Economic Analysis for the 

TSCA Lead Renovation, Repair, 

and Painting Program Opt-out 

and Recordkeeping Final Rule 

for Target Housing and ChildOccupied Facilities 

Economic and Policy Analysis Branch 

Economics, Exposure and Technology Division 

Office of Pollution Prevention and Toxics 

U.S. Environmental Protection Agency 

April 2010 
Acknowledgment

EPA acknowledges the analytical and draft preparation support of Abt Associates Inc. of 

Cambridge, Massachusetts, provided under Contract Nos. EP-W-08-10 and EP-W-05-022, in the 

preparation of this report. 

Notice 

This is not an official guidance document and should not be relied upon to determine 

applicable regulatory requirements. This document was prepared to provide economic 

information for the rulemaking process, and to meet various administrative and 

legislative requirements. Due to the nature of the information available to EPA, the 

document contains various assumptions that may not reflect the regulatory 

determinations that an individual firm would make were it to apply the rule's 

requirements to its specific circumstances. Persons seeking information on regulatory 

requirements as they apply to specific facilities should consult 40 CFR Part 745, the 

preamble for the regulatory action, EPA guidance documents, and EPA’s National 

Lead Information Center. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Table of Contents

Executive Summary .............................................................................................................................. ES-1

Introduction ............................................................................................................................. ES-1

Number of Facilities Subject to the Rule................................................................................. ES-1

Rule Options Analyzed............................................................................................................ ES-2

Costs ........................................................................................................................................ ES-3

Benefits.................................................................................................................................... ES-6

Small Entity Impacts ............................................................................................................... ES-10

1. Introduction ................................................................................................................................ 1-1

1.1 Purpose of the LRRP Rule Revisions...................................................................................... 1-1

1.2 Goal of the Economic Analysis............................................................................................... 1-2

1.3 Organization of this Report ..................................................................................................... 1-3

2. Lead, Renovation, Repair, and Painting Industry Profile...................................................... 2-1

2.1 Contractors that Supply Renovation Services ......................................................................... 2-2

2.2 Child Care and Schools: Child Occupied Facilities ................................................................ 2-11

2.3 Nonresidential Commercial Property Owners and Managers ................................................. 2-24

2.4 The Demand for Renovation Services..................................................................................... 2-25

2.5 Renovation Industry Market Structure.................................................................................... 2-27

2.6 Residential Property Owners & Managers.............................................................................. 2-29

2.7 Training Providers................................................................................................................... 2-31

2.8 Summary Characteristics: Numbers of Structures in the Regulated Universe........................ 2-33

3. Problem Definition ..................................................................................................................... 3-1

3.1 Lead Contamination Problem.................................................................................................. 3-1

3.2 Regulatory Background........................................................................................................... 3-4

3.3 Justification for Federal Regulations of Lead Exposure during Renovation........................... 3-11

3.4 Approaches for Reducing Lead Exposure Resulting from Renovation .................................. 3-16

Appendix 3A: The Role of Elasticities in Determining the Impacts of a Rule ............................... 3-20

3A.1 Elasticities of Supply and Demand .......................................................................................... 3-20

3A.2 How Price Elasticity of Demand Affects the RRP Rule.......................................................... 3-24

Appendix 3B: Elasticities of Demand and Supply for Housing / Renovation Services.................. 3-26

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

4.1 Definitions of Options............................................................................................................. 4-1

4.2 Estimating the Number of Regulated Renovation, Repair, and Painting Events .................... 4-5

4.3 Work Practice Compliance Costs............................................................................................ 4-36

4.4 Estimating the Number of Firms and Personnel Obtaining Training and Certification to 

Meet the Demand for Lead-Safe RRP Services ...................................................................... 4-59

4.5 Training Costs ......................................................................................................................... 4-72

4.6 Certification Costs: Firm Paperwork Burden and EPA Administrative and Enforcement 

Costs........................................................................................................................................ 4-75

4.7 Recordkeeping Checklist Provision Costs .............................................................................. 4-78
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

4.8 Total Costs............................................................................................................................... 4-82

4.9 Alternative Regulatory Options: Options E1 – E4.................................................................. 4-87

5. Benefits of the Revisions to the LRRP Rule ............................................................................. 5-1

5.1 Overview of Removal of Opt-Out Provision in Terms of Benefits Estimation ...................... 5-2

5.2 Calculated Benefits of Eliminating the Opt-Out Provision..................................................... 5-5

5.3 Benefits of Additional Recordkeeping Requirements............................................................. 5-25

5.4 Lead-Related Health Effects and Ecological Effects .............................................................. 5-25

6. Estimated Impacts of the Lead, Renovation, Repair, and Painting Rule Revisions............. 6-1

6.1 Paperwork Reduction Act ....................................................................................................... 6-1

6.2 Regulatory Flexibility Act....................................................................................................... 6-6

6.3 Unfunded Mandates Reform Act (UMRA)............................................................................. 6-39

6.4 Executive Order 13132 - Federalism....................................................................................... 6-41

6.5 Executive Order 13175 - Tribal Implications.......................................................................... 6-41

6.6 Protection of Children from Environmental Health Risk and Safety Risks............................ 6-41

6.7 Executive Order 13211 - Energy Effects ................................................................................ 6-43

6.8 National Technology Transfer and Advancement Act............................................................ 6-43 

6.9 Executive Order 12898 – Environmental Justice .................................................................... 6-43 

APPENDIX 6A: Estimating average per-pupil expenditures of private schools ............................ 6-46
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-1 

Executive Summary 

Introduction 

This report presents an economic analysis of alternative regulatory options for revising the lead, 

renovation, repair and painting (LRRP) program regulations for target housing and child occupied 

facilities (COFs). 1 The LRRP rule for target housing and COFs was promulgated in 2008 (73 FR 21692) 

and is codified in Part 745 of Title 40 of the Code of Federal Regulations (CFR). The rule was 

promulgated under the authority of §402(c) of the Toxic Substances Control Act (TSCA). Section IV of 

TSCA was established by the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known 

as Title X of the Housing and Community Development Act of 1992, Public Law 102-550. 

Past use of lead-based paint has resulted in contamination that continues to pose human health hazards. 

While intact lead-based paint is not likely to contribute to such hazards, the deterioration of a structure 

over time or acute environmental stresses, such as are commonly present during renovation activities, has 

been found to create lead hazards. Since many buildings constructed before 1978 have lead-based paint, 

it is likely that renovation activities in pre-1978 buildings will contribute to lead hazards unless 

appropriate containment and clean-up practices are employed. 

The 2008 LRRP regulations require entities that perform renovation, repair and painting work for 

compensation in buildings covered by the rule to become certified by EPA, ensure that their employees 

are trained as either renovators or workers, and use lead-safe work practices when disturbing lead-based 

paint. 

The rule contains two major revisions to the LRRP program. The first revision is the removal of the optout provision in 40 CFR §745.82(c), under which renovators do not need to follow the work practices in 

the LRRP rule if they obtain a signed statement from the owner of a target housing unit agreeing that the 

required LRRP work practices will not be used and stating that the renovation will occur in the owner’s 

residence, no child under age 6 or pregnant woman resides there, and the housing is not a COF. The 

second revision is a requirement that renovation firms provide owners and occupants with a copy of the 

records demonstrating compliance with the training and work practice requirements of the LRRP rule 

(referred to here as the “recordkeeping checklist requirement”). 

Disturbing lead-based paint in renovation, repair, and painting events generates lead dust that is an 

important source of lead exposure. Exposure to lead results in increased blood lead levels associated with 

various adverse health effects. If EPA were to take no action, society would not incur the costs to comply 

with the rule, but the negative health and environmental effects due to these preventable lead exposures 

would continue. 

Number of Facilities Subject to the Rule 

Table ES-1 provides summary information about the numbers of structures affected by the rule’s 

requirements. There are 78 million target housing units and COFs, composed of 77.9 million target 

housing units and 0.1 million COFs in public or commercial buildings. The 2008 LRRP rule applied to 

37.7 million target housing units and 0.1 million public and commercial buildings. About 40.2 million 

 

1

 Target housing is defined as any housing constructed before 1978, except housing for the elderly or persons with disabilities 

(unless any child under age 6 resides or is expected to reside in such housing) or any 0-bedroom dwelling. A COF is 

defined as a building, or portion of a building, constructed prior to 1978, visited regularly by the same child, under 6 years 

of age, on at least two different days within any week (Sunday through Saturday period), provided that each day’s visit lasts 

at least 3 hours and the combined weekly visits last at least 6 hours, and the combined annual visits last at least 60 hours. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-2 

target housing units would be added to the regulated universe due to the elimination of the opt-out 

provision. The recordkeeping checklist provision of the rule would apply to all 78 million target housing 

units and COFs. 

Table ES-1: Number of Structures in Regulated Universe by Type 

Affected by 

Removal of 

Opt-out 

Provision 

Affected by 

Additional 

Recordkeeping 

Number of 

Structures 

Target housing: Owner-occupied housing where no child <age 6 

or pregnant woman resides, and that does not qualify as a COF X X 40,222,000

Target housing covered by 2008 LRRP rule: Rental housing, 

COF in target housing, or a child <age 6 or pregnant woman 

resides in housing X 37,665,000

Subtotal – all target housing 77,888,000

COFs in public or commercial - covered by 2008 LRRP rule X 97,000

Total 77,985,000

Note: Number of structures includes buildings with and without lead-based paint. 

Estimated number of structures affected by the removal of the opt-out provision assumes that all owners of target 

housing eligible for the opt-out provision under the 2008 LRRP rule would have chosen to opt-out. 

Rule Options Analyzed 

This economic analysis considers a variety of options for addressing the risks created by renovation, 

repair, and painting (RRP) activities disturbing lead-based paint in housing previously eligible for the optout provision. These options include different alternatives for the effective date of the rule; an option 

phasing out the opt-out provision depending on when the housing was built; and different options for the 

work practices requirements. 

Options A through D all apply the 2008 LRRP requirements to renovations in the housing previously 

eligible for the opt-out provision. However, the date when the opt-out provision would be eliminated 

differs across options A through D. Options E1 through E4 all have the same effective date, but have 

varying work practice requirements. Table ES-2 summarizes the options considered in this analysis; they 

are described in more detail below. 

Options A and D both start eliminating the opt-out provision in June 2010, but Option A removes it for all 

houses in June 2010 while Option D allows the owners of houses built between 1960 and 1978 to 

continue to opt out until June 2011. Options B and C have effective dates of January 2011 and June 2011 

(respectively) for the complete elimination of the opt-out provision. 

Options E1 through E4 have the same effective dates and universe of regulated structures as Option A, 

but include alternative work practice requirements. Option E1 has the same containment requirements as 

the 2008 LRRP rule, but does not include any cleaning or cleaning verification work practices. Option E2 

has the same cleaning and cleaning verification requirements as the 2008 LRRP rule, but does not include 

any containment work practices. Option E3 has the same cleaning requirements as the 2008 LRRP rule, 

but does not include any containment or cleaning verification work practices. Option E4 has the same 

containment, cleaning and cleaning verification requirements as the 2008 LRRP rule, but does not restrict 

or prohibit any paint removal practices. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-3 

All the options would also require renovation firms to provide owners and occupants of the buildings with 

a copy of the records demonstrating compliance with the training and work practice requirements of the 

LRRP rule. The effective date for the recordkeeping checklist requirement is June 2010 under all options. 

Table ES-2: Options Included in Economic Analysis 

Option Effective Dates and Scope For Opt-Out 

Elimination* 

Containment, 

Cleaning, and 

Cleaning Verification 

Requirements 

Paint Removal 

Practices 

Restricted or 

Prohibited 

A 

(final rule) 

June 2010, no phase-out Yes Yes 

B January 2011, no phase-out Yes Yes 

C June 2011, no phase-out Yes Yes 

D June 2010 for pre-1960 housing, June 2011 for 

housing built between 1960 and 1978 

Yes Yes 

E1 June 2010, no phase-out Containment Only Yes 

E2 June 2010, no phase-out Cleaning and Cleaning 

Verification Only 

Yes 

E3 June 2010, no phase-out Cleaning Only Yes 

E4 June 2010, no phase-out Yes No 

*The effective date for the recordkeeping checklist requirement is June 2010 under all options. 

Costs 

The costs associated with the revisions to the §402(c) LRRP Rule are divided into four categories: (1) 

work practice costs, (2) training costs, (3) certification costs (which include the firm’s paperwork burden 

and EPA administrative and enforcement costs), and (4) recordkeeping checklist provision costs.2

 The 

costs associated with the first three components are all attributable to the elimination of the opt-out 

provision, which will extend the 2008 LRRP rule requirements to additional housing units. In addition to 

the work practice costs associated with the RRP events in these housing units, this change is predicted to 

result in more individuals and firms seeking training and certification.3

 The fourth component, 

recordkeeping checklist provision costs, applies to all renovations regulated under the 2008 LRRP rule as 

well as the additional housing units that would no longer be eligible for the opt-out provision. 

 

2

 Note that the costs of the action as estimated in the Economic Analysis are expressed in 2005 dollars. The estimated costs 

would be approximately 10 percent higher if they were adjusted to be expressed in 2009$. 

3

 This analysis assumes that renovation firms are somewhat specialized in terms of whether they work in facilities where the RRP

program is applicable. However, there may be many instances where firms working in opt-out housing will already have 

become certified, and their staff been trained, because they also work in regulated facilities ineligible for the opt-out 

provision. If firms are less specialized than the analysis assumed, there may be little to no incremental training and 

certification costs due to the rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-4 

Costs are driven, in part, by the additional number of renovation, repair, and painting (RRP) events where 

renovators test for lead-based paint once the opt-out provision is removed; and the subset of these events 

that test positive for lead-based paint and where RRP is performed using the lead-safe cleaning, 

containment, and verification practices required by the rule (referred to as lead-safe work practice events). 

The number of events under each option is summarized in Table ES-3 and is compared with the number 

of events regulated under the 2008 LRRP rule. The differences in the number of events in the first year 

for options A through D are due to variation in the date the opt-out provision is eliminated, so the 

differences in the costs estimated for Options A through D are all due to the timing of the opt-out 

elimination. And since Options A and E1 through E4 have the same effective dates and universe of 

regulated structures, the cost differences among these options are all attributable to their different work 

practice costs. 

Because not all buildings built before 1978 have lead-based paint, the number of renovation events that 

need to use lead safe work practices (LSWP) is a subset of the total number of events covered by the rule. 

Currently available test kits for detecting whether lead-based paint is present have a high false positive 

rate resulting in the frequent use of lead safe work practices when they are not necessary, i.e., when leadbased paint is not present. EPA is working on the development of test kits that accurately identify both 

the presence and absence of lead in paint at levels that exceed the Federal standards. This analysis 

assumes that improved test kits will be in use starting in June 2011. Thus, the number of events with lead 

safe work practices is estimated to decrease from the first year to the second year because of the adoption 

of the improved test kits. 

Table ES-3: Number of Renovation Events and Total Rule Costs 

Scope Number of RRP Events (Millions)2 Total Rule Costs (Millions 2005$)3

Year 1 Year 2 Year 2 Annualized 

 Option Total 

Events 

LSWP 

Events 

Total 

Events 

LSWP 

Events 

Year 1 3% 

Discount 

Rate 

7% 

Discount 

Rate 

3% 

Discount 

Rate 

7% 

Discount 

Rate 

2008 LRRP Rule 11.4 8.4 11.4 4.4 $758 $395 $380 $404 $441 

Option A 7.3 5.4 7.2 3.0 $507 $290 $279 $295 $320 

Option B 3.6 2.7 7.2 3.0 $263 $336 $323 $287 $306 

Option C 0.0 0.0 7.2 3.0 $20 $382 $368 $280 $291 

Option D 3.8 3.1 7.2 3.0 $291 $334 $321 $288 $308 

Option E1 7.3 5.4 7.2 3.0 $442 $254 $245 $258 $281 

Option E2 7.3 5.4 7.2 3.0 $447 $257 $247 $261 $283 

Option E3 7.3 5.4 7.2 3.0 $421 $242 $233 $246 $267 

Increase Due to 

Rule1

Option E4 7.3 5.4 7.2 3.0 $502 $287 $276 $292 $317 

1. The results for the rule options are incremental to the estimates for the 2008 LRRP rule (in shaded row). 

2. Numbers of events for the options only include the events affected by the elimination of the opt-out provision. The events 

affected by the additional recordkeeping checklist requirement would also include those covered by the 2008 LRRP rule. For 

example, 18.7 (11.4 + 7.3) million events have recordkeeping checklist provision requirements in the first year under Option A. 

3. Costs for 2008 LRRP rule do not include recordkeeping checklist costs. 

Analysis assumes a 75% compliance rate with the rule. 

LSWP = Lead-Safe Work Practices. 

Option A represents the final rule. 

Table ES-4 indicates the component costs that comprise the total cost for Option A. Work practice costs 

in housing formerly eligible for the opt-out provision represents the largest share of total costs of the rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-5 

Table ES-4: Costs for Option A by Cost Type (millions 2005$) 

3 Percent Discount Rate 

Cost Type Year 1 Year 2 Year 3 Annualized 

Work Practice $336 $216 $209 $218 

Training $76 $18 $17 $20 

Certification $63 $25 $24 $26 

Checklist - Target Housing $31 $30 $29 $30 

Checklist - COF in Public or Commercial Bldg $1 $1 $1 $1 

Total $507 $290 $281 $295 

7 Percent Discount Rate 

Cost Type Year 1 Year 2 Year 3 Annualized 

Work Practice $336 $208 $194 $236 

Training $76 $17 $16 $23 

Certification $63 $24 $22 $29 

Checklist - Target Housing $31 $29 $27 $32 

Checklist - COF in Public or Commercial Bldg $1 $1 $1 $1 

Total $507 $279 $260 $320 

In addition to the number of renovation events complying with the rule, other major factors in 

determining the costs of the rule revisions are the additional number of firms certified and the additional 

number of renovators and workers trained. The elimination of the opt-out provision is predicted to result 

in more individuals and firms seeking training and certification in order to meet the increased demand for 

RRP performed by certified firms and trained renovators resulting from the increase in the number of 

events where it will be required. Each renovation project covered by the LRRP rule must be performed 

by a certified firm and the work must be performed and/or directed by an individual who has become a 

certified renovator by successfully completing renovator training from an accredited training provider. 

The renovation activities may be performed by workers who have been provided on-the-job training by a 

certified renovator. However, the certified renovator must be physically present at the work site while 

signs are being posted, containment is being established, and the work area is being cleaned after the 

renovation to ensure that these tasks are performed correctly. 

Table ES-5 presents a summary of the estimated increase in the number of establishments that will seek 

firm certification each year as a result of the removal of the opt-out provision, as well as the increase in 

the estimated number of employees that will need to be trained as renovators and workers in the first three 

years, and compares this to prior estimates for the 2008 LRRP rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-6 

Table ES-5: Number of Establishments Certified and Renovators and Workers Trained (thousands) 

Additional Number Estimated under LRRP 

Revision Options

2008 

LRRP 

Rule A & E1-E4 B C D 

Total Number of Establishments (with 

Employees and without) Seeking Certification 212 111 56 0 59 

Total Number of Renovators Seeking Training 236 127 63 0 67 

Year 1 

Total Number of Workers Seeking Training 338 190 95 0 100 

Total Number of Establishments (with 

Employees and without) Seeking Certification 70 22 67 111 64 

Total Number of Renovators Seeking Training 78 22 74 126 72 

Year 2 

Total Number of Workers Seeking Training 337 189 189 189 189 

Total Number of Establishments (with 

Employees and without) Seeking Certification 70 22 22 22 22 

Total Number of Renovators Seeking Training 78 22 22 22 22 

Year 3 

Total Number of Workers Seeking Training 335 188 188 188 188 

Results for the rule options only include the events affected by the elimination of the opt-out provision. These numbers are 

incremental to the estimates for the 2008 LRRP rule (in the shaded row). 

Analysis assumes a 75% compliance rate with the rule. 

Option A represents the final rule.

The estimates presented in Table ES-5 reflect the simplifying assumption that additional initial 

certification and training due to the removal of the opt-out provision takes place over a 12 month period 

starting from the effective date. For example, it is estimated that an additional 127 thousand trained 

renovators would be necessary to meet the increased demand after the elimination of the opt-out 

provision, so under Option A all 127 thousand are assumed to be trained from June 2010 through June 

2011. Under Option B, the opt-out provision is eliminated half-way through the first year (January 2011). 

Thus, half of the 127 thousand, or 56 thousand renovators, are assumed to incur the training costs in the 

first year. Since the opt-out provision is not eliminated until the second year under Option C (June 2011), 

it is assumed that no training costs are incurred in the first year under Option C. A simplifying 

assumption was necessary because it is not possible to predict the precise timing of the training and 

certification that would occur under the various options. In reality, any additional firms and renovators 

that become certified and trained because of the removal of the opt-out provision may do so before the 

removal of the opt-out provision goes into effect. Thus, under Option C, it is unlikely that there would 

actually be zero firms certified or renovators trained in the first year after promulgation of the rule. 

Benefits 

A great deal of information on the numerous adverse health effects of lead is available from decades of 

medical observation and scientific research. Inhaled or ingested lead is distributed throughout the body 

and is toxic to many organ systems. As a result, its toxicity manifests itself in the form of impacts on 

several organ systems. A reduction in lead exposure resulting from the rule would lead to a reduction in 

these adverse health effects and the costs of treating them. Young children (from birth through age five) 

are particularly sensitive to lead, which impairs a child’s neuropsychological development (frequently 

measured by IQ change). 

These cognitive and behavioral effects, discussed above, are strongly related to future productivity and 

expected earnings. The estimated value of an IQ point is approximately $13,000, which represents the 

present value of a loss in expected lifetime earnings due to a one point IQ drop. This estimated value of 

an IQ point is limited to reduced income, and does not include other potential impacts such as additional 

education costs for special and remedial education, and medical costs to treat very high levels of lead. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-7 

Investigating associations between lead exposure and behavior, mood, and social conduct of children has 

been an emerging area of research. Early studies indicated linkages between lower-level lead toxicity and 

behavioral problems (e.g., aggression, attentional problems, and hyperactivity) in children. Blood-lead 

and tooth-lead levels have been associated with behavioral features of attention-deficit hyperactivity 

disorder (ADHD), including distractibility, poor organization, lack of persistence in completing tasks, and 

daydreaming, in various cohorts of children with a wide range of lead exposures. The relationship 

between lead exposure and delinquent and criminal behavior also has been addressed in several 

investigations. Studies linking attention deficits, aggressive and disruptive behaviors, and poor selfregulation with lead have raised the prospect that early exposure may result in an increased likelihood of 

engaging in antisocial behaviors in later life. Elevated lead levels have been associated with several 

measures of behavioral disturbance and delinquent behavior. 

Epidemiologic studies have consistently demonstrated associations between lead exposure and enhanced 

risk of deleterious cardiovascular outcomes, including increased blood pressure and increased 

hypertension. 

Both epidemiologic and toxicologic studies have shown that environmentally relevant levels of lead affect 

many different organ systems. Neurotoxic effects in children and cardiovascular effects in adults are 

among those best substantiated as occurring at blood-lead concentrations as low as 5 to 10 ug/dL (or 

possibly lower); and these categories of effects are currently of greatest public health concern. Other 

newly demonstrated immune and renal system effects among general population groups are also emerging 

as low-level lead exposure effects of potential public health concern. It appears that some of these 

effects, particularly changes in the levels of certain blood enzymes and in aspects of children's 

neurobehavioral development, may occur at blood-lead levels so low as to be essentially without a 

threshold. 

The rule’s removal of the opt-out provision will apply the LRRP program’s work practices, training and 

certification requirements to renovations in all target housing and COFs (including housing previously 

eligible for the opt-out provision). This will reduce lead exposure by increasing the containment and 

cleanup of dust and debris generated by RRP activities. Additional reductions in lead exposure will be 

achieved by prohibiting the use of certain paint preparation and removal techniques in jobs that require 

lead-safe work practices. These reductions in exposure will in turn reduce the risks of adverse health and 

ecological effects in the vicinity of these activities. 

The requirement that renovators provide the owners and occupants of renovated buildings with copies of 

the records renovation firms must maintain to document compliance with the rule’s training and work 

practice requirements will enable building owners and occupants to better understand what the renovation 

firm did to comply with the rule and how the rule’s provisions affected their specific renovation. 

Educating the owners and occupants in this way is likely to help them to be better able to protect 

themselves from lead-based paint hazards that may have been created by the renovation and improve their 

ability to assist the EPA in monitoring compliance with the LRRP rule. These improvements in education 

and monitoring will improve compliance with the rule, which will ultimately protect children and adults 

from exposure to lead hazards due to renovation activities. 

Removing the opt-out provision will protect children and adults from exposure to lead dust from 

renovations in a variety of situations. They include children under the age of six who visit a friend, 

relative, or caregiver’s house where a renovation has been performed under the opt-out provision; 

children who move into such housing when their family purchases it after such a renovation has been 

performed; and children who live in a property adjacent to housing where renovation has been performed 

under the opt-out provision. Removing the opt-out provision will also protect individuals age 6 and older 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-8 

who live in houses that were renovated under the opt-out provision; who move into such housing after 

such a renovation has been performed; and who live in adjacent properties. 

In addition, removal of the opt-out provision will provide additional protection for women who do not 

know they are pregnant at the time a renovation commences, women who become pregnant shortly after a 

renovation occurs, and women of child-bearing age in general. This is particularly important because the 

transplacental transfer of lead in humans is well documented, and infants are generally born with a lead 

body burden reflecting that of the mother. 

Removing the opt-out provision will also result in fewer homes being purchased with pre-existing lead 

hazards. It is common for home owners to perform activities that disturb paint before selling a house. 

Removing the opt-out provision decreases the likelihood of lead hazards being present when new 

occupants move into the home. 

Eliminating the opt-out provision will also protect individuals residing adjacent to homes undergoing 

renovations. Renovations on the exterior of a residence can spread leaded dust and debris some distance 

from the renovation activity. There are approximately 1.6 million owner-occupied single-family attached 

homes built before 1978 eligible for the opt-out provision. If these homeowners opt out of the LRRP 

program, renovations on the exterior of these homes are likely to contaminate neighboring yards and 

porches, resulting in exposure inside the neighboring houses as well as outside (because exterior dust is 

tracked into the home). Many more single-family detached homes are located in close proximity to each 

other, and renovations performed under the opt-out provision present a similar risk for these homes. 

Removing the opt-out provision will also provide protection to family pets living in owner-occupied 

housing where no children under age 6 or pregnant women reside. Lead poisoning resulting from 

renovations has been documented in both cats and dogs, resulting in both veterinary care costs and, in 

some instances, loss of a family pet. 

EPA has calculated crude benefits numbers for several groups of individuals protected by removing the 

opt-out provision. This has been done by estimating the number of individuals in each group and 

combining this with the average benefit per individual for a similar group from previous LRRP rule 

analyses. These averages do not replicate the scenarios used in the previous analyses, which included an 

array of factors such as age of child, type of renovation, size of job, and building vintage, so the 

calculations in this chapter do not reflect the methodology that EPA previously had peer reviewed for the 

LRRP rule analysis. 

As a result of severe time constraints for the conduct of this analysis, the average benefits per individual 

from the previous analyses have not been modified to reflect any differences in exposure between 

populations protected by the 2008 rule and those protected by the removal of the opt-out provision. 

While these values can serve as a proxy to provide a sense of the magnitude of benefits from this action, 

the amount of error in these values is unknown. 

Estimating benefits from avoided lead exposure is not an issue that lends itself to simplified calculations. 

Thus, the benefits calculations used here should be viewed as crude indicators of the magnitude of 

benefits. In light of this, the analysis calculates benefits under two different scenarios. In one of the 

scenarios, aggregate benefits are based on average benefits per individual from previous analyses 

multiplied by an estimate of the number of people affected by the rule. In the second scenario, benefits 

are calculated by applying a simple linear adjustment factor to one of the components in the first scenario, 

in order to reflect the uncertainties created by relying on the average benefit per individual from previous 

analyses as a basis for the calculation. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-9 

Table ES-6 and Table ES-7 summarize the result of the benefits calculations for both scenarios using a 

3% and a 7% discount rate, respectively. 

Table ES-6: Summary of Benefits for Option A (final rule) – millions of dollars, 3% discount rate) 

Children Under 6 

IQ Benefits 

Adult 

Cardiovascular Benefits Combined Population 

Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scenario 2 

(1) Reside in housing renovated 

under opt-out provision 

Not applicable – children 

under 6 do not reside in 

opt-out eligible housing $656.5 $2,626 $656.5 $2,626 

(2) Live contiguous to attached 

house renovated under opt-out 

provision $15.4 $15.4 $119 $119 $134.4 $134.4 

(3) Move into house renovated 

under opt-out provision $68.2 $272.7 45* $722* $68.2* $272.7* 

(4) Receive childcare in housing 

renovated under opt-out provision $6.9 $27.5 Not applicable $6.9 $27.5 

Subtotal $90.5 $315.6 $775.5 $2,745 $866.0 $3,060.6 

Uncalculated Benefits

(5) Live near house renovated under opt-out provision, other than contiguous attached house; 

(6) Spend time in friend’s or relative’s house renovated under opt-out provision; 

(7) Health effects for all populations other than IQ loss in children <6 and blood pressure effects in older individuals. 

* Adult component not included in subtotal because these benefits are assumed to be incorporated into row #1 above based on 

the exposure assumptions used.

Table ES-7: Summary of Benefits for Option A (final rule) – millions of dollars, 7% discount rate 

Children Under 6 

IQ Benefits 

Adult 

Cardiovascular Benefits Combined Population 

Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scenario 2 

(1) Reside in housing renovated 

under opt-out provision 

Not applicable – children 

under 6 do not reside in 

opt-out eligible housing $698.8 $2,795 $698.8 $2,795 

(2) Live contiguous to attached 

house renovated under opt-out 

provision $16.4 $16.4 $127 $127 $143.4 $151.6 

(3) Move into house renovated 

under opt-out provision $72.6 $290.3 $48* 768* $72.6* $290.3* 

(4) Receive childcare in housing 

renovated under opt-out provision $7.3 $29.2 Not applicable $7.3 $29.2 

Subtotal $96.3 $335.9 $825.8 $2,922 $920.1 $3,257.9 

Uncalculated Benefits

(5) Live near house renovated under opt-out provision, other than contiguous attached house; 

(6) Spend time in friend’s or relative’s house renovated under opt-out provision; 

(7) Health effects for all populations other than IQ loss in children <6 and blood pressure effects in older individuals. 

* Adult component not included in subtotal because these benefits are assumed to be incorporated into row #1 above based on 

the exposure assumptions used.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-10 

Small Entity Impacts 

The Regulatory Flexibility Act (RFA) of 1980, amended by the Small Business Regulatory Enforcement 

Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on small entities 

including businesses, nonprofit organizations, and governments. The vast majority of entities in the 

industries affected by the rule are small. The small entity impact analysis considers firms that would seek 

certification as a result of the elimination of the opt-out provision (opt-out entities) separately from the 

firms that are currently regulated under the 2008 LRRP rule (currently regulated entities). The revisions 

to the renovation, repair, and painting program will affect approximately 289,000 small entities; of those 

small entities, it is predicted that up to 101,000 will incur certification, work practice, and training costs 

as a result of the elimination of the opt-out provision. 

Two factors are evaluated in analyzing the rule’s impacts on small entities, (1) the number of firms that 

would experience the impact, and (2) the size of the impact. Average annual compliance costs as a 

percentage of average annual revenues are used to assess the potential average impact of the rule on small 

businesses and small governments. This ratio is a good measure of entities’ ability to afford the costs 

attributable to a regulatory requirement, because comparing compliance costs to revenues provides a 

reasonable indication of the magnitude of the regulatory burden relative to a commonly available measure 

of economic activity. Where regulatory costs represent a small fraction of a typical entity’s revenues, the 

financial impacts of the regulation on such entities may be considered as not significant. For non-profit 

organizations, impacts are measured by comparing rule costs to the organization’s annual expenditures. 

When expenditure data were not available, however, revenue information was used as a proxy for 

expenditures. It is appropriate to calculate the impact ratios using annualized costs, because these costs 

are more representative of the continuing costs entities face to comply with the rule. 

There are approximately 101,000 small entities that would be affected by the removal of the opt-out 

provision. The average annualized cost to a typical small entity in this group is estimated to range from 

about $1,133 to $6,408 per year, depending on the number of renovation, repair, and painting events 

undertaken by a small entity in the industry sector involved. As shown in Table ES-8, the cost impact of 

the revisions on small opt-out entities ranges from about 0.8 percent to 1.7 percent of revenues, depending 

on the industry sector. (If renovation firms are less specialized than the analysis assumed, in terms of 

whether they work in facilities where the RRP program is applicable, impacts will be lower than 

calculated because some firms that also work in regulated facilities ineligible for the opt-out provision 

will already have incurred costs for training and certification.) 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-11 

There are approximately 189,000 small entities that are not predicted to be affected by the removal of the 

opt-out provision, but that are expected to be affected by the additional recordkeeping requirements. 

These are all entities that were previously assumed to be affected by the 2008 LRRP rule. For a typical 

small entity in this group, the average annualized cost of the rule is estimated to range from about $1 to 

$283 per year, depending on the number of RRP events undertaken by a small entity in the industry sector 

involved. As shown in Table ES-9, the cost impact on currently regulated small entities ranges from 

about 0.0001 percent to 0.08 percent of revenues, depending on the industry sector. 

 Table ES-8: Typical-Year Number of Small Entities with RRP Events and Associated CostImpact Ratio to Entities Affected by both the Removal of the Opt-out Provision and the 

Additional Recordkeeping Requirements 

 Final Rule (Option A) 

Entity Type 

Number of 

Small 

Entities 

Average 

Cost-Impact 

Ratio 

Residential Contractors (working in target housing) 

Residential remodelers Business 32,093 0.83% 

Siding contractors Business 2,335 1.19% 

Finish carpentry contractors Business 22,790 1.13% 

Other building equipment contractors Business 1,059 1.14% 

Other building finishing contractors Business 1,450 1.11% 

Tile and terrazzo contractors Business 3,255 1.17% 

Plumbing and HVAC contractors Business 10,953 1.12% 

Glass and glazing contractors Business 966 0.90% 

Painting and wall covering contractors Business 12,650 1.70% 

Electrical contractors Business 7,787 1.37% 

Drywall and insulation contractors Business 5,326 1.14% 

Total 100,662 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-12 

Combining the small entities affected by the removal of the opt-out provision with those affected only by 

the additional recordkeeping requirements, Table ES-10 presents the total number of small governments, 

non-profit organizations, and small for-profit businesses affected by the rule, and the average cost-torevenue ratios for each category. It is estimated that under Option A, a total of 289,000 small entities 

would be affected by the program, including 266,000 small businesses with average impacts of 0.4 

percent, nearly 17,000 small non-profits with average impacts of about 0.0001 percent, and over 6,000 

small governments with average impacts of about 0.0005 percent. 

Table ES-10: Aggregate Impacts on All Small Entities 

 

Total Number of Small 

Entities Affected 

Average Impacts, 

All Small Entities 

Option A 

Small Governments 6,492 0.0001% 

Non-Profit Organizations 16,655 0.0005% 

Small For-Profit Businesses 266,102 0.43% 

Total 289,250 

 Table ES-9: Typical-Year Number of Small Entities with RRP Events where the 2008 LRRP 

Rule is Applicable and Only Affected by the Additional Recordkeeping Requirements 

 Final Rule (Option A) 

 Description Entity Type Number of 

Small 

Entities 

Average 

Cost-Impact 

Ratio 

Public School Districts Government 6,492 0.0001% 

Private Schools Non-Profit 6,174 0.0005% 

Daycare Centers Non-Profit 10,481 0.0005% 

Non-Residential Landlords Business 11,056 0.0010% 

Non-Residential Contractors (working in public or 

commercial building COFs) 

Business 2,866 0.01% 

Residential Contractors (working in target housing) 

Residential remodelers Business 41,359 0.02% 

Siding contractors Business 3,008 0.03% 

Finish carpentry contractors Business 29,369 0.03% 

Other building equipment contractors Business 1,365 0.03% 

Other building finishing contractors Business 1,868 0.03% 

Tile and terrazzo contractors Business 4,195 0.03% 

Plumbing and HVAC contractors Business 14,114 0.03% 

Glass and glazing contractors Business 1,244 0.02% 

Painting and wall covering contractors Business 16,302 0.04% 

Electrical contractors Business 10,035 0.04% 

Drywall and insulation contractors Business 6,863 0.03% 

Residential Property Managers Business 5,824 0.08% 

Lessors of Residential Real Estate Business 15,970 0.03% 

Total 188,588 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Executive Summary ES-13 

Some of the small entities subject to the rule have employees while others are non-employers. The nonemployers typically perform fewer jobs than firms with employees, and thus have lower work practice 

compliance costs. However, they also have lower average revenues than entities with employees, so their 

impacts (measured as costs divided by revenues) can be higher. Impact estimates for non-employers 

should be interpreted with caution, as some non-employers may have issues related to understatement of 

income, which would tend to exaggerate the average impact ratio for this class of small entities. 

As shown in Table ES-11, there are 75,000 non-employer renovation contractors estimated to be affected 

by the removal of the opt-out provision. The average cost to these contractors is estimated to be $1,193 

apiece. This represents 1.3% to 4.7% of reported revenues, depending on the industry sector. This rule’s 

new recordkeeping requirement is estimated to affect an additional 96,000 non-employer renovation 

contractors not affected by removal of the opt-out provision. The costs to these contractors are estimated 

to be $42 apiece. This represents 0.05% to 0.17% of revenues, depending on the industry sector. 

Table ES-11: Cost-to-Revenue Ratios: Non-Employers 

Industry Description Number of 

Small 

Entities 

Average 

CostImpact 

Ratio

Residential Opt-Out Contractors 

Residential remodelers 22,522 3.48% 

Siding contractors 1,651 3.65% 

Finish carpentry contractors 19,170 3.91% 

Other building equipment contractors 664 3.03% 

Other building finishing contractors 1,222 1.56% 

Tile and terrazzo contractors 2,739 3.11% 

Plumbing and HVAC contractors 6,162 2.07% 

Glass and glazing contractors 685 1.96% 

Painting and wall covering contractors 10,639 4.73% 

Electrical contractors 4,869 2.96% 

Drywall and insulation contractors 4,497 1.30% 

Total, Small Construction Establishments 74,821 3.07% 

Currently Regulated Contractors

Residential remodelers 29,024 0.12% 

Siding contractors 2,128 0.13% 

Finish carpentry contractors 24,705 0.14% 

Other building equipment contractors 856 0.11% 

Other building finishing contractors 1,575 0.06% 

Tile and terrazzo contractors 3,530 0.11% 

Plumbing and HVAC contractors 7,940 0.07% 

Glass and glazing contractors 883 0.07% 

Painting and wall covering contractors 13,710 0.17% 

Electrical contractors 6,275 0.10% 

Drywall and insulation contractors 5,796 0.05% 

Total, Small Construction Establishments 96,422 0.11% 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 1 1-1 

1. Introduction 

This report presents an economic analysis of alternative regulatory options for revising the lead, 

renovation, repair and painting (LRRP) program regulations for target housing and child occupied 

facilities (COFs). The LRRP rule for target housing and COFs was promulgated in 2008 (73 FR 21692) 

and is codified in Part 745 of Title 40 of the Code of Federal Regulations (CFR). The rule was 

promulgated under the authority of §402(c) of the Toxic Substances Control Act (TSCA). Section IV of 

TSCA was established by the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known 

as Title X of the Housing and Community Development Act of 1992, Public Law 102-550. 

The existing LRRP regulations require entities that perform renovation, repair and painting work for 

compensation in buildings covered by the rule to become certified by EPA, ensure that their employees 

are trained as either renovators or workers, and use lead-safe work practices when disturbing lead-based 

paint. 

Past use of lead-based paint has resulted in contamination that continues to pose human health hazards. 

While intact lead-based paint is not likely to contribute to such hazards, the deterioration of a structure 

over time or acute environmental stresses, such as are commonly present during renovation activities, has 

been found to create lead hazards. Since many buildings constructed before 1978 have lead-based paint, 

it is likely that renovation activities in pre-1978 buildings will contribute to lead hazards unless 

appropriate containment and clean-up practices are employed. 

The proposed revisions to the LRRP program include: (1) the removal of the opt-out provision for owneroccupied target housing without either children under the age of 6 or a pregnant woman in residence, and 

(2) an additional requirement that the renovator provide a copy of their recordkeeping checklist to owners 

and occupants of renovated structures. 

1.1 Purpose of the LRRP Rule Revisions 

Removing the opt-out provision will protect individuals (including children under age 6 and pregnant 

women), who visit, move into, or live adjacent to a home renovated under the opt-out provision, from 

exposure to lead hazards due to renovation activities. Requiring renovators to provide owners and 

occupants of renovated buildings with copies of the records documenting the renovation firm’s 

compliance with the rule’s training and work practice requirements will enable them to better understand 

what the renovation firm did to comply with the rule and improve their ability to assist the EPA in 

monitoring compliance with the RRP rule. EPA anticipates that the rule will further develop a market1

for lead safe renovation services that has been established by past lead rules. 

The LRRP rule requires certification of entities that perform renovation, repair and/or painting in 

buildings covered by the regulations. This includes construction contractors (including sole practitioners) 

as well as landlords and other building owners (such as school districts) that may perform RRP activities 

using their own staff. It does not, however, cover renovation, repair and painting (RRP) work performed 

by homeowners on their own homes. The certified entity must ensure that all persons performing RRP 

activities on behalf of the entity in buildings covered by the rule are either renovators who have received 

formal training in EPA-approved work practices from an EPA-accredited course or workers who have 

received on-the-job training in these approved work practices. In addition, the rule requires the use of 

these approved work practices to ensure that proper cleanup has occurred. Supporting these work 

practices, training and certification requirements, EPA is undertaking an enhanced outreach program to 

 

1

 These markets are expected to consist of suppliers who offer lead safe renovation services (LSRS) and consumers 

who are willing to pay the incremental costs associated with using LSRS over non-LSRS.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 1 1-2 

educate the general public about the dangers of lead exposure and ways to limit exposure resulting from 

RRP activities. 

1.2 Goal of the Economic Analysis 

The purpose of this report is to analyze various options for the LRRP rulemaking revisions. The report 

addresses the requirements for economic analysis of Executive Order 12866 – Regulatory Planning and 

Review; the Regulatory Flexibility Act (RFA) and the Small Business Regulatory Enforcement Fairness 

Act (SBRFA); Executive Order 12898 – Federal Actions to Address Environmental Justice in Minority 

Populations and Low-Income Populations; Executive Order 13045 – Protection of Children from 

Environmental Health Risks and Safety Risks; the Unfunded Mandates Reform Act; Executive Order 

12875 – Enhancing the Intergovernmental Partnership; and the Paperwork Reduction Act (PRA). 

This economic analysis considers various regulatory options. The effective date for the recordkeeping 

checklist requirement is June 2010 under all options. Options A through D all include containment, 

cleaning, and cleaning verification requirements, as well as restricting or prohibiting certain paint removal 

practices. However, options A through D differ in terms of the effective dates of the elimination of the 

opt-out provision. In addition, the economic analysis considers four options with varying work practice 

requirements, Options E1 through E4. Table 1-1 summarizes the options considered in this analysis; they 

are described in more detail below. 

Options A and D both have effective dates of June 2010 for the elimination of the opt-out provision, but 

Option A does not phase in the opt-out elimination while Option D is limits opt-out elimination to pre1960 structures during Phase 1 of the regulation and expands the requirements to structures built between 

1960 and 1978 in Phase 2, which has an effective date of June 2011. Options B and C have effective 

dates of January 2011 and June 2011 for the elimination of the opt-out provision respectively, and neither 

option phases in this requirement. 

Options E1 through E4 have the same effective dates and universe of regulated structures as Option A, 

but consider alternative work practice requirements. Option E1 has the same containment requirements 

as 40 CFR 745.85, but does not include any cleaning or cleaning verification work practices. Option E2 

has the same cleaning and cleaning verification requirements as 40 CFR 745.85, but does not include any 

containment work practices. Option E3 has the same cleaning requirements as 40 CFR 745.85, but does 

not include any containment or cleaning verification work practices. Option E4 has the same 

containment, cleaning and cleaning verification requirements as 40 CFR 745.85, but does not restrict or 

prohibit any paint removal practices. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 1 1-3 

Table 1-1: Options Included in Economic Analysis 

Option Effective Dates and Scope For Opt-Out 

Elimination* 

Containment, 

Cleaning, and 

Cleaning 

Verification 

Requirements 

Paint Removal 

Practices 

Restricted or 

Prohibited 

A June 2010, no phase-in Yes Yes 

B January 2011, no phase-in Yes Yes 

C June 2011, no phase-in Yes Yes 

D June 2010 for pre-1960 housing, June 2011 

for housing built between 1960 and 1978 

Yes Yes 

E1 June 2010, no phase-in Containment Only Yes 

E2 June 2010, no phase-in Cleaning and 

Cleaning Verification 

Only 

Yes 

E3 June 2010, no phase-in Cleaning Only Yes 

E4 June 2010, no phase-in Yes No 

*The effective date for the recordkeeping checklist requirement is June 2010 under all options. 

1.3 Organization of this Report 

Chapter 2 profiles the RRP industry, as well as non-profit and governmental suppliers of childcare 

including family daycare providers. It examines the supply of and demand for renovation, remodeling and 

painting services. Using data from a variety of sources, including the U.S. Economic Census, the chapter 

discusses the size of the RRP industry and characteristics of its firms, as well as the organizational 

structure and competitiveness of the industry. The demand for RRP services is characterized and the 

factors that affect demand are discussed. Other affected industries (e.g. training providers, property 

owners and managers) are also profiled in this chapter. 

Chapter 3 characterizes the lead contamination problem to be addressed under the proposed rule. It 

discusses how incomplete information and external costs have resulted in inefficient levels of lead 

contamination resulting from renovation activity, and introduces regulation as a reasonable solution for 

these market failures. The chapter also reviews state and local regulations that affect RRP activities and 

demonstrates that these are not sufficient to address the problem. 

Chapter 4 describes in detail the methods used to calculate costs of the various regulatory options 

considered. It describes the data sources used and is organized around the four general categories of costs 

incurred under the proposed rule: work practice compliance costs, training costs, certification and 

administrative costs, and checklist provision costs. The last section of the chapter estimates the costs of 

each option over a 50-year period and presents annualized costs at both 3 percent and 7 percent. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 1 1-4 

Chapter 5 calculates crude benefits numbers for several groups of individuals protected by removing the 

opt-out provision. While these values can serve as a proxy to provide a sense of the magnitude of benefits 

from this action, the amount of error in these values is unknown. 

Chapter 6 presents findings of distributional analyses relevant to specific rule-making requirements, 

including small business impacts, environmental justice, protection of children and unfunded mandates. 

 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-1 

2. Lead, Renovation, Repair, and Painting Industry Profile 

The LRRP rule for target housing and child occupied facilities (COFs) was promulgated in 2008 (73 FR 

21692) and is codified in Part 745 of Title 40 of the Code of Federal Regulations (CFR). The rule was 

promulgated under the authority of §402(c) of the Toxic Substances Control Act (TSCA). Section IV of 

TSCA was established by the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known 

as Title X of the Housing and Community Development Act of 1992, Public Law 102-550. 

The existing LRRP regulations apply to entities that perform renovation, repair and painting work for 

compensation in target housing or child occupied facilities, including building owners or managers who 

use their own staff to conduct RRP activities. These entities must become certified by EPA, ensure that 

their employees are trained as either renovators or workers, and use lead-safe work practices when 

disturbing lead-based paint. 

The revisions to the LRRP program include: (1) the removal of the opt-out provision for owner-occupied 

target housing without either children under the age of 6 or a pregnant woman in residence, (2) an 

additional requirement that the renovator provide a copy of their recordkeeping checklist to owners and 

occupants of renovated structures, and (3) clarifications and other technical changes to the LRRP program 

that do not have cost implications. 

Target housing is defined in section 401 of the Toxic Substances Control Act (TSCA) as any housing 

constructed before 1978, except housing for the elderly or persons with disabilities (unless any child 

under age 6 resides or is expected to reside in such housing) or any 0-bedroom dwelling. 

A COF is defined under the rule in Title 40 of the Code of Federal Regulations (CFR) §745.83, as: 

Child-occupied facility means a building, or portion of a building, constructed prior to 1978, 

visited regularly by the same child, under 6 years of age, on at least two different days within any 

week (Sunday through Saturday period), provided that each day’s visit lasts at least 3 hours and 

the combined weekly visits last at least 6 hours, and the combined annual visits last at least 60 

hours. Child-occupied facilities may include, but are not limited to, day care centers, preschools 

and kindergarten classrooms. Child-occupied facilities may be located in target housing or in 

public and commercial buildings. With respect to common areas in public and commercial 

buildings that contain child-occupied facilities, the child-occupied facility encompasses only 

those common areas that are routinely used by children under age 6, such as restrooms and 

cafeterias. Common areas that children under age 6 only pass through, such as hallways, 

stairways, and garages are not included. In addition, for public and commercial buildings that 

contain child-occupied facilities, the child-occupied facility encompasses only the exterior sides 

of the building that are immediately adjacent to the child-occupied facility or the common areas 

routinely used by children under age 6. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-2 

The term renovation is defined in 40 CFR §745.83 to encompass a wide variety of construction activities: 

Renovation means the modification of any existing structure, or portion thereof, that results in the 

disturbance of painted surfaces, unless that activity is performed as part of an abatement as 

defined by this part (40 CFR § 745.223). The term renovation includes (but is not limited to): the 

removal, modification or repair of painted surfaces or painted components (e.g., modification of 

painted doors, surface restoration, window repair, surface preparation activity (such as sanding, 

scraping, or other such activities that may generate paint dust)); the removal of building 

components (e.g., walls, ceilings, plumbing, windows); weatherization projects (e.g., cutting 

holes in painted surfaces to install blown-in insulation or to gain access to attics, planing 

thresholds to install weather-stripping), and interim controls that disturb painted surfaces. A 

renovation performed for the purpose of converting a building, or part of a building, into target 

housing or a child-occupied facility is a renovation under this subpart. 

Thus, renovation includes repair work as well as painting work involving sanding, scraping, or other paint 

removal. Renovation activities are conducted without the intent of removing lead, but may disturb it in 

the process. Lead abatement activities, on the other hand, are conducted with the intent to remove leadbased paint or otherwise permanently eliminate a lead-based paint hazard. Depending on the reason they 

are undertaken, many activities, such as replacing windows, can be either renovation or abatement. 

Because the rule will address renovation, rather than abatement activity, this profile characterizes the 

renovation industry as opposed to the abatement services industry. 

The industry profile is categorized into eight sections. Section 2.1 discusses the supply of contractorprovided renovation services. Section 2.2 presents information on the numbers and types of child care 

facilities and schools. Section 2.3 presents information on the number and sizes of non-residential 

property owners and managers likely to be affected by the rule. Section 2.4 focuses on the demand-side 

of renovation by identifying the quantity of renovation activities performed. Section 2.5 discusses the 

overall market organization for the renovation industry. Section 2.6 describes the residential property 

owner and manager industry. Section 2.7 discusses training providers. Section 2.8 provides an overview 

of the structures that would be affected by the revisions to the LRRP rule. 

2.1 Contractors that Supply Renovation Services 

Data from the U.S. Economic Census were used to identify the North American Industry Classification 

System (NAICS) industry groups that may provide renovation, repair and painting work (U.S. Census 

Bureau 2004a). An establishment is assigned to a NAICS group based on the activities from which it 

derives the greatest share of its revenues. These activities may or may not make up the majority of work 

(i.e. labor hours) performed by the establishment, which may also be involved in a variety of other related 

(or unrelated) lines of work. The analysis identified 12 NAICS codes that are likely to include the vast 

majority of construction-related establishments that will be affected by the rule. Affected industry groups 

include two building construction sectors (NAICS 236118 – Residential Remodelers; and NAICS 236220 

– Commercial and Institutional Building Construction) and ten specialty trade contractor sectors. 

The number of contracting establishments affected is also discussed in Chapter 4. This profile examines 

the financial and employment characteristics of construction establishments likely to provide renovation 

work in child-occupied facilities. 

NAICS sectors likely to perform projects regulated under the LRRP rule, as well as examples of the work 

they perform, are presented in Table 2-1. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-3 

Table 2-1: Contractor Sectors likely to be affected by the rule 

2002 NAICS Examples of Work Performed 

236118 - Residential Remodelers  Addition, alteration and renovation of single-family 

homes 

 Addition, alteration and renovation of multifamily 

buildings 

 Home improvement (e.g., adding on, remodeling, 

renovating) 

236220 - Commercial Building 

Construction  Addition, alteration, maintenance and repair of 

commercial and institutional buildings 

 Commercial and Institutional building general 

contractors 

238150 - Glass and Glazing Contractors  Mirror Installation 

 Window pane or sheet installation 

238170 - Siding Contractors  Vinyl Siding, soffit and fascia, installation 

 Wood Siding, Installation 

238210 - Electrical Contractors  Electrical wiring contractors 

 Lighting system installation 

 Electrical power control panel and outlet installation 

238220 – Plumbing and HVAC 

Contractors  Heating equipment installation 

 Plumbing fixture installation 

 Plumbing and heating contractors 

238290 – Other Building Equipment 

Contractors  Pipe, duct and boiler installation 

 Water pipe insulating 

 Deodorization (i.e., air filtration) system installation 

238310 – Drywall and Insulation 

Contractors  Panel or rigid board insulation installation 

 Mineral wool insulation installation 

 Plastering (i.e., ornamental, plain) contractors 

238320 – Painting and Wall Covering 

Contractors  House painting 

 Paint and Wallpaper Stripping 

 Paperhanging and removal contractors 

238340 – Tile and Terrazzo Contractors  Ceramic tile installation 

 Mantel, marble or stone, installation 

 Mosaic work 

238350 – Finish Carpentry Contractors  Door and window, prefabricated, installation 

 Millwork installation 

 Paneling installation 

238390 - Other Building Finishing 

Contractors 

 Window shade and blind installation 

 Building fixture and fitting (except mechanical 

equipment) installation 

 Drapery fixture (e.g., hardware, rods, tracks) 

installation 

Source: U.S. Census Bureau 2004a 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-4 

2.1.1 Number of Establishments with Employees 

The U.S. Economic Census tracks businesses with paid employees (employer establishments) and nonemployer establishments (self-employed contractors) separately.1

 This discussion deals with employer 

establishments only; non-employers are addressed in the next section. 

Table 2-2 presents both the number of establishments and the number of employees in each NAICS group 

of interest. The number of establishments “includes all establishments that were in business at any time 

during the year are included. Construction establishments that were inactive or idle for the entire year 

were not included” (U.S. Census Bureau 2006a). Table 2-2 also presents the average per-establishment 

employment numbers by NAICS code. The average employment numbers are small for all affected 

sectors. Overall, Other Building Equipment contractors have the largest number of employees per 

establishment (20.8 people), while Residential Remodelers have the smallest (3.9 people). 

Table 2-2: Number of Employer Establishments and Employees by NAICS Code 

NAICS Industry Establishments Number of Employees Average Size 

236118 Residential Remodelers 82,750 320,208 3.9 

236220 Commercial building 

construction 37,208 715,896 19.2 

238150 Glass and glazing 

contractors 5,294 50,800 9.6 

238170 Siding contractors 6,632 43,042 6.5 

238210 Electrical contractors 62,586 771,184 12.3 

238220 Plumbing and HVAC 

contractors 87,501 974,368 11.1 

238290 Other building equipment 

contractors 6,087 126,559 20.8 

238310 Drywall and insulation 

contractors 19,598 311,077 15.9 

238320 Painting and wall covering 

contractors 38,943 234,562 6.0 

238340 Tile and terrazzo 

contractors 8,950 60,001 6.7 

238350 Finish Carpentry 

contractors 35,087 179,476 5.1 

238390 Other building finishing 

contractors 3,729 50,617 13.6 

 Total, All sectors 394,365 3,837,790 9.7 

Source: U.S. Census Bureau 2005c 

Table 2-3 presents the total number of employees and the number of construction workers in each 

identified industry. The number of employees “includes all full-time and part-time individuals on the 

payrolls of construction establishments during any part of the pay period which included the 12th of 

March, May, August, and November” (U.S. Census Bureau 2005m). The number of construction 

workers “includes all payroll workers (up through the working supervisory level) directly engaged in 

construction operations, such as painters, carpenters, plumbers, and electricians... journeymen, 

mechanics...truck drivers and helpers.” Non-construction employees include “payroll employees in 

executive, purchasing, accounting, ...and routine office functions” (U.S. Census Bureau 2005m). 

Because construction workers form the vast majority of the people who require training under the rule, 

 

1

 Data at the firm level were not available for these NAICS groups when the analysis was performed. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-5 

their role in the composition of each sector’s labor force provides an indication of the extent to which 

each sector will be affected by the regulations. 

In total, about 3.8 million people work for the 394,365 establishments in the potentially affected 

industries. About 73 percent of these employees are construction workers. The affected sectors differ in 

terms of the composition of their labor force. For example, construction workers make up 84 percent of 

employees in the Drywall and Insulation contractor sector. In the Residential Remodelers sector, 

however, construction workers make up only 65 percent of the labor force (U.S. Census Bureau 2005c) 

2.1.2 Number of Non-Employer Establishments 

As mentioned above, the U.S. Economic Census tracks non-employer establishments separately from 

establishments with employees. Data on the number of non-employer establishments were available from 

the U.S. Small Business Administration. A non-employer firm “is defined as one that has no paid 

employees, has annual business receipts of $1,000 or more ($1 or more in the construction industries), 

and is subject to federal income taxes” (U.S. Small Business Administration 2006a). Essentially, nonemployers are self-employed contractors. Because little financial and operational data is available for 

non-employers, the vast majority of this profile focuses on establishments with employees. This 

subsection discusses the number of non-employers in the affected industry sectors and the receipts of 

these establishments. 

The U.S. Small Business Administration did not provide data on the number or revenues of non-employer 

establishments in each of the 6-digit level NAICS industries addressed in this profile. Data on the 

number of such establishments was available for Plumbing and HVAC contractors (NAICS 238220) and 

Electrical contractors (NAICS 238210) only; for the remaining industries, data was provided at the more 

general 4-digit NAICS level. In total, there are nearly 1.2 million self-employed contractors. 

To estimate the number of non-employer establishments in each of the 6-digit sectors, it was assumed that 

the distribution of non-employer establishments in each 4-digit NAICS code is the same as the 

distribution of establishments with payroll in the same 4-digit group. Similarly, to estimate the revenues 

Table 2-3: Number of Employer Establishments, Total Employees and Employees 

involved in Construction

NAICS Description 

Total 

Number of 

Employees 

Number of 

Construction 

Workers 

Construction 

Workers as Percent 

of Total Employees

236118 Residential Remodelers 320,208 207,637 65% 

236220 Commercial Building Construction 715,896 478,923 67% 

238150 Glass and Glazing Contractors 50,800 34,086 67% 

238170 Siding Contractors 43,042 30,284 70% 

238210 Electrical Contractors 771,184 606,403 79% 

238220 Plumbing and HVAC Contractors 974,368 712,452 73% 

238290 Other Building Equipment Contractors 126,559 90,504 72% 

238310 Drywall and Insulation Contractors 311,077 261,239 84% 

238320 Painting and Wall Covering Contractors 234,562 184,328 79% 

238340 Tile and Terrazzo Contractors 60,001 44,729 75% 

238350 Finish Carpentry Contractors 179,476 129,888 72% 

238390 Other Building Finishing Contractors 50,617 37,353 74% 

Total 3,837,790 2,817,826 73% 

Sources: U.S. Census Bureau 2005c 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-6 

of these establishments, it was assumed that the distribution of receipts in each 4-digit NAICS code is the 

same as the distribution of revenues of payroll establishments in the same 4-digit industry. 

Table 2-4 presents the estimated number and revenues of non-employer establishments in each of the 12 

sectors affected by the rule. 

Table 2-4: Number and Annual Revenues of Non-Employer Establishments in Affected 

Sectors 

NAICS Description 

Number of Non-Employer 

Establishments 

Revenues of NonEmployer 

Establishments 

(000) 

236118 Residential Remodelers 194,182 $6,187,917 

236220 Commercial Building construction 74,255 $4,784,817 

238150 Glass and Glazing contractors 12,723 $720,934 

238170 Siding contractors 15,939 $485,112 

238210 Electrical contractors 102,219 $3,834,347 

238220 Plumbing and HVAC contractors 110,183 $5,920,986 

238290 Other Building Equipment contractors 9,710 $356,461 

238310 Drywall and Insulation contractors 103,398 $8,798,899 

238320 Painting and Wall Covering contractors 205,462 $4,823,217 

238340 Tile and Terrazzo contractors 47,220 $1,684,174 

238350 Finish Carpentry contractors 185,118 $5,254,955 

238390 Other Building Finishing contractors 19,674 $1,396,611 

Sources: U.S. Census Bureau 2005h, U.S. Census Bureau 2004q, U.S. Census Bureau 2005i 

2.1.3 Financial Profile 

In this section, Census data is used to examine key financial indicators for the renovation industry. The 

indicators include net value of construction (value of construction less value of construction 

subcontracted out to others) and labor costs. Net value of construction work is used instead of the total 

value of construction work because it is a measure of the work actually performed by the establishment. 

Table 2-5 presents the average per establishment net value of construction work (NVCW) for each 

industry sector. The table also presents labor costs as a percent of the net value of construction for each 

of the affected NAICS codes. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-7 

Table 2-5 shows the wide range of values of construction work per establishment across all NAICS codes 

of interest. The average establishment in the Residential Remodeler industry (NAICS 236118) has the 

smallest net value of construction work ($370,000), followed by the Finish Carpentry contractors industry 

($446,000). Meanwhile, the average establishment in the Commercial Building Construction industry 

(NAICS 236220) has the largest net value of construction value ($2,909,000), with the Other Building 

Equipment contractors industry netting the second largest value ($2,247,000). It should come as no 

surprise that the Commercial Building Construction industry’s net value of construction is so much larger 

than the Residential Remodeler industry’s net value of construction work given that commercial building 

construction projects tend to be substantially larger in scope and size than residential remodeling projects. 

As demonstrated in Table 2-5, while labor constitutes about 33% of net value of construction for all the 

industry sectors, the composition varies across industry sectors. The Painting and Wall Covering 

contractor (NAICS 238220) industry is most dependent on labor, with an overall labor cost to net value of 

construction ratio of 39 percent. The Commercial Building Construction industry, with an overall labor 

cost to net value of construction work ratio of 27 percent, is the least dependent of the 12 sectors (U.S. 

Census Bureau 2005c). It is worth mentioning that labor (as measured by payroll) is a relatively small 

percentage (27% to 39%) of total net value, reflecting the fact that a large percent of revenues go to 

covering the cost of materials and profit. 

Table 2-5: Financial Summary for Contractor Sectors Affected by the rule 

2002 

NAICS 

code Industry Name 

Annual Net 

Value of 

Construction 

Work (000) 

Number of 

Establishments

Net Value of 

Construction 

Work per 

Establishment 

(000) 

Total Payroll 

(000) 

Payroll as % 

of Net Values 

of 

Construction 

Work 

236118 Residential Remodelers $30,627,850 82,750 $370 $8,703,503 28 

236220 Commercial Building 

construction $108,229,283 37,208 $2,909 $29,210,092 27 

238150 Glass and Glazing 

contractors $6,016,766 5,294 $1,137 $1,764,314 29 

238170 Siding contractors $3,810,070 6,632 $574 $1,185,348 31 

238210 Electrical contractors $77,671,846 62,586 $1,241 $29,324,486 38 

238220 Plumbing and HVAC 

contractors $105,323,163 87,501 $1,204 $35,942,262 34 

238290 Other Building Equipment 

contractors $13,680,062 6,087 $2,247 $4,940,641 36 

238310 Drywall and Insulation 

contractors $27,046,301 19,598 $1,380 $9,766,997 36 

238320 Painting and wall covering 

contractors $15,316,726 38,943 $393 $6,005,447 39 

238340 Tile and Terrazzo 

contractors $5,639,641 8,950 $630 $1,834,890 33 

238350 Finish Carpentry 

contractors $15,640,544 35,087 $446 $4,711,739 30 

238390 Other Building Finishing 

contractors $4,560,138 3,729 $1,223 $1,719,039 38 

 Total, all industries $407,922,749 394,365 $1,034 $135,108,758 33 

Source: U.S. Census Bureau 2005c 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-8 

2.1.3.1 Establishment Size by Revenue Bracket 

The Small Business Administration (SBA) defines a small business in both the Residential Remodeler 

and Commercial Building Construction industries as one that has revenues of $33.5 million dollars a year 

or less. The small business definition for the ten specialty contractor industries is $14 million per year 

(U.S. Small Business Administration 2008). The SBA size standards apply to firms rather than 

establishments; at the time the analysis was performed, revenue data in the 2002 Economic Census was 

only available at the establishment level. Since a firm may consist of one establishment, a few 

establishments or even a very large number of establishments, by using establishment rather than firm 

data, this analysis overestimates the number of small businesses in the affected industry. 

The remainder of this section examines the number of establishments, number of employees, net value of 

construction work and value of business done2

 distributed by establishment revenue bracket. These data 

were available from the 2002 Economic Census at the NAICS code level only. Establishments were 

classified into two revenue categories based on the total value of business done – those with revenues less 

that $10 million and those with revenues greater than $10 million. Because the Census groups all 

establishments with revenues of $10 million or more into one revenue bracket, it is not possible to 

determine what percentage of Residential Remodeler nor Commercial Building Construction 

establishments have revenues of less than $33.5 million. Note, however, that nearly 100 percent of 

Residential Remodeler establishments have revenues of less than $10 million per year. The same cannot 

be said for Commercial Building Construction establishments, as 12 percent have revenues greater than 

$10 million per year. The percent of establishments, employees and net value of construction contributed 

by establishments in each revenue bracket is presented in Table 2-6. 

