. The first is related to the underlying estimates of events resulting from the rule revisions as generated from the occurrence and predictive modeling. The occurrence and predictive modeling (discussed in detail in Chapter 5) does not explicitly consider uncertainty, and therefore does not generate “confidence intervals” on the predicte d outcomes. However, EPA evaluated the model inputs to determine which of the inputs were like ly to have a significant effect on the results and subjected those to further review through sensitivity analyses. In particular, EPA evaluated the impacts of alternative estimates of the net ch ange percentage of PW Ss predicted to take
corrective actions in re sponse to an assessment (10 percent in the model) and the associated
effectiveness of those corrective actions (Section 5.3.3.1 discusses these analyses in detail). The results of these analyses suggest that changes in the major a ssumptions about the net change percentage of corrective actions identified and th e effectiveness of those actions have a less than linear effect on predicted outcomes. When applied to costs estimates they would have even less impact.

In the case where PWSs increase the percentage of corrective actions taken in response to an assessment, costs are expected to increase corresponding to the greater number of corrective actions taken. Using the increases predicted fo r the small subset of PWSs analyzed in the analysis, it is estimated that corrective actions (and related costs) would increase by 65% for Level 1 corrective actions and 7% for Level 2 corrective actions. This is in response to a doubling of the net change percenta ge of corrective actions taken in response to an assessment. However, the increased effectiveness of more co rrective actions has a dampening effect on other
costs that would offset the increased correctiv e action costs. For inst ance, although the numbers of corrective actions increase due to the higher percentages found during assessments, the actual number of assessments decreases (-16% Level 1 and -43% Level 2) because fewer positive samples (ranging from -13% routine TC+ to -28% repeat TC+) are predicted to be found. TheEconomic Analysis for the Proposed RTCR 7-40 June 2010 

### overall effect of the cost increases and decrea ses in response to the ma jor predictive occurrence model uncertainties is expected to be minimal.

The other major area of uncertainty that may af fect the resulting cost calculations is the distribution of corrective actions taken by PWSs (t he compliance forecast) in response to finding a problem during a Level 1 or Level 2 assessment. The compliance forecast presented in Exhibit 7.16 represents EPA’s best estimate of a distribut ion of corrective actions that may be taken by PWSs to respond to problems identified under the proposed RTCR. Because there is a wide
variation in the unit costs of the actual corrective ac tions underlying the compliance forecast (see Appendix D for unit cost detail), EPA ran two sens itivity analyses to assess the potential impacts of different distributions within the compliance forecast. These two sensitivity runs attempt to bound the analysis of corrective action costs by generating a low and high cost bound to the
estimates.



## Low Bound Estimate

During discussions in the TCRDSAC meeti ngs, several stakeholders suggested that
almost all additional corrective actions taken in response to the proposed RTCR would be in response to transient contamination events or poo r sampling techniques. These are also the least expensive corrective actions. To examine the ef fects of greater emphasis on these types of corrective actions, EPA reran the cost model to re flect 90% selection of ei ther spot flushing or sampler training as corrective actions. The remain ing 10% of costs were distributed across the least costly corrective actions und er each of the other compliance fo recast categories. This results in an approximate 80 percent decrease in tota l net costs for the AIP and an approximate 44 percent decrease in total net costs for the Altern ative option. Exhibit 7.24 shows the change in the overall costs with this change.



## High Bound Estimate

PWSs may also take actions that result in higher corrective action costs than those predicted by the current compliance forecast, al though this would be a less likely scenario based on stakeholder discussions. Purely economic consid erations also suggest that, given the option, PWSs would opt for the least cost ly option to address any issues identified. However, to test a potential high end of corrective action costs, EPA ran the cost model with the compliance forecast set to take the highest cost corrective act ion in each compliance forecast category. In this scenario, only 5% of corrective actions were pr edicted for flushing and sampler training, and 10% were estimated for each of the other complia nce categories, and unit costs were assigned for the highest unit cost corrective action in each. This re sults in an increase in total net costs for the AIP by approximately a factor of 1.8, and an incr ease in total net costs by approximately a factor of 1.5 for the Alternative option. Exhibit 7.24 shows the annualiz ed total and net change cost estimates for PWSs and states to comply with proposed RTCR under the TCR, AIP, and Alternative options based on low bound and high bound estimates in the compliance forecast.Economic Analysis for the Proposed RTCR 7-41 June 2010 

### Exhibit 7.24 Sensitivity Analysis – Annualized Net Change in Costs based on Changes in Compliance Forecast ($Millions, 2007$)

PWSs State Total PWSs State Total

AIP Net Change 13.54 $ 0.15 $ 13.69 $ 13.24 $ 0.42 $ 13.66 $ AIP Low Bound Net Change 2.54 $ 0.15 $ 2.68 $ 3.84 $ 0.42 $ 4.26 $ AIP High Bound Net Change 24.82 $ 0.15 $ 24.96 $ 23.38 $ 0.42 $ 23.80 $ Alternative Option Net Change 26.95 $ 0.29 $ 27.24 $ 29.10 $ 0.59 $ 29.69 $ Alternative Option Low Bound Net Change 15.03 $ 0.29 $ 15.31 $ 18.64 $ 0.59 $ 19.23 $ Alternative Option High Bound Net Change 40.11 $ 0.29 $ 40.40 $ 41.46 $ 0.59 $ 42.05 $

Note: Detail may not add due to independent rounding. Source: Proposed RTCR Cost Model. 3% Discount Rate 7% Discount Rate



### Overall, EPA recognizes that there is uncerta inty in various parts of its estimates that
could result in either an over- or underestimate of the costs as presented in this chapter. Exhibit 7.25 presents a summary of these issues, referenc es the location in the EA where the information is introduced, and estimates the effects that each may have on nationa l costs. All of the assumptions influencing the EA baseline (current TCR) do so in the same way for the AIP and Alternative option. Therefore, EP A does not expect the net results of the analyses presented in this EA to be significantly influenced by the uncertainty in the assumptions applied in developing the RTCR cost analysis. EPA has been careful to use the best available data, to account for uncertainty quantitatively when possibl e, and to avoid any co nsistent biases in assumptions and the use of data.Economic Analysis for the Proposed RTCR 7-42 June 2010 

### Exhibit 7.25 Cost Uncertainty Summary

Uncertainty Section with Full Discussion of Uncertainty Most Likely Effect of Current Assumptions on Estimate of National Costs

Underestimate Overestimate Unknown Impact
Labor Rate 7.2.1 X
Labor Burden Estimates 7.4.1 – 7.4.8 X

Unit Costs 7.4.1 – 7. 4.8 X [note 1] Percentage of systems on monthly, quarterly, and annual monitoring frequencies 7.4.3 X

Number of acute violations 7.4.5 X

Number of systems performing level 1 and level 2
assessments 7.4.5 X

Compliance forecasts for corrective actions based on level 1 and level 2 assessments 7.4.6 and 7.7 X [note 2]

Corrective Actions based on level 1 and level 2 Assessments 7.4.6 X

Notes: 1) All unit costs (with the exception of those for corre ctive actions, which are not applied to the current TCR) were used in the proposed RTCR cost code in the sa me way for the current TCR, AIP, and Alternative option. Therefore, EPA expects that any under- or over-estimation wo uld affect the baseline and other options similarly, resulting in no significant net effect on the results of the analysis.

2) The compliance forecast represents EPA’s best estimate of a distribution of corrective actions that may be taken by PWSs to respond to problems identifi ed under the proposed RTCR. EPA ran two sensitivity analyses to assess the potential impacts of different distributions within the compliance forecast (see Section 7.7). These two sensitivity runs showed that under the low bound and high bound estimates, the net change costs for the AIP were smaller than those for the Alternative Option.



### 7.8 

## Comparison of Total and Net Annu alized Costs for All Regulatory
Alternatives

Based on information presented previously in this chapter, EPA developed national cost estimates for the TCR, AIP, and Alternativ e option. Exhibit 7.26 presents the total 8 

### and net change in annualized costs to PWSs and states at 3 and 7 percent discount rates. Exhibit 7.27 presents the total and net change in annualized costs for the TCR, AIP, and Alternative option by rule component at 3 and 7 percent discount rates. Exhibit 7.28 presents the total and net change in annualized costs for the TCR, AIP, and Alte rnative Option by PWS size and type at 3 and 7

8 Because only the incremental costs of some rule components are considered as part of the cost analysis, references to “total” costs in this section do not refer to the complete costs for regulatory implementation, but only to the specific costs considered to calculate net changes in costs.Economic Analysis for the Proposed RTCR 7-43 June 2010 

### percent discount rates. Exhibit 7.29 presents the costs shown in Exhibit 7.28 on a per-PWS basis.
Further discussion of the results follows these exhibits.

Exhibit 7.26 Comparison of Total and Net Change from Current TCR in Annualized Present Value Costs ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total 185 $ 0.9 $ 186 $ 178 $ 0.9 $ 179 $

AIP - Total 199 $ 1.1 $ 200 $ 191 $ 1.3 $ 192 $ AIP - Net Change 14 $ 0.1 $ 14 $ 13 $ 0.4 $ 14 $ AIP - Percent Change 7% 16% 7% 7% 48% 8% Alternative Option - Total 212 $ 1.2 $ 213 $ 207 $ 1.5 $ 209 $ Alternative Option - Net Change 27 $ 0.3 $ 27 $ 29 $ 0.6 $ 30 $ Alternative Option - Percent Change 15% 32% 15% 16% 67% 17% 3% Discount Rate 7% Discount Rate

Note: Detail may not add due to independent rounding. Bec ause only the incremental costs of some rule components are considered as part of the cost analysis, references to “t otal” costs in this exhibit do not refer to the complete costs for regulatory implementation, but only to the specific costs considered to calculate net changes in costs.

Source: Proposed RTCR Cost Model.Economic Analysis for the Proposed RTCR 7-44 June 2010 

### Exhibit 7.27 Comparison of Total and Net Change in Annualized Present Value Costs by Rule Component ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ AIP - Net Change 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ Alternative Option - Total 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ Alternative Option - Net Change 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ AIP - Net Change 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ Alternative Option - Total 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ Alternative Option - Net Change 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $

TCR - Total 170.59 $ - $ 170.59 $ 163.94 $ - $ 163.94 $

AIP - Total 174.71 $ - $ 174.71 $ 167.74 $ - $ 167.74 $ AIP - Net Change 4.12 $ - $ 4.12 $ 3.80 $ - $ 3.80 $ Alternative Option - Total 186.34 $ - $ 186.34 $ 181.49 $ - $ 181.49 $ Alternative Option - Net Change 15.75 $ - $ 15.75 $ 17.56 $ - $ 17.56 $

TCR - Total 3.87 $ - $ 3.87 $ 3.72 $ - $ 3.72 $

AIP - Total 1.12 $ - $ 1.12 $ 1.09 $ - $ 1.09 $ AIP - Net Change (2.75) $ - $ (2.75) $ (2.63) $ - $ (2.63) $ Alternative Option - Total 0.68 $ - $ 0.68 $ 0.58 $ - $ 0.58 $ Alternative Option - Net Change (3.19) $ - $ (3.19) $ (3.14) $ - $ (3.14) $

TCR - Total 5.11 $ - $ 5.11 $ 4.92 $ - $ 4.92 $

AIP - Total 4.82 $ - $ 4.82 $ 4.64 $ - $ 4.64 $ AIP - Net Change (0.29) $ - $ (0.29) $ (0.28) $ - $ (0.28) $ Alternative Option - Total 5.50 $ - $ 5.50 $ 5.45 $ - $ 5.45 $ Alternative Option - Net Change 0.39 $ - $ 0.39 $ 0.54 $ - $ 0.54 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total

- $ - $ - $ - $ - $ - $ AIP - Net Change

- $ - $ - $ - $ - $ - $ Alternative Option - Total

- $ - $ - $ - $ - $ - $ Alternative Option - Net Change

- $ - $ - $ - $ - $ - $

TCR - Total 1.13 $ 0.21 $ 1.34 $ 1.08 $ 0.20 $ 1.29 $

AIP - Total 1.63 $ 0.20 $ 1.84 $ 1.57 $ 0.20 $ 1.77 $ AIP - Net Change 0.50 $ (0.01) $ 0.49 $ 0.49 $ (0.01) $ 0.48 $ Alternative Option - Total 1.73 $ 0.23 $ 1.95 $ 1.69 $ 0.22 $ 1.91 $ Alternative Option - Net Change 0.60 $ 0.01 $ 0.61 $ 0.60 $ 0.02 $ 0.62 $

TCR - Total 0.70 $ 0.26 $ 0.96 $ 0.68 $ 0.25 $ 0.92 $

AIP - Total 0.90 $ 0.19 $ 1.09 $ 0.88 $ 0.18 $ 1.06 $ AIP - Net Change 0.20 $ (0.07) $ 0.12 $ 0.20 $ (0.07) $ 0.13 $ Alternative Option - Total 1.23 $ 0.28 $ 1.51 $ 1.27 $ 0.30 $ 1.57 $ Alternative Option - Net Change 0.52 $ 0.02 $ 0.55 $ 0.60 $ 0.05 $ 0.65 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 9.17 $ 0.01 $ 9.18 $ 7.77 $ 0.01 $ 7.77 $ AIP - Net Change 9.17 $ 0.01 $ 9.18 $ 7.77 $ 0.01 $ 7.77 $ Alternative Option - Total 9.39 $ 0.01 $ 9.40 $ 8.01 $ 0.01 $ 8.02 $ Alternative Option - Net Change 9.39 $ 0.01 $ 9.40 $ 8.01 $ 0.01 $ 8.02 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 2.72 $ 0.00 $ 2.72 $ 2.41 $ 0.00 $ 2.41 $ AIP - Net Change 2.72 $ 0.00 $ 2.72 $ 2.41 $ 0.00 $ 2.41 $ Alternative Option - Total 3.53 $ 0.01 $ 3.53 $ 3.36 $ 0.01 $ 3.37 $ Alternative Option - Net Change 3.53 $ 0.01 $ 3.53 $ 3.36 $ 0.01 $ 3.37 $

TCR - Total 3.75 $ 0.44 $ 4.19 $ 3.60 $ 0.42 $ 4.02 $

AIP - Total 0.26 $ 0.06 $ 0.33 $ 0.26 $ 0.06 $ 0.32 $ AIP - Net Change (3.48) $ (0.38) $ (3.86) $ (3.34) $ (0.36) $ (3.70) $ Alternative Option - Total 0.34 $ 0.08 $ 0.42 $ 0.35 $ 0.08 $ 0.43 $ Alternative Option - Net Change (3.41) $ (0.36) $ (3.77) $ (3.25) $ (0.34) $ (3.59) $

Notes:

2) For modeling purposes, additional routine sample counts include regular routine samples taken in the same month. Source: Proposed RTCR cost model. 3% Discount Rate 7% Discount Rate

Routine Monitoring

Corrective Actions based on Level 2 Assessments Level 2 Assessment Repeat Monitoring

Annual Site Visits

Level 1 Assessment

Corrective Actions based on Level 1 Assessments Additional Routine Monitoring

Revising Sampling Plans

Rule Implementation

Public Notification

1) Detail may not add due to independent rounding. Because only the incremental costs of some rule components are considered as part of the cost analysis, references to “total” costs in this exhibit do not refer to the complete costs for regulatory implem entation, but only to the specific costs considered to calculate net changes in costs.Economic Analysis for the Proposed RTCR 7-45 June 2010 

### Exhibit 7.28 Total and Net Change in A nnualized Costs to PWSs by PWS Size and Type ($Millions, 2007$)

TCR - Total AIP - Total AIP - Net Alternative Option - Total Alternative Option - Net TCR - Total AIP - Total AIP - Net Alternative Option -

Total Alternative Option - Net

A B C=B-A D E=D-A F G H=G-F I J=I-F

≤ 100 $7.4 $7.5 $0.1 $7.6 $0.2 $7.1 $7.3 $0.2 $7.4 $0.3
101-500 $9.0 $9.3 $0.3 $9.4 $0.4 $8.6 $9.1 $0.4 $9.2 $0.6
501-1,000 $3.7 $3.8 $0.0 $3.8 $0.1 $3.6 $3.7 $0.1 $3.7 $0.1
1,001-4,100 $13.2 $13.6 $0.3 $13.6 $0.3 $12.7 $13.1 $0.4 $13.1 $0.4
4,101-33,000 $42.4 $44.7 $2.3 $44.7 $2.3 $40.7 $42.7 $2.0 $42.7 $2.0
33,001-96,000 $34.9 $36.4 $1.5 $36.4 $1.5 $33.5 $34.8 $1.3 $34.8 $1.3
96,001-500,000 $34.7 $36.2 $1.5 $36.2 $1.5 $33.4 $34.6 $1.2 $34.6 $1.2

500,001-1 M illion $6.5 $6.7 $0.2 $6.7 $0.2 $6.2 $6.4 $0.1 $6.4 $0.1 > 1 Million $5.6 $5.5 ($0.0) $5.5 ($0.0) $5.3 $5.3 ($0.0) $5.3 ($0.0)
Total $157.4 $163.6 $6.2 $163.9 $6.5 $151.3 $157.0 $5.7 $157.3 $6.0

≤ 100 $2.6 $2.6 $0.1 $3.6 $1.0 $2.5 $2.6 $0.2 $3.8 $1.3
101-500 $1.9 $2.0 $0.1 $2.7 $0.9 $1.8 $2.0 $0.2 $2.9 $1.1
501-1,000 $0.6 $0.6 $0.0 $0.8 $0.3 $0.6 $0.6 $0.1 $0.9 $0.3
1,001-4,100 $1.2 $1.3 $0.1 $1.3 $0.1 $1.1 $1.2 $0.1 $1.2 $0.1
4,101-33,000 $0.4 $0.5 $0.1 $0.5 $0.1 $0.4 $0.5 $0.0 $0.5 $0.0
33,001-96,000 $0.1 $0.1 $0.0 $0.1 $0.0 $0.1 $0.1 $0.0 $0.1 $0.0 96,001-500,000 $0.1 $0.1 ($0.0) $0.1 ($0.0) $0.1 $0.1 ($0.0) $0.1 ($0.0)

500,001-1 M illion $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
> 1 Million $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Total $6.9 $7.2 $0.4 $9.1 $2.3 $6.6 $7.2 $0.6 $9.4 $2.8

≤ 100 $13.4 $18.5 $5.1 $26.7 $13.4 $12.8 $18.0 $5.1 $27.8 $14.9
101-500 $4.9 $6.4 $1.5 $9.1 $4.2 $4.7 $6.2 $1.5 $9.4 $4.7
501-1,000 $0.6 $0.8 $0.2 $1.1 $0.5 $0.6 $0.8 $0.2 $1.2 $0.5
1,001-4,100 $0.9 $1.0 $0.1 $1.0 $0.1 $0.9 $1.0 $0.1 $1.0 $0.1
4,101-33,000 $0.4 $0.5 $0.1 $0.5 $0.1 $0.4 $0.5 $0.0 $0.5 $0.0 33,001-96,000 $0.1 $0.1 ($0.0) $0.1 ($0.0) $0.1 $0.1 ($0.0) $0.1 ($0.0) 96,001-500,000 $0.1 $0.1 ($0.0) $0.1 ($0.0) $0.1 $0.1 ($0.0) $0.1 ($0.0)

500,001-1 M illion $0.2 $0.2 ($0.0) $0.2 ($0.0) $0.2 $0.2 ($0.0) $0.2 ($0.0)
> 1 Million $0.3 $0.3 $0.0 $0.3 $0.0 $0.3 $0.3 $0.0 $0.3 $0.0
Total $20.9 $27.8 $6.9 $39.1 $18.2 $20.1 $27.1 $7.0 $40.4 $20.3
Grand Total $185.2 $198.7 $13.5 $212.1 $26.9 $177.9 $191.2 $13.2 $207.0 $29.1

Source: Proposed RTCR cost model. Note: Detail may not add due to independent rounding. Because only the incremental costs of some rule components are considered as part of the cost analysis, references to “total” costs in this exhibit do not refer to the complete costs for regulatory implementation, but only to the specific costs considered to calculate net changes in costs.