 

2

 Value of business done is defined by the U.S. Census Bureau as including “the sum of value of construction work 

and other business receipts. Value of business done is the sum of receipts, billings, or sales from establishments of 

construction business activities plus receipts from other business activities” (U.S. Census Bureau 2004d). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-9 

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

NAICS NAICS 

Percent of 

Establishments 

Percent of 

Employees 

Percent of Net 

Value of 

Construction 

Percent of Value 

of Business done 

236118 Residential Remodelers 

236118 Revenues < $10 million 100% 95% 92% 91% 

236118 Revenues > $10 million 0% 5% 8% 9% 

236220 Commercial Building Contractors 

236220 Revenues < $10 million 88% 41% 30% 24% 

236220 Revenues > $10 million 12% 59% 70% 76% 

238150 Glass and Glazing Contractors 

238150 Revenues < $10 million 98% 82% 77% 77% 

238150 Revenues > $10 million 2% 18% 23% 23% 

238170 Siding Contractors 

238170 Revenues < $10 million 100% 90% 88% 87% 

238170 Revenues > $10 million 0% 10% 12% 13% 

238210 Electrical Contractors 

238210 Revenues < $10 million 98% 68% 61% 60% 

238210 Revenues > $10 million 2% 32% 39% 40% 

238220 Plumbing and HVAC Contractors 

238220 Revenues < $10 million 98% 70% 63% 61% 

238220 Revenues > $10 million 2% 30% 37% 39% 

238290 Other Building Equipment Contractors 

238290 Revenues < $10 million 95% 60% 55% 55% 

238290 Revenues > $10 million 5% 40% 45% 45% 

238310 Drywall and Insulation Contractors 

238310 Revenues < $10 million 97% 64% 60% 60% 

238310 Revenues > $10 million 3% 36% 40% 40% 

238320 Painting and Wall Covering Contractors 

238320 Revenues < $10 million 100% 92% 88% 88% 

238320 Revenues > $10 million 0% 8% 12% 12% 

238340 Tile and Terazzo Contractors 

238340 Revenues < $10 million 100% 91% 86% 86% 

238340 Revenues > $10 million 0% 9% 14% 14% 

238350 Finish Carpentry Contractors 

238350 Revenues < $10 million 100% 86% 84% 83% 

238350 Revenues > $10 million 0% 14% 16% 17% 

238390 Other Building Finishing Contractors 

238390 Revenues < $10 million 98% 81% 74% 74% 

238390 Revenues > $10 million 2% 19% 26% 26% 

Total 

Total Revenues < $10 million 98% 69% 58% 50% 

Total Revenues > $10 million 2% 31% 42% 50% 

100 percent = establishments in this revenue category make up over 99.5 percent, but less than 

 100 percent of establishments in the industry. 

Source: U.S. Census Bureau 2004c,d,e,f,g,h,i,j,k,l,m; U.S. Census Bureau 2005m 

The distribution of the number of establishments for all twelve NAICS codes is greatly skewed toward 

smaller establishments. In five out of twelve industry sectors, over 99.5 percent of establishments have 

revenues below $10 million. For the remaining sectors, establishments with revenues greater than $10 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-10 

million make up less than 5 percent of establishments in any sector (with the exception of the Commercial 

Building Construction industry where 12% of establishments earn more than $10 million in revenues3

). 

Thus, about 98 percent of all establishments in the affected industries have revenues well below the SBA 

definition of small business. 

Establishments with revenues of less than $10 million account for between 41 and 95 percent of total 

employment for each sector, and about 69 percent of employment overall. The distribution of the net 

value of construction work and the total value of business done is skewed toward smaller establishments 

in a manner similar to the distribution of employees. Establishments with revenues of less than $10 

million account for between 30 and 92 percent of the net value of construction work and between 24 and 

91 percent of the total value of business done in each sector. It is worth mentioning that if the 

Commercial Building Construction industry is removed, the lows in the previously cited categories jump 

to 55 percent. Overall (across all industry sectors) small businesses contribute about 58 percent of the net 

value of construction work and 50% of the total value of business (U.S. Census Bureau 

2004c,d,e,f,g,h,i,j,k,l,m; U.S. Census Bureau 2005m). 

2.1.3.2 Labor and Material Costs as a Percentage of Total Value of Business Done 

In order to better understand the potential impacts of the rule on the affected industries, and particularly 

on small businesses, it is important to observe whether establishment costs as a percentage of the total 

establishments’ total revenues differ for small and large establishments. Figure 2-1 examines labor and 

material costs, as well as the cost of construction work subcontracted out as a percentage of the total value 

of business done for the twelve affected sectors. While the rule will increase the cost of material slightly, 

the major impact will be on labor costs, including the training of staff. Each of the sectors was broken 

down into two size categories by revenue bracket: less than $10 million and $10 million and more. The 

cost of labor, of materials, and of construction work subcontracted out was summed across the 12 industry 

sectors for large and for small establishments. These values were then compared to their total value of 

business. 

Labor costs, material costs, and the cost of construction work subcontracted out as a percentage of total 

value of business done are presented in Figure 2-1. Regardless of size of establishments, material costs 

tend to be a slightly larger percentage of total revenues than do labor costs. Labor costs make up about 25 

percent of revenues for small establishments and about 16 percent for large establishments. Based on 

Census data, large establishments subcontract out a much larger percentage of their work than do small 

businesses. 

 

3 Once again, this difference arises because of the larger size of a majority of Commercial building construction 

projects. Regardless, if only 12% earn revenues greater than $10 million, it can easily be assumed that a much 

smaller percentage of establishments in this industry earn revenues greater than the SBA cutoff of $33.5 

million. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-11 

 Figure 2-1: Labor and Material Costs as % of Total Value of Business Done 

Labor Cost as % of

Total Value of

Business Done

M aterial Costs as % of

Total Value of

Business Done

Cost of Construction

Work subcontracted

out as % of Total Value

of Business Done

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Type of Cost

Establishments with value of

Business Done of: < $10 million

Establishments with Value of

Business Done of: $10 million+

Source: U.S. Census Bureau 2005a 

2.2 Child Care and Schools: Child Occupied Facilities 

For the purposes of analysis, COFs are divided into the following categories4: 

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

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

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

 Informal daycare: Informal (i.e. not licensed) day care providers, including relatives and nonrelatives. Some of these providers may be paid for their services. 

There is a great deal of diversity and complexity in the childcare industry. The formal childcare sector 

consists primarily of two types of facilities – center-based care and family daycare. Daycare centers are 

typically located in commercial or educational buildings, including schools and university campuses. 

They include private for-profit and non-profit facilities that can operate as independent centers or as part 

of chains. For-profit facilities can be found in office buildings, factories, other workplace settings, or in 

stand-alone facilities. Non-profit facilities may be found in YMCAs or other community centers, 

churches, college and university campuses, as well as in office or stand-alone buildings. Government 

 

4 The analysis is limited to kindergartens, pre-schools, daycare centers, family daycare, and informal daycare. Due 

to a lack of data, it does not include other facilities that may qualify as COFs under the rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-12 

education and human services agencies also provide daycare through programs such as Head Start, as 

well as through kindergarten and pre-kindergarten programs at local schools. 

Unlike center-based care, family daycare is typically offered in the home of the caregiver. Family 

daycare facilities tend to serve smaller groups of children and have a smaller child-to-caregiver ratio 

(KeepKidsHealthy 2001). In addition to formal care provided by daycare centers, schools, and family 

daycare, children may also be cared for informally by relatives, family friends, or other acquaintances. 

Informal care may be paid or unpaid, and usually takes place at the home of either the child or the 

provider. 

Table 2-7 summarizes the types and numbers of facilities and childcare providers in this universe, 

grouping them by the age of their construction. It shows that the rule would apply to 1,656,000 childoccupied facilities, of which 1,559,000 are in target housing. 

Table 2-7: Total Number of Childcare Facilities in the United States, Number of 

Child-Occupied Facilities Potentially Affected by the Rule 

Number by Date of Construction b,c, 

Type 

Total Childcare 

Facilities in the 

United Statesa All Pre-1978 All Pre-1960 

(1) Schools with prekindergartens and/or 

kindergartens 

79,000 46,000 25,000 

(2) Pre-schools and daycare 

centers located outside of 

schools 

88,000 51,000 28,000 

(3) Childcare in target 

housing 

2,398,000 1,559,000 823,000 

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

a. The Total Childcare Facilities in the United States count includes facilities constructed 

both before and after 1978. Facilities constructed after 1978 are not regulated under 

the rule. 

b. Not all facilities in the table have lead-based paint. 

c. The number of facilities by date of construction is inclusive (pre-1960 is a subset of 

pre-1978). 

Sources: Center for the Childcare Workforce and Human Services Policy Center 2002; U.S. 

Bureau of Labor Statistics 2006; U.S. Department of Education 2004; U.S. Department of 

Energy 2003; Wilder Research Center 2001, Wilder Research Center 2005.

2.2.1 Daycare Centers and Family Daycare 

Establishments involved in the provision of day care of infants or children are classified under NAICS 

624410 – Child Day Care Services. This industry covers child day care centers (including those located 

in the provider’s home), pre-school centers, nursery schools and pre-kindergarten centers (except as part 

of elementary schools). In 2002, Census reported that this industry included over 55,000 firms that 

employed nearly 752,000 people (U.S. Census Bureau 2005d). Furthermore, Census reports 618,947 

non-employers in the industry (U.S. Census Bureau 2005k). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-13 

While Census covers both family and center-based childcare under NAICS 624410, there is reason to 

believe that Census undercounts the number of employer firms in this industry. This is likely to occur for 

two reasons. First, it is likely that the number of firms reported by Census primarily includes centers, 

since care provided solely by one person (as occurs at many family daycare establishments) would be 

classified under non-employer statistics. Second, Census classifies a business into NAICS 624410 if its 

primary line of business is the provision of child day care services; it is likely that many facilities have 

alternate primary lines of business (YMCAs and churches, for example). The number of non-employers, 

on the other hand, is likely to include care providers such as nannies or babysitters that do not constitute 

formal care, but that cannot be disentangled from the total count. 

In light of the limitations of the Census data, an alternative data source is used for this analysis. In 2005, 

the National Association for Regulatory Administration (NARA) in conjunction with the National 

Childcare Information Center (NCCIC) conducted a study on the number and licensed capacity of daycare 

centers and family daycare establishments in the 50 U.S. states. Based on these data, there are 

approximately 115,000 licensed daycare centers in the United States. Because licensing requirements 

differ from state to state, this count includes 105,444 facilities licensed as daycare centers, as well as 

about 10,000 facilities such as Head Start, religious daycare, and other similar establishments, which are 

required to obtain a license in some states, but must only be registered or certified in others. 

According to the Department of Housing and Urban Development’s (HUD) First National Health Survey 

of Childcare Centers, about 22 percent of licensed daycare centers are located in elementary schools. 

Since throughout this analysis, schools are analyzed separately from daycare centers, the number of 

daycare centers was reduced by 22 percent, bringing the total number of centers to 89,260. According to 

NCES data on public and private schools, however, an additional 1,421 schools without kindergartens 

have a pre-kindergarten program (See Section 2.2.2.1). These 1,421 centers are also excluded from the 

total center counts to avoid double-counting, bringing the number of centers to 87,840. 

In addition to the 115,000 centers, NARA reported a total of 166,514 licensed small family childcare 

homes and 47,452 large family childcare homes.5

 With the addition of about 16,000 family daycare 

homes that are reported as certified, not licensed, NARA reports a total of 229,875 family daycare 

facilities. 

Because some states either completely exempt family daycare with fewer than a certain number of 

students from licensing requirements, or offer voluntary registration, the family daycare numbers reported 

by NARA are likely to underestimate the total family daycare universe. As such, to estimate the number 

of family daycares, this analysis relied on a 2002 report by the Center for the Childcare Workforce, which 

provides data on family childcare providers caring for unrelated children in their own homes. Based on 

these data, it is estimated that there are a total of 591,071 family daycare facilities in the United States. 

Table 2-8 summarizes the size of the formal (center and family daycare) childcare universe. 

 

5 Here large and small refer to the number of children enrolled. It is not the same as the large and small definitions 

used by SBA. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-14 

Table 2-8: Number of Daycare Centers and Family Daycare 

Facilities in the United States 

Daycare Centers 

(excluding schools) 

Total Family 

Daycare 

Number of facilities 87,840 591,071 

Sources: NARA 2006; Center for Childcare Workforce 2002

2.2.1.1 Daycare Center and Family Daycare Outlook 

Figure 2-2 plots changes in the numbers of licensed child-occupied facilities between 1995 and 2004 

using information compiled from the Childcare Licensing Studies published annually by the Children’s 

Foundation and the National Association for Regulatory Administration (NARA).6

 These data give larger 

counts than the data above because they include facilities in Puerto Rico, Guam and the Virgin Islands.7

 

But the trends displayed in this data are likely to be present in the smaller data set. The number of 

licensed Childcare Centers has grown gradually over time, from 92,000 in 1995 to 120,000 facilities in 

2004. The number of Large/Group Family Childcare Homes grew in a similar manner, before tapering 

off in 2004. Over the time period specified, the number of Small Family Childcare Homes declined from 

276,000 to 256,000, while exhibiting much more variation from year to year than the other two 

categories. Here, as noted earlier, large and small refer to the number of children enrolled, not the SBA 

definition of a large or small entity. 

 

6 When the Children’s Foundation closed in 2005, NARA assumed sole responsibility for collecting licensing 

information through the annual study. However, because the methodology was altered with the new leadership, 

data from the 2005 Childcare Licensing Study were not included into Figure 2-2. 

7 While the rule would apply to Puerto Rico, Guam and the Virgin Islands, they are not included in this analysis for 

reasons of consistency since some of the major data sources used elsewhere in the analysis were limited to the 

50 states and the District of Columbia. Holding all other things equal, by not including COFs in Puerto Rico, 

Guam, and the Virgin Islands, the analysis underestimates the costs and benefits of the rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-15 

Figure 2-2: Number of Licensed Child-Occupied Facilities: 1995-2004 

0

50,000

100,000

150,000

200,000

250,000

300,000

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004

Time

Number

Small Family Child Care Homes

Child Care Centers

Large/Group Family Child Care Homes

Sources: National Childcare Information Center 2005

The market for lead-safe renovation activities in COFs is dependent on the number of care providing 

facilities. Figure 2-2 indicates that while there have been some fluctuations in the underlying components 

of the overall market, when considered over the entire time frame, the number of licensed COFs has been 

relatively stable. 

While there wasn’t significant growth in childcare over the 1995-2004 timeframe, a study forecasts 

growth in the demand for childcare labor. Fueling the future demand for childcare services is the 

expected increase in the amount of children below 5 between 2004 and 2014. Adding to this growing 

demand will be an increased female labor force participation rate, forcing families to find alternate care 

options for their children. Furthermore, many states will be implementing their own care programs for 3- 

and 4- year old children in the coming years. The government also plans to increase subsidies for lowincome families attending day care programs (Bureau of Labor Statistics 2005). While trends point to 

increased demand for childcare labor, it is difficult to assess whether this will be accompanied by an 

increase in the number of facilities, and to what extent these new facilities will be located in pre-1978 

buildings. 

2.2.1.2 Informal Daycare 

Informal daycare is provided by unlicensed providers, including relatives, friends, and others. 

Calculations determining the number of informal daycare providers are based on figures and percentages 

found in a report on the number of paid relatives and non-relatives providing childcare entitled 

“Estimating the Size Components of the U.S. Childcare Workforce and Caregiving Population: Key 

Findings from the Childcare Workforce Estimate” (Center for Childcare Work Force 2002).8

 

 

8 For a more in-depth discussion of the methodology refer to Section 2 of Chapter 4 of this analysis. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-16 

Target Housing COFs 

Family daycare and informal daycare take place in target housing. Renovation events in some target 

housing COFs would be regulated under the 2008 LRRP rule regardless of their status as a COF; for 

example, if they are owner-occupied units where a child under the age of six or a pregnant woman resides 

or if they are rental units. For a detailed explanation of the methodology used to estimate the number of 

target housing COFs, please see Section 4.2 of Chapter 4. Section 2.8 presents the estimated numbers of 

target housing COFs affected by the rule. 

2.2.2 Public and Private Schools 

This section describes the number and size of public and private schools with kindergartens and prekindergartens. 

2.2.2.1 Number of Schools 

According to the National Center for Education Statistics, during the 2004-2005 academic year, there 

were 93,295 public schools with students in the United States. In total, these schools served 48.8 million 

students (NCES 2006a). The rule will apply only to those portions of schools that meet the COF 

definition. Thus, the rule is expected to primarily impact schools that have kindergarten or prekindergarten programs. According to the NCES’s Public Elementary and Secondary School Universe 

Survey, which collects data on all operational public schools in the United States, in 2004-2005, 52,129 

of the 93,295 U.S. public schools (roughly 56 percent) provided either pre-kindergarten or kindergarten 

services.9

 Of these 52,129 schools, 20,885 offered both pre-kindergarten and kindergarten and 29,884 

schools provided kindergarten services only. Only 1,400 schools offered pre-kindergarten, but not 

kindergarten services; this group of schools includes standalone preschools operated by local school 

boards, as well as daycare centers located in public middle schools, high schools, and ungraded schools 

(See Table 2-9). Note that these figures are not limited to schools with pre-1978 buildings. 

Table 2-9: Number of Public Schools, by Type 

Type of Public School Number of Schools 

Total number of public elementary and secondary schools 93,295 

Number of schools with pre-kindergartens and kindergartens 20,885 

Number of schools with pre-kindergartens but no kindergartens 1,400 

Number of schools with kindergartens, but no pre-kindergartens 29,844 

Total number of schools with pre-kindergartens 22,285 

Total number of schools with kindergartens 50,729 

Total number of schools with pre-kindergartens or kindergartens 52,129 

Source: NCES 2006a,b 

As shown in Table 2-10, in 2004-2005 a total of 990,421 pre-kindergartners and 3,543,554 kindergartners 

were enrolled in pre-kindergartens and kindergartens offered at public schools, respectively. Given the 

number of programs described above, this means that there are roughly 44 pre-kindergarten students per 

school and 70 kindergarten students per school. 

 

9 A school was considered as having a pre-kindergarten if a) pre-kindergarten enrollment was greater than zero 

students, or b) the school reported that the lowest grade offered was pre-kindergarten, but enrollment data were 

not provided. Similarly, a school was considered as having a kindergarten if a) kindergarten enrollment was 

greater than zero, or b) the school reported that the lowest grade offered was pre-kindergarten or kindergarten, 

but did not report kindergarten enrollment. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-17 

Table 2-10: Enrollment in Public Pre-kindergarten and Kindergarten Program Statistics 

Number of 

Schools offering 

program 

Number of 

Students Served 

Average Students 

Served per School 

Pre-kindergartens in public schools 22,285 990,421 44 

Kindergartens in public schools 50,729 3,543,554 70 

Source: NCES 2006a,b 

Number of Public School Districts 

Public schools in the United States are operated by local education agencies (LEAs), organizations 

“responsible for providing free public elementary/secondary instruction or education support services.” 

The National Center for Education Statistics collects data on LEAs through its Common Core of Data 

(CCD) fiscal and non-fiscal surveys. NCES designed the Common Core of Data system to 

“accommodate the many and varied organizational structures used in the provision of public elementary 

and secondary education.” As such the CCD contains records that represent “administrative and 

operating units that are unlike typical public schools and school districts – for example, regional 

administrative service centers without students.” 

According to the CCD Local Education Agency Universe Survey, in 2004-2005, 17,647 LEAs operated 

in the 50 contiguous states and the District of Columbia. Of these 17,647 agencies, 14,473 operated at 

least one school that offered pre-kindergarten or kindergarten services and may thus be affected by the 

rule. 

Of the 14,473 local education agencies responsible for schools with pre-kindergarten and kindergarten 

programs, just under 13,200 are typical public school districts (usually county or town agencies 

responsible for providing education services in that location). An additional 949 agencies are charter 

school organizations. The remaining 333 agencies represent regional, state, and federal institutions, as 

well as supervisory union administrative centers.10 Table 2-11 presents a detailed breakdown of the 

number of education agencies by agency type, as well as counts of schools with pre-kindergartens and/or 

kindergartens operated by each agency. 

 

10 Supervisory union administrative centers operate schools only in Massachusetts, Vermont, and Virginia. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-18 

Table 2-11: Number of Local Education Agencies Operating Schools with Kindergartens or 

Pre-Kindergartens, by Agency Type 

Type of Local Education Agency 

Number of 

Agencies 

Number of Schools 

with Pre-K or 

Kindergarten 

Programs 

Average 

Number of 

Pre-K or K 

Schools 

Local School District 13,191 50,386 3.8 

Supervisory Union Administrative Office 85 159 1.9 

Regional Education Services Agency 167 308 1.8 

State Institution 54 75 1.4 

Federal Institution 27 188 7.0 

Other Agency (Primarily Charter Schools) 949 1,013 1.1 

Total 14,473 52,129 3.6 

Source: NCES 2006b,c 

The NCES collects data on the revenues and expenditures of local education agencies through its CCD 

School District Finance Survey. Table 2-12 presents the total revenues, average revenues, and percent 

revenues derived from federal, state, and local funds for education agencies operating schools with prekindergarten and/or or kindergarten programs. All figures are based only on agencies with available data; 

for each agency type, the table indicates the percent of LEAs represented in the totals. Note that financial 

data were not available for any federal institutions, nor for most state institutions. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-19 

Table 2-12: Total Revenues, Average Revenues and Percent of Revenues by Source for Local 

Education Agencies Operating with Pre-Kindergarten and/or Kindergarten Programs 

Revenues 

Percent of Revenues by 

Revenue Source 

 

% LEAs 

with Data 

Total Revenues, 

(Millions of $) 

Average LEA 

Revenues ($) Federal State Local 

Local School District 99% $440,444 $33,560,173 8% 47% 45%

Supervisory Union 

Administrative Office 91% $1,269 $16,481,935 8% 41% 52%

Regional Education 

Services Agency 95% $7,612 $48,180,367 24% 35% 41%

State Institution 7% $8 $2,115,250 12% 54% 34%

Federal Institution 0% n.a. n.a n.a n.a n.a

Other Agency 

(Primarily charter 

schools) 81% $2,074 $2,683,282 11% 68% 21%

All LEAs 98% $451,408 $31,933,217 9% 46% 45%

Source: NCES 2006b,c,d 

Table 2-13 presents the total and average expenditures of local education agencies. Total expenditures 

are composed of total current expenditures for elementary/secondary education, as well as other 

expenditures. Elementary/secondary education current expenditures include expenditures for instruction 

(e.g. teacher salaries), support services (including, but not limited to, administrative, maintenance, and 

operations costs), and other expenses, such as transportation and food services. Other expenditures 

include spending not related to elementary/secondary education, such as expenditures for community 

service, or adult education, capital outlay expenditures, payments to other government and educational 

entities, and debt interest payments. In Table 2-13 current expenditures are split out by type, while the 

remainder (capital and non-educational) are combined and labeled as “all other” expenditures. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-20 

Table 2-13: Total Expenses, Average Expenses, and Percent of Expenditures by Expenditure 

Type for Local Education Agencies 

 Expenses 

Percent of Expenditures by Expenditure 

Type 

 

% LEAs 

with Data 

Total 

Expenses (in 

Millions of $)

Average 

Expenses Instruc. 

Support 

Service 

Other 

Current 

All 

Other 

Local School District 99% $451,464 $34,399,846 52% 28% 3% 17% 

Supervisory Union 

Administrative Office 91% $1,203 $15,628,805 57% 32% 3% 8% 

Regional Education 

Services Agency 95% $7,154 $45,278,905 28% 33% 1% 38% 

State Institution 7% $7 $1,759,000 49% 39% 0% 11% 

Federal Institution 0% n.a. n.a. n.a. n.a. n.a. n.a. 

Other Agency (Primarily 

charter schools) 81% $2,023 $2,616,922 47% 41% 3% 9% 

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

Sources: NCES 2006b,c,d 

For most LEAs, the majority of expenditures (51 percent on average, across all LEAs) are spent on 

instruction. In aggregate, the category containing maintenance costs (i.e. support service) makes up 

around one-third of all expenditures. Lastly, the “all other” expenditures category makes up a significant 

percentage of the expenditures for regional education services agencies. 

Under the Regulatory Flexibility Act, public school districts are considered large if they serve a 

population of more than 50,000. Table 2-14 presents the number of LEAs that operate schools that have 

pre-kindergartens and/or kindergartens, by agency type and the size of the population served. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-21 

Table 2-14: Local Education Agencies that operate schools with Kindergartens 

and/or Pre-Kindergartens, by Agency Type and Size of Population Served 

Type of Local Education 

Agency 

Total Number of 

LEAs with Pre-K 

or K Programs 

Number of LEAs 

Serving < 50,000a

Small LEAs as % 

of all LEAs with 

Pre-K or K 

Programs 

Local School District 13,191 12,130 92% 

Supervisory Union 

Administrative Office 85 84 99% 

Regional Education 

Services Agency 167 167 100% 

State Institution 54 0 b

 0% 

Federal Institution 27 0 b 0% 

Other Agency (Primarily 

charter schools) 949 949 100% 

All LEAs 14,473 13,330 92% 

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

districts for which no population data were available were assumed to serve a population of 

fewer than 50,000. 

b. Assumes that all state and federal agencies are large. 

Source: NCES 2006b,c,e,g 

Private schools 

In 2003-2004, the National Center for Education Statistics conducted a survey of private schools in the 

United States. NCES’s Characteristics of Private Schools in the United States: Results From the 2003-

2004 Private School Universe Survey (2006) presents a summary of survey results, including numbers of 

schools currently in operation, the number of students enrolled, and teachers employed. Table 2-15 

presents summary statistics on national private schools, including a total count of all private schools, 

enrollment and teachers, as presented in NCES’s report. 

Table 2-15: Enrollment and Teacher Statistics for Private Schools 

Entity 

Number of 

Schools 

Total 

Enrollment

Total 

Teachers

Average 

Enrollment 

Average 

Teachers 

Private Schools 34,681 5,212,992 441,384 150.3 12.7 

Sources: NCES 2006e 

According to the NCES data, in 2003-2004 there were 34,681 private schools in the U.S., enrolling a total 

of just over 5.2 million students, with a total teaching staff of over 441,000. On average, there were 150 

students enrolled in a private school and 13 teachers per school. These figures must be interpreted with 

caution however, since they encompass elementary schools, secondary schools, etc. which, by definition, 

include different numbers of classes. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-22 

While the NCES report provides some data on the number of private schools by grade level, it does not 

provide data on grades offered by each individual school in the survey. In order to identify schools with 

kindergartens only, pre-kindergartens and kindergartens, and pre-kindergartens only, this analysis relied 

on the Excel database underlying NCES’s 2003-2004 report. This database, which contains records for 

29,907 of the estimated 34,461 private schools in the United States, specifies the highest and lowest grade 

offered at each school, as well as the number of students enrolled in each grade. The database, however, 

does not include sampling weights used to adjust some of the survey results to generate final numbers 

presented in NCES’s report. In order to most accurately estimate the number of schools offering each 

combination of kindergarten or pre-kindergarten programs, as well as the number of children enrolled in 

these programs, this analysis: 

 used the underlying database to identify schools with pre-kindergartens only, kindergartens only, 

and both kindergartens and pre-kindergartens, then 

 inflated these counts to account for the 4,500 schools that were not included in the database. The 

numbers of schools offering each combination of programs was inflated using the ratio of the 

number of schools presented in the published report to the number of schools included in the 

database. Similarly, the number of children in each school setting, estimated based on the 

underlying data, was adjusted using the ratio of the number of kindergartners presented in the 

published report to the number of kindergartners reported in the database.11 

Table 2-16 breaks down the totals from the previous table to provide a count of the number of private 

schools with pre-kindergartens and/or kindergartens. 

Table 2-16: Number of Private Schools, by Type 

Type of Private School 

Number of 

schools 

Total number of private elementary and secondary schools 34,681 

Number of schools with pre-kindergartens and kindergartens 19,305 

Number of schools with pre-kindergartens and no kindergartens 21 

Number of schools with kindergartens but no pre-kindergartens 7,205 

Total number of schools with pre-kindergartens 19,326 

Total number of schools with kindergartens 26,510 

Total number of schools with pre-kindergartens or kindergartens 26,531 

Source: NCES 2006e 

Of the 34,681 private schools counted in the 2003-2004 survey, 26,531 provided either pre-kindergarten 

or kindergarten services.12 Furthermore, of these 26,531 private schools, 19,305 provided both prekindergarten and kindergarten services. Only 21 private schools provided pre-kindergarten but not 

 

11 In its report, NCES tracks schools where kindergarten is the highest grade offered separately from regular 

elementary, middle and high schools. As such, when inflating counts obtained from underlying data, the 

analysis calculated two sets of ratios for the numbers of schools and numbers of children enrolled – one for 

regular, and another for kindergarten-terminal schools. 

12 A private school was identified as having a pre-kindergarten or kindergarten in the same fashion as a public school 

was in Section 2.2.1. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-23 

kindergarten services13; while 7,205 private schools offered kindergarten but not pre-kindergarten 

services. Note that these figures are not limited to schools in pre-1978 buildings. 

Table 2-17 presents a count of the number of pre-kindergarten and kindergarten students served in private 

schools, as well as the average number of students served per school. 

Table 2-17: Total Number and Average Kindergarten and Pre-Kindergarten Students 

Served Per School 

Number of Schools 

offering Program 

Number of Students 

Served 

Average Students 

Served per School 

Pre-kindergartens in private schools 19,326 863,542 45 

Kindergartens in private schools 26,510 555,531 21 

Source: NCES 2006e 

According to Table 2-17, there are 26,510 private schools with kindergartens, enrolling a total of 555,531 

kindergarteners. Also, there are 19,326 private schools with pre-kindergartens, enrolling 863,542 prekindergarten students. The average number of private pre-kindergarten students per school (45) is more 

than double the average number of kindergarten students (21). Whereas public schools displayed nearly 

the opposite ratio with on average 44 pre-kindergarten students and 70 kindergarten students per school. 

Non-profit organizations, including private schools, are defined as small under the Regulatory Flexibility 

Act if they are independently owned and operated and not dominant in their field. While determining 

whether a school meets this definition is difficult, it is useful to present some statistics describing the size 

distribution of private schools. Table 2-18 shows the distribution of private schools by the number of 

students they serve. This represents the total number of students served, and not just the number of 

kindergarten and pre-kindergarten students. 

Table 2-18: Schools with Kindergarten or Pre-Kindergarten programs, by Number of 

Students in the School 

Number of Students Served 

<100 100-499a

 500-999 1000-1499 >1500 

 Total % Total % Total % Total % Total % 

Number of 

Private School 10,862 41% 13,951 53% 1,519 6% 161 1% 38 0%

Note: schools that did not report the total number of students were considered as having less than 100 student 

a. Includes all schools with missing total student data. These schools are assumed to have student enrollment 

equal to the average school with over 100 students, or 285. 

Source: NCES 2006e 

The distribution of private schools in the U.S. is heavily skewed toward smaller schools, with 94% of 

private schools serving less than 500 students and 99% of private schools serving less than 1000 students. 

 

13 Beginning in 1995, the definition of school employed by the Private School Survey was expanded to include 

schools whose highest grade was kindergarten. Therefore, these statistics are likely to include some prekindergartens that are more likely also classified as preschools in other sources (NCES 2006e). Later sections 

explain how the calculations avoid double-counting. However, because this is a small figure, it is almost 

negligible. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-24 

However, these data do not indicate whether the schools are affiliated with or part of a larger 

organization. 

2.3 Nonresidential Commercial Property Owners and Managers 

Nonresidential commercial property owners and managers will be affected by the rule if they rent space to 

daycare facilities or other COFs in buildings constructed prior to 1978. The number and size of firms in 

this industry is described below. 

2.3.1 Industry Definitions and Characteristics 

Firms involved in the leasing of nonresidential buildings (except Miniwarehouses) are classified under 

NAICS 531120 – Lessors of nonresidential buildings (except Miniwarehouses). In 2002, this industry 

included 28,426 firms that employed 154,725 people (U.S. Census Bureau 2005b). 

Firms involved in the management of non-residential properties are classified under NAICS 531312 – 

Nonresidential property managers. In 2002, this industry included 10,506 firms that employed 125,616 

people (U.S. Census Bureau 2005b).14 Table 2-19 includes only firms with employees. The U.S. Census 

Bureau does not differentiate between self-employed individuals that lease or manage commercial real 

estate as opposed to residential buildings. This analysis assumes that non-employers primarily lease 

residential buildings, rather than commercial property. As such, non-employer establishments are not 

included in this profile, or in the remainder of the analysis. 

Table 2-19: Summary Statistics for NAICS 531120 and NAICS 531312 

NAICS Code and Description Firms 

Annual Revenues 

(000) 

Annual Payroll 

(000) Employees

531120 - Lessors of 

nonresidential buildings (except 

miniwarehouses) 

28,426 $51,778,431 $5,384,512 154,725 

531312 - Nonresidential property 

managers 

10,506 $12,297,703 $5,521,674 125,616 

Total 38,932 $64,076,134 $10,906,186 280,341 

Sources: U.S. Census Bureau 2005j 

The 2008 LRRP rule economic analysis (EPA 2008) indicated that a total of 17,705 daycare centers rent 

space in pre-1978 buildings. Because daycare centers are only one of many types of establishments 

renting non-residential space, and because the rule applies only to centers in buildings constructed prior to 

1978, the analysis also assumes that each property manager or lessor firm owns only one regulated 

building. As such, the number of affected lessor/manager firms is equivalent to the number of daycare 

centers renting space, or 17,705. 

2.3.2 Establishment Size and Industry Environment 

The U.S. Small Business Administration indicates that to qualify for small business status, a firm in 

NAICS 531120 must have revenues of less than $7 million, while firms in NAICS 531312 must have 

revenues of less than $2 million (U.S. Small Business Administration 2008). Average revenues in these 

NAICS codes are significantly below the small business designation threshold (Table 2-20). 

 

14 Firms involved in the leasing and/or management of residential buildings are already covered under the residential lead RRP 

rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-25 

Table 2-20: Summary Statistics for NAICS 531120 and NAICS 531312 (Per Firm) 

NAICS Code and Description 

Average Annual 

Revenues ($) 

Average Annual 

Payroll ($) 

Paid Employees 

Per Firm 

531120 - Lessors of 

nonresidential buildings (except 

miniwarehouses) 

$1,821,517 $189,422 5.4 

531312 - Nonresidential property 

managers 

$1,170,541 $525,573 12.0 

Sources: U.S. Census 2005j 

Census data are not specific enough to report revenues at either the $7 million dollar or $2 million dollar 

cutoff; Table 2-21 presents the percent of firms in NAICS 531120 and NAICS 531312 that have revenues 

below $5 million and $1 million respectively. Consequently, the figures in Table 2-21 are all 

underestimates of the true percentages of firms that qualify as small businesses. 

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

NAICS 

Code: Description 

Percent of 

Firms by 

Revenue 

Bracket 

Percent of 

Industry 

Revenues by 

Revenue 

Bracket 

Percent of 

Industry 

Employees by

Revenue 

Bracket 

531120 Lessors of nonresidential buildings (except mini-warehouses) 

 Firms with Revenues < $5 million 96% 32% 73% 

 Firms with Revenues of $5 million+ 4% 68% 27% 

531312 Nonresidential property managers 

 Firms with Revenues < $1 million 81% 19% 26% 

Firms with Revenues of $1 million + 19% 81% 74% 

Sources: U.S. Census 2005j 

Based on 2002 data, 96 percent of NAICS 531120 firms and 81 percent of NAICS 531312 firms have 

revenues below $5 million and $1 million, respectively. In the Lessors of Nonresidential Buildings 

industry, these firms contribute 32 percent of the industry revenues while employing 73 percent of the 

workforce. The revenue and employment distribution is more skewed in the Nonresidential Property 

Managers sector. Small firms in this industry contribute only 19 percent of the revenues, while 

employing only 26 percent of the workforce. 

2.4 The Demand for Renovation Services 

The demand for renovation is responsive to changes in the overall economic conditions. The same factors 

that stimulate economic growth, such as low unemployment, high consumer confidence and low interest 

rates, also stimulate the demand for renovation activities. For both residential and nonresidential building 

projects, the U.S. Census Bureau tracks information on the “value of construction put in place,” a figure 

composed of some of the variables previously discussed in this chapter such as labor and material costs 

(while also including other variables such as the contractors profit, the cost of architectural and 

engineering work, etc). Although the definition of construction includes renovations, alterations, 

additions, and other improvements, it does not include “maintenance and repairs to existing structures or 

service facilities” (U.S. Census Bureau 2006d), two components of primary interest to this rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-26 

Using this Census data, Figure 2-3 illustrates the relationship between the value of construction put in 

place for private preschools (a term that includes childcare and day-care centers, nurseries, and 

preschools), state and local elementary school buildings, private primary and secondary educational 

buildings, and real GDP (U.S. Census Bureau 2006b,c).15 Both real GDP and the value of state and local 

construction of elementary school buildings substantially increased over the previous 12 years. 

Meanwhile, the value of private preschool construction and private primary and secondary educational 

buildings construction have seen more moderate growth, peaking around 2001 and then gradually 

tapering off. 

Figure 2-3: Annual Value of Construction Put in Place Compared to GDP 

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

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

Year

Millions of Dollars

7,000,000

7,800,000

8,600,000

9,400,000

10,200,000

11,000,000

11,800,000

State and Local Construction of Elementary School Buildings - Read Left-Hand Vertical Scale for Values in

Millions of Dollars

Private Preschool Construction - Read Left-Hand Vertical Scale for Values in Millions of Dollars

Private Primary and Secondary Educational Building Construction - Read Left-Hand Scale for Values in

Millions of Dollars

Real Gross Domestic Product in millions of chained 2000 dollars - Read Right-Hand Vertical Scale for

Values in Millions of Dollars

Source: U.S. Census Bureau 2006b,c; U.S. Department of Commerce 2006 

Construction is a term that encompasses not only the creation of new buildings but renovations to older 

structures as well. While the Census tracks this breakdown between renovation and new building 

construction for residential construction, it does not for non-residential construction. The U.S. Census 

Bureau, however, did compile statistics for the expenditures of non-residential improvements in 1986, 

1989, and 1992. The U.S. Census defines improvements as “additions, alterations (renovations, 

 

15 State and Local Construction of Elementary School Buildings is meant to give an indication of public kindergarten 

construction, while Private Primary and Secondary Educational Building Construction is meant to give an 

indication of private school kindergartens. Since the variables shown in Figure 2-3 are more broadly defined 

than the variables of interest, they overestimate the value of construction put in place. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-27 

remodeling, etc.) and major replacements.” While not being able to collect data on the number or extent 

of the individual projects, the Census was able to make some estimations in the non-residential domain, 

concluding that “about 23 percent of all buildings had some improvement work, while about 71 percent 

had some expenditures for repair” (U.S. Census Bureau 1999). The collected data, however, were not 

specific enough to capture improvement expenditures on COFs. Thus, Table 2-22 presents improvement 

expenditures as the percentage of the total value of non-residential educational building construction put 

in place in each of the three years for which improvement expenditure data were available. 

Table 2-22: Improvement Expenditures as a Percentage of the Value of 

Construction Put in Place for Non-Residential Educational Buildings 

Type of Construction 1986 1989 1992 

Private Non-Residential Educational 

Buildings 40% 46% 19% 

State and Local Non-Residential 

Educational Buildings 58% 35% 41% 

Source: U.S. Census Bureau 1999, U.S. Census Bureau 2006b,c 

As shown in Table 2-22, expenditures on improvements as a percent of the total value of educational 

building construction put in place vary year to year. Expenditures on improvement made up between 35 

and 58 percent of the total value of construction put in place in either private or state and local nonresidential buildings in the three selected years, with the data moderately variable. These figures indicate 

that a substantial amount of non-residential educational building expenditures are for activities that might 

disturb lead-based paint. The high frequency of these improvement activities points to the importance of 

schools in this rule. 

2.5 Renovation Industry Market Structure 

The previous sections focused on the supply and demand for renovation services. This section discusses 

the overall market structure of the renovation industry. 

Firms and consumers interact in markets for goods and services with the results of these interactions 

depending on the competitive characteristics of the market. Competitive markets are characterized as 

markets with a large number of buyers (e.g., consumers) and sellers (e.g., firms) and relatively 

homogeneous goods. In competitive markets, neither firms nor consumers can influence the price of the 

good by altering their supply or demand decisions. Oligopolistic, monopolistic and monopsonistic 

markets are markets where either firms or consumers have market power and exhibit strategic behavior to 

change the price of the good sold. The competitive nature of an industry can be estimated by examining 

the following market characteristics. 

 Number of establishments; 

 Specialization of establishments; 

 Number of consumers; 

 Barriers to entry; 

 Availability of substitutes; and 

 Homogeneity of the good/service. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-28 

The data in Section 2.1 indicate that there are a large number of firms in the construction industry. Using 

data for the twelve NAICS codes, there are approximately 394,365 establishments with employees in 

construction sectors potentially affected by the rule. Of these establishments, only 2.3 percent have 

annual revenues of $10 million or more. In addition, there are about 1.2 million self-employed contractors 

in these industries, all of which are, in all likelihood, considered small by SBA standards. Given the large 

number of small establishments, it is unlikely that any one firm exhibits substantial market share in the 

overall market for renovation services. It is possible in some geographic areas for a small number of 

firms or a single firm to establish a market niche, but overall the market for renovation services appears to 

be quite competitive on the supply side. 

The relatively low barriers to entry in the renovation industry enhance the competition taking place within 

it. Much of the work covered by this rule does not require particularly unusual or high levels of skills. 

Renovation work has traditionally attracted recent immigrants because a lack of English is not important 

(Farzad 2005). While any training required as part of this rule will increase the skill level, the cost of the 

training is expected to be relatively low. 

There are also a large number of consumers in the industry. As such, no single consumer of renovation 

services is expected to exhibit influence over the price of these services. 

There are three sources of substitutes for renovation services. First, consumers can substitute from one 

contractor to another. Second, consumers can substitute away from professional renovation and into DIY 

work. This is less likely to occur for COFs than for residential RRP work. Operators of COFs must be 

certified and have their employees trained in order to do covered RRP in the facility. Third, consumers 

can reduce the scope of the project or forgo renovation altogether. However, that is unlikely as the cost of 

the rule is a relatively small share of the cost of a renovation. Again, this is less likely to occur for COFs 

than for residential RRP work. Many states require annual inspections in COFs that assess the amount of 

chipped or peeling lead-based paint and dictate that appropriate measures must be taken to alleviate the 

risk that it imposes. 

Additional characteristics of the RRP market result in reduced demand elasticity. First, some 

differentiation in RRP services does exist. Contractors can provide services at a higher price if they can 

convince consumers that their services are better or distinctly different from their competitors. This is an 

important factor in anticipating the impact of the RRP requirements on contractors. The costs of safely 

renovating or repairing target housing and COFs are expected to be higher than traditional methods. If 

the consumer is indifferent between safe- or unsafe-lead work practices, then those companies that choose 

not to use lead-safe work practices may have a competitive advantage in the market due to lower costs. 

However, if the consumer recognizes that higher quality renovation jobs are those jobs completed with 

lead-safe work practices, then firms may be able to comply with the regulation and charge a higher price. 

Under such a scenario, the consumer’s marginal benefit for an additional unit of safe renovation may be 

higher than for an additional unit of unsafe renovation. The consumer who has a preference for lead-safe 

work practices would choose to do lead-safe renovation as long as the incremental cost of the lead-safe 

renovation is less than the incremental benefit of such a renovation. Also, the market for RRP services is 

fragmented and there are substantial costs involved in getting prices. Getting bids from various 

contractors takes time and consumers need to compare prices across services that differ along many 

dimensions. These difficulties make it easier for firms to increase their prices to cover the costs for the 

new requirements. 

The combination of a large number of firms, a large number of consumers, low barriers to entry, and 

available substitutes indicate that the renovation industry is likely to have a relatively high price elasticity 

of supply. The price elasticity of demand, however, may be small in absolute value. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-29 

2.6 Residential Property Owners & Managers 

Property owners and managers also will be affected by the rule if they choose to perform their own RRP 

projects rather than hire an outside contractor or if their renovation and maintenance costs rise as a result 

of the regulations. 

Property owners and managers may have in-house crews that perform RRP activities. If this is the case, 

then the property owners and managers will directly bear the costs of training and certifying their workers 

as well as the cost of safe work practices. Furthermore, because all firms that perform regulated RRP 

projects will experience an increase in costs due to training of supervisors and workers and the use of safe 

work practices, it is assumed that costs to property owners and managers who hire outside contractors will 

increase. 

2.6.1 Industry Definitions and Characteristics 

Establishments involved in the leasing of apartments and other residential units are classified under 

NAICS 531110 - Lessors of Residential Buildings and Dwellings. This industry, in turn, is divided into 

two sub-sectors, NAICS 5311101—Lessors of Apartment Buildings and NAICS 5311109—Lessors of 

Dwellings Other than Apartment Buildings. According to the 2002 U.S. Economic Census data, together 

these industries include a total of 61,787 establishments that employ 292,405 people (U.S. Census Bureau 

2004b). 

Establishments involved in the management of residential properties are classified under NAICS 

531311—Residential Property Managers. In 2002, this industry included 26,233 establishments that 

employed 289,870 people (U.S. Census Bureau 2004b). Table 2-23 presents summary statistics for the 

businesses in NAICS 531311 as well as NAICS 531110 and its sub-sectors. 

Table 2-23: Summary Statistics for NAICS 531110, NAICS 5311101 and NAICS 5311109 

NAICS Code and Description Establishments Annual Revenues 

(000) 

Annual Payroll 

(000) Paid Employees 

5311101 - Lessors of Apartment 

Buildings 51,502 $51,708,553 $5,831,398 257,624 

5311109 - Lessors of Dwellings 

other than Apartment Buildings 10,285 $5,263,795 $748,821 34,781 

531311 - Residential property 

managers 26,223 $19,988,344 $8,193,831 289,870 

Total 88,010 $76,960,692 $14,774,050 582,275 

Source: U.S. Census Bureau 2004b

2.6.2 Establishment Size and Industry Environment 

The U.S. Small Business Administration indicates that to qualify for small business status, a firm in 

NAICS 531110 must have annual revenues of less than $7 million, while establishments in NAICS 

531311 must have revenues of less than $2 million (U.S. Small Business Administration, 2004). 

Although data on the number of firms by revenue bracket were not available from the 2002 U.S. 

Economic Census when this analysis was performed, the average revenues of establishments in these 

NAICS codes are significantly below the small business designation threshold (Table 2-24). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-30 

Table 2-24: Summary Statistics for NAICS 531110, NAICS 5311101 and NAICS 5311109 

(Per Establishment) 

NAICS Code and Description Average Annual 

Revenues ($) 

Average Annual 

Payroll ($) 

Paid Employees per 

Establishment 

5311101 - Lessors of Apartment 

Buildings $1,004,011 $113,227 5.0 

5311109 - Lessors of dwellings 

other than apartment buildings $511,793 $72,807 3.4 

531311 - Residential property 

managers $762,245 $312,467 11.1 

Source: U.S. Census Bureau 2004b 

In 1997, 98.7 percent of the then 51,572 establishments in the Lessors of Residential Buildings and 

Dwellings sector had annual revenues below $5 million and about 85 percent of the 19,000 establishments 

in NAICS 531311 had revenues less than $1 million (U.S. Census Bureau 2000a).16 Because 2002 data 

on the number of establishments by revenue bracket was not available at the time the estimates were 

developed, 1997 data was used to estimate the percent of establishments in each industry that qualify for 

small business status. Table 2-25 presents the percent of NAICS 531311 and NAICS 531110 

establishments that have revenues below $1 million and $5 million, respectively. The table also presents 

the percent of industry revenues and employment that can be attributed to these establishments. 

Table 2-25: Small and Large Establishments as Percent of Industry 

NAICS 

Code Description 

Percent of 

Establishments by

Revenue Bracket

Percent of Industry

Revenues by 

Revenue Bracket 

Percent of Industry

Employees by 

Revenue Bracket 

531311 Residential Property Managers 

 Establishments with Revenues < $1 million 85 35 40 

 Establishments with Revenues of >$1 million 15 65 60 

531110 Lessors of Residential Buildings and Dwellings 

 Establishments with Revenues < $5 million 99 82 86 

 Establishments with Revenues of >$5 million 1 18 14 

Source: U.S. Census Bureau 2000a 

Based on 1997 data over 85 percent of NAICS 531311 establishments, and about 99 percent of NAICS 

53110 establishments have revenues below the small business threshold defined by SBA. In the 

Residential Property Manager industry, these establishments contribute only 35 percent of the revenues, 

and employ only 40 percent of the workforce. The revenue and employment distribution is less skewed in 

the Lessor of Residential Buildings and Dwellings sector. Small establishments in this industry 

contribute about 82 percent of the revenues and employ 86 percent of the workforce (U.S. Census Bureau 

2000a). 

2.6.3 Industry Outlook 

The market for lead-safe renovation activities will depend in part on the state of the rental housing 

market—an increase in rents would provide resources to construct new housing and/or renovate existing 

 

16 Includes establishments open year-round only. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-31 

housing. According to Harvard University’s Joint Center for Housing Studies (JCHS), “rents fell in 9 of 

the 27 metropolitan areas tracked by the federal government [in 2003]. Nationally, real contract and gross 

rents barely increased last year.” The JCHS indicates that both the weak labor market and increased 

home ownership contributed to the softening of the rental market (JCHS 2004). 

At the same time as rents fell, the nation-wide rental vacancy rate increased from 8.9 percent in 2002 to 

9.8 percent in 2003. The vacancy rate was slightly above 10 percent during the first three quarters of 

2004 (U.S. Census Bureau 2004e). None-the-less, the JCHS predicts a strengthening of the rental market 

over the next ten years due to the influx of immigrants and the aging of the “echo baby-boom generation.” 

The strengthening of the market may also come from overall economic growth and a stemming of home 

ownership growth due to rising interest rates and/or house prices (JCHS 2004). 

2.7 Training Providers 

Impacts of the rule will be felt beyond the construction industry. Certified renovators will need 

accredited training. Both initial and refresher training courses will be required for certified renovators. 

2.7.1 Definitions and Industry Characteristics 

It is likely that lead-based paint training courses will be provided by establishments categorized as 

NAICS code 611519: Other Technical and Trade Schools. Census defines NAICS 61159 as 

“establishments primarily engaged in offering job or career vocational or technical courses (except 

cosmetology and barber training, aviation and flight training, and apprenticeship training). The 

curriculums offered by these schools are highly structured and specialized and lead to job-specific 

certification” and these establishments are believed to currently provide training for lead abatement 

professionals (U.S. Census Bureau 2004p). 

According to the 2002 Economic Census, there are a total of 3,323 establishments in the U.S. certified as 

Other Technical and Trade Schools (see Table 2-26). On average, each establishment employs 15.3 

people. A striking characteristic is that about 19% of these establishments are exempt from the Federal 

Income Tax (FIT). Exempt establishments include non-profit organizations and educational institutions 

such as colleges or universities. 

Table 2-26: Number of Establishments in NAICS 611519 

Industry Number of 

Establishments 

Total Number 

of Employees 

Average Number 

of Employees 

NAICS 611519 - Other Technical and 

Trade Schools 3,323 50,709 15.3 

Source: U.S. Census Bureau 2004n 

Table 2-27 summarizes available financial information for establishments categorized under NAICS 

611519. These include total revenues for the sector, average annual revenues per establishment, annual 

payroll for the sector, and payroll as a percent of revenue. As Table 2-27 indicates, for Other Technical 

and Trade schools, annual payroll is equal to about 35 percent of establishment revenue. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-32 

Table 2-27: Summary Statistics for NAICS 611519 

Industry Number of 

Establishments 

Annual 

Sector 

Revenue 

(000) 

Average 

Revenue per 

Establishment 

(000) 

Average Payroll 

per 

Establishment 

(000) 

Labor 

Cost as 

percent of 

Revenue 

NAICS 611519 - 

Other Technical and 

Trade Schools 

3,323 $4,118,995 $1,240 $429 35 % 

Source: U.S. Census Bureau 2004n 

According to the U.S. Small Business Administration, in order to qualify as a small business, a firm 

categorized under NAICS 611519 must have annual revenues of $7 million or less (U.S. Small Business 

Administration 2006a).17 The 2002 Economic Census provided data on the number of firms by revenue 

bracket. In 2002, 94 percent of the then 2,274 firms classified as Other Technical and Trade Schools that 

were in operation for the entire year had revenues under $5 million (U.S. Census Bureau 2005f). This 

figure indicates that a large percentage of firms had revenues under the $6.5 million threshold and thus 

qualified for small business status. 

2.7.2 Number and Type of Training Establishments 

As mentioned in Section 2.7.1, there are over 3,000 establishments in the Other Technical and Trade 

school industry. It is likely that only a small portion of these establishments are involved in lead based 

paint-related training. To help characterize the lead training segment of the training provider industry, a 

random sample of firms that offer one or more of the courses required for EPA lead abatement 

certification were identified as part of the economic analysis of the 2006 proposed LRRP target housing 

rule (EPA 2006). The goal was both to collect tuition data for currently offered lead abatement training 

courses and to learn what types of institutions (private establishments, non-profits, unions, etc.) offer 

these classes. 

The sample consisted of 83 establishments selected from the Lead Listing18 directory of 194 training 

providers.19 Data were collected from company web sites (when available) and/or over the phone. 

Information was obtained from 68 training providers; a total of 15 training providers could not be 

reached. Seven of the 68 contacted providers no longer offered lead abatement training courses. 

There were five types of training providers in the sample: private for-profit establishments, non-profit 

establishments, educational institutions, trade unions and public/government training institutions. Trade 

unions provide tuition-free training to their members. Public/government providers train state employees 

and workers who qualify for financial assistance through government programs. They do not offer 

training to the general public. 

 

17 Effective July 31st, 2006. 

18 The Lead Listing (www.leadlisting.org) website was run for the U.S. Department of Housing and Urban 

Development’s Office of Healthy Homes and Lead Hazard Control that contained a directory of lead service 

providers. It is no longer in operation (as of late 2004). 

19 The sample included all the establishments on the list that are certified to offer a Project Designer course (42 

total), as well as a random sample of 41 establishments that were not certified to offer this class. The data were 

weighted by the inversed probability of selection into the sample (P=1 for providers that offer a Project 

Designer course and P=.270 for providers that do not offer this class). It was assumed that there was no nonresponse bias. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-33 

Table 2-28 summarizes the number of private establishments, educational institutions, non-profits, unions 

and public government providers that appeared in the sample. The table also presents the estimated 

national number of providers that fall into each of these categories. More than a third of lead hazard 

reduction training providers are private, for-profit establishments. The next largest group of providers is 

labor unions, followed by educational institutions (colleges and universities). None of the unions, 

however, are certified to offer the Project Designer course. About 13 percent of certified providers either 

do not offer training at this time, or have permanently stopped offering lead courses. 

More than half of the privately owned, for-profit establishments in the sample (19 out of 35) offer 

environmental consulting services in addition to training. Thirteen of the 35 privately-owned providers 

specialize in training and do not offer other services. All of these 13 firms offer both lead and asbestos 

training courses, as well as, in most cases, OSHA safety, HAZ-MAT and/or mold classes. Although there 

was not enough information to determine the services provided by the remaining three companies, these 

findings indicate that lead-based paint training providers generally participate in several lines of business. 

Table 2-28: Estimated Number of Training Providers 

National Estimates Type of Provider Number in 

Sample Total Percent 

Private Providers 35 74 38 

Educational Institutions 11 27 14 

Non-Profit 4 19 10 

Union 9 42 22 

Pub/Gov Providers 2 6 3 

No Longer Offer Training 7 26 13 

Total Companies 68 194 

a. Adjusted for non-response assuming no non-response bias and weighted 

based on the probability of selection into the sample 

Source: U.S. Environmental Protection Agency 2006 

2.8 Summary Characteristics: Numbers of Structures in the Regulated 

Universe 

This section provides summary information about the numbers of target housing and public or 

commercial building COFs that form the basis for the analyses presented in the subsequent chapters of 

this report. Each tally is then subdivided into categories based on the age of the building and the type of 

structure. After each table, there is a discussion of how the numbers presented in that table were 

calculated. 

Table 2-29 provides counts of the number of buildings by type and vintage of building. There are 78.0 

million structures covered by the recordkeeping checklist provision of the revisions to the rule, including 

77.9 million target housing units and 0.1 million COFs in public or commercial buildings. About 40.2 

million target housing units would be added to the regulated universe due to the elimination of the opt-out 

provision. Table 2-29 also shows the regulated universe under the existing 2008 LRRP rule (37.7 million 

target housing units and 0.1 million public and commercial buildings). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-34 

Table 2-29: Number of Structures, by Type and Age of Construction 

Type All Pre-1960 All Pre-1978

Target Housing where LLRP rule is applicable after opt-out provision removal 41,040,000 77,888,000

 Target Housing where LRRP program was applicable under 2008 LRRP

 Rule: Rental, COF, or where a child <6 or pregnant woman resides) 20,321,000 37,665,000

 Rental where a child <6 or pregnant woman resides 2,187,000 4,130,000

 Rental where no child <6 or pregnant woman resides 14,180,000 26,289,000

 Owner-Occupied where a child <6 or pregnant woman resides 3,529,000 6,422,000

 Owner-Occupied COF where no child <6 or pregnant woman 

 resides 424,000 824,000

 Target Housing COFs 823,000 1,559,000

 Renter-Occupied COF where a child <6 or pregnant woman 

 resides 33,000 62,000

 Renter-Occupied COF where no child <6 or pregnant woman 

 resides 214,000 397,000

 Owner-Occupied COF where a child <6 or pregnant woman 

 resides 152,000 276,000

 Owner-Occupied COF where no child <6 or pregnant woman 

 resides 424,000 824,000

 Target Housing Universe affected by elimination of the opt-out 

 provision (Owner-Occupied where no child <6 or pregnant woman 

 resides that is not a COF) 20,719,000 40,222,000

Public or Commercial Building COFs 54,000 97,000

 Daycare Centers* 29,000 52,000

 Schools* 25,000 45,000

 Kindergarten Only 12,000 21,000

 Kindergarten and Pre-Kindergarten 13,000 23,000

Note: Counts include buildings with and without lead-based paint. 

* There are 800 pre-1978 schools that have pre-kindergartens but no kindergarten. In this table and in the cost 

and benefits analysis in Chapters 4 and 5, they are accounted for as daycare centers. In the small entity impact 

and Unfunded Mandates Reform Act analyses in Chapter 6 these buildings are accounted for as schools. 

2.8.1 Target Housing 

This section provides a brief discussion of the estimates of the number of the target housing units 

presented in Table 2-29; a detailed explanation of the data sources used to develop these estimates can be 

found in Section 4.2 of Chapter 4. 

Estimates of the number of housing units by tenure of occupant (owner or renter), age of occupants, and 

pregnancy status of occupants were estimated using the 2003 American Housing Survey, which is 

described in more detail in Section 4.2 of Chapter 4. Section 4.2 of Chapter 4 also provides a detailed 

explanation of the estimated number of target housing units that are defined as COFs. The COFs in target 

housing include family daycare providers and the homes of family, friends, and neighbors who regularly 

care for someone else’s children. These estimates include care provided for pay and not for pay, and rely 

primarily on estimates of the size of the childcare workforce as published by the Center for Childcare 

Workforce, 2002. This report includes data on the number of: (1) family childcare providers caring for 

unrelated children, (2) paid relatives and non-relatives providing childcare, and (3) unpaid relatives and 

non-relatives providing childcare. Based on data provided by the Center for Childcare Workforce, a total 

of just under 2.4 million caregivers provide care outside of the child’s home for more than six hours per 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-35 

week. As described in detail in Section 4.2, these data are used to estimate the number of COFs in target 

housing. These numbers are further reduced to estimate the number of pre-1960 and pre-1978 housing 

units based on American Housing Survey data. 

2.8.2 Childcare Centers 

In 2006, the National Association for Regulatory Administration (NARA) released a report entitled “The 

2005 Childcare Licensing Study” providing counts of all the licensed childcare centers and family 

childcare homes in the United States. The NARA report indicated that there were approximately 115,000 

licensed childcare centers, 66,700 of which are estimated to be built before 1978 according to 

Commercial Building Energy Consumption Suevey (CBECS) data (DOE 2003). According to HUD's 

First National Health Survey of Childcare Centers (HUD 2003), approximately 24 percent of licensed 

centers are located in elementary schools. These 15,753 centers are assumed to be included in the 

estimated 40,190 elementary schools with pre-schools and kindergartens. Thus, there are a total of 

50,947 pre-1978 daycare centers located outside of elementary schools. According to NCES data on 

public and private schools, however, an additional 824 pre-1978 schools without kindergartens have a 

pre-kindergarten program, which brings the total number of buildings accounted for as daycare centers to 

51,771 (EPA 2008). 

2.8.2.1 Public Schools 

The National Center for Education Statistics (NCES) reported that during the 2004-2005 academic year, 

there were more than 93,000 public schools in the United States. Of these 93,295 public schools, 52,129 

had either a pre-kindergarten (PK) or kindergarten (K) program. The Common Core of Data Public 

Elementary/Secondary School Universe Survey data was used to calculate the number of private schools 

with PK or K programs. Using this data, a school was considered as having a pre-kindergarten if a) prekindergarten enrollment was greater than zero students, or b) the school reported that the lowest grade 

offered was pre-kindergarten, but enrollment data were not provided. Similarly, a school was considered 

as having a kindergarten if a) kindergarten enrollment was greater than zero, or b) the school reported that 

the lowest grade offered was pre-kindergarten or kindergarten, but did not report kindergarten enrollment. 

Again, the educational building age distribution found in CBECS and HUD (2003) was applied to the 

total counts, resulting in the estimated 17,000 pre-1960, and 30,000 pre-1978 public schools. 

2.8.2.2 Private Schools 

This analysis used NCES’s Results from the 2003-2004 Private School Universe Survey report and the 

underlying dataset to estimate the number of private schools with kindergartens and/or pre-kindergartens. 

A school was considered as having a pre-kindergarten if a) pre-kindergarten enrollment was greater than 

zero students, or b) the school reported that the lowest grade offered was pre-kindergarten, but enrollment 

data were not provided. Similarly, a school was considered as having a kindergarten if a) kindergarten 

enrollment was greater than zero, or b) the school reported that the lowest grade offered was prekindergarten or kindergarten, but did not report kindergarten enrollment. The previously cited CBECS 

and HUD educational building age distribution was then applied to the private school universe to 

calculate the number of private schools by age of construction. This adjustment yielded 9,000 pre-1960, 

and 15,000 pre-1978 private schools. 

For the purpose of the total cost analysis, private and public schools were categorized according to 

whether they offered kindergarten only, kindergarten and pre-kindergarten, and pre-kindergarten only. 

Table 2-29 uses information drawn from Table 2-9 and Table 2-16 to obtain the total number of schools 

with each combination of programs. Table 2-9 and Table 2-16 indicate that there are 29,844 public 

schools and 7,205 private schools with kindergarten programs only, for a total of 37,049 such schools. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-36 

Table 2-9 and Table 2-16 also indicate that there are 20,885 public schools and 19,305 private schools 

with both pre-kindergarten and kindergarten programs. Finally, there are a total of 1,400 public and 21 

private schools with pre-kindergarten, but no kindergarten, which are accounted for as daycare centers for 

the purposes of the analysis. Table 2-29 presents the total number of schools with kindergartens, 

kindergartens and pre-kindergartens, and pre-kindergartens only by age of construction. Information 

about the age distribution of buildings was taken from CBECS and HUD and applied to the data to give 

estimates of the number of schools by the age of the building. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-37 

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Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-39 

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11/18/2006). 

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(Accessed 11/18/2006). 

U.S. Census Bureau. 2004n. “Educational Services: Industry Series: Summary Statistics for the United 

States: 2002.” American Fact Finder. Available at: 

http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-ds_name=EC0261I1&-

_lang=en (Downloaded 11/13/2006). 

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American Fact Finder. Available at: 

http://factfinder.census.gov/servlet/MetadataBrowserServlet?typ (Accessed 12/4/2006). 

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http://www.census.gov/epcd/nonemployer/download/04_data/nonemp04us.txt (Accessed 

12/4/2006). 

U.S. Census Bureau. 2005a. “Sector 23: Construction: Industry Series: Selected Statistics for 

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_lang=en (Downloaded 11/13/2006). 

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Firm Size: Employment Size of Establishments for the United States: 2002.” American Fact 

Finder. Available at: http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-

ds_name=EC0253SSSZ2&-_lang=en (Downloaded 11/13/2006). 

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_lang=en (Downloaded 11/13/2006). 

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Firm Size: Employment Size of Establishments for the United States: 2002.” American Fact 

Finder. Available at: http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-

ds_name=EC0262SSSZ2&-_lang=en (Downloaded 11/14/2006). 

U.S. Census Bureau. 2005f. “Educational Services: Subject Series – Estab and Firm Size: 

Receipts/Revenue Size of Firms for the United States: 2002.” American Fact Finder. Available at: 

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_lang=en (Downloaded 11/13/2006). 

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http://www.census.gov/econ/census02/data/us/US000_23.HTM (Accessed 12/1/2006). 

U.S. Census Bureau. 2005i. 2002 Economic Census: Construction: By Industry. Available at: 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 2 2-40 

http://www.census.gov/econ/census02/data/us/US000_23.HTM (Accessed 8/3/2005). 

U.S. Census Bureau. 2005j. “Sector 53: Real Estate and Rental and Leasing: Subject Series - Estab & 

Firm Size: Revenue Size of Firms for the United States: 2002.” American Fact Finder. Available 

at: http://factfinder.census.gov/servlet/IBQTable?_bm=y&-geo_id=&-fds_name=EC0200A1&-

_skip=100&-ds_name=EC0253SSSZ4&-_lang=en. (Downloaded 12/19/2006). 

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States.” http://www.census.gov/epcd/nonemployer/2002/us/US000_62.HTM. (Downloaded 

3/24/2007). 

U.S. Census Bureau. 2005m. 2002 Economic Census: Industry Series: Residential Remodelers ECO2-

23I-236118 (RV). Available at: http://www.census.gov/prod/ec02/ec0223i236118.pdf (Accessed 

11/18/2006). 

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American Fact Finder. Available at: http://factfinder.census.gov/servlet/MetadataBrowserServlet? 

(Accessed 12/1/2006). 

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http://www.census.gov/const/C30/state.xls (Downloaded 12/8/2006). 

U.S. Census Bureau 2006c. “Annual Value of Private Construction Put in Place.” Available at: 

http://www.census.gov/const/C30/private.xls (Downloaded 12/8/2006). 

U.S. Census Bureau. 2006d. “Definitions of Construction.” Available at: 

http://www.census.gov/const/C30/definitions.pdf (Accessed 2/15/2006.) 

U.S. Department of Commerce. 2006. Table 1.1.6. Real Gross Domestic Product, Chained Dollars. Last 

revised: November 29, 2006. 

U.S. Department of Education, Institute of Education Sciences. 2004. “Full-day and Half-day 

Kindergarten in the United States: Findings from the Early Childhood Longitudinal Study, 

Kindergarten Class of 1998-99” June 2004. 

U.S. Department of Education, National Center for Education Statistics. Kindergarten Teachers: Public 

and Private School Teachers of the Kindergarten Class of 1998–99, NCES 2004–060, by Elvira 

Germino-Hausken, Jill Walston, and Amy H. Rathbun. Project Officer: Elvira Germino-Hausken. 

Washington, DC: 2004. 

U.S. Department of Energy. 2003. Commercial Buildings Energy Consumption Survey (CBECS). 

U.S. Department of Housing and Urban Development (HUD). 2003. First National Environmental Health 

Survey of Childcare Centers. 

U.S. Environmental Protection Agency. 1996. “Lead; Requirements for Lead-Based Paint Activities in 

Target Housing and Child-Occupied Facilities; Final Rule.” Federal Register. 

http://www.epa.gov/docs/fedrgstr/EPA-TOX/1996/August/Day-29/pr-24181DIR/pr-24181.pdf 

(Accessed 12/8/2006). 

U.S. Environmental Protection Agency. 2006. “Economic Analysis for the Renovation, Repair and 

Painting Program Proposed Rule”, February 2006. 

U.S. Small Business Administration. 2006a. “Firm Size Data.” Available at: 

http://www.sba.gov/advo/research/data.html. (Accessed 11/30/2006). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

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U.S. Small Business Administration. 2006b. “Small Business Size Standards matched to North American 

Industry Classification System.” Available at: 

http://www.sba.gov/services/contractingopportunities/sizestandardstopics/tableofsize/SERV_TA

BLE_HTML.html (Downloaded 11/24/2006). 

U.S. Small Business Administration. 2008. “Small Business Size Standards matched to North American 

Industry Classification System.” Available at: 

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(Downloaded 7/29/2009). 

Wilder Research Center. 2001. “Staff recruitment and retention in early childhood care and education and 

school-age care.” April 2001. 

 Wilder Research Center. 2005. “Family, Friend and Neighbor Caregivers: Results of the 2004 Minnesota 

statewide household childcare survey.” December 2005. 
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3. Problem Definition 

This chapter begins by characterizing the lead contamination problem, including the various sources of 

exposure, presented in Section 3.1. This is followed by a summary of the regulatory background in 

Section 3.2. Section 3.3 discusses how market failure due to incomplete information and external costs 

result in inefficient levels of lead containment and control in renovation activities, requiring regulatory 

intervention. Section 3.4 describes how the rule will address these market failures. 

3.1 Lead Contamination Problem 

Despite recent reductions in air, water, and food contamination, important sources of lead exposure 

remain, due largely to the widespread presence of lead-based paint. Exposure to lead results in increased 

blood lead levels associated with various adverse health effects, including reductions in IQ and other 

negative cognitive effects, particularly in children. In addition, exposure to lead can result in a variety of 

adverse health effects in adults. 

3.1.1 Exposure Sources 

As described in Chapter 5 lead may cause adverse health effects in any individual, exposed at any stage of 

life (in utero through adulthood) (U.S. EPA 2005c). However, young children are particularly susceptible 

to lead hazards because their central nervous systems are rapidly developing, and because their behavior 

is likely to result in greater exposure to lead than older individuals experience. 

Currently, the most significant high-dose source of lead exposure in children under school age is leadbased paint. Through the 1940's, paint manufacturers used lead as a primary ingredient in many oil-based 

interior and exterior house paints. During the 1950's and 1960's, the usage gradually decreased as new 

paints were developed, and in 1978 the Consumer Product Safety Commission (CPSC) ruled that paint 

used for residences, toys, furniture, and public areas must not contain more than 0.06% lead by weight. 

Nevertheless, about 50 percent of housing units and public and commercial buildings constructed before 

1980 still contain lead-based paint (U.S. HUD 2000). Children’s exposure to lead from lead-based paint 

is likely to be high when the paint is in a deteriorated state or is found on accessible, chewable, impact, or 

friction surfaces, making the lead paint available to children who ingest paint chips. This “pica” behavior 

appears to be rare, but is the likely cause of many of the highest blood lead levels observed in children. 

Renovation activities can create lead-based paint hazards for children by making paint chips more 

accessible for ingestion. These hazards can occur both within and outside the building unit being 

renovated. 

In addition to being a source of direct exposure, lead-based paint can be the source of lead contamination 

in soil and dust. Children are exposed to lead from soil or dust in their homes as a result of typical handto-mouth activities. Lead-contaminated dust and soil are the major pathway through which most young 

children are exposed to lead from lead-based paint hazards. Renovation activities increase the level of 

lead dust in the facility and in the soil, thereby increasing the risk of lead ingestion in young children. 

While occupational exposure is the primary exposure pathway to lead for adults, other common exposure 

pathways for teenagers and adults include gardening, housework, drinking water and certain hobbies such 

as creating objects from stained-glass and making pottery. Individuals (children, teenagers and adults) are 

also exposed to a variety of other lead sources, some of which are localized in nature. 

Airborne lead is present in emissions from lead smelters, battery manufacturing plants, and solid waste 

incinerators. The phase-out of leaded gasoline has substantially reduced airborne lead. Drinking water 

may become contaminated with lead after it leaves the treatment plant. Although lead levels in drinking 
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 Chapter 3 3-2 

water generally do not have a statistically significant effect on blood-lead concentrations as a result of 

regulations stemming from the 1986 Safe Drinking Water Act, water is still considered an important 

localized exposure source where lead solder and/or brass plumbing fixtures are present because of the 

high absorption rate of lead in water. Lead exposure through food ingestion has declined greatly due to 

the phase-out of lead-soldered food cans and public education. With these improvements in exposure 

from air, water, and food, lead-based paint remains as the largest widespread source of lead exposure. 

3.1.2 Lead from Renovation Activities 

EPA exposure data (EPA 1997) indicate that renovation activities potentially increase both short-term and 

long-term lead exposure levels. Lead concentrations are greatest in the area where the renovation work is 

performed, but lead does settle into other areas of the building and potentially the surrounding area, 

causing longer-term exposure. The study found that, with the exception of carpet removal and drilling 

into plaster, all renovation activities examined deposited significant amounts of lead onto the floors in the 

area where the work was being performed, ranging from 480 micrograms per square foot for sawing to 

15,500 micrograms per square foot for paint removal. This lead may be ingested or inhaled by occupants 

if proper containment and clean-up practices are not used. The study found that sweeping and shopvacuum clean-up, considered to be standard practice in the industry, reduced the total amount of lead 

available to occupants. However, as the distance from the activity increased, the cleanup left a higher 

percentage of the lead behind so that lead hazards remained following cleanup. These findings 

demonstrate that these practices do not adequately reduce risks from lead dust generated by renovation 

activities. Lead dust settled in carpeted areas or in soil is the most difficult to remove with simple broom 

and vacuum clean-up and thereby creates the longest lasting exposure pathway for facility occupants. 

EPA conducted a field study in 2007 (Characterization of Dust Lead Levels after Renovation, Repair, and 

Painting Activities) (the ‘‘Dust Study’’) to characterize dust lead levels resulting from various renovation, 

repair, and painting activities (EPA 2007). This study was designed to compare environmental lead levels 

at appropriate stages after various types of renovation, repair, and painting preparation activities were 

performed on the interiors and exteriors of target housing units and child-occupied facilities. All of the 

jobs disturbed more than 2 square feet of lead-based paint, so they would not have been eligible for the 

minor maintenance exception. The renovation activities were conducted by local professional renovation 

firms, using personnel who received lead safe work practices training using the curriculum developed by 

EPA and HUD, ‘‘Lead Safety for Remodeling, Repair, and Painting’’ (EPA 2003a). The activities 

conducted represented a range of activities that would be permitted under the 2006 Proposal, including 

work practices that are restricted or prohibited for abatements under 40 CFR 745.227(e)(6). Of particular 

interest was the impact of using specific work practices that renovation firms would be required to use 

under the proposed rule, such as the use of plastic to contain the work area and a multi-step cleaning 

protocol, as opposed to more typical work practices. 

In the Dust Study, 12 different interior and 12 different exterior renovation activities were performed at 7 

vacant target housing units in Columbus, Ohio, and 8 vacant target housing units (including four 

apartments) in Pittsburgh, Pennsylvania. Three different interior and three different exterior renovation 

activities were conducted at a building representing a child-occupied facility, a vacant school in 

Columbus. The presence of lead-based paint was confirmed by laboratory analysis before a building was 

assigned a particular renovation activity or set of activities. Before interior renovation activities were 

performed, the floors and windowsills in the work area and adjacent rooms were cleaned. In most cases, 

pre-work cleaning resulted in dust lead levels on floors of less than 10 μg/ft2

; nearly all floors were less 

than 40 μg/ft2 before work started. Most windowsills that would be used for later sampling were cleaned 

to dust lead levels less than 250 μg/ft2. In the few cases where that level was not achieved on a 
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 Chapter 3 3-3 

windowsill needed for sampling, dust collection trays were used. Interior renovation activities included 

the following jobs: 

 Making cut-outs in the walls. 

 Replacing a window from the inside. 

 Removing paint with a high temperature (greater than 1100 degrees Fahrenheit) heat gun. 

 Removing paint with a low temperature (less than 1100 degrees Fahrenheit) heat gun. 

 Removing paint by dry scraping. 

 Removing kitchen cabinets. 

 Removing paint with a power planer. 

To illustrate the impact of the containment plastic and the specialized cleaning and cleaning verification 

protocol that would be required by the 2006 Proposal, each activity was performed a minimum of four 

times: 

 With the plastic containment described in the 2006 Proposal followed by the cleaning protocol 

described in the proposal. 

 With the plastic containment described in the 2006 Proposal followed by dry sweeping and 

vacuuming with a shop vacuum. 

 With no plastic containment followed by the cleaning protocol described in the 2006 Proposal. 

 With no plastic containment followed by dry sweeping and vacuuming with a shop vacuum. 

Dust samples were collected after the renovation work was completed, after cleaning, and after cleaning 

verification. If a building was being used again for the same job under different work practices, or for a 

completely different job, the unit was recleaned and retested prior to starting the next job. All buildings 

were cleaned and tested after the last job. 

Exterior renovation activities performed as part of the study included the following: 

 Replacing a door and doorway. 

 Replacing fascia boards, soffits, and other trim. 

 Removing paint with a high temperature (greater than 1100 degrees Fahrenheit) heat gun. 

 Removing paint with a low temperature (less than 1100 degrees Fahrenheit) heat gun. 

 Removing paint by dry scraping. 

 Removing paint with a needle gun. 

 Removing paint with power sanding or grinding. 

 Removing paint with a torch or open flame. 

For the exterior jobs, plastic sheeting was placed on the ground to catch the debris and dust from the job, 

in accordance with the requirements of the proposed rule. Additional plastic sheeting was laid out beneath 
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 Chapter 3 3-4 

and beyond the ‘‘proposed rule’’ plastic. Trays to collect dust and debris were placed on top of and 

underneath the ‘‘proposed rule’’ plastic. Trays were also placed just outside of the ‘‘proposed rule’’ 

plastic to assess how far the dust was spreading. A vertical containment, as high as the work zone, was 

erected at the end of the additional plastic. 

The use of the ‘‘proposed rule’’ plastic as a ground covering captured large amounts of leaded dust. For 

all job types except removing paint with a torch, there was a substantial difference between the amount of 

lead captured by the ‘‘proposed rule’’ plastic and the amount under the ‘‘proposed rule’’ plastic. 

The 2008 final LRRP rule was supported by the Dust Study discussed above. Therefore, EPA conducted a 

peer review in accordance with OMB’s Final Information Quality Bulletin for Peer Review. EPA 

requested this review from the Clean Air Scientific Advisory Committee (CASAC) Lead Review Panel. 

The CASAC, which is comprised of seven members appointed by the EPA Administrator, was 

established under the Clean Air Act as an independent scientific advisory committee. The CASAC’s 

comments on the Dust Study, along with EPA’s responses, have been placed into the public docket for 

this action. More information on the CASAC consultation process, along with background documents, is 

available on EPA’s website at http://www.epa.gov/ lead/pubs/casac.htm. 

According to the peer review report, the CASAC Panel found 

“. . .that the [Dust Study] was reasonably well-designed, considering the complexity of the 

problem, and that the report provided information not available from any other source. The study 

indicated that the rule cleaning procedures reduced the residual lead (Pb) remaining after a 

renovation more than did the baseline cleaning procedures. Another positive aspect of the Dust 

Study was that it described deviations from the protocol when they occurred. “ 

The CASAC Panel also contended that the limited data from residential housing units and child-occupied 

facilities included in the Dust Study, most likely do not represent a statistically valid sample of housing at 

the national level. They noted that there are aspects of the study that would underestimate the levels of 

lead-loadings while other aspects of the study would overestimate the loadings. EPA agrees that the Dust 

Study is not nationally representative of all housing. EPA notes that there are several reasons why this is 

the case, including the fact that all of the housing studied was built during 1925 or earlier, and a large 

number of the floors were in poor condition. A major purpose of the Dust Study was to assess the 

proposed work practices. A statistically valid sample of housing at the national level is not needed to 

assess the work practices. If anything, the Dust Study is conservative with respect to the age of housing 

because it studied older houses and therefore is appropriate for assessing the effectiveness of the work 

practices. 

3.2 Regulatory Background 

This section outlines the extensive history of lead-based paint regulations at the federal level. Childhood 

lead exposure continues to be a major public health problem among young children in the United States. 

Most children with blood lead levels in excess of CDC’s current level of concern have been exposed to 

lead in non-intact paint, interior settled dust, and dust and soil in and around deteriorating older housing 

(CDC 2004). The nature and extent of the problems associated with lead-based paint in housing units 

have been thoroughly investigated. Approximately 40% of all U.S. housing units (about 38 million 

homes) have some lead-based paint. Use of lead safe work practices during renovation can advance the 

goal of primary prevention of lead poisoning (CDC 2004). 

The Federal Lead-based Paint Program. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-5 

Title X and the Federal goal 

Primarily in response to the persistent health threat posed by lead-based paint, in 1992 Congress enacted 

Title X. Congress found that low-level lead poisoning was widespread among American children, 

affecting, at that time, as many as 3 million children under age 6; that the ingestion of household dust 

containing lead from deteriorating or abraded lead-based paint was the most common cause of lead 

poisoning in children; and that the health and development of children living in as many as 3.8 million 

American homes was endangered by chipping or peeling lead paint, or excessive amounts of leadcontaminated dust in their homes. Congress determined that the prior Federal response to this crisis was 

insufficient and established, in Title X, a national goal of eliminating lead-based paint hazards as 

expeditiously as possible. Congress decided that the Federal government would take a leadership role in 

building the infrastructure necessary to achieve this goal. 

The stated purposes of Title X are: 

 To develop a national strategy to build the infrastructure necessary to eliminate lead-based paint 

hazards in all housing as expeditiously as possible. 

 To reorient the national approach to the presence of lead-based paint in housing to implement, on 

a priority basis, a broad program to evaluate and reduce lead-based paint hazards in the Nation’s 

housing stock. 

 To encourage effective action to prevent childhood lead poisoning by establishing a workable 

framework for lead-based paint hazard evaluation and reduction and by ending the current 

confusion over reasonable standards of care. 

 To ensure that the existence of lead-based paint hazards is taken into account in the development 

of Government housing policies and in the sale, rental, and renovation of homes and apartments. 

 To mobilize national resources expeditiously, through a partnership among all levels of 

government and the private sector, to develop the most promising, cost-effective methods for 

evaluating and reducing lead-based paint hazards. 

 To reduce the threat of childhood lead poisoning in housing owned, assisted, or transferred by the 

Federal Government. 

 To educate the public concerning the hazards and sources of lead-based paint poisoning and steps 

to reduce and eliminate such hazards (Residential Lead-Based Paint Hazard Reduction Act of 

1992). 

EPA’s lead-based paint program 

Under Title X, EPA is directed to take actions that can be divided into 4 key categories: 

 Establishing a training and certification program for persons engaged in lead-based paint 

activities, accrediting training providers, establishing work practice standards for the safe, 

reliable, and effective identification and elimination of lead-based paint hazards, and developing a 

program to address exposure to lead-based paint hazards from renovation and remodeling 

activities. 

 Ensuring that, for most housing constructed before 1978, lead-based paint information flows from 

sellers to purchasers, from landlords to tenants, and from renovators to owners and occupants. 

 Establishing standards for identifying dangerous levels of lead in paint, dust and soil. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-6 

 Providing information on lead hazards to the public, including steps that people can take to 

protect themselves and their families from lead-based paint hazards. Each of these categories is 

discussed in more detail in the following sections. 

a. Training and certification, accreditation, and work practice standards. Title X added a new title to 

TSCA entitled ‘‘Title IV Lead Exposure Reduction.’’ Most of EPA’s responsibilities for addressing leadbased paint hazards can be found in this title, with section 402 being one source of the rulemaking 

authority to carry out these responsibilities. TSCA section 402(a) directs EPA to promulgate regulations 

covering lead-based paint activities to ensure persons performing these activities are properly trained, that 

training programs are accredited, and that contractors performing these activities are certified. These 

regulations must contain standards for performing lead-based paint activities, taking into account 

reliability, effectiveness, and safety. 

On August 29, 1996, EPA promulgated final regulations under TSCA section 402(a) governing leadbased paint inspections, lead hazard screens, risk assessments, and abatements in target housing (U.S. 

EPA 1996). TSCA section 401 defines ‘‘target housing’’ as any housing constructed prior to 1978, 

except housing for the elderly or persons with disabilities (unless any child who is less than 6 years of age 

resides or is expected to reside in such housing for the elderly or persons with disabilities) or any 0-

bedroom dwelling. These regulations also apply to ‘‘child-occupied facilities,’’ which are defined at 40 

CFR 745.223 as buildings constructed before 1978, or portions of such buildings, where children under 

age 6 are regularly present. TSCA section 402 defines lead-based paint activities in target housing as 

inspections, risk assessments and abatements. The 1996 regulations cover lead-based paint abatement 

activities in target housing and child-occupied facilities, along with limited screening activities called lead 

hazard screens. The regulations also established an accreditation program for training providers and a 

certification program for individuals and firms performing these activities. Training providers who wish 

to provide lead-based paint training for the purposes of the Federal lead-based paint program must be 

accredited by EPA. Implementing regulations at 40 CFR 745.225 describe in detail the requirements for 

each course of study, how training programs must be operated, and the process for obtaining 

accreditation. Training programs must have a training manager with experience or education in a 

construction or environmental field, and a principal instructor with experience or education in a related 

field and education or experience in teaching adults. Training programs must also have adequate facilities 

and equipment for delivering the training. To become accredited, an application for accreditation must be 

submitted to EPA on behalf of the training program. The application must either include the course 

materials and syllabus, or a statement that EPA model materials or materials approved by an authorized 

State or Tribe will be used. The application must also include a description of the facilities and 

equipment that will be used, a copy of the test blueprint for each course, a description of the activities and 

procedures that will be used during the hands-on skills portion of each course, a copy of the quality 

control plan, and the correct amount of fees. If EPA finds that the program meets the regulatory 

requirements, it will accredit the training program for 4 years. To maintain accreditation, the training 

program must submit an application and the correct amount of fees every 4 years. 

Individuals and firms that perform inspections, lead hazard screens, risk assessments, or abatements in 

target housing or child-occupied facilities must be certified. Certification requirements and the process 

for becoming certified are described in 40 CFR 745.226. A firm that wishes to become certified must 

submit an application, along with the correct amount of fees, attesting that it will use only certified 

individuals to perform lead-based paint activities and that it will follow the work practice standards in 40 

CFR 745.227. An individual who wishes to become certified must take an accredited training course in at 

least one of the certified disciplines: Inspector, risk assessor, project designer, abatement worker, and 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-7 

abatement supervisor. The risk assessor, project designer, and abatement supervisor disciplines have 

additional requirements for education or experience in a construction or environmental field. The 

inspector, risk assessor, and abatement supervisor disciplines also require the applicant to pass a 

certification examination administered by a third party. 

The regulations at 40 CFR part 745, subpart L, also contain work practice standards for performing 

inspections, lead hazard screens, risk assessments and abatements in target housing and child-occupied 

facilities. The regulations contain specific requirements for conducting paint sampling during an 

inspection and specify information that must be gathered and samples that must be taken as part of a lead 

hazard screen or risk assessment. The requirements for abatements are also set forth in the regulations. 

When conducting abatements, an occupant protection plan must be prepared by a certified supervisor or 

project designer; certain work practices such as open-flame burning, machine sanding or abrasive blasting 

without high-efficiency exhaust control, dry scraping, and heat guns at high settings are prohibited; and a 

visual inspection and dust clearance sampling must be performed after the abatement is finished to ensure 

that the area is ready for re-occupancy. Any samples collected during any of these regulated lead-based 

paint activities must be analyzed by a laboratory recognized by EPA as being capable of analyzing paint 

chips, dust, and soil for lead. Requirements for inspection, lead hazard screen, risk assessment or 

abatement reports are also described in this section 

Recognizing the importance of States and Territories in achieving the goal of eliminating lead-based paint 

hazards in housing, Congress specifically directed EPA to establish a model State program and a process 

for authorizing States to operate such programs in lieu of the Federal program. Concurrently with the 

subpart L rulemaking in 1996, EPA codified, at 40 CFR part 745, subpart Q, a model training and 

certification program and a process for enabling States, Territories, and Tribes to apply for authorization 

to administer their own lead-based paint activity programs. Providing Indian Tribes with this opportunity 

is consistent with EPA’s Policy for the Administration of Environmental Programs on Indian 

Reservations (U.S. EPA 1984). EPA also provides grants under TSCA section 404 to States, Territories, 

and Tribes to assist them in developing and administering these programs, as well as programs 

implementing TSCA section 406(b). On June 9, 1999, the subpart L regulations were amended to include 

a fee schedule for training programs seeking EPA accreditation and for individuals and firms seeking 

EPA certification (U.S. EPA 1999). These fees were established as directed by TSCA section 402(a)(3), 

which requires EPA to recover the cost of administering and enforcing the lead-based paint activities 

requirements in unauthorized States. The most recent amendment to the subpart L regulations occurred 

on March 20, 2009 (U.S. EPA 2009). 

In addition, Congress directed EPA, in TSCA section 405, to establish protocols, criteria, and minimum 

performance standards for analysis of lead in paint, dust, and soil. TSCA section 405 further directed 

EPA, in consultation with HHS, to develop a program to certify qualified laboratories. The National Lead 

Laboratory Accreditation Program (NLLAP) provides the public with a list of laboratories that have met 

EPA requirements and demonstrated the capability to accurately analyze paint chip, dust, or soil samples 

for lead. All laboratories recognized by NLLAP must pass on-site audits conducted by one of the two 

accrediting organizations currently participating in NLLAP, the American Industrial Hygiene Association 

(AIHA), and the American Association for Laboratory Accreditation. Recognized laboratories must also 

perform successfully on a continuing basis in the Environmental Lead Proficiency Analytical Testing 

(ELPAT) Program established by NIOSH, AIHA, and EPA. 

More recently, the LRRP rule for target housing and COFs was promulgated in 2008 (73 FR 21692) and 

is codified in Part 745 of Title 40 of the Code of Federal Regulations (CFR). The rule was promulgated 

under the authority of §402(c) of the Toxic Substances Control Act (TSCA). Section IV of TSCA was 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-8 

established by the Residential Lead-Based Paint Hazard Reduction Act of 1992, also known as Title X of 

the Housing and Community Development Act of 1992, Public Law 102-550. 

The 2008 LRRP regulation requires entities that perform renovation, repair and painting work for 

compensation in buildings covered by the rule to become certified by EPA, ensure that their employees 

are trained as either renovators or workers, and use lead-safe work practices when disturbing lead-based 

paint. 

b. Lead-based paint information for purchasers, renters, owners, and occupants of target housing. 

Another of EPA’s responsibilities under Title X is to require that purchasers and tenants of target housing, 

as well as occupants of target housing and parents of children in COFs undergoing renovation are 

provided information on lead-based paint and lead-based paint hazards. As directed by TSCA section 

406(a), CPSC, HUD, and EPA, in consultation with CDC, jointly developed a lead hazard information 

pamphlet entitled ‘‘Protect Your Family From Lead in Your Home’’ (‘‘PYF’’) (U.S. EPA et al 2003b). 

This pamphlet was designed to be distributed as part of the disclosure requirements of section 1018 of 

Title X and TSCA section 406(b), to provide home purchasers, renters, owners, and occupants with the 

information necessary to allow them to make informed choices when selecting housing to buy or rent, or 

deciding on home renovation projects. The pamphlet contains information on the health effects of lead, 

how exposure can occur, and steps that can be taken to reduce or eliminate the risk of exposure during 

various activities in the home. 

Pursuant to the authority provided in section 1018 of Title X, on March 6, 1996, HUD and EPA jointly 

promulgated regulations requiring persons who are selling or leasing target housing to provide the PYF 

pamphlet and information on known lead-based paint and lead-based paint hazards in the housing to 

purchasers and renters (HUD and U.S. EPA 1996). These joint regulations, codified at 24 CFR part 35, 

subpart A, and 40 CFR part 745, subpart F, describe in detail the information that must be provided 

before the contract or lease is signed and require that sellers, landlords, and agents document compliance 

with the disclosure requirements in the contract to sell or lease the property. Title X does not provide for 

these requirements to be administered by States or Tribes in lieu of the Federal regulations. Therefore, 

HUD and EPA are responsible for administering and enforcing these disclosure obligations. 

TSCA section 406(b) directs EPA to promulgate regulations requiring persons who perform home 

renovations for compensation to provide a lead hazard information pamphlet to owners and occupants of 

target housing being renovated. These regulations, promulgated on June 1, 1998, are codified at 40 CFR 

part 745, subpart E (U.S. EPA 1998). The term ‘‘renovation’’ is defined, at 40 CFR 745.83, as the 

modification of any existing structure, or portion of a structure, that results in the disturbance of painted 

surfaces. Lead-based paint abatement projects are specifically excluded, as are small projects that disturb 

2 square feet or less of painted surfaces, emergency projects, and renovations affecting components that 

have been found to be free of lead-based paint, as that term is defined in the regulations, by a certified 

inspector or risk assessor. Like the regulations regarding disclosure during sales or leases, these 

regulations require the renovation firm to document compliance with the requirement to provide the 

owner and the occupant with the PYF pamphlet. One important difference from the disclosure 

requirements in section 1018 of Title X is that TSCA section 404 allows States to apply for, and receive 

authorization to administer, the TSCA section 406(b) requirements. Two States are currently authorized 

to operate this program. 

c. Standards for lead in paint, dust, and soil. Another responsibility assigned to EPA by Title X is the 

development of standards for identifying dangerous levels of lead in paint, dust and soil. These standards, 

promulgated pursuant to TSCA section 403 on January 5, 2001 and codified at 40 CFR part 745, subpart 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

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D, provide various Federal agencies, including HUD, and State, local and Tribal governments with 

uniform benchmarks on which to base decisions on remedial actions to safeguard children and the public 

from lead-based paint hazards (U.S. EPA 2001b). These standards also allow certified inspectors and risk 

assessors to easily determine whether a particular situation presents a lead-based paint hazard and whether 

to recommend remedial actions such as lead-based paint abatement, cleaning of dust, or removal of soil. 

The standards define lead-based paint hazards in target housing and child-occupied facilities as paint-lead, 

dust-lead, and soil-lead hazards. A paint-lead hazard is defined as any damaged or deteriorated leadbased paint, any chewable lead-based painted surface with evidence of teeth marks, or any lead-based 

paint on a friction surface if lead dust levels underneath the friction surface exceed the dust-lead hazard 

standards. A dust-lead hazard is surface dust that contains a mass-per-area concentration of lead equal to 

or exceeding 40 micrograms per square foot (μg/ft2

) on floors or 250 μg/ft2on interior windowsills based 

on wipe samples. A soil-lead hazard is bare soil that contains total lead equal to or exceeding 400 parts 

per million (μg/g) in a play area or average of 1,200 parts per million of bare soil in the rest of the yard 

based on soil samples. 

d. Public outreach and education. Among other things, TSCA section 405(d) directs EPA, along with 

the Agency for Toxic Substances and Disease Registry (ATSDR) and HUD, to sponsor public education 

and outreach activities to increase public awareness of the health effects of lead, the potential for 

exposures, the importance of screening children for elevated blood lead levels, and measures that can be 

taken to reduce or eliminate lead-based paint hazards. Accordingly, EPA has worked to provide the 

public with information and increase public awareness of such matters. To date, these activities have 

included web site management, development of public outreach strategies, development of partnership 

agreements, distribution of materials, participation in national conferences and exhibits, and developing 

hazard information documents (and other media, such as videos), as necessary to implement Title X. EPA 

has collaborated closely with other Federal agencies and its State, Tribal, and local government partners 

in developing outreach campaigns. EPA has also been involved in developing model tool kits of various 

educational tools to provide to partners, such as slogans and graphic materials for public buses, trains, and 

mass transit stations. 

TSCA section 405(e) further directs EPA to establish, in connection with HUD, CDC, other Federal 

agencies, and State and local governments, a clearinghouse for information on lead-based paint and a 

hotline for the public to use for questions and requests for information on lead-based paint. This 

clearinghouse, the National Lead Information Center, handles approximately 50,000 calls per year, and 

disseminates up to 500,000 documents per year to the public. 

Lead-based paint programs at other Federal agencies 

In addition to EPA, other Federal agencies have important roles in achieving the goals of reducing or 

eliminating lead-based paint hazards in housing. Other agencies specifically assigned tasks in Title X 

include HUD, CDC, and OSHA. 

The Federal agencies have long realized that they must work together to develop and implement Federal 

strategies for addressing lead-based paint hazards in order to be efficient and effective. In 1989, HUD 

and EPA formed an inter-agency task force to work through issues associated with lead-based paint 

abatement. The Federal Interagency Lead Based Paint Task Force has remained active throughout the 

years and continues to meet on a quarterly basis. Participating agencies include the Department of 

Defense, the Veterans Administration, the National Institute of Standards and Technology (NIST), the 

U.S. Public Health Service, the National Aeronautics and Space Administration (NASA), the United 

States Department of Agriculture (USDA), the Government Accountability Office (GAO), the National 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-10 

Institute for Environmental Health Sciences (NIEHS), ATSDR, CDC, CPSC, NIOSH, OSHA, HUD, and 

EPA. This Task Force serves as an important forum for coordinating the strategic plans of the Federal 

agencies who have responsibilities under Title X or who have responsibilities for maintaining and 

disposing of property that may contain lead-based paint. 

Title X assigned certain responsibilities to HUD. One of HUD’s functions is the administration of the 

Lead-Based Paint Hazard Control Grant Program established by the Act. This program provides grants of 

$1 million to $3 million to State and local governments for control of lead-based paint hazards in 

privately owned, low-income owner-occupied and rental housing that is not receiving federal assistance. 

These grants are also designed to stimulate the development of a trained and certified hazard evaluation 

and control industry. Evaluation and hazard control work funded by the program must be conducted by 

either contractors who are certified by EPA or an EPA-approved State or Tribal program, or by 

contractors trained in lead-safe work practices, in the case of interim controls. Through these 

requirements, HUD hopes to create infrastructure that will last beyond the life of the grant. In awarding 

grants, HUD promotes the use of cost-effective approaches to hazard control that can be replicated across 

the nation. Since 1993, approximately $971 million has been awarded to over 200 local and State 

jurisdictions across the country. The work approved to date will lead to the control of lead-based paint 

hazards in more than 70,000 homes where young children reside or are expected to reside. Other HUD 

lead grant programs include the Lead Hazard Reduction Demonstration program, the Lead Elimination 

Action Program (LEAP), the Lead Outreach program and the Lead Technical Studies program. 

HUD was also given regulatory authority over some aspects of lead based paint hazard control. As noted 

previously, on March 6, 1996, HUD and EPA jointly promulgated regulations requiring the disclosure of 

lead-based paint information during sale or lease transactions involving target housing. The HUD 

disclosure regulations are codified at 24 CFR part 35, subpart A. Subparts B through R of 24 CFR part 

35 are known as the ‘‘Lead Safe Housing Rule,’’ initially promulgated on September 15, 1999, and 

updated in June 2004 (HUD 2004b). This rule was designed to protect young children from lead-based 

paint hazards in target housing that is being sold by the Federal government or receives financial 

assistance from the government. The requirements generally depend upon the level of assistance being 

provided, and may include such things as inspections, risk assessments, abatement, paint stabilization, or 

interim controls, which are temporary measures to reduce potential exposure to lead-based paint hazards. 

The emphasis is on reducing lead-based paint hazards, so, after paint is disturbed, a visual assessment for 

surface dust, debris, and residue and dust clearance testing is required to ensure that no dust lead hazards 

were created or left in the work area or, for rehabilitation projects of moderate or substantial scope, in the 

entire housing unit. More information on the Lead Safe Housing Rule is available on the HUD website at 

http://www.hud.gov/offices/lead. 

Section 1017 of Title X required HUD to issue ‘‘guidelines for the conduct of federally supported work 

involving risk assessments, inspections, interim controls, and abatement of lead-based paint hazards.’’ In 

response to this directive, HUD completed the Guidelines for the Evaluation and Control of Lead-Based 

Paint Hazards in Housing (Guidelines), in June 1995 (HUD 1995). The Guidelines provide detailed, 

comprehensive, technical information on how to identify lead-based paint hazards in housing and how to 

control such hazards safely and efficiently. 

Other core activities of HUD’s lead-based paint program include providing technical assistance to 

housing authorities, nonprofit housing providers, local and State agencies, other Federal agencies, housing 

developers, inspectors, real estate professionals, contractors and financiers, and public health authorities; 

evaluating the hazard reduction methods used in the grant program to measure their effectiveness, cost 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

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and safety; and maintaining a community outreach program in coordination with the other Federal 

agencies involved in lead-based paint hazard reduction. 

CDC also provides significant funding for the prevention of childhood lead poisoning. CDC provides 

funding to support State, city and county programs in the areas of primary prevention, case management 

and screening, surveillance, strategic partnerships, and program evaluation. Since 2002, CDC has 

recommended that a blood lead level of 10 micrograms per deciliter (μg/dL) be used as a threshold for 

individual intervention (CDC 2002). Additional CDC recommendations address the type and intensity of 

individual intervention strategies that should be undertaken, depending upon the child’s blood lead level. 

These strategies range from nutritional and educational interventions, along with more frequent testing, 

for a child with a blood lead level of 10–14 μg/dL, to medical and environmental interventions for 

children with blood lead levels above 45 μg/dL (CDC 2002). CDC has established a national surveillance 

system for children with elevated blood lead levels. In addition, CDC works with HUD and EPA to 

coordinate outreach and education campaigns. 

OSHA is another agency with regulatory authority under Title X. As directed by the Act, OSHA 

promulgated an interim final standard on May 4, 1993, which regulates lead exposures in the construction 

industry (OSHA 1993). This standard, codified at 29 CFR 1926.62, limits worker exposures to 50 

micrograms of lead per cubic meter of air averaged over an 8–hour workday. Employers must use a 

combination of engineering controls and work practices to reduce employee exposure as much as 

possible, using appropriate respiratory protection where necessary to achieve the exposure limit. 

Employees must receive training on the health effects of lead and how to limit exposure through proper 

work practices and personal protective equipment. Exposure monitoring and medical monitoring, 

including blood lead testing, are also required. This standard remains in effect and OSHA retains the 

authority to protect workers from occupational exposure to lead. 

Many Federal agencies have been working to reduce or eliminate lead-based paint hazards in housing and 

to end lead poisoning. EPA, HUD, and other Federal agencies have been working for many years on the 

problem of lead-based paint hazards that can be created during renovation and remodeling activities in 

housing and child-occupied facilities. This rulemaking is an important component of the Federal strategy 

for eliminating lead poisoning. 

3.3 Justification for Federal Regulations of Lead Exposure during Renovation 

3.3.1 Market Failure 

From an economic perspective, a necessary condition for regulations is the existence of inefficiency in the 

allocation of resources. This inefficiency is commonly labeled a market failure since the market is the 

mechanism assumed to make efficient resource allocations possible. A market failure can come from one 

or more of several sources. These include poorly defined property rights (such as negative externalities, 

common property resources, and public goods); imperfect markets for trading property rights (because of 

a lack of perfect information or of contingent markets; monopoly power; distortionary taxes and subsidies 

and other inappropriate government regulations); and the divergence of private and social discount rates. 

The occurrence of any of these conditions justifies further inquiry into the need for government regulation 

to reduce inefficiencies in the allocation of society’s resources. This section considers whether any of 

these conditions are linked to lead exposures resulting from renovation in target housing and public or 

commercial building COFs. If so, understanding the nature of the inefficiencies involved facilitates the 

design of more effective regulations. The specific regulatory approach considered here involves the 

removal of the opt-out provision (currently available for renovations in owner-occupied target housing 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-12 

where no child under the age of 6 or pregnant woman resides and no COF operates), and a requirement 

that renovators provide owners and occupants with information documenting compliance with the training 

and work practice requirements of the LRRP rule. 

Economic efficiency suggests that “lead-safe” renovation will occur as long as the property owners’ 

willingness-to-pay for reduced lead risks exceeds the cost of reducing these risks. If the property owners 

are aware of the risks and of the availability and costs of reducing these risks, then arguably they might be 

able to accurately trade off risk and cost without the aid of government regulation. However, there are 

two arguments for why individual property owners may not trade off risk and cost efficiently. 

Externalities and Public-Good Characteristics of Lead-Safe Renovation 

A major cause of failure in the market for lead-safe renovations stems from externalities due to 

renovations disturbing lead-based paint that do not use lead-safe work practices because they occur in 

target housing units eligible for the opt-out provision. An efficient outcome is achieved when the 

marginal willingness-to-pay for a service is equivalent to the marginal cost of providing that service. 

Because the use of lead-safe work practices is likely to benefit not only the consumer of the renovation 

(the homeowner and his or her family members) but also residents of adjacent properties, future 

occupants, visitors, and children receiving child care on the premises, lead-safe renovation services are, in 

part, a public good. As such, even with perfect information, the maximum amount that the individual 

consumer of the renovation would be willing to pay for lead-safe work is likely to be lower than the total 

amount that that particular consumer plus the other beneficiaries (neighbors, future occupants, etc.) would 

be willing-to-pay for the service. For example, occupants of neighboring properties may also experience 

an increased exposure to lead and may be willing to pay to reduce or eliminate this exposure but may not 

be consulted by the property owner making the decision. As another example, children do not testify to 

their willingness-to-pay for risk reduction and rely on their parents’ or the property owners’ willingnessto-pay. Even if other parties were consulted, the transaction costs of reaching an agreement would be 

high, so that this would be an inefficient process. 

An example of an externality can be found in an owner’s decision about which contractor to hire to 

perform renovation in his or her housing unit. Contractors that provide lead-safe renovation services are 

likely to charge more for their work than establishments that do not use lead-safe practices. Lead-safe 

work practices may also increase the duration of the project because contractors need to take additional 

steps to prevent the spread of lead dust. Since the property owner pays for the renovation, but not 

necessarily for the consequences of all the resulting lead exposure, he or she is faced with powerful shortterm incentives (lower cost and a faster turn-around) to hire a contractor that does not use lead-safe work 

practices. Other parties (such as residents of adjacent properties, future occupants, visitors, and children 

receiving child care and their parents) pay for the consequences of lead exposures, not the property 

owner. This externality results in a socially inefficient outcome of too little lead-safe renovation services 

being purchased. 

A similar external cost problem also leads to inefficiencies on the supply side of this market. Renovators 

that use lead-safe work practices incur higher costs than other contractors who are faced with the 

incentives to keep their costs as low as possible. Similar to property owners, contractors may not incur 

the costs of consumer lead exposure resulting from unsafe renovation work. 

Because the legal/liability system is not perfect, the contractor’s financial responsibilities (in terms of 

costs related to the customer’s lead exposure) are not clear and consistently enforced. The same situation 

occurs with respect to a property owner’s responsibilities to residents of adjacent properties, future 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-13 

occupants, visitors, and child-care customers. This is likely to result in an inefficient outcome of either 

too little lead-safe renovation services being consumed. 

Inadequate Information 

Another cause of failure in the market for lead-safe work practices is due to inadequate information. 

Correct information is an important prerequisite to the demand for containment and clean-up practices 

that reduce lead exposure during renovation projects. In deciding whether lead-safe work practices or 

well-trained contractors are worth the extra cost, the property owner has to know whether there is lead in 

the work area, what risks are implied by having renovation done in areas with lead-based paint, the 

significance of these risks, what can be accomplished in reducing those risks through specific 

containment and clean-up practices, and how much these practices cost. 

Misinformation can lead to inefficient outcomes. Without knowing there is a lead problem, or how 

renovation might create lead hazards, the owner will have too low a demand for proper work practices 

and may be unwilling to pay additional costs for contractors who voluntarily abide by these containment 

and clean-up standards. Furthermore, a great deal of uncertainty can exist if the consumer is unsure about 

the quality of lead-safe renovation services being purchased and their likely benefits. If consumers do not 

have any guarantee that contractor are qualified to identify and control lead-based paint hazards, demand 

for these services is likely to be lower than in the presence of such a guarantee. On the supply side, 

contractors may be unaware of the risks they are creating and the methods they can use to reduce risks of 

lead exposure. 

Impacts of the Regulation on Demand for Lead-Safe Renovation Services in Opt-out Housing 

A consumer’s demand for renovation services is a function of the price of these services, the 

characteristics of the services (e.g., quality, lead safety etc.), and the characteristics of consumers. 

Assume that all renovation services are identical except that some are performed using lead-safe 

containment and clean-up practices and some are not. Assume for illustration purposes that there is only 

one consumer and one supplier in the market. Of the services that are performed not using these lead-safe 

practices, some are done by the supplier, while others are do-it-yourself projects performed by the 

consumer. The general market failure relationships discussed above are illustrated in Exhibit 3-1 as three 

markets for close substitutes. Figure (a) represents the market for lead-safe renovation projects, Figure 

(b) represents the professional market for “standard practice” renovations that do not use lead-safe work 

practices, and Figure (c) represents the do-it-yourself market for “standard practice” renovations. In each 

market, S0 represents the supply of renovation services and D0 represents the demand for renovation 

services in the baseline with incomplete information. Note that, moving from left to right, each supply 

curve is lower than the prior one, corresponding to the lower cost in terms of materials and time 

combined. The area under the demand curve in each market represents the consumer’s willingness-to-pay 

for renovation services. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-14 

Exhibit 3-1: Impact of Regulation on Markets for Renovation/Remodeling Services in Opt-out Housing 

The LRRP program alters the nature of these three markets by providing information to the consumer and 

contractor about the risk associated with lead-based paint renovation activities and by requiring lead-safe 

containment and clean-up practices for professional projects. The implementation of the LRRP program 

will help to establish a more structured market for lead-safe renovation services. Prior to the LRRP 

program, consumers of renovation services generally had no guarantee that a contractor who claimed to 

provide lead-safe renovation services would actually perform the project in a lead-safe manner. The 

implementation of work practice standards and training/certification requirements is likely to increase 

consumer confidence in the quality of the work provided by certified contractors, increasing their 

willingness-to-pay for these services. 

EPA’s targeted outreach program is also likely to increase demand for lead-safe renovation services by 

raising consumer awareness about the dangers of unsafe work. Although contractors that currently 

provide well-trained staff and perform lead-safe work practices are expected to find it in their vested 

interest to provide the kinds of information cited above, this possibility has not closed the information 

gaps for the public. One impediment may be public uncertainty about the reliability of information that 

contractors themselves provide. Their information may be considered unreliable because consumers are 

not fully competent to assess the lead contamination and what needs to be done, because the businesses 

are subject to moral hazard (which occurs, for example, because businesses have a financial interest in 

minimizing their work practice costs), or both. Since many property owners may lack easy access to 

independent sources of information to motivate their decisions, doing nothing may be the likely response. 

With the implementation of the LRRP program, however, consumers are more likely to avoid the dangers 

posed by unsafe renovation and hire a qualified contractor to perform the work in a lead-safe manner. 

The increased demand discussed above is shown by an upward shift of the demand curve in Figure (a) 

from D0 to D1 and an associated increase in price. Simultaneously, the demand for “standard practice” 

renovation services decreases with an associated decrease in price. Given scarce resources for 

enforcement, it is expected that some “standard practice” professional work will continue, even in 

properties where there is the potential for lead exposure. The effect of the regulation on the do-it-yourself 

market is ambiguous. Some property owners that might have hired a professional to perform “standard 

practice” renovation work in the baseline may decide to perform this work themselves rather than pay the 

additional costs for lead-safe work practices. This would shift the supply curve back up. On the other 

S0

D1

Work Practices

Figure (b) Professional Market with 

“Standard” Work Practices

QLead-Safe QStandard Professional

PLead-Safe PStandard Professional

D0

S0

Q Standard Do-it-yourself

?

Figure (c) Do-it-Yourself Market with

“Standard” Work Practices

P0

PStandard Do-it-yourself

D0

S1

D0

D1

S0

S1

Q0 Q1

P0

P1

Q0

P0

P1

Figure (a) Market with Lead-Safe 

Q1 Q0

S0

D1

Work Practices

Figure (b) Professional Market with 

“Standard” Work Practices

QLead-Safe QStandard Professional

PLead-Safe PStandard Professional

D0

S0

Q Standard Do-it-yourself

?

Figure (c) Do-it-Yourself Market with

“Standard” Work Practices

P0

PStandard Do-it-yourself

D0

S1

D0

D1

S0

S1

Q0 Q1

P0

P1

Q0

P0

P1

Figure (a) Market with Lead-Safe 

Q1 Q0
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-15 

hand, with increased information, property owners that would have performed do-it-yourself “standard” 

practice” renovation in the baseline may decide to either forgo renovation altogether or hire a lead-safe 

professional, thus reducing do-it-yourself demand. 

Impacts of the Regulation on the Supply of Lead-Safe Renovation Services 

The regulation will increase both the costs of supplying lead-safe services and standard services. In 

Figures (a) and (b), S1 represents the supply of services with the regulations. A contractor that already 

uses lead-safe practices will also incur the costs of training, certification and cleaning verification. A 

contractor that continues to provide standard (not lead-safe) renovation services will have higher costs of 

operation due to potential enforcement actions, and potentially higher liability. The relative size of the 

shifts in the two submarkets will affect the final changes in quantity and price of both lead-safe and 

standard renovation services. 

The net impact on the quantity of renovation projects performed is also ambiguous. If all property owners 

are willing to pay the full amount for lead-safe work practices, then the total quantity performed across all 

three markets will remain constant but the average price will rise. However, if some property owners are 

not willing to pay for the risk reduction they may chose to forgo renovation services altogether, resulting 

in a net decline in renovation services provided after regulation.1

Conclusions 

As demonstrated in this review, due to inadequate information and the existence of externalities, the 

quantity of lead-safe RRP services currently provided is likely to be inefficiently low. The results of the 

market failures discussed in this review are significant in both qualitative and quantitative terms. 

Childhood lead exposure continues to be a major public health problem among young children in the 

United States. During 1999 through 2002, approximately 310,000 children aged 1 to 5 years, had bloodlead levels greater than 10 μg/dL, despite the removal of lead from gasoline and the banning of lead-based 

paint in 1978 (CDC 2005). Most children with blood-lead levels in excess of CDC’s current level of 

concern have been exposed to lead in non-intact paint, interior settled dust, and dust and soil in and 

around deteriorating older housing or other buildings where they spend time. According to the Center for 

Disease Control (CDC), “renovation and remodeling activities that disturb lead-based paint can create 

substantial amounts of lead dust in the home; such dust can then be inhaled or ingested by children” 

(CDC 1997). An insufficient number of lead-based paint interventions have occurred to remove the 

dangers posed by uncontrolled renovation activities; renovation activity thus continues to pose a 

significant risk of lead exposure. 

3.3.2 Justification for Regulation at the Federal Level 

In the Residential Lead-Based Paint Hazard Reduction Act of 1992 (Title X), the United States Congress 

stated that the elimination of lead-based paint hazards was a national goal. Under §402, Congress 

directed EPA to promulgate regulations governing lead-based paint activities to ensure that individuals 

are properly trained, that training programs are accredited, and that contractors engaged in such activities 

are certified; and to promulgate guidelines for the conduct of such renovation and remodeling activities 

which may create a risk of exposure to dangerous levels of lead. Accordingly, the 2008 LRRP rule 

 

1 The amount by which price and quantity change in each of these markets is a function of both the amount by which 

the supply and/or demand functions shift and the relative elasticities of the two functions. See Appendix 3A for 

a discussion of how these factors affect the price of renovation services and the quantity provided by the 

market. Appendix 3B presents price elasticity estimates for construction and RRP.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-16 

established training, certification and accreditation requirements, as well as work practice requirements 

for renovation work in target housing and COFs. 

The rule revises the LRRP program by removing the opt-out provision in the 2008 LRRP rule. The rule 

also requires renovation firms to provide owners and occupants with a copy of the records demonstrating 

compliance with the training and work practice requirements of the LRRP rule. Since both of these 

provisions revise the existing Federal RRP regulation, it is appropriate that the changes be made at the 

Federal level, instead of the state or local level. 

3.4 Approaches for Reducing Lead Exposure Resulting from Renovation 

This section examines how the information provision and the mandatory training and work practice 

requirements in the rule address the market failures discussed in the previous section. 

3.4.1 Information Provision 

Information provision will occur in several ways under the LRRP program, in conjunction with other 

sections of Title X. Consumers will be directly informed about lead-based paint hazards and risks 

associated with renovation work through educational programs and through the expanded notification 

requirements. The aim of these programs will be to educate the property owner about the risks associated 

with lead-based paint and lead-based paint hazards and having renovation work done in areas where these 

are present, the significance of these risks, and how specific work practices can reduce those risks. In 

addition, requiring training of professionals who carry out renovation projects will provide these 

individuals information about the hazards of lead exposure and the use of appropriate procedures to 

reduce exposure during their work. Similarly, the entity certification process will act as an indirect form 

of information provision to the consumer by assuring them that the services they are purchasing will 

reduce or eliminate lead exposure. 

The rule addresses the market failure due to inadequate information in two ways. First, removing the optout provision will bring renovations in these housing units under the purview of the LRRP program, 

which assures consumers that firms are certified and renovation staff are trained and qualified to 

minimize exposure to lead-based paint hazards created during renovations. Second, requiring renovators 

to provide owners and occupants with a record of the steps taken to comply with the requirements of the 

LRRP program (using the checklist or other means) can facilitate a review and discussion between the 

parties of how well the renovator complied with the work practice requirements in the LRRP program. 

Both of these information provision activities are described below. 

Effect of Removing the Opt-Out Provision 

The objective of removing the opt-out provision is to reduce exposure to lead dust generated by 

renovation projects and thereby protect children and adults from the health hazards posed by lead. Due to 

the nature of the problem, uncertainty currently exists on the part of consumers about the quality of leadsafe renovation services and their likely benefits. The lack of information regarding the benefits of and 

the lack of confidence in the quality of a good or service generally leads to a lower demand and a lower 

willingness-to-pay for that good or service. Thus, if consumers of renovation services are not aware of 

the dangers posed by lead dust generated during renovation, or if they are not confident that a contractor 

who claims to use lead-safe work practices has been properly trained, they may not be willing to pay the 

additional costs of contractors who voluntarily abide by these work practice standards. Removing the 

opt-out provision will bring renovations in these housing units under the purview of the LRRP program, 

which assures consumers that firms are certified and renovation staff are trained and qualified to 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-17 

minimize exposure to lead-based paint hazards created during renovations. This provision of information 

will act as an important instrument in alleviating the problems contributing to undue lead exposure. An 

example of the market failure stemming from inadequate information is presented in the previous section 

and is shown graphically in Exhibit 3-1. 

An additional information flow will occur under these regulations. The teaching of safe work practices to 

contractors and other personnel performing RRP work in opt-out housing will provide them with 

information they need to undertake renovation activities in ways that will minimize exposure to the 

occupants of the building and others. The training course will also provide information about the hazards 

associated with lead and renovation activities, which contractors will pass along to their clients. This 

provision of information is likely to increase the demand for lead-safe work practices and assist in 

eliminating the market failure that currently exists due to incomplete or misinformation. 

Effect of Requiring Checklist Provision

The rule’s requirement for renovators to provide the owner and occupant with a record of the steps taken 

to comply with the requirements of the LRRP program is one of several information provision 

requirements under Title X. For example, the rule will function in conjunction with EPA’s prerenovation education rule, promulgated under TSCA section 406(b), that requires renovators to provide 

owners and occupants of target housing and COFs with a lead hazard information pamphlet before 

conducting renovations. The pamphlet that renovators must provide (entitled Renovate Right: Important 

Lead Hazard Information for Families, Child Care Providers and Schools) covers topics including the 

potential health effects resulting from lead exposure; how to prepare for a renovation; the work practices 

that contractors must follow (containment, cleaning, cleaning verification, etc.); and what to look during 

the job and after the job is done. 

 The rule requires renovators to provide a copy of the checklist (or other information documenting the 

steps taken to comply with the requirements of the LRRP program) when the final invoice for the 

renovation is delivered, or within 30 days of the completion of the renovation, whichever is earlier. 

Because the owner will receive the information prior to making the final payment for the work, he or she 

can use this information in a discussion with the renovator about any differences between the work 

practices required in the rule and those identified on the checklist as having been completed, or between 

the work practices that the renovator identified on the checklist and those that the owner observed being 

used. If there were any deficiencies in the contractor’s work practices, the two parties may then be able to 

negotiate a resolution to address them. For example, if the renovator failed to appropriately contain the 

work area, he or she may agree to have the dust levels checked through dust wipe sampling, and 

(depending on the results) to perform additional cleaning in order to decrease dust lead levels. Or owners 

may want to perform additional cleaning on their own. 

In situations where the occupant is not the owner (i.e., in a rental unit), the occupant may be in a better 

position than the homeowner to note whether the renovator followed all of the steps noted on the 

checklist. Because the renovator also provides the occupant with a copy of the checklist, the occupant 

can raise with the owner any discrepancies between what the occupant observed and what the completed 

checklist says. The owner can then take the steps outlined above. 

Requiring the renovator to provide the owner and occupant with a record of the steps taken to comply 

with the LRRP program creates an additional incentive for the renovator to comply. A renovator is more 

likely to adhere to all of the work practice requirements knowing that a consumer with a copy of the 

completed checklist will be in a better position to evaluate whether the work followed the requirements. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-18 

A mandatory information provision requirement is useful for renovators as well as consumers, since it 

provides renovators with an affirmative indication that they have followed the work practice requirements 

in the rule. Having the option of using a checklist developed and suggested by EPA (instead of using a 

checklist that has been developed by private parties) may address possible questions of whether the 

checklist renovators are using is sufficient and appropriate. 

EPA’s version of the checklist is short (one page long) and is written in simple and clear language. The 

information provided by the renovator is supplied in checkboxes or in short fill-in-the-blank answers. 

Thus, the information is provided in a format the owners and occupants can readily understand. Because 

renovators must provide the checklist prior to final payment for the work, owners will receive the 

information in a timely fashion. This provides them with the ability to act on the information in an 

appropriate manner. 

If renovators were not mandated to provide this information to consumers, responsible renovators might 

theoretically provide it voluntarily (although renovators who are not as responsible are unlikely to provide 

this information voluntarily). But there is no evidence that even responsible renovators are doing this. 

EPA’s analyses for this rule and for the 2008 LRRP rule assumes that some of the work practices required 

by the LRRP program are already used in a fraction of the renovations in the baseline (that is, without the 

LRRP program applying). If renovators were interested in voluntarily providing consumers with 

information similar to that on the checklist, then presumably some of them would already be doing it (i.e., 

providing consumers with documentation of the types of containment, cleaning, and other work practices 

they are using in the baseline). However, there has been no indication that renovators are providing 

owners with documentation of the work practices used, much less that renovators are providing 

documentation comparing the work practices used with the suite of work practices required by the LRRP 

program. The failure of the marketplace to provide this information on its own means that owners and 

occupants may not be able to react appropriately to avoid or prevent risks from lead-based paint. 

The rule does not require owners and occupants to read the checklist or to take further actions to reduce 

lead-based paint hazards. Thus, the extent to which lead exposure is reduced (beyond the expected 

increase in the compliance rate discussed above) depends upon how participants in the transaction 

respond to the information provision required by the rule. Neither the costs nor benefits of these 

responses can be quantified because doing so would require predicting the behavior of the parties, which 

is influenced by many factors unique to each individual situation. Data are not available to estimate the 

behavior changes. 

3.4.2 Mandatory Training and Work Practice Requirements 

The information provision described above will aid in reducing the extent of the market failure that 

currently exists for lead-safe renovation services. However, relying solely on information provision is 

unlikely to be sufficient to correct the market failure because of the nature of the lead paint problem. The 

lead in lead-based paint cannot be seen on visual inspection, so the owner and occupant do not know if 

lead is present and whether a lead exposure hazard exists. Likewise, the adverse health effects are not 

noticeable for several years, and the source may not be recognized. In such situations, education may not 

be sufficient and other mechanisms are needed to ensure that if a potential risk exists, it is suitably 

addressed. The LRRP program introduces other mechanisms for the elimination of lead-based paint 

hazards during renovation work. These include training requirements for personnel engaged in 

renovation work, and the use of standard practices for the containment and cleanup of lead dust and debris 

generated during the project, and the prohibition or restriction of certain high-hazard techniques. The rule 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-19 

requires the use of these work practices in all target housing by removing the opt-out provision from the 

LRRP program. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-20 

Appendix 3A: The Role of Elasticities in Determining the Impacts of a 

Rule 

EPA is often faced with deciding on a regulatory policy in the absence of good information about the 

likely effects of the policy on consumers and producers. In particular, data on the own-price elasticity of 

supply and demand often are uncertain. This appendix provides background information on the likely 

effects of own-price elasticity of demand and supply on the outcomes of EPA’s regulatory efforts. The 

bulk of the discussion focuses on the case of perfect competition, not because the majority of markets 

EPA is likely to affect will exhibit competitive behavior, but simply because the theory is clearly defined 

in this case. However, this appendix also examines the likely impacts of relaxing the assumption of 

perfect competition. It focuses on two general classes of regulatory options: regulations that alter the 

market outcome by imposing additional costs upon producers, and regulations that alter the market by 

providing information to consumers. 

3A.1 Elasticities of Supply and Demand 

The market equilibrium for a commodity (e.g., purchasing renovation, remodeling or painting (RRP) 

work that uses lead-safe work practices) is determined by the intersection of the aggregate demand and 

supply curves. The aggregate demand curve depicts consumer behavior and is based on consumer income 

and preferences. Likewise, the aggregate supply curve describes the behavior of producers in the market, 

and is dependent upon the costs of production. At market equilibrium, the price is referred to as market 

clearing. In other words, at this price, the quantity demanded by consumers and supplied by producers 

are equal and neither the consumer nor producer has any incentive to move away from this steady state as 

long as current demand and supply conditions prevail. 

However, when demand and supply conditions do change, for example when new information causes 

consumers to adjust their preferences and thus shift the demand curve, or changes in input prices affect 

costs of production and shift the supply curve, the market gravitates to a new equilibrium. This new 

equilibrium is represented by a new combination of market clearing price and quantity. The magnitude of 

the change in price and quantity is dependent not only upon the extent of the shift in the demand or supply 

curve, but also on the own-price elasticity of demand and supply for the commodity. 

The own-price elasticity of demand is defined as the ratio of the percent change in quantity demanded to 

the percent change in price, and is reflected in the slope of the demand curve, similarly for the own-price 

elasticity of supply. By determining the level of change in price and quantity, the elasticities of the two 

curves also determine the distribution of the burden or benefit between the consumer and producer 

resulting from a change in equilibrium conditions. Analyzing changes in consumer and producer 

surpluses provides a means for quantifying such distributional changes. 

Figure 3A-1 below provides a hypothetical example of how the effects of regulation may impact 

consumer and producer surpluses. In the baseline, the supply curve is represented by S1, and producers 

supply Q1 at a price P1. On all the inframarginal units supplied, producers receive a price above the cost 

of production. The difference between the price and the cost of production represents the producer 

surplus resulting from supplying Q1 at price P1 (triangle P1CD). Similarly, in the baseline consumers 

demand quantity Q1 at price P1. For all the inframarginal units demanded, consumers would be willing to 

pay more than that price and thus receive a surplus. The difference between what consumers are willing 

to pay as measured by the height of the demand curve, and what they have to pay is the consumer surplus 

(triangle ACP1). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-21 

So what are the effects of regulation? In Figure 3A-1, the upward shift in the supply curve to S2 (say 

from a rise in production costs due to the implementation of the RRP rule which requires use of the more 

costly lead-safe work practices) results in a new equilibrium at the point B, with a new market price of P2

and quantity of Q2. Note that producer surplus decreases from P1CD to EBP2 and the consumer surplus 

also decreases from ACP1 to ABP2. Thus, in the arbitrary case drawn in Figure 3A-1, the social costs of 

the regulation are born by both consumers and producers of the pollution-generating good. This result 

turns out to be a function of the way the supply and demand curves have been drawn, and the distribution 

of costs between consumers and producers depends on the slope (elasticity) of the demand and supply 

curves. 

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

A

B

C

D

E

Q2 Q1

P1

P2

S2

S1

D

In general, for a given production cost increase, the more elastic the demand curve, the greater the 

inability on the part of the producers to pass the additional costs of production on to the consumers. As 

shown in Figure 3A-2 (a) and 3A-2 (b) below, the differing slopes of the demand curve lead to 

differential impacts on the consumer and producer surplus. In Figure 3A-2 (a) demand for the good is 

relatively price elastic, while in Figure 3A-2 (b) the good has a relatively inelastic demand. Notice that 

when demand is less elastic, the price increase resulting from a shift in supply is greater and consumers 

bear a greater share of the loss in consumer surplus. On the other hand, with a more elastic demand, the 

overall price increase is smaller and the share of total costs born by producers is larger. 

Figure 3A-2(a) Figure 3A-2(b) 

2(a): Effect of a change in input prices when demand is elastic 

2(b): Effect of a change in input prices when demand is inelastic 

S2

S1

D

Q2 Q1

P1

P2

Q2 Q1

P1

P2

D

S1

S2
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-22 

The elasticity of demand is determined in general by the existence of suitable substitutes for a 

commodity. If several commodities exist in the market that are considered to be close substitutes for each 

other, then a consumer is likely to have a great deal of choice available to him while making his 

consumption decision. This being the case, if the price of the commodity that he is presently consuming 

happens to rise, he is easily able to reduce his current consumption level of that commodity and switch 

over to consuming more of one of the substitutes. This flexibility limits the ability of the producer to pass 

on the burden of the cost increase on to the consumer. Thus, the availability of close substitutes in the 

market explains why the demand curve for a commodity will be relatively elastic, and why the rise in 

price will be relatively small. On the other hand, if substitutes are lacking for a commodity that 

experiences a price increase (and it is not a luxury good), then the consumer has little choice but to carry 

on consuming similar quantities of the same product. Thus, in this situation he will have to shoulder a 

larger share of the increased costs by paying a much higher price, and this rigidity in his consumption 

behavior explains the inelastic nature of the demand curve for that commodity. 

Recognizing that most markets are not perfectly competitive, product differentiation allows firms to 

charge prices higher than marginal costs and charge different prices for similar goods. The degree to 

which producers can pass on the cost of production depends heavily on the degree to which they can 

convince consumers that their product is different from other products. In its limit this argument is just a 

restatement of the fact that markets with lower elasticities of demand will experience higher price 

increases. If “market demand” is defined to be the demand for a single brand of good, then the number of 

substitutes for the good affects its demand elasticity and thus affects the degree to which the producer can 

pass on cost increases. If the firm can convince consumers that the product is distinct then it in essence 

lowers the elasticity of demand for its product. 

The own price elasticity of supply, on the other hand, is dependent on the degree of specialization of 

inputs. If the inputs are highly specialized or firms are locked into long-term contracts then firms in this 

industry can be left with substantial sunk investments creating high transition costs which are reflected in 

an inelastic supply curve. However, if supply is highly elastic then firms can easily switch production to 

other uses and minimize the effect of the demand shock. In essence the elasticity of supply measures the 

amount of resources lost or tied up indefinitely when consumption patterns change suddenly. 

The EPA seeks to reduce hazards from lead-based paint by two separate pathways of regulatory impact. 

First, it hopes to reduce exposure to lead-based paint by regulating the “method of production” of RRP 

work in opt-out housing by establishing standards for such activities and through requiring certifications 

and/or training. This is likely to result in an increase in the “costs of production” of RRP work thereby 

affecting the supply curve for such activities. Second, the rule will provide information to consumers. In 

this case EPA is likely to alter the market outcomes by changing the demand for products (lead-safe and 

non lead-safe work practices). To the extent that the demand and supply of RRP work will be affected by 

the rule, one must consider the price elasticities involved to determine the distributive impact of the rule 

on consumers and producers. 

An important factor on which the price elasticity will depend is the number of substitutes that exist for the 

RRP service that is sought in the market. As previously explained, the greater the number of available 

substitutes, the more elastic the demand and lesser the burden of a production cost increase likely to fall 

on the consumer. Under this rule three classes of substitutes may be said to exist for RRP services. These 

are (1) professionals using lead-safe work practices, (2) professionals using non lead-safe work practices, 

and (3) the do-it-yourself jobs. Thus, a certain amount of flexibility is available to the consumer when it 

comes to hiring RRP services. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-23 

Currently a sizeable number of RRP firms may not necessarily be following lead-safe work practices 

thereby limiting the size of the class of firms that do so. However, with the implementation of the rule, a 

much larger number of firms are expected to adhere to these practices in the future, thus enlarging the size 

of this class. In addition, this increase in the number of professionals using lead-safe work practices will 

also have a geographical impact. Presently, the limited number of professionals who use lead-safe work 

practices are concentrated in a select number of locations where state and local regulations have fostered 

their development. As a result, in many parts of the country the choice of hiring “lead-safe” professionals 

currently does not exist. But this situation will change as a larger number of firms switch to lead-safe 

work practices once the rule come into effect. 

However, if the increase in production costs from the rule is extremely high such a large transition of 

firms from using lead-unsafe to lead-safe work practices may not occur. This is because the cheaper 

option of using non-certified (non lead-safe work practice using) RRP workers or doing the work yourself 

will limit the ability of the certified (lead-safe work practice using) professional to charge the consumer 

for all or a large portion of this significant cost increase. In this situation a large number of lead-unsafe 

firms may remain in existence. Thus, one may assume that as long as an appreciable difference exists 

between “costs of production” of lead-safe and non lead-safe work practices, firms of both types will 

continue to exist. The continued existence of firms using non lead-safe practices also depends on the 

extent and effectiveness of enforcement activities. The greater the cost differential between lead-safe and 

non lead-safe practices, the greater the need for enforcement activities. 

In addition to the number of substitutes, the closeness of substitutes in their ability to replace one another 

needs to be judged. The important question is whether RRP work done by uncertified professionals and 

the do-it-yourself efforts are substantially less safe than the services of certified professionals. To the 

extent an appreciable difference exists between the quality of service (in terms of preventing or reducing 

lead-based paint hazards) provided by the two groups, they will not be perceived as close substitutes for 

each other and their demand curves will not be as elastic as they would have been if they were considered 

close substitutes. In such a situation, consumers feel that a sufficiently differentiated product is being 

offered by the two groups, and thus their choice is limited. 