PWS Size (Population

Served) 3% Discount Rate 7% Discount Rate

Community Water Systems (CWSs)

Nontransient Noncommunity Water Systems (NTNCWSs)

Transient Noncommunity Water Systems (TNCWSs)Economic Analysis for the Proposed RTCR 7-46 June 2010 

### Exhibit 7.29 Total and Net Change in Annualized Per PWS Costs by PWS Size and Type (2007$)

TCR - Total AIP - Total AIP - Net Alternative Option -

Total Alternative Option - Net TCR - Total AIP - Total AIP - Net Alternative Option -

Total Alternative Option - Net

A B C=B-A D E=D-A F G H=G-F I J=I-F

≤ 100 $564 $570 $5 $578 $14 $542 $555 $13 $566 $24
101-500 $561 $581 $20 $587 $26 $539 $566 $27 $574 $35
501-1,000 $662 $669 $6 $676 $13 $637 $652 $15 $661 $25
1,001-4,100 $1,411 $1,447 $36 $1,447 $36 $1,356 $1,397 $42 $1,397 $42
4,101-33,000 $6,707 $7,070 $363 $7,070 $363 $6,445 $6,763 $318 $6,763 $318
33,001-96,000 $33,053 $34,520 $1,467 $34,520 $1,467 $31,764 $32,981 $1,217 $32,981 $1,217
96,001-500,000 $93,619 $97,565 $3,946 $97,565 $3,946 $89,968 $93,201 $3,233 $93,201 $3,233

500,001-1 M illion $185,678 $190,077 $4,399 $190,077 $4,399 $178,435 $181,939 $3,504 $181,939 $3,504

> 1 Million $277,732 $277,488 ($244) $277,488 ($244) $266,900 $266,698 ($201) $266,698 ($201)
Total $3,029 $3,148 $120 $3,153 $124 $2,911 $3,020 $109 $3,026 $116

≤ 100 $284 $292 $8 $394 $111 $273 $291 $18 $413 $141
101-500 $273 $289 $16 $397 $124 $263 $289 $26 $416 $153
501-1,000 $321 $347 $26 $465 $144 $308 $346 $38 $486 $178
1,001-4,100 $1,325 $1,436 $111 $1,436 $111 $1,273 $1,380 $106 $1,380 $106
4,101-33,000 $4,819 $5,365 $546 $5,365 $546 $4,631 $5,110 $478 $5,110 $478
33,001-96,000 $32,004 $33,310 $1,305 $33,310 $1,305 $30,757 $31,853 $1,096 $31,853 $1,096 96,001-500,000 $91,171 $90,807 ($364) $90,807 ($364) $87,617 $87,298 ($319) $87,298 ($319)

500,001-1 M illion $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
> 1 Million $0 $0 $0 $0 $0 $0 $0 $0 $0 $0
Total $366 $387 $20 $488 $121 $352 $382 $30 $501 $149

≤ 100 $217 $300 $83 $434 $217 $209 $292 $83 $451 $243
101-500 $247 $323 $76 $459 $212 $237 $314 $77 $474 $237
501-1,000 $311 $405 $94 $548 $237 $299 $393 $94 $564 $265
1,001-4,100 $1,363 $1,524 $161 $1,524 $161 $1,310 $1,457 $147 $1,457 $147
4,101-33,000 $5,068 $5,658 $589 $5,658 $589 $4,871 $5,390 $519 $5,390 $519 33,001-96,000 $38,507 $38,155 ($352) $38,155 ($352) $37,008 $36,701 ($307) $36,701 ($307) 96,001-500,000 $77,791 $77,043 ($748) $77,043 ($748) $74,762 $74,090 ($672) $74,090 ($672)

500,001-1 M illion $186,699 $184,841 ($1,858) $184,841 ($1,858) $179,429 $177,725 ($1,704) $177,725 ($1,704)

> 1 Million $287,010 $301,525 $14,515 $301,525 $14,515 $275,817 $289,883 $14,066 $289,883 $14,066
Total $248 $331 $83 $465 $216 $238 $322 $83 $480 $241
Grand Total $1,196 $1,283 $87 $1,370 $174 $1,149 $1,235 $39 $1,337 $141

Source: Proposed RTCR cost model. Note: Detail may not add due to independent rounding. Because only the incremental costs of some rule components are considered as part of the cost analysis, references to “total” costs in this exhibit do not refer to the complete costs for regulatory implementation, but only to the s pecific costs considered to calculate net changes in costs. Transient Noncommunity Water Systems (TNCWSs) 3% Discount Rate 7% Discount Rate

Community Water Systems (CWSs)

Nontransient Noncommunity Water Systems (NTNCWSs)

PWS Size (Population

Served)



### Evaluation of Regulatory Options

Exhibit 7.26 summarizes the comparison of tota l and annualized present value of the net change difference in cost from the baseline for ea ch of the three regulatory scenarios (existing TCR, AIP Option, and Alternative option). A cont inuation of the existing TCR would result in no net change in costs. The net change in mean annualized present value national costs of the AIP Option is estimated to be approximately $14M . The net change in mean annualized present value national costs for the Alternative option are estimated to be approximately $27M using a 3% discount rate and $30M using a 7% discount rate.

The total net change in national annualized present value costs fo r PWSs serving >4,100 people (approximately $5M) are the same under the AI P and Alternative option. This is expected because the provisions for PWSs serving >4,100 are the same under both the AIP and Alternative option. Monitoring requirements for PWSs se rving >4,100 people would remain essentiallyEconomic Analysis for the Proposed RTCR 7-47 June 2010 

### unchanged under either the AIP or Alternative option. The observed overall net increase in costs for PWSs serving >4,100 people is driven prim arily by the requirements to conduct assessments and to correct any sanitary defects that are found.

Under the AIP, PWSs are estimated to incur approximately 97% to 99% of the net annualized present value costs. States are expect ed to incur the remaining costs. EPA recognizes that state labor may be more expensive than PWS labor, and that for some states, state costs may be passed onto PWSs. However, state costs are on ly a very small percentage of the total net change costs for the RTCR.

Exhibit 7.27 presents the comparison of tota l and net change in a nnualized present value costs by rule component. The exhi bit shows that, for the AIP and Alternative option, corrective action costs are the most significan t contributor to the net increas e in costs for PWSs. Under the AIP, state costs to review revised sampling plan s contribute most to the cost increase. For both PWSs and states, a net decrease in costs associated with PN requirements helps to offset the total
net cost increase.

The large difference in net cost increases between the AIP and the Alternative option is primarily driven by the increased number of r outine samples taken under the Alternative option in comparison to the AIP. A larger number of samples are also estimated to result more in Level 1 and Level 2 triggers and to subsequently requi re corrective actions based on Level 1 and Level 2 assessments. Overall, the total net costs of the AIP are estimated at 50% of the net costs of the Alternative option. This cost difference is an im portant consideration in the selection of the AIP option over the Alternative option as the preferred proposed RTCR option.

Exhibit 7.28 presents the total and net cha nge in annualized costs to PWSs by size and type for the three regulatory options. No net chan ge in costs would result from a continuation of the current TCR. Among PWSs serving ≤ 4,100 people, the largest incr ease in net costs would be incurred by the TNCWSs serving ≤ 100 people under either the AIP ($5.1M) or Alternative option ($13.4M). As shown in Exhibit 7.29, on a per system basis, this translates to a net annualized present value increase of approxi mately $83 per system under the AIP and $217 per system under the Alternative op tion for the TNCWSs serving ≤ 100 people. Significant impacts are also estimated for CWSs serving greater th an 4,101 people, driven by the relatively high number of CWSs in this category, combined with relatively high unit costs for implementing corrective actions for PWSs of this size. However, PWSs of this size (and CWSs in general) are expected to be better able to absorb cost incr eases by passing costs throug h to a larger base of customers. Overall, the most important drivers of total net costs are the numbers of PWSs and the underlying baseline occurrence estimates in a given size category. Taken together, these influence the numbers of samples and ultimately the numbers of corrective actions taken, which
drive the cost estimates.

Exhibit 7.29 shows the costs from Exhibit 7. 28 on a per-PWS basis. On this basis, the annual impact of the proposed RTCR generally increases with PWS size and the magnitude of the annual per-PWS net costs do not appear to be prohibitive, even for the most heavily impacted PWS categories. However, the range of per-PWS co sts is expected to be fairly wide and some individual PWSs may be more heavily impacted.Economic Analysis for the Proposed RTCR 8-1 June 2010 

## 8. Economic Impact Analysis

8.1. Introduction

As part of the rulemaking process, the Un ited States Environmental Protection Agency (EPA) is required to address the direct and indirect burdens that the Revised Total Coliform Rule (RTCR) may place on certain types of government s, businesses, and populations. This chapter presents analyses performed by the EPA in acco rdance with the following 12 federal mandates and statutory reviews:

1. Executive Order 12866: Regulatory Planning and Review.
2. Paperwork Reduction Act (the Informa tion Collection Request (ICR) document for the proposed RTCR contains the complete analysis (USEPA, 2010b)).
3. The Regulatory Flexibility Act (RFA) of 1980, as amended by the Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996.
4. Unfunded Mandates Reform Act (UMRA) of 1995.
5. Executive Order 13132: Federalism.
6. Executive Order 13175: Consultation and Coordination with Indian Tribal
Governments.
7. Executive Order 13045: Protection of Children from Environmental Health Risks and Safety Risks.
8. Executive Order 13211: Action Concerning Re gulations That Significantly Affect Energy Supply, Distribution, or Use.
9. National Technology Transfer and Advancement Act (NTTAA).
10. Executive Order 12898: Federal Action to Address Environmental Justice in Minority Populations and Low-Income Populations.
11. Consultations with the Science Advisory Board (SAB), National Drinking Water Advisory Council (NDWAC), and the Secret ary of Health and Human Services as Required by Section 1412 (d) and (e) of the Safe Drinking Water Act (SDWA). 12. Impacts on Sensitive Subpopulations as Required by Section 1412(b)(3)(c)(i) of
the 1996 Amendments to the SDWA. 13. Plain Language as Requi red by Executive Order 12866.

Many of the requirements and executive orde rs listed above call for an explanation of why the rule is necessary, the statutory authority for the rule, and the primary objectives that the rule is intended to achieve (refer to Chapter 2 for more information regarding the objectives of the rule). Others are designed to assess the financial and health effects of the rule on sensitive, low-income, and tribal populations as well as on small Public Water Systems (PWSs).Economic Analysis for the Proposed RTCR 8-2 June 2010 

## 8.2. Executive Order 12866: Regula tory Planning and Review

Under Executive Order 12866 (58 Federal Regi ster (FR) 51735, October 4, 1993), the Agency must determine whether the regulatory ac tion is “significant” and therefore subject to Office of Management and Budget (OMB) review and the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may:

• Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities;

• Create a serious inconsistency or otherw ise interfere with an action taken or planned by another agency;

• Materially alter the budgetar y impact of entitlement, gr ants, user fees, or loan programs or the rights and obligatio ns of recipients thereof; or

• Raise novel legal or policy issues arising out of legal mandates, the President’s priorities, or the principles set forth in the Executive Order.

Under Executive Order 12866, this acti on is a “significant regulatory action.” Accordingly, EPA submitted this action to the OMB for review under Executive Order 12866 and any changes made in response to OMB r ecommendations have been documented in the
docket for this action.

In addition, EPA prepared an analysis of th e potential costs and bene fits associated with this action. EPA estimates that the proposed RTCR will have an overall impact on PWSs of $14 M and that the impact on small entities (PWSs serving 10,000 people or fewer) will be $9.4 M - $9.8 M annualized at 3 and 7 percent discount rates, respectively. These impacts are described in
Section 8.4 as well as secti ons VI and VII.C of the propos ed RTCR preamble (USEPA 2010c), respectively.



## 8.3. Paperwork Reduction Act

The information collection requirements for the proposed RTCR have been submitted for approval to the OMB under the Paperwor k Reduction Act (PRA), 44 U.S.C. 3501 et seq . The ICR document prepared by EPA has been assigned EPA ICR number 1895.06.

The PRA requires EPA to estimate the burden on PWSs and state/primacy agencies of complying with the rule. The info rmation collected as a result of EPA’s efforts toward proposing the proposed RTCR should allow states/primacy agencies and EPA to determine appropriate requirements for specific systems and evaluate co mpliance with the proposed RTCR. Burden is defined at 5 CFR 1320.3(b) and means the total ti me, effort, and financial resources required to generate, maintain, retain, disclose, or provide in formation to or for a federal agency. The burden
includes the time needed to conduct the following state and PWS activities:Economic Analysis for the Proposed RTCR 8-3 June 2010 

### State activities:

• Read and understand the rule;

• Mobilize (including primacy appli cation), plan, and implement;

• Train PWS and consultant staff;

• Track compliance;

• Analyze and review PWS data;

• Review sampling plans and recommend any revisions to PWSs;

• Make determinations concerning PWS monitoring requirements;

• Respond to PWSs with positive samples;

• Recordkeeping;

• Review completed assessment forms and consult with the PWS about the assessment report;

• Review and coordinate with PWSs to determine optimal corrective actions to be implemented; and

• Provide consultation, review public notific ation certifications, a nd file reports of
violations.

PWS activities:

• Read and understand the rule;

• Planning and mobilization activities;

• Revise existing sampling plans to identify sampling locations and collection schedules that are representative of water throughout the distribution system;

• Conduct routine, additional rou tine, and repeat monitoring;

• Complete a Level 1 Assessment if the PWS experiences a Level 1 trigger, and
submit a timetable to the state to identif y sanitary defects detected, corrective actions completed, and a timetable for any corrective actions not already completed;

• Complete a Level 2 Assessment if the PWS experiences a Level 2 trigger, and submit a timetable for any corrective actions not already completed;Economic Analysis for the Proposed RTCR 8-4 June 2010 

### • Correct sanitary defects found through th e performance of Level 1 or Level 2
assessments;

• Develop and distribute Tier 1 public notices when E. coli MCL violations occur;

• Develop and distribute Tier 2 public no tices when the PWSs failed to take corrective action; and

• Develop and distribute Tier 3 public notic es when the PWSs failed to comply with the monitoring requirements or with mandatory repo rting of required information within the specified timeframe.

For the first three y ears after publication of the final rule in the Federal Register , the major information requirements apply to 154,89 4 respondents. The total incremental burden associated with the change in moving from the information requirements of the current TCR to those in the proposed RTCR over the three year s covered by the ICR is 2,518,878 hours, for an average of 839,526 hours per year. The total incr emental cost over the three year clearance period is $71.3 million, for an average of $23.8 million per year (simple average over three years). (The ICR estimate is higher than what is presented in the Economic Analysis (EA) for the proposed rule because in the EA, the up-front costs that occur in the first three years, as well as future costs, are annualized ove r a 25-year time horizon.) The av erage burden per response (i.e., the amount of time needed for each activity that requires a collection of information) is 5.4 hours; the average cost per res ponse is $153.4. The collection re quirements are mandatory under SDWA (42 U.S.C. 300h et seq. ). Detail on the calculation of the proposed rule information collection burden and costs can be found in the ICR for the Proposed RTCR and Chapter 7 of this EA. A summary of the burdens and costs of the proposed collection is presented in Exhibit
8.1 below.

Exhibit 8.1 Average Annual Net Change Burden and Costs for the Proposed RTCR Information Collection Request

Annual Labor
Cost Annual O&M
Cost Annual Capital
Cost Total Annual
Cost
PWSs 747,848 $ 20,171,639 $ - $ - $ 20,171,639 103,225

States and Territories 91,678 $ 3,595,421 $ - $ - $ 3,595,421 51,669

TOTAL 839,526 $ 23,767,060 $ - $ - $ 23,767,060 154,894 Respondent Type Annual Burden
Hours Cost

Annual Responses

Notes: Detail may not add exactly to total due to independent rounding. “Annual Burden Hours” reflects an annual average for all system size s over the 3-year ICR period. Source: ICR for the proposed RTCR (USEPA 2010b).



### An agency may not conduct or sponsor, a nd a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.Economic Analysis for the Proposed RTCR 8-5 June 2010 

### To comment on EPA’s need for this information, the accuracy of the provided burden estimates, and any suggested methods for minimi zing respondent burden, EPA has established apublic docket for this proposed rule, which includes this ICR, under Docket ID number EPAHQ-OW-2008-0878. Submit any comments related to the ICR to EPA and OMB. See ADDRESSES section at the beginning of this notice for where to submit comments to EPA.
Send comments to OMB at the Office of Info rmation and Regulatory Affairs, Office of Management and Budget, 725 17th Street, NW, Wa shington, DC 20503, Attention: Desk Officer for EPA. Since OMB is required to make a deci sion concerning the ICR between 30 and 60 days
after [INSERT DATE OF PUBLICATION IN THE FEDERAL REGISTER] , a comment to OMB is best assured of having its full effect if OMB receives it by [INSERT DATE 30 DAYS AFTER PUBLICATION IN THE FEDERAL REGISTER] . The final rule will respond to any OMB or public comments on the information collection requirements contained in this proposal.



## 8.4. The Regulatory Flexibility Act

The RFA generally requires an agency to pr epare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifie s that the rule will not have a significant economic impact on a substantial number of sm all entities. Small en tities include small businesses, small organizations, a nd small governmental jurisdictions.

The RFA provides default definitions for each type of small entity. Small entities are defined as: (1) a small business as defined by the Small Business Administration’s (SBA) regulations at 13 CFR 121.201; (2) a small governme ntal jurisdiction that is a government of a city, county, town, school district, or special di strict with a population of less than 50,000; and (3) a small organization that is any "not-for-pro fit enterprise which is independently owned and operated and is not dominant in its field." Howeve r, the RFA also authorizes an agency to use alternative definitions for each category of small entity, “which are approp riate to the activities of the agency” after proposing the alternative definition(s) in the Federal Register and taking comment. 5 USC 601(3) - (5). In addition, to esta blish an alternative small business definition, agencies must consult with SBA’s Chief Counsel for Advocacy.

For purposes of assessing the impacts of the proposed RTCR on small entities, EPA considered small entities to be PWSs serving fewer than 10,000 people. This is the cut-off level specified by Congress in the 1996 Amendments to the SDWA for small system flexibility provisions. As required by the RFA, EPA proposed using this alternative definition in the Federal Register (63 FR 7620, February 13, 1998), requested public comment, consulted with the SBA, and finalized the alternative definiti on in the Consumer Confidence Reports regulation (63 FR 44524, August 19, 1998). As stated in that Fi nal Rule, the alternative definition would be applied for all future drinking water regulations.