This judgment on the degree of closeness of substitutes will to some extent depend upon the importance 

that lead safety holds with the property owner compared to other priorities. To the extent that the priority 

assigned to lead exposure is relatively small, the uncertified professionals and do-it-yourself jobs will 

tend to be seen as closer substitutes for certified professionals, than if lead-based paint hazards are 

perceived as a larger threat by the property owner. Thus, the elasticity of demand will also vary according 

to owner priorities, and in this regard, the informational aspect of the rule may in fact assist in raising 

more awareness, resulting in lead safety being assigned a higher priority. 

Of a related nature, the firm certification aspect of the rule is likely to increase consumer ability to 

differentiate between the services being offered by the three classes of substitutes. The certification 

process will create a distinct divide which will permit the property owner to get a better appreciation of 

the varied benefits to be gained from the alternatives at hand. This is likely to reduce to some extent the 

perceived closeness of the substitutes and thereby make the demand more inelastic for each class of RRP 

service. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-24 

3A.2 How Price Elasticity of Demand Affects the RRP Rule 

As discussed above, EPA foresees two separate pathways by which the rule will take effect; increasing 

costs of production leading to a shift in supply and provision of information to consumers leading to a 

shift in demand. The way these two effects will play out and the role that price elasticities will play in the 

adjustment of prices and quantities under the two scenarios is discussed below. 

3A.2.1 Effect of Rule on the Cost of Production (Supply Shift) 

EPA seeks to reduce exposure to lead-based paint hazards by the introduction of lead-safe work practices 

during RRP work. These practices involve the use of increased precautions in situations where lead-based 

paint hazards may potentially be created during RRP work, and as a result costs of RRP work are likely to 

increase above current levels. Since producers seek to maximize profits and in the baseline will produce 

goods using the lowest-cost combination of inputs, a rule requiring producers to change their input mix 

will necessarily increase the cost of production. Thus, one impact of the rule will be to increase the 

production costs, leading the supply curve to shift upward and to the left. 

Figures 3A-2(a) and 3A-2(b) demonstrate the distributional affects of such a hypothetical shift in supply 

in markets with different elasticities of demand. The price increase is much higher (P1 to P2) and the 

decrease in quantity demanded is much lower (Q1 to Q2) with a given shift in supply when demand is 

less elastic (as shown in Figure 3A-2(b)) as compared to the elastic demand scenario in Figure 3A-2(a). 

Thus, the consumers bear a higher share of the total social cost from the regulation (represented by the 

relatively larger decrease in the consumer surplus compared to that in the producer surplus). On the other 

hand, Figure 3A-2(a) shows that the higher the elasticity of demand, the lower the overall price increase, 

the larger the reduction in quantity demanded, and thus the larger the share of total costs to be born by 

producers (represented similarly by the larger decrease in producer surplus as compared to the consumer 

surplus). 

3A.2.2 Effect of Rule on the Provision of Information to Consumers (Demand Shift) 

The alternative regulatory approach is to provide information to consumers in the hopes that they will 

make more environmentally friendly consumption choices. In this case EPA alters the market outcomes 

by changing the demand for products. Figures 3A-3(a) and 3A-3(b) depict such a hypothetical example. 

In these cases the commodity in question (non lead-safe work practices) has negative environmental 

effects (byproducts). By educating consumers about these byproducts and alternative products that have 

lower levels of adverse effects (lead-safe work practices), EPA can change consumer preferences and 

shift demand for the “bad product” inward and to the left. This lower demand curve would more 

accurately reflect the true “social” marginal benefits of consuming the product. 

What are the likely distributional and efficiency effects of this type of regulatory policy? Figures 3A-3(a) 

and 3A-3(b) reveal that under both scenarios (for an elastic and inelastic supply curve), the downward 

shift in the demand curve will lead to a decrease in price and quantity demanded of the commodity. 

However, in the case of an elastic supply curve when the transition costs associated with switching to the 

production of other products is relatively low, the decrease in price of the commodity is smaller and the 

decrease in quantity demanded larger, as compared to the changes in the case of an inelastic supply curve 

involving high transition costs. Restated in terms of changes in producer and consumer surpluses, the 

producer surplus is reduced under each scenario, but the elastic supply curve causes a relatively smaller 

burden to fall on the producer than the inelastic supply curve. Similarly, the consumer receives a 

reduction in social benefit under each scenario; however, the magnitude of this reduction is larger under 

the inelastic supply curve case. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-25 

Figure 3A-3(a) Figure 3A-3(b) 

3(a): Effects of a regulation-induced change in demand when supply is elastic 

3(b): Effects of a regulation-induced change in demand when supply is inelastic

D1

D2

S

Q2 Q1

P1

P2

Q2 Q1

P1

P2

D2

D1

S

3A.2.3 Application to Renovation 

In the rule, EPA is both affecting production and providing information. The likely effects of the 

regulation on prices and welfare are difficult to discuss without more accurate information on the supply 

and demand elasticities. However, some general observations are warranted. 

The welfare effects of the regulation will likely be driven by the supply side rather than the demand side. 

This is because the elasticity of supply for RRP services is likely to be relatively higher than the elasticity 

of demand. Supply elasticities are expected to be relatively high because there are relatively few barriers 

to entering or leaving this industry. Little capital equipment or specialized labor skills are needed for 

RRP work, and what is needed is easily transferred from non-compliant renovation to “lead-safe” 

projects. On the demand side, there are two primary categories of RRP events – those of a maintenance 

character and those of an improvement character. Maintenance activities usually cannot be postponed 

and thus are not particularly sensitive to price. Improvement projects, however, can more easily be 

postponed and thus tend to be more price elastic. Complicating matters, however, are the existence of 

different categories of purchasers. Some place a high premium on quality and timeliness, while others 

actively seek low prices. Appendix 3B discusses some of the empirical evidence on elasticities of 

demand and supply. 

However, the analysis does not suggest that the education factor is unimportant. If the regulation is not 

accompanied by education efforts and enforcement, then EPA could unintentionally drive up demand for 

non-compliant renovation projects creating additional welfare losses. These losses are the result of the 

fact that if consumers were aware of the lead paint issues their true marginal valuation for the noncompliant projects is lower than the price of these projects. Thus, if enforcement is not perfect, education 

is essential. EPA can compensate for the fact that it is raising the costs of lead-free renovation on the 

supply side by educating consumers on the environmental effects of non-compliant renovations thereby 

making these cheaper, non-compliant projects less attractive. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-26 

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

Renovation Services 

As described in Chapter 3 and Appendix 3A, the impact of increases in the cost of RRP services on 

demand for RRP will depend on both the size of the cost increase and the elasticity of demand for these 

services. Likewise, the impact on the supply of RRP services will depend on both the size of the cost 

increase and the elasticity of supply for these services. These impacts are expressed in terms of changes 

in price and in the quantity of services purchased. Chapter 4 estimates the cost increases due to the 

requirements of the various regulatory options, based on the increased labor and materials costs of 

complying with the containment and clean-up requirements, as well as the training and certification costs 

imposed by the requirements. This appendix reviews the existing literature on residential demand 

elasticities. 

Unfortunately, RRP has received relatively little attention by housing economists. While there are many 

studies that estimate elasticities for new construction, these studies have only limited applicability to 

renovation and remodeling. The income elasticity of demand for housing is generally estimated to be 

somewhat inelastic (in the 1.0 to 0.8 range). This is consistent with housing being a necessity – 

expenditures on housing do not increase as rapidly as income (Green and Malpezzi 2003). Demand for 

housing is also considered to be somewhat price inelastic, with generally accepted values either in the 

range of -0.5 to -1.0 or -0.75 to -1.2 (Mayo 1981, Malpezzi and Maclennan 2001, Ellwood and Polinski 

1979). One study is available that estimated a renovation demand elasticity (Gyourko and Saiz 2003). 

This study found renovation demand to be very inelastic, with an elasticity estimated to be –0.28. 

On the other hand, housing supply appears to be very elastic – consistent with the highly competitive 

nature of the residential construction market and the large number of small contractors. Because it is very 

easy to enter (and to leave) the construction business, supply is very responsive to changes in prices, 

especially in the long run.2

 Based on the literature surveyed, estimates of housing supply elasticities tend 

to range from 1.0 to 4.0, but a couple of studies found elasticities as high as 13 or higher (DiPasquale and 

Wheaton 1994, Topel and Rosen 1988, Blackley 1999, Malpezzi and Maclennan 2001). No elasticity 

numbers specific to the supply of renovation services could be found. 

Several characteristics of RRP tend to make its demand more price elastic than the demand for housing in 

general. For example: 

 The existence of close substitutes to compliant RRP. These substitutes include: 

 Do-It-Yourself RRP –owners of buildings may be tempted to do their own RRP work 

without proper training and certification. 

 Firms that do not complying with the regulations. These regulations may be difficult to 

enforce against contractors, particularly the large number of small contractors who may 

be hard to identify and monitor. 

 Reductions in the scope of the projects, or postponement of the projects, to compensate 

for the price increase. Purchasers can reduce other RRP-related costs by substituting 

lower-priced fixtures/finishes and/or less extensive remodeling. 

 Many RRP projects are discretionary. The price elasticity of discretionary projects is likely to be 

higher than replacement projects (e.g. new roof). For discretionary RRP projects, it is relatively 

 

2

 Note – stock adjustment models give lower elasticities than flow models. Malpezzi and Maclennan (2001). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-27 

easy for the purchaser to reduce the scale/scope of the project, postpone the project, or never do 

it. 

Offsetting these characteristics that foster higher elasticities of demand, are ones that foster lower 

elasticities. The major one is that the product purchased cannot be separated from the firm providing the 

product, which is true of all services. In addition to the various RRP events analyzed in the subsequent 

chapters, RRP firms themselves are relatively differentiated. Some firms specialize in high-end, 

complicated projects (e.g. elaborate new kitchens) while other firms specialize in performing small 

routine tasks (repainting apartments at tenant turn-over). Some firms only work in historic or Victorian 

homes, while others will work on any type of home. Some firms do only one type of project (e.g. 

replacing siding) while other firms will do any and all types of RRP work. This differentiation results in 

lower demand elasticities, because producers may not be considered particularly close substitutes. 

 To the extent that lead-safe work can be distinguished from non-lead-safe work, a higher price 

can be charged for it. 

 Many contractors already employ lead-safe practices (or at least control the dispersion of dust and 

clean well before leaving). The regulations will serve to reduce this differentiation. 

Second, the nature of RRP projects may also reduce price competition. For relatively small jobs, property 

owners frequently will not get multiple bids – the assumed cost of the job does not warrant the effort. In 

this case, the compliance cost can be passed on without fear of losing the work. In the case of large jobs, 

where owners will get bids, compliance costs will make up a relatively small proportion of the total cost 

and, again, passing on the costs may be easy. 

Characteristics of the purchaser of the RRP services may also affect their demand price elasticity. Highincome purchasers are likely to be less price sensitive than low-income purchasers. In addition, owners of 

rental properties may be more price sensitive than owner occupants because they have different objective 

functions. Owner-occupants operate so as to maximize their utility (their enjoyment of the house) and 

asset growth is likely to enter their decision as a secondary factor. Owners of rental housing, on the other 

hand, are assumed to be maximizing their profits. It is reasonable to expect that the optimal level of 

capital of an absentee landlord’s rental building is lower than that of an owner-occupier’s house, since the 

landlord’s marginal rent revenue from renovations is likely to be less than the homeowner’s marginal 

utility. 

Because of the lack of detailed price elasticity estimates for RRP, the analysis in Chapters 4, 5 and 6 does 

not incorporate any reduction in professional RRP activities in response to the cost increases resulting 

from the regulation. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-28 

References

Center for Disease Control. 1997. “Children with Elevated Blood Lead Levels Attributed to Home 

Renovation and Remodeling Activities -- New York, 1993-1994.” Morbidity and Mortality 

Weekly Reports. 45(51&52);1120-3. Available at: 

http://www.cdc.gov/mmwr/preview/mmwrhtml/00045033.htm. 

Center for Disease Control. 2002. Managing Elevated Blood Lead Levels Among Young Children 

(March). 

Center for Disease Control. 2004. Preventing Lead Exposure in Young Children: A Housing Based 

Approach to Primary Prevention of Lead Poisoning: Recommendations from the Advisory 

Committee on Childhood Lead Poisoning Prevention (October). 

Center for Disease Control. 2005. “Blood Lead Levels --- United States, 1999—2002.” Morbidity and 

Mortality Weekly Reports. 54(20);513-516. Available at: 

http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5420a5.htm#tab1. 

Residential Lead-Based Paint Hazard Reduction Act of 1992, Pub. L. no. 102-550. 106 Stat. 3672 

(1992). 

U.S. Department of Housing and Urban Development (HUD). 1990. Comprehensive and Workable Plan 

for the Abatement of Lead-Based Paint in Privately Owned Housing: Report to Congress. 

Washington, DC, February. 

U.S. Department of Housing and Urban Development (HUD). 1995. Guidelines for the Evaluation and 

Control of Lead-Based Paint Hazards in Housing (June). 

U.S. Department of Housing and Urban Development (HUD). Data as of August, 2000. National Survey 

of Lead and Allergens in Housing. Office of Healthy Homes and Lead Hazard Control, 

Washington, DC. 

U.S. Department of Housing and Urban Development (HUD). 2004b. Requirements for Notification, 

Evaluation, and Reduction of Lead-based Paint Hazards in Housing Receiving Federal Assistance 

and Federally Owned Residential Property Being Sold (Lead Safe Housing Rule); Final Rule, 

Conforming Amendments and Corrections. Federal Register (69 FR 34262, June 21, 2004). 

U.S Department of Housing and Urban Development (HUD) and U.S. EPA. 1996. Lead; Requirements 

for Disclosure of Known Lead-Based Paint and/or Lead-Based Paint Hazards in Housing; Final 

Rule. Federal Register (61 FR 9064, March 6, 1996) 

U.S. Department of Labor, Occupational Safety and Health Administration (OSHA). 1993. Lead 

Exposure in Construction; Interim Final Rule. Federal Register (58 FR 26590, May 4, 1993). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-29 

U.S. Environmental Protection Agency (EPA). 1984. EPA Policy for the Administration of 

Environmental Programs on Indian Reservations (November 8). 

U.S. Environmental Protection Agency (EPA). 1995. Lead Hazard Information Pamphlet; Notice of 

Availability. Federal Register (60 FR 39167, August 1, 1995). 

U.S. Environmental Protection Agency (EPA). 1996. Lead; Requirements for Lead-Based Paint 

Activities in Target Housing and Child-Occupied Facilities: Final Rule. Federal Register (61 FR 

5778, August 29, 1996). 

U.S. Environmental Protection Agency (EPA). 1997. Lead Exposure Associated with Renovation and 

Remodeling Activities: Environmental Field Sampling Study (EFSS). EPA 747-R-96-007, May 

1997. http://www.epa.gov/lead/pubs/r96-007.pdf 

U.S. Environmental Protection Agency (EPA). 1998. Lead; Requirements for Hazard Education Before 

Renovation of Target Housing; Final Rule. Federal Register (63 FR 29908, June 1, 1998). 

U.S. Environmental Protection Agency (EPA). 1999. Lead; Fees for accreditation of Training Programs 

and Certification of Lead-based Paint Activities Contractors; Final Rule. Federal Register (64 FR 

31092, June 9, 1999). 

U.S. Environmental Protection Agency (EPA). 2001b. Lead; Identification of Dangerous Levels of 

Lead; Final Rule. Federal Register (66 FR 1206, January 5, 2001) 

U.S. Environmental Protection Agency (EPA). 2003a. Lead Safety for Remodeling, Repair, And 

Painting. Joint EPA/HUD Renovation Training Curriculum (EPA 747-B-03-001/2, July 2003). 

U.S. Environmental Protection Agency (EPA). 2003b. Protect Your Family From Lead in Your Home. 

U.S. Environmental Protection Agency, U.S. Consumer Product Safety Commission, and U.S. 

Department of Housing and Urban Development, (EPA 747-K-99-001, June 2003). 

U.S. Environmental Protection Agency (EPA). 2004a. Lead; Notification Requirements for Lead-Based 

Paint Abatement Activities and Training; Final Rule. Federal Register (69 FR 18489, April 8, 

2004) 

U.S. Environmental Protection Agency (EPA). 2004b. Targeted Grants to Reduce Childhood Lead 

Poisoning; Notice of Funds Availability. Federal Register (69 FR 69913, December 1, 2004). 

U.S. Environmental Protection Agency (EPA). 2005c. Air Quality Criteria for Lead (First 

 External Review Draft). EPA/600/R-05/144aA-bA. December. 

 http://cfpub2.epa.gov/ncea/cfm/recordisplay.cfm?deid=141779 

U.S. Environmental Protection Agency (EPA). 2007. Characterization of Dust Lead Levels After 

Renovation, Repair, And Painting Activities. November 13, 2007. 

U.S. Environmental Protection Agency (EPA). 2008. Renovate Right: Important Lead Hazard 

Information for Families, Child Care Providers and Schools (EPA 740-F-08-002, March 2008). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 3 3-30 

U.S. Environmental Protection Agency (EPA). 2009. Lead; Fees for Accreditation of Training Programs 

and Certification of Lead-based Paint Activities and Renovation Contractors. 74 FR 11863, 

March 20, 2009. 

 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-1 

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

Revisions 

The revisions to the LRRP program include: (1) the removal of the opt-out provision for owner-occupied 

target housing without either children under the age of 6 or a pregnant woman in residence, and (2) an 

additional requirement that the renovator provide a copy of their recordkeeping checklist to owners and 

occupants of renovated structures. 

The costs associated with the revisions to the §402(c) Lead, Renovation, Repair, and Painting (LRRP) 

Rule are divided into four categories for the purposes of this analysis: (1) work practice costs, (2) training 

costs, (3) certification costs (which include the firm’s paperwork burden and EPA administrative and 

enforcement costs), and (4) recordkeeping checklist provision costs. The costs associated with the first 

three components are all attributable to the elimination of the opt-out provision, which will extend the 

2008 LRRP requirements to additional housing units. In addition to the work practice costs associated 

with the RRP events in these housing units, this change is expected to result in more individuals and firms 

seeking training and certification. The fourth component, recordkeeping checklist provision costs, applies 

to all housing units regulated under the 2008 LRRP rule as well as the additional housing units that would 

no longer be eligible for the opt-out provision. 

The general approach of the analysis is to first estimate the number of affected activities or entities and 

then estimate the incremental regulatory cost per-activity or entity affected. Finally, the incremental costs 

and the number of affected activities and entities are combined to estimate the total costs. The analysis 

estimates the total costs associated with the first three years of regulation and then extrapolates to the 

costs of the regulation over a fifty year period—estimated with three and seven percent discount rates. 

The chapter is organized as follows: Section 4.1 defines the regulatory options considered in this analysis; 

Section 4.2 estimates the number of regulated renovation, repair, and painting events under the various 

regulatory scenarios; Section 4.3 presents the estimated costs of using the required work practices; 

Section 4.4 presents the estimated number of firms, renovators, and workers seeking training and 

certification; Section 4.5 presents the incremental training costs; Section 4.6 presents the estimated 

certification, administrative and enforcement cost estimates; Section 4.7 presents the recordkeeping 

checklist provision cost estimates; Section 4.8 presents the total costs of the regulation; and Section 4.9 

presents the total costs associated with various alternative regulatory options. 

4.1 Definitions of Options 

This economic analysis considers various regulatory options. The effective date for the recordkeeping 

checklist requirement is June 2010 under all options. However, options A through D differ in terms of 

the effective dates of the elimination of the opt-out provision. In addition, the economic analysis 

considers four options with varying work practice requirements, Options E1 through E4. Table 4-1 

summarizes the options considered in this analysis; they are described in more detail below. 

Options A and D both have effective dates of June 2010 for the elimination of the opt-out provision, but 

Option A does not phase in the opt-out elimination while Option D limits opt-out elimination to pre-1960 

structures during Phase 1 of the regulation and expands the requirements to structures built between 1960 

and 1978 in Phase 2, which has an effective date of June 2011. Options B and C have effective dates of 

January 2011 and June 2011 for the elimination of the opt-out provision, respectively and neither option 

phases in this requirement. 

Options E1 through E4, analyzed in Section 4.9, have the same effective dates and universe of regulated 

structures as Option A, but consider alternative work practice requirements. Option E1 has the same 

containment requirements as specified in 40 CFR 745.85, but does not include any cleaning or cleaning 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-2 

verification work practices. Option E2 has the same cleaning and cleaning verification requirements as 

specified in 40 CFR 745.85, but does not include any containment work practices. Option E3 has the 

same cleaning requirements as specified in 40 CFR 745.85, but does not include any containment or 

cleaning verification work practices. Option E4 has the same containment, cleaning and cleaning 

verification requirements as specified in 40 CFR 745.85, but does not restrict or prohibit any paint 

removal practices. 

Table 4-1: Options Included in Economic Analysis 

Option Effective Dates and Scope For Opt-Out 

Elimination* 

Containment, 

Cleaning, and 

Cleaning 

Verification 

Requirements 

Paint 

Removal 

Practices 

Restricted or 

Prohibited 

A June 2010, no phase-in Yes Yes 

B January 2011, no phase-in Yes Yes 

C June 2011, no phase-in Yes Yes 

D June 2010 for pre-1960 housing, June 

2011 for housing built between 1960 and 

1978 

Yes Yes 

E1 June 2010, no phase-in Containment Only Yes 

E2 June 2010, no phase-in Cleaning and 

Cleaning 

Verification Only 

Yes 

E3 June 2010, no phase-in Cleaning Only Yes 

E4 June 2010, no phase-in Yes No 

*The effective date for the recordkeeping checklist requirement is June 2010 under all options. 

4.1.1 Affected Universe 

The term “target housing” is defined in TSCA Section 401 as any housing constructed before 1978, 

except housing for the elderly or persons with disabilities (unless any child under 6 resides or is expected 

to reside in such housing) or any 0-bedroom dwelling. A child-occupied facility (COF) is defined as ‘‘a 

building, or portion of a building, constructed prior to 1978, visited regularly by the same child, under the 

age of six, on at least 2 different days within any week (Sunday through Saturday period), provided that 

each day’s visit lasts at least 3 hours and the combined weekly visits last at least 6 hours, and the 

combined annual visits last at least 60 hours. Child-occupied facilities may include, but are not limited 

to, day-care centers, preschools and kindergarten classrooms” as follows: 

 Kindergartens: Located in public and private schools. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-3 

 Pre-Schools and Daycare centers: Organized (licensed) facilities located in public or 

commercial buildings. 

 Family daycare: Organized (licensed) daycare facilities located in the provider’s home. 

 Informal daycare: Informal (i.e. not licensed) day care providers, including relatives and nonrelatives. Some of these providers may be paid for their services. 

Some COFs are also target housing (e.g., daycare facilities located in the provider’s home). The 2008 

LRRP rule applied to rental units, all target housing COFs, and all owner-occupied target housing units 

where a child under the age of 6 resides within the vintage categories specified above. The 2008 LRRP 

rule provided an opt-out provision for owner-occupied target housing units that are not COFs and where 

no child under the age of 6 or pregnant woman resides. The revisions to the LRRP program include the 

removal of this opt-out provision and an additional requirement that the renovator provide a copy of their 

recordkeeping checklist to owners and occupants of renovated structures. 

4.1.2 Containment, Cleaning, and Verification Standards 

The containment, cleaning, and verification standards discussed in this section are the same for Options 

A-D as for the 2008 LRRP rule. Options with alternative work practice are considered in section 4.9 of 

this analysis. 

4.1.3 Occupant protection 

Under Title 40 of the Code of Federal Regulations (CFR), Section 745.85(a)(1), work areas must be 

clearly defined with signs warning occupants and other persons not involved in renovation activities to 

remain outside of the work area. These signs must be posted before beginning the renovation and must 

remain in place until the renovation has been completed and the work area has been verified to have been 

adequately cleaned. If warning signs have been posted in accordance with HUD’s Lead Safe Housing 

Rule (24 CFR §35.1345(b)(2)) or OSHA’s Lead in Construction Standard (29 CFR §1926.62(m)), 

additional signs are not required by this proposal. 

4.1.4 Containing the work area 

Under 40 CFR §745.85(a)(2), a firm must contain the work area so that no visible dust or debris leaves 

the work area while the renovation is being performed. Containment refers to methods of preventing 

leaded dust from migrating beyond the work area. It includes everything from the simple use of 

disposable plastic drop cloths to the sealing of openings with plastic sheeting. 

4.1.4.1 Interior renovations 

Under 40 CFR §745.85(a)(2)(ii), a firm must take the necessary work site preparation steps in order to 

prevent dust and debris from leaving the work area. Renovation projects generate varying amounts of 

leaded dust, paint chips, and other lead-contaminated materials depending on the type of work, area 

affected, and applied work methods. For example, repairing a small area of damaged drywall would 

likely generate less lead-contaminated dust and debris than sanding a large area in preparation for 

painting. 

4.1.4.2 Exterior renovations 

Under 40 CFR §745.85(a)(2)(ii), a firm preparing the work area for an external renovation must close all 

doors and windows within and below the area undergoing renovation and to cover the ground with plastic 

sheeting or other disposable impermeable material extending out from the edge of the structure a 

sufficient distance to collect falling paint debris. In addition, doors within the work area that must be 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-4 

used while the job is being performed must be covered with plastic sheeting to prevent dust and debris 

from entering the building. 

4.1.5 Waste from renovations 

Renovation projects can generate a considerable amount of waste material. Lead-contaminated building 

components and work area debris must be handled carefully to prevent the release of lead-contaminated 

dust and debris. Under 40 CFR §745.85(a)(3), a firm must contain the waste from renovation activities to 

prevent releases of dust and debris before the waste is removed from the work area for storage or 

disposal. If a chute is used to remove waste from the work area, it must be covered. At the conclusion of 

each work day and at the conclusion of the renovation, waste that has been collected from renovation 

activities must be stored under containment, or behind a barrier that prevents release of dust and debris 

out of the work area and prevents access to dust and debris. 

In addition, transporting lead-based paint waste in uncovered vehicles is a possible source of releases of 

paint chips or dust. Therefore, lead-based paint waste from RRP activities must be transported under 

containment that prevents identifiable releases (e.g., inside a plastic garbage bag). 

4.1.6 Cleaning the work area 

Under 40 CFR §745.85(a)(4), a firm must clean the work area until no visible dust, debris, or residue 

remains. The firm must also conduct a more thorough, specialized cleaning, which would remove both 

visible debris and dust particles too small to be seen by the naked eye. 

4.1.7 Cleaning verification 

Under 40 CFR §745.85(b), a firm must conduct an additional cleaning verification step following the 

visual inspection. This step involves wiping the windowsills and floors with specialized cleaning cloths 

and comparing them to a cleaning verification card developed and distributed, or otherwise approved, by 

EPA for the purpose of determining, through comparison of disposable cleaning cloths with the card, 

whether post renovation cleaning has been properly completed. 

4.1.8 Exceptions 

As defined in 40 CFR §745.83, minor repair and maintenance activities (including minor electrical work 

and plumbing) are not considered renovations and are not subject to the work practice requirements 

described above if they disrupt 6 square feet or less of a painted surface per room for interior renovations 

or 20 square feet or less for exterior renovations. Such activities are only considered minor maintenance 

if they do not involve prohibited or restricted practices, window replacement, or demolition of painted 

surface areas. 

Under 40 CFR §745.82, the work practice requirements of the rule do not apply to renovations that only 

affect painted components that a certified inspector or risk assessor has determined do not contain 

regulated lead-based paint (at least 1.0 mg/cm2

 or 0.5% by weight lead). Furthermore, the work practice 

requirements do not apply to renovations that only affect painted components that have been 

demonstrated to be free of regulated lead-based paint through the use of an EPA-recognized test kit by a 

certified renovator. Test kits for LBP that are currently available have false positive rates that range from 

47 percent to 78 percent. EPA believes that by the end of 2010, improved test kits will be developed that 

will have a false positive rate of 10 percent or less. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-5 

4.2 Estimating the Number of Regulated Renovation, Repair, and Painting 

Events 

4.2.1 Estimating the Number of Regulated Renovation, Repair, and Painting Events in 

Target Housing 

To achieve the rule’s objective of controlling lead exposure through containment, cleanup, and 

verification, most of the compliance costs associated with the RRP rule’s work practices pertain to the 

room or area where the renovation work is performed. Therefore, this analysis defines a regulated event 

as any group of renovation tasks where two or more square feet of a painted surface are disturbed in a 

specific room or area of a housing unit. The 2003 American Housing Survey (AHS) is the primary data 

source for the estimates of regulated RRP events that occur in owner-occupied housing. The 1995 

Property Owners and Managers Survey (POMS) is the primary data source utilized for estimating the 

number of regulated events in renter-occupied housing. 

Following the methodology from the economic analysis of the 2008 LRRP rule (EPA 2008), event counts 

are estimated separately by housing type (single-family or multi-family) and tenure of occupant (owner or 

renter). The housing units affected by the elimination of the opt-out provision include both single-family 

and multi-family owner-occupied units.1

 Since single-family owner-occupied units have larger average 

sizes compared to multi-family owner-occupied units, separate work practice compliance costs are 

estimated for these two types of housing units. Since all rental units are ineligible for the opt-out 

provision under the 2008 LRRP rule, no work practice costs, training costs, or certification costs are 

associated with these units under the LRRP rule revision. However, recordkeeping checklist provision 

costs are estimated for events in all housing types, since this provision affects both the units regulated 

under the 2008 LRRP rule and the units that will be regulated under the removal of the opt-out provision. 

Available renovation data do not include information specific enough to determine when a renovation 

task disturbs a painted surface or when renovation tasks are performed together in the same room or area. 

Thus, it was necessary to make some assumptions about which types of renovation tasks are likely to 

disturb painted surfaces and which sets of tasks are likely to be performed together as part of one 

renovation project. Note that the counts of exterior events for multi-family housing units are adjusted to 

correspond to building-specific compliance costs. 2

4.2.1.1 Data Sources 

U.S. Census: American Housing Survey 

According to the U.S. Census (2005g): 

The survey is conducted by the Bureau of the Census for the Department of Housing and Urban 

Development (HUD). 

The American Housing Survey (AHS) collects data on the Nation's housing including apartments, singlefamily homes, mobile homes, vacant housing units, household characteristics, income, housing and 

neighborhood quality, housing costs, equipment and fuels, size of housing unit, and recent moves. 

National data are collected in odd numbered years. Data for each of 47 selected Metropolitan Areas are 

collected currently about every six years. 

 

1

 Multi-family owner-occupied units include rental properties where the owner resides in one of the units, owner-occupied condo 

units, and owner-occupied co-op units. 

2 For example, when siding is replaced on the outside of a three-unit building, the analysis accounts for this as one siding 

replacement event rather than the siding replacement outside of three units.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-6 

The surveys utilized in this analysis, 1997 and 2003, have sample sizes of 45,932 and 55,452, 

respectively. Of the housing units sampled, 33,549 and 35,996, for the 1997 and 2003 surveys 

respectively, have at least one bedroom, are not public housing, receive no rent subsidies, and were built 

before 1980. The 2003 AHS groups housing units built in the 1970’s as units built between 1970-74 or 

1975-1979, so this analysis counts all housing units built before 1980 in the pre-1978 regulated universe. 

The sample weights provided by the U.S. Census for analyzing the AHS data were designed so that 

estimates using the provided sample weights would represent the national housing population. However, 

the U.S. Census weights were not designed to correct for underreporting within housing units—such as 

information reported on occupants living in the housing units. Since there is underreporting withinhousing units, estimates of the number of individuals calculated using the U.S. Census weights results in 

lower population estimates than those estimated using other U.S. Census population data sources. In 

addition, according to Harvard’s Joint Center for Housing Studies (personal communication with Kermit 

Baker, August 2005), it appears that the 2003 survey labels too many housing units as vacant; these units 

are actually occupied by individuals that did not respond to the survey. To correct for this bias, the Joint 

Center for Housing Studies has adjusted the weights provided by the U.S. Census for the 2003 AHS. 

These adjusted weights provided by the Joint Center for Housing Studies are utilized for all of the 

calculations using the 2003 AHS in this analysis; population estimates calculated from the AHS are more 

closely aligned with other U.S. Census population estimates when calculated with these adjusted weights. 

U.S. Census: Property Owners and Managers Survey 

According to the U.S. Census (2005h): 

The Property Owners and Managers Survey (POMS) was designed to learn more about rental housing and 

its providers. The purpose was to gain a better understanding of the property owners and managers on 

whom the nation depends to provide affordable rental housing and what motivates their rental and 

maintenance policies. Survey interviews were conducted between November 1995 and June 1996. 

A nationwide sample of approximately 16,300 housing units which were rented or vacant-for-rent in the 

1993 American Housing Survey National Sample (AHS-N) was selected and a questionnaire was mailed 

to the property owner, manager, or other agent of the owner of each property containing a selected unit. 

Detailed information was collected on maintenance, management practices, tenant policy, financial 

aspects of rental property ownership, owner characteristics, and related topics. 

POMS Sample Areas 

The addresses included in the POMS sample were limited to counties and independent cities in the 438 

sampling areas used for the Census Bureau's 1993 American Housing Survey (AHS) National Sample. 

Units Included 

A unit (and the property containing the unit) was included in the survey if it was a privately owned rental 

unit in the 1993 AHS-N and was still a rental at the time of the POMS (November 1995 to June 1996). A 

unit was considered a rental if it was either rented for cash rent, occupied by someone other than the 

owner without payment of cash rent, or vacant but available for rent. 

Since the POMS survey is relatively old (1995), this analysis first calculates the percentage of rentalhousing units performing renovations according to the POMS and then applies these percentages to the 

corresponding number of rental-housing units in 2003 according to calculations using the AHS. This 

approach is described in greater detail in the section below. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-7 

4.2.1.2 Number of Regulated Events in Owner-Occupied Housing Units 

The 2003 AHS is the primary data source used for estimating the number of RRP events in owneroccupied housing for which compliance costs will be incurred. The 1997 AHS is also used for estimating 

the number of RRP events since it contains some more specific renovation information that was not 

included in the 2003 survey. AHS respondents report information about the ages of householders who are 

defined in the survey as persons who live or sleep there most of the time. Thus, child-occupied 

households are defined as those households with a householder under the age of 6 at the time of the RRP. 

Child-occupied households are estimated to be households with a householder between the ages of one 

and seven at the time of the survey since it is assumed that any RRP reported occurred a year earlier (RRP 

performed up to two years earlier may be reported). It follows that a household is defined as being 

occupied by a pregnant woman if there is a woman of childbearing age and a child who is under the age 

of one at the time of the survey. This section describes how the numbers of events are estimated from the 

renovation module of the AHS and the methodology for estimating the number of Interior Painting and 

Exterior Painting events using data from the (one-time) 1997 lead paint module of the AHS. 

AHS Renovation Tasks 

The 2003 AHS allows respondents to report 40 different renovation tasks; this analysis categorized 24 of 

these 40 as tasks that may disturb more than 6 square feet or more per room of a painted surface for 

interior renovations, or 20 square feet or more for exterior renovations. Since tasks performed within two 

years of the survey can be reported, it is assumed that half occurred in the first year and half occurred in 

the second (i.e. the total number of events counted for the two year period is divided by two). Since do-ityourself RRP is not covered by the rule, only tasks that are reported to be performed by professionals are 

included in the analysis. 

Table 4-2 lists these 24 AHS renovation tasks by their event category. Note that while the respondents do 

not specifically report whether or not painted surfaces were disturbed, the survey instrument instructed 

them to only include major work.3

 This analysis groups the 24 AHS tasks into seven event categories 

(bathroom event, kitchen event, addition event, window/door event, wall-disturbing event, whole exterior 

event, contained exterior event) based on the room or area where each AHS renovation task is likely to be 

performed. 

When a household reported multiple tasks to AHS that fall under the same EPA event category, it is 

assumed that these tasks are performed together in the same area of the housing unit. Therefore, one set 

of compliance costs are assumed to apply to each event. For example, if a household reported to AHS 

that they replaced their air conditioning system and replaced their heating system, this analysis assumes 

that they would incur the compliance costs associated with one wall-disturbing event. Compliance costs 

are dependent on the size of the work area. Thus, when a household reported a wall-disturbing task to 

AHS that is not specific to a particular room as well as a room-specific task—e.g. remodeling the kitchen 

(specific to the kitchen) and replacing water pipes (not room-specific)—this analysis accounts for this as 

one event with a work area that includes the room in which a room-specific task was reported. However, 

if a household reported tasks to AHS corresponding to multiple room-specific events (such as remodeling 

the kitchen and bathroom), these are counted as separate events. . 

As shown in Table 4-2 and discussed above, some tasks reported to AHS are not necessarily confined to a 

specific room or area of the unit. Most of these tasks are likely to involve disturbing a wall or the ceiling 

 

3

Specifically, the survey instrument instructed respondents with the following language: “We are only interested in 

jobs that were MAJOR alterations or improvements, such as rewiring, a new roof, new windows or doors. Do NOT 

include minor repairs or other routine maintenance.” This analysis assumes that jobs that were not reported to AHS 

would qualify for the minor maintenance exception under the LRRP rule.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-8 

(e.g., replacing wiring or pipes); in these cases, the tasks are assigned to a wall-disturbing event. Window 

or door replacement tasks are assigned to their own event category, because (as described in Section 

4.2.1.5) there is a higher likelihood that windows and doors contain lead-based paint (LBP), and this 

analysis accounts for the likelihood of LBP by component type. 

As stated above, the 2003 AHS did not explicitly ask respondents whether a renovation task involved 

disturbing a painted surface. Therefore, in order to estimate the number of events subject to the rule’s 

requirements, this analysis makes assumptions about which tasks might disturb paint. In general, when a 

tasked reported to AHS will sometimes involve disturbing a painted surface, it is assumed that 

compliance costs are incurred each time that task is reported to AHS. For example, replacing internal 

water pipes will sometimes, but not always, require disturbing painted walls to access old pipes and 

replace them with new ones. However, the analysis makes no adjustment to the AHS data to account for 

the instances where no painted surfaces are disturbed or when a job will qualify for the minor 

maintenance exception4

. Sufficient data for making such an adjustment are not available. Thus, these 

assumptions may lead to an overestimate of the number of regulated events. 

In the case of adding or replacing heating equipment (AHS task 58) and/or central air conditioning 

equipment (AHS task 57)—Heating Ventilation and Air Conditioning (HVAC) tasks—it is assumed that 

only a fraction of these HVAC tasks require disturbing a painted surface. In addition, 18 percent of the 

households reporting tasks listed in Table 4-2 to AHS reported at least one HVAC task without reporting 

any other wall-disturbing task. Therefore, assuming that all HVAC work disturbs painted surfaces likely 

results in a substantial overestimate of wall-disturbing events that disturb LBP and are subject to the 

LRRP rule. 

The percentages of HVAC tasks that are assumed to disturb painted surfaces are estimated using the 1997 

AHS. Unlike the 2003 AHS, the 1997 AHS distinguishes between installing new HVAC equipment and 

replacing existing equipment. Since disturbing a painted surface is most likely to occur while performing 

work on the HVAC ducts (which often are behind painted walls), it is assumed that this occurs when new 

systems are installed but not when existing systems are replaced.5

In addition to the seven event definitions in Table 4-2, the analysis estimates costs for Interior Painting 

events and Exterior Painting events. The remodeling module of the 2003 AHS data does not cover these 

types of activities but the 1997 AHS did, so data from the 1997 (one-time) lead module are utilized to 

estimate the number of these events. 

 

4

 Jobs that disturb 6 square feet or less of a painted surface per room for interior renovations or 20 square feet or less for exterior 

renovations; and do not involve prohibited or restricted practices, window replacement, or demolition of painted surface 

areas. 

5 When heating equipment work (but not air conditioning work) is reported, 7 percent and 9 percent of these tasks involve adding 

a new system for single- and multi-family units, respectively. When air conditioning equipment work (but not heating work) is 

reported, 36 percent and 17 percent of these tasks involve adding a new system for single- and multi-family units, respectively. 

When both heating and air-conditioning equipment work is reported, 52 percent and 29 percent of the households install a new 

system for single- and multi-family units, respectively. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-9 

Interior Painting Events 

In the 1997 AHS, respondents were asked two questions related to painting activities that are used to 

estimate the number of Interior Painting events. Respondents were asked: 

 Was there any painting done on the inside of the unit? 

 Before painting, did anyone sand or scrape off any of the old paint? 

The number of painting events involving sanding or scraping is important because painting without 

sanding, scraping, or other substrate preparation does not qualify as disturbing LBP and is not subject to 

the LRRP rule. 

Table 4-2: Renovation Events Used in the Analysis and Corresponding 1997 and 

2003 AHS Renovation Tasks 

EPA Renovation 

Event 

2003 AHS 

Task ID 

AHS Task Description 

Bathroom Event 71 Remodeled bathroom 

Kitchen Event 72 Remodeled Kitchen 

7 Added Bathroom onto home 

8 Added Kitchen onto home 

9 Added Bedroom onto home 

10 Added other inside room onto home 

35 Bedroom created through structural changes 

36 Other room created through structural changes 

Addition Event

73 Bathroom created through structural changes 

Window/Door 

Event

45 Added/Replaced doors/windows to home 

40 Added/replaced internal water pipes in home 

42 Added/replaced electrical wiring, fuse boxes, or breaker switches 

in home 

47 Added/Replaced plumbing fixtures in home 

55 Installed paneling or ceiling tiles 

57 Added/replaced central air conditioning 

58 Added/replaced built-in heating equipment 

64 Other major improvements or repairs (up to three could be 

reported) 

Wall-Disturbing 

Event

74 Added/replaced security system in home 

Whole Exterior 

Event

38 Added/replaced siding on home 

11 Added attached garage onto home 

12 Added porch onto home 

13 Added deck onto home 

14 Added carport onto home 

Contained 

Exterior Event

69 Added/replaced shed, detached garage, or other building 

Interior Painting * Interior Painting 

Exterior Painting * Exterior Painting 

* Not reported in 2003 AHS. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-10 

In contrast with the other AHS renovation questions, respondents were not asked to specify whether the 

work was performed by a professional. Thus, obtaining a count of the number of Interior Painting events 

is not as simple as adding up the number of respondents that answered yes to both of these questions. It is 

also necessary to estimate: (1) how many of the respondents that had painting done with sanding or 

scraping hired a professional to do the work, and (2) how many of these events occur in conjunction with 

other professional events reported (so the analysis does not double count if, for example, someone painted 

with sanding or scraping in their kitchen and reported both painting with sanding or scraping and 

remodeling their kitchen). 

This analysis assumes that 44 percent of the interior painting with sanding and scraping reported in AHS 

was performed by professionals. An Angie’s List (Bucksot 2006) online poll found that 44 percent of 

respondents reported that they hired professionals to perform painting rather than doing it themselves. 

Since Angie’s List is used to find professional contractors it seems likely that respondents would be more 

likely to hire professionals than the general population. Thus, this assumption may lead to an 

overstatement of the number of interior painting events that are subject to the rule. 

Exterior Painting Events 

This analysis assumes that exteriors of 100 percent of homes with some paint on their exterior are painted 

with sanding or scraping every eight years.6

 Since data on the percentage of homes with some paint on 

their exteriors are not available, it is assumed that 75 percent of all pre-1978 homes have some exterior 

paint; this assumption is based on data from HUD’s (2001) National Survey of Dust Lead Hazards and 

Allergens in Housing, which indicates that 70 percent of pre-1960 homes have some lead paint on their 

exterior. Not all pre-1960 homes have exterior paint. But of those that do, nearly all have at least some 

exterior lead-based paint. Since nearly all exterior painted surfaces on pre-1960 homes are likely to have 

some lead paint, it was assumed that slightly more, 75 percent, of all pre-1978 homes have exterior 

painted surfaces. The annual number of Exterior Painting events is estimated as one eighth of the number 

of regulated structures with exterior paint. 

4.2.1.3 Number of Regulated Events in Renter-Occupied Housing Units 

The 1995 POMS is the primary data source used for estimating the number of RRP events in renter 

occupied housing where compliance costs will be incurred. Renter occupied units are only affected by the 

rule’s additional recordkeeping checklist requirement. The 1997 and 2003 AHS are also used for 

estimating the number of renter-occupied RRP events, since these data contain more current estimates of 

the number of potentially regulated households as well as some other information not available from the 

POMS. 

This section first describes how the POMS data are used to obtain the annual percentage of renteroccupied housing units where there is a regulated RRP event. Second, it describes the methods employed 

for combining the percentages estimated from the POMS and the AHS data to obtain an estimate of 

regulated RRP events in renter-occupied units for the first year the rule is in effect. 

POMS Data 

The POMS data generally has less detail then the AHS but is still the best source of renter-occupied 

renovation information available. The POMS asked property owners or managers about 12 or 13 types of 

maintenance and repair activities (for single-family and multi-family units respectively) and about 11 

types of capital improvements that may have been made to their properties. It is likely that 12 of these 

 

6 According to the Painting and Decorating Council, exteriors of homes are usually painted every 4-12 years; thus, the analysis 

uses the midpoint, eight, for estimating the number of Exterior Painting events.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-11 

maintenance, repair, or upgrade activities require disturbing painted surfaces; these activities are listed in 

Table 4-3 according to the event category that they are classified by in this analysis. 

The percentage of units where at least one of the RRP activities listed under each event was performed is 

calculated separately for single- and multi-family units. This is because the average square footage of 

these two groups of housing differs, and the estimated costs for many of the work practices required by 

the rule depend on the size of the work area. Similar to the owner-occupied event estimates, when 

multiple tasks are reported in POMS, this analysis assumes that these tasks are performed together in the 

same area. Therefore, the compliance costs are estimated based on those costs associated with the task 

with the largest work area. Unlike in the AHS data, POMS respondents were not asked whether sanding 

or scraping was performed before painting (and painting without sanding or scraping is not subject to the 

rule’s requirements). Therefore, it is assumed that 40 percent of the households reporting interior 

painting are subject to the rule’s requirements based on the percentage of rental households that reported 

sanding or scraping before painting in the AHS.7

In POMS, questions about capital improvements were asked about the entire property rather than about a 

specific unit. To account for this difference, it was assumed that a specific unit was worked on 40% of 

the time an upgrade was reported for a property. Since properties average about three units each, this 

assumption results in more renovation compared to the assumption that upgrades are performed on one 

unit at a time. The assumption utilized in this analysis results in renovation frequencies in multi-family 

properties that are similar to those estimated for single-family properties. 

Window or door replacement tasks are assigned to their own event category, because (as described in 

Section 4.2.1.5 there is a higher likelihood that windows and doors contain LBP, and this analysis 

accounts for the likelihood of LBP by component type. Since POMS does not ask respondents about 

replacing windows or doors, the frequency for these tasks is assumed to be the same in rental units as was 

reported in AHS for owner-occupied units. Therefore, it is assumed that 3.7 and 3.4 percent of renteroccupied single- and multi-family units, respectively, replace windows or doors each year. Since these 

improvements are likely to be reported in the POMS data as “other major upgrades,” this analysis adjusts 

downward the numbers of “other major upgrade” tasks that are reported in POMS to reflect this. Since 10 

and 14.8 percent of owner-occupied single- and multi-family units, respectively, reported other major 

upgrades, 37 and 23 percent of “other major upgrades” reported in the POMS are assumed to be window 

or door replacements, for single- and multi-family units respectively.8

Similar to the methodology for the owner-occupied RRP event estimates, it is assumed that HVAC 

related activities do not always incur compliance costs. The analysis assumes that compliance costs are 

incurred 28 percent and 15 percent of the time for single- and multi-family units respectively, which is the 

percentage of the time new equipment is installed when HVAC work is performed in owner-occupied 

units according to the 1997 AHS. 

 

7

 The 40 percent of rental units that reported sanding or scraping before painting in AHS compares to the 35 percent 

of owner-occupied units that reported sanding or scraping before painting in AHS. 

8

 37% = 3.7%/10% and 23% = 3.4%/14.8%. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-12 

4.2.1.4 Extrapolating from the POMS and AHS Data 

After calculating the percentages of rental units where RRP was performed in the event categories listed 

in Table 4-3, the number of renter-occupied events in these categories are calculated by applying the 

event frequencies calculated with the 1995 POMS data to the number of rental-units according to the 

2003 AHS. It is assumed that Whole Exterior events and Contained Exterior events occur in rental units 

with the same frequency as they do in owner-occupied units (since data on these types of events are not 

available in the POMS). Additional tasks reported in the AHS data but not the POMS data are not 

estimated for rental units since these renovation activities are fairly uncommon in rental units and likely 

to already be reported as “other major upgrade” and counted as a wall-disturbing event. 

Estimating the Number of Target Housing Events Affected by the Removal of the Opt-out 

Provision 

The LRRP revisions remove the opt-out provision from the LRRP rule for certain owner-occupied 

housing units. Owner-occupied target housing units where a child under the age of six or a pregnant 

woman resides, rental units, and COFs (including owner-occupied target housing units that qualify as 

COFs) would not be affected by the elimination of the opt-out provision because these units were not 

eligible for this provision under the 2008 LRRP rule. 

The number of housing units that would be affected by the elimination of the opt-out provision is 

estimated by taking the number of owner-occupied housing units and subtracting the number of owneroccupied target housing units that: (1) have a child under the age of six or pregnant woman in residence, 

or (2) are COFs. 

Table 4-3: Renovation Events Used in the Analysis and Corresponding 1995 POMS RRP 

Activities

EPA Event Category POMS Task 

Interior Painting Event Any Interior Painting in 1995 

Bathroom Event Upgraded Bathroom in 1995 

Kitchen Event Upgraded Kitchen in 1995 

Unit Rewired in 1995 

Other major repairs in 1995a

Upgraded Plumbing in 1995 

Upgraded Security System in 1995 

Other Major Upgrade in 1995 

Repaired Heat or AC in 1995 

Upgraded Heat in 1995 

Upgraded AC in 1995 

Wall-Disturbing Event

Other Major Upgrade in 1995a

Exterior Painting Event Any Exterior Painting in 1995 (single-family units only) 

Whole Exterior ** 

Contained Exterior ** a Some ‘Other Major Upgrades’ are counted as wall-disturbing events, others are counted as Window/Door 

Replacement events. See text above for a description of how the task is apportioned. 

** Not reported in POMS. Assumed to occur with the same frequency as in owner-occupied units reported in AHS. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-13 

Owner-occupied housing units with a child under the age of six or pregnant woman in residence 

The 2003 AHS data identifies owner-occupied housing units where a child under the age of six or a 

pregnant woman resides. AHS respondents report information about the ages of householders, who are 

defined by the survey as persons who live or sleep there most of the time. Thus, child-occupied 

households are defined as those households with a householder under the age of 6 at the time of the RRP. 

Child-occupied households are estimated as households with a householder between the ages of one and 

seven at the time of the survey since it is assumed that any RRP reported occurred a year earlier (RRP 

performed up to two years earlier may be reported). It follows that a household is defined as being 

occupied by a pregnant woman if there is a woman of childbearing age and a child who is under the age 

of one in the household at the time of the survey. 

Owner-Occupied housing units that are COFs 

COFs in target housing include family daycare providers and the homes of family, friends, and neighbors 

who regularly care for someone else’s children. The estimated number of target housing COFs includes 

care provided with and without compensation and relies primarily on estimates of the size of the childcare 

workforce (Center for the Child Care Workforce 2002). The Center for the Child Care Workforce (2002) 

report includes: (1) data on family child care providers caring for unrelated children in their own homes, 

(2) paid relatives and non-relatives providing child care, and (3) unpaid relatives and non-relatives 

providing child care. 

The number of target housing COFs is projected based on estimates of the caregiver workforce in the 

Center for the Child Care Workforce (2002) report. Based on a Wilder Research Center report, it is 

assumed that 10 percent of family child care providers caring for unrelated children in their own homes 

employ 2 workers (Wilder Research Center 2001, p.16). For the remaining childcare providers, one 

worker is assumed per location. Based on 2003 American Housing Survey data for the general 

population of housing, it is assumed that 65 percent of these housing units were built before 1978. 

The number of target housing units where child care is provised was also adjusted to exclude those units 

that are already included in the RRP rule universe because care is provided in a child’s own home, or 

where the units do not qualify as COFs because less than six hours of care per-week is provided9

. In 

addition, the number of target housing COFs that are not eligible for the opt-out provision under the 2008 

LRRP rule because they are rental units or have a child under the age of six or pregnant woman in 

residence must be estimated to avoid double counting. The basis for these adjustments is discussed 

below. 

Care Provided in Child’s Own Home 

It is assumed that 22 percent of relatives and non-relatives (paid or unpaid) providing care provide it in 

the child’s home based on a Wilder Research Center (2005, p.28) report on the results of the 2004 

Minnesota Statewide Household Child Care Survey. 

Less Than Six Hours of Care Per-Week is Provided 

Of those providing care in their own home, it is assumed that 27 percent of relatives and non-relatives 

(paid or unpaid) provide care for less than six hours a week (Wilder Research Center 2005, p.28). All 

family daycare providers caring for unrelated children in their own homes are assumed to care for at least 

one child for more than six hours a week. 

 

9

 There is not sufficient data to adjust for the other COF criteria that the building is visited at least 2 different days within any 

week, that each day’s visits lasts at least 3 hours, or that the combined annual visits last at least 60 hours. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-14 

Caregiver Lives in a Rental Unit 

It is assumed that family, friend, and neighbor caregivers have the same likelihood of living in a rental 

unit as the general population of target housing occupants (39 percent). 

Caregiver has a Child Under Six Living With Them 

Based on the January 2006 Current Population Survey (U.S. Bureau of Labor Statistics 2006), 16 percent 

of Child Care Workers have children under six. Thus, it is assumed that 16 percent of in-home family 

daycare providers (formal care providers) caring for unrelated children in their own homes have children 

under the age of six. Based on the Wilder Research Center (2005, p.19) report, 57.5 percent of family, 

friend, and neighbor caregivers (informal care providers) have children under the age of 12. Thus it is 

assumed that half as many, or 29 percent, have children under the age of six. 

Table 4-4 presents the estimated number of target housing COF units regulated under the 2008 LRRP 

rule. 

Table 4-4: Number of Owner-Occupied Pre-1978 Target Housing Units Regulated Under 2008 

LRRP Rule (Excluding Rental Units and Units Where a Child Under 6 or Pregnant Woman 

Resides) 

Type of 

Care a

Number of 

Target 

Housing 

COFs 

(thousands)b

In 

child’s 

own 

home 

Less 

than 6-

hours 

perweek 

Post-78 In rental 

unit 

Child 

under 6 

resides 

Pregnant 

woman 

resides 

Total 

Adjustmentc

Total 

Regulated 

Units 

(thousands) d

Paid InHome 

Family 

Daycare 

591 n.a. n.a. 35% n.a. 16% 1.1% 55% 319 

Paid Relative 

Care 804 22% 27% 35% 39% 29% 1.1% 84% 128 

Unpaid 

Relative and 

Non-Relative 

Care 

2,354 22% 27% 35% 39% 29% 1.1% 84% 376 

Total (Pre-78) 824 

Total (Pre-60) e 424 

a. Paid In-Home Family Daycare refers to formal licensed daycare located in the provider’s home. Paid 

relative care is when family members are paid to care for the child in the family member’s home 

(unlicensed care). Unpaid relative and non-relative care refers to informal unpaid care provided at 

the homes of family, friends or neighbors (unlicensed care). 

b. Based on the size of the childcare workforce (Center for the Child Care Workforce 2002), assuming 

1.1 workers per location for paid in-home family daycare and 1 worker per location for other types of 

care. 

c. Calculated as one minus the product of one minus the adjustments. e.g., for the first row, 55% = 

100% - (100%-35%)*(100%-16%)*(100%-1.1%). 

d. Components may not sum to totals due to rounding. Not adjusted for compliance rates. 

e. Adjusted based on the total number of target housing units by vintage.

Source: U.S. Census Bureau 1995, 1997, and 2003; EPA Calculations.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-15 

Target Housing Units Affected by the Removal of the Opt-out Provision 

As described in Table 4-4, there are about 824,000 target housing COFs where no child under the age of 

six or a pregnant woman resides. Thus, of the 47,080,000 owner occupied housing units (see Section 2.8 

of Chapter 2): 

 A child under six resides or pregnant woman resides in 6,370,000 units (see Section 2.8 of 

Chapter 2) 

 About 824,000 units are COFs where no child under the age of six or pregnant woman resides 

(see Table 4-4) 

Therefore, about 39,886,000 units would be affected by the elimination of the opt-out provision.10 The 

frequency of RRP events in these housing units is estimated using the 2003 AHS data as described in 

section 4.2.1.2. 

4.2.1.5 Likelihood of Positive Test Kit Result for LBP 

It is assumed that all certified renovators use a test kit for LBP before performing any RRP, given that 

performing this relatively inexpensive test may allow the renovator to avoid the costs of using Lead-Safe 

Work Practices (LSWP) that are required when LBP is disturbed. Since LBP is most likely to be found 

on certain components of housing units—and therefore most likely to be disturbed during certain types of 

renovations—the analysis accounts for this by estimating LBP likelihoods specific to each event type. 

These LBP likelihoods are estimated using data from HUD’s 2000 National Survey of Lead and 

Allergens in Housing (HUD 2001).11 The survey has information on approximately 630 housing units 

built before 1978 including data on the presence of LBP in certain rooms (e.g. kitchen) and on certain 

components or surfaces (e.g. floors, walls, ceilings, doors and windows). 

The probability that LBP is disturbed during a RRP event is estimated as the probability of LBP in any of 

the rooms where RRP is performed or on any of the components that might be disturbed during the RRP 

event. This assumption leads to an upward bias in the estimates of the number of events where LSWP are 

required. For example, if there is LBP in the kitchen, it is assumed that a kitchen remodeling will disturb 

LBP. However, the LBP component(s) will not necessarily always be disturbed. For example, the LBP 

in the kitchen may be on the window trim, but the renovation may not disturb the window trim. 

Unfortunately, there is no reasonable basis for correcting this bias using currently available data. For the 

purposes of this analysis, data from HUD (2001) are used to estimate event-specific likelihoods of 

positive test kit results based on the estimated likelihood of disturbing LBP for each event type, as 

described in Table 4-5. 

 

10 39,886,000 = 47,080,000 – 6,370,000 – 824,000. 

11 In addition to the likelihood of the presence of lead-based paint varying by age of housing, there is evidence that 

the concentration of lead in the paint varies by the age of housing. A review of the data in HUD 2000 is 

presented in EPA 2005c. This document is available in the docket for this rulemaking.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-16 

Test kits for LBP that are currently available have false positive rates that range from 47 percent to 78 

percent. This analysis assumes a false positive rate of 63 percent, the midpoint, for the first year following 

rule implementation. This analysis assumes that an improved test kit that will have a false positive rate of 

10 percent or less will be in use by June 2011.12 A false negative rate of 5 percent is also assumed for 

both the current and improved test kits. Thus, the likelihood of a positive test kit result in the first year is 

estimated as 95 percent of the likelihood of LBP, plus 63 percent of the percentage of homes without 

LBP. In the second year, the likelihood of a positive test kit result is estimated as 95 percent of the 

likelihood of LBP plus 10 percent of the percentage of homes without LBP. Table 4-6 shows the 

likelihoods of LBP that are used to estimate the percentage of events where LBP is disturbed. 

In cases where a household performed more than one interior event, the likelihood of disturbing LBP is 

estimated as the likelihood of LBP anywhere in the interior of the unit. There are two exceptions to this: 

(1) when one of the events is an Addition, the Addition likelihood is used, and (2) when the sum of the 

 

12 EPA believes that the sensitivity of test kits can be adjusted so the results reliably correspond to one of the two 

Federal standards for lead-based paint (1.0 mg/cm2

 and 0.5% by weight). EPA is working on the development 

of test kits that accurately identify both the presence and absence of lead in paint at levels that exceed the 

Federal standards. EPA is confident that improved test kits can be commercially available by September 2010, 

although for ease of computation, this analysis does not assume they will be in use until June 2011. 

Table 4-5: Types of Estimates Used for Calculating the Likelihood of Disturbing LBP for Each 

Event Type 

Event Type Estimate of Likelihood of Disturbing LBP 

Kitchen Likelihood of LBP in the kitchen 

Bathroom Likelihood of LBP in “other room” (up to two “other rooms” were inspected for LBP in 

each housing unit; these rooms might be bathrooms, living rooms, dens, or laundry rooms) 

Additions Likelihood of LBP on the interior or exterior of the unit (since these events typically 

require some demolition of the interior and exterior) 

Wall-Disturbing Likelihood of LBP on any walls, floors or ceilings of the housing unit 

Window/Door 

Replacement 

Likelihood of LBP anywhere on the interior or exterior of windows and doors 

Interior Painting Likelihood of LBP anywhere in interior of unit 

Whole Exterior Likelihood of LBP anywhere on exterior of unit 

Contained Exterior Likelihood of LBP anywhere on exterior walls of unit (since Contained Exterior events—

such as replacing a porch—are likely to disturb exterior walls, but not very likely to 

disturb other exterior components such as windows 

Exterior Painting Likelihood of LBP anywhere on exterior of unit 

EPA estimated LBP Likelihoods with room and component/surface specific data from HUD (2001). 

Table 4-6: Likelihood of LBP 

Year Built Kitchen Bathroom Addition WallDisturbing

Window/ 

Door 

Interior 

Painting

Whole 

Exterior 

Contained 

Exterior 

Exterior 

Painting

Likelihood of LBP 

Pre-1930 53% 34% 87% 40% 81% 79% 70% 55% 70% 

1930-1949 45% 27% 75% 25% 71% 64% 70% 35% 70% 

1950-1959 23% 12% 67% 16% 56% 38% 55% 27% 55% 

1960-1979 6% 4% 22% 5% 14% 14% 13% 10% 13% 

Source: EPA calculations using HUD (2001) 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-17 

individual event probabilities is less than the likelihood of LBP anywhere in the interior of the unit, the 

sum of the event probabilities is used. These simplifying assumptions are necessary because the data are 

not sufficient for calculating the joint probabilities that would be necessary for relaxing this assumption. 

As a result, the estimates of the number of events where LSWP will be used are biased upward. That is, 

for a housing unit performing multiple interior events, it is assumed that if there is LBP in the housing 

unit, all the interior events in that unit require LSWP. However, the LBP component(s) may be disturbed 

only in certain areas throughout the house, requiring less containment than is assumed. Similar to the 

assumptions pertaining to households performing multiple interior events, for households performing 

multiple exterior events the likelihood of disturbing LBP is assumed to be the maximum likelihood for 

the events performed. Unlike for interior events, this is always the same as the largest and most costly 

exterior event that determines the housing unit’s exterior compliance costs. 

4.2.1.6 Event Sizes 

For interior events, the average square footage of particular rooms was determined by taking the average 

square footage of the whole unit from the AHS and reviewing house plans for homes of similar square 

footage (Homestyles.com 2002). The work area sizes for wall-disturbing events were estimated as 

follows: 

Table 4-7: Kitchen and Bathroom Event Size Definitions 

Bathroom 

(one 

bathroomsized work 

area) 

One average work area size. 

48 Square Feet. 

Kitchen (one 

kitchen-sized 

work area) 

One average work area size: 

160, 120, and 80 Square Feet for single-family-owner, single-family-renter, and multifamily units, respectively. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-18 

Table 4-8: Wall-Disturbing Event Size Definitions 

Small 

(bathroomsized) 

Where bathrooms were or were not remodeled, kitchens were not remodeled, rooms were not added, and less 

than 3 of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work; 

Or where one room was added, bathrooms were not remodeled, kitchens were not remodeled, and less than 

3 of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work 

48 Square Feet.

Medium 

(kitchensized) 

Where bathrooms were not remodeled, kitchens were or were not remodeled, rooms were not added, and less 

than 3 of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work; 

Or where one room was added, bathrooms were not remodeled, kitchens were not remodeled, and 3 or more 

of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work 

160, 120, and 80 Square Feet for single-family-owner, single-family-renter, and multi-family units, 

respectively.

Large 

(size of a 

bathroom and 

kitchen) 

Where bathrooms and kitchens were remodeled, rooms were not added, and at least 1 of the following 

tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work; 

Or where at least two rooms were added and at least 1 of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work 

208, 168, and 128 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-19 

Table 4-9: Addition Event Size Definitions 

Small 

(bathroomsized) 

Where one room was added, and fewer than three of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work, (9) Remodeled Bathroom, (10) Remodeled Kitchen. 

48 Square Feet.

Medium 

(kitchensized) 

Where one room was added, and three or more of the following tasks were performed: 

(1) Added/Replaced Internal Water Pipes In Home, (2) Added/Replaced Plumbing Fixtures In Home, (3) 

Added/Replaced Electrical Wiring To Home, (4) Installed Paneling Or Ceiling Tiles, (5) Added/Replaced 

Central Air Conditioning, (6) Added/Replaced Built-In Heating Equipment, (7) Added/Replaced Security 

System In Home, (8) HVAC work, (9) Remodeled Bathroom, (10) Remodeled Kitchen. 

160, 120, and 80 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.

Large (size of 

a bathroom 

and kitchen) 

Where more than one room was added. 

208, 168, and 128 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.

Table 4-10: Interior Painting Event Size Definitions 

Small 

(square root 

of 25% of the 

square 

footage times 

5 feet) 

Accounts for one third of all interior painting events. The square root of 25% of the total square footage 

times 5 feet is equivalent to the area along one wall and five feet out. 

112, 96, and 84 Square Feet for single-family-owner, single-family-renter, and multi-family units, 

respectively.

Medium 

(midpoint 

between small 

and large 

sized) 

Accounts for one third of all interior painting events. 

308, 232, and 184 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.

Large (25% 

of the total 

unit square 

footage) 

Accounts for one third of all interior painting events. 

504, 368, and 284 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-20 

Table 4-11: Window/Door Replacement Event Size Definitions 

Small 

(square root 

of a kitchensized work 

area times 5 

feet) 

Accounts for one third of window/door replacement events. In the 1997 AHS respondents who reported 

replacing windows or doors also reported how many windows and doors they repaired or replaced. These 

respondents were divided into three groups according to how many doors and windows they reported 

replacing. The average numbers or doors and windows reported repaired or replaced were 1, 3, and 12 for 

these three groups. The work area for replacing one window/door is assumed to be along one wall and five 

feet out, estimated as the square root of 25% of a kitchen-sized work area times 5 feet. 

63, 55, and 45 Square Feet for single-family-owner, single-family-renter, and multi-family units, 

respectively.