After considering the economi c impacts of today’s proposed rule on small entities, I certify that this action will not have a significant economic imp act on a substantial number of small entities. The small entities directly regulated by this proposed rule are small PWSs serving fewer than 10,000 people. These include small community water systems (CWSs), non-transient noncommunity water systems (NTNCWSs), a nd transient noncommunity water systems (TNCWSs), entities such as municipal water systems (publicly and privately owned), andEconomic Analysis for the Proposed RTCR 8-6 June 2010 

### privately-owned PWSs and for profit businesses wh ere provision of water may be ancillary, such as mobile home parks, day care centers, chur ches, schools and homeowner associations. We have determined that only 61 of 150,672 small sy stems (0.04 percent) will experience an impact of more than one percent of revenues, and that none of the small systems will experience an impact of three percent or greater of revenue. Exhibit 8.2 provides a summary of the numbers and percentages of small systems for which costs exceed one percent of revenues, by size category and system type using a three percent discount rate. Exhibit 8. 3 provides a summary of the average costs to average revenues on a per system basis.

Exhibit 8.2 Average Annualized Revenue by System Size and Percent of Systems with Costs Exceeding One Percent and Three Percent of Revenue (Three Percent Discount Rate)

Total
Systems Average Revenue/

System 1% of

Revenue Systems Exceeding

1% of

Revenue Percent of
Systems Exceeding

1% of

Revenue 3% of

Revenue Systems Exceeding

3% of

Revenue Percent of
Systems Exceeding

3% of

Revenue A B C=B*0.01 D E=D/A F=B*0.03 G H=G/A

< 500 29,150 199,000 $ 2,000 $ 60 0.21% 6,000 $ 0 0.00%

501 ‐ 4,100 15,021 1,114,000 $ 11,000 $ 0 0.00% 33,000 $ 0 0.00%

4,101 ‐ 10,000 3,672 4,432,000 $ 44,000 $ 1 0.03% 133,000 $ 0 0.00%

< 500 15,942 3,075,000 $ 31,000 $ 0 0.00% 92,000 $ 0 0.00%

501 ‐ 4,100 2,690 11,793,000 $ 118,000 $ 0 0.00% 354,000 $ 0 0.00%

4,101 ‐ 10,000 80 61,663,000 $ 617,000 $ 0 0.00% 1,850,000 $ 0 0.00%

< 500 81,311 1,811,000 $ 18,000 $ 0 0.00% 54,000 $ 0 0.00%

501 ‐ 4,100 2,735 3,192,000 $ 32,000 $ 0 0.00% 96,000 $ 0 0.00%

4,101 ‐ 10,000 71 11,280,000 $ 113,000 $ 0 0.00% 338,000 $ 0 0.00%

All <10,000 150,672 N/A N/A 61 0.04% N/A 0 0.00%

System

Type System

Size

CWS

NTNCWS

TNCWS

Sources: (A) SDWIS 2007 (B) Average CWS revenues from 2006 CWSS survey. Average NTNCWS and TNCWS revenues calculated based on representative revenues for specific business categorizations (Appendix I provides additional detail.) (D, G) Number of systems with costs exceeding one pe rcent and three percent of revenue calculated based on distributions of costs for each rule component by system size compared to the average revenues. 

### A s a function of calculations in the cost model, fract ional system counts may be generated. Anal yses in the exhibit are based only on whole system counts. (Appendix I provid es additional detail.) Consistent with the rest of the EA, the population break is at 4,100 people rather than 3,300. This population break was based on T CRDSAC deliberations and consideration that concluded that breaking out the analysis at the 4,100 point would be mo st informative because of changes in the rule provisions at the 4,100 people poi nt. (Chapter 4 provides further detai l on data selection and size break outs.)Economic Analysis for the Proposed RTCR 8-7 June 2010 

### Exhibit 8.3 Average Costs per System and as Percentage of Revenue (2007$)

Number

of
Systems Average

Annual

Net Cost/

System Average Revenue/

System 1 

### Average Annual

Net Costs as a Percentage of

Revenue A B C D=(B/C)*100

< 500 

### 126,403 57 $ 1,599,00 0 $ 0.004%

501 ‐ 4,100 20,446 43 $ 2,797,000 $ 0.002%

4,101 ‐ 10,000 3,823 262 $ 5,757,000 $ 0.005%

All PWSs
<10,000 150,672 60 $ 1,867,000 $ 0.003% System

Size

1 Includes water revenues and non

‐ water revenues (e.g., revenues related to the primary

entities that operate a water system to support their business or municipal general revenue for publicly owned and operated systems).



### Although this proposed rule will not have a significant economic im pact on a substantial number of small entities, EPA nonetheless has trie d to reduce the impact of this rule on small PWSs. Provisions in the proposed RTCR that re sult in reduced costs for many small entities
include:

• Reduced routine monitoring for qualifying PWS serving 1,000 or fewer people.

• Reduced number of repeat samples required.

• Reduced additional routine monitoring for PWS serving 4,100 or fewer people.

• Reduced public notification requirements for all systems, including small systems.

For some PWSs, cost savings may be offset in whole or in part by increased costs of more stringent assessment requirements, stricter rules for qualifying for reduced monitoring, or performing specific corrective actions. Additiona lly, seasonal PWSs are subject to increased monitoring.

A description of activities that small systems perform under the proposed RTCR for each rule component is provided in Section 7.4 of this EA along with the associated change in cost. Exhibit 8.4 below provides the distribution of to tal costs to small entities by rule component. Underlying these estimates are EPA’s assumptions regarding the types of corrective actions that will be implemented and the number of small PW Ss predicted to implement each type. These assumptions are detailed in Appendix D of this EA.Economic Analysis for the Proposed RTCR 8-8 June 2010 

### Exhibit 8.4 Annualized Net Rule Costs Predicted for Small Entities (PWSs serving

≤ 10,000) by Rule Component Using Three Percent and Seven Percent Discount Rates (2007$)

Rule Component Net Costs at 3% Net Costs at 7%
Rule Implementation 2,673,000 $ 3,849,000 $
Revising Sampling Plans 535,000 $ 755,000 $

Routine Monitoring 4,120,000 $ 3,799,000 $
Additional Routine Monitoring (2,750,000) $ (2,631,000) $
Repeat Monitoring (193,000) $ (186,000) $

Site Inspections - $ - $

Level 1 Assessment 414,000 $ 401,000 $

Level 2 Assessment 172,000 $ 179,000 $
Correction Actions based on Level 1 Assessments 4,712,000 $ 4,055,000 $
Correction Actions based on Level 2 Assessments 2,542,000 $ 2,255,000 $
Public Notification (2,789,000) $ (2,675,000) $

Total 9,435,000 $ 9,801,000 $ Source: Derived from cost model outputs (Appendix C).



### EPA also conducted outreach to small entiti es and convened a Small Business Advocacy Review (SBAR) Panel to obtain advice and reco mmendations of representatives of the small entities that potentially would be subject to the proposed rule's requirements. EPA consulted with small entity representatives before and during the review by the Panel. These small entity representatives included represen tatives from small water systems of various types and sizes, representatives from associations that assist and /or advocate for small systems, and federal agencies that operate small systems. Panel me mbers included representa tives from OMB, SBA,
and the EPA Office of Ground Water and Drinki ng Water. The consultation led to the development of a report providing recommendati ons to EPA on how to revise the TCR to address small system concerns, which EPA considered in drafting this proposed RTCR (SBAR Panel 2008). EPA also made presentations to th e advisory committee on the recommendations of the Panel so the advisory committee could cons ider their recommendati ons in developing the Agreement in Principle ( 

### AIP).

Consistent with the RFA/SBREFA requireme nts, the Panel evaluated the assembled materials and small-entity comments on issues and prepared a final report to the EPA Administrator. A copy of the Panel report is in cluded in the docket for this proposed rule. The proposed rule is consistent with the Panel recommendations to use total coliforms as a trigger for investigation and/or corrective ac tion, to balance monitoring requir ements and costs with risk, to further differentiate requirements based on di fferences in water systems, to coordinate requirements with other related rules, and to consider reportin g and recordkeeping costs in estimating burden. Consistent with the Panel recommendation to evaluate which parameters are most appropriate for routine monitoring and as po tential triggers for investigative and corrective actions, EPA is conducting a review of ex isting methods for total coliform and E. coli analysis and is evaluating its Alternative Test Pro cedure protocol for a pproving new methods as described in section III.9 of the proposed RT CR preamble. EPA is also one of the foundingEconomic Analysis for the Proposed RTCR 8-9 June 2010 

### members of a Research and Information Collectio n Partnership, described in section V of the proposed RTCR preamble, which is considering research and information needs to evaluate the magnitude of risks and potential risk mitigation options related to potential distribution system
contamination.

EPA further reviewed the potential impacts of the AIP option on small entities in terms of the assumption incorporated into SDWA major rulemakings th at households or residential
water users are most vulnerable to cost increases 1 

### (SBAR Panel 2008). In an Assessment of the Vulnerability of Noncommunity Water Systems to SDWA Cost Increases (USEPA, 2008d), EPA
considered the burden of SDWA rule costs in comparison to the average revenues of various categories of noncommunity water systems. A ll of the NCWS categorie s reviewed were found
to be less vulnerable to SDWA-re lated increases than a typical hous ehold. The report notes that in some categories of businesses, costs are more easily passed on to the customer base than in others. However, in each NCWS category, expenditures on wate r were found to be a relatively small percentage of total re venues. In nearly all cases , water expenditures (including expenditures for sewer service and miscellaneous other utilities) to taled less than one percent of total revenues, and were not more than 1.3 perc ent of total revenues for any category. Several caveats were put forth in this report, includ ing one that considered the potential for underestimating the impact to golf courses, wh ich were grouped in w ith other recreational entities whose use of water was less significant to the core business than the golf courses. Despite the significant caveats listed, the repo rt strongly suggests that TNCWS and NTNCWS should not be considered partic ularly vulnerable to operating co st increases resulting from SDWA rulemakings.

The consistency of many of the aspects of the AIP option with the recommendations of the SBAR Panel further support th at the formulation of the proposed RTCR EA is conducive to minimizing net impacts on small entities that will be affected by the rule. Overall, the economic analysis summarized in Exhibit 8. 2 shows that net cost increase s from the AIP option over time
are low relative to revenue. Based on this resu lt, EPA certifies that there will not be a significant impact on a substantial number of small entities under the AIP option.



## 8.5. Unfunded Mandates Reform Act

The UMRA seeks to protect state, local, and tribal governments from the imposition of unfunded federal mandates. In addition, the Act s eeks to strengthen the partnership between the federal government and state, lo cal, and tribal governments and ensure that the federal government covers the costs incurred dur ing compliance with federal mandates.

Title II of the UMRA of 1995, Public Law 104-4, establishes requirements for federal agencies to assess the effects of their regulator y actions on state, local, and tribal governments and the private sector. Under section 202 of UMRA, EPA genera lly must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “federal mandates” that may result in expenditures to state, local, an d tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year.

1 Major SDWA rulemakings generally include a section in the Economic Analysis that presents an analysis of costs of the rule per household.Economic Analysis for the Proposed RTCR 8-10 June 2010 

### Before promulgating an EPA rule for which a written statement is needed, section 205 of UMRA generally requires EPA to identify a nd consider a reasonable number of regulatory options and adopt the least costly, most cost-e ffective or least burdens ome option that achieves the objectives of the rule. The provisions of sect ion 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an option other that the least costly, most cost-effective or least burdensome option if the Administrator publishes with the final rule and explanation w hy that option was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal gove rnments, it must have developed under section 203 of UMRA a small government agency plan. Th e plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA re gulatory proposals with significant federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

This proposed rule does not contain a federa l mandate that may result in expenditures to state, local, and tribal governments, in the aggr egate, or to the private sector, of $100 million or more in any one year. Expenditures associated wi th compliance, defined as the incremental costs beyond the current TCR, will not surpass $100 million in the aggregate in any year. Thus, this proposed rule is not subject to the requi rements of sections 202 and 205 of UMRA.

This proposed rule is also not subject to the requirements of section 203 of UMRA because it contains no regulatory requirements that might significantly or uniquely affect small governments. Costs to small entities are generally not significant, as de scribed previously in
Section 8.3 and in section VII. C of the proposed RTCR preamble. The regulatory requirements of the proposed RTCR are not unique to small govern ments, as they apply to all PWSs regardless
of size.



## 8.6. Executive Order 13132: Federalism

Executive Order 13132, entitled “Federalis m” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by state and local officials in the development of regulatory policie s that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that
have “substantial direct effects on the states, on the relations hip between the national government and the states, or on the distri bution of power and re sponsibilities among the various levels of government.”

This action does not have federalism implica tions. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government as specified in Executive Order 13132. The net change in cost for state, local, and tribal governments in the aggregate is es timated to be approximately $0.1M and $0.4M at three percent and seven percent discount rates, respectively. Thus, Executive Order 13132 does not apply to this proposed rule.Economic Analysis for the Proposed RTCR 8-11 June 2010 

### Although section 6 of Executive Order 13132 does not apply to the proposed RTCR, EPA conducted a federalism consultation, consis tent with Executive Order 13132, in July 2008. The consultation included a stakeholder meeting where EPA requested comments on the impacts of the potential revisions to the TCR with resp ect to state, county and local governments. EPA did not receive any comments in response to th is consultation. In addition, the advisory committee included representatives of state, local and tribal g overnments, and through this process EPA consulted with state, local, and trib al government representatives to ensure that
their views were considered when the AIP recommendations for the RTCR were developed.

In the spirit of Executive Order 13132, and consistent with EPA policy to promote
communications between EPA and state and lo cal governments, EPA specifically solicits comment on this proposed action from state and local officials.



## 8.7. Executive Order 13175: Co nsultation and Coordinati on with Indian Tribal Governments

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) , requires EPA to develop an accountable process to ensure “meaningful and timely inpu t by tribal officials in the development of regulatory policies that have tribal implications .” The Executive Order defines “policies that have tribal implications: to incl ude regulations that have “substan tial direct effects on one or more Indian tribes, on the relationship between th e federal government and the Indian tribes, or on the distribution of power and responsibilitie s between the federal government and Indian
tribes.”

Under Executive Order 13175, EPA may not issue a regulation that has tribal implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the federal government provides the funds necessary to pay the direct compliance costs incurred by tribal governments, or EPA consults with tribal officials early in the process of developing the proposed regulation and devel ops a tribal summary impact statement.

This action does not have tribal implicat ions, as specified in Executive Order 13175. Because the requirements of the proposed RTCR as defined by the AIP option are estimated to result in low net cost increases (or in many cases , net cost savings) compared to the existing TCR requirements, the AIP option is not anticipated to have a negative impact on tribal PWSs. Thus, Executive Order 13175 does not apply to this action.

Although Executive Order 13175 does not apply to this action, EPA consulted with tribal officials in developing this action. EPA has c onsulted with tribal governments through the EPA American Indian Environmental Office, included a representative of the Native American Water Association on the advisory committee which developed recommendations regarding the proposed rule and signed the AIP, and has addres sed tribal concerns th roughout the regulatory development process, as appropriate. The consul tation included participation in three tribal conference calls (EPA regional tribal call (February 2008), National Indian Workgroup call (March 2008), and National Tribal Water Conf erence (March 2008)). EPA requested comments on the current TCR, requested suggestions for current TCR revisions (March 2008), and presented possible revisions to the current TCR to the National Tribal Council (April 2008). In addition, the advisory committee included entitie s representing tribal governments, and throughEconomic Analysis for the Proposed RTCR 8-12 June 2010 

### this process EPA ensured that their views were considered when the AIP recommendations for the RTCR were developed. None of these consultati ons identified issues that were particular to tribal entities. As a result of the tribal consultations and other tribal outreach, EPA has determined that the proposed RTCR is not anticipated to have a negative impact on tribal systems. Thus, Executive Order 13175 does not apply to this action.

EPA specifically solicits additional comment on this proposed action from tribal officials.



## 8.8. Executive Order 13045: Pr otection of Children fro m Environmental Health Risks and Safety Risks

Executive Order 13045 (62 FR 19885; April 23, 1997) applies to any ru le initiated after April 21, 1998, that (1) is determined to be “economically significant” as defined under Executive Order 12866; and (2) concerns an environm ental, health, or safety risk that EPA has reason to believe may have a disproportionate e ffect on children. If the regulatory action meets both criteria, EPA must evaluate the environmental, health, or safety effects of the planned rule on children, and explain why the pl anned regulation is preferable to other potentially effective and reasonably feasible options considered by EPA.

The proposed RTCR is not subject to Executive Order 13045 because it is not economically significant as defined in Executiv e Order 12866. This action’s health and risk
assessments are contained in section VI.K.1 of the proposed RTCR preamble and Chapter 6 of the EA. This EA uses a qualitative approach in assessing the changes in risk anticipated for each regulatory option relative the baseline (current TCR). EPA expects that the proposed RTCR would provide additional protect ion, through the additional asse ssments and corrective action required, to both children and adults who co nsume drinking water supplied from PWSs. EPA
also assumes that the benefits of the proposed rule, includ ing reduced health risk, will disproportionally accrue more to children becau se young children are more susceptible than
adults to some waterborne illnesses and are more likely to experience more serious effects from infection. For example, the risk of mortality resul ting from diarrhea is often greatest in the very young and elderly (Rose 1997; Gerba et al. 1996), and viral and bacterial illnesses often disproportionately affect children. Any overall benefits of th e rule would reduce this mortality
risk for children.

The public is invited to submit comments or id entify peer-reviewed studies and data that assess effects of early life exposure to dri nking water that contains fecal contaminants.



## 8.9. Executive Order 13211: A ction Concerning Regulati ons That Significantly Affect Energy Supply, Di stribution, or Use

Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply Distribution, or Use” (66 FR 28355; May 22, 2001), provides that agencies shall prepare and submit to the Administrator of the Office of Information and Regulatory Affairs, OMB, a Statement of Energy Effects for certain actions identified as “significant energy actions.” Section 4(b) of Executive Order 13211 defines “significant energy actions” as “any action by an agency (normally published in the Federal Register ) that promulgates or is expected to lead to the promulgation of a final rule or regulation, including noti ces of inquiry, advanceEconomic Analysis for the Proposed RTCR 8-13 June 2010 

### notices of proposed rulemaking, and notices of pr oposed rulemaking: (1)(i) that is a significant regulatory action under Executive Order 12866 or any succ essor order, and (ii) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (2) that is designated by
the Administrator of the Office of Information and Regulatory Affairs as a significant energy
action.”

The proposed RTCR is not a “significant en ergy action” as defined in Executive Order 13211, because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy. This proposed rule is not a significant regulatory act ion under Executive Order 12866, and has not been designated by the Admini strator of the Office of Information and Regulatory Affairs as a signifi cant energy action, for the reasons described as follows.

Energy Supply

The proposed RTCR does not regulate power gene ration, either directly or indirectly, and public and private PWSs that the proposed RTCR applies to do not, as a rule, generate power. Further, the energy cost increases borne by customer s of PWSs as a result of the AIP option are a low percentage of the total cost of water. Th erefore, power generation utilities that purchase water as part of their operations are unlikely to face any significant effects as a result of the AIP option.

Energy Distribution

The proposed RTCR does not regulate any aspe ct of energy distribu tion and PWSs that are regulated by the proposed RTCR already have elec trical service. The rule is not expected to increase peak electricity demand at PWSs. Therefore, EPA assumes that the existing connections are adequate and that the AIP op tion has no discernable ad verse effect on energy
distribution.

Energy Use

Because the proposed RTCR modifies existing regulations, very few PWSs are expected to make modifications or changes that will al ter energy use patterns. Therefore, EPA does not expect any noticeable effect on th e national levels of power generation in terms of average and peak loads.



## 8.10. National Technology Trans fer and Advancement Act

Section 12(d) of the NTTAA of 1995, P ublic Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standa rds in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical . Voluntary consensus standards are technical standards (e.g., mate rials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when
EPA decides not to use available and a pplicable voluntary co nsensus standards.

The proposed RTCR involves technical volunta ry consensus standards. EPA proposes to use several analytical methods to monitor for tota l coliforms and/or E. coli as they are describedEconomic Analysis for the Proposed RTCR 8-14 June 2010 

### in Standard Methods for the Examination of Water and Wastewater, 20 th and 21st editions (Clesceri et al. 1998; Eaton et al. 2005). Methods included in St andard Methods are voluntary consensus standards. The proposed rule includes 11 methods that can be used to test for total coliform, four of which are described in Standard Methods.

EPA welcomes comments on this aspect of the proposed rulemaking and, specifically, invites the public to identify potentially-applicab le voluntary consensus st andards and to explain why such standards should be used in this regulation.



## 8.11. Executive Order 12898: Fe deral Actions to Address Environmental Justice in Minority Populations an d Low-Income Populations

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice. It s main provision directs federal ag encies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission. Agencies must do this by identifying and addressing as appropriate any dispr oportionately high and
adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has determined that this proposed ru le will not have disproportionately high and
adverse human health or environmental effects on minority or low-income populations because it
increases the level of environm ental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population. The proposed RTCR applies uniformly to all PWSs. Consequently, the proposed RTCR provides h ealth protection equally to all income and minority groups served by PWSs. The proposed RTCR and other drinking water regulations are expected to have a positive effect on human health regardless of the social or economic status of a specific population. To the extent that contaminants in drinking water might be disproportionately high among minority or low- income populations (which is unknown), the proposed RTCR contributes toward removing those differences by assuring that all PWSs meet drinking water standards and take appropriate co rrective action whenever appropriate. Thus, the proposed RTCR meets the intent of the federal policy requiring incorpora tion of environmental justice into federal agency missions.



## 8.12. Consultations with the Science Adviso ry Board, National Drinking Water Advisory Council, and the Secretary of Health and Human Services as Required by Section 1412 (d) and (e) of the SDWA

In accordance with section 1412 (d) and (e) of the SDWA, EPA consulted with the Science Advisory Board (SAB), National Drinki ng Water Advisory Coun cil (NDWAC), and the Secretary of the US Department of Health and Human Services on the proposed RTCR.

EPA met with the SAB Drinking Water Committee (DWC) and considered their recommendations in developing data requirements to better understand th e impacts of the RTCR. In response to the SAB DWC recommendations, EPA also conducted sensitivity analyses, to explore a wider range of assump tions regarding the percentage of assessments leading to
corrective actions and to demonstrate that us ing an annual average fo r occurrence providedEconomic Analysis for the Proposed RTCR 8-15 June 2010 

### results comparable to varying the occurrence based on the season. In addition, EPA added an exhibit in the EA that summarizes all signifi cant model parameters and assumptions, their influence on variability and uncer tainty, and their most likely eff ect on benefits or costs. A copy of the SAB report (SAB 2010) is availabl e in the docket for the proposed RTCR.

EPA also consulted with NDWAC and consid ered their recommendations in developing the public notification requirements for the proposed rule.

EPA completed its consultation with the US Department of Health and Human Services, as required by SDWA section 1412(d). In additi on, EPA provided an informational briefing to the Food and Safety Group of the Food and Drug Administration.

Details about EPA’s consultations with SA B, NDWAC, and the US Department of
Health and Human Services can be found at Section VII.K of the proposed RTCR preamble.



## 8.13. Impacts on Sensitive Su bpopulations as Required by Section 1412(b)(3)(c)(i)
of the 1996 Amendments to the Safe Drinking Water Act (SDWA)

EPA is required to seek public comment regarding the effects of contamination associated with the proposed RTCR on the general population and se nsitive subpopulations. Sensitive subpopulations include “infants, children, pregnant women, the elderly, individuals with a history of serious illness, or other subpopu lations that are identified as likely to be at greater risk of adverse health e ffects due to exposure to contamin ants in drinking water than the general population” (SDWA section 1412(b)(3 )(C)(i)(V), 42 U.S.C 300g-1(b)(3)(C)(i)(V)).

Pregnant and lactating women may be at an in creased risk from pathogens as well as act
as a source of infection for newborns. Inf ection during pregnancy ma y also result in the
transmission of infection from the mother to the ch ild in utero, during birth, or shortly thereafter. Since very young children do not have fully devel oped immune systems, they are at increased risk and are particularly difficult to treat.

Infectious diseases are also a major probl em for the elderly because immune function declines with age. As a result, outbreaks of wate rborne diseases can be devastating on the elderly community (e.g., nursing homes) and may increa se the possibility of significantly higher mortality rates in the elderly th an in the general population.

Immunocompromised individuals are a grow ing proportion of the population with the
continued increase in HIV/AIDS , the aging population, and the escalation in organ and tissue transplantations. Immunocompromised individuals are more susceptible to severe and invasive
infection. These infections are particularly difficult to treat and can result in a significantly higher mortality than in immunocompetent persons.

It is anticipated that the requirements of the proposed RTCR will help reduce pathways of entry for fecal contamination and/or waterborne pathogens into the distribution system, thereby reducing exposure and risk from these contaminan ts in drinking water to the entire general population. The proposed RTCR seeks to provide a similar level of drinking water protection to all groups including sensitive subpopulations, thus meeting the intent of this federal policy.Economic Analysis for the Proposed RTCR 8-16 June 2010 

## 8.14. Plain Language as Required by Executive Order 12866

Executive Order 12866 requires each agency to write its rules in plain language. Readable regulations help th e public find requirements quickly and understand them easily. Readable regulations may also increase comp liance, strengthen enforcement, and decrease mistakes, frustration, phone calls, appeals, a nd distrust of government. EPA has made every effort to write this preamble to the proposed ru le in as clear, concise, and unambiguous manner as possible. EPA requests comments on how to im prove rule language to enhance readability and
make it easier to understand.Economic Analysis for the Proposed RTCR 9-1 June 2010 

## 9. Comparison of Benefits and Costs

9.1 

## National Benefits and Costs of the AI P Option Considered in Comparison to the Current Total Coliform Ru le and Alternative Option

The Environmental Protection Agency (EPA) is proposing a regulator y option consistent with the Total Coliform Rule/Distribution Sy stem Advisory Committee (TCRDSAC) Agreement in Principle (AIP) for the Revised Total Colifo rm Rule (RTCR) (the AIP option). The primary discussion of costs and benefits in this chapte r focuses on the requirements of the AIP option in comparison to the current Total Coliform Rule (TCR) and the Alternative option considered.

The primary benefit of the AIP option is to fu rther reduce the risk of fecal contamination of public drinking water from the current baseline risk under the existing TCR. The indicator of this benefit that is most feasible to predict is the reduction in E. coli occurrence in Public Water Systems (PWSs). As a fecal contamination indicator, E. coli can also co-occur with other pathogenic organisms shed in feces, such as viruse s, bacteria, and pathogenic protozoa at a rate that is not quantified. 1 

### EPA believes that a reduction in E. coli occurrence, together with other AIP option actions, will result in reduced PW S fecal contamination and may facilitate a consequent reduction in endemic and epidemic waterborne disease in the United States.

The current TCR mandates sampling for total coliforms (TC) and E. coli in PWSs in the U.S. However, under the current TCR, PWSs that encounter samples testing positive for E. coli have the option to implement an effective long- term corrective action, a short-term corrective action, or they can choose not to implement a ny corrective action. This wide variability in
effectiveness of corrective acti ons increases the potential for exposure to fecally-contaminated drinking water when the response to E. coli occurrence is inadequate or ineffective.

EPA proposes to augment the current TCR with, among other components, the requirement for systems to implement mandatory assessments and corrective actions. PWSs would be required to conduct eith er a Level 1 or Level 2 assessm ent, depending on the severity of a trigger (based on TC vs. E. coli and the number of triggers). As described in Chapter 3, the Level 1 and 2 assessments require a PWS to more formally pursue the cause of a non-acute or acute violation, and to address the problem with an appropriate corrective action. It is the combination of these two requirements (assessmen ts and corrective actions ) from which most of
the net benefits and costs of the AIP option would derive.

A significant amount of the costs of the additional activities required under the AIP option would be offset by the reduced costs fr om some decreases in monitoring (additional routine and repeat) and Public Notification (P N). The decreases in monitoring may limit the ability of PWSs to identify E. coli positive samples at the levels found under the current TCR when using the same monitoring techniques. Howe ver, predictive modeling results show that significantly more contamination ev ents will be prevented by assessments that lead to additional corrective actions under the AIP option than wo uld be missed by reduced additional routine and

1 Chapter 2 of this EA provides examples of waterborne pathogens that can occur in PWSs. Also, Edberg, R. (2000) discusses the use of E. coli as an indicator of drinking water quality.Economic Analysis for the Proposed RTCR 9-2 June 2010 

### repeat monitoring for systems serving 4,100 or fewer people. 2 

### Some of this reduction in both monitoring and costs would be offset by the incr ease in routine monitoring predicted for systems serving 1,000 or fewer people because fewer syst ems are likely to qualify for reduced monitoring based on the more stringent re quirements under the AIP option 3



### .

Further cost reductions may be achieved by th e requirement for a mandatory sampling plan under the AIP option, which would increase mon itoring efficiency by having the operator submit a planned approach, including re gular sampling sites that are representative of the water throughout the distribution system. The plan may al so specify repeat sample locations that may, if approved by the State, satisfy source water sa mpling requirements as well; this benefit would likely apply to some of the PWSs with limited or no distribution systems.

These increases in routine monitoring,along with more efficient monitoring based on approved monitoring plans, are expected to increas e the ability of PWSs to detect EC a larger percentage of the time when it is present. This increase in detection will be partially offset by reductions in additional routine and repeat monito ring. For the reasons discussed this chapter and in analyses and discussion presented throughout this Economic Analysis (EA), EPA concludes that the AIP option will improve public health protection compared to the current TCR.

The Alternative option considered in this EA would provide benefits equal to or greater than the AIP option in terms of decreased risk of PWSs delivering contaminated water to the public and subsequent decreases in potential health risks. Ho wever, monitoring costs under the Alternative option would increase significantly, particularly for small systems, causing a significant challenge to the effective implementation of the Alternative option.

The remainder of this chapter provides furthe r detail on the costs and benefits and how they compare under the AIP and Alternative options:

y National benefits (Section 9.1.1)

y National costs (Section 9.1.2)

y Uncertainty and nonquantified benefits (Section 9.2)

y Comparison of regulatory alternatives in cost/benefit terms (Section 9.3)

2 Chapter 6 of this EA explores the trade-off in a stepwise analysis of the risk benefit resulting from implementation of assessments resulting in corrective actions vs. the potent ial increase in risk due to decreased sampling frequency. That analysis concludes that for each type of system a nd size category, the AIP would avoid a larger number of acute events than it would fail to diagnose.

3 Chapter 5 (Section 5.3) includes a description of the determination of PWS sampling frequencies that are applicable beginning in year 6 following RTCR promulgation.Economic Analysis for the Proposed RTCR 9-3 June 2010 

### 9.1.1. National Benefits of the Regulatory Options Considered

The benefit analyses performed in this EA and summarized in this section consider the net changes in TC and E. coli occurrence under the AIP option as compared to the current TCR 4



### . In promulgating the RTCR as defined by the AIP op tion, EPA expects to further reduce the risk of contamination of public drinking water from th e current baseline risk under the existing TCR. The options considered during develo pment of this proposed rule and analyzed as part of this EAare designed to achieve this reduction while maintaining public health protection in a costeffective manner.

This section examines the benefits in term s of trade-offs between compliance with the current TCR and the AIP and Alternative opti ons. Based on limitations in available data (described further in Chapter 6, Section 6.3), EPA determined that benefits could not be calculated in terms of avoided cases of (or cost s related to) morbidity or mortality. EPA used several methods to qualitatively evaluate the benefits of the AIP option. The qualitative evaluation uses both the judgment of EPA as in formed by the TCRDSAC deliberations as well as quantitative estimates of changes in TC occurrence and counts of systems implementing corrective actions. The evaluation characterizes, in relative terms, the reduction in risk for each regulatory scenario as compar ed to baseline conditions.

Since E. coli is an indicator of fecal contamina tion, EPA assumed that a decrease in E. coli occurrence in the distributi on system would be associated with a decrease in fecal contamination in the distribution system. In genera l, this decrease in feca l contamination should reduce the potential risk to human health for PWS customers. Thus, any reduction in E. coli occurrence is considered a benefit of the propos ed RTCR. Also, since fecal contamination may contain waterborne pathogens including bacteria, vi ruses, and parasitic protozoa, in general, a reduction in fecal contamination should also re duce the risk from these other contaminants.

As presented in Exhibit 4.9, the percentage s of samples that are positive for TC and E. coli are generally higher for PWSs serving 4,100 or fewer people than those serving more than 4,100 people. PWSs with higher TC and E. coli occurrence are more likely to be triggered into
assessments and corrective action. As discussed previously, EPA believes that the assessments
and corrective action will lead to a decrease in TC and E. coli occurrence. Because the PWSs serving 4,100 people or fe wer have a higher initial E. coli occurrence and will be triggered into
more assessments and corrective actions than la rger PWSs, the increase in benefits for these small systems will be more evident as compared to the larger systems. In particular, model results suggest that customers of small ground water Transient Noncommunity Water Systems (TNCWSs), which constitute approximately 30% of PWSs, would experience the most obvious benefit under the AIP option. That is, the occurrence of E. coli is predicted to decrease more for TNCWSs than for other systems types.

As discussed above, because there was in sufficient data on th e co-occurrence of E. coli and waterborne pathogens, it was not possible to quantify the adverse health effects in the human population served by PWSs. Thus, EPA employed a qualitative approach as the primary method for analyzing the expected change in exposure to fecal contamination based on each individual

4 The “current TCR” is the baseline used in the RTCR EA, and consists of the rule components and resulting activities of the 1989 TCR with effects of the Ground Water Rule (GWR) implementation in 2010 incorporated. Chapter 4 of this EA presents information used to devel op this baseline, and Chapter 5 (Section 5.3.1) describes how the occurrence and predictive model incorporates the GWR effects.Economic Analysis for the Proposed RTCR 9-4 June 2010 

### rule component. The qualitative analysis considers the antici pated changes in sampling and corrective action regimens and estimates the co rresponding anticipated re duction or increase in exposure to fecal contamination. Because the re duced exposure to fecal contamination conveys inadequate information about pathogen exposure, the analysis in this section is a hazard analysis rather than a risk analysis. Nevertheless, because the intent is to reduce risk by reducing hazard (potential exposure to fecal contamination and/or waterborne pathogens), risk is used as the discussion endpoint. Section 9.1.1.1 below summarizes the results of the qua litative analysis, and Chapter 6 (Section 6.2) presents this information in more detail.

Although a qualitative analysis was th e primary method employed for analyzing potential changes in risk, quantitative measures were used to support the qualitative conclusions, providing additional perspective on potential cha nges in risk. In particular, EPA considered modeled predictions of the reductions in the numbe rs of violations/assessment triggers and of the
number of corrective actions to be performed as they may relate to risk. Section 9.1.1.2 below discusses the predicted changes in these outcomes. More detailed discussions of the predictive model and analyses results are pr esented in Chapters 5 and 6.

9.1.1.1. Qualitative Comparison – Relative Risk s of the AIP and Alternative Options Compared to Baseline

When revising an existing drinking water regul ation, one of the main concerns is to ensure that backsliding on water quality and public health protection does not occur. Risk reduction for the AIP option is characterized by th e activities performed th at are presumed to reduce risk of exposing the public to contaminated water. Thes e activities are considered under each rule component presented in Exhibit 9.1b. Under repeat and additional routine monitoring provisions for both rule options, th ere is a potential to contribute to increased risk for PWS customers because TC monitoring frequency may be reduced for some PWSs. However, this increase in risk is expected to be more than o ffset by potential decreases in risk from increased routine monitoring and the addition of the assess ments and corrective action provisions that will find and fix problems identified by monitoring.

Exhibit 9.1a illustrates the predicted reduced frequency at which TC-positives occur subsequent to the implementation of the AIP and Alternative options. TC o ccurrence is used as a surrogate for indicating the existence of potentia l pathways through which waterborne pathogens may enter a PWS. Exhibit 9.1a illustrates the co mbined effects on TC occurrence resulting from changes in monitoring and the eff ects of assessments and corrective actions for the different rule options illustrated. The relative trends evident in Exhibit 9.1a for TNCWSs also pertain to other PWS categories as illustrated in Chapter 5 of proposed RTCR EA. EPA chose to include the characterization for TNCWSs because they repres ent the system category of largest influence on the national impacts.Economic Analysis for the Proposed RTCR 9-5 June 2010 

### Exhibit 9.1a Ground Water (GW) Transi ent Noncommunity Water System TC Occurrence

0 0.005

0.01 0.015

0.02 0.025

0.03 0.035

0.04 0.045

0 5 10 15 20 25 30 35AnnualTCPositiveAssaysRate

Years TCR No GWR

TCR

AIP

Alt

Note: 1) Six Year 2005 TC-positive occurrence is repr esentative of all GW TNCWS. The rate presented may underestimate the occurrence for systems serving 25-4,100 individuals. 2) Graph shows the 30-year modeled period discussed in Ch. 5. Model years 3 – 27 represent the 25-y ear period of analysis for this EA. Model year 11 begins the steady state, during which system s that qualified for reduced monitoring are now sampling on their reduced schedules. The criteria and timing of this monitoring adjustm ent is discussed in Section 5. 3.2.2 of this EA. 3) The results represented by the curves for TCR, AIP, and Alt all incorporate the effects of the GWR.