Medium 

(kitchensized work 

area) 

Accounts for one third of window/door replacement events. In the 1997 AHS respondents who reported 

replacing windows or doors also reported how many windows and doors they repaired or replaced. These 

respondents were divided into three groups according to how many doors and windows they reported 

replacing. The average numbers or doors and windows reported repaired or replaced were 1, 3, and 12 for 

these three groups. The work area for replacing three windows/doors is assumed to be the size of a typical 

room (i.e., kitchen-sized). 

160, 120, and 80 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.

Large 

(the size of 4 

Rooms) 

Accounts for one third of window/door replacement events. In the 1997 AHS respondents who reported 

replacing windows or doors also reported how many windows and doors they repaired or replaced. These 

respondents were divided into three groups according to how many doors and windows they reported 

replacing. The average numbers or doors and windows reported repaired or replaced were 1, 3, and 12 for 

these three groups. The work area for replacing 12 windows is assumed to be the size of 4 typical rooms (i.e., 

four times kitchen-size). 

640, 480, and 320 Square Feet for single-family-owner, single-family-renter, and multi-family 

units, respectively.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-21 

Table 4-12: Exterior Event Size Definitions 

1-Wall 

Exterior 

Painting 

The perimeter estimates were calculated following the procedure used in EPA’s Economic Analysis for the 

TSCA Section 403 rule (EPA 2000b). It was assumed that the home is rectangular with a front to side ratio 

of 2:3 and an average first floor area of 1,390 sq. feet.a This assumption leads to a perimeter of 152 feet for a 

single-family owner occupied home. The perimeter of a single-family renter unit was estimated to be 130 

feet, which assumes that the proportion of a single-family renter unit has the same proportion of total square 

footage to square footage of the first floor of a single-family owner unit. The perimeter of a multi-family 

housing structure (which contains an average of units) was calculated assuming the first-floor area was three 

times as large as a single-family unit. This perimeter estimate is 264 feet. A 1-Wall Exterior Painting Event 

is assumed to be 1⁄4 of the full perimeter. 

4-Wall 

Exterior 

Painting and 

Whole 

Exterior 

Renovation 

Events 

The perimeter estimates were calculated following the procedure used in EPA’s Economic Analysis for the 

TSCA Section 403 rule (EPA 2000b). It was assumed that the home is rectangular with a front to side ratio of 

2:3 and an average first floor area of 1,390 sq. feet. a This assumption leads to a perimeter of 152 feet for a 

single-family owner occupied home. The perimeter of a single-family renter unit was estimated to be 130 

feet, which assumes that the proportion of a single-family renter unit has the same proportion of total square 

footage to square footage of the first floor of a single-family owner unit. The perimeter of a multi-family 

housing structure (which contains an average of 3 units) was calculated assuming the first-floor area was three 

times as large as a single-family unit. This perimeter estimate is 264 feet. 

Contained 

Exterior 

Renovation 

Events 

The structures in a Contained Exterior event are outside the main body of the house and the structural work 

and contamination is primarily outdoors. The perimeter of a contained exterior structure (such as a garage) is 

estimated to be 60 feet (10’×20’). Containment is necessary along the entire perimeter of a detached 

structure. However, it is assumed that less containment is required for attached contained exterior structures, 

which are assumed to be attached to the main structure of the house along a 20 foot side of the detached 

contained exterior structure. The analysis assumes half are attached structures and half are detached 

structures. a Estimated based on information from http://www.dreamhomesource.com (2005) on the average size of the first floor of nine 

2,000 square foot two stories homes (1,280 sq. feet). The weighted average of a first floor was calculated using 2003 AHS data

which shows that 85% of single-family housing units are two stories high and the remaining 15% of homes are one story (i.e., 

first floor is 2,016 sq. feet).

4.2.1.7 Estimated Number of RRP Events in the First and Second Years 

The numbers of regulated events are estimated using the methodology outlined above along with the 

assumption that 75 percent of the RRP events subject to the rule’s requirements comply with the 

requirements. This assumption is based on compliance rates observed for the Occupational Safety and 

Health Administration’s (OSHA) regulations for the construction industry (Gilkeya 2003 and Weil 1999). 

The variation in the number of regulated events in compliance under the different options reflects the 

variation in the regulated universe. 

Table 4-13 through Table 4-16 present the numbers of RRP events potentially affected by the removal of 

the opt-out provision by type of event, for the first and second year the rule is in effect. Note that Option 

C does not go into effect until the second year, so this option does not affect any events in the first year. 

Each table shows the total number of events where compliance costs are incurred, labeled “All Events.” 

“All Events” include all the events where a test kit was used to test for LBP. The columns labeled “LBP 

Events” include all the events where test kits correctly identified that LBP was present; it does not include 

events where there was a false positive or a false negative test kit result. The columns labeled “LSWP 

Events” include all events where there was a positive test kit result – including false positives. The 

LSWP event estimate is the estimated number of events where compliance costs associated with cleaning, 

containment, and verification are incurred. Table 4-17 through Table 4-19 present the likelihoods of 

events where LBP is correctly identified as well as those where there was a positive test kit result (LSWP 

Events). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-22 

Table 4-13: Option A: First Year (thousands) 

All Events With Costs LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total SF-O Multi-O Total 

Bath 252 18 269 60 5 65 179 13 192 

Kit 255 22 277 74 6 81 186 16 202 

Ad-S 54 1 55 24 0 25 42 1 43 

Ad-M 21 0 21 10 0 10 16 0 16 

Ad-L 83 1 84 39 0 39 65 1 66 

Wl-S 840 45 885 125 8 132 571 31 602 

Wl-M 47 3 51 12 1 13 34 2 36 

Wl-L 0 0 0 0 0 0 0 0 0 

WD-S 221 7 228 85 3 88 168 6 173 

WD-M 256 10 267 101 5 106 195 8 204 

WD-L 341 17 358 138 8 147 261 13 275 

IP-S 573 39 612 238 17 255 441 30 471 

IP-M 322 23 345 133 10 143 248 18 266 

IP-L 272 20 292 112 9 120 209 16 225 

EP 2,682 146 2,828 1,008 54 1,062 2,029 110 2,139 

C Ext 347 0 347 89 0 89 249 0 249 

W Ext 337 15 352 129 7 136 256 12 268

Total 6,904 368 7,272 2,376 135 2,510 5,150 277 5,427 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s 

requirements, and (2) in compliance. Thus, this includes some events where LSWP are not required because 

a test kit indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be 

noncompliant. A “-” indicates that zero events were estimated; a “0” indicates that fewer than 500 events 

were estimated. All Events With Costs include those where there is a negative test kit result for LBP. LBP 

Events include all the events where test kits correctly identified that LBP was present; it does not include 

events where there was a false positive or a false negative test kit result. LSWP events include all events with 

test kit results that are positive for LBP, including false positive results. See Table 4-1 for options 

descriptions. Note that the number of LSWP events is equal to the number of LBP events (which exclude 

false negatives) plus the number of false positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events 

With Costs) – (LBP Events)/0.95) * (False Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large WallDisturbing Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door 

Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IPM = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-23 

Table 4-14: Option B: First Year (thousands) 

All Events With Costs LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total SF-O Multi-O Total 

Bath 126 9 135 30 2 32 89 6 96 

Kit 127 11 139 37 3 40 93 8 101 

Ad-S 27 0 27 12 0 12 21 0 21 

Ad-M 10 0 10 5 0 5 8 0 8 

Ad-L 42 1 42 19 0 19 33 0 33 

Wl-S 420 23 443 62 4 66 286 16 301 

Wl-M 24 2 25 6 1 7 17 1 18 

Wl-L 0 0 0 0 0 0 0 0 0 

WD-S 111 4 114 42 2 44 84 3 87 

WD-M 128 5 133 51 2 53 98 4 102 

WD-L 171 8 179 69 4 73 131 7 137 

IP-S 286 19 306 119 9 127 220 15 236 

IP-M 161 11 173 66 5 71 124 9 133 

IP-L 136 10 146 56 4 60 105 8 112 

EP 1,341 73 1,414 504 27 531 1,015 55 1,070 

C Ext 173 0 173 45 0 45 124 0 124 

W Ext 168 7 176 65 4 68 128 6 134 

Total 3,452 184 3,636 1,188 67 1,255 2,575 138 2,713 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s 

requirements, and (2) in compliance. Thus, this includes some events where LSWP are not required because 

a test kit indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be 

noncompliant. A “-” indicates that zero events were estimated; a “0” indicates that fewer than 500 events 

were estimated. All Events With Costs include those where there is a negative test kit result for LBP. LBP 

Events include all the events where test kits correctly identified that LBP was present; it does not include 

events where there was a false positive or a false negative test kit result. LSWP events include all events with 

test kit results that are positive for LBP, including false positive results. See Table 4-1 for options 

descriptions. Note that the number of LSWP events is equal to the number of LBP events (which exclude 

false negatives) plus the number of false positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events 

With Costs) – (LBP Events)/0.95) * (False Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large WallDisturbing Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door 

Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IPM = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-24 

Table 4-15: Option D: First Year (thousands) 

All Events With Costs LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total SF-O Multi-O Total 

Bath 111 8 119 48 4 52 87 6 93 

Kit 115 9 124 60 5 65 93 7 100 

Ad-S 25 1 25 18 0 18 22 1 22 

Ad-M 11 0 11 8 0 8 10 0 10 

Ad-L 41 0 41 30 0 30 36 0 36 

Wl-S 414 21 436 105 7 112 296 16 312 

Wl-M 28 3 31 11 1 12 21 2 23 

Wl-L 0 0 0 0 0 0 0 0 0 

WD-S 109 4 113 69 3 72 92 3 95 

WD-M 131 6 137 84 4 88 111 5 116 

WD-L 179 11 190 115 8 123 152 9 161 

IP-S 355 23 379 207 15 222 294 20 313 

IP-M 199 13 212 115 9 124 164 11 175 

IP-L 168 12 180 97 7 105 138 10 148 

EP 1,386 71 1,457 853 45 898 1,161 60 1,220 

C Ext 178 0 178 72 0 72 137 0 137 

W Ext 179 10 189 110 7 117 150 9 158 

Total 3,630 191 3,821 2,004 115 2,119 2,962 159 3,121 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s 

requirements, and (2) in compliance. Thus, this includes some events where LSWP are not required because 

a test kit indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be 

noncompliant. A “-” indicates that zero events were estimated; a “0” indicates that fewer than 500 events 

were estimated. All Events With Costs include those where there is a negative test kit result for LBP. LBP 

Events” include all the events where test kits correctly identified that LBP was present; it does not include 

events where there was a false positive or a false negative test kit result. LSWP events include all events with 

test kit results that are positive for LBP, including false positive results. See Table 4-1 for options 

descriptions. Note that the number of LSWP events is equal to the number of LBP events (which exclude 

false negatives) plus the number of false positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events 

With Costs) – (LBP Events)/0.95) * (False Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large WallDisturbing Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door 

Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IPM = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-25 

Table 4-16: Option A, B, C, and D: Second Year (thousands) 

All Events With Costs LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total SF-O Multi-O Total 

Bath 250 18 268 60 5 64 78 6 84 

Kit 254 22 276 74 6 80 92 8 99 

Ad-S 54 1 55 24 0 25 27 0 27 

Ad-M 21 0 21 10 0 10 11 0 11 

Ad-L 83 1 84 38 0 39 43 0 43 

Wl-S 837 45 882 124 8 132 195 11 206 

Wl-M 47 3 50 12 1 13 16 1 17 

Wl-L 0 0 0 0 0 0 0 0 0 

WD-S 220 7 227 84 3 88 97 4 101 

WD-M 255 10 266 101 5 105 116 5 121 

WD-L 340 17 356 138 8 146 157 9 167 

IP-S 571 39 609 237 17 254 269 19 288 

IP-M 321 23 344 132 10 142 150 11 162 

IP-L 271 20 291 111 9 120 127 10 136 

EP 2,671 145 2,817 1,004 54 1,058 1,165 63 1,228 

C Ext 346 0 346 89 0 89 114 0 114 

W Ext 336 15 350 129 7 136 149 8 156 

Total 6,876 366 7,242 2,366 134 2,500 2,804 157 2,961 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s 

requirements, and (2) in compliance. Thus, this includes some events where LSWP are not required because 

a test kit indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be 

noncompliant. A “-” indicates that zero events were estimated; a “0” indicates that fewer than 500 events 

were estimated. All Events With Costs include those where there is a negative test kit result for LBP. LBP 

Events include all the events where test kits correctly identified that LBP was present; it does not include 

events where there was a false positive or a false negative test kit result. LSWP events include all events with 

test kit results that are positive for LBP, including false positive results. See Table 4-1 for options 

descriptions. Note that the number of LSWP events is equal to the number of LBP events (which exclude 

false negatives) plus the number of false positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events 

With Costs) – (LBP Events)/0.95) * (False Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large WallDisturbing Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door 

Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IPM = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-26 

Table 4-17: Likelihoods of LBP and LSWP –Options A and B, First Year 

LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total 

Bath 24% 26% 24% 71% 72% 71% 

Kit 29% 28% 29% 73% 73% 73% 

Ad-S 45% 82% 45% 78% 91% 78% 

Ad-M 47% - 47% 79% - 79% 

Ad-L 46% 21% 46% 79% 70% 78% 

Wl-S 15% 17% 15% 68% 69% 68% 

Wl-M 26% 39% 27% 72% 76% 72% 

Wl-L - - - - - - 

WD-S 38% 45% 39% 76% 78% 76% 

WD-M 39% 47% 40% 76% 79% 76% 

WD-L 41% 50% 41% 77% 80% 77% 

IP-S 42% 44% 42% 77% 78% 77% 

IP-M 41% 44% 41% 77% 78% 77% 

IP-L 41% 43% 41% 77% 78% 77% 

EP 38% 37% 38% 76% 76% 76% 

C Ext 26% - 26% 72% - 72% 

W Ext 38% 48% 39% 76% 79% 76% 

Total 34% 37% 35% 75% 75% 75% 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s requirements, 

and (2) in compliance. Thus, this includes some events where LSWP are not required because a test kit 

indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be noncompliant. 

A “-” indicates that zero events were estimated; a “0” indicates that fewer than 500 events were estimated. All 

Events With Costs include those where there is a negative test kit result for LBP. LBP Events include all the 

events where test kits correctly identified that LBP was present; it does not include events where there was a 

false positive or a false negative test kit result. LSWP events include all events with test kit results that are 

positive for LBP, including false positive results. See Table 4-1 for options descriptions. Note that the number 

of LSWP events is equal to the number of LBP events (which exclude false negatives) plus the number of false 

positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events With Costs) – (LBP Events)/0.95) * (False 

Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing 

Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door Replacement 

Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IP-M = Medium 

Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained Exterior Event; W 

Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-27 

Table 4-18: Likelihoods of LBP and LSWP –Option D, First Year 

LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total 

Bath 43% 47% 44% 78% 79% 78% 

Kit 52% 57% 53% 81% 82% 81% 

Ad-S 73% 82% 73% 88% 91% 88% 

Ad-M 69% - 69% 86% - 86% 

Ad-L 72% - 72% 87% - 87% 

Wl-S 25% 31% 26% 72% 73% 72% 

Wl-M 39% 43% 39% 76% 78% 76% 

Wl-L - - - - - - 

WD-S 64% 70% 64% 84% 87% 85% 

WD-M 64% 70% 64% 85% 87% 85% 

WD-L 64% 71% 65% 85% 87% 85% 

IP-S 58% 64% 59% 83% 85% 83% 

IP-M 58% 66% 59% 83% 85% 83% 

IP-L 58% 64% 58% 82% 85% 83% 

EP 62% 64% 62% 84% 85% 84% 

C Ext 41% - 41% 77% - 77% 

W Ext 62% 65% 62% 84% 85% 84% 

Total 55% 60% 55% 82% 83% 82% 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s requirements, 

and (2) in compliance. Thus, this includes some events where LSWP are not required because a test kit 

indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be noncompliant. 

A “-“ indicates that zero events were estimated; a “0” indicates that fewer than 500 events were estimated. All 

Events With Costs include those where there is a negative test kit result for LBP. LBP Events include all the 

events where test kits correctly identified that LBP was present; it does not include events where there was a 

false positive or a false negative test kit result. LSWP events include all events with test kit results that are 

positive for LBP, including false positive results. See Table 4-1 for options descriptions. Note that the number 

of LSWP events is equal to the number of LBP events (which exclude false negatives) plus the number of false 

positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events With Costs) – (LBP Events)/0.95) * (False 

Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing 

Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door Replacement 

Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IP-M = Medium 

Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained Exterior Event; W 

Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-28 

Table 4-19: Likelihoods of LBP and LSWP –Options A, B, C, and D, Second Year 

LBP Events LSWP Events 

SF-O Multi-O Total SF-O Multi-O Total 

Bath 24% 26% 24% 31% 33% 31% 

Kit 29% 28% 29% 36% 35% 36% 

Ad-S 45% 82% 45% 50% 84% 50% 

Ad-M 47% - 47% 52% - 52% 

Ad-L 46% 21% 46% 51% 29% 51% 

Wl-S 15% 17% 15% 23% 25% 23% 

Wl-M 26% 39% 27% 33% 45% 34% 

Wl-L - - - - - - 

WD-S 38% 45% 39% 44% 50% 44% 

WD-M 39% 47% 40% 45% 52% 46% 

WD-L 41% 50% 41% 46% 55% 47% 

IP-S 42% 44% 42% 47% 50% 47% 

IP-M 41% 44% 41% 47% 49% 47% 

IP-L 41% 43% 41% 47% 49% 47% 

EP 38% 37% 38% 44% 43% 44% 

C Ext 26% - 26% 33% - 33% 

W Ext 38% 48% 39% 44% 53% 45% 

Total 34% 37% 35% 41% 43% 41% 

Notes: Events where compliance costs are incurred include those that are: (1) subject to the rule’s requirements, 

and (2) in compliance. Thus, this includes some events where LSWP are not required because a test kit 

indicates that LBP is not present. It excludes the 25% of regulated events that are assumed to be noncompliant. 

A “-“ indicates that zero events were estimated; a “0” indicates that fewer than 500 events were estimated. All 

Events With Costs include those where there is a negative test kit result for LBP. LBP Events include all the 

events where test kits correctly identified that LBP was present; it does not include events where there was a 

false positive or a false negative test kit result. LSWP events include all events with test kit results that are 

positive for LBP, including false positive results. See Table 4-1 for options descriptions. Note that the number 

of LSWP events is equal to the number of LBP events (which exclude false negatives) plus the number of false 

positive events; i.e., (LSWP Events) = (LBP Events) + ((All Events With Costs) – (LBP Events)/0.95) * (False 

Positive Rate). 

Abbreviations: 

SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen 

Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; 

Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing 

Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium Window or Door Replacement 

Event; WD-L = Large Window or Door Replacement Event; IP-S = Small Interior Painting; IP-M = Medium 

Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained Exterior Event; W 

Ext = Whole Exterior Event. 

4.2.2 Estimating the Number of Regulated Renovation, Repair, and Painting Events in 

COFs in Public or Commercial Buildings 

This section describes the methodology for estimating the number of events in daycare centers, preschools and kindergartens—i.e., COFs in public or commercial buildings. Events in these structures are 

all regulated under the existing LRRP program. Events in these structures, however, will be affected by 

the rule’s requirement to provide the recordkeeping checklist to owners or occupants. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-29 

4.2.2.1 Data Sources 

This section provides a brief summary of the primary data sources used to estimate the number of RRP 

events in COFs in public or commercial buildings. 

HUD's (2003) First National Health Survey of Child Care Centers 

HUD’s (2003) First National Environmental Health Survey of Child Care Centers was conducted under 

the sponsorship of the Department of Housing and Urban Development (HUD), the Environmental 

Protection Agency (EPA), and the Consumer Product Safety Commission (CPSC) to assess children's 

potential exposure to lead, allergens, and pesticides in licensed child care centers. The survey data were 

collected in 2001 and were published in 2003; they include data on 98 childcare centers that are known to 

have been built before 1978. Note that while the data only includes child care centers, some of these 

centers are located in schools and the information on lead likelihoods, characteristics of classrooms, and 

the frequencies of painting are extrapolated to elementary schools with pre-schools or kindergartens. This 

survey can be used to estimate lead levels in dust, paint, and soil in childcare centers. This analysis uses 

these data to estimate: (1) likelihoods of LBP on various components that might be disturbed during RRP, 

(2) various characteristics of the rooms and buildings (such as the size and number of rooms, windows, 

and doors), and (3) the frequency of interior painting, exterior painting, and cleaning. 

Whitestone (2006) Building Maintenance and Repair Cost Reference 2006-2007 

Whitestone Research is a commercial service that provides data on the frequency of different types of 

maintenance activities and their costs, for use by building managers and investors. For over 50 building 

types (including both elementary schools and childcare centers), Whitestone defines a typical building 

and lists the building components they are likely to contain (e.g. type of windows, type of interior and 

exterior wall coverings, type of heating system, etc.). Whitestone lists the frequency and type of repairs 

each building component will need, including replacements. The Whitestone data can be used to estimate 

the types and frequency of RRP work for COFs in public or commercial buildings. 

4.2.2.2 Description of Methodology for Estimating the Number of RRP Events in COFs in Public or 

Commercial Buildings 

The basic steps for estimating the number of events are: 

1. Estimate the number of COFs (rooms and buildings), 

2. Estimate the frequency of performing an event, 

3. Estimate the likelihood that an event will be covered by the rule (disturbing paint). 

4. Combine the results of the above four steps to estimate: (1) annual number of buildings and 

classrooms where more than six square feet of a painted surface per room is disturbed for interior 

renovations, or twenty square feet for exterior renovations. 

The methodology for performing these steps is described below in more detail. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-30 

Step 1: Estimate the Number of Public or Commercial Building COFs (rooms and centers) 

Based on the number of daycare centers reported to be located in schools according to the HUD (2003) 

data, 22 percent of the estimated 115,000 centers are estimated to be located in elementary schools. Thus, 

these 25,300 daycare centers are assumed to be accounted for in the estimated 40,190 elementary schools 

with pre-schools and kindergartens. Although an additional 1,421 pre-schools are located in schools 

without kindergarten programs (such as middle or high schools), these pre-schools are included in the 

count of daycare centers for the purposes of the total cost analysis. In summary, there are 40,190 

elementary schools with pre-schools and kindergartens, 37,049 elementary schools with kindergartens but 

no pre-school and 89,261 daycare centers (see Section 2.9 of Chapter 2).13 Using data from the 

Commercial Buildings Energy Consumption Survey (CBECS) for education buildings (DOE 2003), it 

was estimated that 58 percent of buildings were built prior to 1978. The HUD (2003) data was used to 

estimate the relative number of pre-1960 buildings. 

This analysis considers three categories of COFs in public or commercial buildings: (1) daycare centers, 

(2) elementary schools with kindergartens only, and (3) elementary schools with kindergartens and preschools. The analysis distinguishes between these types of buildings because they have different sizes 

and thus different compliance costs. The number of childcare center classrooms was estimated using the 

HUD (2003) data. The estimated numbers of pre-kindergarten and kindergarten classrooms per building 

are 3.8 and 6.7 for elementary schools with kindergartens and elementary schools with pre-schools and 

kindergartens, respectively. The number of pre-school classrooms per building was estimated based on 

the number of pre-kindergarten schools and classes reported in the NCES Prekindergarten in U.S. Public 

Schools 2000-2001 Report (U.S. Department of Education 2003). The number of kindergarten 

classrooms per building was estimated based on the number of kindergarten schools and classes reported 

in the Full-Day and Half-Day Kindergarten in the United States 1998-1999 (U.S. Department of 

Education 2003). In addition, this analysis accounts for RRP events in spaces other than classrooms in the 

public or commercial buildings that might be visited by children under the age of six on a regular basis 

(libraries, cafeterias, gyms, etc.). 

Spaces in Addition To Regular Kindergarten and Pre-Kindergarten Classrooms Regularly Visited 

by Children Under Age Six 

At least for part of the year, children under the age of 6 are in first grade. In addition, in some schools 

children under the age of 6 might use other rooms on a regular basis, including libraries, cafeterias, gyms, 

computer rooms, and music and/or art rooms. 

According to NCES’s 2005 After-School Programs and Activities Survey of the National Household 

Education Surveys Program data, just under 0.5 percent of all first graders are 5 years old. Thus there are 

nearly 19,000 first graders who are age 5 (NCES 2005). The survey collected age data as of December 

31st of 2004 and as such does not include children who turned 6 after the start of the school year in 

September but before the end of December. Thus it is thus likely that this figure underestimates the 

number of children who are 5 years old when they enter first grade. While the total number of five year 

olds in first grade is relatively small, any class with one of these children is subject to the rule. 

Unlike for pre-kindergartens or kindergartens, there is no data on the number of first grade classrooms in 

the United States. The number of first grade classrooms was estimated based on student enrollment and 

the average number of first graders in a typical classroom. Data on the average number of students in first 

grade were obtained from four states – Texas, New Hampshire, New York, and Illinois (Texas Education 

 

13 The 89,261 daycare centers include 1,421 schools with pre-kindergarten but no kindergarten, and 87,840 daycare 

centers located outside of schools (see Section 2.9 of Chapter 2). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-31 

Agency 1999; New Hampshire Department of Education 2006; New York State Office of the State 

Comptroller 2005; ASU 2007). The number of students per classroom reported in these states ranged 

from 18 to 21.6, with an average of 20 students per classroom. To estimate the total number of first grade 

classrooms, the total number of first graders (3,663,005 in public schools + 439,510 in private schools) 

was divided by the average of 20 students per first-grade class. The resulting number of classrooms 

(205,126) was divided by the total number of schools with a first grade (51,572 public schools + 22,362 

private schools) to estimate the average number of classrooms per school.14 Based on these calculations, 

there is an average of 2.8 first grade classrooms per school. 

Data were not available on the amount of the school day or week that kindergartners and first graders 

spend outside of their primary classroom or the rooms they visit. Nor were data available on the average 

size of these rooms in older elementary schools. Thus the following assumptions were made: 

Gyms are about the size of 5 classrooms. This estimate is based on the assumption that most elementary 

school gyms will accommodate a basketball court. A basketball court is 3,108 square feet and an average 

classroom is 729 square feet (ProDunkHoops 2006; HUD 2003). Thus, a basketball court is about 4.25 

classrooms, which was rounded up to 5 to accommodate bleachers, etc. 

 Cafeterias are about the same size as an elementary school gym. 

 Elementary school libraries are about the size of 2 classrooms 

 Students were also assumed to regularly spend time in at least one other classroom (e.g. computer 

room, music or art room). 

Estimates were generated using data on the percentage of public elementary schools that have various 

non-classroom facilities as follows: 

 Cafeteria 98%15 (NCES 2006g) 

 Library 95% (NCES 2004) 

 Gymnasium 80% (NCES 2007) 

Using these percentages and the classroom-equivalent sizes for rooms specified above, the equivalent of 

an additional 12 rooms was assumed to be covered by the rule because children under the age of 6 use 

them in addition to their regular classrooms. The calculation is: 

98% * (1 cafeteria)*(5 classroom equivalents) + 95% * (1 library)*(2 classroom equivalents) + 

80% * (1 gym)*(5 classroom equivalents) + (1 extra room) = 12 classroom equivalents. 

 

14 The numbers of first graders in public and private schools were drawn from NCES’s Overview of Public 

Elementary and Secondary Students, Staff, Schools, School Districts, Revenues, and Expenditures: School Year 

2004-2005 and Fiscal Year 2004 (NCES 2006a) and Characteristics of Private Schools in the United States: 

Results From the 2003-2004 Private School Universe Survey (NCES 2006e), respectively. The numbers of 

public and private schools with first grades were calculated using NCES’s Common Core of Data Public 

Elementary/Secondary School Universe Survey Data, 2004-2005 (NCES 2006b) and 2003-2004 Private School 

Universe Survey Data (NCES 2006f), respectively. 

15 This figure is based on the number of schools providing food services in a cafeteria or lunch room. Since many 

elementary schools use the gymnasium as a lunch room, there may be substantial overlap between cafeterias 

and gymnasiums. Also, in some schools children do not eat in the cafeteria until 1st grade. Thus, this may 

overestimate the areas in schools potentially impacted by the rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-32 

In addition, an average of 2.8 first grade classrooms are assumed to be covered by the rule, making the 

average total number of additional classroom equivalents 14.8. The estimated numbers of prekindergarten and kindergarten classrooms per building are 3.8 and 6.7 for elementary schools with 

kindergartens and elementary schools with pre-schools and kindergartens, respectively. Thus, the average 

numbers of classrooms and classroom equivalents covered under the rule are 18.6 and 21.5 for elementary 

schools with kindergartens and elementary schools with pre-schools and kindergartens, respectively. 

The resulting estimates of the number of regulated daycare centers and elementary schools with 

preschools or kindergartens, as well as the number of regulated classrooms in these buildings are 

presented in Table 4-20. 

Step 2: Estimate the frequency of performing an event 

Interior Painting 

When asked how often they repainted the interior, respondents to the HUD (2003) survey could respond: 

(1) every 1 to 4 years, (2) every 5 to 10 years, or (3) every 10 to 20 years. The average frequency of 

painting was estimated using the midpoints for these ranges (weighted averages were calculated using the 

buildings’ survey weight). On average, building interiors are painted every 4.4 years. It is assumed that 

35 percent involve sanding and/or scraping before painting, based on data for housing units (EPA 2006). 

Exterior Painting 

When asked how often they repainted the exterior, respondents to the HUD (2003) survey could respond: 

(1) every 1 to 4 years, (2) every 5 to 10 years, or (3) every 10 to 20 years. The average frequency of 

painting was estimated using the midpoints for these ranges (weighted averages were calculated using the 

building’s survey weight); on average, buildings paint their exterior every 7 years. Thus, the analysis 

assumes that buildings with exterior paint (about 90 percent of the buildings have exterior paint) are 

painted every seven years. It is assumed that the exterior is always sanded or scraped before painting 

(EPA 2006). 

Wall Disturbing Events 

The number of events where walls are disturbed is considered separately from those events that generally 

disturb trim, doors, and windows, which have higher likelihoods of LBP. The number of wall disturbing 

events is estimated using the Whitestone Maintenance and Repair (M&R) Cost Reference. The 

Whitestone M&R Cost Reference provides information on the frequency of a wide variety of maintenance 

and repair activities. As described in their Preface, the book is intended for two audiences. 

“The first group has a common need to know the long-term M&R costs of specific 

buildings. This group consists of analysts, developers, architects, bankers, investors and 

Table 4-20: Number of Regulated Buildings and Classrooms, by Building Type and Year Built 

Daycare Centers 

Elementary Schools 

with Kindergartens 

Only 

Elementary Schools with 

Pre-Schools and 

Kindergartens 

Buildings Classrooms Buildings Classrooms Buildings Classrooms 

Pre-1978 51,771 170,472 21,488 399,685 23,310 501,169 

Pre-1960 28,687 103,566 11,907 242,817 12,917 304,471 

*The stock of public or commercial buildings is assumed to decline by 0.41% per year. That rate was 

calculated using the average annual compound rate of change in the pre-1980 housing stock using data from 

the 1990 and 2000 Decennial Census (U.S. Census Bureau 1990 and 2000c). 

Source: Calculated using HUD 2003 data. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-33 

others who must account for M&R costs that, over a 50-year building lifetime, can easily 

exceed the cost of construction. ... The second audience consists of facility managers and 

all those responsible for estimating and justifying facility maintenance budgets.” 

The bulk of the reference is composed of detailed lists of building components and M&R tasks, along 

with their average size, frequency of the M&R tasks, trade involved (e.g. plumber, carpenter) and 

estimated cost. The reference also provides building profiles for 56 different building types, including 

childcare centers and elementary schools. Each profile lists the typical building components for that 

building type and then generates a 50-year stream of expenditures that cover these building components. 

The number of wall disturbing events is estimated based on the following categories of RRP events: 

 Replace Plumbing Pipes and Fixtures 

 Replace HVAC Systems 

 Replace Electrical System and Fixtures 

Using the frequencies of major renewal and replacement tasks that are likely to disturb lead-based paint 

for the building components described in the childcare center and elementary school profiles, this analysis 

developed the assumed frequency of RRP events shown in Table 4-21. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-34 

 Table 4-21: Frequency of Wall Disturbing RRP Events 

Category of RRP Event and Whitestone Components and 

Frequencies Used to Estimate Frequency of RRP Events 

Assumed Average 

Frequency of Performing 

RRP Event 

Resulting Total Number 

of RRP Events per 

Classroom per Year 

RRP Event - Replace Plumbing Pipes and Fixtures 

Pipe & Fittings, 3/4" Copper, Cold Water 

 Replace 10' section every 20 years, replace all 

 pipes and fittings every 25 years. 

Pipe & Fittings, 3/4" Copper, Hot Water 

 Replace 10' section every 13 years, replace all 

 pipes and fittings every 25 years. 

Pipe & Fittings, 2" Copper, Cold Water 

 Replace 10' section every 20 years, replace all 

 pipes and fittings every 25 years. 

Pipe & Fittings, 6" Cast Iron 

 Replace 10' section every 13 years, replace all 

 pipes and fittings every 75 years. 

Pipe & Fittings, 10" Cast Iron 

 Replace 10' section every 13 years, replace all 

 pipes and fittings every 75 years. 

Pipe & Fittings, 4" DWV PVC 

 Replace 10' section every 10 years, replace all 

 pipes and fittings every 30 years.

Since replacing 10’ sections 

of pipes is done as often as 

once every 10 years, the 

analysis assumes 1 job per 

classroom every 10 years – 1⁄2 

are assumed to be large and 1⁄2 

are assumed to be small 

(0.05 small jobs and 0.05 

large jobs per year) 

RRP Event - Replace HVAC Systems 

Pipes & Fittings, 4" Steel, Gas 

Replace 10' section every 12 years, replace all pipes and 

fittings every 75 years. 

Rounding to the nearest 10 

years, it is assumed that there 

is 1 job per classroom every 

10 years. Since 10’ sections 

are replaced about every 10 

years and all pipes and fittings 

are replaced about every 80 

years, it is assumed that 1/8 

are large jobs and 7/8 are 

small jobs. 

(0.0875 small jobs and 0.0125 

large jobs per year) 

RRP Event - Replace Electrical System and Fixtures 

Fluorescent Lighting Fixture, 160 W 

Replace every 20 Years 

1 job per classroom every 20 

years, assumed to be large* 

(0.05 large jobs per year) 

RRP Event - Unscheduled Maintenance Assumes a small job is 

performed in 1 out of every 

11 classrooms each year. 

This is equivalent to one job 

per building on average. 

Each of the 4 categories is 

considered a separate 

event. Aggregating the 

frequencies provides 

annual averages of: 

0.34 jobs, composed of: 

0.23 small jobs 

0.11 large jobs 

where a small job disturbs 

paint on one wall of a 

classroom, and a large job 

disturbs paint on all four 

walls. 

* All unplanned maintenance events are assumed to be small jobs. 

Source: Derived from Whitestone M&R Reference (2006). 

Because historical data on M&R activities for wall disturbing events in these buildings are not available, 

and to simplify the calculations, it is assumed that the RRP events are evenly spread over the population 

of buildings. In other words, if a plumbing replacement job typically occurs once every 10 years, the 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-35 

analysis assumes that one-tenth of the buildings experience this RRP event in any given year. Thus in 

any given year, it is assumed that plumbing is replaced in 10 percent of buildings, HVAC systems are 

replaced in 10 percent of buildings and electrical systems are replaced in 5 percent of buildings. If 

multiple jobs are occurring in the same building, the analysis assumes they occur at different times in the 

year and thus each incurs its own work practice costs. To the extent that these events are actually 

occurring at the same time, the analysis overestimates the work practice costs. The Whitestone data does 

not include information on the frequency of unscheduled maintenance events. Instead, this analysis 

assumes that 1 out of 11 classrooms have an unscheduled maintenance job performed in a given year – 

this is approximately one job per building. The number of unscheduled maintenance events is based on 

an assumption, and not on empirical data. 

Window and Door Replacement Events 

The number of events where windows and doors are disturbed is also estimated using the Whitestone 

M&R Cost Reference, which listed the frequency with which door and window types typically found in 

elementary schools and daycare centers must be replaced—about every 20 years. Thus, in any given 

year, windows and doors are assumed to be replaced in 5 percent of buildings. 

Step 3: Estimate the likelihood that an event will be affected by the rule (disturbing paint) 

The next step is to estimate how many events in public or commercial building COFs disturb painted 

surfaces and therefore would be affected by the recordkeeping checklist provision requirement of the 

LRRP rule revision. This analysis considers four types of events for public or commercial buildings: (1) 

Interior Painting, (2) Exterior Painting, (3) Window Replacement, and (4) Wall Disturbing Events (e.g., 

plumbing, electrical). It is estimated that 35 percent of interior painting jobs involve disturbing painted 

surfaces (i.e., sanding and/or scraping before painting), based on data for housing units (EPA 2006). All 

other event types are always assumed to disturb painted surfaces. 

Step 4: Combine the results 

The number of affected classrooms or buildings is multiplied by the frequency of renovation activities 

that disturb painted surfaces to yield the number of events in public or commercial buildings where the 

recordkeeping checklist will have to be provided by the renovator. These results are presented in Table 4-

22. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-36 

4.3 Work Practice Compliance Costs 

RRP projects generate varying amounts of leaded dust, paint chips, and other lead-contaminated materials 

depending on the type of work, size of area affected, and work methods used. For example, repairing a 

small area of damaged drywall is likely to generate less lead-contaminated dust and debris than sanding a 

large area in preparation for painting. Because of this variability, the size of the area that must be isolated 

and the containment methods used will vary from project to project. Large renovation projects could 

involve one or more rooms and potentially encompass an entire home or building while small projects 

may involve a portion of a room or a building’s exterior. The necessary work area preparations will 

depend on the size of the surface(s) being disturbed, the method used in disturbing the surface, and the 

building layout. The certified renovator assigned to a renovation would weigh all of these factors in 

determining the appropriate work area size for that particular situation. For example, repairing a small 

area of damaged drywall would probably require a smaller work area while demolition work would 

probably require a larger work area in order to prevent the migration of dust and debris from the work 

area. 

Note that the costs of the action as estimated in the Economic Analysis are expressed in 2005 dollars. To 

express values in terms of current dollars, the Implicit Price Deflator for Gross Domestic Product as 

determined by the Bureau of Economic Analysis can be consulted for an indication of how nominal prices 

for goods and services produced in the economy have changed over time. From 2005 to the second 

quarter of 2009, the implicit price deflator increased from 100 to 109.753, a difference of approximately 

10 percent (BEA 2009). 

4.3.1 LBP Test Kit Compliance Costs 

It is assumed that spot test kits are used to test for LBP before each RRP event where a lead inspection 

has not been performed; they are inexpensive to use and a negative result will allow the renovator to forgo 

the more costly containment, cleaning and verification requirements. Lead test kits currently can be 

Table 4-22: Summary of the Number of Public or Commercial Building COF 

Events 

Events Where Recordkeeping Checklist is Provided 

Interior 

Painting 

Exterior 

Painting 

Window 

and Door 

Disturbing 

Events 

Wall 

Disturbing 

Events All Events 

Year 1

Daycare Centers 10,244 4,989 6,393 42,427 64,053 

Kindergartens Only 24,018 2,071 14,989 99,473 140,551 

Kindergartens and Pre-Schools 30,116 2,246 18,795 124,730 175,887 

All Public or commercial 

building COFs 64,378 9,306 40,177 266,630 380,491 

 Year 2* 

Daycare Centers 10,202 4,969 6,367 42,253 63,790 

Kindergartens Only 23,920 2,063 14,928 99,065 139,975 

Kindergartens and Pre-Schools 29,993 2,237 18,718 124,219 175,166 

All Public or commercial 

building COFs 64,114 9,268 40,012 265,537 378,931 

Note: Following EPA (2008), it is assumed that 75 percent of COFs comply with the rule. 

*The stock of public or commercial buildings is assumed to decline by 0.41% per year. That rate 

was calculated using the average annual compound rate of change in the pre-1980 housing stock 

using data from the 1990 and 2000 Decennial Census (U.S. Census Bureau 1990 and 2000c). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-37 

purchased in bulk at a cost of approximately $0.50 per test. It is assumed that the renovator will take an 

average of four samples, because some jobs may disturb multiple components (walls, trim, windows, etc.) 

or multiple rooms, and testing four samples will require about 15 minutes of a certified renovator’s time. 

The loaded wage rate for certified renovators is $31.64/hour16. Thus, testing using the test kits is 

estimated to cost $10 per event (15 minutes * $31.64/hour + 4 test kits * $0.50/test = $10). 

RRP purchasers may choose to have x-ray fluorescence (XRF) testing conducted to detect the presence of 

LBP instead of using a test kit. XRF testing has the advantage of having lower false positive rates but the 

testing cost per event is much higher than a test kit. Therefore, it is assumed that test kits are used in lieu 

of XRF testing. 

4.3.2 Containment, Cleaning, and Verification 

The containment and cleaning practices covered in the cost estimates are:17

For large interior events: 

 Remove or cover all objects in the room where the renovation will be performed including 

furniture, rugs, and window coverings. 

 Close and cover all ducts opening into the room with taped-down plastic sheeting or other 

impermeable material. 

 Close windows and doors in the work area. Doors must be covered with plastic sheeting or other 

impermeable material. Doors used as an entrance to the work area must be covered with plastic 

sheeting or other impermeable material in a manner that allows workers to pass through while 

confining dust and debris to the work area.18 

 Cover the floor with taped-down plastic sheeting or other impermeable material. Place a tack pad 

at the edge of the sheeting at the entrance to the room. Cover paths through the rest of the 

buildings used by persons performing the renovation with plastic sheeting or other impermeable 

material. 

For small interior events: 

 Remove or cover all objects within five feet of the work area, including furniture, rugs, and 

window coverings. 

 Close all windows, doors, and ducts within five feet of the work area. Cover ducts with plastic 

sheeting or other impermeable material.

 Cover the floor within five feet of the work area with taped-down plastic sheeting or other 

impermeable material.

 Wear disposable shoe covers and vacuum clothes.

 

16 Wages are based on U.S. Bureau of Labor Statistics (2005a) data, from the occupational employment statistics series. All 

wages are fully loaded to account for fringe benefits with an average fringe rate for the construction industry of 23.5 percent. 

Certified renovators’ fully loaded wages ($31.64/hour) are estimated from the wages earned by First-Line 

Supervisors/Managers of Construction Trades and Extraction Workers (Occupation 47-1011) who work in the residential 

building construction industry. Workers’ loaded wages ($16.94/hour) are estimated from the wages of Construction 

Laborers who work in the residential building construction industry (Occupation 47-2061). 

17 For the purposes of simplifying the modeling of the costs, some of the work practices described here are slightly 

different than those practices required by the rule. The costs of these practices are expected to be representative 

of the practices required by the rule.

18 This analysis assumes that contractors will meet the entrance door requirement by creating an airlock using two 

sheets of plastic.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-38 

For large and small exterior events: 

 Cover the ground with plastic sheeting or other disposable impermeable material extending out 

from the edge of the structure a sufficient distance to collect falling paint debris. 

 Ensure that doors within the work area that must be used while the job is being performed are 

covered with plastic sheeting or other impermeable material in a manner that allows workers to 

pass through while confining dust and debris to the work area. 

For all events: 

 Post signs warning occupants and other persons not involved in renovation activities to remain 

outside of the work area. 

 Isolate the work area so that no visible dust or debris leaves the work area while the renovation is 

being performed. 

 Contain waste from renovation activities to prevent releases of dust and debris before the waste is 

removed from the work area for storage or disposal. 

 At the conclusion of each workday, store waste from renovation activities under containment, in 

an enclosure, or behind a barrier that prevents release of dust and debris and prevents access to 

dust and debris. 

 Pick up all paint chips and debris. 

 Remove plastic sheeting from objects in the work area and the floor or ground. Mist the sheeting 

before folding it, fold the dirty side inward and tape shut to seal. Dispose of the sheeting as 

waste. 

Additional Cleaning for interior events 

 Clean all objects and surfaces in and around the work area for interior events in the following 

manner, cleaning from higher to lower: 

a. Thoroughly vacuum all surfaces and objects in the work area, including furniture and 

fixtures, with a vacuum equipped with a high-efficiency particulate air (HEPA) filter. 

Where feasible, floor surfaces underneath a rug or carpeting must also be thoroughly 

vacuumed with a HEPA vacuum. 

b. Wipe all surfaces and objects in the work area with a damp cloth (except for walls, 

ceilings, carpeted surfaces and upholstered surfaces). 

c. Mop uncarpeted floors thoroughly, using a two-bucket mopping method that keeps 

the wash water separate from the rinse water, or using a wet mopping system. 

Post-renovation cleaning verification for interior events: 

 A certified renovator must perform a visual inspection to determine if visible amounts of dust, 

debris or residue are still present. If visible amounts of dust, debris or residue are present, these 

conditions must be eliminated by re-cleaning and another visual inspection must be performed. 

 After a successful visual inspection, a certified renovator must: 

a. Wipe uncarpeted floors within the work area with a disposable wet cleaning cloth. 

The cloth must remain damp at all times while it is being used to wipe the floor for 

post-cleaning verification. If the floor surface within the work area is greater than 40 

square feet, the floor within the area must be divided into roughly equal sections that 

are less than 40 square feet. Wipe each such section separately with a new 

disposable cleaning cloth. If the cloths used to wipe each section of the floor within 

the work area match the cleaning verification card, that section of the floor has been 

adequately cleaned. 

b. If the cloth used to wipe a particular section of floor does not match the cleaning 

verification card, re-clean that section of the floor using the two-bucket mopping 

method. Then wipe that section of the floor using a new wet cleaning cloth. If the 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-39 

cloth matches the cleaning verification card, that section of the floor has been 

adequately cleaned. 

c. If the second cloth used to wipe a particular floor section does not match the cleaning 

verification card, re-clean that section of the floor using the two-bucket mopping 

method described above and allow the entire floor within the work area to dry 

completely. After the entire floor within the work area has completely dried, wipe 

the floor with electrostatic cleaning cloths until a cloth that has wiped the entire floor 

matches the cleaning verification card.19

d. Wipe the windowsills in the work area following the same protocol as used for floors 

but with one wet-wipe per-windowsill. 

e. When the area passes the post-renovation cleaning verification, remove the warning 

signs. 

Post-renovation cleaning verification for exterior events: 

 A certified renovator must perform a visual inspection to determine if visible amounts of dust, 

debris or residue are still present. If visible amounts of dust, debris or residue are present, these 

conditions must be eliminated by re-cleaning and another visual inspection must be performed. 

When the area passes the visual inspection, remove the warning signs. 

4.3.3 Cost of Each Containment and Cleaning Practice 

The primary source of information on the cost of containment and cleaning practices, equipment, and 

materials was the Means CostWorks Repair & Remodeling Cost Data (R.S. Means 2005). The data are 

designed to help contractors estimate the cost of a renovation project. The database provides the total 

labor and material costs of different renovation components on a unit basis. Most of the unit costs taken 

from the R.S. Means database utilized in this analysis were for an asbestos abatement project, which 

requires much more elaborate containment and clean up than required under the analyzed options. The 

R.S. Means labor estimates have been adjusted downwards to reflect the less stringent requirements of the 

LRRP rule. Depending on the type of activity, the unit may be a square foot, each item, or some other 

measure. Table 4-23 and Table 4-24 show the material costs, labor requirements and total cost for the 

containment and cleaning practices for interior events and exterior events, respectively. 

 

19 It is assumed that a second cleaning is required 30 percent of the time and a third cleaning is required 2 percent of 

the time.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-40 

Table 4-23: Unit Costs of RRP Interior Activities (2005$) 

Cost Type Material Cost Units Labor Hours Total Costa

Containment

Sign $0.11b Ea. 0 $0.11 

Floors (labor): Cover surfaces with 

polyethylene sheeting, each layer, 6 mil, 

incl. glue & tape 

$0.00 S.F. 0.006 $0.12 

Floors (materials): Cover surfaces with 

polyethylene sheeting, each layer, 6 mil, 

incl. glue & tape 

$0.08c

 S.F. 0.000 $0.08 

Wallsd: Cover surfaces with polyethylene 

sheeting, each layer, 6 mil, incl. glue & tape $0.08c

 S.F. 0.008 $0.25 

Tack pad $0.51e Per sheet 0 $0.51 

Disposable shoe covers $0.38f Per pair 0 $0.38 

Roll down polyethylene sheeting $0.00 S.F. 0.002 $0.03 

Bag polyethylene sheeting $1.15 Ea. 0.05 $2.24 

Cleaning

HEPA vacuum for work area $0.63g,h Ea. 0 $0.63 

HEPA vacuum use (floor) $0.01 S.F. 0.002 $0.05 

HEPA vacuum use (walls) $0.01 S.F. 0.002 $0.05 

HEPA vacuum clothes $0.00 Hours 0.167 $3.44 

Wet wipe, flat surfaces (cleaning) $0.01 S.F. 0.002 $0.06 

Verification

Wet wipe, flat surfaces (verification) $0.01 S.F. 0.002 $0.06 

Electrostatic cloth sweeper $0.01g,i Ea. 0 $0.01 

Disposable wet cloth $0.01j S.F. 0.002k $0.05 

Disposable dry cloth $0.01j S.F. 0.002k $0.05 a Using a mean loaded wage rate of $20.62 (2005$) based on the wages of three construction laborers ($16.94/hr 

each) and one supervisor ($31.64.hr each) from the May, 2004 Occupational Employment Statistics data from the 

Bureau of Labor Statistics. b The cost of a 9”x12” aluminum sign is $10.99; assumed to be used 100 times. c Based on a web search, which showed that duct tape costs $0.02 per square foot and 6 mil. polyethylene sheeting 

costs $0.06 per square foot. d Estimate used for plastic on the doors, windows, and ducts. e Based on a review of price lists on the web, which showed that the average cost per disposable sheet is $0.51. f Based on a review of price lists on the web, which showed that the average cost per pair of shoe covers is $0.38. g Assumes that it will be used for 1,000 events. 

h Based on a review of price lists on the web that showed that the average cost for a HEPA vacuum is $626. i Based on a review of price lists on the web that showed that the average cost of an electrostatic cloth sweeper is 

$13.60. 

j Based on a review of price lists on the web that showed that the average cost of an electrostatic cloth wet cloth is 

$0.46. Also based on clearance requirements that the work area must be divided into roughly equal sections that 

are 40 square feet, therefore it costs $0.01 per square foot. k Based on EPA’s (2005b) “Disposable Cleaning Cloth (DCC) Lead Clearance Field Study” document that it would 

take 5 minutes per cleaning cloth and clearance requirements that the work area must be divided into roughly equal 

sections that are 40 square feet that is equivalent to 0.125 minutes per square foot or 0.002 hours per square foot. 

Abbreviations: S.F. = Square Feet; Ea. = Each Item 

Source: RS Means 2005; U.S. Bureau of Labor Statistics 2005b.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-41 

4.3.4 Quantities of Each Containment and Cleaning Practice 

Table 4-25 and Table 4-26 describe how the number of units required for each work practice is estimated 

for the various event types. This methodology is the same as that used to estimate work practice costs in 

the 2008 LRRP rule analysis (EPA 2008). Appendix 4A in the Economic Analysis of the 2008 LRRP 

rule (EPA 2008) presents the resulting estimates for each type of event. The number of units is multiplied 

by the per-unit costs, which can be per-each, per-square foot, or per hour, as described above in section 

4.3.3. 

Table 4-24: Unit Costs of RRP Exterior Activities (2005$) 

Cost Type Material Cost Units Labor Hours Total Costa

Sign $0.11b Ea. 0 $0.11 

Ground: Cover surfaces with polyethylene 

sheeting, each layer, 6 mil, incl. glue & tape $0.06c

 S.F. 0.001 $0.08 

Doorsd: Cover surfaces with polyethylene 

sheeting, each layer, 6 mil, incl. glue & tape $0.08c

 S.F. 0.008 $0.25 

Roll down polyethylene sheetinge $0.00 S.F. 0.0005 $0.01 

a Based on a mean loaded wage rate of $20.62 (2005$) based on the wages of three construction laborers 

($16.94/hr each) and one supervisor ($31.64/hr) from the May, 2004 Occupational Employment Statistics data 

from the Bureau of Labor Statistics. b The cost of a 9”x12” aluminum sign is $10.99 and it is assumed that the sign will be used 100 times. c Based on a web search that showed that duct tape costs $0.02 per square foot and 6 mil. polyethylene sheeting 

costs $0.06 per square foot. Based on the EPA 2000a Model Renovation Training Course, duct tape will be used 

to tape the plastic to the building and rocks or other heavy objects will be used to weight down the edges therefore 

it is assumed that only 1⁄4 of the duct tape is needed for floors. d Estimate used for plastic on the doors. e Assume that for exterior events the contractor would tape the plastic up rather than bagging it. 

Abbreviations: S.F. = Square Feet; Ea. = Each Item 

Source: RS Means 2005; U.S. Bureau of Labor Statistics 2005a and 2005b. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-42 

Table 4-25: Number of Units Required for RRP Interior Activities (2005$) 

Cost Type Units Number of Units Required 

Containment

(1) Sign Ea. Two signs are assumed to be required. 

(2) Floors (labor): Cover surfaces with 

polyethylene sheeting, each layer, 6 mil, incl. 

glue & tape 

S.F. 

Estimated as 110% of the square footage of the work area (to include 

horizontal surfaces besides the floor) plus 60 square feet of sheeting for 

paths (except for small events). 

(3) Floors (materials): Cover surfaces with 

polyethylene sheeting, each layer, 6 mil, incl. 

glue & tape 

S.F. Same as (2). 

(4) Wallsd: Cover surfaces with polyethylene 

sheeting, each layer, 6 mil, incl. glue & tape S.F. 

Estimated as the number of doors times 20 square feet (door size), plus 

20 square feet (for an extra layer of plastic over the entry door), plus the 

number of ducts times 1 square foot (duct size). 

(5) Tack pad Per sheet One tack pad per room affected. 

(6) Disposable shoe covers Per pair Two for small jobs, none for large jobs. 

(7) Roll down polyethylene sheeting S.F. (2) plus (4). 

(8) Bag polyethylene sheeting Ea. (7) divided by 76.2 square feet (the amount of plastic that will fit in a 

bag). 

Cleaning

(9) HEPA vacuum for work area Ea. Estimated as 1. 

(10) HEPA vacuum use (floor) S.F. 

Estimated as 110% (125% for kitchens and bathrooms, to include 

countertops) of the square footage of the work area plus the number of 

windows times 2/3 of a square foot (the size of a window sill). 

(11) HEPA vacuum use (walls) S.F. Estimated as the square root of the square footage of the work area 

times 32 (4 eight foot tall walls). 

(12) HEPA vacuum clothes Hours Estimated as ten minutes (small events only). 

(13) Wet wipe, flat surfaces (cleaning) S.F. 

Estimated as the likelihood of uncarpeted floors multiplied by the 

square footage of the work area, plus 10% (or 25% for kitchens and 

bathrooms) of the square footage of the work area multiplied plus the 

number of windows times 2/3 of a square foot (the size of a window 

sill). 

Verification

(14) Wet wipe, flat surfaces (verification) S.F. Estimated as 31.8 percent (sum of first and second failure rates) 

multiplied by (13). 

(15) Electrostatic cloth sweeper Ea. Estimated as 1. 

(16) Disposable wet cloth S.F. 

Estimated as 131.8% multiplied by {the square footage of the work 

area, multiplied by the likelihood of uncarpeted floors plus the number 

of windows multiplied by 2/3 of a square foot (the size of a window 

sill)}. 

(17) Disposable dry cloth S.F. 

Estimated as 1.8% (second failure rate), multiplied by the square 

footage of the work area, multiplied by the likelihood of uncarpeted 

floors. 

Abbreviations: S.F. = Square Feet; Ea. = Each Item 

Source: RS Means 2005; U.S. Bureau of Labor Statistics 2005b. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-43 

4.3.5 Baseline Frequency of Prohibited Practice and Costs of Alternatives 

Several paint preparation and removal practices are prohibited or restricted in renovations that require 

lead-safe work practices under the existing rule. A telephone questionnaire was administered to nine 

respondents to gather information on the baseline use of certain paint removal practices. The respondents 

included six painting firms and three historic home restoration firms. The six painting firms were 

randomly drawn from the online sales lead provider, Salesgenie.com. The historic home restoration firms 

were drawn randomly from the Old House Journal’s online restoration directory. 

These firms were asked how often they used the following four paint removal techniques on the interior 

and exterior of pre-1978 buildings: 

1. Open flame burning or torching of paint; 

2. Using a heat gun above 1,100o F; 

3. Power sanding, grinding, or abrasive blasting except when done with HEPA exhaust control; and 

4. Dry scraping of lead based-paint. 

If the firms reported that they did not use the method, they were asked why they did not use it and what 

alternatives they used instead. They were also asked how much they thought costs would increase if the 

specific removal technique was prohibited and if there were any situations where use of the method could 

not be avoided. When responding firms could not precisely state what percentage of the time they used a 

certain work practice they were prompted with never, rarely, sometimes, often or nearly always. These 

prompted answers are assumed to correspond with the following percentages: 

Table 4-26: Number of Units Required for RRP Exterior Activities (2005$) 

Cost Type Units Number of Units Required 

Containment

(1) Sign Ea. Two signs are assumed to be required. 

(2) Ground: Cover surfaces with polyethylene 

sheeting, each layer, 6 mil, incl. glue & tape S.F. Estimated as the perimeter times 10 feet plus an extra 314 

square feet for the corners. 

(3) Doors: Cover surfaces with polyethylene 

sheeting, each layer, 6 mil, incl. glue & tape S.F. Estimated as the number of doors multiplied by 40 square feet, less 20 square feet. 

(4) Roll down polyethylene sheeting S.F. Estimated as the sum of (2) and (3). 

Abbreviations: S.F. = Square Feet; Ea. = Each Item 

Source: RS Means 2005; U.S. Bureau of Labor Statistics 2005b. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-44 

Table 4-27: Response Categories and Corresponding 

Percentages 

Never 1.5% 

Rarely 16% 

Sometimes 50% 

Often 84% 

Nearly Always 99% 

Table 4-28 shows the minimum, maximum and average work practice frequencies, by interior and 

exterior work events: 

Table 4-28: Summary Statistics for Frequency of Work Practices Included in 

Telephone Questionnaire 

 Interior Exterior 

Prohibited Practice Min Max Average Min Max Average 

Heat Gun (High Temp) 1.5% 16% 5% 1.5% 16% 5% 

Open Flame Burning 1.5% 16% 3% 1.5% 16% 3% 

Power Sanding 1.5% 99% 40% 1.5% 99% 47% 

Dry Scraping 1.5% 99% 43% 1.5% 84% 30% 

Based on these estimates it was estimated that interior and exterior painting jobs use various paint 

removal techniques with the frequencies presented in Table 4-29. Since several respondents indicated 

that they typically used heat guns at lower temperatures that are allowed under the LRRP rule (under 

1100 °F), it was assumed that 20 percent of paint removal was performed with low temperature heat guns. 

The remaining 80 percent of paint removal practices were assumed to occur proportionally to the 

frequencies in the telephone questionnaire responses so that the sum of the frequencies for the five paint 

removal practices equals 100 percent. 

Table 4-29: Summary Statistics for Frequency of Paint 

Removal Work Practice Use 

Paint Removal Practice Practice Interior Exterior 

Heat Gun (Low Temp) 20% 20% 

Heat Gun (High Temp) 7% 4% 

Open Flame Burning n.a. 3% 

Power Sanding 35% 44% 

Dry Scraping 38% 29% 

Interior open flame burning is combined with interior high temperature 

heat gun usage (EPA 2008). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-45 

4.3.5.1 Estimating the Incremental Costs of Alternatives to Prohibited Work Practices 

Power Sanding without attachment to HEPA Vacuum 

It is assumed that if power sanding, grinding, or abrasive blasting is prohibited in opt-out housing for 

renovations requiring lead-safe work practices under the rule, except when done with HEPA exhaust 

control, renovators would use power tools with HEPA exhaust controls. 

The costs of requiring that power sanders be attached to vacuums with HEPA filters includes: (1) the cost 

of a sander capable of being attached to a HEPA vacuum, and (2) the cost of additional HEPA filters that 

will be required because of the increased vacuum use. The cost of a HEPA vacuum is not included as an 

incremental cost of this requirement since HEPA vacuum costs are already accounted for in the estimated 

costs of complying with the cleaning requirements under the rule. 

To estimate the cost of the HEPA vacuum compatible power sanders, quotes for 27 power sanders were 

found through online queries; the average cost for such sanders was $209. It is assumed that each sander 

can be used for at least 200 jobs. Most power sanders have one-year warranties, thus 200 jobs represents 

the minimum lifespan. Therefore, the per-job cost of a new sander is $1.05 [$209/200]. 

The cost of extra HEPA filters was based on the cost of re-useable HEPA filters. Internet queries found 

that re-useable filters cost between $30 and $38 each, with an average price of about $35. It is assumed 

that each is good for the life of the sander (200 jobs), resulting in a cost per job of $.18 [$35/200]. 

Table 4-30: Per Job Equipment Costs as a Result of Prohibition on Power Sanding 

(Unless Done with HEPA Attachment) 

Product Average Cost Expected Lifespan (# 

of Jobs) Per Job Cost 

Power Sander $209 200 $1.05 

HEPA Filter $35 200 $0.18 

Sum of Sander and Filter $1.23 

High Temperature Heat Guns and Open Flame Burning or Torching of Paint 

It is assumed that if the use of high temperature heat guns (over 1,100 degrees F) and open flame burning 

or torching of paint is prohibited for renovations in opt-out housing requiring lead-safe work practices 

under the rule, renovators will use low temperature heat guns (under 1,100 degrees F) instead. The cost 

of switching to low temperature heat guns is described below for typical interior and exterior painting 

events where they may be used. 

High Temperature Heat Guns and Open Flame Burning– Interior 

An average interior heat gun event was assumed to involve paint removal from 144 sq. ft. of a 10’ x 10’ 

room. This calculation includes 3” molding around the ceiling, 6” baseboard, 1 doorway, and two 3’ x 5’ 

windows. It was estimated that this would take 1.05 hours using a high temperature heat gun and 1.36 

hours using a low temperature heat gun.20 Thus, switching to a low temperature heat gun would require 

 

20 According to Hunt (2006), a high temperature heat gun can remove the same amount of paint as dry scraping in 64 

percent of the time required for dry scraping. It was estimated that dry scraping can be performed at a rate of 

35-100 square feet per-hour, or 68 square feet per-hour on average (the rate of 35-100 square feet per-hour is 

from Painting and Decorating Contractors of America, 2003). Based on personal communications with industry 

sources, low-temperature heat gun paint removal takes 30 percent longer than high-temperature heat gun paint 

removal.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-46 

an additional 0.31 hours per job. At an hourly rate of $18/hr plus 60% overhead, the additional cost of 

using a low temperature heat gun rather than a high temperature heat gun is $8.93 (PDCA 2003). 

High Temperature Heat Guns and Open Flame Burning – Exterior 

Assuming exterior paint removal from 2 doorways and 10 windows, the average event would include 

paint removal from 243 sq. ft. It was estimated that this would take 1.77 hours using a high temperature 

heat gun and 2.3 hours using a low temperature heat gun.21 Thus, switching to a low temperature heat 

gun would require an additional 0.53 hours per job. At an hourly rate of $18/hr plus 60% overhead, the 

incremental cost of using a low temperature heat gun is $15.26 per job. The cost of switching from using 

open flame burning or torching of paint to a low temperature heat gun is assumed to be the same as for 

switching from a high temperature heat gun to a low temperature heat gun. 

Table 4-31: Time and Cost Associated with Using High and Low Temperature Heat 

Guns 

Interior Job Exterior Job 

Method 

Hours Per Job Cost Incremental 

Per Job Cost Hours Per Job Cost 

Incremental 

Per Job 

Cost 

High Temp 1.05 $30.24 - 1.77 $50.98 - 

Low Temp 1.36 $39.17 $8.93 2.3 $66.24 $15.26 

An average interior heat gun event was assumed to involve paint removal from 144 sq. ft. of a 10’ 

x 10’ room. This calculation includes 3” molding around the ceiling, 6” baseboard, 1 doorway, 

and two 3’ x 5’ windows. An average exterior heat gun event was assumed to involve paint 

removal from 243 sq. ft., involving 2 doorways and 10 windows. 

Estimating Average Costs Per Interior Painting and Exterior Painting Job 

The sections above described how the average costs per event using a prohibited or restricted practice 

were estimated. For cost estimating purposes an average cost across all jobs was estimated– including 

those without prohibited practices. Table 4-32 presents these estimates. 

 

21 See footnote 20.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-47 

Table 4-32: Average Additional Cost of Alternatives to Prohibited or Restricted Practices Over 

All Interior and Exterior Painting Jobs* 

Average Interior Painting Job Average Exterior Painting Job Prohibited 

Method Incremental 

Per Job Cost 

Frequency as 

% of All Jobs

Average Cost 

Per Job 

Incremental 

Per Job Cost

Frequency as 

% of All Jobs 

Average Cost 

Per Job 

High Temp $8.93 7% $0.63 $15.26 4% $0.61 

Open Flame n.a. n.a. n.a. $15.26 3% $0.46 

Power Sanding $1.23 35% $0.43 $1.23 44% $0.54 

All Prohibited 

Methods $1.06 $1.61 

*The average additional cost is a weighted average across all interior and exterior painting jobs, including those 

where prohibited practices are not used (and additional costs are not incurred). 

Interior open flame burning is combined with interior high temperature heat gun jobs (EPA 2008). 

Low temperature heat guns are assumed to be the alternative to high temperature heat guns and open flame 

burning. The alternative to power sanding not attached to a HEPA vacuum is assumed to be power sanding 

attached to a HEPA vacuum. 

4.3.6 Frequency and Cost of Vertical Containment for Exterior Events 

In certain situations, the renovation firm must take extra precautions in containing the work area for optout housing to ensure that dust and debris from an exterior renovation does not contaminate other 

buildings or other areas of the property or migrate to adjacent properties. These situations include work 

areas in close proximity to other buildings, work areas that abut a property line, and work in windy 

conditions. In some cases, it may be necessary to erect a system of vertical containment to prevent paint 

dust and debris from contaminating the ground or any object beyond the work area. Such vertical 

containment could take a number of forms such as attaching plastic sheeting to a fence or other support at 

the property line, attaching the plastic to a building or a frame attached to the building, or attaching the 

plastic to scaffolding erected next to the building. 

This section presents the calculations used to determine the total and incremental vertical containment 

costs for events occurring along one side of a building or all four sides (referred to as 1 and 4-wall events) 

in target housing units. The hanging of disposable reinforced plastic sheeting constitutes the largest 

component of the vertical containment costs, so the average height of the buildings must be calculated to 

determine the surface area of the sheeting. 