### The effect that the proposed changes to publ ic notification requirements for monthly/nonacute MCL violations have on risk is difficult to predict. Some factors, such as reduction in available public information and possible PWS comp lacency, lead to a potential increase in risk and other factors, such as less confusion (PN more in line with potential health risks) and PWSs resources used more efficiently, lead to a potenti al decrease, as discussed in Exhibit 9.1b. This change to PN is addressing a key concern expressed by various stakeholders in the advisory committee and during the Six-Year Review 1 comme nt solicitation process. By eliminating the requirement and replacing it with assessment a nd corrective action requi rements, the Agency expects less public confusion, more effective use of resources, and increased transparency. Other proposed rule components are expected to have a negligible effect on ri sk. However, the overall effect of the proposed RTCR is expected to be a further reduction in risk from the current baseline risk under the current TCR. Chapter 6 presents a detailed disc ussion of the potential influence on health risk for each proposed rule component.Economic Analysis for the Proposed RTCR 9-6 June 2010Exhibit 9.1b Potential Changes in Risk under the AIPand Alternative Options Relative to the Current TCRProposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskAIP optionAlternativeoption AIP optionAlternativeoption AIP optionAlternativeoptionImplementationActivitiesNone None None None No change No changeRoutineMonitoring(IncludingReducedMonitoring)None NoneIncreased stringencyin requirements toqualify for reducedmonitoring along withrequirement to returnto baselinemonitoring upon lossof these criteria isexpected to result indecreased risk (i.e.,fewer PWSs willqualify and thereforemore will monitormore frequently).PWSs all monitormonthly in the first fewyears of implementationof the RTCR, which is anincrease in samplingfrequency for systemsthat monitor quarterly orannually under thecurrent TCR. After thefirst few years, systemsmay reduce to quarterly,but none may reduce toannual monitoring,creating a decrease inrisk for systems onannual monitoring underthe current TCR.Decrease DecreaseEconomic Analysis for the Proposed RTCR 9-7 June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskRepeatMonitoringRequired repeatsamples reducedfrom 4 to 3 forsystems serving<1,000 peopleRequired repeatsamplesreduced from 4to 3 for systemsserving <1,000peopleNone None Increase IncreaseAdditionalRoutineMonitoringAdditional routinesamples are nolonger required forPWSs monitoringmonthly.Ground waterPWSs serving≤1,000 peoplewould reduceadditional routinesamples from 5 to3.Additionalroutine samplesare no longerrequired forPWSsmonitoringmonthly.Ground waterPWSs serving≤1,000 peoplewould reduceadditionalroutine samplesfrom 5 to 3.None None Increase IncreaseAnnualInspectionsNone (onlystatescurrentlyperforming annualinspections areexpected tocontinue)Based ondiscussions withstakeholders,states thatcurrentlyconduct annualsiteassessmentsunder thecurrent TCRmay no longerhave theNone (onlystatescurrently performingannual inspectionsare expected tocontinue)None No change IncreaseEconomic Analysis for the Proposed RTCR 9-8 June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskresources tocontinue theinspections andconductquarterlymonitoringunder theAlternativeoption.Assessments None NoneMandatoryassessments are anew requirement.Mandatory assessmentsare a new requirement.Decrease DecreaseCorrectiveActionsNone NoneMandatory correctiveactions are a newrequirement.Mandatory correctiveactions are a newrequirement.Decrease DecreasePublicNotification –Monthly/NonAcute MCLViolationsReduction inavailable publicinformationPossible PWScomplacencyReduction inavailable publicinformationPossible PWScomplacencyLess confusion (PNmore in line withpotential health risks)PWS resources usedmore efficientlyLess confusion (PNmore in line withpotential health risks)PWS resources usedmore efficientlyUnknown UnknownEconomic Analysis for the Proposed RTCR 9-9 June 2010Proposed RuleComponentFactors Leading to a PotentialIncrease in RiskFactors Leading to a Potential Decrease inRiskOverall Predicted Change inRiskPublicNotification –Monitoring andReportingViolationsNone NoneIncreased stringencyof PNs motivatesPWSs to conductrequired sampling.Increased stringency ofPNs motivates PWSs toconduct requiredsampling.Decrease DecreaseOverall Decrease DecreaseNote: Detailed discussion of the rationale for determinations of potential risk for each rule component is presented in Ch. 6(Section 6.2) of this EA. Implementationactivities consist of administrative activitiesby PWSs and states to implement the rule.Assessment of potential changes in risk for monitoring components is anoverallassessment. Potential changes (or static state) of riskfor particular system sizesand types differ according to individual regulatory requirementsand are discussed in Section 6.2. Chapter 3 provides a detailed description of the regulatorycomponents for all three regulatory scenarios, and the preamble to the RTCR provides additional discussion of the TCRDSAC process and the rationale underlyingthe structure of the regulatory options considered.Economic Analysis for the Proposed RTCR 9-10 June 2010 

### 9.1.1.2. Comparison of Quantified Benefits between Baseline and AIP and Alternative Options

The quantified portion of the benefits analysis fo cuses on several measures that contribute to the changes in risk expected under the AIP option. Specifically, EPA modeled the predicted outcomes based on each regulatory option considered – baseline (current TCR), the AIP option, and the Alternative option – in th e form of estimates of non-acute violations for the current TCR and assessment triggers for the AIP and Alternative options; E. coli violations; and the number of corrective actions implemented under each option.

This section presents a summary of the es timated impacts of both regulatory options considered in comparison to the current TCR. Evaluation of each of these endpoints informed EPA’s understanding of potential changes to the underlying quality of drinking water. In particular, the number of correc tive actions performed has a strong relationship to potential improvements in water quality and public health. For a given level of TC and E. coli occurrence, an increase in the number of corrective actions implemented would lead to improved water quality. However, a reduction in samp ling leads to a reduction in TC and E. coli positives being found, which in turn leads to a reduction in assessments and corrective actions being implemented. The number of TC and E. coli positives that are preven ted, missed, or found under each regulatory option considered in comparis on to those predicted under the current TCR
results in estimates of annual non-acute and acute violations (current TCR) and assessment triggers (AIP and Alternative options). Section 6.4 of this EA presents a step-wise uncertainty analysis of the competing effects of additiona l protective activity (assessments and corrective actions) and decreased additional routine and rep eat sampling of the regulatory alternatives compared to the current TCR. The results of th is uncertainty analysis showed that for all categories of systems, more TC and E. coli positives would be prevented than missed.

For each of the graphs presented in Exhib it 9.2 through Exhibit 9.7 there are two main model drivers that impact the endpoints depicted ; the total number of samples taken over time (including routine, additional routine, and repeat ) and corrective actions taken. When looking at the comparisons between the TCR with the AIP option across all PWSs, the overall impact of the total numbers of samples taken is negligible becau se the total number of samples predicted to be taken throughout the period of analysis is almo st the same (approximately 82 million samples) under both the TCR and AIP option, as shown in Exhibits 6.2 – 6.4 of this EA. For the Alternative option, the analysis predicts that almost 87 million total samples will be taken over the period of analysis. Based on the relationships of total samples taken between the TCR, AIP option, and Alternative option, the best way to inte rpret the graphs presented in this section is in a step-wise manner.

The first comparison is between the TCR and proposed RTCR as defined by the AIP option. Because similar total numbers of samples are ta ken under each, the major effect seen in the graphs can be isolated to the effects that implementation of corrective actions will have on underlying occurrence and how that occurrence in fluences the endpoint in question. In each graph, this is depicted by a marked reduction in the endpoint under the AIP option compared to
the TCR and is a reflection of overall better wa ter quality. The second comparison can then be made of the Alternative option against the AI P option. In each graph, the endpoints for theEconomic Analysis for the Proposed RTCR 9-11 June 2010 

### Alternative option are above those for the AIP op tion and represent an a dditional benefit over the AIP option. This additional benefit is a primarily a function of the additional diagnostic abilities gained through increased monitori ng under the Alternative option, a nd is especially prominent in the early years of the analysis when all syst ems are required to mon itor at least monthly.

More detailed descriptions of each endpoint co nsidered in terms of the evaluation process described previously are provided in this secti on as they apply to the individual graphs in Exhibits 9.2 through 9.7. The graphs shown in th is section are presente d first in nondiscounted terms and then based on a discount rate of 3% to reflect the reduced valuation of potential benefits over time, consistent with the presentation of costs in th e section that follows. Graphs of benefits discounted using 7% discount rates are presented in Appendix B to this EA.

Exhibit 9.2 shows the effect (on average acro ss all PWSs) of the AIP and the Alternative options on the annual number of non-acute viol ations (assessment triggers under the AIP and Alternative options) over time. The estimated redu ction of approximately 1,000 trigger events in moving from the current TCR option to the AIP option is a net result from the following effects described previously in this section: improve d water quality (events prevented); retained diagnostic power (events found), which in turn lead s to prevention of some future events; and reduced diagnostic power (missed events). The am ount of this reduction would be some amount lower if the analysis could account for events where contamination was present but not diagnosed (“missed” events). This is why a sim ilar, but smaller, reduction from the current TCR is seen under the Alternative op tion. During the first 9 years of sampling under the AIP option and Alternative option sampling re gimens, diagnostic power under th e Alternative option is at a maximum based on the “All-monthly” sampling re quirement. In year 9, following a 5-year period of assessment 5 

### , all systems that qualified for reduced monitoring begin sampling according to their new regimens. This is the star t of the relatively steady state of the period of analysis, driven by the static nature of the per centages of systems followi ng monthly, quarterly, or annual sampling regimens throughout the remai nder of the analysis (years 9 through 25). Trigger events under the Alterna tive option remain at a higher steady state than under the AIP option based on the increased diagnostic ability provided by more frequent sampling under the Alternative option. The additional number of tr iggers identified by increased sampling under the Alternative option translate into greater potential benefits th an those under the AIP option.

Exhibit 9.3 shows the effect (on average across all PWSs) of the AIP option and the Alternative option with respect to acute ( E. coli ) violations found over the 25-year period of analysis in comparison to the current TCR. Th e overall reduction in annual acute violations under the AIP option of more than 100 events is a measure that should correlate more closely with expected benefits (i.e., reductions in adve rse health outcomes) than non-acute violations
because acute violations are a di rect result of measurement of E. coli in water. Again a similar, but smaller, reduction is seen under the Alternativ e option after steady state is achieved. This is the result of two off-setting effects. The “true” number of steady state violations under the Alternative option is lower, because there is a greater likelihood that violations will be found and fixed. However, the additional monitoring leads to a higher percentage of violations being detected. This second effect outweig hs the first, so that the total number of detected violations in

5 The assessment period is 3 years for CWSs, and CWSs begin sampling on their reduced regimens in year 7 after promulgation.Economic Analysis for the Proposed RTCR 9-12 June 2010 

### the steady state is higher than for the AIP, even though the underlying “true” number of
violations is lower. This lower number of “tru e” violations means that the Alternate option is more protective of public health, even though more violations are detected.

Exhibit 9.4 presents estimates over the 25-ye ar period of analysis of the increase in corrective actions (on average across all PWSs) attr ibutable to the regulatory options considered. The performance of these additional corrective acti ons is expected to result in the most direct benefits under the AIP option. Because only th e numbers of corrective actions estimated under the AIP option and Alternative option net of those estimated under the current TCR were modeled, the reference point for comparison to the current TCR is the base (zero) line in the graph. The RTCR EA assumes that corrective actions are being performed under the current TCR. These are taken into account by assuming only a modest net increase in effective corrective actions implemented, calculated as 10% of assessments performed under each regulatory alternative that are net of those performed under the current TCR.

Exhibit 9.4 indicates that more corrective actions would be implemented under the Alternative option than under the AIP option. This is driven, ag ain, by the increased diagnostic power of more sampling and reflects additional potential benefits beyond those gained under the AIP option. However, not quantified are the num bers of corrective act ions that would be identified by the annual inspections required to qualify for annual monitoring under the AIP option but not under the Alternativ e option. Inclusion of the add itional corrective actions taken under the AIP option due to the annual inspect ion requirement could narrow the difference between the potential benefits of th e Alternative option and AIP option.

Taken together, Exhibits 9.2 – 9.4 indicate that the modeled endpoints for the AIP option and Alternative option pred ict positive benefits in comparison to the current TCR; in particular, the Alternative option would captu re more benefits than the AIP option. These outcomes are consistent with the qualitative assessment of th e benefits summarized in Section 9.1.1.1 above.

The assessment based on Exhibits 9.5 – 9.7 is also consistent with the qualitative analysis
in Section 9.1.1.1: For each of the discounted endpoints presented over ti me in Exhibits 9.5 – 9.7, the graphs show that (on average across all PWSs) the Alternativ e option would provide more benefits than the AIP option, and both prov ide more benefits than the current TCR. The major difference between the AIP option and Altern ative option is the increased monitoring that would be required under the Altern ative option. The increased di agnostic ability of the extra samples taken under the Alternative option is seen in the large difference in the endpoint counts through the first several y ears in the graphs below. Absent this effect, the Alternative option would mirror the AIP option in the graphs. Thus, even though the predicted endpoints are greater than the current TCR at first, it is due to initially finding more problems through monitoring. This would reflect a frontloading of benefits unde r the Alternative option at the beginning of the implementation period. The benefits, however, w ould tend to even out over time between the AIP option and Alternative option as eligible systems qualify for less frequent (quarterly) monitoring under the Al ternative option.Economic Analysis for the Proposed RTCR 9-13 June 2010 

### Exhibit 9.2 Estimates of Non-Acute Vi olations (TCR) and Level 1 Assessment Triggers (AIP and Alternative Options)

5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000 14,000

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Non-Acute Violations (TCR) and Level 1 Assessment Triggers (AIPand Alt Options) (Nondiscounted Values)

Time (Years) TCR - Non-Acute Violations

AIP Option - Level 1 Assessment Triggers

Alt Option - Level 1 Assessment Triggers

Source: Proposed RTCR occurrence model output.

Notes: 1) The X-axis begins at Year 4 after rule promulgation, wh ich is the first year under full implementation of the AIP or Alternative options

.
2) The annual rates of non-acute violations (TCR) and Level 1 assessment triggers (AIP and Alternative options) as predicted by the model reach a steady st ate beginning in approximately Year 9, by which time PWSs that would be expected to meet the criteria for reduced monitoring would have begun it.

3) Non-acute violations/Level 1 assessment triggers are predicted to be lower under the AIP option because, although both options are preventing c ontamination events as discussed in Sect ion 6.4 of this EA, the Alternative option is finding more because of its increased sampling and correspondingly higher diagnostic power.Economic Analysis for the Proposed RTCR 9-14 June 2010 

### Exhibit 9.3 Estimates of Acute Violations (TCR) and E. coli MCL Violations (AIP and Alternative Options)

400 500 600 700 800 900 1,000 1,100 1,200 1,300

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Acute Violations (TCR) andE. coliMCL Violations (AIP and AltOptions) (Nondiscounted Values)

Time (Years) TCR - Acute Violations

AIP Option - E. coli MCL Violations

Alt Option - E. coli MCL Violations

AIP Option ‐ E. coli MCL Violations

Alt Option ‐ E. coli MCL Violations

Source: Proposed RTCR occurrence model output.

Notes: 1) X-axis begins at Year 4 after rule promulgation, whic h is the first year under full implementation of the AIP or Alternative options

.
2) The annual rates of acute violations (TCR) and EC viol ations (AIP and Alternative options) as predicted by the model reach steady state in a pproximately Year 9, by which time PWSs th at would be expected to meet the criteria for a reduced monitoring schedule would have begun it. Estim ates represent the annual num ber of acute violations found by each option and the TCR.

3) Acute violations are predicted to be lower under the AIP option because, althoug h both options are preventing contamination events as discussed in Se ction 6.4 of this EA, the Alternative option is finding more because of its increased sampling and correspondingly higher diagnostic power.Economic Analysis for the Proposed RTCR 9-15 June 2010 

### Exhibit 9.4 Estimates of Corrective Actions

500 600 700 800 900 1,000 1,100 1,200 1,300 1,400 1,500 1,600

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Corrective Acitons (Nondiscounted Values)

Time (Years) AIP Option - Corrective Actions

Alt Option - Corrective Actions

Source: Proposed RTCR occurrence model output.

Notes: 1) X-axis begins at Year 4 after rule promulgation, which is the first year under full im plementation of the AIP option or Alternative option

. The annual rates of corrective actions as predic ted by the model reach a steady state beginning approximately in Year 9, by which time PWSs that would be expected to meet the cr iteria for reduced monitoring would have begun it.

2) Includes L1 and L2 corrective actions. All corrective action s performed are in addition to activity under the current TCR, which does not require correctiv e actions. Therefore the current TC R is not included in this graph.

3) Corrective actions are predicted to be higher under the Alternative option because, although both options are preventing contamination events as discussed in Section 6. 4 of this EA, the Alternative option is finding more because of its increased sampling and correspondingly higher diagnostic power.Economic Analysis for the Proposed RTCR 9-16 June 2010 

### Exhibit 9.5 Discounted Estimates of N on-Acute Violations (TCR) and Level 1 Assessment Triggers (AIP and Alte rnative Options) (3% Discount Rate)

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 10,000 11,000 12,000 13,000

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Non-Acute Violations (TCR) and Level 1 Assessment Triggers (AIPOption and Alt Option) (Present Value, 3% Discount Rate)



### Time (Years) TCR - Non-Acute Violations

AIP Option - Level 1 Assessment Triggers

Alt Option - Level 1 Assessment Triggers

Source: Proposed RTCR occurrence model output.

Notes: 1) X-axis begins at Year 4 after rule promulgation, which is the first year under full im plementation of the AIP option or Alternative option

.
2)The annual rates of non-acute violations (TCR) and Level 1 assessment triggers (AIP and Alternative options) as predicted by the model reach a steady st ate beginning in approximately Year 9, by which time PWSs that would be expected to meet the criteria for reduced monitoring would have begun it.

3) Non-acute violations/Level 1 assessment triggers ar e predicted to be lower under the AIP option because, although both options are preventing c ontamination events as discussed in Sect ion 6.4 of this EA, the Alternative option is finding more because of its increased sampling and correspondingly higher diagnostic power.Economic Analysis for the Proposed RTCR 9-17 June 2010 

### Exhibit 9.6 Discounted Estimates of Acute Violations (TCR) and E. coli MCL Violations (AIP and Alternat ive Options) (3% Discount Rate)

0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Acute Violations (TCR) andE. coliMCL Violations (AIP Option andAlt Option) (Present Value, 3% Discount Rate)



### Time (Years) TCR - Acute Violations

AIP Option - E. coli MCL Violations

Alt Option - E. coli MCL Violations

Source: Proposed RTCR occurrence model output.

Notes: 1) X-axis begins at Year 4 after rule promulgation, which is the first year under full im plementation of the AIP option or Alternative option

.
2) The annual rates of acute violations (TCR) and EC violations (AIP and Alternative options) as predicted by the model reach steady state in a pproximately Year 9, by which time PWSs th at would be expected to meet the criteria for reduced monitoring would have begun it.

3) Acute violations are predicted to be lower under the AIP option because, althoug h both options are preventing contamination events as discussed in Se ction 6.4 of this EA, the Alternative option is finding more because of its increased sampling and correspondingly higher diagnostic power.Economic Analysis for the Proposed RTCR 9-18 June 2010 

### Exhibit 9.7 Discounted Esti mates of Corrective Actions (3% Discount Rate)

0 100 200 300 400 500 600 700 800 900 1,000 1,100 1,200 1,300 1,400

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Corrective Acitons (Present Value, 3% Discount Rate)



### Time (Years) AIP Option - Corrective Actions

Alt Option - Corrective Actions

Source: Proposed RTCR occurrence model output.

Notes: 1) X-axis begins at Year 4, which is the first year under full implementation of the AIP or Alternative options

.
2) Includes L1 and L2 corrective actions. The annual rates of corrective actions as predicted by the model reach a steady state beginning in approximately Year 9, by which time PWSs that woul d be expected to meet the criteria for reduced monitoring would have begun it. All corrective actions performed are in addition to activity under the current TCR, which does not require correctiv e actions. Therefore the current TC R is not included in this graph.

3) Corrective actions are predicted to be higher under the Alternative option because, although both options are preventing contamination events as discussed in Section 6. 4 of this EA, the Alternative option is finding more because of its increased sampling and correspondingly higher diagnostic power.Economic Analysis for the Proposed RTCR 9-19 June 2010 

### 9.1.2 National Cost Summary

To understand the net impacts of the AIP op tion on public water systems and states, EPA first used available data, information, and best professional judgment to characterize how PWSs and states are currently implementing the current TCR. Then, EPA considered the net change in costs that would result from implementing the AI P option or Alternative option as compared to the costs of continuing with the current TCR. The objective was to provi de the net change in costs resulting from revisions to the current TCR rather than absolute totals. The exhibits below present this net change in costs several different ways to help analyze the impacts of the AIP option.

Costs are estimated for different PWS types a nd size categories (eight size categories are used based on population served) us ing unit costs developed in the Technology and Cost Document for the Proposed Revised Total Coliform Rule (USEPA, 2010d). Cost analyses for PWSs include estimates to implement the rule; to revise sampling plans; to conduct routine monitoring, additional routine monitoring, and re peat monitoring; to perform Level 1 and Level 2 assessments and implement corrective actions; and to provide public notification in the case of violations. State cost analyses include estimates of the labor burdens that states would incur, including staff training on RTCR requirements a nd conducting annual administration, reviewing monitoring reports, reviewing and approving corr ective action plans, and for recordkeeping. Chapter 7 of this EA provides detailed discus sion on the underlying cost -buildup for each rule component analyzed within the cost model.

Considering costs over time, Exhibits 9.8 through 9.10 show that most of the cost difference between the AIP option and Alternative option will be experienced in the first 8 years after promulgation. Nevertheless, the costs of the AIP option remain lower than those of the Alternative option throu ghout the period of analysis. The lo wer costs of the AIP option are driven by the monitoring requirements of the re spective options (e.g., AIP option allows annual monitoring for qualifying PWSs while the Alte rnative option requires at least quarterly monitoring for all PWSs).

Exhibit 9.11 presents the total and net cha nge in costs for the TCR and the regulatory options considered for both systems and states. The estimated net change in costs is relatively small for PWSs and states on a national level; fo r the AIP option, total costs would increase from the current TCR by approximately 7%, or $14 m illion (using a 3 percent discount rate). The Alternative option, based on the increased sampling regimen, increases total costs from baseline by approximately 15%, or about $27 million (using a 3 percent discount rate). Given these relatively low net costs, both options are below th e threshold of a “significant regulatory action” under Executive Order 12866. The approximate $13 million difference between the two options, and the net cost of each option, are not particul arly large in absolute terms compared to a threshold for economic significance of $100 million annually.

As shown in Exhibit 9.11, the largest portion of the net cost increase is borne by PWSs, which incur approximately 99% of the proposed re vised rule’s net annualiz ed present value costs (using a 3 percent discount rate). States are ex pected to incur the remaining costs. PWS costs represent only a 7% and 15% increase, respectivel y, for the AIP option and Alternative option, inEconomic Analysis for the Proposed RTCR 9-20 June 2010 

### costs over those estimated for the current TCR. By comparison, state costs are expected to increase by 16% and 32% of the TCR costs under the AIP and Alternative options, respectively; however, state costs remain relatively low in abso lute terms. The higher net change in PWS costs reflects the potential impact on the subsets of PWSs (primarily small TNCWSs) that would be most affected by the RTCR under either regulatory option. Exhibit 9.13 s hows that the greatest cost impact is on the smallest subset of TNCW Ss, for whom the net change is more than double under the Alternative option as comp ared to the AIP option. The fr ont loading of costs (shown in Exhibits 9.8 through 9.10) would further amp lify the impacts on small TNCWSs during this period.

Comparison of Costs of the Re gulatory Options Considered

EPA estimated the net change in costs of the AIP and Alternative options as compared to the baseline (current TCR).

Exhibit 9.12 presents the total and net cha nge in costs to PWSs and states by rule component for each of the regulat ory alternatives considered. Fo r PWSs, the main driver of
additional costs under the alternatives would be additional corrective actions and increases in routine monitoring. Offsetting the cost increase ar e reductions in costs for additional routine and repeat monitoring and PN.

For states, the main drivers of net cost incr eases are reviews of re vised sampling plans. states are expected to see a reduction in costs for assess ment activities and PN, although they would experience an overall estimated increase in net costs of $0.1 million and $0.3 million, respectively, for the AIP and Alternative options . The additional costs associated with the Alternative option would result from the increas ed sampling (and reporting) frequency under that option, and the resulting increase in assessments and corrective actions.

Exhibit 9.13 presents the total and net change in costs to PWSs by system size and type. For PWSs, the most significant total net cost im pact is for the smallest category of TNCWSs (serving ≤ 100 people). Approximately 38% of the ne t cost increase under the AIP option is estimated to fall on these systems. This is an im portant factor in evalua tion of potential impacts when comparing regulatory options.Economic Analysis for the Proposed RTCR 9-21 June 2010 

### Exhibit 9.8 Net Costs to PWSs (2007$)

$210.00 $220.00 $230.00 $240.00 $250.00 $260.00 $270.00

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Nondiscounted Costs ($Millions,2007$)

Time (Years) TCR

AIP Option

Alternative Option

Source: Proposed RTCR occurrence model output.

Note: X-axis begins at Year 4, which is the first y ear of implementation of the AIP or Alternative options

. Steady state begins in approximately Year 9, by which time PWSs that would be expected to meet the criteria would have qualified for and would begin reduced monitoring.Economic Analysis for the Proposed RTCR 9-22 June 2010 

### Exhibit 9.9 Discounted Net Costs to PW Ss Over Time (3% Discount Rate) (2007$)

$100.00 $110.00 $120.00 $130.00 $140.00 $150.00 $160.00 $170.00 $180.00 $190.00 $200.00 $210.00 $220.00 $230.00 $240.00 $250.00

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Costs ($Millions, 2007$, Present Value, 3% Discount Rate)

Time (Years) TCR

AIP

Alternative Option

Source: Proposed RTCR cost model.

Note: X-axis begins at Year 4, which is the first y ear of implementation of the AIP or Alternative options

. Steady state begins in approximately Year 9, by which time PWSs that would be expected to meet t he criteria would have qualified for and would begin reduced monitoring.Economic Analysis for the Proposed RTCR 9-23 June 2010 

### Exhibit 9.10 Discounted Net Costs to PWSs (7% Discount Rate) (2007$)

$30.00 $55.00 $80.00 $105.00 $130.00 $155.00 $180.00 $205.00 $230.00

4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25Costs ($Millions, 2007$, Present Value, 7% Discount Rate)

Time (Years) TCR

AIP

Alternative Option

Source: Proposed RTCR cost model.

Note: X-axis begins at Year 4, which is the first y ear of implementation of the AIP or Alternative options

. Steady state begins in approximately Year 9, by which time PWSs that would be expected to meet the criteria would have qualified for and would begin reduced monitoring.Economic Analysis for the Proposed RTCR 9-24 June 2010 

### Exhibit 9.11 Comparison of Total and Net Change in Annualized Present Value Costs ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total 185 $ 0.9 $ 186 $ 178 $ 0.9 $ 179 $

AIP - Total 199 $ 1.1 $ 200 $ 191 $ 1.3 $ 192 $ AIP - Net Change 14 $ 0.1 $ 14 $ 13 $ 0.4 $ 14 $ AIP - Percent Change 7% 16% 7% 7% 48% 8% Alternative Option - Total 212 $ 1.2 $ 213 $ 207 $ 1.5 $ 209 $ Alternative Option - Net Change 27 $ 0.3 $ 27 $ 29 $ 0.6 $ 30 $ Alternative Option - Percent Change 15% 32% 15% 16% 67% 17% 3% Discount Rate 7% Discount Rate

Source: Proposed RTCR cost model.

Note: 1) Detail may not add due to independent rounding.

2) Annualized costs are greater using t he 7% than 3% discount rate for the Alte rnative option. This occurs because the costs under the Alternative option are front-loaded in the 25-year time period due to the all-monthly sampling requirement (which doesn’t occur under the AIP option). Discounting a given stream using 3% and 7% will always result in a higher present value using 3%; annualization of an identical value (any value) using 3% and 7% would result in a higher value under 7%. Depending on how cost s accrue over the period, and how long the period is, one effect will be stronger than the other. Generally, the discou nting effect is stronger, res ulting in the pa ttern commonly seen where the 3% annualized amount is greater than the 7% one. However, in cases like the Alternative option where the costs accrue faster early in the time period, t he annualization effect can more than compensate for the discounting effect, resulting in a higher annualized value under 7% compared to 3%.Economic Analysis for the Proposed RTCR 9-25 June 2010 

### Exhibit 9.12 Comparison of Total and Net Change in Annualized Present Value Costs by Rule Component ($Millions, 2007$)

PWSs State Total PWSs State Total

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ AIP - Net Change 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ Alternative Option - Total 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $ Alternative Option - Net Change 2.77 $ 0.18 $ 2.95 $ 4.00 $ 0.26 $ 4.26 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ AIP - Net Change 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ Alternative Option - Total 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $ Alternative Option - Net Change 0.59 $ 0.42 $ 1.01 $ 0.84 $ 0.59 $ 1.42 $

TCR - Total 170.59 $ - $ 170.59 $ 163.94 $ - $ 163.94 $

AIP - Total 174.71 $ - $ 174.71 $ 167.74 $ - $ 167.74 $ AIP - Net Change 4.12 $ - $ 4.12 $ 3.80 $ - $ 3.80 $ Alternative Option - Total 186.34 $ - $ 186.34 $ 181.49 $ - $ 181.49 $ Alternative Option - Net Change 15.75 $ - $ 15.75 $ 17.56 $ - $ 17.56 $

TCR - Total 3.87 $ - $ 3.87 $ 3.72 $ - $ 3.72 $

AIP - Total 1.12 $ - $ 1.12 $ 1.09 $ - $ 1.09 $ AIP - Net Change (2.75) $ - $ (2.75) $ (2.63) $ - $ (2.63) $ Alternative Option - Total 0.68 $ - $ 0.68 $ 0.58 $ - $ 0.58 $ Alternative Option - Net Change (3.18) $ - $ (3.18) $ (3.14) $ - $ (3.14) $

TCR - Total 5.11 $ - $ 5.11 $ 4.91 $ - $ 4.91 $

AIP - Total 4.82 $ - $ 4.82 $ 4.64 $ - $ 4.64 $ AIP - Net Change (0.29) $ - $ (0.29) $ (0.27) $ - $ (0.27) $ Alternative Option - Total 5.50 $ - $ 5.50 $ 5.45 $ - $ 5.45 $ Alternative Option - Net Change 0.39 $ - $ 0.39 $ 0.54 $ - $ 0.54 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total

- $ - $ - $ - $ - $ - $ AIP - Net Change

- $ - $ - $ - $ - $ - $ Alternative Option - Total

- $ - $ - $ - $ - $ - $ Alternative Option - Net Change

- $ - $ - $ - $ - $ - $

TCR - Total 1.13 $ 0.21 $ 1.34 $ 1.08 $ 0.21 $ 1.29 $

AIP - Total 1.63 $ 0.20 $ 1.84 $ 1.57 $ 0.20 $ 1.77 $ AIP - Net Change 0.50 $ (0.01) $ 0.49 $ 0.49 $ (0.01) $ 0.48 $ Alternative Option - Total 1.73 $ 0.23 $ 1.95 $ 1.69 $ 0.22 $ 1.91 $ Alternative Option - Net Change 0.60 $ 0.01 $ 0.61 $ 0.60 $ 0.02 $ 0.62 $

TCR - Total 0.70 $ 0.26 $ 0.96 $ 0.68 $ 0.25 $ 0.93 $

AIP - Total 0.90 $ 0.19 $ 1.09 $ 0.88 $ 0.18 $ 1.06 $ AIP - Net Change 0.20 $ (0.07) $ 0.12 $ 0.20 $ (0.07) $ 0.13 $ Alternative Option - Total 1.23 $ 0.28 $ 1.51 $ 1.27 $ 0.30 $ 1.57 $ Alternative Option - Net Change 0.52 $ 0.02 $ 0.55 $ 0.60 $ 0.05 $ 0.65 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 9.17 $ 0.01 $ 9.18 $ 7.77 $ 0.01 $ 7.77 $ AIP - Net Change 9.17 $ 0.01 $ 9.18 $ 7.77 $ 0.01 $ 7.77 $ Alternative Option - Total 9.39 $ 0.01 $ 9.40 $ 8.01 $ 0.01 $ 8.02 $ Alternative Option - Net Change 9.39 $ 0.01 $ 9.40 $ 8.01 $ 0.01 $ 8.02 $

TCR - Total

- $ - $ - $ - $ - $ - $

AIP - Total 2.72 $ 0.00 $ 2.72 $ 2.41 $ 0.00 $ 2.41 $ AIP - Net Change 2.72 $ 0.00 $ 2.72 $ 2.41 $ 0.00 $ 2.41 $ Alternative Option - Total 3.53 $ 0.01 $ 3.53 $ 3.36 $ 0.01 $ 3.37 $ Alternative Option - Net Change 3.53 $ 0.01 $ 3.53 $ 3.36 $ 0.01 $ 3.37 $

TCR - Total 3.75 $ 0.44 $ 4.19 $ 3.60 $ 0.42 $ 4.03 $

AIP - Total 0.26 $ 0.06 $ 0.33 $ 0.26 $ 0.06 $ 0.32 $ AIP - Net Change (3.49) $ (0.38) $ (3.87) $ (3.35) $ (0.36) $ (3.71) $ Alternative Option - Total 0.34 $ 0.08 $ 0.42 $ 0.35 $ 0.08 $ 0.43 $ Alternative Option - Net Change (3.41) $ (0.36) $ (3.77) $ (3.26) $ (0.34) $ (3.60) $ Repeat Monitoring

Site Inspections

Level 1 Assessment

Corrective Actions based on Level 1 Assessments 3% Discount Rate 7% Discount Rate

Routine Monitoring

Corrective Actions based on Level 2 Assessments Level 2 Assessment Additional Routine Monitoring

Revising Sampling Plans

Rule Implementation

Public Notification

Notes: 1) Detail may not add due to independent rounding.

2) For modeling purposes, additional routine sample counts include regular routine samples taken in the same month.

3) The “Site Inspections” component has $0 cost because it’s not required by the rule. A PWS may request a site visit by the state as part of the process of moving towards qualifying for reduced monitoring.Economic Analysis for the Proposed RTCR 9-26 June 2010 4) Not all TCR components are quantified. For components not quantified for the TCR, the AIP and Al ternative option totals include only an estimate of the net increase for those same rule components (e.g., corrective action costs).

Source: Proposed RTCR cost model.



### Exhibit 9.13 Total and Net Change in A nnualized Costs to PWSs by PWS Size and Type ($Millions, 2007$)

TCR - Total AIP - Total AIP - Net Alternative Option - Total Alternative Option - Net TCR - Total AIP - Total AIP - Net Alternative Option -

Total Alternative Option - Net

A B C=B-A D E=D-A F G H=G-F I J=I-F

≤ 100 $7.4 $7.5 $0.1 $7.6 $0.2 $7.1 $7.3 $0.2 $7.4 $0.3
101-500 $9.0 $9.3 $0.3 $9.4 $0.4 $8.6 $9.1 $0.4 $9.2 $0.6
501-1,000 $3.7 $3.8 $0.0 $3.8 $0.1 $3.6 $3.7 $0.1 $3.7 $0.1
1,001-4,100 $13.2 $13.6 $0.3 $13.6 $0.3 $12.7 $13.1 $0.4 $13.1 $0.4
4,101-33,000 $42.4 $44.7 $2.3 $44.7 $2.3 $40.7 $42.7 $2.0 $42.7 $2.0
33,001-96,000 $34.9 $36.4 $1.5 $36.4 $1.5 $33.5 $34.8 $1.3 $34.8 $1.3
96,001-500,000 $34.7 $36.2 $1.5 $36.2 $1.5 $33.4 $34.6 $1.2 $34.6 $1.2

500,001-1 M illion $6.5 $6.7 $0.2 $6.7 $0.2 $6.2 $6.4 $0.1 $6.4 $0.1 > 1 Million $5.6 $5.5 ($0.0) $5.5 ($0.0) $5.3 $5.3 ($0.0) $5.3 ($0.0)
Total $157.4 $163.6 $6.2 $163.9 $6.5 $151.3 $157.0 $5.7 $157.3 $6.0

≤ 100 $2.6 $2.6 $0.1 $3.6 $1.0 $2.5 $2.6 $0.2 $3.8 $1.3
101-500 $1.9 $2.0 $0.1 $2.7 $0.9 $1.8 $2.0 $0.2 $2.9 $1.1
501-1,000 $0.6 $0.6 $0.0 $0.8 $0.3 $0.6 $0.6 $0.1 $0.9 $0.3
1,001-4,100 $1.2 $1.3 $0.1 $1.3 $0.1 $1.1 $1.2 $0.1 $1.2 $0.1
4,101-33,000 $0.4 $0.5 $0.1 $0.5 $0.1 $0.4 $0.5 $0.0 $0.5 $0.0
33,001-96,000 $0.1 $0.1 $0.0 $0.1 $0.0 $0.1 $0.1 $0.0 $0.1 $0.0 96,001-500,000 $0.1 $0.1 ($0.0) $0.1 ($0.0) $0.1 $0.1 ($0.0) $0.1 ($0.0)

500,001-1 M illion $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
> 1 Million $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0 $0.0
Total $6.9 $7.2 $0.4 $9.1 $2.3 $6.6 $7.2 $0.6 $9.4 $2.8

≤ 100 $13.4 $18.5 $5.1 $26.7 $13.4 $12.8 $18.0 $5.1 $27.8 $14.9
101-500 $4.9 $6.4 $1.5 $9.1 $4.2 $4.7 $6.2 $1.5 $9.4 $4.7
501-1,000 $0.6 $0.8 $0.2 $1.1 $0.5 $0.6 $0.8 $0.2 $1.2 $0.5
1,001-4,100 $0.9 $1.0 $0.1 $1.0 $0.1 $0.9 $1.0 $0.1 $1.0 $0.1
4,101-33,000 $0.4 $0.5 $0.1 $0.5 $0.1 $0.4 $0.5 $0.0 $0.5 $0.0 33,001-96,000 $0.1 $0.1 ($0.0) $0.1 ($0.0) $0.1 $0.1 ($0.0) $0.1 ($0.0) 96,001-500,000 $0.1 $0.1 ($0.0) $0.1 ($0.0) $0.1 $0.1 ($0.0) $0.1 ($0.0)

500,001-1 M illion $0.2 $0.2 ($0.0) $0.2 ($0.0) $0.2 $0.2 ($0.0) $0.2 ($0.0)
> 1 Million $0.3 $0.3 $0.0 $0.3 $0.0 $0.3 $0.3 $0.0 $0.3 $0.0
Total $20.9 $27.8 $6.9 $39.1 $18.2 $20.1 $27.1 $7.0 $40.4 $20.3
Grand Total $185.2 $198.7 $13.5 $212.1 $26.9 $177.9 $191.2 $13.2 $207.0 $29.1

PWS Size (Population

Served) 3% Discount Rate 7% Discount Rate

Community Water Systems (CWSs)

Nontransient Noncommunity Water Systems (NTNCWSs)

Transient Noncommunity Water Systems (TNCWSs)

Source: Proposed RTCR cost model. Note: Detail may not add due to independent rounding. Because only the incremental costs of some rule components are considered as part of the cost analysis, references to “total” costs in this exhibit do not refer to the complete costs for regulatory implementation, but only to the s pecific costs considered to calculate net changes in costs.Economic Analysis for the Proposed RTCR 9-27 June 2010 

### 9.1.3 Comparison of National Benefits and Co sts of the Regulatory Options Considered

Because the potential benef its of the AIP and Alternat ive options have not been monetized, direct questions of how benefits compare to costs ca nnot be quantitatively answered (i.e., whether monetary benefits exceed costs and by how much). However, EPA’s collective evaluation of the results presented in this EA lead to the conclusion that the benefits of the AIP option will, in fact, exceed costs. Further evaluati on of the cost effectiveness of the AIP option in comparison to the Alternative option considered is provided in Section 9.3 below. The breakeven analysis described in Section 9.3.2 entail s determining how many cases of morbidity and/or mortality would need to be avoided in order for the benefit of those avoided cases to equal the cost of the rule option. It does not predict cases of illness avoided as a result of the rule. Instead, it is included to help provide some context for co nsidering the magnitude of cases of waterborne
illness that would need to be avoided to breakeven with rule costs.