Information from the 2005 American Housing Survey (AHS) was used to calculate the average height of 

residential housing units. The AHS includes information on the number of stories in the buildings where 

housing units are located. The average heights of owner occupied units and renter occupied units are just 

under two stories and two-and-a-half stories, respectively. 

In order to apply the average number of stories to the cost estimates, separate height estimates are needed 

for: single-family owner occupied, single-family rental, and multi-family units. Data from the U.S. 

Census Bureau’s American Factfinder was used to determine which average height values from Table 4-

33 to apply to these three categories of residential housing units using information on the percent of units 

that are in single-family or multi-family buildings. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-48 

Table 4-33: Average Height of Building for Owner and Renter 

Occupied Units, Total Housing Stock 

 Owner Occupied Units Renter Occupied Units 

Stories in Structure Total Occupied Units 

1 26,278,000 8,537,000 

2 24,026,000 12,257,000 

3 16,375,000 7,340,000 

4 to 6 2,248,000 2,880,000 

7 or more 488,000 1,504,000 

Total 69,415,000 32,518,000 

Average 1.99 2.46 

Sources: U.S. Census Bureau 2006. Note: To calculate the average, “4 to 6” 

was given a value of 5, and “7 or more” was given a value of 7

Table 4-34 presents the number of owner-occupied housing units by the number of units in the structure. 

It also shows what percentage of the housing units are single-family homes and multi-family. 

Table 4-34: Number of Housing Units, by Units in 

Structure 

Owner-occupied housing units Units in Structure 

Number Percentage 

1, detached or attached 56,255,657 

1, attached 3,819,810 86% 

2 1,164,675 

3 or 4 651,003 

5 or more 1,989,511 

Mobile home 5,850,241 

Boat, RV, Van, etc. 85,616 

14% 

Total 69,816,513 100% 

Sources: U.S. Census Bureau 2000

As shown in Table 4-34, the majority of owner-occupied housing units are in one-unit buildings. Thus 

the average height of owner-occupied housing (2.0 stories) is used to characterize all single-family 

housing and the average height of rental housing (2.5 stories) is used to characterize the height of multifamily housing. 

Table 4-35 summarizes the physical characteristics of the various building types. It assumes that the 

average height of a “story” is 12 feet. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-49 

Table 4-35: Physical Characteristics of Various Building, by Type 

Building Type Estimated 

Sq. ft. per 

floor 

Estimated 

Perimeter 

(ft) 

Estimated 

Front to 

Side Ratio

Estimated 

Width of 

Front (ft)

Estimated 

Width of 

Side (ft) 

Average 

Number of 

Stories 

Assumed 

height per 

story (ft)

Estimated 

Height of 

Building (ft)

Single-family owner 

occupied home 1,390 152 2 to 3 30.4 45.6 1.99 12 24 

Multi-family owneroccupied housing structure 4,182 264 2 to 3 52.8 79.2 2.46 12 30 

Source: EPA Calculations using U.S. DOE 2003. 

Table 4-36 presents the total and incremental costs of a vertical containment event involving either one or 

four walls in the various residential housing units.22 It is assumed that vertical containment is used for 2% 

of exterior painting events. To calculate the necessary amount of disposable reinforced plastic sheeting, it 

was assumed that the workers would hang the sheeting not on the perimeter of the house but on the 

perimeter of the laid polyethylene sheeting. Furthermore, it is assumed that for those jobs using vertical 

containment, 50% of the events in residential units will not need scaffolding because they will use plastic 

at the fence line or attached to the building, and that 50% of those events that do need scaffolding for 

vertical containment are already using it for other reasons, and only incur incremental costs related to 

plastic sheeting. Therefore only 25% of the residential units that undertake vertical containment will incur 

incremental costs for scaffolding. 

 

22 The analysis only considered one and four wall exterior events to capture the range of containment that might be required for 

exterior painting events. Two or three wall events are also possible and would result in containment costs between those 

estimated for the one and four wall events. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-50 

Table 4-36: Total and Incremental Costs of Vertical Containment Events Involving One and Four Walls in 

Residential Housing Units, by Type of Housing and Number of Walls 

Single Family Owner Occupied Multi Family Owner Occupied 

Cost Type 1 Wall Event 4 Wall Event 1 Wall Event 4 Wall Event 

Cost 

Per 

Sq. Ft # of sq. ft. Cost # of sq. ft. Cost # of sq. ft. Cost # of sq. ft. Cost 

Scaffolding, steel tubular, 

regular, labor only to erect 

and dismantle, bldg ext, 

wall face, 6'-4"x5' framesa 

$1.82 1088.7 $495.4 3629.1 $1,651.2 2338.1 $1,063.8 7793.7 $3,546.2 

Scaffolding, steel tubular, 

regular for complete system 

for face of walls, 6'-4"x5' 

framesa 

$0.38 1088.7 $5.1 3629.1 $68.0 2338.1 $11.0 7793.7 $146.1 

Disposable reinforced 

plastic sheetb $.23d 1088.7 $250.4 5921.2 $1,361.9 2338.1 $537.8 10627.8 $2,444.4

Plastic tapec $0.02 18.1 $0.4 79.6 $1.6 39.0 $0.8 153.5 $3.1

Roll down polyethylene 

sheeting $0.01 1088.7 $11.2 5921.2 $61.0 2338.1 $24.1 10627.8 $109.6

Total $762.5 $3,143.8 $1,637.5 $6,249.3

Average (2% of Total) e $15.25 $62.88 $32.75 $124.79

Sources: EPA calculations using RS Means 2005 

a. The scaffolding costs take into account the assumption that only 25% of residential housing units with vertical containment will need 

incur incremental costs for scaffolding. It is assumed that the scaffolding is needed for one day per wall. 

b. Based on a web search, which showed that reinforced plastic sheeting costs $.07 per square foot. 

c. Based on a web search, which showed that duct tape costs $0.02 per square foot and 6 mil. polyethylene sheeting costs $0.06 per 

square foot. 

d. This includes both material and labor costs. 

e. The average presented is the average across all exterior painting jobs, including the 98% of exterior painting jobs where vertical 

containment is not assumed to be used. 

Table 4-36 shows that the costs range in value from just over $760 for a one wall event in a single-family 

renter occupied unit, to just under $6,250 for a four wall event in a multi-family housing unit. On average, 

59% of the total cost is due to the labor involved with erecting and dismantling the scaffolding. 

4.3.7 Baseline Work Practices 

Some of the containment and cleaning practice standards specified by EPA under the rule are currently in 

use by certain renovation contractors. The costs of work practices already in use are not incremental costs 

of the rule and are subtracted out of the cost estimates. In order to determine how often the required work 

practices are used in the absence of regulation, a telephone questionnaire was administered to 9 

contractors in 2007 to collect information on baseline industry practices. A series of questions were 

asked to determine if the listed work practices were currently in use and if they were, the frequency with 

which they occur. 

The questionnaire’s objective was to collect responses to two sets of questions. One set of questions dealt 

with current interior RRP work practices. The other dealt with exterior work practices. The list of 

contractors to contact was generated from Salesgenie.com, an online service that contains contact 

information for over 14 million U.S. businesses. The service permitted companies to be selected based on 

their SIC Codes. The universe of potential respondents was generated by randomly selecting businesses 

with the following SIC Codes: 172101 (Painting Contractors), 1521 (General Contractors - Single-Family 

Houses), and 1522 (General Contractors - Residential Buildings Other Than Single-Family). The 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-51 

responding companies were comprised of four painting firms and five general contracting firms. All nine 

of the painting and general contracting firms answered both the interior and exterior surveys. The 

instrument used to administer the questionnaire is presented below (Figure 4-1 and Figure 4-2). 

Figure 4-1: Questions Regarding Work Practices – Interior RRP

Question # Practice Percent of 

Time Used 

1  How often do you post signs warning residents to remain outside the work area? 

2  While the work is being performed, how often do you keep all windows and 

doors within the work area closed, or covered with sheeting? 

3  How often do you cover the floor within the work area with taped down 

sheeting? 

4 If > 0%, When you cover the floor with sheeting, do you dispose of the 

sheeting afterwards or do you reuse the sheeting for other jobs? 

5 If > 0%, When you cover the floor with disposable plastic sheeting how 

often do you, your crew or your subcontractors mist the sheeting, fold it 

dirty side inward, and tape it shut to seal or seal in heavy duty plastic 

bags before removing from the work area? 

6  To prevent tracking dust outside the work area, how often do you place a tackpad outside the work area to catch dust on your shoes? 

7  To prevent tracking dust outside the work area, how often do you wear 

disposable shoe covers? 

8  To prevent tracking dust outside the work area, how often do you vacuum your 

clothes, tools, and other items each time you leave the work area? 

9  After completing the job, how often do you vacuum any surfaces in the work area 

10 If >0%, How often was a HEPA vacuum used for vacuuming floors? 

11 If >0%, How often do you vacuum the walls? 

12  After completing the job, how often do you wipe all smooth surfaces with a damp 

cloth? 

13  After completing a job where the floor is not carpeted, how often do you wet 

mop? 

14 If >0%, How often do you use a two-bucket mopping system? 

(Two-bucket mopping means using one bucket and mop with wash 

water and another bucket and mop with rinse water) 

15  After completing a job where the floor is not carpeted, how often do you sweep 

with an electrostatic cloth sweeper (for example a Swiffer®)? 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-52 

Figure 4-2: Questions Regarding Work Practices – Exterior Painting

Practice Percent of 

Time 

Practice 

Used 

(1) How often do you post signs warning residents to remain outside the work area? 

(2) While the work is being performed, how often do you keep all windows and doors 

within 20 feet of the work area closed, or covered with sheeting? 

(3) How often do you cover the ground with sheeting in order to collect falling paint 

debris? 

Table 4-37 presents the individual results of the surveys as well as overall statistics for across the surveys. 

The data are broken down by firm type (painting or general contracting), and survey type (interior or 

exterior questions). 

Table 4-37: Summary of Baseline Work Practice Survey Results 

 Painting Firms General Contractors Descriptive Statistics 

 P1 P2 P3 P4 G1 G2 G3 G4 G5 Min Max Average 

1 0% 5% 100% 0% 100% 100% 0% 0% 0% 0% 100% 34%

2 80% 100% 75% 0% 100% 75% 100% 100% 50% 0% 100% 76%

3 100% 100% 100% 100% 16% 100% 100% 25% 50% 16% 100% 77%

4 Reuse Reuse Reuse Reuse Dispose Dispose Reuse - Dispose - 

5 100% - 100% 100% 16% 100% 0% 0% 100% 0% 100% 77%

6 16% 0% 45% 0% 0% 100% 100% 0% 0% 0% 100% 29%

7 0% 0% 0% 0% 0% 25% 100% 50% 0% 0% 100% 19%

8 0% 0% 0% 0% 50% 50% 100% 50% 10% 0% 100% 29%

9 100% 100% 25% 75% 100% 100% 100% 75% 50% 25% 100% 81%

10 0% 0% 0% 100% ? 100% 100% 0% 0% 0% 100% 38%

11 0% 0% 0% 0% 100% 100% 0% 75% 0% 0% 100% 31%

12 100% 100% 15% 50% 100% 100% 100% 75% 90% 15% 100% 81%

13 100% 50% 10% 0% 16% 100% 0% 75% 100% 0% 100% 50%

14 0% 100% 100% 0% 0% 100% 0% 16% 0% 0% 100% 35%

Interior 

15 0% 60% 0% 0% 16% 0% 0% 0% 0% 0% 60% 8%

1 0% 5% 100% 10% 100% 100% 0% 0% 0% 0% 100% 35%

Exterior 2 100% 100% 75% 100% 100% 100% 100% 75% 100% 75% 100% 94%

3 0% 100% 100% 0% 100% 100% 100% 100% 0% 0% 100% 67%

Notes: When respondents gave a range of values for the percent of time they used a certain work practice, the midpoint of 

the range was used in calculating the average. When the respondent was unable to give a response, a question mark is 

presented and the value is excluded from the calculation. 

Table 4-38 describes how the incremental cost adjustment is estimated to account for the use of required 

work practices in the baseline. These calculations are based on the questionnaire responses and adjusted 

to account for the assumption in this analysis that there will be 75 percent compliance with the rule. For 

example, based on the average questionnaire response, signs are posted 34 percent of the time. Since it is 

assumed that signs will be posted 75 percent of the time after the rule, 45 percent (45% = 34%/75%) of 

the post-rule sign-posting costs are already incurred in the baseline. Thus, since it is estimated that 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-53 

posting a sign costs $0.11 per-event, the incremental impact of the rule’s sign posting requirement is 

$0.07 ($0.11 * (1-45%)) after adjusting for baseline sign posting 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-54 

Table 4-38: Description of Calculations for Baseline Work Practice Factors 

 

Work Practice Question 

Number(s) Description of Calculation Unadjusted 

Percentage

Complianceadjusted 

Percentagea 

Sign 1 Simple average of responses 34% 45%

Floors: Cover surfaces with 

polyethylene sheeting (labor) 3 Simple average of responses 77% 100%

Floors: Cover surfaces with 

polyethylene sheeting 

(materials) 

3,4 

An average was calculated; those who 

stated that they reused the sheeting were 

coded as zeroes; the values given in 

question three were used for those who 

disposed of the sheeting. 21% 28%

Walls: Cover surfaces with 

polyethylene sheeting 2 Simple average of responses 76% 100%

Tack pad 6 Simple average of responses 29% 39%

Pair of disposable shoe covers 7 Simple average of responses 19% 26%

Roll down polyethylene 

sheeting 3,5 Product of 3 and 5 69% 92%

Bag polyethylene sheeting 3,5 0% if Reuse, Product of 3 and 5 if Dispose. 19% 25%

HEPA vacuum for work area 

(the actual vacuum) 

10 

An average was calculated; those who 

responded that they used a HEPA vacuum 

were coded a one, and those who stated that 

they didn't were coded a zero. 38% 50%

HEPA vacuum use 10,11 

An average of the responses to questions 10 

and 11. 34% 45%

vacuum use (floors) 9 Simple average of responses 81% 100%

vacuum use (walls) 11 Simple average of responses 31% 41%

HEPA vacuum clothes 8 Simple average of responses 29% 39%

Wet wipe, flat surfaces 12 Simple average of responses 81% 100%

Wet wipe, flat surfaces 

(verification) 

Assume zero, this is the extra verification 

cleaning. 0% 0%

Electrostatic cloth sweeper 

15 

An average was calculated; those who 

responded that they used an electorstatic 

cloth sweeper were coded as ones; those 

who responded that they didn't were coded 

as zeroes. 22% 30%

Disposable wet cloth 

Assume zero, this is the cleaning 

verification. 0% 0%

Interior 

Disposable dry cloth 

Assume zero, this is the cleaning 

verification. 0% 0%

Sign 1 Simple average of responses 35% 47%

Ground: Cover surfaces with 

polyethylene sheeting, each 

layer, 6 mil, incl. glue & tape 3 Simple average of responses 67% 89%

Doors: Cover surfaces with 

polyethylene sheeting, each 

layer, 6 mil, incl. glue & tape 2 Simple average of responses 94% 100%

Exterior 

Roll down polyethylene 

sheetinge

 3, interior 5 Product of 3 and interior 5 40% 53%

a. The compliance-adjusted work practice factor inflates the unadjusted value by incorporating an assumed 75% non-compliance 

rate and cannot be greater than 100%. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-55 

4.3.8 Summary of Incremental Work Practice Costs Per Event in Target Housing 

Table 4-39 summarizes the incremental work practice costs associated with containment, cleaning, and 

verification in target housing. The methodology behind these estimates is described in the preceding 

sections and more detailed data is presented in Appendix 4A of the Economic Analysis of the 2008 LRRP 

rule (EPA 2008). Table 4-40 shows the average expected costs per-compliant event, accounting for the 

relative number of small and large events. These are average expected costs so some individual events 

will be above the average and some will be below it. 

Table 4-39: Average Incremental Work Practice Costs in Residences 

(Adjusted for Baseline Work Practices, Assumes 75 Percent Compliance Rate) 

Single-Family Owner-Occupied Multi-Family Owner-Occupied 

Interior Cont. Clean. Verif. Tot. 

Bath $11 $7 $4 $22 $10 $7 $4 $22 

Kit $21 $15 $14 $49 $14 $10 $7 $30 

Ad-S $5 $9 $2 $16 $5 $9 $2 $16 

Ad-M $21 $13 $7 $41 $14 $9 $4 $26 

Ad-L $26 $15 $10 $51 $19 $12 $6 $36 

Wl-S $5 $9 $2 $16 $5 $9 $2 $16 

Wl-M $21 $13 $7 $41 $14 $9 $4 $26 

Wl-L $26 $15 $10 $51 $19 $12 $6 $36 

WD-S $6 $10 $3 $19 $5 $9 $2 $15 

WD-M $21 $13 $7 $41 $14 $9 $4 $26 

WD-L $66 $29 $29 $124 $38 $19 $15 $72 

IP-S $11 $11 $5 $27 $8 $9 $4 $22 

IP-M $33 $19 $14 $67 $22 $14 $8 $46 

IP-L $51 $25 $23 $101 $31 $18 $13 $63 

Exterior Cont. Proh. V.C. Tot. Cont. Proh. V.C. Tot. 

EP $16 $2 $39 $57 $25 $2 $79 $106 

C Ext $10 - $10 $10 $10 

W Ext $25 $25 $41 $41 

Notes: The sum of the containment, cleaning and verification costs may not equal the total per-event cost due 

to rounding. The costs associated with using prohibited practice alternatives are only included in the Total 

Per-Event Cost column. The prohibited practice alternatives costs are $1.06 for the interior painting events 

and $1.61 for exterior painting events. 

Abbreviations: 

Cont. = Per Event Containment Costs (does not include vertical containment); Clean = Per Event Cleaning 

Costs; Verif. = Per Event Verification Costs; Tot. = Total Per-Event Costs, including costs for prohibited 

practice alternatives and vertical containment; Proh. = prohibited practice costs; V.C. = vertical containment 

costs; Kit = Kitchen Event; Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; 

Ad-L = Large Addition; Wl-S = Small Wall-Disturbing Event; Wl-M = Medium Wall-Disturbing Event; WlL = Large Wall-Disturbing Event; WD-S = Small Window or Door Replacement Event; WD-M = Medium 

Window or Door Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small 

Interior Painting; IP-M = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; 

C Ext = Contained Exterior Event; W Ext = Whole Exterior Event. 

4.3.9 Total Work Practice Costs Resulting from Removing Opt-Out Provisions 

Table 4-40 through Table 4-43 present the total work practice costs associated with target housing 

regulated under the revised rule (i.e., owner occupied housing that may no longer opt out of the LRRP 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-56 

program requirements) for the first and second years after the revisions rule goes into effect. For 

individual options the costs vary between the first and the second year for two primary reasons: (1) for 

some options, the scope of the regulated universe expands between the first and the second year, and (2) 

the improved test kits are assumed to become available by January 2011, which is the second year of the 

rule for Options A through C. Increasing the scope of the regulated universe tends to increase costs and 

the availability of the improved test kits tends to decrease the costs (since improved test kits will lower 

the number of instances where LSWP costs are incurred when lead-based paint is not disturbed). After 

the second year, estimated work practice costs decline proportionally to the assumed decline in the stock 

of regulated buildings (a 0.41 percent decline per year). Note that the removal of the opt-out provision 

would not begin until the second year under Option C. 

Table 4-40: Option A: First Year Target Housing Work Practice Costs 

Events (thousands) Unit Costs Total Costs (thousands) 

All LSWP LSWP LSWP 

SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Total 

Costs 

Bath 269 179 13 $10 $22 $22 $2,695 $3,930 $284 $6,909 

Kit 277 186 16 $10 $49 $30 $2,774 $9,098 $488 $12,360 

Ad-S 55 42 1 $10 $16 $16 $548 $677 $8 $1,234 

Ad-M 21 16 0 $10 $41 $26 $207 $669 $0 $877 

Ad-L 84 65 1 $10 $51 $36 $844 $3,334 $32 $4,210 

Wl-S 885 571 31 $10 $16 $16 $8,853 $9,140 $496 $18,489 

Wl-M 51 34 2 $10 $41 $26 $506 $1,392 $63 $1,961 

Wl-L 0 0 0 $10 $51 $36 $0 $0 $0 $0 

WD-S 228 168 6 $10 $19 $15 $2,282 $3,187 $84 $5,553 

WD-M 267 195 8 $10 $41 $26 $2,666 $8,011 $215 $10,892 

WD-L 358 261 13 $10 $124 $72 $3,579 $32,424 $972 $36,975 

IP-S 612 441 30 $10 $27 $22 $6,117 $11,906 $666 $18,690 

IP-M 345 248 18 $10 $67 $46 $3,453 $16,603 $820 $20,876 

IP-L 292 209 16 $10 $101 $63 $2,921 $21,112 $979 $25,013 

EP 2,828 2,029 110 $10 $57 $106 $28,281 $115,670 $11,674 $155,625 

C Ext 347 249 0 $10 $10 $10 $3,470 $2,487 $0 $5,956 

W Ext 352 256 12 $10 $25 $41 $3,518 $6,394 $484 $10,396 

Total 7,272 5,150 277 $72,716 $246,034 $17,265 $336,014 

See Table 4-1 for options descriptions. 

Abbreviations: SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen Event; 

Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; Wl-S = Small Wall-Disturbing 

Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing Event; WD-S = Small Window or Door Replacement 

Event; WD-M = Medium Window or Door Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small 

Interior Painting; IP-M = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-57 

Table 4-41: Option B: First Year Target Housing Work Practice Costs 

Events (thousands) Unit Costs Total Costs (thousands) 

All LSWP LSWP LSWP 

SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Total 

Costs 

Bath 135 89 6 $10 $22 $22 $1,347 $1,965 $142 $3,454 

Kit 139 93 8 $10 $49 $30 $1,387 $4,549 $244 $6,180 

Ad-S 27 21 0 $10 $16 $16 $274 $339 $4 $617 

Ad-M 10 8 0 $10 $41 $26 $104 $335 $0 $438 

Ad-L 42 33 0 $10 $51 $36 $422 $1,667 $16 $2,105 

Wl-S 443 286 16 $10 $16 $16 $4,426 $4,570 $248 $9,244 

Wl-M 25 17 1 $10 $41 $26 $253 $696 $31 $980 

Wl-L 0 0 0 $10 $51 $36 $0 $0 $0 $0 

WD-S 114 84 3 $10 $19 $15 $1,141 $1,594 $42 $2,777 

WD-M 133 98 4 $10 $41 $26 $1,333 $4,005 $107 $5,446 

WD-L 179 131 7 $10 $124 $72 $1,790 $16,212 $486 $18,488 

IP-S 306 220 15 $10 $27 $22 $3,059 $5,953 $333 $9,345 

IP-M 173 124 9 $10 $67 $46 $1,727 $8,301 $410 $10,438 

IP-L 146 105 8 $10 $101 $63 $1,461 $10,556 $490 $12,506 

EP 1,414 1,015 55 $10 $57 $106 $14,141 $57,835 $5,837 $77,812 

C Ext 173 124 0 $10 $10 $10 $1,735 $1,243 $0 $2,978 

W Ext 176 128 6 $10 $25 $41 $1,759 $3,197 $242 $5,198 

Total 3,636 2,575 138 $36,358 $123,017 $8,632 $168,007 

See Table 4-1 for options descriptions. 

Abbreviations: SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen Event; 

Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; Wl-S = Small Wall-Disturbing 

Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing Event; WD-S = Small Window or Door Replacement 

Event; WD-M = Medium Window or Door Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small 

Interior Painting; IP-M = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-58 

Table 4-42: Option D: First Year Target Housing Work Practice Costs 

Events (thousands) Unit Costs Total Costs (thousands) 

All LSWP LSWP LSWP 

SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Total 

Costs 

Bath 119 87 6 $10 $22 $22 $1,191 $1,903 $133 $3,227 

Kit 124 93 7 $10 $49 $30 $1,241 $4,556 $216 $6,012 

Ad-S 25 22 1 $10 $16 $16 $252 $346 $8 $606 

Ad-M 11 10 0 $10 $41 $26 $110 $390 $0 $500 

Ad-L 41 36 0 $10 $51 $36 $414 $1,842 $0 $2,256 

Wl-S 436 296 16 $10 $16 $16 $4,356 $4,742 $251 $9,349 

Wl-M 31 21 2 $10 $41 $26 $308 $875 $56 $1,240 

Wl-L 0 0 0 $10 $51 $36 $0 $0 $0 $0 

WD-S 113 92 3 $10 $19 $15 $1,128 $1,745 $52 $2,924 

WD-M 137 111 5 $10 $41 $26 $1,371 $4,539 $138 $6,049 

WD-L 190 152 9 $10 $124 $72 $1,898 $18,821 $666 $21,386 

IP-S 379 294 20 $10 $27 $22 $3,786 $7,926 $437 $12,149 

IP-M 212 164 11 $10 $67 $46 $2,121 $10,995 $521 $13,637 

IP-L 180 138 10 $10 $101 $63 $1,795 $13,982 $621 $16,399 

EP 1,457 1,161 60 $10 $57 $106 $14,568 $66,152 $6,343 $87,062 

C Ext 178 137 0 $10 $10 $10 $1,780 $1,366 $0 $3,145 

W Ext 189 150 9 $10 $25 $41 $1,886 $3,740 $349 $5,975 

Total 3,821 2,962 159 $38,205 $143,921 $9,790 $191,916 

See Table 4-1 for options descriptions. 

Abbreviations: SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen Event; 

Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; Wl-S = Small Wall-Disturbing 

Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing Event; WD-S = Small Window or Door Replacement 

Event; WD-M = Medium Window or Door Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small 

Interior Painting; IP-M = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-59 

Table 4-43: Options A, B, C, and D: Second Year Target Housing Work Practice Costs 

Events (thousands) Unit Costs Total Costs (thousands) 

All LSWP LSWP LSWP 

SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Spot 

Test SF-O Multi-O 

Total 

Costs 

Bath 268 78 6 $10 $22 $22 $2,684 $1,726 $132 $4,541 

Kit 276 92 8 $10 $49 $30 $2,763 $4,487 $237 $7,487 

Ad-S 55 27 0 $10 $16 $16 $546 $431 $7 $985 

Ad-M 21 11 0 $10 $41 $26 $207 $438 $0 $644 

Ad-L 84 43 0 $10 $51 $36 $841 $2,174 $13 $3,028 

Wl-S 882 195 11 $10 $16 $16 $8,816 $3,115 $181 $12,112 

Wl-M 50 16 1 $10 $41 $26 $504 $639 $37 $1,179 

Wl-L 0 0 0 $10 $51 $36 $0 $0 $0 $0 

WD-S 227 97 4 $10 $19 $15 $2,272 $1,852 $54 $4,178 

WD-M 266 116 5 $10 $41 $26 $2,655 $4,737 $141 $7,533 

WD-L 356 157 9 $10 $124 $72 $3,565 $19,513 $662 $23,740 

IP-S 609 269 19 $10 $27 $22 $6,092 $7,260 $423 $13,775 

IP-M 344 150 11 $10 $67 $46 $3,439 $10,069 $519 $14,027 

IP-L 291 127 10 $10 $101 $63 $2,909 $12,787 $611 $16,308 

EP 2,817 1,165 63 $10 $57 $106 $28,165 $66,406 $6,668 $101,238 

C Ext 346 114 0 $10 $10 $10 $3,455 $1,141 $0 $4,596 

W Ext 350 149 8 $10 $25 $41 $3,504 $3,716 $321 $7,540 

Total 7,242 2,804 157 $72,417 $140,490 $10,004 $222,912 

See Table 4-1 for options descriptions. 

Abbreviations: SF-O = Single-Family Owner-Occupied Unit; Multi-O = Multi-Family Owner-Occupied Unit; Kit = Kitchen Event; 

Bath = Bathroom Event; Ad-S = Small Addition; Ad-M = Medium Addition; Ad-L = Large Addition; Wl-S = Small Wall-Disturbing 

Event; Wl-M = Medium Wall-Disturbing Event; Wl-L = Large Wall-Disturbing Event; WD-S = Small Window or Door Replacement 

Event; WD-M = Medium Window or Door Replacement Event; WD-L = Large Window or Door Replacement Event; IP-S = Small 

Interior Painting; IP-M = Medium Interior Painting; IP-L = Large Interior Painting; EP = Exterior Painting; C Ext = Contained 

Exterior Event; W Ext = Whole Exterior Event. 

4.4 Estimating the Number of Firms and Personnel Obtaining Training and 

Certification to Meet the Demand for Lead-Safe RRP Services 

The rule requires all entities that conduct RRP activities for compensation in regulated structures to 

become certified under the rule. This analysis refers to these certified entities as firms. The regulations 

also require firms to ensure that all persons performing renovation activities on behalf of the firm are 

either certified renovators that have received formal training or have received informal training from a 

certified renovator. Hereafter, “renovator” refers to an individual who has successfully completed a 

renovator course accredited by EPA or an EPA-authorized State or Tribal program, and “worker” refers to 

an individual who has received on-the-job training in the work practices from a certified renovator. It is 

expected that two types of construction businesses will perform regulated RRP work – businesses with 

employees and non-employer, or self-employed, contractors. In addition, rental companies are likely to 

perform some of the RRP work on the properties they manage rather than hire an outside contractor. 

Likewise, schools and daycare centers are likely to perform some or all of their RRP work with their own 

staff. The regulation requires that a certified renovator be physically present when warning signs are 

being posted, the work site is being contained, and when the post-renovation cleaning is being done. The 

certified renovator must be available, either on-site or by telephone, at all other times when regulated 

renovation activities are being performed. In addition, only a certified renovator may perform the 

cleaning verification step required by the rule. As such, each certified firm with employees will need to 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-60 

have at least one certified renovator on staff. All self-employed contractors performing regulated RRP 

work will need to be trained as renovators and upon satisfying the training requirements, will need to be 

certified as firms. 

4.4.1 Residential Activities: Estimating the Number of Firms and Personnel Obtaining 

Training and Certification to Meet the Demand for Lead-Safe RRP Services 

This section describes how the analysis estimates the number of (1) firms obtaining certification, (2) 

renovators obtaining formal training, and (3) workers obtaining informal on-the-job training in order to 

meet the demand for lead-safe RRP services in residential settings. The general approach was to obtain 

Census estimates of the total number of establishments and employees in affected industries and adjust 

these estimates to account for the fact that not all work performed in these industries is affected by the 

rule. Note that Census data are only available for establishments and not firms, and these data are used as 

the basis for estimating the number of firms that will obtain certification. The total numbers of 

establishments and employees are adjusted in two ways: (1) according to the share of their revenues that 

come from residential work, and (2) to reflect the share of the housing stock that is affected by the LRRP 

revisions rule. 23 These adjustments imply that there will be some degree of specialization in regulated 

work. They do not, however, imply full specialization in regulated work. In addition, the adjustments do 

not fully reflect the share of RRP work that does not disturb any painted surfaces, or the disproportionate 

amount of residential work that is related to new construction. Adjusting for these two factors would 

result in a lower estimate of the number of affected firms and personnel. 

4.4.1.1 Estimating the Stock of Certified Firms Necessary to Meet Demand for Residential RRP 

The numbers of firms seeking certification under the rule are estimated in three segments: (1) residential 

construction establishments with employees, (2) non-employer residential construction establishments 

(i.e., self-employed contractors), and (3) Residential Property Managers and Lessors. Residential 

Property Managers and Lessors would not be affected by the removal of the opt-out provision (because 

rental units were not eligible for the opt-out provision under the 2008 LRRP rule) but they would be 

affected by the additional recordkeeping checklist requirement. 

 

23 With respect to the second adjustment, it implies that by expanding the scope of the LRRP program (by removing the opt-out 

provisions), the LRRP revisions will proportionately increase the number of certified firms and trained renovators and 

workers, and thus the total training and certification costs for residential contractors. To the extent that firms are less 

specialized than assumed here, more renovators and firms than originally predicted may become trained and renovated as a 

result of the 2008 LRRP rule. In that case, the incremental training and certification cost of the LRRP revisions rule may be 

less than this analysis estimates. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-61 

Estimating the Number of Residential Construction Establishments with Employees 

The LRRP revisions rule requires firms that conduct RRP activities in housing previously eligible for the 

opt-out provision to become certified under the LRRP program rule. Because the majority of firms 

involved in construction work are likely to be small, single establishment businesses, this analysis 

assumes that firms will seek certification at the establishment level. As demonstrated in Chapter 2, the 

eleven potentially affected construction sectors (Residential Remodelers and ten specialty contractor 

sectors: Plumbing and HVAC, Tile and Terrazzo, Painting and Wall Covering, Finish Carpentry, Glass 

and Glazing, Drywall and Insulation, Siding, Other Building Equipment, Other Building Finishing, and 

Electrical contractors) include over 357,000 establishments with employees. Because these 

establishments are involved in a variety of construction and non-construction activities, in all likelihood 

only some of them will seek certification under the LRRP program rule. For example, only 54 percent of 

Residential Remodeling establishments specialize in residential work (i.e. derive at least 51 percent of 

their revenues from residential work). In addition, only 56 percent of the revenues of Residential 

Remodelers come from residential RRP activities. Establishments may choose to incur the cost of 

certification and of training their employees only if they derive a substantial portion of their revenues 

from residential Renovation, Repair, and Painting in housing affected by the regulations. Businesses that 

derive the majority of their revenues from new construction or from RRP activities in non-target housing 

may decide not to invest in certification. 

Unfortunately, the U.S. Economic Census does not provide data on the number of establishments that 

specialize in residential RRP. The number of establishments estimated to specialize in residential RRP 

was estimated by multiplying the total number of establishments by each industry sector’s ratio of RRP 

residential revenues to total construction revenues (See Table 4-44). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-62 

Estimating the Number of Non-Employer Residential Construction Firms 

The number of self-employed (non-employer) firms in each of the eleven affected industry sectors is 

presented in Table 4-45. It was assumed that these firms will specialize in residential work with the same 

frequency as employer establishments in the same industry. In other words, to estimate the number of 

self-employed contractors specializing in residential work, the estimated number of non-employer 

establishments in each industry was multiplied by that industry’s ratio of residential RRP revenues to total 

construction revenues (see Table 4-45). 

Table 4-44: Employer Construction Establishments, Total and Number Specializing in 

Residential RRP 

NAICS Description 

Number of 

Employer 

Estab. in 

Industry 

Residential 

Adjustment Factor: 

Residential Revenues 

as a Percent of Total 

Value of Construction

Number of Employer 

Estab. in Industry, 

Adjusted by Residential 

Adjustment Factor 

236118 Residential remodelers 82,747 56% 46,338 

238170 Siding contractors 6,632 50% 3,316 

238350 Finish carpentry 

contractors 35,087 50% 17,544 

238290 Other building equipment 

contractors 6,087 33% 2,009 

238390 Other building finishing 

contractors 3,729 30% 1,119 

238340 Tile and terrazzo 

contractors 8,950 28% 2,506 

238220 Plumbing and HVAC 

contractors 87,501 27% 23,625 

238150 Glass and glazing 

contractors 5,294 26% 1,376 

238320 Painting and wall covering 

contractors 38,943 25% 9,736 

238210 Electrical contractors 62,586 23% 14,395 

238310 Drywall and insulation 

contractors 19,598 21% 4,116 

Total 357,154 35% 126,080 

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 2005; 

EPA Calculations 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-63 

Estimating the Number of Property Managers and Lessors that Perform Residential RRP 

Instead of hiring an outside contractor for RRP work on properties under their management, Residential 

Property Managers (NAICS 531311) and Lessors of Residential Buildings and Dwellings (NAICS 

531110) may choose to do the renovation work with their own staff. Since all firms performing RRP 

work in regulated housing must be certified, establishments that choose to perform their own RRP work 

will seek certifications under the regulations. The estimated numbers of these establishments are 

presented in Table 4-46. Note that rental units and therefore Residential Property Managers and Lessors 

of Residential Buildings and Dwellings are not affected by the opt-out provision, but would be subject to 

the additional recordkeeping checklist requirement. 

The U.S. Economic Census does not present any data on the amount of RRP work performed by 

Residential Property Managers on their own properties. Due to this lack of data, this analysis assumes 

that all Residential Property Management and Lessors of Residential Buildings and Dwellings 

establishments that have paid employees and manage housing regulated by the rule will seek certification 

and train their employees as certified renovators or workers. Although this assumption is likely to 

overestimate the number of establishments and personnel seeking certification and training, it is not 

unreasonable since performing minor renovation or maintenance work in-house is often less expensive 

than hiring an outside contractor. The vast majority of establishments that manage regulated housing may 

Table 4-45: Non-Employer Construction Establishments, Total and Number Specializing in 

Residential RRP 

NAICS Description 

Number of 

Non-Employer 

Estab. in 

Industry 

Residential 

Adjustment Factor: 

Residential Revenues 

as a Percent of Total 

Value of Construction

Number of NonEmployer Estab. in 

Industry, Adjusted by 

Residential Adjustment 

Factor 

236118 Residential remodelers 194,182 56% 108,742 

238170 Siding contractors 15,939 50% 7,970 

238350 Finish carpentry 

contractors 185,118 50% 92,559 

238290 Other building equipment 

contractors 9,710 33% 3,204 

238390 Other building finishing 

contractors 19,674 30% 5,902 

238340 Tile and terrazzo 

contractors 47,220 28% 13,222 

238220 Plumbing and HVAC 

contractors 110,183 27% 29,749 

238150 Glass and glazing 

contractors 12,723 26% 3,308 

238320 Painting and wall covering 

contractors 205,462 25% 51,366 

238210 Electrical contractors 102,219 23% 23,510 

238310 Drywall and insulation 

contractors 103,398 21% 21,714 

Total 1,005,828 36% 361,246 

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 2005; 

EPA Calculations 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-64 

thus find certification worthwhile. Note that only establishments with employees are expected to seek 

certification; non-employers are unlikely to have the time or manpower to perform renovations 

themselves and are more likely to hire an outside contractor for work that disturbs more than 6 square feet 

per room of a painted surface for interior renovations or 20 square feet for exterior renovations. 

Table 4-46: Property Managers and Lessor Establishments Performing 

RRP 

NAICS Description Number of Establishment 

in Industry 

531311 Residential Property Managers 26,223 

531110 Lessors or Residential Buildings and Dwellings 61,787 

Total 88,010 

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business 

Administration 2005; EPA Calculations 

Summary of the Additional Number of Establishments Needed to Perform Residential RRP After 

the Removal of the Opt-Out Provision 

Table 4-47 presents a summary of the estimated number of establishments specializing in residential 

RRP. The estimated number of residential RRP establishments was further reduced to account for the fact 

that only some of these entities will perform RRP work in target housing. The latter adjustment was 

made based on data obtained from the American Housing Survey that 65 percent of U.S. households 

reside in target housing. 

Table 4-47: Total Number of Establishments Performing Residential RRP in Target 

Housing 

Type of Establishment 

Number Performing 

Residential RRP 

Estimated Number of 

Establishments Performing 

Residential RRP in Pre-1978 

Housing 

Non-Employer Construction Establishments 361,246 234,810

Employer Construction Establishments 126,080 81,952

Property Manager and Lessor Establishments 88,010 57,207

Total 575,336 373,968

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 

2005; EPA Calculations 

The estimate that 373,968 firms perform residential RRP in pre-1978 housing represents the total stock of 

firms that would be required to meet the potential demand for RRP using LSWP in all target housing. To 

estimate the stock of certified firms under the various options, 373,968 is adjusted by 75 percent to 

account for the 75 percent rate of compliance assumed in this analysis. In addition, the complianceadjusted estimate is adjusted to reflect the scope of each regulatory option, based on the percentage of all 

target housing RRP events regulated under each option. The removal of the opt-out provision from the 

final LRRP rule would affect entities performing RRP work in owner-occupied target housing units that 

are not COFs and where no child under the age of six or a pregnant woman resides. The estimated stock 

of firms needed to meet the demand for RRP under the 2008 LRRP rule as well as the increase in the 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-65 

stock of certified firms that would be needed after the removal of the opt-out provision is presented in 

Table 4-48. 

Table 4-48: Estimated Stock of Firms Certified to Perform RRP Under the 2008 

LLRP Rule and the Opt-Out Revision, by Option and Year 

2008 LRRP Additional Number Estimated due to LRRP Revisions 

Rule Option A Option B Option C Option D 

Year 1 211,721 111,426 55,713 0 58,544 

Year 2 210,853 110,969 110,969 110,969 110,969 

Year 3 209,989 110,514 110,514 110,514 110,514 

See Table 4-1 for options descriptions. 

Source: EPA Calculations. 

Estimating the Stock of Trained Construction Workers Necessary to Meet Demand for Residential 

RRP 

The rule requires certified firms to ensure that renovation activities covered by the rule are performed by 

certified renovators, or by renovation workers who receive on-the-job training in the work practices from 

a certified renovator. The regulation requires that a certified renovator be physically present when 

warning signs are being posted, the work site is being contained, and during post-renovation cleaning. 

The certified renovator must be available, either on-site or by telephone, at all other times when regulated 

renovation activities are being performed. In addition, only a certified renovator may perform the 

cleaning verification step required by the rule. As such, each certified establishment with employees will 

need to have at least one certified renovator on staff. All self-employed contractors performing regulated 

RRP work will need to be trained as renovators and upon satisfying the training requirements, will need 

to be certified as firms. 

Estimating the Number of Residential Construction Employees (excluding self-employed) 

To estimate the number of construction employees that will train to become certified renovators, this 

analysis looked at the average number of construction employees in establishments performing residential 

RRP jobs. The average employment size was calculated by dividing the number of construction 

employees seeking training by the number of establishments certified in each industry (See Table 4-49). 

This analysis also assumed that establishments will employ one certified renovator per every five 

construction employees. In other words, establishments that have one to five construction workers on 

staff will employ one renovator, establishments with more than five and fewer than 10 construction 

workers on staff will employ two renovators, and those with 10 or more construction workers on staff will 

employ three renovators. The average number of construction workers per establishment was no higher 

than 15 in any affected sector. 

To estimate the number of construction employees that would be trained as renovators, the estimated 

number of establishments seeking certification in each sector was multiplied by the expected number of 

renovators per establishment for that sector (see Table 4-49 and Table 4-50). Four of the affected sectors 

(Other Building Equipment Contractors, Other Building Finishing Contractors, Electrical Contractors and 

Drywall and Insulation Contractors) had, on average, between 10 and 15 construction employees per 

establishment and were assumed to have three renovators on staff each. The number of construction 

employees in each sector that will need to receive worker training was estimated by subtracting the 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-66 

number of people receiving renovator certification from the total number of people seeking training (see 

Table 4-50). 

The number of employee establishment personnel expected to seek training as either certified renovators 

or workers was estimated by applying the same approach used for the estimation of the number of 

establishments that will seek certification under the regulations (note: employee establishment personnel 

does not include the self-employed). It was assumed that the number of people who perform RRP work in 

each of the affected industries is proportional to the ratio of residential RRP revenues to the total 

construction revenues in that sector. In other words, it was assumed that since 28 percent of construction 

revenues in the Tile and Terrazzo contractor industry come from residential RRP, then 28 percent of the 

construction employees perform residential RRP work. The number of employees estimated to specialize 

in residential RRP was estimated by multiplying the total number of employees by each industry sector’s 

ratio of RRP residential revenues to total construction revenues (See Table 4-50). 

Table 4-49: Employer Construction Employees: Construction Workers in Supervisory Roles

NAICS Description 

Number of 

Employer 

Estab. in 

Industry 

Number of 

Construction 

Workers 

Employed by 

Employer 

Establishments 

Employees Per 

Establishment 

Estimated 

Number of 

Renovators Per 

Establishment*

236118 Residential remodelers 82,747 207,633 2.5 1 

238170 Siding contractors 6,632 30,284 4.6 1 

238350 Finish carpentry 

contractors 35,087 129,888 3.7 1 

238290 Other building equipment 

contractors 6,087 90,504 14.9 3 

238390 Other building finishing 

contractors 3,729 37,353 10.0 3 

238340 Tile and terrazzo 

contractors 8,950 44,729 5.0 1 

238220 Plumbing and HVAC 

contractors 87,501 712,452 8.1 2 

238150 Glass and glazing 

contractors 5,294 34,086 6.4 2 

238320 Painting and wall covering 

contractors 38,943 184,328 4.7 1 

238210 Electrical contractors 62,586 606,403 9.7 2 

238310 Drywall and insulation 

contractors 19,598 261,239 13.3 3 

Total 357,154 2,338,899 6.5 2 

*It is assumed that establishments with 5 or fewer employees will have one construction worker in a 

supervisory role; establishments with more than 5 and fewer than 10 employees will have two construction 

workers in supervisory roles; establishments with 10 or more employees will have three construction workers 

in supervisory roles. 

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 2005; 

EPA Calculations 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-67 

Estimating the Number of Property Managers and Lessors Employees that Perform Residential 

RRP 

Based on 2002 U.S. Census Data, establishments in the Residential Property Manager industry employ 

about eleven people on average. It was estimated that each establishment will have two certified 

renovators on staff; the remainder of the employees will be trained as workers. This estimate is based on 

the fact that Residential Property Manager establishments are involved in a variety of non-construction 

activities; it is thus unlikely that these businesses will have more than one ten-person construction crew 

on staff. Lessors of Residential Buildings and Dwellings establishments employ about five people on 

Table 4-50: Employer Construction Renovators and Workers, Total and Number Specializing in 

Residential RRP

NAICS Description 

Estimated 

Number of 

Construction 

Renovators 

Estimated 

Number of NonSupervisory 

Construction 

Workers 

Residential 

Adjustment 

Factor: 

Residential 

Revenues as a 

Percent of Total 

Value of 

Construction 

Estimated 

Number of 

Residential 

Construction 

Renovators 

Estimated 

Number of NonSupervisory 

Residential 

Construction 

Workers 

236118 Residential 

remodelers 82,747 124,886 56% 46,338 69,936 

238170 Siding contractors 6,632 23,652 50% 3,316 11,826 

238350 Finish carpentry 

contractors 35,087 94,801 50% 17,544 47,400 

238290 

Other building 

equipment 

contractors 18,261 72,243 33% 6,027 23,839 

238390 

Other building 

finishing 

contractors 11,187 26,166 30% 3,357 7,849 

238340 Tile and terrazzo 

contractors 8,950 35,779 28% 2,506 10,018 

238220 Plumbing and 

HVAC contractors 175,002 537,450 27% 47,250 145,112 

238150 Glass and glazing 

contractors 10,588 23,498 26% 2,752 6,110 

238320 

Painting and wall 

covering 

contractors 38,943 145,385 25% 9,736 36,346 

238210 Electrical 

contractors 125,172 481,231 23% 28,790 110,683 

238310 

Drywall and 

insulation 

contractors 58,794 202,445 21% 12,348 42,512 

Total 571,363 1,767,536 36% 179,964 511,631 

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 2005; EPA 

Calculations 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-68 

average, and will thus each have one certified renovator on staff. The remaining employees involved in 

RRP projects will be trained as workers. Table 4-51 presents the estimated number of employees in the 

residential property managers and lessors of residential buildings and dwellings industries seeking 

training. 

Table 4-51: Property Managers and Lessor Establishments Performing RRP 

NAICS Description 

Number of 

Establishments in 

Industry 

Number of RRP 

Work 

Renovators 

Number of RRP 

Workers (NonSupervisors) 

531311 Residential Property Managers 26,223 52,446 237,424 

531110 Lessors or Residential Buildings and Dwellings 61,787 61,787 230,618 

Total 88,010 114,233 468,042 

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 2005; EPA 

Calculations 

4.4.1.2 Estimating the Increase in the Number of Firms and Personnel Seeking Certification and 

Training Each Year After the Removal of the Opt-Out Provision 

The number of renovators and firms that seek training and certification in the first few years is estimated 

slightly differently for the option with a phase-in period (Option D) as it is for those that do not phase-in 

regulated structures in the second year (Options A and C). Further, Option B, which would implement 

the revised rule midway through the first year, is calculated similarly to an option with a phase-in period. 

The methodology employed to estimate the stock of renovators and firms required to meet the demand for 

lead-safe RRP services is described above and the results are summarized in Table 4-48. The number of 

firms and individuals seeking training and certification in any given year is estimated from the stock of 

firms and individuals necessary to meet demand for lead-safe RRP services. (Because training and 

certification are valid for five years, the annual number trained and certified each year after the first year 

is a fraction of the total stock of trained individuals and certified firms.) The differences in the number of 

renovators and firms seeking training and certification across the options are proportional to the number 

of RRP events regulated by each option.. 

Note that many of the additional firms and renovators that expected to become certified and trained 

because of the removal of the opt-out provision are likely to seek certification and training before the 

removal of the opt-out provision goes into effect. (So, for example, under Option C, it is unlikely that 

there would actually be zero firms certified or renovators trained in the first year after promulgation of the 

rule.) However, this analysis utilizes the simplifying assumption that any additional initial certification 

and training takes place over a 12 month period starting from the date of the expansion of the regulated 

universe. 

Options Without Phase-In (Options A and C) 

In the first year, it is assumed that the increase in the number of renovators and firms that seek initial 

training and certification is equal to the number that is necessary to meet the increase in demand for leadsafe RRP services in that first year. Thus, under options A and C, the number of initial trainings and 

certifications in the year the opt-out provision is removed is equal to the stock of renovators and firms 

required to meet the increase in demand for lead-safe RRP services associated with all owner-occupied 

target housing units where no child under age six or pregnant woman resides. After the first year, it is 

assumed that one-fifth of the necessary stock of individuals and firms will obtain training and certification 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-69 

each year (since refresher-training and re-certification is required every five years). In addition, the 

number of individuals trained is assumed to decline by 0.41 percent annually to account for the decline in 

the size of the pre-1978 housing stock over time, and thus the decline in demand for lead-safe renovation 

services. The entire stock of workers is assumed to receive informal training each year. 

Options With Phase-In (Option D): 

In the first year, it is assumed that the increase in the number of renovators and firms that seek initial 

training and certification is equal to the number that is necessary to meet the demand for lead-safe RRP 

services in that first year. Under Option D, the number of initial trainings and certifications in the first 

year is equal to the stock of renovators and firms required to meet the increase in demand for lead-safe 

RRP services associated with all owner-occupied pre-1960 housing units where no child under age six or 

pregnant woman resides. In the second year, this analysis makes the simplifying assumption that one-fifth 

of the number who were trained and certified in the first year will seek initial- or re-certification (adjusted 

by 0.41 percent annually to reflect the decline in the stock of pre-1978 buildings), and that the stock of 

individuals and firms required to meet the additional demand in the newly regulated 1960 to 1978 

structures will obtain initial training and certification. In later years, it is assumed that one-fifth of the 

necessary stock of individuals and firms will obtain training and certification each year (since refreshertraining and re-certification is required every five years). The entire stock of workers is assumed to 

receive informal training each year. 

Options With Partial-Year Implementation (Option B): 

In the first year, it is assumed that the increase in the number of renovators and firms that seek initial 

training and certification is equal to the number that is necessary to meet the increased demand for leadsafe RRP services in that first year. Under Option B, the rule does not become effective until halfway 

through the first year. Thus, under Option B, the stock of renovators and firms seeking initial training and 

certification in the first year is half as large as that required to meet the increase in demand for lead-safe 

RRP services in all pre-1978 structures during a full year. In the second year, this analysis makes the 

simplifying assumption that one-fifth of the number who were trained and certified in the first year will 

seek initial- or re-certification (adjusted by 0.41 percent annually to reflect the decline in the stock of pre1978 buildings). In addition, the stock of individuals and firms required to meet the additional demand 

for a full year’s renovations (rather than the six months in the first year) will obtain initial training and 

certification. In later years, it is assumed that one-fifth of the necessary stock of individuals and firms 

will obtain training and certification each year (since refresher-training and re-certification is required 

every five years). The entire stock of workers is assumed to receive informal training each year. 

Training and Certification after the Initial Years 

As indicated above, this analysis assumes a steady annual number of firm and individual certifications 

after the second year of regulation with an annual decline of 0.41 percent. If all the individuals and firms 

needed to meet the demand for lead-safe RRP were trained and certified in the first and second years, one 

might expect a drop in the level of training and certification in the third year, followed by a spike in the 

next year. That is, one might expect a cyclical pattern of training and certification to emerge. However, 

it is difficult to predict how cyclical the training and certification demand might be or how this cyclicality 

might diminish over time. Therefore, this analysis assumes that a typical amount of training and 

certification occurs each year after the first two years. Modeling a cyclical component would add little to 

the analysis without being able to estimate the extent of any cyclicality more precisely. 

The analysis does account for certified firms and trained individuals that exit the industry each year and 

are replaced by new entrants. This analysis accounts for turnover in the regulated RRP industry by 

assuming a certain percentage of certifications each year are initial certifications. Specifically, after the 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-70 

first year, 52 percent of the renovators seeking training and certification are assumed to be seeking their 

initial certification. This percentage is based on the relative number of Abatement Supervisors applying 

for initial certifications according to the Federal Lead-Based Paint Program (FLPP) database (EPA 2005). 

Similarly, 54 percent of firms seeking certification are assumed to be seeking their initial certification 

based on the relative frequency of initial certifications observed for abatement firms in the FLPP 

database. 

Summary of Number of Individuals Trained to Perform Residential RRP using LSWP 

Table 4-52 presents a summary of the estimated number of construction renovators and workers 

specializing in residential RRP. The estimated number of residential RRP renovators and workers was 

further reduced to account for the fact that only some of these individuals will perform RRP work in 

target housing. The latter adjustment was made based on data obtained from the American Housing 

Survey that 65 percent of U.S. households reside in target housing. 

Table 4-52: Total Number of Renovators and Workers Performing Residential RRP in 

Target Housing 

Type of Establishment 

Number of 

Renovators 

Performing 

Residential RRP

Number of 

Renovators 

Performing 

Residential RRP in 

Pre-1978 Housing

Number of NonSupervisors 

Performing 

Residential RRP 

Number of NonSupervisors 

Performing 

Residential RRP in 

Pre-1978 Housing

Non-Employer 

Construction 

Establishments 361,245 234,809 0 0

Employer Construction 

Establishments 179,964 116,977 511,631 332,560

Property Manager and 

Lessor Establishments 114,233 74,251 468,042 304,227

Total 655,442 426,038 979,673 636,787

Source: U.S. Census Bureau 2003; U.S. Census Bureau 2005d,f; U.S. Small Business Administration 

2005; EPA Calculations 

The estimated number of renovators and workers that perform residential RRP in pre-1978 housing, 

426,038 and 636,787, respectively, represents the estimated stock of renovators and workers that would 

be required to meet the demand for RRP in target housing (This includes renovations covered by the 2008 

LRRP rule as well as the LRRP revisions rule). To estimate the stock of trained individuals under the 

various options, these estimates are adjusted by 75 percent to account for the 75 percent rate of 

compliance assumed in this analysis. In addition, the compliance-adjusted estimate is further adjusted to 

reflect the scope of each regulatory option based on the percentage of all target housing RRP events 

regulated under each option. For example, the increase in the stock of trained renovators under Option A 

(126,940) is estimated by multiplying the estimated stock of renovators that would be required to meet the 

demand for RRP in all target housing (426,038) by the compliance rate (75 percent) and the percentage of 

target housing RRP events regulated under Option A (35 percent). The removal of the opt-out provision 

from the 2008 LRRP rule would require that RRP is performed by trained renovators and workers in 

owner-occupied target housing units that are not COFs and where no child under the age of six or a 

pregnant woman resides. The estimated increase in the stock of renovators and workers that would be 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-71 

required after the removal of the opt-out provision is presented in Table 4-53, and compared to the prior 

estimates for the 2008 LRRP rule (EPA 2008). 

Table 4-53: Estimated Stock of Trained Individuals to Perform RRP in Regulated 

Target Housing Under the 2008 LRRP Rule and Opt-out Revision, by Option and 

Year 

2008 LRRP Additional Number Estimated due to LRRP Revisions 

Rule Option A Option B Option C Option D 

Renovators 

Year 1 235,916 126,940 63,470 0 66,695 

Year 2 234,949 126,420 126,420 126,420 126,420 

Year 3 233,985 125,901 125,901 125,901 125,901 

Workers 

Year 1 337,887 189,734 94,867 0 99,688 

Year 2 336,502 188,956 188,956 188,956 188,956 

Year 3 335,122 188,181 188,181 188,181 188,181 

See Table 4-1 for options descriptions. 

Source: EPA Calculations. 

Table 4-54 presents a summary of the estimated increase in the number of establishments that will seek 

firm certification each year as a result of the removal of the opt-out provision, as well as the increase in 

the estimated number of employees that will need to be trained as renovators and workers in years 1 

through 3, and compares this to prior estimates for the 2008 LRRP rule (EPA 2008). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-72 

Table 4-54: Target Housing Activities: Estimated Number of Establishments Seeking 

Certification and Workers and Renovators Seeking Training Under the 2008 LRRP Rule 

and the Opt-out Revision 

Additional Number Estimated due to LRRP 

Revisions

2008 

LRRP 

Rule Option A Option B Option C Option D 

Year 1

Total Number of Establishments (with 

Employees and without) Seeking Certification 211,721 111,426 55,713 0 58,544 

Total Number of Renovators Seeking Training 235,916 126,940 63,470 0 66,695 

Total Number of Workers Seeking Training 337,887 189,734 94,867 0 99,688 

Year 2

Total Number of Establishments (with 

Employees and without) Seeking Certification 70,284 22,194 66,581 110,969 64,326 

Total Number of Renovators Seeking Training 78,316 21,913 74,166 126,420 71,511 

Total Number of Workers Seeking Training 336,502 188,956 188,956 188,956 188,956 

Year 3

Total Number of Establishments (with 

Employees and without) Seeking Certification 69,996 22,103 22,103 22,103 22,103 

Total Number of Renovators Seeking Training 77,995 21,823 21,823 21,823 21,823 

Total Number of Workers Seeking Training 335,122 188,181 188,181 188,181 188,181 

Note: Components may not add up to totals due to rounding. The number of firms and individuals certified and 

trained, respectively, are assumed to decline by 0.41 percent annually to account for the decline in the size of the 

regulated housing stock over time, and thus the demand for lead-safe renovation services. This table presents the 

numbers of renovators and firms seeking training and certification in a given year; therefore the numbers in years 2 and 

3 differ from those presented in Table 4-48, which presents the stock of trained renovators and certified firms. Because 

training and certification are valid for five years, the stock of certified firms and trained individuals exceeds the annual 

number trained and certified each year after Year 1. Workers receive training each year. 

See Table 4-1 for options descriptions. 

Source: EPA Calculations. 

4.5 Training Costs 

Training costs include the cost of the time spent on training activities as well as the associated travel and 

tuition costs. Note that tuition costs are assumed to include the costs associated with training provider 

accreditation. In other words, it is assumed that accredited training providers pass along their 

accreditation fees and other administrative costs through their tuition. These accreditation fees and other 

administrative costs are estimated in the paperwork burden analysis but are only implicitly accounted for 

(as part of tuition costs) in the estimates of the total cost of the rule. 

4.5.1 Training Burden Per Individual 

To estimate the incremental burden of training, several cost components are calculated, including tuition 

rates, wage rates, and travel and expense costs. Each certified renovator will participate in 8 hours of 

formal initial training. Refresher renovator certification training is required every five years; the refresher 

course is only four hours. Workers receive informal, on-the-job training; it is assumed that, on average, 

three workers are trained at a time by a certified renovator and the training requires one hour. 

Tuition for the initial certified renovator training class is estimated to be $186; the corresponding 

refresher course tuition is estimated to be $93 (EPA 2006). This estimate relies on the assumption that 

the average hourly tuition is equal to the observed rates for the accredited lead abatement and evaluation 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-73 

courses ($23.26/hr).24 Additional travel and meal costs associated with training are assumed to be $121 

(EPA 2006).25 Digital photos of each certified renovator are also added into the additional costs. The 

total cost for a one-time use digital camera that takes 25 pictures is $14 ($0.56 per picture taken). The 

total time allotted to taking and processing these photos is estimated at 3 minutes ($1.20). A total cost of 

$1.76 (rounded to $2 in the total cost estimates) is therefore estimated. For a class size of 10 students, 3 

minutes per student is equivalent to a total time of 30 minutes to take the digital photos, associate them 

with the appropriate students, and insert the photos onto the training certificates. 

The value of the time for certified renovators to receive formal initial training is $253 (8 hours at a loaded 

wage rate of $31.64/hour); the refresher training is half this amount, or $127 (EPA 2006). Certified 

renovators may be self-employed or might be employed by a larger company. Therefore, the value of 

time is likely to represent a mix of lost wages and additional overhead to firms. Assuming one certified 

renovator trains three workers at a time and this informal training requires an hour, informal training is 

estimated to cost $27 per worker trained, based on the renovator wage rate and an average loaded wage 

rate for workers of $16.94/hour (EPA 2006). Thus, as shown in Table 4-55, the aggregated incremental 

cost of training is $560 for initial certified renovator training, $341 for refresher certified renovator 

training and $27 for informal worker training (EPA 2006). 

Table 4-55: Incremental Training Costs (2005$) 

Tuition Value of Time 

Travel and 

Meals 

Digital 

Photo Total 

Initial Training 

Certified Renovator $186 $253 $121 $2 $562 

Worker $0 $27 $0 $0 $27 

Refresher Training 

Certified Renovator $93 $127 $121 $0 $341 

Source: EPA Calculations. 

4.5.2 Total Training Costs 

Table 4-56 through Table 4-58 present the total training costs of the rule for the first three years. The 

number of renovators and workers seeking training is described in Section 4.4.1.2, the value of training 

time for renovators and workers is described in Section 4.5.1. The average training cost per renovator 

varies in the initial years of the regulation according to the relative number of initial and refresher 

trainings. After the second year, 52 percent of contractors and public or commercial building renovators 

receive initial training (due to turnover in the industry) and the rest obtain refresher training. Note that an 

individual who received initial training and let their certification expire must retake the initial training. 

The stock of regulated structures declines by 0.41 percent annually which also reduces the demand for 

lead-safe renovation services, and thus the number of renovators and workers seeking training and the 

undiscounted total training costs. 

 

24 The average of the hourly tuition rates are used rather than picking a single similar course because no single 

course is similar enough to the renovator course. For example, the initial courses are the only courses with 

hands-on training, but they are also longer than the renovator course. The refresher courses are more similar in 

length, but have no hands on requirements. 

25 Travel costs include 2 hours of travel time ($63), meals ($9), and mileage costs (50 miles, $49).
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-74 

Table 4-56: Total Training Costs for Renovators and Workers: First Year of Regulation 

Number of 

Renovators 

Seeking 

Training 

Average Cost of 

Training 

Total Renovator 

Training Cost 

Total Worker 

Training Cost 

($27 Per 

Worker) 

Total Training 

Costs (2005$, 

before 

discounting) 

Year 1 

Initial Training Renovators 

Option A 126,940 $562 $71,340,280 $5,122,818 $76,463,098 

Option B 63,470 $562 $35,670,140 $2,561,409 $38,231,549 

Option C 0 $562 $0 $0 $0 

Option D 66,695 $562 $37,482,590 $2,691,576 $40,174,166 

See Table 4-1 for options descriptions.

Source: EPA Calculations. 

Table 4-57: Total Training Costs for Renovators and Workers: Second Year of Regulation 

Number of 

Renovators 

Seeking 

Training 

Average Cost of 

Training 

Total Renovator 

Training Cost 

Total Worker 

Training Cost 

($27 Per 

Worker) 

Total Training 

Costs (2005$, 

before 

discounting) 

Year 2 

Initial Training Renovators 

Option A 21,913 $562 $12,314,949 $5,101,814 $17,416,764 

Option B 74,166 $562 $41,681,367 $5,101,814 $46,783,182 

Option C 126,420 $562 $71,047,785 $5,101,814 $76,149,599 

Option D 71,511 $562 $40,189,218 $5,101,814 $45,291,033 

Refresher Training Renovators 

Option A 3,371 $341 $1,149,575 n/a $1,149,575 

Option B 1,686 $341 $574,788 n/a $574,788 

Option C 0 $341 $0 n/a $0 

Option D 1,771 $341 $603,993 n/a $603,993 

See Table 4-1 for options descriptions. 

Source: EPA Calculations. 

Table 4-58: Total Training Costs for Renovators and Workers: Third Year of Regulation 

Number of 

Renovators 

Seeking 

Training 

Average Cost of 

Training 

Total Renovator 

Training Cost 

Total Worker 

Training Cost 

($27 Per 

Worker) 

Total Training 

Costs (2005$, 

before 

discounting) 

Year 3 

Initial Training Renovators 

Option A 21,823 $562 $12,264,458 $5,080,897 $17,345,355 

Option B 21,823 $562 $12,264,458 $5,080,897 $17,345,355 

Option C 21,823 $562 $12,264,458 $5,080,897 $17,345,355 

Option D 21,823 $562 $12,264,458 $5,080,897 $17,345,355 

Refresher Training Renovators 

Option A 3,357 $341 $1,144,862 n/a $1,144,862 

Option B 3,357 $341 $1,144,862 n/a $1,144,862 

Option C 3,357 $341 $1,144,862 n/a $1,144,862 

Option D 3,357 $341 $1,144,862 n/a $1,144,862 

See Table 4-1 for options descriptions. 

Source: EPA Calculations. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-75 

4.6 Certification Costs: Firm Paperwork Burden and EPA Administrative and 

Enforcement Costs 

Under this rule, states are given the option of administering the regulations as long as the state 

implementation plan is approved by EPA. EPA will directly administer programs in states that do not 

have an approved implementation plan. This section of the analysis estimates costs that EPA expects to 

incur while administrating and enforcing the LRRP rule under the assumption that EPA administers the 

program everywhere. States that choose to implement the rule themselves are expected to incur similar 

costs in lieu of EPA. Firm paperwork costs associated with certification are also presented in this section. 

EPA will perform three tasks as part of administering the LRRP rule: accrediting training providers, 

certifying firms, and processing training provider notifications. In addition to administrative costs, EPA 

will also incur costs to enforce the LRRP rule. To reduce the burden on the regulated community, EPA 

has decided not to require formal certification for renovators and workers. 

In the economic analysis of the 2008 LRRP rule, EPA estimated enforcement costs independently from 

firm certification costs. However, for this analysis, EPA adopted firm certification fees set forth in a 

separate rulemaking. Under this fee schedule, enforcement costs are assumed to be variable and captured 

by the certification fees paid by firms. 

Accreditation/certification cost estimates are based on the 2009 rule that set fees for accreditation of 

training programs and certification of lead-based paint activities and renovation contractors (EPA 2009). 

This analysis utilizes the $300 per firm fees set for initial certification and re-certification. Note that there 

are also administrative and enforcement costs related to accrediting training providers but these costs are 

also assumed to be recovered through tuition charges and are therefore accounted for through the tuition 

costs. 