9.2 

## Effect of Uncertainties and Nonquantified Benefit/Cost Estimates on the Estimation of National Benefits and Costs

Throughout the development of the analys es in this EA, EPA closely evaluated uncertainties in data used. EPA presents a discus sion and comprehensive list of assumptions that introduce uncertainty into the analysis in Sect ions 4.5 and 5.3.3.1 (Exhibits 4.13 and 5.22a-b, respectively). Certain assumptions are incorpor ated into the predictive model for all three regulatory scenarios in a similar fashion (current TCR as well as the AIP and Alternative options). Because the analysis is based on net changes from the current TCR to the AIP and Alternative options, incorporating these uncerta inties into the current TCR and the options results in no significant net effect on the analys is results. As discussed in Chapters 4 and 5, although GWR assumptions are considered by EPA to be conservative estimates of the effectiveness of the GWR, they are incorporated into the model in similar fashion for all three regulatory options considered, and th erefore are not expected to signi ficantly affect net results of the EA. However, assumptions for certain variable s identified as key drivers in producing the net results of this EA (the frequency and effectiv eness of CA’s) affect the AIP and Alternative options but not the current TCR. These assumptions are further evaluated in a sensitivity analysis in Ch. 5, which is summarized in Section 9.2.1 below.

EPA also assessed nonquantified costs and benef its to estimate how they would affect the overall conclusions of the analyses performe d. Potential impacts of nonquantified costs and benefits are discussed in Chapter 7 and Chapte r 6, respectively, of the EA. Section 9.2.2 summarizes the major nonquantified co sts and benefits evaluated.

9.2.1 Summary of Major Uncertainties in EA Analyses

The primary sources of uncertainty in the AIP option are introduced into the analysis in the occurrence model and cost models. In the occurrence model, uncertainty is introduced in two types of information. First, data on TC/ E. coli occurrence and acute a nd non-acute violations data are adapted from the Six-Year Review and Safe Drinking Water Information SystemFederal Version ( SDWIS/FED). Second, EPA used best professional judgment in choosing theEconomic Analysis for the Proposed RTCR 9-28 June 2010 

### values of model inputs to repr esent the net increase in eff ective corrective actions to be implemented under the AIP option, and the resu lting period of reduced occurrence (both in length of time and percent reduc tion). The data limitations are discussed in Chapter 4 of this EA. The influence of selected inputs on the model output was tested in a sensitivity analysis, using
substitute values that were fact ors of 0.5 and 2.0 of the original values. Model runs based on the 0.5 decrease in original inputs yielded results th at decreased by a factor less than 0.5 (i.e., the
results were between 0.5 and 1.0 of the original value). Similarly, model runs based on inputs that were 2X the value of the original inputs yiel ded results that were less than a multiple of 2X the original output. These results, showing that input variable se lection has less than a one-to-one influence on model output, indicate that the mode l output is not highly sensitive to changes in these input variables.

Additionally, uncertainty in the analysis results stemmed from the complexity of
interactions between the effect s of the various rule component s. The occurrence model produced outputs that showed a decrease in acute violations under the AI P option and an increase under the Alternative option. Given that the Alterna tive option incorporated the same risk reducing features (assessments and corrective actions) as the AIP option, EPA considered that the additional sampling under the Altern ative option was havi ng a larger upwards effect (increase) on occurrence compared to the downward effect of the additional co rrective actions. EPA developed a stepwise sensitivity analysis to test the relative importance of the following competing effects under the AIP opti on relative to the current TCR:

y New assessments and corres ponding correctiv e actions

y Reduced repeat and additional routine monitoring.

The results (Section 6.4) revealed that acute violations under the AIP option as compared
to the current TCR differed as follows:

y Many acute violations were prevente d from occurring by implementation of assessments and corresp onding corrective actions.

y Some acute violations were missed by the re duction in repeat a nd additional routine sampling.

From these results (described in Section 6.4) , EPA concluded that under the AIP option and the Alternative option, more acute violations ar e prevented than are missed. Additionally, the increase in routine monitoring under the AIP option finds additional acute violations as compared to the current TCR, which explains th e net increase in the acute violations found as compared to the current TCR. Exhibits 9.2 – 9.7 show the larger net difference (between the alternative and baseline) seen in levels of acute violations, no n-acute violations, and corrective actions implemented under the AIP option as compared to the Alternative option.

The sources of uncertainty embedded within th e results of the occu rrence model are also incorporated into the cost model. As described in reference to the occurrence model, EPA used best professional judgment in choosing 10% as the factor of net increase over corrective actionsEconomic Analysis for the Proposed RTCR 9-29 June 2010 

### implemented under the current TCR. A sensitivity anal ysis of the effect of an increase in this
factor on costs revealed that as the number of corrective actions increase, a portion of the corresponding cost is offset by the reduced num ber of assessments required as water quality improves (Section 7.7 of this EA).

A potentially significant additional source of unc ertainty in costs is introduced in the
distribution of correction actions selected (i.e., the number of each type implemented) for the 10% additional corrective actions. Because there is a wide variation in the unit costs of the actual corrective actions underlying the compliance for ecast (see Appendix D for unit cost detail), EPA ran two sensitivity analyses to assess the potential impacts of a high and low cost distribution in the compliance forecast. The results provide a low bound and a high bound on the original analysis results: approximately $1million/ $19 million for the AIP option and $16 million/$39 million for the Alternative option. This indicates that although the estimates of the number of systems that would choose each type of corrective action has a signi ficant impact on costs of the rule, the rule remains a relatively low cost rule under the most c onservative (costly) assumptions.

9.2.2 Summary of Nonquantified Costs and Benefits

EPA believes that all of the rule elements that are the major drivers of the net change in costs from the current TCR have been quantified to the greatest degree possible. However, cost reductions related to fewer monitoring and reporti ng violations are not sp ecifically accounted for in the cost analysis, and their exclusion from co nsideration may result in an overestimate of net change in cost between the TCR and the AIP option or Alternative option. Using E. coli as the endpoint, benefits have been estimated and predic tions made about the reduced hazard associated with reduced exposure to fecal contamination and the potential benefits from corrective actions that, if effective, will reduce exposure. No a ttempt was made to monetize these benefits by predicting infections, illnesses or deaths and to compare these valu es directly with the monetized
costs because of lack of data.

Because the cost analyses in this EA focu s on net changes in costs, consideration of nonquantified costs can result in either an under- or over-estimate of the net costs for the AIP option, as described in Section 7.7 of this EA. Overall, the nonquantified costs identified would potentially lower the net cost of the AIP option, and include the following:

y Reduced costs due to overlap between sanita ry surveys and required assessments; and

y Reductions in costs related to less fr equent PN for reporting and monitoring
violations.

Additionally, EPA identified a potential cost and benefit increase for the AIP option and Alternative option related to the baseline assu mption that all PWSs are currently meeting requirements of the TCR. To the degree that PWSs are not currently meeting TCR requirements,
the current TCR costs and benefits are overstate d in the RTCR EA, resulting in an underestimate of costs and benefits under the AIP option.Economic Analysis for the Proposed RTCR 9-30 June 2010 

### EPA identified five additional poten tial areas of nonquantified benefits:

y Reductions in primary and secondary endemic disease burden, both acute and chronic, associated with c onsuming PWS drinking water;

y Reductions in risk of outbreak an d associated illness and costs;

y Benefits from increased systems knowledge (including more consistent water quality);

y Accelerated infrastructure repair/replacement; and

y Reductions in averting behavior (due to higher consumer c onfidence in water quality).

Taken together, these items represent a potential for significant additional health benefits. For the first four items listed above, bene fits may be realized directly through the elimination, reduction, and/or prevention of pathogen occurrence. Reductions in averting behavior may lead to benefits related to a more efficient use of resources (i.e ., using tap water instead of more expensive, yet not necessarily safer, alternatives).

9.3 

## Comparison of the Regula tory Options Considered

The following subsections present further analys is of the AIP option in comparison to the Alternative option. Comparisons based on in cremental costs and benefits and several effectiveness measures are presented to info rm the selection of the AIP option over the Alternative option,

9.3.1 Incremental Costs and Benefits

Incremental costs and benefits are those that are incurred or realized to reduce pathogen
illnesses and deaths from one alternative to the next more stringent alternative. Estimates of
incremental costs and benefits ar e useful when considering the ec onomic efficiency of different regulatory alternatives considered by EPA. One goal of an incremental analysis is to identify the regulatory alternatives where net social benefits are maximized. Incremental net benefits analysis is not possible when benefits are not moneti zed as in the case with the RTCR. However, incremental analysis can still provide informa tion on relative cost-effectiveness of different regulatory options.

For the RTCR only costs were monetized. An in direct proxy for benefits was quantified. To compare the additional net cost increases and associated incremental benefits of the AIP and Alternative options, benefits are presented in terms of corrective actions performed since performance of corrective actions is expected to have an impact that is most directly translatable into potential health benefits.Economic Analysis for the Proposed RTCR 9-31 June 2010 

### To compare the additional net cost increases and associated benefits of the AIP and Alternative options (shown as numbers of co rrective actions performed), analyses of both
incremental costs and benefits ar e presented in Exhibit 9.14. The results represent that portion of
costs for each rule alternative th at are an addition to the cost of the next least stringent rule option. Benefits are also incrementally presented in terms of corrective act ions performed, since performance of corrective actions is expected to have an impact that is most directly translatable into potential health benefits.

Exhibit 9.14 shows that the Alternative opti on is incrementally approximately the same annualized cost as the AIP option using a 3 di scount rate ($13.5 million vs. $13.7 million, respectively). Consistent with the lower incrementa l costs, the incremental benefits in terms of corrective actions performed are fewer under the Alternative option than under the AIP. The new requirement under both the AIP and Alternative op tions for PWSs to implement assessments and corrective actions will capture the bulk of improvem ents to be made in comparison to the current TCR option. The additional sampling required u nder the Alternative option relative to the AIP option is providing an approximately equal increm ental increase in costs but a lower incremental
effectiveness relative to the portion of costs that occurs under both the AIP and Alternative options. This suggests that beyond a certain leve l of corrective action implementation, PWSs would experience diminishing net marginal return s for their investment in correction actions. The relationship between the incremental costs and benefits is examined further with respect to
cost effectiveness in Section 9.3.2 below.

Exhibit 9.14 Incremental Net Change in Annualized Present Value Costs ($Millions, 2007$) and Benefits (Number of Corrective Actions)

3% 7% 3% 7%

Current TCR 186.1 $ 178.8 $ No change 3 No change 3

AIP 199.8 $ 192.5 $ 202 189

Incremental AIP 1 13.7 $ 13.7 $ 202 189 Alternative Option 213.3 $ 208.5 $ 326 331
Incremental Alternative Option 2 13.5 $ 16.0 $ 124 143 Benefits (L2 Corrective Actions) Regulatory Option Costs

1 Represents the incremental net change of the AIP option ov er the current TCR option.

2 Represents the incremental net cha nge of the Alternative option over the AIP option. Add incremental net change for Alternative option to incremental net change for AIP option to calculate the total net change of the Alternative option over the current T CR option. Note: The RTCR occurrence model yields the number of corrective actions that are expected to be implemented in addition to (net of) those already implemented under the current TCR. The model does not incorporate an estimate of the number of corrective actions implemented per year under the cu rrent TCR and does not yield a total for the AIP and Alternative option that includes the current TCR co rrective actions. Benefit s shown include corrective actions based on L2 assessments. Detailed benefits and cost information is provided in Appendices A and C, respectively, of t he Proposed RTCR EA (USEPA 2009a).

3 As explained in section VI.F.2 .f of the preamble, for modeling pu rposes, EPA estimate s the net change only in the number of corrective actions performed un der the AIP and Alternative options compared to the current TCR and thus did not quantify the (non-zero) baseline number of corrective actions performed under the Current TCR.Economic Analysis for the Proposed RTCR 9-32 June 2010 

### 9.3.2 Cost Effectiveness Measures

To further differentiate between the AIP option and Alternative option results, EPA performed analyses to assess the co st effectiveness of each regulato ry scenario. In this section, EPA provides an estimate of the cost per co rrective action performe d under the regulatory alternatives, which is a measure of the cost eff ectiveness of each proposed rule option. As noted elsewhere in this chapter, correc tive actions are considered a clea r enhancement to the efforts to
reduce E. coli (and co-occurring pathogen) occurrence in PWSs, and the most direct benefit in
this EA. Corrective actions are also a main driver of the net increases in costs for both rule options considered. In addition, the modeling of corre ctive actions is done only on a net basis
relative to the level performed under the current TCR, thus providing a clear dividing line between impacts under the current TCR and each rule option. The results (Exhibit 9.15) of this EA show that, on average, the annual net cost of the rule per correctiv e action performed beyond baseline is approximately $23,000 and $35,000, resp ectively, for the AIP and Alternative options (using a 3 percent discount rate).

Exhibit 9.15 Total Net Annual Cost Pe r Corrective Action Implemented under AIP

Option and Alternative Options, Annualiz ed Using 3% and 7% Discount Rates ($2007)

Regulatory Scenario 3% Discount Rate 7% Discount Rate

AIP Net Cost 13.7 $ 13.7 $ AIP Net Corrective Actions (L1 & L2) 598 555 AIP Cost Effectiveness Analysis (CEA )(net rule cost/CA) 22,902 $ 24,613 $ Alternative Option Net Cost 27.2 $ 29.7 $
Alternative Option Net Corrective Actions (L1 & L2) 785 765 Alternative Option CEA (net rule cost/CA) 34,721 $ 38,815 $
Note: Corrective actions include those conducted as a result either Level 1 or Level 2 assessments. Total rule costs are shown in Exhibit 9.14. Detailed benefits and cost inform ation is provided in Appendices A and C, respectively, of this EA.



### EPA also considered the incremental cost e ffectiveness of the AIP as compared to the Alternative option to determine the additional bene fit associated with that portion of Alternative option cost beyond the cost of the AIP option. Ex hibit 9.16 shows that th e AIP option has a far lower marginal cost per corrective action than the Alternative option ($23,000 for the AIP option vs. $73,000 for the Alternative option). This indi cates that the additi onal corrective actions performed under the Alternative option are mu ch more costly on a unit basis than those performed under the AIP option.

EPA further considered the issue of add itional costs under the Alternative option as compared to the AIP option in terms of the effect on small TNCWSs using GW (serving ≤ 100).
The additional net cost increases under the Alte rnative option could cause substantial additional burden on small TNCWSs, which incur the larg est portion of costs of the rule among all categories of systems. However, these same TNCW Ss would also receive the most benefits from the RTCR (increased assessments and corrective actions following a trigger). EPA considered the group of 60,200 TNCWSs using GW (serving ≤ 100), which are the largest subset of systems by size/type, and which are expected to bear th e highest burden of all system categories underEconomic Analysis for the Proposed RTCR 9-33 June 2010 

### the AIP option. Exhibit 9.17 shows that in increm ental terms, the cost effectiveness of the AIP option is significantly greater than of the Alte rnative option (a cost per corrective action of $18,000 vs. $65,000, respectively) and both options are more cost effective for this subset (TNCWSs using GW serving ≤ 100) than for the entire population of PWSs taken as a whole. The two incremental analyses (Exhibits 9.16 and 9. 17) together indicate that, using a 3 percent discount rate to compare incremental benefits and costs, the AIP option is significantly more cost effective (by a factor of approximately 3.5) th an the Alternative option for the most burdened subset of systems, and is significantly more cost effective (by a factor of approximately 3.2) than the Alternative option when considering all PWSs together.

Exhibit 9.16 Incremental Rule Cost Pe r Corrective Action (CA) Implemented for All PWSs under AIP and Alternative Op tions, Annualized Using 3% and 7% Discount Rates ($2007)

Regulatory Scenario 3% Discount Rate 7% Discount Rate AIP Incremental Net Costs ($ millions) 1 13.7 $ 13.7 $
AIP Incremental Net Corrective Actions (L1 & L2) 1 598 555 AIP Incremental Cost per CA ($) 22,902 $ 24,613 $ Alternative Option Incremental Net Costs ($ millions) 2 13.5 $ 16.0 $
Alternative Option Incremental Net Corrective Actions (L1 & L2) 2 187 210 Alternative Option Incremental Cost per CA ($) 72,582 $ 76,299 $ Note: Exhibit includes only the number of correctiv e actions predicted by the RTCR occurrence model to be implemented in addition to those implemented under the cu rrent TCR. Includes both L1 & L2 corrective actions. Total net costs for each option and total CAs (not incremental) are shown in Exhibit 9.15. Detailed benefits and cost information is provided in Appendices A and C, respectively, of this EA.

1 Represents the incremental increase of the AIP option over the current TCR.

2 Represents the incremental increase of the Alternative option over AIP opti on. Add incremental net values for Alternative option to incremental net va lues for AIP option to calculate total net values of Alternative option over current TCR.



### Exhibit 9.17 Incremental Rule Cost Per CA Implemented for GW TNCWSs under AIP and Alternative Options, Annualized Using 3% and 7% Discount Rates ($2007)

Regulatory Scenario 3% Discount Rate 7% Discount Rate AIP Incremental Net Costs ($ millions) 1 5.1 $ 5.1 $
AIP Incremental Corrective Actions (L1 & L2) (TNCWS <101 only) 1 279 257 AIP Incremental Cost per CA ($) 18,219 $ 19,965 $ Alternative Option Incremental Net Costs ($ millions) 2 8.3 $ 9.8 $

Alternative Option Incremental Corrective Actions (L1 & L2) (TNCWS <101 only) 2 128 145 Alternative Option Incremental Cost per CA ($) 64,731 $ 67,762 $
Note: Incremental Net Costs are based on TNCWS servin g <101 people. Detailed benefits and cost information is provided in Appendices A and C, respectively, of this EA.

1 Represents the incremental increase of the AIP option over the current TCR.

2 Represents the incremental increase of the Alternative option over AIP optio n. Add incremental net values for Alternative option to incremental net va lues for AIP option to calculate total net values of Alternative option over current TCR.Economic Analysis for the Proposed RTCR 9-34 June 2010 

### 9.3.3 Break-Even Analysis

As described in Chapter 6 of this EA, this an alysis does not include a fully quantified risk
assessment because there are insufficient data on the co-occurrence in PW Ss of fecal indicator E. coli and pathogenic strains of E. coli or other bacteria, viruses, a nd parasitic protozoa that can
cause waterborne disease. Given the absence of E. coli and waterborne pathogen co-occurrence data to predict health effects in PWSs, EPA de veloped a break-even analysis to inform the
discussion of whether the benefits justify the costs of the regu lation. A break-even analysis typically compares the rule cost with the estimat ed value of the medical cases (and related costs such as time off from work) that would be avoided annually by the rule to determin e if the rule
benefits “break even” with avoided costs. In the case of the EA, where cases avoided cannot be estimated, the break-even analysis informs the benefit/cost discussion by providing estimates of
the number of fatal and non-fatal cases that the rule would need to avoid in order to break even
with rule costs.

The underlying question this analysis seeks to inform is whethe r corrective actions performed under the AIP option will suffici ently reduce potentia l exposure to fecal contamination and/or waterborne pathogens to compensate for the net costs of the rule. One result of the implementation of the RTCR predicte d by the model and presented in Exhibit 6.5 is that some number of acute events will be prevented. 6 

### As discussed in Chapter 6, sufficient data are not available to quantify the numbers of illnesses and deaths potentially avoided by preventing such acute events. However, the presence of E. coli in a water system is an indicator of the presence of fecal contamination; 7 

### it suggests that a path way for the introduction of waterborne pathogens may exist. The total numbe rs of acute events and potentially affected people are small (most events are predicted in small NCWSs), but nonetheless there will be a positive impact on public health by avoiding these events. The magnitude of this impact will depend heavily on the specific elements underlyi ng any acute event avoided: who and how many in the population are affected, and the etiol ogic agent to which exposure is avoided. An event can be endemic to a single person or small gr oup of persons, or it may reach the level of an outbreak. The cause of an event may be one or more of a range of bacteria l, viral, or parasitic organisms, as described in Chapter 2 of this EA. Although there may be a range of waterborne pathogens mitigated by implementation of th e proposed RTCR, two potential waterborne pathogens are considered in this analysis to pr ovide input for developing the break even analysis: shiga toxin-producing E. coli O157:H7 (STEC O157) 8 

### and Salmonella

. 9

6 Results presented in Exhibit 6.5 of this EA indicate that fewer EC positive events would occur under the AIP option
than under the current TCR. These results are consiste nt with the net improvement in PWS water quality (as indicated by a decrease in fecal indicator EC) suggested by the step-wise analys is presented in Section 6.4 of this EA. Chapter 6 of the EA presents this information in further detail.