4.6.1 Administrative and Enforcement Costs: Contribution to Total Costs 

The fees that firms and training providers pay to become certified and accredited, respectively, are 

designed to recover EPA’s administrative and enforcement costs. These fees were set in a separate 

rulemaking (74 Federal Register 11863, March 20, 2009, codified at 40 CFR '745.92). Simply adding 

these costs to the other cost components, however, will result in some double counting. This analysis 

assumes that training providers will recover their accreditation fees (which in turn cover EPA’s 

administrative and enforcement costs of training provider accreditation) through the tuition they charge to 

renovators. Those costs have already been accounted for in Section 4.5 Thus, the additional social cost 

of EPA’s administrative and enforcement activities can be calculated based on the fees firms pay to 

become certified. The EPA costs that will be recovered from RRP firms in a given year are calculated as 

follows: 

4.6.2 Firm Paperwork Burden 

It is estimated that firms will spend a total of three hours to familiarize themselves with the LRRP rule’s 

requirements and a half an hour to fill out and mail the one-page application for renovator certification. 

In addition, each year time is spent keeping records that demonstrate compliance with the LRRP training 

and work-practice requirements. Additional costs are minor and include: one application printout, one 

photocopy for personal records, an envelope, and a stamp. As shown in Table 4-60, it is estimated that 

EPA Administrative and Enforcement 

Costs that will be recovered from 

FirmsYear X

= $300 * # of Firms CertifiedYear X 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-76 

paperwork costs are $263 in initial certification years, $168 in re-certification years and $152 in other 

years. 

Table 4-59: Costs to Firms Associated with Information Collection (2005$) 

First Year/Initial 

Certification Year 

Re-Certification 

Year 

Non-Certification 

Years 

Rule Familiarization (3 hours) $94.93 $0 $0 

Certification Form (half hour) $15.82 $15.82 $0 

Recordkeeping (4.8 hours per firm) $151.89 $151.89 $151.89 

2 photocopies $0.16 $0.16 $0 

1 envelope $0.02 $0.02 $0 

1 Stamp $0.37 $0.37 $0 

Totala $263 $168 $152 

a Rounded to nearest dollar. 

Source: EPA Calculations and U.S. Bureau of Labor Statistics 2005a. 

4.6.3 Total Certification Costs: Increase in Firm Paperwork and EPA Administrative and 

Enforcement Costs Associated with the Removal of the Opt-Out Provision 

Table 4-60 shows the total certification costs for the LRRP rule revision in the first year. Table 4-61 and 

Table 4-62 show the total certification costs by initial certification firms, refresher certification firms, and 

firms not seeking certification for the LRRP rule revision in the second and third years, respectively. The 

certification costs decline by 0.41 percent each year after the third year, accounting for the expected 

decline in regulated universe as older housing units are replaced with newer structures. Total costs perfirm are the sum of EPA’s administrative costs per firm and the firm’s costs for paperwork and 

recordkeeping. This cost per firm is multiplied by the additional number of establishments estimated to 

provide lead-safe RRP services as a result of the removal of the opt-out provision (see Section 4.4.1.1). 

In the first year, all the firms listed in the number of establishments’ column in Table 4-60 are presumed 

to seek initial certification, paying their share of EPA’s administrative and enforcement costs ($300 per 

firm, see Section 4.6.1). In addition, they incur a cost for paperwork and recordkeeping. The tables 

reflect only those additional firms that are expected to become certified as a result of the removal of the 

opt-out provision. 

Table 4-60: Firm Annual Certification Costs: Firm Paperwork and Fees in the First Year of 

Regulation (including EPA Administrative and Enforcement Costs) 

EPA 

Administrative / 

Enforcement Costs Paperwork Costs 

Number of 

Establishments 

Total Certification 

Costs (2005$, 

before discounting) 

Year 1 

Initial Certification Firms 

Option A $300 $263 111,426 $62,732,838 

Option B $300 $263 55,713 $31,366,419 

Option C $300 $263 0 $0 

Option D $300 $263 58,544 $32,960,272 

See Table 4-1 for options descriptions. 

Source: U.S. EPA 2009 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-77 

In subsequent years, the increase in EPA administrative costs per-firm and the firm paperwork costs are 

estimated based on the costs presented in Table 4-61 and Table 4-62 and the relative number of firms 

seeking initial-certification, re-certification, and not seeking certification. Section 4.4.1.1 describes and 

presents these estimates. The increase in the number of establishments is shown for firms seeking initial 

certification, recertification, and not seeking certification. 

Table 4-61: Firm Annual Certification Costs: Firm Paperwork and Fees in the Second Year of 

Regulation (including EPA Administrative and Enforcement Costs) 

EPA 

Administrative / 

Enforcement Costs Paperwork Costs 

Number of 

Establishments 

Total Certification 

Costs (2005$, 

before 

discounting) 

Year 2 

Initial Certification Firms 

Option A $300 $263 19,974 $11,245,614 

Option B $300 $263 65,472 $36,860,624 

Option C $300 $263 110,969 $62,475,633 

Option D $300 $263 63,160 $35,559,023 

Re-Certification Firms

Option A $300 $168 2,219 $1,038,671 

Option B $300 $168 1,110 $519,336 

Option C $300 $168 0 $0 

Option D $300 $168 1,166 $545,725 

Non-Certification Year Firms 

Option A n/a $152 88,775 $13,493,849 

Option B n/a $152 44,388 $6,746,925 

Option C n/a $152 0 $0 

Option D n/a $152 46,643 $7,089,763 

See Table 4-1 for options descriptions.

Source: EPA Calculations; U.S. EPA 2009 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-78 

4.7 Recordkeeping Checklist Provision Costs 

4.7.1 Recordkeeping Checklist Provision Requirements 

The revision to the 2008 LRRP rule would require all renovation firms to provide a copy of the records 

demonstrating compliance with the training and work practice requirements of the RRP rule to the owner 

and, if different, the occupant of the building being renovated or the operator of the child-occupied 

facility. Renovation firms would have to provide this information to owners and occupants when the final 

invoice for the renovation is delivered, or within thirty days of the completion of work, whichever is 

earlier. It is expected that renovators will furnish this information by providing a copy of the short 

checklist or other form that is used for compliance purposes, and thus it is referred to here as a checklist. 

If dust clearance is performed in lieu of cleaning verification, the renovation firm must also provide a 

copy of the dust wipe sampling report(s). For renovations occurring in common areas of target housing or 

child-occupied facilities, the renovation firm can post instructions to tenants on how to obtain the 

information. 

The checklist or form must include documentation that a certified renovator was assigned to the project, 

that the certified renovator provided on-the-job training for workers used on the project, that the certified 

renovator performed or directed workers who performed the tasks required by this final rule, and that the 

certified renovator performed the post-renovation cleaning verification. It must also include the 

identifying information on the manufacturer and model of the test kits used, if any; a description of the 

components that were tested including their locations; and the test kit results. This documentation must 

include a certification by the certified renovator that the work practices were followed with descriptions 

as applicable (see Figure 4-3 for a sample recordkeeping checklist). 

Table 4-62: Firm Annual Certification Costs: Firm Paperwork and Fees in the Third Year of 

Regulation (including EPA Administrative and Enforcement Costs) 

EPA 

Administrative / 

Enforcement Costs Paperwork Costs 

Number of 

Establishments 

Total Certification 

Costs (2005$, 

before 

discounting) 

Year 3 

Initial Certification Firms 

Option A $300 $263 19,893 $11,199,507 

Option B $300 $263 19,893 $11,199,507 

Option C $300 $263 19,893 $11,199,507 

Option D $300 $263 19,893 $11,199,507 

Re-Certification Firms

Option A $300 $168 2,210 $1,034,413 

Option B $300 $168 2,210 $1,034,413 

Option C $300 $168 2,210 $1,034,413 

Option D $300 $168 2,210 $1,034,413 

Non-Certification Year Firms 

Option A n/a $152 88,411 $13,438,524 

Option B n/a $152 88,411 $13,438,524 

Option C n/a $152 88,411 $13,438,524 

Option D n/a $152 88,411 $13,438,524 

See Table 4-1 for options descriptions.

Source: EPA Calculations; U.S. EPA 2009 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-79 

Figure 4-3: Sample Recordkeeping Checklist 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-80 

4.7.2 Recordkeeping Checklist Unit Costs 

4.7.2.1 Labor Costs 

Under the requirements of the 2008 LRRP rule, renovation firms must complete and retain a copy of the 

information described above for enforcement purposes. Therefore, the LRRP revisions rule would only 

result in renovation firms incurring the incremental labor costs of photocopying and distributing the 

checklist to the owners and/or occupants. The burden will be minimal, since the renovator will typically 

be delivering the checklist along with an invoice or other job-relate paperwork. EPA assumed that 

photocopying and distributing the checklist would take an average of three minutes of a renovator’s time 

at a loaded wage rate of $31.64 per hour, for an average cost of $1.58. 

4.7.2.2 Material Costs 

The checklist provision requires renovation firms to supply a copy of the checklist to the owner of the 

affected building, or if different, the occupant of the affected target housing unit or operator of the childoccupied facility, and to post the checklist in a common area. Therefore, renovation firms performing 

work in target housing or public or commercial buildings would incur an incremental cost of photocopy 

materials. 

Table 4-63 shows the estimated average costs per event of the checklist provision requirements. 

4.7.3 Number of Events Affected by the Checklist Provision 

The recordkeeping checklist provision would apply to both firms affected by the 2008 LRRP rule and to 

firms that would be covered by the elimination of the opt-out provision. Under Option A, the entire stock 

of firms necessary to meet demand, including those working in target housing, and public or commercial 

building COFs, would incur checklist costs in the first year. However, under Options B and C, which 

have delayed implementation, and Option D, which has a phase-in period, only some of the incremental 

stock of firms ultimately affected by the removal of the opt-out provision would incur costs in the first 

year. That is, there would be no delay in providing the checklist for events covered by the 2008 LRRP 

rule; for options with a delayed effective date or phase-in, the checklist provision requirement would take 

effect at the same time as the LRRP work practice requirements. From the second year onward, the entire 

stock of firms would incur checklist provision costs. 

As mentioned above, firms performing work in owner-occupied target housing would be required to 

distribute one copy of the checklist while firms performing work in renter-occupied target housing would 

be required to provide a copy to the owner and occupant. If the work occurs in the common area of an 

Table 4-63: Cost of the Checklist Provision per Event 

 Target Housing Events Public or Commercial Building Events 

 Owner Renter 

In-house / 

Landlord b 

Contractor 

– Owner c 

Contractor 

– Renter d 

Labor Cost a $1.58 $1.58 $1.58 $1.58 $1.58 

Material Cost $0.08 $0.16 $0.08 $0.16 $0.24 

Total Cost $1.66 $1.74 $1.66 $1.74 $1.82 a

 Based on a burden of 3 minutes, at a wage rate of $31.64. 

b

 RRP is performed by the owner of a public or commercial building. 

c

 RRP is performed by a contractor in an owner-occupied public or commercial building. 

d

 RRP is performed by a contractor in a renter-occupied public or commercial building. 

Source: EPA Calculations. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-81 

apartment building, the checklist, or information on how to obtain the checklist, can be posted on a sign in 

the common area. 

The checklist provision also applies to firms performing work in public or commercial building COFs. 

Child-occupied facilities that perform work themselves must post the checklist, or information on how to 

obtain the checklist, on a sign that is accessible to parents or guardians of the children. Similarly, 

landlords that perform work would have to supply one copy of the checklist attached to a sign in the area 

where the work is being performed. Contractors who perform work in owner-occupied COFs must 

provide two copies of the checklist: one copy to the owner of the COF and one copy to be posted on a 

sign in the COF. In addition to the two copies required in owner-occupied events, contractors working in 

renter-occupied COFs must also provide the operator of the COF with a third copy of the checklist. 

Table 4-64 presents the number of events affected by the checklist provision in the first and second years 

of the rule’s implementation by event type and compares the number of events affected under each option 

with the number that would be affected without the elimination of the opt-out provision (events regulated 

under the 2008 LRRP rule). 

Table 4-64: Number of Events Affected by the Checklist Provision by Option and Event Type 

Target Housing Events Public or Commercial Building COF 

Events 

Option All Events Owner Renter 

In-house / 

Landlord b 

Contractor 

– Owner c 

Contractor 

– Renter d 

Year 1 

2008 LRRP Rule 

Events 11,412,621 1,459,940 9,572,191 100,057 267,533 12,900 

Option A 18,684,176 8,731,495 9,572,191 100,057 267,533 12,900 

Option B 15,048,399 5,095,718 9,572,191 100,057 267,533 12,900 

Option C 11,412,621 1,459,940 9,572,191 100,057 267,533 12,900 

Option D 15,233,155 5,280,474 9,572,191 100,057 267,533 12,900 

Year 2 a 

2008 LRRP Rule 

Events 11,365,829 1,453,954 9,532,945 99,647 266,436 12,847 

Option A 18,607,571 8,695,696 9,532,945 99,647 266,436 12,847 

Option B 18,607,571 8,695,696 9,532,945 99,647 266,436 12,847 

Option C 18,607,571 8,695,696 9,532,945 99,647 266,436 12,847 

Option D 18,607,571 8,695,696 9,532,945 99,647 266,436 12,847 

“2008 LRRP Rule Events” represents the number of events affected by the checklist requirement if the opt-out 

provision is not removed. The number of events for each regulatory option represents the total number of events 

affected by the checklist requirement if the opt-out is removed, including the 2008 LRRP Rule Events. The 

number of events affected the opt-out removal can be calculated by subtracting the 2008 LRRP Rule Events from 

the number of events for each regulatory option. a Assumed to decline by 0.41 percent each year after the first year, accounting for the decline in the stock of pre1978 structures. 

b

 RRP is performed by the owner of a public or commercial building. 

c

 RRP is performed by a contractor in an owner-occupied public or commercial building. 

d

 RRP is performed by a contractor in a renter-occupied public or commercial building. 

See Table 4-1 for options descriptions. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-82 

4.7.4 Total Costs of the Recordkeeping Checklist Provision 

Table 4-65 presents the total costs imposed on firms as a result of the recordkeeping checklist provision in 

the first and second years of the rule’s implementation under each option with the costs that would be 

incurred without the elimination of the opt-out provision (costs of events regulated under the 2008 LRRP 

rule). EPA estimated total costs by multiplying unit costs in Table 4-63 with the corresponding number 

of events in Table 4-64. 

4.8 Total Costs 

This section presents the total costs of the revisions to the LRRP program. Total costs are estimated for 

the first, second, and third years of regulation. Total 50-year costs and 50-year annualized costs are also 

calculated. Out year costs are estimated using discount rates of both 3 and 7 percent. 

4.8.1 Total Costs in the First Year of Regulation 

Table 4-66 presents the total first year costs associated with the LRRP rule. Total containment, cleaning, 

and verification costs are calculated by adding the cost of testing using the LBP test kits to the costs of 

containment, cleaning, and verification. The total costs of containment, cleaning, and verification are 

calculated by multiplying the number of events requiring work practices (Section 4.2) by the 

corresponding incremental unit costs (Section 4.3). The total cost of conducting LBP tests using test kits 

Table 4-65: Total Cost of the Recordkeeping Checklist Provision by Option and Event Type 

Target Housing Events Public or Commercial Building Events 

Option All Events Owner Renter 

In-house / 

Landlordb 

Contractor 

– Ownerc

Contractor 

– Renterd 

Year 1 

2008 LRRP Rule 

Events $19,757,018 $2,426,420 $16,674,757 $166,295 $466,042 $23,504 

Option A $31,842,342 $14,511,745 $16,674,757 $166,295 $466,042 $23,504 

Option B $25,799,680 $8,469,082 $16,674,757 $166,295 $466,042 $23,504 

Option C $19,757,018 $2,426,420 $16,674,757 $166,295 $466,042 $23,504 

Option D $26,106,746 $8,776,148 $16,674,757 $166,295 $466,042 $23,504 

Year 2 a 

2008 LRRP Rule 

Events $19,676,014 $2,416,472 $16,606,390 $165,613 $464,131 $23,408 

Option A $31,711,789 $14,452,247 $16,606,390 $165,613 $464,132 $23,407 

Option B $31,711,789 $14,452,247 $16,606,390 $165,613 $464,132 $23,407 

Option C $31,711,789 $14,452,247 $16,606,390 $165,613 $464,132 $23,407 

Option D $31,711,789 $14,452,247 $16,606,390 $165,613 $464,132 $23,407 

“2008 LRRP Rule Events” represents the cost of the checklist requirement if the opt-out provision is not 

removed. The cost for each regulatory option represents the total cost of the checklist requirement if the opt-out 

is removed, including the checklist cost for the 2008 LRRP Rule Events. The cost for events affected by the optout removal can be calculated by subtracting the cost for the 2008 LRRP Rule Events from the cost for each 

regulatory option. 

a Assumed to decline by 0.41 percent each year after the first year, accounting for the decline in the stock of pre1978 structures. 

b

 RRP is performed by the owner of a public or commercial building. 

c

 RRP is performed by a contractor in an owner-occupied public or commercial building. 

d

 RRP is performed by a contractor in a renter-occupied public or commercial building. 

See Table 4-1 for options descriptions.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-83 

is estimated as the number of events (Section 4.2) multiplied by the cost of conducting the test (see 

Section 4.3.1). Total training costs are calculated by multiplying the number of trained individuals 

(Section 4.4) by the corresponding incremental training costs (Section 4.5.1). Total certification costs are 

calculated by multiplying the number of firms (Section 4.4) by the corresponding incremental firm costs 

(Section 4.6). The recordkeeping checklist provision costs are calculated by multiplying the number of 

events where a recordkeeping checklist must be provided (Section 4.7.3) by the corresponding unit cost of 

providing the recordkeeping checklist (Section 4.7.2). 

The total costs are higher in the first year for the options that regulate more RRP events. First year costs 

are highest under Option A ($507 million), which fully eliminates the opt-out provision immediately. 

First year costs are second highest under Option D ($291 million), which fully eliminates the opt-out 

provision for pre-1960 housing as soon as the rule is implemented. The costs under Option B ($263 

million), which fully eliminates the opt-out provision midway through the first year, are slightly lower 

compared to Option D. Option C first year total costs ($20 million) only include recordkeeping checklist 

provision costs for events covered by the 2008 LRRP rule in the first year. 

Table 4-66: Total First Year Incremental Costs of the Rule (millions 2005$) 

Cost Type Option A Option B Option C Option D 

Work Practice $336 $168 $0 $192 

Training $76 $38 $0 $40 

Certification $63 $31 $0 $33 

TH Checklista $31 $25 $19 $25 

COF Checklistb $1 $1 $1 $1 

Total $507 $263 $20 $291 

a. Target Housing (TH) 

b. Public or Commercial Building (COF) 

See Table 4-1 for options descriptions. 

4.8.2 Total Costs in the Second and Third Years of Regulation 

Table 4-67 and Table 4-68 show that total costs differ across options in the second year but are the same 

across all options by the third year. Despite the second year expansion of the number of regulated events 

under Option D, the total work practice costs are only slightly higher than in the first year. This modest 

increase results from the improved effectiveness of the test kit (decrease in false positive rate of 63 

percent to 10 percent), which offsets a portion of the cost increase associated with the larger universe of 

regulated events. 

In the second year, the training and certification costs are highest under Option C and are relatively higher 

under Option B and Option D compared to Option A. This ranking reflects the delayed start-up costs 

associated with training and certifying the additional individuals and firms needed to meet the demand 

increase that corresponds to the expansion in the regulated universe in the second year. From the third 

year forward, training and certification costs are the same under all options. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-84 

Table 4-67: Total Second Year Incremental Costs of the Rule (millions 2005$) 

3 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $216 $216 $216 $216 

Training $18 $46 $74 $45 

Certification $25 $43 $61 $42 

TH Checklista $30 $30 $30 $30 

COF Checklistb $1 $1 $1 $1 

Total $290 $336 $382 $334 

7 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $208 $208 $208 $208 

Training $17 $44 $71 $43 

Certification $24 $41 $58 $40 

TH Checklista $29 $29 $29 $29 

COF Checklistb $1 $1 $1 $1 

Total $279 $323 $368 $321 

a. Target Housing (TH) 

b. Public or Commercial Building (COF) 

See Table 4-1 for options descriptions. 

Table 4-68: Total Third Year Incremental Costs of the Rule (millions 2005$) 

3 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $209 $209 $209 $209 

Training $17 $17 $17 $17 

Certification $24 $24 $24 $24 

TH Checklista $29 $29 $29 $29 

COF Checklistb $1 $1 $1 $1 

Total $281 $281 $281 $281 

7 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $194 $194 $194 $194 

Training $16 $16 $16 $16 

Certification $22 $22 $22 $22 

TH Checklista $27 $27 $27 $27 

COF Checklistb $1 $1 $1 $1 

Total $260 $260 $260 $260 

a. Target Housing (TH) 

b. Public or Commercial Building (COF) 

See Table 4-1 for options descriptions. 

4.8.3 Total 50-Year and 50-Year Annualized Costs 

The total costs are also calculated discounted over a 50-year period. Discounting refers to the economic 

conversion of future costs (and benefits) to their present values, accounting for the fact that society tends 

to value future costs or benefits less than comparable near-term costs or benefits. Discounting is 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-85 

important when the values of costs or benefits occur over a multiple year period and may vary from year 

to year. Discounting enables the accumulation of the cost and benefit values from multiple years at a 

single point in time, accounting for the difference in how society values those costs and benefits 

depending on the year in which the values are estimated to occur. 

The 50-year costs were estimated by developing a profile of the compliance costs associated with each 

option over a 50-year period. (The 50-year period was chosen to be consistent with the economic analysis 

done for the TSCA Section 403 Lead-Based Paint Hazard Standards.) The profile of costs over time was 

developed by estimating an annual decline in pre-1978 housing stock of 0.41 percent per-year and 

assuming that the regulated universe would decrease by that rate every year. That rate was calculated 

using the average annual compound rate of change in the pre-1980 housing stock using data from the 

1990 and 2000 Decennial Census (U.S. Census Bureau 1990 and 2000c). This rate affects costs because 

it decreases the number of events and number of workers trained every year. 

As discussed above, first year training and certification costs account for the training and certification of 

all renovators and firms to meet the demand for lead-safe RRP services in the first year. For Option B 

and Option D, it is assumed that the additional individuals and firms will obtain training and certification 

in the second year to meet the increase in demand associated with the larger number of regulated RRP 

events in the second year. In subsequent years, it is assumed that one fifth of the necessary stock of 

individuals and firms will obtain training and certification each year (since refresher-training and recertification is required every five years). 

In fact, if all the individuals and firms needed to meet the demand for lead-safe RRP are trained and 

certified in the first and second years, one might expect a drop in the level of training and certification in 

the third year followed by a spike in the future years. That is, one might expect a cyclical pattern of 

training and certification to emerge. This analysis assumes a typical amount of training and certification 

occurs each year because modeling such a trend would add little to the analysis without being able to 

precisely estimate the extent of any cyclicality. 

The total 50-year costs and the 50-year annualized costs are discounted using rates of 3 and 7 percent. 

These discount rate values reflect guidance from the Office of Management and Budget regulatory 

analysis guidance document, Circular A-4 (OMB, 2003). 

The following formula was used to calculate the present value (PV) of the time stream of costs: 

PV = ( 1)

,

(1 )   t

x t

r

Cost

where: 

 Costt = Costs in year t; 

 r = Discount rate (3 percent and 7 percent); and 

 t = Year in which cost is incurred. 

This analysis also presents the 50-year annualized costs of the rule. Conceptually, the 50-year annualized 

cost is the level annual payment that one would have to make to pay off a debt equal to the present value 

total 50-year cost for a given interest rate (the discount rate). 

The following formula is used to calculate the 50-year annualized cost. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-86 

(1 ) 1

(1 )

(50)

50

 

   

r

r r AC PVr

where: 

 AC = Annualized 50-Year Costs; 

 PVr = Present Value Total 50-Year Costs assuming a discount rate of r; and 

 r = Discount rate (3 percent and 7 percent) 

Table 4-69 shows the present value of the total 50-year costs, and Table 4-70 shows the annualized 50-

year costs for the options considered. Because the test kits available for the first year (i.e., starting in June 

2010) have a high false positive rate, including the newer housing units in the regulated universe before 

improved test kits are available is relatively costly. This is because the high rate of false positives will 

require many units without LBP to use the more costly work practices. 

Table 4-69: Total Present Value 50 Year Incremental Costs of the Revisions to the Renovation, 

Repair, and Painting Rule (millions 2005$) 

3 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $5,617 $5,449 $5,281 $5,473 

Training $516 $506 $496 $507 

Certification $673 $660 $646 $661 

TH Checklista $767 $761 $755 $761 

COF Checklistb $16 $16 $16 $16 

Total $7,590 $7,392 $7,194 $7,418 

7 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $3,255 $3,087 $2,919 $3,111 

Training $320 $308 $297 $309 

Certification $400 $386 $372 $387 

TH Checklista $438 $432 $426 $432 

COF Checklistb $9 $9 $9 $9 

Total $4,422 $4,222 $4,023 $4,248 

a. Target Housing (TH) 

b. Public or Commercial Building (COF) 

See Table 4-1 for options descriptions.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-87 

Table 4-70: Annualized 50 Year Incremental Costs of the Revisions to the Renovation, Repair, 

and Painting Rule (millions 2005$) 

3 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $218 $212 $205 $213 

Training $20 $20 $19 $20 

Certification $26 $26 $25 $26 

TH Checklista $30 $30 $29 $30 

COF Checklistb $1 $1 $1 $1 

Total $295 $287 $280 $288 

7 Percent Discount Rate 

Cost Type Option A Option B Option C Option D 

Work Practice $236 $224 $212 $225 

Training $23 $22 $22 $22 

Certification $29 $28 $27 $28 

TH Checklista $32 $31 $31 $31 

COF Checklistb $1 $1 $1 $1 

Total $320 $306 $291 $308 

a. Target Housing (TH) 

b. Public or Commercial Building (COF) 

See Table 4-1 for options descriptions.

4.9 Alternative Regulatory Options: Options E1 – E4 

Options A through D differ only in the timing of how the regulated universe is covered. This section 

presents cost estimates for various work practice alternatives to Option A, including: (1) requiring interior 

containment without any cleaning or verification requirements, (2) requiring interior cleaning without any 

containment or verification requirements, (3) requiring interior cleaning and verification without any 

interior containment requirements, and (4) no ban on prohibited practices and no exterior vertical 

containment requirements. Like Option A, these options would become effective June 2010, and would 

be applied to all pre-1978 housing eligible for the opt-out provision under the 2008 LRRP rule. In 

addition, the requirement for the renovator to provide the recordkeeping checklist to the owners and 

occupants would apply in both the renovations covered by the 2008 LRRP rule and those formerly 

eligible for the opt-out provision. Options E1 to E4 cover the same number of renovation events as 

Option A, and result in the same number of renovators being trained and firms certified. Thus, Options 

E1 to E4 have the same training, certification, and checklist costs as Option A, but the work practice costs 

differ from Option A. 

4.9.1 Alternative Interior Containment, Cleaning, and Verification Requirements 

Section 4.3 presents the work practice unit costs for the following three components: (1) containment, (2) 

cleaning, and (3) verification. Under the alternative regulatory options presented in Table 4-71, not all of 

these work practice components are required and therefore compliance costs are lower. Not requiring any 

interior cleaning or verification, but requiring rule containment, lowers the total annualized costs by about 

12 percent compared to Option A. Requiring rule-style interior cleaning and verification, but not 

requiring interior containment also lowers the annualized total costs of the rule by 12 percent compared to 

Option A. Not requiring any interior containment or verification, but requiring rule-style cleaning, results 

in the largest decline in total annualized costs of about 17 percent compared to Option A. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-88 

Table 4-71: Options E1-E3: Alternative Interior Containment, Cleaning, and Verification 

requirements 

3 Percent Discount Rate 7 Percent Discount Rate 

Option 

Annualized 

Costs 

Percent 

Change from 

Option A 

Annualized 

Costs 

Percent 

Change from 

Option A 

Option A $295 $320 

Option E1: No Interior Cleaning 

or Verification Required $258 -12% $281 -12% 

Option E2: No Interior 

Containment Required $261 -12% $283 -12% 

Option E3: No Interior 

Containment or Verification 

Required 

$246 -17% $267 -17% 

See Table 4-1 for options descriptions.

4.9.2 Regulatory Alternative without a Paint Removal Practice Prohibition 

This alternative regulatory option has the same scope and work practice requirements as Option A, except 

that there is no prohibition or restriction on open-flame burning or torching of LBP; operating a heat gun 

on LBP at 1100° F or higher; or using machines that remove LBP through high speed operation (such as 

sanding, grinding, power planing, needle gun, abrasive blasting, or sandblasting) without HEPA exhaust 

control. As shown in Table 4-72, if the rule allows these paint removal practices to continue to be used, 

total annualized costs for the option would be 1 percent lower than for Option A. 

Table 4-72: Option E4: Alternative Containment, Cleaning, and Verification requirements 

3 Percent Discount Rate 7 Percent Discount Rate 

Option 

Annualized 

Costs 

Percent 

Change from 

Option A 

Annualized 

Costs 

Percent 

Change from 

Option A 

Option A $295 $320 

Option E4: No Prohibited Practice 

Ban $292 -1% $317 -1% 

See Table 4-1 for options descriptions.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 4 4-89 

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Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-1 

5. Benefits of the Revisions to the LRRP Rule 

This chapter presents a discussion of the benefits associated with reducing lead exposure by revising the 

lead, renovation, repair and painting (LRRP) program regulations. The revisions to the LRRP program 

include: (1) the removal of the opt-out provision (currently available for owner-occupied target housing 

without either children under the age of 6 or a pregnant woman in residence and where the housing is not 

a COF), and (2) an additional requirement that the renovator provide a copy of their recordkeeping 

checklist to owners and occupants of renovated structures. 

An overview of the opt-out provision, as it applies to this benefits estimation, is provided in Section 5.1. 

Section 5.2 presents calculated values meant to serve as a proxy for the magnitude of benefits under this 

action. Section 5.3 includes a discussion of the benefits of the additional recordkeeping checklist 

provision requirement. Finally, in Section 5.4, the human health and ecological consequences of lead 

exposure are summarized. 

The work practices, training and certification requirements for the housing units previously eligible for 

the opt-out provision will reduce lead exposure by increasing the containment and cleanup of dust and 

debris generated by renovation, repair, and painting (RRP) activities. Additional reductions in lead 

exposure will be achieved by prohibiting the use of certain paint preparation and removal techniques in 

jobs that require lead-safe work practices. These reductions in exposure will in turn reduce the risks of 

adverse health and ecological effects in the vicinity of these activities. 

A great deal of information on the numerous adverse health effects of lead is available from decades of 

medical observation and scientific research. Inhaled or ingested lead is distributed throughout the body 

and is toxic to many organ systems. As a result, its toxicity manifests itself in the form of impacts on 

several organ systems. A reduction in lead exposure resulting from the rule would lead to a reduction in 

these adverse health effects and the costs of treating them. Young children (from birth through age five) 

are particularly sensitive to lead, which impairs a child’s neuropsychological development (frequently 

measured by IQ change). EPA’s Air Quality Criteria for Lead (EPA 2006b) provided a thorough review 

of the available science on lead-related health and ecological effects. An excerpt from the Executive 

Summary is provided in section 5.4 of this analysis. 

With regard to potential implications of lead effects on IQ, the Criteria Document recognizes the 

‘‘critical’’ distinction between population and individual risk, identifying issues regarding declines in IQ 

for an individual and for the population. The Criteria Document further states that a ‘‘point estimate 

indicating a modest mean change on a health index at the individual level can have substantial 

implications at the population level’’ (CD, p. 8–77). A downward shift in the mean IQ value is associated 

with both substantial decreases in percentages achieving very high scores and substantial increases in the 

percentage of individuals achieving very low scores (AQCD, p. 8–81). For an individual functioning in 

the low IQ range due to the influence of developmental risk factors other than lead, a lead-associated IQ 

decline of several points might be sufficient to drop that individual into the range associated with 

increased risk of educational, vocational, and social failure (AQCD, p. 8–77). 

Other cognitive effects observed in studies of children have included effects on attention, executive 

functions, language, memory, learning and visuospatial processing (AQCD, sections 5.3.5, 6.2.5 and 

8.4.2.1), with attention and executive function effects associated with lead exposures indexed by blood 

lead levels below 10 μg/dL (AQCD, section 6.2.5 and pp. 8–30 to 8–31). The evidence for the role of lead 

in this suite of effects includes experimental animal findings (discussed in AQCD, section 8.4.2.1; p. 8–

31), which provide strong biological plausibility of lead effects on learning ability, memory and attention 

(AQCD, section 5.3.5), as well as associated mechanistic findings. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-2 

These cognitive and behavioral effects, discussed above, are strongly related to future productivity and 

expected earnings (Salkever 1995). Based on Salkever’s coefficients, the estimated value of an IQ point 

is $12,953 (2005 dollars). This IQ value is modeled as the present value of a loss in expected lifetime 

earnings due to a one point IQ drop. The present value is calculated assuming that children would be 

affected by lead at 3 years of age, the median of the range when children are most susceptible to lead 

hazards; that while most people start working at age 18, average income in the early adult years is 

reduced because some are still in school; and that retirement occurs at the age of 67. This estimated value 

of an IQ point is limited to reduced income, and does not include other potential impacts such as 

additional education costs for special and remedial education, and medical costs to treat very high levels 

of lead. 

Both epidemiologic and toxicological studies have shown that environmentally relevant levels of lead 

affect many different organ systems (EPA 2006b, p.E-8). It appears that some of these effects, 

particularly changes in the levels of certain blood enzymes and in aspects of children's neurobehavioral 

development, may occur at blood-lead levels so low as to be essentially without a threshold (EPA 2004). 

Epidemiologic studies have consistently demonstrated associations between lead exposure and enhanced 

risk of deleterious cardiovascular outcomes, including increased blood pressure and increased 

hypertension (EPA 2006b). Neurotoxic effects in children and cardiovascular effects in adults are among 

those best substantiated as occurring at blood-lead concentrations as low as 5 to 10 ug/dL (or possibly 

lower); and these categories of effects are currently clearly of greatest public health concern (EPA 2006b, 

p 8-60). Other newly demonstrated immune and renal system effects among general population groups 

are also emerging as low-level lead exposure effects of potential public health concern (EPA 2006b, p 8-

60). 

Some studies have examined the question of whether the neurological effects of exposures in early 

childhood are ameliorated when blood-lead levels decline. The data are mixed on this issue. In a study 

that treated lead-exposed children with a chelating agent, Ruff (1993) found that children whose bloodlead levels had the greatest decline showed the most improvement in cognitive scores. In contrast, Rogan 

(2001) found that treatment with a chelating agent lowered blood-lead levels in children but did not 

appear to improve neurological function. Liu (2002) also found that chelation therapy at age 2, while 

lowering blood-lead levels, did not improve neurological function in children at 5 years of age. While the 

study did detect a relationship between declining blood-lead and improved neurological function, this 

association was observed only in the untreated group, leading the authors to speculate that some other 

factor besides declining lead levels from chelation therapy (such as greater parental involvement), led to 

the neurological gains. Dietrich (2004) had similar findings in the same cohort of children at 7 years of 

age. One study cited in ATSDR (1999) showed impaired motor and cognitive function at a current mean 

level of 2.9 μg/dL, about 20 years after exposure when blood-lead levels were 40-50 μg/dL (Stokes 1998). 

The negative impact of lead on IQ and other neurobehavioral outcomes persist in most recent studies 

following adjustment for numerous confounding factors including social class, quality of caregiving, and 

parental intelligence. Moreover, these effects appear to persist into adolescence and young adulthood in 

the absence of marked reductions in environmental exposure to lead. (EPA 2006b, p. 6-76). This further 

supports the concern that early exposures to lead may lead to irreversible damage and supports the 

benefits of regulatory interventions to prevent and/or reduce lead exposure. 

5.1 Overview of Removal of Opt-Out Provision in Terms of Benefits Estimation 

Under 40 CFR 745.82(c), the LRRP rule’s training requirements and work practice standards do not apply 

to renovations in target housing when the firm performing the renovation has obtained a statement signed 

by the owner that the renovation will occur in the owner's residence, no child under age 6 resides there, no 

pregnant woman resides there, the housing is not a child-occupied facility, and the owner acknowledges 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-3 

that the renovation firm will not be required to use the work practices contained in EPA's renovation, 

repair, and painting rule. This is referred to as the “opt-out provision” of the LRRP rule. 

After further consideration of the opt-out provision, the Agency believes it is in the best interest of the 

public to remove the provision. EPA has decided it is important to require the LRRP work practices in 

target housing even if there is no child under age six or pregnant woman residing there and the housing is 

not a COF. The 2008 LRRP rule focused mainly on protecting young children and pregnant women from 

lead hazards. Lead exposure adversely affects older children and adults. Those effects most pertinent to 

adults at levels associated with individual blood lead levels in the range of 10 ug/dL and less include 

hematological, cardiovascular and renal effects. 

Epidemiologic studies have consistently demonstrated associations between lead exposure and enhanced 

risk of deleterious cardiovascular outcomes, including increased blood pressure and incidence of 

hypertension. A meta-analysis of numerous studies estimates that a doubling of blood-lead level (e.g., 

from 5 to 10 μg/dL) is associated with ~1.0 millimeter of mercury (mm Hg) increase in systolic blood 

pressure and ~0.6 mm Hg increase in diastolic pressure. The evidence for an association of lead with 

cardiovascular morbidity and mortality is limited but supportive (EPA 2006b, p. E-10). 

The Criteria Document states ‘‘although an increase of a few mmHg in blood pressure might not be of 

concern for an individual’s well-being, the same increase in the population mean might be associated with 

substantial increases in the percentages of individuals with values that are sufficiently extreme that they 

exceed the criteria used to diagnose hypertension’’ (EPA 2006b, p. 8–77). 

Renovation activities that disturb lead-based paint create high dust-lead levels which are not removed 

through typical cleaning practices. EPA’s Dust Study (EPA 2007) found that dust-lead levels created by 

renovation activities ranged from 422 to 32,633 μg/ft2

. While dry sweeping and the use of a regular shop 

vacuum resulted in a reduction in these levels, a significant amount of leaded dust remained. All 

residents of the household or occupants of the building can be exposed to this dust, regardless of age. 

EPA’s Exposure Factors Handbook (EPA 1997) contains recommended soil and dust ingestion estimates 

for adults, and EPA’s Child-Specific Exposure Factors Handbook (EPA 2008a), which includes 

recommended soil and dust ingestion estimates for children between the ages of 6 and 21. 

By removing the opt-out provision the rule will go farther toward protecting older children and adult 

occupants of target housing where no child under six or pregnant woman resides. In addition, removal of 

the opt-out provision will provide additional protection for women who do not know they are pregnant at 

the time a renovation commences, women who become pregnant shortly after a renovation occurs, and 

women of child-bearing age in general. This is particularly important because the transplacental transfer 

of lead in humans is well documented, and infants are generally born with a lead body burden reflecting 

that of the mother. 

Removing the opt-out provision also protects children under the age of six who spend a limited amount of 

time in housing (such as a relative or caregiver’s house) where a renovation has been performed under the 

opt-out provision; children who move into such housing when their family purchases it after such a 

renovation has been performed; and children who live in a property adjacent or near to owner-occupied 

housing where renovation has been performed under the opt-out provision. 

Some locations where children under the age of six regularly receive child care are eligible for the opt-out 

provision because of the way a child-occupied facility (COF) is defined. A COF is defined as ‘‘a 

building, or portion of a building, constructed prior to 1978, visited regularly by the same child, under the 

age of six, on at least 2 different days within any week (Sunday through Saturday period), provided that 

each day’s visit lasts at least 3 hours and the combined weekly visits last at least 6 hours, and the 

combined annual visits last at least 60 hours.” Non-resident children may regularly visit or receive child 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-4 

care in target housing that is eligible for the opt-out provision because the children do not spend enough 

time there for the building to meet the COF definition. These children may nevertheless receive a dose of 

lead from playing in dust-lead hazards created by renovations performed under the opt-out provision 

Removing the opt-out provision will also result in fewer homes being purchased with pre-existing lead 

hazards. It is common for home owners to perform activities that disturb paint before selling a house. 

Under the RRP rule, the opt-out provision was limited to owner-occupied target housing and did not 

extend to rental housing because of the concern that future lessees could unknowingly move into a rental 

unit where dust-lead hazards created by the renovation are present. In the same way, dust-lead hazards 

created during renovations in an owner-occupied residence conducted prior to a sale will be present for 

the next occupants. Removing the opt-out provision decreases the likelihood of lead hazards being 

present when someone else (which may include a child under the age of six or a pregnant woman) moves 

into the home. 

Eliminating the opt-out provision will also protect individuals including pregnant women and families 

with young children residing adjacent to homes undergoing renovations. Under the 2008 LRRP rule, an 

owner occupant can take advantage of the opt-out provision even if a child under 6 or pregnant woman 

lives in an adjacent home. Renovations on the exterior of a residence can spread leaded dust and debris 

some distance from the renovation activity, which is why, for regulated exterior renovations, EPA 

requires renovation firms to cover the ground with plastic sheeting or other impermeable material a 

distance of 10 feet from the renovation. If homeowners opt out of the LRRP program, renovations on the 

exterior of their homes are likely to contaminate neighboring yards and porches, resulting in exposure 

inside the neighboring houses as well as outside (because exterior dust is tracked into the home). 

Removing the opt-out provision will also provide protection to family pets living in owner-occupied 

housing where no children under age 6 or pregnant women reside. Lead poisoning resulting from 

renovations has been identified as a means of exposure in both cats and dogs (Knight 2003, Kowalczyk 

1976). This can result in both veterinary care costs and, in some instances, loss of a family pet. 

5.1.1 Regulatory Options Under the Elimination of the Opt-Out Provision 

This economic analysis considers several regulatory options related to removal of the opt-out provision 

(See Table 5-1). Options A through D all include containment, cleaning, and cleaning verification 

requirements, as well as restricting or prohibiting certain paint removal practices. Options A through D 

differ in terms of the effective date of the rule and the universe of structures affected in each year 

(phasing in of regulatory coverage). Options A and D both have effective dates of June 2010, but Option 

A does not phase in regulatory coverage while Option D is limited to pre-1960 structures during Phase 1 

of the regulation and its scope is expanded to include structures built between 1960 and 1978 in Phase 2, 

which has an effective date of June 2011. Options B and D have effective dates of January 2011 and June 

2011, respectively, and neither option phases in regulatory coverage. Options E1 to E4 cover the same 

target housing universe and have the same effective date as Option A, but do not provide the same level 

of protection because they do not require all of the work practice standards under 40 CFR 734.85. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-5 

Table 5-1: Effective Start Dates for Options Examined in Economic Analysis 

Effective Date For Opt-Out Elimination 

Option Target Housing 

June 2010 January 2011 June 2011 

A All X 

B All X 

C All X 

D Pre-1960 

1960-1978 

X 

X 

E1 to E4* All X 

* Options E1 to E4 cover the same target housing universe and have the same effective date as 

Option A, but do not provide the same level of protection because they do not require all of the 

work practice standards under 40 CFR 734.85. 

5.2 Calculated Benefits of Eliminating the Opt-Out Provision 

EPA has calculated crude benefits numbers for several groups of individuals protected by removing the 

opt-out provision. This has been done by estimating the number of individuals in each group and 

combining this with the average benefit per individual for a similar group from previous LRRP rule 

analyses. These averages do not replicate the scenarios used in the previous analyses, which included an 

array of factors such as age of child, type of renovation, size of job, and building vintage, so the 

calculations in this chapter do not reflect the methodology that EPA previously had peer reviewed for the 

LRRP rule analysis. 

As a result of severe time constraints for the conduct of this analysis, the average benefits per individual 

from the previous analyses have not been modified to reflect any differences in exposure between 

populations protected by the 2008 rule and those protected by the removal of the opt-out provision. 

While these values can serve as a proxy to provide a sense of the magnitude of benefits from this action, 

the amount of error in these values is unknown. The exposure scenarios differ between this rule and the 

2008 rule, for example, in the length of time that individuals spend in renovated structures, and in the 

frequency, types, and sizes of renovations affected by the two rulemakings. Simple computational 

adjustments to the average benefits to try and address the differences in the scenarios do not fully reflect 

the complex nature of the relationships being addressed. For example, there are two key relationships 

involved in calculating IQ change – going from lead exposure to blood lead, and from blood lead to IQ. 

Both of these relationships are non-linear, with the steepest slopes at lower levels, meaning that IQ effects 

are proportionately greater for lower exposures and blood lead levels. 

Moreover, because of the complex interactions between different components of the previous analysis for 

the 2008 rule, how the estimated benefits differ between scenarios is not always obvious. For example, 

children who receive childcare in a COF in target housing generally spend less time there than in their 

own residence. Yet as described later in this section, based on the 2008 analysis, preventing exposures to 

the children in target housing COFs yields an average benefit of $1,772 per child, which is larger than the 

average benefit of $1,384 per child for children residing in target housing. (This is due to differences in 

average background lead levels and the non-linear relations that are being modeled.) This example 

demonstrates the pitfalls of making simplified assumptions such as calculating the benefits to one group 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-6 

of children by scaling the estimated benefits to a different group of children based on the amount of time 

spent at home or in childcare. In the example given above, calculating the average benefits per child for 

children in target housing COFs by a linear scaling of the results for children residing in target housing 

would yield a lower average benefits value for the non-residential children, while the 2008 analysis 

indicates that the benefits are higher. 

Estimating benefits from avoided lead exposure is not an issue that lends itself to simplified calculations. 

Thus, the benefits calculations used here should be viewed as crude indicators of the magnitude of 

benefits. In light of this, the analysis calculates benefits under two different scenarios. In one of the 

scenarios, aggregate benefits are based on average benefits per individual from previous analyses 

multiplied by an estimate of the number of people affected by the rule. In the second scenario, benefits 

are calculated by applying a simple linear adjustment factor to one of the components in the first scenario, 

in order to reflect the uncertainties created by relying on the average benefit per individual from previous 

analyses as a basis for the calculation. 

It would not be accurate to characterize the average benefits per child calculated here as an upper bound 

estimate. The change in IQ may be larger for children with lower exposures, due to the non-linearities in 

the relationships. Because the previous LRRP rule analysis reflected a broad range of exposures and 

conditions, the IQ benefits in the earlier analysis may include flatter sections of the curves. To the extent 

that children protected by removing the opt-out provision are on steeper sections of the curves, the 

average benefit per child calculated from the 2008 analysis may underestimate the benefit of avoiding 

exposures by removing the opt-out provision. 

A limitation of this analysis is that the benefits calculations presented here are only based on some of the 

populations protected by the rule, and on some of the health effects avoided due to the rule. The 

population groups discussed below do not reflect all of the individuals protected by removing the opt-out, 

but instead represent groups for which calculations can be readily made. For example, these calculations 

do not include individuals living in detached houses adjacent to houses renovated under the opt-out 

provision, or children who spend time in a friend or relative’s house renovated under the opt-out. 

Furthermore, the calculations do not include the benefits of avoiding other effects that can be caused by 

lead exposure such as neurobehavioral impacts in children (e.g., aggression, attention deficit problems, 

and hyperactivity), as well as various other health effects that can also occur in individuals of all ages 

(including renal effects, immune system effects, and reproductive and developmental effects). The 

benefits of avoiding these effects were not quantified in the previous LRRP analyses, and thus are not 

calculated here. 

Benefits are calculated in this chapter for several groups of individuals affected by the removal of the optout provision: those residing in housing renovated under the opt-out provision; those living contiguous to 

attached housing renovated under the opt-out provision; those moving in to housing renovated by the 

previous owner under the opt-out provision; and those receiving childcare in housing renovated under the 

opt-out provision. 

5.2.1 Individuals Residing in Housing Units Renovated Under the Opt-out Provision 

Lead can result in serious effects for adults at low blood lead levels. According to the Clean Air 

Scientific Advisory Committee (CASAC) Lead Review Panel (CASAC 2007a): 

Lead’s effects extend beyond childhood. In adults, lead exposure is a risk factor for some of the 

most prevalent diseases or conditions of industrialized society, including cardiovascular disease 

and renal disease (16–20). There is also compelling evidence that the risks for mortality from 

stroke and myocardial infarction are increased at PbB concentrations below 10 μg/dl, which is 

considerably lower than those considered acceptable for adults (19). Finally, although less 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-7 

definitive, there is also evidence that lead exposure during pregnancy is a risk factor for 

spontaneous abortion or miscarriage at PbB concentrations < 10 μg/dl (21). 

CASAC has advised EPA not to focus only on IQ changes in children (CASAC 2007b): 

While the CASAC agrees with the Agency’s choice of IQ alterations in young children as the 

priority health effect and population for the risk assessment, the Lead Panel cautions against 

focusing only on IQ loss (or gain). There are ramifications of lead exposure on other endpoints 

that have societal and individual implications of great importance. Neurological developmental 

and functional effects in children exposed to Pb can lead to negative and disruptive behaviors 

well into teenage years. Moreover, while the adult nervous system has long been recognized as a 

target of Pb toxicity, epidemiologic and experimental toxicology data are emerging that support 

the relationship between Pb exposure and increased adverse cardiovascular outcomes, including 

increased blood pressure, increased incidence of hypertension, and cardiovascular morbidity and 

mortality at lower and lower levels of exposure. 

Removing the opt-out provision will benefit adults by reducing their exposure to lead dust generated by 

RRP activities in housing eligible for the opt-out provision. The first step in calculating these benefits is 

to estimate the number of individuals that would be protected by eliminating the opt-out provision. This 

is done by estimating the number of affected housing units. Next the number of occupants in the affected 

households must be estimated. Then the number of individuals protected is estimated as the number of 

individuals who reside where LBP is disturbed during RRP. Finally, the number of individuals is 

multiplied by the average benefit per individual. 

5.2.1.1 Estimating the Number of Individuals Residing in Housing Units Renovated Under the Optout Provision 

The elimination of the opt-out provision would affect owner-occupied target housing units where no child 

under the age of six or pregnant woman resides, and that do not meet the definition of a COF. Owneroccupied housing units where a child under the age of six or a pregnant woman resides can be identified 

in the 2003 American Housing Survey (AHS) data. (See Chapter 4 for a detailed discussion of the AHS 

data.) AHS respondents report information about the ages of householders, who are defined by the survey 

as persons who live or sleep there most of the time. Thus, child-occupied households are defined as those 

households with a householder under the age of six at the time of the RRP. Child-occupied households 

are estimated as households with a householder between the ages of one and seven at the time of the 

survey, since it is assumed that any RRP reported occurred a year earlier. (RRP performed up to two 

years earlier may be reported.) It follows that the number of households occupied by pregnant women 

can be estimated as the number of households with a woman of childbearing age and a child who is under 

the age of one in the household at the time of the survey. 

As described above, the AHS data can be used to identify rental units and target housing units where no 

child under the age of six or pregnant woman resides. However, to estimate the number of units that 

would be affected by the elimination of the opt-out provision, target housing units that are also COFs 

must also be identified so they can be excluded from the count of affected units. 

Note that COFs in target housing include family daycare providers and the homes of family, friends, and 

neighbors who regularly care for someone else’s children. The estimates include care provided with and 

without compensation and rely primarily on estimates of the size of the childcare workforce (Center for 

the Child Care Workforce, 2002). The Center for the Child Care Workforce (2002) report includes: (1) 

data on family child care providers caring for unrelated children in their own homes, (2) paid relatives and 

non-relatives providing child care, and (3) unpaid relatives and non-relatives providing child care. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-8 

The number of target housing COFs is projected based on estimates of the caregiver workforce in the 

Center for the Child Care Workforce (2002) report. Based on a Wilder Research Center report, it is 

assumed that 10 percent of family child care providers caring for unrelated children in their own homes 

employ 2 workers (Wilder Research Center 2001, p.16). For the remaining childcare providers, one 

worker is assumed per location. Based on 2003 AHS data for the general population of target housing, it 

is assumed that 65 percent of these housing units were built before 1978. 

The number of target housing units is adjusted to account for units that are already included in the LRRP 

rule universe or do not qualify as COFs because: (1) care is provided in a child’s own home, or (2) less 

than six hours of care per week is provided. In addition, the number of target housing units where 

childcare is provided that are regulated under the 2008 LRRP rule without qualifying as COFs must be 

estimated to avoid double counting. This includes: (1) units where the caregiver is pregnant or has a child 

under six living in the household, and (2) units where the caregiver lives in a rental unit. The basis for 

these adjustments is presented below. 

 Care Provided in Child’s Own Home 

 It is assumed that 22 percent of relatives and non-relatives (paid or unpaid) provide care in 

the child’s home; this is based on a Wilder Research Center (2005, p.28) report on the results 

of the 2004 Minnesota Statewide Household Child Care Survey. 

 Less Than Six Hours of Care Per-Week is Provided 

 Of those providing care in their own home, it is assumed that 27 percent of relatives and nonrelatives (paid or unpaid) provide care for less than six hours a week (Wilder Research Center 

2005, p.28). All family daycare providers caring for unrelated children in their own homes 

are assumed to care for at least one child for more than six hours a week. 

 Caregiver Lives in a Rental Unit 

 It is assumed that family, friend, and neighbor caregivers have the same likelihood of living 

in a rental unit as the general population of target housing occupants (39 percent). 

 Caregiver has a Child Under Six Living With Them 

 Based on the January 2006 Current Population Survey (U.S. Bureau of Labor Statistics 

2006), 16 percent of Child Care Workers have children under six. Thus, it is assumed that 16 

percent of in-home family daycare providers (formal care providers) caring for unrelated 

children in their own homes themselves have children under the age of six. Based on the 

Wilder Research Center (2005, p.19) report, 57.5 percent of family, friend, and neighbor 

caregivers (informal care providers) have children under the age of 12. Thus it is assumed 

that half as many, or 29 percent, have children under the age of six. 

 Caregiver is Pregnant 

 It was estimated that 1.1% of owner-occupied households with no child under the age of six 

were occupied by a pregnant woman using the 2003 AHS data. 

5.2.1.2 Summary of Target Housing COF Units 

Table 5-2 presents the estimated number of target housing units regulated under the 2008 LRRP rule. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-9 

Table 5-2: Number of Owner-Occupied Pre-1978 Target Housing Units Regulated Under 2008 LRRP 

Rule (Excluding Rental Units and Units Where a Child Under 6 or Pregnant Woman Resides) 

Type of Care a

Number of 

Target 

Housing 

COFs 

(thousands) b

In child’s 

own home 

Less than 

6-hours 

per-week

Post-78 In rental 

unit 

Child 

under 6 

resides 

Pregnant 

woman 

resides 

Total 

Adjustmentc

Total 

Regulated 

Units 

(thousands) d

Paid In-Home 

Family Daycare 591 n.a. n.a. 35% n.a. 16% 1.1% 55% 319 

Paid Relative 

Care 804 22% 27% 35% 39% 29% 1.1% 84% 128 

Unpaid Relative 

and Non-Relative 

Care 

2,354 22% 27% 35% 39% 29% 1.1% 84% 376 

Total (Pre-78) 824 

Total (Pre-60) e 424 

a. Paid In-Home Family Daycare refers to formal licensed daycare located in the provider’s home. Paid relative 

care is when family members are paid to care for the child in the family member’s home (unlicensed care). 

Unpaid relative and non-relative care refers to informal unpaid care provided at the homes of family, friends 

or neighbors (unlicensed care). 

b. Based on the size of the childcare workforce (Center for the Child Care Workforce 2002), assuming 1.1 

workers per location for paid in-home family daycare and 1 worker per location for other types of care. 

c. Calculated as one minus the product of one minus the adjustments. e.g., for the first row, 55% = 100% - 

(100%-35%)*(100%-16%)*(100%-1.1%). 

d. Components may not sum to totals due to rounding. Not adjusted for compliance rates. 

e. Adjusted based on number of target housing units.

Source: U.S. Census Bureau 1995, 1997, and 2003; EPA Calculations.

As described in Table 5-2, there are about 824,000 target housing COFs where no child under the age of 

six or a pregnant woman resides. Thus, of the 47,080,000 owner occupied housing units (see Section 2.8 

of Chapter 2): 

 A child under six resides or pregnant woman resides in 6,370,000 units (see Section 2.8 of 

Chapter 2) 

 About 824,000 units are COFs where no child under the age of six or pregnant woman resides 

(see Table 5-2) 

Therefore, about 39,886,000 units would be affected by the elimination of the opt-out provision.1

5.2.1.3 Number of Individuals Residing in Housing Units Affected by the Elimination of the OptOut Provision 

Only individuals age six and greater reside in housing units that would be affected by the elimination of 

the opt-out provision. Using the methodology described in Section 4.2 of Chapter 4, it was estimated that 

about 5.7 percent of pre-1978 households disturb LBP during RRP annually. In pre-1960 households, 

which are more likely to contain LBP, 10.1 percent households disturb LBP during RRP annually. The 

resulting estimates of the number of individuals who reside in these housing units where LBP is disturbed 

during RRP are presented in Table 5-3. 

 

1

 39,886,000 = 47,080,000 – 6,370,000 – 824,000. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-10 

Table 5-3: Annual Number of Individuals Age 6 and Older 

Residing in Opt-Out Eligible Housing Where LBP is Disturbed 

During an RRP Event that are Protected by the Removal of the 

Opt-out Provision 

Number of Individuals Age 6 and Older Protected 

by the Rule Each Yeara

Option 

First Year Second Yearb

A 5,248,000 5,226,000 

B 2,624,000 5,226,000 

C 0 5,226,000 

D 4,380,000 5,226,000 

E1 to E4c 5,248,000 5,226,000 

a. Assumes a 75% compliance rate. 

b. The stock of target housing, and therefore the number of individuals living in 

target housing, is assumed to decline by 0.41% per year (due to demolitions, 

conversions, etc,) based on Census data. 

c. Options E1 to E4 cover the same target housing universe and have the same 

effective date as Option A, but do not provide the same level of protection 

because they do not require all of the work practice standards under 40 CFR 

734.85. 

Since the opt-out provision is eliminated under Option A as soon as the rule becomes effective, all 

individuals residing in opt-out eligible housing performing RRP that disturbs LBP are protected in the 

first year. Since the opt-out provision under Option B is eliminated six months later (halfway through the 

beginning of the first year the rule is in place), the number of individuals protected under Option B in the 

first year is half the number estimated for Option A. Under Option C, the opt-out provision is eliminated a 

year later. Under Option D the opt-out provision is eliminated as soon as the rule becomes effective for 

housing built before 1960. Options E1 through E4 have the same effective dates and universe of 

regulated structures as Option A, but consider alternative work practice requirements. As indicated in the 

numbers presented in Table 5-3, the majority of the individuals that would be protected by the elimination 

of the opt-out provision reside in housing built before 1960 because of the higher likelihood of LBP in 

these housing units. In the second year (starting June 2011), the opt-out provision would be eliminated 

under all options.2

5.2.1.4 Calculated Benefits to Individuals Residing in Housing Units Renovated Under the Opt-out 

Provision 

EPA’s Economic Analysis for the 2006 proposed LRRP rule included estimates of benefits from avoided 

increases in blood pressure due to lead exposure and associated incidences of hypertension, heart attack, 

stroke, and death (EPA 2006b). The proposed rule was estimated to protect around 4.5 million 

individuals age 6 and older, resulting in annualized adult benefit of $2.25 billion/year, which is equivalent 

to an average benefit of $523 per year per person. The 2006 proposed rule only estimated cardiovascular 

benefits for adults age 40 and older, but the number of such adults protected by the LRRP rule was not 

listed in the Economic Analysis report. Instead, the 2006 report provides information on the number of 

 

2

 The stock of target housing, and therefore the number of individuals living in target housing, is assumed to decline by 0.41% 

per year (due to demolitions, conversions, etc.) based on Census data. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-11 

individuals age 6 and older. Dividing total estimated adult benefits from the 2006 LRRP analysis by the 

number of individuals 6 and older protected by the LRRP rule underestimates the average cardiovascular 

benefit per person for adults 40 and older. However, assuming that the ratio of the number of adults over 

age 40 protected to the number of all individuals over age 6 protected is similar for both the LRRP rule 

and the opt-out rule, multiplying the average benefit per individual age 6 and above by the number of 

individuals age 6 and above protected by the opt-out rule yields an estimate of the cardiovascular benefits 

of the opt-out rule to adults age 40 and older. 

Table 5-4 combines that $523 average with the 5.2 million individuals age 6 and older living in opt-out 

housing to calculate cardiovascular benefits under Scenario 2. Similar to the IQ change calculations 

discussed earlier, this is a crude indicator that does not account for differences in renovations or exposure 

between the LRRP rule and the opt-out proposal. This calculation is limited to cardiovascular effects and 

does not include the avoided incidence of other effects such as renal effects, immune system effects, and 

reproductive and developmental effects. 

Due to the uncertainty in calculating benefits using the average benefit per individual from a previous 

LRRP analysis, Scenario 1 is calculated assuming that the average cardiovascular benefit per individual is 

a quarter of the Scenario 2 value, or an average of $130.86 per individual age 6 and older. This could 

reflect potential improvements in treatment of high blood pressure and cardiovascular disease since the 

1970’s and 1980’s, when the data on which the Scenario 2 benefits per individual were based, were 

collected. These results are also shown in Table 5-4. 

As discussed in the 2006 analysis (EPA 2006a, p. 5-42), EPA acknowledges that the dose-response 

functions noted in that analysis rely on older published data and that not all of these data were included in 

the review presented in Appendix 5A of the 2006 document. EPA plans to prepare an expanded 

assessment for future rulemakings which quantify adult cardiovascular benefits, and will explore the use 

of more recent equations and more recent NHANES data. The use of newer equations and data is 

expected to reduce some of the existing uncertainties. 

Table 5-4: Calculated Cardiovascular Benefits for Adults Who Reside in Housing where 

LBP is Disturbed in RRP Events Under the Opt-Out Provision (millions, 2005$) 

Adult Benefits (millions, 2005$) 

Scenario 

Number Of 

Individuals 

>6* 

Average 

Cardiovascular 

Benefit Per 

Individual >6 

(2005$) 

First Year 

Cardiovasc. 

Benefits 

Annualized 

Cardiovasc. 

Benefits 

(3 percent) 

Annualized 

Cardiovasc. 

Benefits 

(7 percent) 

Scenario 1 5,247,590 $130.86 $687 $657 $699 

Scenario 2 5,247,590 $523.44 $2,747 $2,626 $2,795 

* Monetized benefit estimate reflects the fraction of this population age 40 and older. 

Notes: 1. Assumes a 75% compliance rate. 2. Average benefit based only on avoided cardiovascular effects. 

5.2.2 Number of Individuals Residing in Housing Attached to Opt-Out Housing 

Another group that would benefit from the removal of the opt-out provision is neighbors living nearby. 

The Dust Study indicates that exterior renovations generate large quantities of lead dust that spreads from 

the renovation site. This lead dust can contaminate neighboring properties. This analysis calculates the 

benefits of removing the opt-out provision for residents of neighboring properties, but the calculation is 

limited to a subset of such properties. The benefits calculation is based on the number of neighbors living 

in attached housing (such as townhouses) contiguous with housing renovated under the opt-out provision. 

In the Dust Study, testing samples taken 12 to 15 feet or more from the renovation work showed high dust 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-12 

lead levels. These distances are sufficient to reach across the property lines of attached houses. However, 

dust from RRP work can also contaminate non-contiguous attached houses and detached houses. 

Therefore, the individuals counted here represent a subset of the number of neighbors potentially exposed 

from RRP work on opt-out housing. 

Based on American Housing Survey (AHS) data (U.S. Census 2003), there are approximately 3.4 million 

attached housing units built before 1978, of which 1.9 million are owner-occupied. About 1.6 million of 

these units (or 48 percent of the 3.4 million pre-1978 attached units) are eligible for the opt-out provision 

under the 2008 LRRP rule because there is no child under the age of 6 or pregnant woman in residence 

and the unit is not a COF. According to the AHS data, about 751 thousand children under the age of six 

and 7.7 million individuals age six and older reside in these 3.4 million pre-1978 attached housing units. 

These individuals are among those who may be exposed to lead dust generated from exterior RRP work 

performed on a nearby unit that is renovated under the opt-out provision. 

The number of exposed individuals in attached housing units contiguous to a unit renovated under the 

opt-out provision is calculated by extrapolating from the existing LRRP analyses based on the number of 

exterior renovations that disturb lead-based paint. The number of attached opt-out housing units with 

exterior renovations that disturb lead-based paint and comply with the rule represent 3.2 percent of all 

compliant regulated single family housing units (assuming a 75 percent compliance rate).3

 Assuming 

each attached opt-out unit is attached to two other housing units (one on either side), the probability that 

LBP is disturbed during exterior RRP in an adjacent unit is double the 3.2 percent, or 6.4 percent4

. Since 

about 48 percent of attached housing units are eligible for the opt-out provision, 3.1 percent of all 

attached housing units will be attached to an opt-out eligible housing unit where LBP is disturbed during 

exterior RRP work (where 3.1 percent is the product of 48 percent and 6.4 percent). Thus, it is estimated 

that the removal of the opt-out provision would protect 23 thousand children and 238 thousand 

individuals aged 6 and older from exterior RRP work that disturbs LBP on a contiguous attached housing 

unit. 

The benefits to children in contiguous attached housing are calculated using the average benefit per child 

from the analysis of the 2008 LRRP final rule (EPA 2008b) for children under six residing in target 

housing with exterior renovation jobs. That value was $689.32 per child, and is used to calculate benefits 

under both Scenario 1 and Scenario 2.5

 

There are multiple factors that influence the benefits to individuals in these contiguous attached housing. 

Because of insufficient data, the analysis does not address these factors. For example, calculating benefits 

based on the average benefit for exterior RRP events from the 2008 analysis may underestimate the 

 

3

 3.2 percent is calculated as the sum of the exterior events where test kits correctly identified the presence of LBP in single

family owner-occupied housing (1,226 thousand, see Table 4-13) divided by the total number of single family owneroccupied housing units, 38.1 million. 

4

 Some houses that are semi-attached (e.g., duplexes and end units) rather than townhouses were included in this analysis, and 

such units are attached to one other housing unit instead of two units. It should be noted that semi-attached houses are 

typically placed on small lots. Thus, the distance between the opt-out house and the non-contiguous adjacent house are 

typically relatively small. These non-contiguous adjacent houses are not included in this analysis, but the impact on 

residents of such housing may be similar to residents of attached houses. 