7 Standridge, J. (2008) discusses the use of E.coli as an indicator of drinking water quality.

8 According to the website of the Amer ican Academy of Family Physicians ( http://www.aafp.org/afp/20000401/tips/11.html ), “Shiga toxin-producing Escherichia coli is a group of bacteria strains capable of causing significant human disease. The pathogen is transmitted primarily by food and has become an important pathogen in industrialized No rth America. The subgroup enterohemorrhagic E. coli includes the relatively important serotype O157:H7, and more than 100 other non-O157 strains.”

9 Salmonella , according to the CDC website, is actually a group of bacteria that can cause diarrheal illness in humans. They are microscopic liv ing creatures that pass from th e feces of people or animal s to other people or other
animals. Salmonella serotype Typhimurium, which caused the 2008 Alamosa, CO outbreak, and Salmonella serotype Enteritidis are the most common in the Unite d States. Every year, approximately 40,000 cases ofEconomic Analysis for the Proposed RTCR 9-35 June 2010 

### The Centers for Disease Control and Prev ention (CDC) estimates that STEC O157 pathogens from all sources are responsible fo r approximately 73,000 illnesses in the United States annually. The CDC has f ound that 15% of outbreak cases of STEC 0157 are waterborne (Rangel et al., 2005); if that rate applies as well to endemic cases, then approximately 11,000
cases of STEC 0157 infection would be due to waterborne exposure. For Salmonella infections, the Economic Research Service (ERS) uses an estimate of 1,397,187 cases annually based on
1999 estimates from the CDC that included an estimate of non-reported illnesses. The 1999
estimate stated that the share of cases due to consumption of contaminated food was 95 percent, indicating that approxim ately 70,000 cases were due to othe r sources. While th e portion of these cases due to waterborne exposure is unknown, so me public systems have documented cases of waterborne Salmonellosis. In March of 2008, Salmonella in the water system of Alamosa,
Colorado caused an outbreak in which hundreds of the 10,000 residents were sickened and one person died. The deep mountain aquifer from which the water was drawn was confirmed not to
be the source of the bacteria 10 

### , but two storage tanks had seve ral inches of sediment and breaches, and one tank had breaches large enough fo r birds and animals to enter (CDPHE, 2009).

For the break-even analysis, medical cases ar e classified as non-fatal or fatal, and analyses are presented for these two classifications. 11 

### The valuations for medical cases used in the break-even analysis are developed us ing the ERS Foodborne Illness Calculator 12 

### (ERS calculator), as described in Appe ndix E of the RTCR, for the two example pathogens considered:
STEC O157 and Salmonella . For most ERS calculator inputs, default or suggested alternative values are used to estimate costs. However, for the valuation of fatal cases within the model, EPA used a Value of a Statistical Life (VSL) 13 

### estimate of $8.8 million 14 

### to be consistent with EPA methodology for calculating the value of this measure. 15

salmonellosis are reported in the United States; most of th ese are foodborne, but some, as in the case of Alamosa, are waterborne. ( http://www.cdc.gov/nczved/dfbmd/disease_listing/salmonellosis_gi.html#2 , downloaded 10-6-09)
10 Berg, Rebecca. 2008. The Alamosa Salmonella Outbreak: A Gumshoe Investigation. Journal of Environmental
Health . 71(2):54-55.

11 Evaluation of fatal cases in this analysis includes consideration of the underlying non-fatal component of the illness prior to death.

12 A full detailed description of the ERS Foodborne Illness Calculator, including detailed discussion of the items discussed above and derivation of the underlying values used in calculations can be found online at: http://www.ers.usda.gov/Data/FoodborneIllness/ecoli_Intro.asp.

13 The VSL represents an estimate of the monetary value of reducing risks of premature death. The VSL, therefore, is not an estimate of the value of saving a particular indivi dual’s life. The value of a “s tatistical” life represents the sum of the values placed on small indi vidual risk reductions across an ex posed population. For example, if a regulation were to reduce the risk of premature death by 1/1,000,000 for one million exposed individuals, the regulation would “save” one statistical life (1,000,000 X 1/1, 000,000). If each of the 1,000,000 people were willing to pay $5 to achieve the risk reduction anticipated from the regulation, the VSL would be $5 million ($5 X 1,000,000). Appendix E of this EA provides further detail of the derivation of the updated VSL estimate.

14 An EPA study characterized the ra nge of possible VSL values as a Weibull distribution with a mean of $4.8 million (1990 price level) based on 26 individual study estimates (USEPA 1997b). This represents the value recommended for use in benefits analyses in EPA’s Guidelines for Preparing Economic Analyses (USEPA 2000c) and endorsed by the Scie nce Advisory Board (S AB) Arsenic review panel (USEPA 2001b). For use in the br eak-even analysis, adjust ments to the base value from the EPA study were made to account for income and price level changes over tim e. The mean VSL, after all adjustments were made, was $8.8 million in year 2007 dollars. These adjustments are explained further in Appendix E of this EA.

15 Use of different VSL estimates corresponding to different government agency policy and methodologies is specifically suggested by ERS, and EPA’s methodology is gi ven as a specific example of an alternate value that may be used.Economic Analysis for the Proposed RTCR 9-36 June 2010 

### To represent a range of estimates, EPA used the ERS calculator to calculate break-even thresholds for a low- and high-end valuation of cases avoided corresponding to “traditional” and “enhanced” methodologies for estimating Cost of Illness (COI) values. For the traditional COI valuation, EPA used the ERS calculator default va lues for STEC O157, with the exception of the VSL applied to fatalities, which EPA updated as shown in Appendix E of the RTCR EA. To estimate an enhanced COI valuation, EPA applied the basic settings used for the traditional COI valuation (including the EPA-updated VSL value) but with alternative values for estimated productivity and disutility losses. The traditional COI, as developed in this analysis based on the default setting in the ERS calculator, places no value on lost nonmarket work time, while the
enhanced COI method values nonmarket work tim e based on opportunity costs (equivalent to market work time lost). The alternative valuatio n used (a suggested option within the calculator) is to apply the productivity losses to all lost time for market and non-market work (e.g., for individuals who stay home to raise children or ca re for the elderly). The ERS calculator default value is zero for other forms of disutility caused by the illness 16 

### , including pain and suffering, inconvenience, and lost non-work time; this setti ng is used for the traditional approach in this analysis. The alternative valuation, used for th e enhanced approach in this analysis (also a suggested option within the calcul ator), is based on values (gr eater than zero) used by the Food and Drug Administration.

Exhibits 9.18 and 9.19 show the values calculated for avoided cases using the ERS
Foodborne Illness Calculator for STEC O157 and Salmonella , as summarized above and described in Appendix E of this EA. In addition to separate calculations based on traditional and enhanced COI valuation methodologies, estimates are presented separately for non-fatal and fatal

cases.

Exhibit 9.18 Average Estimated Value Per STEC O157 Case Avoided (2007$)

Traditional COI Enhanced COI

Non

‐ fatal cases only 1,756 $ 5,269 $

Fatal cases only 1 

### 8,820,401 $ 8,821,911 $ Case Description Value Per Case

1 Calculations for fatal cases inclu de the COI component for the underlying illness prior to death. Notes: Estimates for a weighted average estimate of the cost of “all cases” that includes both fatal and non-fata l cases is shown in Appendix E. COI estimates derived using USDA ERS Foodborne Illness Cost Calculator: STEC O157. Traditional COI estimates are based on ERS default values for all inputs except for the VSL estima te, for which EPA substituted its own estimate of approximately $8.8 million. Enhanced COI estimates are based on the same values except for the following changes: productivity losses are applied to all cases rather than just those employed in the formal market, and FDA disutility values are applied rather than the ERS default value of 0.

16 Disutility is a specific category defined in the ERS calculato r, as mentioned above, to include: pain and suffering, inconvenience, and lost non-work time.Economic Analysis for the Proposed RTCR 9-37 June 2010 

### Exhibit 9.19 Average Estimated Value Per Salmonella Case Avoided (2007$)

Traditional COI Enhanced COI

Non

‐ fatal cases only 210 $ 1,397 $

Fatal cases only 1 

### 8,802,998 $ 8,803,551 $ Value Per Case Case Description

1 Calculations for fatal cases in clude the COI component for the underlying illness prior to death. Notes: Estimates for a weighted aver age estimate of the cost of “all cases” that includes both fatal and non-fatal cases is shown in Appendix E. COI estimates derived using USDA ERS Foodborne Illness Cost Calculator: Salmonella . Traditional COI estimates are based on ERS default values for all inputs except for the VSL estimate, for which EPA substituted its own estimate of approximately $8.8 million. Enhanced COI estimates are based on the same values except for the following changes: productivity losses are applied to all cases rather than just those employed in the formal market, and FDA disutility values are applied rather than the ERS default value of 0.



### Using the valuations per case described above, EPA estimated the numbers of cases needed to break even by dividing the total net cost of the AIP option by the values from Exhibits 9.18 and 9.19. The resulting estimates of break-eve n thresholds are presented in Exhibit 9.20 and 9.21 separately for non-fatal and fatal cases for STEC O157 and Salmonella , respectively. Estimates are presented using both thr ee and seven percent discount rates.

Exhibit 9.20 Estimated Annual Break-Ev en Threshold for Avoided Cases of STEC O157

Non

‐ fatal

cases only Fatal cases only 1 

### Non

‐ fatal

cases only Fatal cases only 1



### 3% 8,000 1.6 16,000 3.1

7% 8,000 1.5 17,000 3.4

3% 3,000 1.6 5,000 3.1

7% 3,000 1.5 6,000 3.4 COI Methodology Discount

Rate AIP Option Alternative Option

Traditional

COI

Enhanced COI

1 Calculations for fatal cases include the non-fatal COI component for the underlying illness prior to death. Notes: The number of cases needed to reach break-even threshold calculated by dividing the net change in costs for the RTCR (Exhibit 9.5) by the average estimated value of avoided cases (Exhibit 9.18). Threshold esti mates based on a weighted average of the cost of “all cases” that includes both fata l and non-fatal cases is shown in Appendix E. STEC O157 is only an example of a pathogenic endpoint that could have been used for this analysis. Use of additional pathogenic cont aminants in addition to this single endpoint would result in lower threshold values. Detail may not add due to independent rounding. The break-even threshold is higher using a 7% discount rate than a 3% discount rate under the Alternative option. This result is consistent with the annualized costs of the Alternative option being higher using the 7% discount rate, which is caused by the frontloading of costs in the peri od of analysis, as explained fu rther in Chapter 7 of the EA.Economic Analysis for the Proposed RTCR 9-38 June 2010 

### Exhibit 9.21 Estimated Annual Break-Even Threshold for Avoided Cases of Salmonella

Non

‐ fatal

cases only Fatal cases only 1 

### Non

‐ fatal

cases only Fatal cases only 1



### 3% 65,000 1.6 130,000 3.1

7% 65,000 1.6 141,000 3.4

3% 10,000 1.6 20,000 3.1

7% 10,000 1.6 21,000 3.4 AIP Option Alternative Option

Traditional

COI

Enhanced COI COI Methodology Discount

Rate

1 Note: Calculations for fatal cases in clude the non-fatal COI component for the underlying illness prior to death.

Note: The number of cases needed to reach break-even threshold calculated by dividing the net change in costs for the RTCR (Exhibit 9.5) by the average estimated value of avoided cases (Exhibit 9.19). Threshold estimates based on a weighted average of the cost of “all cases” that in cludes both fatal and non-fatal cases is shown in Appendix E. Salmonella is only an example of a pathog enic endpoint that could have been used for this analysis. Use of addition al pathogenic contaminants in addition to this single endpoint would result in lower threshold values. Detail may not add due to independent rounding.

The break-even threshold is higher using a 7% discount rate than a 3% discount rate under the Alternative option. This result is consistent with the annualized costs of the Alternative option being higher using the 7% discount rate, which is caused by the frontloading of costs in the per iod of analysis, as explained further in Chapter 7 of the EA.



### The estimates shown in Exhibits 9.20 and 9.21 for STEC O157 and Salmonella

, respectively, represent the number of fatal cases that would need to be avoided annually by the rule for its benefits and costs to society to be equal, or break even, with rule costs. Based on either example pathogen considered in this brea k-even analysis, the results show that both the AIP and Alternative options would need to av oid a relatively small number of fatal cases annually.

Under the AIP option, just two deaths woul d need to be avoided annually using a 3%
discount rate based on consideration of the b acterial pathogen STEC O157. Alternatively, approximately 3,000 or 8,000 non-fatal cases, usi ng the enhanced or traditional benefits valuations approaches 17 

### ,, respectively, would need to be avoided to break even with rule costs. As expected based on its costs, the Alternativ e option would require that a higher number of

17 Both traditional and enhanced COI approaches count the value of the direct medical costs and of time lost that would been spent working for a wage, but differ in their assessment of the value of time lost that would be spent in nonmarket work (e.g. housework, yardwork, and raising children) and leisure (e.g. recreation, family time, and sleep). They also differ in their valuation of (other) di sutility, which encompasses a range of factors of well being, including both inconvenience and any pain and suffering. A complete discussion of the traditional and enhanced COI approaches can be found in Appendix E.Economic Analysis for the Proposed RTCR 9-39 June 2010 

### cases be avoided annually for that option to break even (approximately 60% to 100% more than the AIP option under the traditional and enhanced approaches, respectively).

As Exhibit 9.21 shows, approximately 2 d eaths would need to be avoided from a
Salmonella infection for the rule to break ev en. The estimated number of non-fatal Salmonella cases that would need to be avoided to break even is approximately 10,000 or 65,000 cases under
the enhanced and traditional benefits valuations approaches, respectively.

As the discussion presented in Chapter 2 of this EA describes, disease and deaths are attributable to drinking water contamination acro ss the country. The CDC has found that 15% of
outbreak cases of STEC 0157:H7 are waterborne (Rangel et al., 2005); if that rate applies as well to endemic cases, then approximately 11,000 cases would be due to waterborne exposure to STEC 0157:H7. The revised rule could mitigate pathways of contamination into PWSs and prevent some of these endemic cases. For just th is one contaminant, if just 3,000 non-fatal cases under the enhanced COI approach, 8,000 cases under the traditiona l COI approach, or approximately 2 fatal cases of STEC 0157:H7 are avoided by the proposed RTCR, the rule
would break even. If more than one contaminan t was reduced or prevented from occurring in PWSs, the rule would be that much more likely to break even. Avoided illness and death from secondary transmission of infec tion could also be significant, and would increase the likelihood
that total avoided cases reach a break-even threshol d. An additional consideration is that a larger number of avoided cases would be predicted if all the benefits of the rule as described in Chapter 6 could be quantified in the anal ysis. If increased assessments a nd corrective actions result in a level of system knowledge that enables earlier mitigation of potential pathways of contamination, then additional illnesses or deaths may be avoided beyond those suggested by the
decrease in acute events that the model predicts. In the case of the outbreak of Salmonella infections in Alamosa, Colorado, as described previously in this section of the EA, some of the key factors that contributed to the outbreak include significant levels of sediment and the presence of breaches to the integrity of the storage tank.

9.3.4 Summary of Conclusions

The preferred option for this rulemaking is the AIP option. The analyses performed as part of this EA support the collective judgment a nd consensus of the advisory committee that the proposed RTCR requirements, as defined by the AIP, provide for effective and efficient revisions to current TCR regulat ory requirements. The following is a summary of points that must be considered when weighing the benefits and costs of the rule options:

• The estimated net annual cost of the AIP option is small (approximately $14 million) compared to the Alternative option ($27 million) (exhibit 9.11). This cost differential is especially important considering the potential concentration of impacts on the smallest TNCWSs (exhibit 9.13) and th e potential front loading of costs under the Alternative option (exhibits 9.8 - 9.10).

• The benefits are expected to be positive under the AIP option and no backsliding in overall risk is predicted (Section 9.1.1.1) fr om the current TCR. The total benefits underEconomic Analysis for the Proposed RTCR 9-40 June 2010 

### the Alternative option would be greater than under the AIP option (Section 9.1.1.2), but the AIP option is more cost effective both on an average basis and an incremental basis (Exhibits 9.15 – 9.17).

- Of the various outputs of the occurrence and cost models developed in this EA, the
estimate of corrective actions to be implemented has the clearest connection to potential benefits. Based on this metric, the AIP option is more cost effective on average (i.e., costs less per corrective ac tion achieved) than the Alternative option (exhibit 9.15) by a factor of approximately 1.5.

- EPA conducted an incremental cost effec tiveness analysis ba sed on the increasing stringency of the options from the current TCR to the AIP option to the Alternative option. In comparing the ratio of additiona l costs and benefits associated with the AIP option compared to the current TCR and of the Alternative option compared to the AIP option, EPA found the following results:

 Exhibit 9.16 shows that the incremen tal cost effectiveness of the AIP option far exceeds that of the Alte rnative option, by a factor of approximately 3.2.

 Exhibit 9.17 shows that for TNCWSs the cost effectiveness of the AIP option far exceeds that of the Alte rnative option, by a factor of approximately 3.5.

• Although data limitations precluded estimating the number of fatal or non-fatal illnesses that would be avoided by implementation of the regulatory alternatives considered, the break-even analysis (Section 9.3.3) shows th at just over 2 deaths would need to be avoided annually for the rule to break even based on estimated ne t costs (exhibit 9.19) using a three percent discount rate. Consider ing the average costs of non-fatal illnesses resulting from STEC O157 infection, the AI P would break even if it avoided 3,000 or 8,000 such cases annually based on the enhanced or traditional cost of illness approach, respectively. These thresholds under the A lternative option are approximately 60% and 100% more than under the AIP option using the enhanced and traditional approaches, respectively. Under the AIP, the estim ated break-even threshold for non-fatal Salmonella cases is 10,000 or 65,000 for the enhanced and traditional approaches, respectively, and approximately 50% more (using both enhance and traditional approaches) for the Alternative option. These break-e ven thresholds would be redu ced if more than one type of pathogen is avoided through implementation of the RTCR, or if cases of secondary transmission are avoided. Given the large va riety of pathogens that may occur in PWS source water and the relatively low net costs of the AIP option, EPA believes the AIP option is likely to break even.

• There are several items that ar e not quantified in the EA that represent a potential for significant additional benefits (Section 9.2.2). These additional benefits may be realized
due to reductions in co-occu rring contaminants, increased systems knowledge (including more consistent water quality), reductions in outbreak risks, accelerated infrastructureEconomic Analysis for the Proposed RTCR 9-41 June 2010 

### repair/replacement, and reductions in aver ting behavior (due to higher consumer confidence in water quality).

As a result of these considerations, EPA believes that the estimated benefits of the proposed RTCR as defined by the AIP option w ill likely exceed the modest increases in
annualized national costs and will be effective in reducing risk to consumers from exposure to fecal contamination in drinking water

.Economic Analysis for the Proposed RTCR 10-1 June 2010 

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