5

 Numerous epidemiological studies have reported neurocognitive, neurobehavioral, sensory, and motor function effects in 

children with blood lead levels below 10μg/dL (CD, sections 6.2 and 8.4). [FN 7. Further, neurological effects in general 

include behavioral effects, such as delinquent behavior (CD, sections 6.2.6 and 8.4.2.2), sensory effects, such as those 

related to hearing and vision (CD, sections 6.2.7 and 8.4.2.3), and deficits in neuromotor function (CD, p. 8–36).] The 

benefits of avoiding other adverse effects caused by lead exposure were not quantified in the previous analyses, and thus are 

not calculated here. See section 5.4 for a discussion of these health effects. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-13 

benefits to children living in contiguous attached housing of removing the opt-out provision. The 2008 

analysis of exterior target housing RRP events calculated a single average lead level for an entire yard, 

assumed to be 9,304 square feet in size. (The use of a yard-wide average was based on the modeling 

assumption that a child is equally likely to spend time in any part of a yard.) The yard-wide lead level 

was a weighted average calculated by combining the lead levels from three component areas – the 

dripline area, the nearby area, and the rest of the yard. The dripline area was between 4 feet and 12 feet 

from the house (depending on the Dust Study experiment being modeled) and the lead loading was based 

on samples taken from the area covered by rule plastic in the Dust Study. The nearby area extended from 

3 feet to 8 feet from the dripline area (again depending on the Dust Study experiment being modeled), and 

the lead loading was based on samples taken from the area covered by containment plastic in the Dust 

Study. The lead level in the rest of the yard was an average soil level taken from HUD NSLAH data, and 

was significantly below the levels in the dripline and nearby areas. Since the yard-wide average lead 

level is the weighted average of these three areas, and the rest of the yard area was larger than the other 

areas, the yard-wide average lead level was well below the levels in the dripline area and the nearby area. 

The yards for typical attached housing are likely to be smaller than those for detached housing. For some 

attached housing, the entire yard size is an area equivalent to the dripline area or the combined dripline 

and nearby areas. The lead levels in the yards of both renovated attached opt-out housing and the 

contiguous attached housing may be underestimated by using yard-wide lead levels based on a 9,304 

square feet yard. Other factors, such as neighboring housing not being subject to the work practices (like 

closing windows and using plastic to collect lead dust) may affect the magnitude or exposure and related 

benefits for children in neighboring attached housing, compared to those for children in housing 

undergoing renovation. Because the net effect of such factors is unknown, the average benefit per child 

in Scenarios 1 and 2 are the same for this group of exposed children. Combining the number of children 

with the average benefit per child, Table 5-5 presents the calculated benefit of removing the opt-out 

provision in terms of the avoided IQ loss for children residing in contiguous attached housing units. 

Table 5-5: Calculated IQ Benefits for Children Under 6 Residing in Attached Housing 

Contiguous to a Unit Where LBP is Disturbed During an Exterior RRP Event (millions, 2005$) 

First 

Year IQ 

Benefits 

Annualized 

IQ Benefits 

(3 percent) 

Annualized 

IQ Benefits 

(7 percent) Option Number Of Children <6 

Average IQ Benefit 

Per Child <6 for 

Target Housing 

Exterior RRP 

(2005$) (millions, 2005$)

Scenario 1 

and 

Scenario 2 23,386 $689.32 $16.1 $15.4 $16.4 

Notes: 1. Assumes a 75% compliance rate. 2. Average benefit based only on avoided IQ loss. 3. Number of individuals 

does not include residents of detached housing or non-contiguous attached housing. 

The estimated adult benefits from avoided incidences of hypertension, heart attack, stroke, and death from 

EPA’s Economic Analysis for the 2006 proposed LRRP rule averaged $523 per person per year. 

Combining the benefit per individual with the 238 thousand individuals age 6 and older, Table 5-6 

presents the calculated benefits of avoided cardiovascular impacts attached housing contiguous to a unit 

where lead-based paint is disturbed in an exterior RRP event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-14 

Table 5-6: Calculated Cardiovascular Benefits for Adults Residing in Attached Housing 

Contiguous to a Unit Where LBP is Disturbed During an Exterior RRP Event (millions, 2005$) 

Adult Benefits (millions, 2005$) 

Scenario 

Number Of 

Individuals 

>6* 

Average 

Cardiovascular 

Benefit Per 

Individual >6 

(2005$) 

First Year 

Cardiovasc. 

Benefits 

Annualized 

Cardiovasc. 

Benefits 

(3 percent) 

Annualized 

Cardiovasc. 

Benefits 

(7 percent) 

Scenario 1 

and 

Scenario 2 238,359 $523.44 $125 $119 $127 

* Monetized benefit estimate reflects the fraction of this population age 40 and older. 

Notes: 1. Assumes a 75% compliance rate. 2. Average benefit based only on avoided cardiovascular effects. 3. Number of 

individuals does not include residents of detached housing or non-contiguous attached housing. 

5.2.3 Individuals Moving into Housing Units Renovated Under the Opt-Out Provision 

Another group that would benefit from the removal of the opt-out provision is individuals who move into 

housing units that were recently renovated under the opt-out provision. Owners typically perform 

painting and renovation work prior to selling a house, and baseline cleaning (i.e., not following the rule’s 

work practices) removes only visible dust, often leaving behind lead dust hazards. Thus, individuals who 

move into a house where RRP work has been performed under the opt-out provision will be exposed to 

the lead dust that remains. 

Based on AHS data (U.S. Census 2003), there are about 2.8 million owner-occupied target housing units 

that are sold per year, and about 927 thousand children under the age of six and 6.5 million individuals 

ago six and above move into these units. About 85 percent of these housing units were eligible for the 

opt-out provision under the previous owner, based on the overall percentage of owner-occupied target 

housing units that are eligible for the opt-out provision. Thus, each year about 785,000 children under the 

age of 6 and 5.5 million individuals age six and above move into units that were eligible for the opt-out 

provision. 

Overall, an average of about 35 percent of renovations in opt-out housing disturb lead-based paint (see 

Table 4-13 in Chapter 4). Scenario 1 uses this 35 percent and assumes that RRP work is performed in one 

quarter of these opt-out housing units before the units are sold. Thus, under Scenario 1, about 69 

thousand children under the age of six and 481 thousand individuals age 6 and above move into housing 

units each year where LBP was disturbed during RRP. Assuming 75 percent compliance with the rule, 

eliminating the opt-out provision will protect about 52 thousand children under the age of six and 361 

thousand individuals age six and above annually from RRP events where LBP was disturbed before they 

move in. 

Scenario 2 assumes that RRP work that disturbs lead-based paint is performed in all opt-out housing units 

before the units are sold. Thus, under Scenario 2, assuming a 75 percent compliance rate, eliminating the 

opt-out provision will protect about 206 thousand children under the age of six and 1.4 million individuals 

age six and above annually from RRP events where LBP was disturbed before they move in. 

Benefits are calculated under this simplified scenario assuming that homeowners disturb lead-based paint 

by painting or remodeling shortly before their house is sold, so that relatively few iterations of routine 

cleaning occur prior to the new occupants moving in. To the extent that there is an appreciable time 

period between when these RRP events occur and when new tenants move in, the lead levels in these 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-15 

housing units may be lower than the lead levels used in the 2008 analysis. However, since the health 

effects models are non-linear, the size of the impact on the benefits calculation is not known. 

The average monetized benefit from the 2008 LRRP rule analysis for avoided IQ loss in children exposed 

in target housing where an RRP event was performed that disturbed lead-based paint is $1,384.07 (EPA 

2008b). Table 5-7 presents the calculated benefits of avoided IQ loss for children residing in housing 

units where LBP is disturbed during a RRP event before they moved in. 

Table 5-7: Calculated IQ Benefits for Children Under the Age of Six Who Move into Housing 

where LBP was Disturbed During an RRP Event that was Eligible for the Opt-Out Provision 

First 

Year IQ 

Benefits 

Annualized 

IQ Benefits 

(3 percent) 

Annualized 

IQ Benefits 

(7 percent) Option Number Of Children <6 

Average IQ Benefit 

Per Child <6 for 

Target Housing 

(2005$) (millions, 2005$)

Scenario 1 51,538 $1,384.07 $71.3 $68.2 $72.6 

Scenario 2 206,150 $1,384.07 $285.3 $272.7 $290.3 

Notes: 1. Assumes a 75% compliance rate. 2. Average benefit based only on avoided IQ loss. 

As shown in Table 5-8, Scenarios 1 and 2 use the same average adult cardiovascular benefit per 

individual ($131 and $523, respectively) as Scenarios 1 and 2 in Section 5.2.1.4. The calculations shown 

in this table are not included in the summary of the benefits calculations shown in Table 5-12. Since the 

calculations for this scenario are based on the assumption that RRP work occurs shortly before the new 

occupants move in, the original owners are assumed to move out shortly after the RRP work is performed. 

Under this scenario, excluding the new residents from the total is equivalent to subtracting the individuals 

who move out from the number of individuals calculated in Table 5-4. However, the adult benefit 

estimates in the 2006 analysis were based on a non-linear model, so benefits to avoiding exposure to two 

individuals (the home seller and the home buyer) for a shorter period of time may exceed the benefits of 

avoiding exposure to one individual for a longer time period. Under a different scenario (where there was 

assumed to be a non-trivial time delay between when RRP work was performed and when the house was 

sold), it would be appropriate to count benefits to both the old and new occupants in the total. 

 

Table 5-8: Calculated Cardiovascular Benefits for Adults Who Move into Housing that was 

Eligible for the Opt-Out Provision When LBP was Disturbed During an RRP Event 

Adult Benefits (millions, 2005$) 

Scenario 

Number Of 

Individuals 

>6* 

Average 

Cardiovascular 

Benefit Per 

Individual >6 

(2005$) 

First Year 

Cardiovasc. 

Benefits 

Annualized 

Cardiovasc. 

Benefits 

(3 percent) 

Annualized 

Cardiovasc. 

Benefits 

(7 percent) 

Scenario 1 360,680 $130.86 $47.2 $45.1 $48 

Scenario 2 1,442,720 $523.44 $755 $722 $768 

* Monetized benefit estimate reflects the fraction of this population age 40 and older. 

Notes: 1. Assumes a 75% compliance rate. 2. Average benefit based only on avoided IQ loss. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-16 

5.2.4 Children Receiving Regular Care in Target Housing that is not a COF 

A target housing unit where a child visits regularly, but spends fewer that 6 hours a week, is not 

considered a child-occupied facility. Therefore, these housing units, hereafter referred to as Regular Care 

Target Housing (RCTH) units, are eligible for the opt-out provision under the existing LRRP rule 

providing that there is no child under the age of six or pregnant woman that resides in the unit. Thus, 

children visiting RCTH may benefit from the elimination of the opt-out provision by reducing their 

potential exposures to lead dust during these visits. 

The methodology developed to estimate the number of children protected from potential lead exposures in 

RCTH units eligible for the opt-out provision under the existing rule has three primary steps: (1) estimate 

the number of children who regularly visit RCTH units that are eligible for the opt-out provision, (2) 

estimate the frequency that LBP is disturbed during RRP in these units, and (3) combine the results. 

These steps are described in more detail below. 

5.2.4.1 Number of Children Visiting RCTH units 

The total population of children under the age of six and the estimated percentages of children in nonparental care arrangements utilized in this analysis is from Mulligan et al. (2005) and is presented in 

Table 5-9. Following the methodology from the economic analysis of the 2008 LRRP rule (EPA 2008b), 

it is assumed that all paid non-relative care arrangements are in COFs (care for at least one child is 

provided for more than six hours a week) and therefore would not be affected by the elimination of the 

opt-out provision. However, some unpaid non-relative care arrangements and relative care arrangements 

(paid and unpaid) are expected to be for fewer than six hours a week and therefore may be in the RCTH 

units that would be affected by the elimination of the opt-out provision. Of those providing care in their 

own home, it is assumed that 27 percent of relatives (paid and unpaid) and unpaid non-relatives provide 

care for less than six hours a week (Wilder Research Center 2005, p.28). In addition, the estimates are 

adjusted by 22 percent so that they only include children receiving care in homes that are (1) target 

housing, (2) owner occupied, (3) where no pregnant woman resides, (4) outside the child’s own home, 

and (5) where no child under the age of six resides.6

 

The adjustment factors listed above are combined to estimate the number of children who regularly visit 

RCTH units that are eligible for the opt-out provision of the existing LRRP rule presented in Table 5-9. 

 

6

 Based on 2003 AHS data it is estimated that 65 percent of housing units are target housing, 61 percent are owner-occupied, and

98.9 percent of housing units are not occupied by a pregnant woman. 

Based on the Wilder Research Center (2005, p.19) report, 57.5 percent of family, friend, and neighbor caregivers (informal care

providers) have children under the age of 12. It is assumed that half as many, or 29 percent, have children under the age of 

six. Thus, 71 percent of RCTH units are not occupied by a child under the age of six. 

Based on a Wilder Research Center (2005, p.28) report on the results of the 2004 Minnesota Statewide Household Child Care 

Survey it is assumed that 78 percent of relatives and non-relatives (paid or unpaid) provide care outside the child’s home. 

The product of the above adjustment factors, 65%, 61%, 98.9%, 71%, and 78%, is 22%. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-17 

Table 5-9: Number of Children Visiting RCTH Units Affected by the Opt-Out Elimination 

Regulatory Options 

Age 

Total 

Population 

(thousands) 

Percent 

Receiving 

Unpaid NonRelative Care 

Percent 

Receiving 

Relative 

Care 

Percent 

Receiving 

Care < 6 

Hours Per 

Week 

Receiving Care in 

Owner-Occupied, 

Pre-78 Housing, 

Where no ChildUnder Six or 

Pregnant Woman 

Resides* 

Population 

Receiving 

Unpaid NonRelative Care

(thousands) 

Population 

Receiving 

Relative 

Care 

(thousands) 

Total 

Population 

in Affected 

Units 

(thousands)

0 3,868 1.4% 21.0% 27.0% 22.0% 3.3 48.5 51.9 

1 3,902 2.1% 22.0% 27.0% 22.0% 4.8 51.3 56.1 

2 3,931 1.9% 23.0% 27.0% 22.0% 4.5 54.0 58.5 

3 3,795 1.6% 22.0% 27.0% 22.0% 3.7 49.9 53.5 

4 3,861 1.6% 21.0% 27.0% 22.0% 3.7 48.4 52.1 

5 896 1.7% 20.0% 27.0% 22.0% 0.9 10.7 11.6 

0-5 20,253 21.0 262.9 283.9 

*61% of TH units are owner-occupied; 65% of TH units are pre-1978, 78% of children receive care outside their own 

home, and 71% receive care where no other child under the age of six resides, and 98.9% receive care where no 

pregnant woman resides. The product of 61%, 65%, 78%, 71%, and 98.9% is 22%. 

5.2.4.2 Number of Children Visiting RCTH Protected by the Opt-Out Provision Elimination 

The second measure of the benefits for each of the regulatory options consists of the number of children 

regularly visiting RCTH units where LBP is disturbed during RRP in housing eligible for the opt-out 

provision under the existing rule. Using the methodology described in Section 4.2 of Chapter 4, it was 

estimated that about 5.7 percent of Pre-1978 households perform RRP that disturbs lead-based paint 

(LBP) annually. In Pre-1960 households, which are more likely to contain LBP, 10.1 percent households 

perform RRP that disturbs lead-based paint (LBP) annually. Combining the 5.7 percent of RRP events 

that disturb LBP with the 283,900 children receiving child care in RCTH units presented in Table 5-9 

yields the estimate of 16,215 children presented in Table 5-10. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-18 

Table 5-10: Annual Number of Children Visiting Opt-Out 

Eligible RCTH Where LBP is Disturbed During an RRP Event 

that are Protected by the Removal of the Opt-out Provision 

Number of Children Under the Age of 6 Protected 

by the Rule each Yeara

Option 

First Year Second Yearb

A 16,215 16,149 

B 8,108 16,149 

C 0 16,149 

D 13,597 16,149 

E1 to E4c 16,215 16,149 

a. Assumes a 75% compliance rate. 

b. The stock of target housing, and therefore the number of individuals living in 

target housing, is assumed to decline by 0.41% per year (due to demolitions, 

conversions, etc,) based on Census data. 

c. Options E1 to E4 cover the same target housing universe and have the same 

effective date as Option A, but do not provide the same level of protection 

because they do not require all of the work practice standards under 40 CFR 

734.85. 

Since the opt-out provision is eliminated under Option A as soon as the rule becomes effective, all 

children receiving care in opt-out eligible RCTH performing RRP that disturbs LBP are protected in the 

first year. Since the opt-out provision under Option B is eliminated six months later (halfway through the 

beginning of the first year the rule is in place), the number of individuals protected under Option B in the 

first year is half the number estimated for Option A. Under Option C, the opt-out provision is eliminated a 

year later. Under Option D the opt-out provision is eliminated as soon as the rule becomes effective for 

housing built before 1960. Options E1 through E4 have the same effective dates and universe of 

regulated structures as Option A, but consider alternative work practice requirements. As indicated in the 

numbers presented in Table 5-10, the majority of the children that would be protected by the elimination 

of the opt-out provision reside in housing built before 1960 because of the higher likelihood of LBP in 

these housing units. In the second year (starting June 2011), the opt-out provision would be eliminated 

under all options. 

Calculated Benefits for Children in Opt-Out Eligible RCTH 

Under Scenario 2, the IQ benefit per child for children receiving care in RCTH units eligible for the optout provision is calculated using the average monetized benefits due to IQ loss for children receiving 

childcare in target housing where LBP was disturbed during RRP work, taken from the Economic 

Analysis for the 2008 LRRP rule (EPA 2008b). The average calculated benefit due to IQ loss for these 

children $1,771.97 per child.7

 

 

7

 The benefits of avoiding other adverse effects caused by lead exposure (including such neurobehavioral impacts in children as 

aggression, attention deficit problems, and hyperactivity), as well as various other health effects that can also occur in older 

individuals (including renal effects, immune system effects, and reproductive and developmental effects), were not 

quantified in the previous analyses, and thus are not calculated here. See section 5.4 for a discussion of these health effects. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-19 

The average Scenario 2 benefit of $1,771.97 per child for children receiving childcare in target housing is 

higher than the $1,384.07 average benefit for children residing in target housing. (Both of these values 

are for target housing where an RRP event was performed that disturbed LBP.) At first glance this result 

seems counterintuitive, since children who reside in renovated target housing spend more time there on 

average than children who attend childcare in renovated target housing. The result is due to differences in 

background levels for the two groups, and non-linearities in the benefits modeling. 

In the 2008 analysis, vintage-specific background levels were used to estimate media concentrations at 

the site where the RRP activity was occurring. However, "overall" background levels were used to 

estimate media concentrations during time spent away from the site where the RRP activity was 

occurring. The "overall" background level was the average background level across all vintages – 

including post-1978 buildings. When the exposure scenario was at a child's house, and he spent some 

time at daycare, his background exposure was lower for the time at daycare. When the exposure scenario 

was at a child's daycare, her background exposure was lower when she was at home. 

In the 2008 analysis, when a child started from a lower background level of exposure, the damage in 

terms of IQ loss from an exposure was greater. This "background" effect dominated the effect from 

spending less time at the exposure site. As described earlier in this report, there are two key relationships 

involved in calculating IQ change – going from lead exposure to blood lead, and from blood lead to IQ. 

Both of these relationships are nonlinear, with the steepest slopes at lower levels, meaning that IQ effects 

are proportionately greater for lower exposures and blood lead levels. Thus, benefits from avoiding 

exposure are proportionately greater for children starting from a lower background level of exposure. The 

children with the lowest average background exposure level are those exposed at daycare in target 

housing – because these children include children living in post-1978 housing. The result is that children 

receiving childcare in target housing have a higher average benefit per child ($1,771.97 per child) under 

Scenario 2 than children exposed in all target housing units ($1,384.07 per child). 

According to data from the Department of Education National Center for Education Statistics’s 2005 

"Early Childhood Program Participation Survey", the average amount of time that children under the age 

of 6 spend in COFs in target housing varies by age of child, ranging from 25 to 30 hours per week. 

Because the 6 hours per week in childcare assumed for RCTH children is about one quarter of the average 

amount of time children spend in COFs, Scenario 1 assumes that the average benefit per child is one 

quarter that of Scenario 2, or $442.99 per child. 

To be classified as a COF, a pre-1978 building must be frequented by the same child at least two different 

days of the week, with each visit consisting of at least 3 hours each day, and the combined visits at least 6 

hours per week. This can result in a situation where a facility is not classified as a COF even though a 

child receives more than 6 hours of care per week. For example, if a child is in a pre-1978 building 2 

hours per day for 5 days a week, for a total of 10 hours per week, the building would not be classified as a 

COF. Similarly, if a child is in a pre-1978 building 8 hours one day a week and 2.75 hours the other 6 

days a week, for a total of 24.5 hours per week, the building would also not be classified as a COF. There 

are of course other scenarios in which day-care would occur for more than 6 hours a week but where the 

building would not be considered to be a COF. Thus, although this analysis assumes that children spend 

an average of 6 hours per week in RCTH, this is not the upper bound for the time that children spend in 

RCTH. 

Table 5-11 presents the calculated benefits under Option A from removing the opt-out provision for 

children under the age of six receiving childcare at an RCTH where LBP is disturbed during an RRP 

event. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-20 

Table 5-11: Calculated IQ Benefits from Opt-Out Provision Removal for Children in 

Opt-Out Eligible RCTH Where LBP is Disturbed During an RRP Event 

First 

Year 

Benefits 

Annualized 

Benefits 

(3 percent) 

Annualized 

Benefits 

(7 percent) Scenario 

Annual 

Number Of 

Children 

<6 

Average IQ 

Benefit Per Child 

<6 in Target 

Housing 

Childcare 

(2005$) (millions, 2005$)

Scenario 1 16,215 $442.99 $7.2 $6.9 $7.3 

Scenario 2 16,215 $1,771.97 $28.7 $27.5 $29.2 

Notes: 1. Assumes a 75% compliance rate. 2. Average benefit based only on avoided IQ loss. 

5.2.5 Summary of Calculated Benefits 

Table 5-12 presents the Scenario 1 results and Table 5-13 presents the Scenario 2 results at 3 percent and 

7 percent discount rates. Table 5-14 shows both scenarios using a 3 percent discount rate, and Table 5-15 

shows similar information using a 7 percent discount rate. 

The results do not include other populations that will benefit from the rule, such as individuals other than 

those in contiguous attached housing who live near a house renovated under the opt-out provision; or 

those who spend time in a friend’s or relative’s house renovated under the opt-out provision. 

The benefits calculations for children under the age of 6 are based on avoided losses in expected earnings 

due to IQ drop, and the calculations for adults are based on the avoided medical costs (or other proxies for 

willingness to pay) for hypertension, coronary heart disease, stroke, and the resulting incidence of deaths. 

The quantified benefits to children do not include the avoided costs of other associated impacts of lead 

exposure such as aggression, attention deficit problems, hyperactivity, or other neurobehavioral impacts; 

additional education costs for special and remedial education; or medical costs to treat very high levels of 

lead. Nor do any of the calculations include the benefits of renal effects, immune system effects, 

reproductive and developmental effects, or various other health effects that can be caused by lead 

exposure. See Section 5.4 for a discussion of these health effects. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

Chapter 5 

Table 5-12: Summary of Benefits for Option A – Final Rule (millions, 2005$) – Scenario 1 

Children Under 6 

IQ Benefits 

Adult 

Cardiovascular Benefits Comb

Population Annualized 

Benefits 

(3 percent) 

Annualized 

Benefits 

(7 percent) 

Annualized 

Benefits 

(3 percent) 

Annualized 

Benefits 

(7 percent) 

Annualized 

Benefits 

(3 percent) 

Calculated Benefits (1) Reside in housing renovated under opt-out provision 

Not applicable – children 

under 6 do not reside in 

opt-out eligible housing $656.5 $698.8 $656.5 

(2) Live contiguous to attached house renovated under opt-out provision $15.4 $16.4 $119 $127 $134.4 (3) Move into house renovated under opt-out provision $68.2 $72.6 $45.1* $48* $68.2* (4) Receive childcare in housing renovated under opt-out provision $6.9 $7.3 Not applicable $6.9 Subtotal $90.5 $96.3 $775.5 $825.8 $866.0 Uncalculated Benefits (5) Live near house renovated under opt-out provision, other than contiguous attached house Not estimated Not estimated Not estim(6) Spend time in friend’s or relative’s house renovated under opt-out provision Not estimated Not estimated Not estim(7) Health effects for all populations other than IQ loss in children <6 and blood pressure effects in older individuals Not estimated Not estimated Not estimTotal Not estimated Not estimated Not estim* Not included in subtotal because these benefits are assumed to be incorporated into row #1 above based on the exposure assumptions Notes: 1. Assumes a 75% compliance rate. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

Chapter 5 

Table 5-13: Summary of Benefits for Option A – Final Rule (millions, 2005$) – Scenario 2 

Children Under 6 

IQ Benefits 

Adult 

Cardiovascular Benefits Comb

Population Annualized 

Benefits 

(3 percent) 

Annualized 

Benefits 

(7 percent) 

Annualized 

Benefits 

(3 percent) 

Annualized 

Benefits 

(7 percent) 

Annualized 

Benefits 

(3 percent) 

Calculated Benefits (1) Reside in housing renovated under opt-out provision 

Not applicable – children 

under 6 do not reside in 

opt-out eligible housing $2,626 $2,795 $2,626 

(2) Live contiguous to attached house renovated under opt-out provision $15.4 $16.4 $119 $127 $134.4 (3) Move into house renovated under opt-out provision $272.7 $290.3 $722* $768* $272.7* (4) Receive childcare in housing renovated under opt-out provision $27.5 $29.2 Not applicable $27.5 Subtotal $315.6 $335.9 $2,745 $2,922 $3,060.6 Uncalculated Benefits (5) Live near house renovated under opt-out provision, other than contiguous attached house Not estimated Not estimated Not estim(6) Spend time in friend’s or relative’s house renovated under opt-out provision Not estimated Not estimated Not estim(7) Health effects for all populations other than IQ loss in children <6 and blood pressure effects in older individuals Not estimated Not estimated Not estimTotal Not estimated Not estimated Not estim* Not included in subtotal because these benefits are assumed to be incorporated into row #1 above based on the exposure assumptions Notes: 1. Assumes a 75% compliance rate. 
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Table 5-14: Summary of Benefits for Option A – Final Rule (millions of dollars, 3% discount rate) 

Children Under 6 

IQ Benefits 

Adult 

Cardiovascular Benefits Combined Population 

Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scena

(1) Reside in housing renovated under opt-out provision 

Not applicable – children 

under 6 do not reside in 

opt-out eligible housing $656.5 $2,626 $656.5 $2,

(2) Live contiguous to attached house renovated under opt-out provision $15.4 $15.4 $119 $119 $134.4 $13(3) Move into house renovated under opt-out provision $68.2 $272.7 $45* $722* $68.2* $27(4) Receive childcare in housing renovated under opt-out provision $6.9 $27.5 Not applicable $6.9 $Subtotal $90.5 $315.6 $775.5 $2,745 $866.0 $3,06Uncalculated Benefits(5) Live near house renovated under opt-out provision, other than contiguous attached house; (6) Spend time in friend’s or relative’s house renovated under opt-out provision; (7) Health effects for all populations other than IQ loss in children <6 and blood pressure effects in older individuals. * Adult component not included in subtotal because these benefits are assumed to be incorporated into row #1 above based on thexposure assumptions used.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

Chapter 5 

Table 5-15: Summary of Benefits for Option A – Final Rule (millions of dollars, 7% discount rate) 

Children Under 6 

IQ Benefits 

Adult 

Cardiovascular Benefits Combined Population 

Scenario 1 Scenario 2 Scenario 1 Scenario 2 Scenario 1 Scena

(1) Reside in housing renovated under opt-out provision 

Not applicable – children 

under 6 do not reside in 

opt-out eligible housing $698.8 $2,795 $698.8 $2,

(2) Live contiguous to attached house renovated under opt-out provision $16.4 $16.4 $127 $127 $143.4 $15(3) Move into house renovated under opt-out provision $72.6 $290.3 $48* 768* $72.6* $29(4) Receive childcare in housing renovated under opt-out provision $7.3 $29.2 Not applicable $7.3 $Subtotal $96.3 $335.9 $825.8 $2,922 $920.1 $3,25Uncalculated Benefits(5) Live near house renovated under opt-out provision, other than contiguous attached house; (6) Spend time in friend’s or relative’s house renovated under opt-out provision; (7) Health effects for all populations other than IQ loss in children <6 and blood pressure effects in older individuals. * Adult component not included in subtotal because these benefits are assumed to be incorporated into row #1 above based on thexposure assumptions used.
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5.3 Benefits of Additional Recordkeeping Requirements 

In promulgating the 2008 LRRP rule, EPA recognized the importance of education and outreach to teach 

consumers about lead-safe work practices and to encourage them to hire certified renovation firms. 

EPA’s work on the education and outreach campaign for the LRRP program has continued to highlight 

the importance of an informed public to the success of the LRRP program in minimizing exposures to 

lead-based paint hazards that may be created by renovations. 

EPA has determined that if renovators are required to provide the owners and occupants of renovated 

buildings with copies of the records renovation firms must maintain to document compliance with the 

rule’s training and work practice requirements, it will serve to reinforce the information provided in 

EPA’s “Renovate Right” brochure on the potential hazards of renovations and on the LRRP requirements. 

These records will enable building owners and occupants to better understand what the renovation firm 

did to comply with the rule and how the rule’s provisions affected their specific renovation. Educating 

the owners and occupants in this way is likely to help them to be better able to protect themselves from 

lead-based paint hazards that may have been created by the renovation and improve their ability to assist 

the EPA in monitoring compliance with the LRRP rule. For example, the checklist may cause owners or 

occupants to question whether the containment used was sufficient, or whether cleaning verification was 

properly performed. Tenants may raise their concerns with their landlord, and owners may discuss their 

concerns with the renovation firm before making final payment for the renovation. These improvements 

in education and monitoring will improve compliance with the rule, which will ultimately protect children 

and adults from exposure to lead hazards due to renovation activities. 

5.4 Lead-Related Health Effects and Ecological Effects 

Lead exposure can cause many adverse health and ecological effects. This section supplements the 

benefits chapter by providing a broader, qualitative discussion of lead-related effects (including adult 

effects and ecological effects), based on EPA’s Air Quality Criteria for Lead. 

The information provided in this section is an excerpt from the Executive Summary of the document Air 

Quality Criteria for Lead (United States Environmental Protection Agency, October 2006, EPA/600/R5/144aF, this document is available at http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=158823). 

Specifically, the information provided in this section is directly from the following sections of the 

Executive Summary: 

 E.4 Health Effects Associated with Lead Exposure 

 E.5 Human Population Groups at Special Risk and Potential Public Health Impacts 

 E.6 Environmental Effects of Lead 

5.4.1 Background 

The purpose of the 2006 Lead Air Quality Criteria document (AQCD) is to critically assess the latest 

scientific information on lead. The final version of the revised Lead AQCD mainly assesses pertinent 

literature published or accepted for publication through December 2005. 

The First External Review Draft (dated December 2005) of the revised Lead AQCD underwent public 

comment and was reviewed by the Clean Air Scientific Advisory Committee (CASAC) at a public 

meeting held in Durham, NC on February 28-March 1, 2006. The public comments and CASAC 

recommendations received were taken into account in making appropriate revisions and incorporating 

them into a Second External Review Draft (dated May, 2006) which was released for further public 
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comment and CASAC review at a public meeting held June 28-29, 2006. In addition, still further revised 

drafts of the Integrative Synthesis chapter and the Executive Summary were then issued and discussed 

during an August 15, 2006 CASAC teleconference call. Public comments and CASAC advice received 

on these latter materials, as well as Second External Review Draft materials, were taken into account in 

making and incorporating further revisions into this final version of the Lead AQCD. 

5.4.2 Health Effects Associated with Lead Exposure 

Both epidemiologic and toxicological studies have shown that environmentally relevant levels of lead 

affect many different organ systems. Research completed since the 1986 AQCD/Addendum and 1990 

Supplement indicates that lead effects occur at blood-lead levels even lower than those previously 

reported for many endpoints. Remarkable progress has been made since the mid-1980s in understanding 

the Pb effects on health. Recent studies have focused on details of the associations, including the shapes 

of concentration-response relationships, especially at levels well within the range of general population 

exposures, and on those biological and/or socio-environmental factors that either increase or decrease an 

individual’s risk. Key findings and conclusions regarding important outcomes of newly available 

toxicological and epidemiologic studies of Pb health effects are highlighted below.

5.4.2.1 Neurotoxic Effects 

 Neurobehavioral effects of Pb-exposure early in development (during fetal, neonatal, and later 

postnatal periods) in young infants and children (<7 years old) have been observed with 

remarkable consistency across numerous studies involving varying study designs, different 

developmental assessment protocols, and diverse populations. Negative Pb impacts on 

neurocognitive ability and other neurobehavioral outcomes are robust in most recent studies even 

after adjustment for numerous potentially confounding factors (including quality of care giving, 

parental intelligence, and socioeconomic status). These effects generally appear to persist into 

adolescence and young adulthood. 

 The overall weight of the available evidence provides clear substantiation of neurocognitive 

decrements being associated in young children with blood-Pb concentrations in the range of 5-10 

μg/dL, and possibly somewhat lower. Some newly available analyses appear to show Pb effects 

on the intellectual attainment of preschool and school age children at population mean concurrent 

blood-Pb levels ranging down to as low as 2 to 8 μg/dL. A decline of 6.2 points in full scale IQ 

for an increase in concurrent blood Pb levels from 1 to 10 μg/dL has been estimated, based on a 

pooled analysis of results derived from seven well-conducted prospective epidemiologic studies. 

 In the limited literature examining the effects of environmental Pb exposure on adults, mixed 

evidence exists regarding associations between Pb and neurocognitive performance. No 

associations were observed between cognitive performance and blood Pb levels; however, 

significant associations were observed in relation to bone Pb concentrations, suggesting that longterm cumulative Pb exposure may contribute to neurocognitive deficits in adults. 

 Animal toxicology data indicate that developmental Pb exposures creating steady-state blood-Pb 

concentrations of ~10 μg/dL result in behavioral impairments that persist into adulthood in rats 

and monkeys. No evident threshold has yet been found; and Pb-induced deficits, for the most 

part, have been found to be very persistent, even with various chelation treatments. However, 

experimental studies indicate that environmental enrichment during development can partially 

mitigate the effects of Pb on cognitive function. In rats, neurobehavioral deficits that persisted 

well into adulthood were observed with prenatal, preweaning, and postweaning Pb exposure. In 

monkeys, such neurobehavioral deficits were observed both with in utero-only exposure and with 
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early postnatal-only exposure when peak blood-Pb levels did not exceed 15 μg/dL and steadystate levels were ~11 μg/dL. 

 Learning impairment has been observed in animal studies at blood levels as low as 10 μg/dL, 

with higher level learning showing greater impairment than simple learning tasks. The 

mechanisms associated with these deficits include: response preservation; insensitivity to changes 

in reinforcement density or contingencies; deficits in attention; reduced ability to inhibit 

inappropriate responding; impulsivity; and distractibility. 

 Lead affects reactivity to the environment and social behavior in both rodents and nonhuman 

primates at blood Pb levels of 15 to 40 μg/dL. Rodent studies also show that Pb exposure 

potentiates the effects of stress in females. 

 Auditory function has also been shown to be impaired at blood Pb levels of 33 μg/dL, while 

visual functions are affected at 19 μg/dL. 

 Neurotoxicological studies in animals clearly demonstrated that Pb mimics calcium and affects 

neurotransmission and synaptic plasticity. 

 Epidemiologic studies have identified genetic polymorphisms of two genes that may alter 

susceptibility to the neurodevelopmental consequences of Pb exposure in children. Variant alleles 

of the ALAD gene are associated with differences in absorption, retention, and toxicokinetics of 

Pb. Polymorphisms of the vitamin D receptor gene have been shown to affect the rate of 

resorption and excretion of Pb over time. These studies are only suggestive, and parallel animal 

studies have not been completed. 

5.4.2.2 Cardiovascular Effects 

 Epidemiologic studies have consistently demonstrated associations between Pb exposure and 

enhanced risk of deleterious cardiovascular outcomes, including increased blood pressure and 

incidence of hypertension. A meta-analysis of numerous studies estimates that a doubling of 

blood-Pb level (e.g., from 5 to 10 μg/dL) is associated with ~1.0 mm Hg increase in systolic 

blood pressure and ~0.6 mm Hg increase in diastolic pressure. Studies have also found that 

cumulative past Pb exposure (e.g., bone Pb) may be as important, if not more, than present Pb 

exposure in assessing cardiovascular effects. The evidence for an association of Pb with 

cardiovascular morbidity and mortality is limited but supportive. 

 Experimental toxicology studies have confirmed Pb effects on cardiovascular functions. Most 

have shown that exposures creating blood-Pb levels of ~20 to 30 μg/dL for long periods result in 

arterial hypertension that persists long after cessation of Pb exposure in genetically normal 

animals. One study reported blood pressure increases at blood-Pb levels as low as 2 μg/dL in rats. 

A number of in vivo and in vitro studies provide compelling evidence for the role of oxidative 

stress in the pathogenesis of Pb-induced hypertension. However, experimental investigations of 

cardiovascular effects of Pb in animals are unclear as to why low, but not high, levels of Pb 

exposure cause hypertension in experimental animals. 

5.4.2.3 Renal Effects 

 In the general population, both circulating and cumulative Pb was found to be associated with 

longitudinal decline in renal function. Effects on creatine clearance have been reported in human 

adult hypertensives to be associated with general population mean blood-Pb levels of only 4.2 

μg/dL. The public health significance of such effects is not clear, however, in view of more 
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serious signs of kidney dysfunction being seen in occupationally exposed workers only at much 

higher blood-Pb levels (>30-40 μg/dL). 

 Experimental studies using laboratory animals demonstrated that the initial accumulation of 

absorbed Pb occurs primarily in the kidneys. This takes place mainly through glomerular 

filtration and subsequent reabsorption, and, to a small extent, through direct absorption from the 

blood. Both low dose Pb-treated animals and high dose Pb-treated animals showed a 

“hyperfiltration” phenomenon during the first 3 months of Pb exposure. Investigations into 

biochemical alterations in Pb-induced renal toxicity suggested a role for oxidative stress and 

involvement of NO, with a significant increase in nitrotyrosine and substantial fall in urinary 

excretion of NOx. 

 Iron deficiency increases intestinal absorption of Pb and the Pb content of soft tissues and bone. 

Aluminum decreases kidney Pb content and serum creatinine in Pb-intoxicated animals. Age also 

has an effect on Pb retention. There is higher Pb retention at a very young age and lower bone and 

kidney Pb at old age, attributed in part to increased bone resorption and decreased bone accretion 

and, also, kidney Pb. 

5.4.2.4 Immune System Effects 

 Findings from recent epidemiologic studies suggest that Pb exposure may be associated with 

effects on cellular and humoral immunity. These include changes in serum immunoglobulin 

levels. Studies of biomarkers of humoral immunity in children have consistently found significant 

associations between increasing blood-Pb concentrations and serum IgE levels at blood-Pb levels 

<10 μg/dL. 

 Toxicologic studies have shown that Pb targets immune cells, causing suppression of delayed 

type hypersensitivity response, elevation of IgE, and modulation of macrophages into a hyperinflammatory phenotype. These types of changes can cause increased risk of atopy, asthma, and 

some forms of autoimmunity and reduced resistance to some infectious diseases. Lead exposure 

of embryos resulting in blood-Pb levels <10 μg/dL can produce persistent later-life 

immunotoxicity. 

5.4.2.5 Effects on Heme Synthesis 

 Lead exposure has been associated with disruption of heme synthesis in both children and adults. 

A 10% probability of anemia (hematocrit <35%) is estimated to be associated with a blood-Pb 

level of ~20 μg/dL at age 1 year. Increases in blood Pb concentration of about 20-30 μg/dL are 

sufficient to halve erythrocyte ALAD activity and sufficiently inhibit ferrochelatase to double 

erythrocyte protoporphyrin levels. 

 Toxicological studies demonstrated that Pb intoxication interferes with red blood cell (RBC) 

survival and alters RBC mobility. Hematological parameters, such as mean corpuscular volume, 

mean corpuscular hemoglobin, and mean corpuscular hemoglobin concentration, are also 

significantly decreased upon exposure to Pb. These effects are due to internalization of Pb by 

RBC. The transport of Pb across the RBC membrane is energy-independent and carrier-mediated; 

and the uptake of Pb appears to be mediated by an anion exchanger through a vanadate-sensitive 

pathway. 

 Erythrocyte ALAD activity ratio (ratio of activated/non activated enzyme activity) has been 

shown to be a sensitive, dose-responsive measure of Pb exposure, regardless of the mode of 

administration of Pb. Competitive enzyme kinetic analyses in RBCs from both humans and 

Cynomolgus monkeys indicated similar inhibition profiles by Pb. 
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5.4.2.6 Effects on Bones and Teeth 

 Experimental studies in animals demonstrate that Pb substitutes for calcium and is readily taken 

up and stored in the bone and teeth of animals, potentially allowing bone cell function to be 

compromised both directly and indirectly by exposure. Relatively short-term exposure of mature 

animals to Pb does not result in significant growth suppression. However, chronic Pb exposure 

during times of inadequate nutrition has been shown to adversely influence bone growth, 

including decreased bone density, decreased trabecular bone, and growth plates. 

 Exposure of developing animals to Pb during gestation and the immediate postnatal period has 

clearly been shown to significantly depress early bone growth in a dose-dependent fashion, 

though this effect is not manifest below a certain threshold. 

 Systemically, Pb has been shown to disrupt mineralization of bone during growth, to alter 

calcium binding proteins, and to increase calcium and phosphorus concentration in the blood 

stream, in addition to potentially altering bone cell differentiation and function by altering plasma 

levels of growth hormone and calciotropic hormones such as vitamin D3 [1,25- (OH2)D3. 

 Periods of extensive bone remodeling, such as occur during weight loss, advanced age, altered 

metabolic state, and pregnancy and lactation are all associated with mobilization of Pb stores 

from bone of animals. 

 Numerous epidemiologic studies and, separately, animal studies (both post-eruptive Pb exposure 

and pre- and perinatal Pb exposure studies) suggest that Pb is a caries-promoting element. 

However, whether Pb incorporation into the enamel surface compromises the integrity and 

resistance of the surface to dissolution, and ultimately increases risk of dental decay, is unclear. 

 Increased risk of dental caries has been associated with Pb exposure in children and adults. Lead 

effects on caries were observed in populations whose mean blood-Pb levels were less than 10 

μg/dL. 

5.4.2.7 Reproductive and Developmental Effects 

 Epidemiologic evidence suggests small associations between Pb exposure and male reproductive 

outcomes, including perturbed semen quality and increased time to pregnancy. There are no 

adequate epidemiologic data to evaluate associations between Pb exposure and female fertility. 

Most studies have yielded no associations, or weak associations, of Pb exposure with thyroid 

hormone status and male reproductive endocrine status in highly exposed occupational 

populations. 

 New toxicologic studies support earlier conclusions, presented in the 1986 Lead AQCD, that (a) 

Pb can produce both temporary and persisting effects on male and female reproductive function 

and development and (b) Pb disrupts endocrine function at multiple points along the 

hypothalamic-pituitary-gonadal axis. Although there is evidence for a common mode of action, 

consistent effects on circulating testosterone levels are not always observed in Pb-exposed 

animals. Inconsistencies in reports of circulating testosterone levels complicate derivation of a 

dose-response relationship for this endpoint. 

 Lead-induced testicular damage (ultrastructural changes in testes of monkeys at blood-Pb >35 to 

40 μg/dL) and altered female sex hormone release, imprinting during early development, and 

altered female fertility all suggest Pb-induced reproductive effects. However, Pb exposure does 

not generally produce total sterility. Pre- and postnatal exposure to Pb has been demonstrated to 

result in fetal mortality and produce a variety of sublethal effects in the offspring. Many of the 
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Pb-induced sublethal developmental effects occur at maternal blood-Pb levels that do not result in 

clinical (overt) toxicity in the mothers. Teratogenic effects resulting from Pb exposure reported in 

a few studies appear to be confounded by maternal toxicity. 

5.4.2.8 Effects on Other Organ Systems 

 Lead impacts the hypothalamic-pituitary-adrenal axis, elevating corticosterone levels and altering 

stress responsivity. This may be a potential mechanism contributing to Pb-induced hypertension, 

with further possible roles in the etiology of diabetes, obesity and other disorders. 

 Studies of hepatic enzyme levels in serum suggest that liver injury may be present in Pb workers; 

however, associations specifically with Pb exposures are not evident. Children exposed to 

relatively high levels of Pb (blood Pb >30 μg/dL) exhibit depressed levels of circulating 1,25-

dihydroxy vitamin D (1,25-OH-D). However, associations between serum vitamin D status and 

blood Pb were not evident in a study of calcium-replete children who had average lifetime bloodPb concentrations <25 μg/dL. 

 Field studies that evaluated hepatic enzyme levels in serum suggest that liver injury may be 

present in Pb workers; however, associations specifically with Pb exposures have not been well 

established. 

 Simultaneous induction of the activities of phase II drug metabolizing enzymes and decreased 

phase I enzymes with a single exposure to Pb nitrate in rat liver suggest that Pb is capable of 

causing biochemical phenotype similar to hepatic nodules. 

 Newer studies examined the induction of GST-P at both transcriptional and translational levels 

using in vitro systems and indicated a role for Pb-nitrate and Pb-acetate in the induction process. 

 Lead-induced alterations in cholesterol metabolism appear to be mediated by the induction of 

several enzymes related to cholesterol metabolism and the decrease of 7 α-hydroxylase, a 

cholesterol-catabolizing enzyme. This regulation of cholesterol homeostasis is modulated by 

changes in cytokine expression and related signaling. 

 Newer experimental evidence suggests that Pb-induced alterations in liver heme metabolism 

involve perturbations in ALAD activity, porphyrin metabolism, alterations in Transferrin gene 

expression, and associated changes in iron metabolism. 

 Gastrointestinal (GI) absorption of Pb is influenced by a variety of factors, including chemical 

and physical forms of the element in ingested media, age at intake, and various nutritional factors. 

The degeneration of intestinal mucosal epithelium leading to potential malabsorption and 

alterations in the jejunal ultrastructure (possibly associated with distortion of glycocalyx layer) 

have been reported in the intestine of Pb-exposed rats. 

 Nutritional studies that varied Pb, Ca, and vitamin D levels in the diet have demonstrated 

competition of Pb with Ca absorption. Supplementation with vitamin D has been reported to 

enhance intestinal absorption of Ca and Pb. Physiological amounts of vitamin D, when 

administered to vitamin D-deficient rats, resulted in elevated Pb and Ca levels. In the case of 

severe Ca deficiency, Pb ingestion results in a marked decrease in serum 1,25 hydroxy vitamin D. 

5.4.2.9 Genotoxic and Carcinogenic Effects 

 Epidemiologic studies of highly exposed occupational populations suggest a relationship between 

Pb and cancers of the lung and the stomach; however the evidence is limited by the presence of 

various potential confounders, including metal coexposures (e.g., to arsenic, cadmium), smoking, 
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and dietary habits. The 2003 NTP and 2004 IARC reviews concluded that Pb and Pb compounds 

were probable carcinogens, based on limited evidence in humans and sufficient evidence in 

animals. Similarly, Pb and Pb compounds would likely be classified as likely to be carcinogenic 

to humans according to the new 2005 EPA Cancer Assessment Guidelines for Carcinogen Risk 

Assessment, based on animal data even though the human data are inadequate. 

 Studies of genotoxicity consistently find associations of Pb exposure with DNA damage and 

micronuclei formation; however, the associations with the more established indicator of cancer 

risk, chromosomal aberrations, are inconsistent. 

 Pb is an animal carcinogen and extends our understanding of mechanisms involved to include a 

role for metallothionein. Specifically, the recent data show that metallothionein may participate in 

Pb inclusion bodies and, thus, serves to prevent or reduce Pb-induced tumorigenesis. 

 In vitro cell culture studies that evaluated the potential for Pb to transform rodent cells are 

inconsistent, and careful study of a time course of exposure is necessary to determine whether Pb 

actually induces transformation in cultured rodent cells. There is increased evidence suggesting 

that Pb may be co-carcinogenic or promotes the carcinogenicity of other compounds. Cell culture 

studies do support a possible epigenetic mechanism or co-mutagenic effects. 

5.4.2.10 Lead-Binding Proteins 

 Proteins depending upon sulfur-containing side chains for maintaining conformity or activity are 

vulnerable to inactivation by Pb, due to its strong sulfur-binding affinity. 

 The enzyme, ALAD, a 280 kDa protein, is inducible and is the major Pb-binding protein within 

the erythrocyte. 

 The Pb-binding protein in rat kidney has been identified as a cleavage product of α-2-

microglobulin. The low molecular weight Pb-binding proteins in human kidney have been 

identified as thymosin β 4 (molecular weight 5 kDa) and acyl-CoA binding protein (molecular 

weight 9 kDa). In human brain, Pb-binding proteins include thymosin β4 and an unidentified 

protein of 23 kDa. 

 Animal toxicology studies with metallothionein-null mice demonstrated a possible role for 

metallothionein as a renal Pb-binding protein. 

5.4.2.11 Human Population Groups At Special Risk And Potential Public Health Impacts 

 Children, in general and especially low SES (often including larger proportions of AfricanAmerican and Hispanic) children, have been well-documented as being at increased risk for Pb 

exposure and Pb-induced adverse health effects. This is due to several factors, including 

enhanced exposure to Pb via ingestion of soil-Pb and/or dust-Pb due to normal hand-to-mouth 

activity and/or pica. 

 Even children with low Pb exposure levels (having blood Pb of 5-10 μg/dL or, possibly, 

somewhat lower) are at notable risk, due to apparent non-linear dose-response relationships 

between blood Pb and neurodevelopmental outcomes. It is hypothesized that initial 

neurodevelopmental lesions occurring at blood-Pb levels <10 μg/dL may disrupt different 

developmental processes in the nervous system than more severe high level exposures. 

 Adults with idiosyncratic exposures to Pb through occupations, hobbies, make-up use, glazed 

pottery, native medicines, and other sources are at risk for Pb toxicity. Certain ethnic and racial 

groups are known to have cultural practices that involve ingestion of Pb-containing substances, 
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e.g., ingestion of foods or beverages stored in Pb-glazed pottery or imported canned food from 

countries that allow Pb-soldered cans. 

 Cumulative past Pb exposure, measured by bone Pb, may be a better predictor of cardiovascular 

effects than current blood-Pb levels. African-Americans are known to have substantially higher 

baseline blood pressure than other ethnic groups, so Pb’s impact on an already higher baseline 

could indicate a greater susceptibility to Pb for this group. 

 Effects on adults of low-level Pb exposures also include some renal effects (i.e., altered creatinine 

clearance) at blood-Pb levels <5 ug/dL. Lead exposure combined with other risk factors, such as 

diabetes, hypertension, or chronic renal insufficiency may result in clinically relevant effects in 

individuals with two or more other risk factors. 

 At least two genetic polymorphisms, of the ALAD and the vitamin D receptor gene, have been 

suggested to play a role in susceptibility to Pb. In one study, African-American children were 

found to have a higher incidence of being homozygous for alleles of the vitamin D receptor gene 

thought to contribute to greater Pb blood levels. This work is preliminary and further studies will 

be necessary to determine implications of genetic differences that may make certain populations 

more susceptible to Pb exposure. 

 What was considered “low” for Pb exposure levels in the 1980s is an order of magnitude higher 

than the current mean level in the U.S. population, and current average blood-Pb levels in U.S. 

populations remain perhaps as much as two orders of magnitude above preindustrial “natural” 

levels in humans. There is no level of Pb exposure that has yet been identified, with confidence, 

as being clearly not being associated with possible risk of deleterious health effects. Some recent 

studies of Pb neurotoxicity in infants have observed effects at population average blood-Pb levels 

of only 1 or 2 μg/dL; and some cardiovascular, renal, and immune outcomes have been reported 

at blood-Pb levels below 5 μg/dL. 

 Public health interventions have resulted in declines, over the last 25 years, of more than 90% in 

the mean blood-Pb level within all age and gender subgroups of the U.S. population, substantially 

decreasing the numbers of individuals at likely risk for Pb-induced toxicities. Nevertheless, 

estimates of the magnitude of potential public health impacts of Pb exposure can be substantial 

for the U.S. population. For example, in estimating the effect of Pb exposure on intelligence, it 

was projected that the fraction of individuals with an IQ >120 would decrease from ~9% with no 

Pb exposure to less than 3% at a blood-Pb level of 10 μg/dL. Also, the fraction of individuals 

with an IQ >130 points was estimated as being likely to decrease from 2.25% to 0.5% with a 

blood-Pb level change from 0 to 10 μg/dL. In addition, an estimate of hypertension-related risk 

for serious cardiovascular events (coronary disease, stroke, peripheral artery disease, cardiac 

failure) indicates that a decrease in blood Pb from 10 to 5 μg/dL could result in an annual 

decrease of 27 events per 100,000 women and 39 events per 100,000 men. 

5.4.3 Environmental Effects of Lead 

5.4.3.1 Terrestrial Ecosystems 

Methodologies Used in Terrestrial Ecosystem Research 

 Electron probe microanalysis (EPMA) techniques provide the greatest information on metal 

speciation. Other techniques, such as EXAFS (extended X-ray absorption fine structure) and 

EXANES (extended X-ray absorption near edge spectroscopy), show great promise and will be 

important in solving key mechanistic questions. 
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 In situ methodologies have been developed to lower soil-Pb relative bioavailability. These 

amendments typically fall within the categories of phosphate, biosolid, and Al/Fe/Mn-oxide 

amendments. Some of the drawbacks to soil amendment include phosphate toxicity to plants and 

increased arsenic mobility at high soil phosphate concentrations. The use of iron (III) phosphate 

seems to mitigate arsenic mobility, however increased concentrations of phosphate and iron limit 

their application when drinking water quality is a concern. 

Distribution of Atmospherically Delivered Lead in Terrestrial Ecosystems 

 Total Pb deposition during the 20th century has been estimated at 1 to 3 g Pb m-2, depending on 

elevation and proximity to urban areas. Total contemporary loadings to terrestrial ecosystems are 

~1 to 2 mg m-2 year-1. This is a relatively small annual flux of Pb compared to the reservoir of 

~0.5 to 4 g m-2 of gasoline additive-derived Pb already deposited in surface soils over much of the 

United States. 

 Dry deposition can account for 10% to >90% of total Pb deposition. Because Clean Air Act 

Legislation has preferentially reduced Pb associated with fine particles, relative contributions of 

dry deposition have changed in the last few decades. 

 Although inputs of Pb to ecosystems are currently low, Pb export from watersheds via 

groundwater and streams is substantially lower than inputs. Therefore, even at current input 

levels, watersheds are accumulating anthropogenic Pb. 

 Species of Pb delivered to terrestrial ecosystems can be inferred by emission source. For example, 

Pb species emitted from automobile exhaust are dominated by particulate Pb halides and double 

salts with ammonium halides (e.g., PbBrCl, PbBrCl2NH4Cl), while Pb emitted from smelters is 

dominated by Pb-sulfur species. Halides from automobile exhaust break down rapidly in the 

atmosphere, via redox reactions in the presence of atmospheric acids. Lead phases in the 

atmosphere, and presumably the compounds delivered to the surface of the earth (i.e., to 

vegetation and soils), are suspected to be in the form of PbSO4, PbS, and PbO. 

 The importance of humic and fulvic acids and hydrous Mn- and Fe-oxides for scavenging Pb in 

soils was discussed in some detail in the 1986 Lead AQCD. The importance of these Pb binding 

substrates is reinforced by studies reported in the more contemporary literature. 

 The amount of Pb that has leached into mineral soil appears to be on the order of 20 to 50% of the 

total anthropogenic Pb deposition. 

 The vertical distribution and mobility of atmospheric Pb in soils was poorly documented prior to 

1986. Techniques using radiogenic Pb isotopes have been developed to differentiate between 

gasoline-derived Pb and natural, geogenic (native) Pb. These techniques provide more accurate 

determinations of the depth-distribution and potential migration velocities for atmospherically 

delivered Pb in soils. 

 Selective chemical extractions have been used extensively over the past 20 years to quantify 

amounts of a particular metal phase in soil or sediment rather than total metal concentration. 

However, some problems persist with the selective extraction technique: (a) extractions are rarely 

specific to a single phase; and (b) in addition to the nonselectivity of reagents, significant metal 

redistribution has been found to occur during sequential chemical extractions. Thus, although 

chemical extractions provide some useful information on metal phases in soil or sediment, the 

results should be treated as “operationally defined,” e.g., “H2O2-liberated Pb” rather than “organic 

Pb.” 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-34 

 Soil solution dissolved organic matter content and pH typically have very strong positive and 

negative correlations, respectively, with the concentration of dissolved Pb species. 

Effects of Lead on Natural Terrestrial Ecosystems 

 Atmospheric Pb pollution has resulted in the accumulation of Pb in terrestrial ecosystems 

throughout the world. In the United States, anthropogenically-derived Pb represents a significant 

fraction of the total Pb burden in soils, even in sites remote from smelters and other industrial 

plants. However, few significant effects of Pb pollution have been observed at sites that are not 

near point sources of Pb. 

 Evidence from precipitation collection and sediment analyses indicates that atmospheric 

deposition of Pb has declined dramatically (>95%) at sites unaffected by point sources of Pb, and 

there is little evidence that Pb accumulated in soils at these sites represents a threat to ground 

water or surface water supplies. 

 The effects of Pb and other chemical emissions on terrestrial ecosystems near smelters and other 

industrial sites decrease downwind from the Pb source. Several studies using the soil burden as an 

indicator have shown that much of the contamination occurs within a radius of 20 to 50 km 

around the emission source. Elevated metal concentrations around smelters have been found to 

persist despite significant reductions in emissions. The concentrations of Pb in soils, vegetation, 

and fauna at these sites can be two to three orders of magnitude higher than in reference areas. 

Assessing the risks specifically associated with Pb is difficult, because these sites also experience 

elevated concentrations of other metals and because of effects related to SO2 emissions. The 

confounding effect of other pollutants makes the assessment of Pb-specific exposure-response 

relationships impossible at the whole ecosystem level. 

 In the most extreme cases, near smelter sites, the death of vegetation causes a near-complete 

collapse of the detrital food web, creating a terrestrial ecosystem in which energy and nutrient 

flows are minimal. 

 More commonly, stress in soil microorganisms and detritivores can cause reductions in the rate of 

decomposition of detrital organic matter. Although there is little evidence of significant 

bioaccumulation of Pb in natural terrestrial ecosystems, reductions in microbial and detritivorous 

populations can affect the success of their predators. Thus, at present, industrial point sources 

represent the greatest Pb-related threat to the maintenance of sustainable, healthy, diverse, and 

high-functioning terrestrial ecosystems in the United States. 

Terrestrial Species Response/Mode of Action

 Plants take up Pb via their foliage and through their root systems. Surface deposition of Pb onto 

plants may represent a significant contribution to the total Pb in and on the plant, as has been 

observed for plants near smelters and along roadsides. 

 There are two possible mechanisms (symplastic or apoplastic) by which Pb may enter the root of 

a plant. The symplastic route is through the cell membranes of root hairs; this is the mechanism of 

uptake for water and nutrients. The apoplastic route is an extracellular route between epidermal 

cells into the intercellular spaces of the root cortex. The symplastic route is considered the 

primary mechanism of Pb uptake in plants. 

 Recent work supports previous conclusions that the form of metal tested, and its speciation in 

soil, influence uptake and toxicity to plants and invertebrates. The oxide form of Pb is less toxic 

than the chloride or acetate forms, which are less toxic that the nitrate form of Pb. However, these 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-35 

results must be interpreted with caution, as the counter ion (e.g., the nitrate ion) may also be 

contributing to the observed toxicity. 

 Lead may be detoxified in plants by deposition in root cell walls, and this may be influenced by 

calcium concentrations. Other hypotheses put forward recently include the presence of sulfur 

ligands and the sequestration of Pb in old leaves as detoxification mechanisms. Lead 

detoxification has not been studied extensively in invertebrates. Glutathione detoxification 

enzymes were measured in two species of spider. Lead may be stored in waste nodules in 

earthworms or as pyromorphite in the nematode. 

 Lead effects on heme synthesis (as measured primarily by ALAD activity and protoporphyrin 

concentration) were documented in the 1986 Lead AQCD and continue to be studied. However, 

researchers caution that changes in ALAD and other enzyme parameters are not always related to 

adverse effects, but may simply indicate exposure. Other effects on plasma enzymes, which may 

damage other organs, have been reported. Lead also may cause lipid peroxidation, which may be 

alleviated by vitamin E, although Pb poisoning may still result. Changes in fatty acid production 

have been reported, which may influence immune response and bone formation. 

 Insectivorous mammals may be more exposed to Pb than herbivores, and higher trophic-level 

consumers may be less exposed than lower trophic-level organisms. Nutritionally deficient diets 

(including low calcium) cause increased uptake of Pb and greater toxicity in birds. 

 Interactions of Pb with other metals are inconsistent, depending on the endpoint measured, the 

tissue analyzed, the animal species, and the metal combination. 

Exposure/Response of Terrestrial Species

 Recent critical advancements reported in the current Lead AQCD in understanding toxicity levels 

relies heavily on the work completed by a multi-stakeholder group, consisting of federal, state, 

consulting, industry, and academic participants, led by the EPA to develop Ecological Soil 

Screening Levels (Eco-SSLs). 

 Eco-SSLs are concentrations of contaminants in soils that would result in little or no measurable 

effect on ecological receptors. The Eco-SSLs are intentionally conservative in order to provide 

confidence that contaminants that could present an unacceptable risk are not screened out early in 

the evaluation process. That is, at or below these levels, adverse effects are considered unlikely. 

Due to conservative modeling assumptions (e.g., metal exists in most toxic form or highly 

bioavailable form, high food ingestion rate, high soil ingestion rate) that are common to screening 

processes, several Eco-SSLs are derived below the average background soil concentration for a 

particular contaminant. 

 The Eco-SSLs for terrestrial plants, birds, mammals, and soil invertebrates are 120, 11, 56, and 

1700 mg Pb/kg soil, respectively. 

5.4.3.2 Aquatic Ecosystems 

Methodologies Used in Aquatic Ecosystem Research 

 Many of the terrestrial methods can also be applied to suspended solids and sediments collected 

from aquatic ecosystems. Just as in the terrestrial environment, the speciation of Pb and other 

trace metals in natural freshwaters and seawater plays a crucial role in determining their 

reactivity, mobility, bioavailability, and toxicity. Many of the same speciation techniques 

employed for the speciation of Pb in terrestrial ecosystems are applicable in aquatic ecosystems. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-36 

 There is now a better understanding of the potential effects of sampling, sample handling, and 

sample preparation on aqueous-phase metal speciation. Thus, a need has arisen for dynamic 

analytical techniques that are able to capture a metal's speciation, in-situ and in real time. 

 With few exceptions, ambient water quality criteria (AWQC) are derived based on data from 

aquatic toxicity studies conducted in the laboratory. In general, both acute (short term) and 

chronic (long term) AWQCs are developed. Depending on the species, the toxicity studies 

considered for developing acute criteria range in length from 48 to 96 hours. 

 Acceptable chronic toxicity studies should encompass the full life cycle of the test organism, 

although for fish, early life stage or partial life cycle toxicity studies are considered acceptable. 

Acceptable endpoints include reproduction, growth and development, and survival, with the 

effect levels expressed as the chronic value. 

 The biotic ligand model (BLM), which considers the binding of free metal ion to the site of toxic 

action and competition between metal species and other ions, has been developed to predict the 

toxicity of several metals under a variety of water quality conditions. However, there are 

limitations to this tool in deriving AWQC because, currently, limited work has been conducted in 

developing chronic BLMs (for any metals, let alone Pb) and the acute BLMs to date do not 

account for dietary metal exposures. 

Distribution of Lead in Aquatic Ecosystems

 Atmospheric Pb is delivered to aquatic ecosystems primarily through deposition (wet and/or dry) 

or through erosional transport of soil particles. 

 A significant portion of Pb in the aquatic environment exists in the undissolved form (i.e., bound 

to suspended particulate matter). The ratio of Pb in suspended solids to Pb in filtrate varies from 

4:1 in rural streams to 27:1 in urban streams. 

 The oxidation potential of Pb is high in slightly acidic solutions, and Pb2+ binds with high affinity 

to sulfur-, oxygen-, and nitrogen-containing ligands. Therefore, speciation of Pb in the aquatic 

environment is controlled by many factors (e.g., pH, redox, dissolved organic carbon, sulfides). 

The primary form of Pb in aquatic environments is divalent (Pb2+), while Pb4+ exists only under 

extreme oxidizing conditions. Labile forms of Pb (e.g., Pb2+, PbOH+

, PbCO3) are a significant 

portion of the Pb inputs to aquatic systems from atmospheric washout. Lead is typically present in 

acidic aquatic environments as PbSO4, PbCl4, ionic Pb, cationic forms of Pb-hydroxide, and 

ordinary Pb-hydroxide (Pb(OH)2). In alkaline waters, common species of Pb include anionic 

forms of Pb-carbonate (Pb(CO3)) and Pb(OH)2. 

 Lead concentrations in lakes and oceans were generally found to be much lower than those 

measured in the lotic waters assessed by NAWQA. In open waters of the North Atlantic the 

decline of Pb concentrations has been associated with the phasing out of leaded gasoline in North 

America and Western Europe. However, in estuarine systems, it appears that similar declines 

following the phase-out of leaded gasoline are not necessarily as rapid. 

 Based on a synthesis of NAWQA data from the United States, Pb concentrations in surface 

waters, sediments, and fish tissues (whole body) respectively range from: 0.04 to 30 μg/L (mean 

= 0.66, median = 0.50, 95th %tile = 1.1); 0.5 to 12,000 mg/kg (mean = 120, median = 28, 95th 

%tile = 200); and 0.08 to 23 mg/kg (mean = 1.03, median = 0.59, 95th %tile = 3.24). 

Effects of Lead on Natural Aquatic Ecosystems 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-37 

 Lead exposure may adversely affect organisms at different levels of organization, i.e., individual 

organisms, populations, communities, or ecosystems. Generally, however, there is insufficient 

information available for single materials in controlled studies to permit evaluation of specific 

impacts on higher levels of organization (beyond the individual organism). Potential effects at the 

population level or higher are, of necessity, extrapolated from individual level studies. Available 

population, community, or ecosystem level studies are typically conducted at sites that have been 

contaminated or adversely affected by multiple stressors (several chemicals alone or combined 

with physical or biological stressors). Therefore, the best-documented links between Pb and 

effects on the environment are with effects on individual organisms. 

 Natural systems frequently contain multiple metals, making it difficult to attribute observed 

adverse effects to single metals. For example, macro invertebrate communities have been widely 

studied with respect to metals contamination and community composition and species richness. In 

these studies, multiple metals were evaluated and correlations between observed community level 

effects were ascertained. The results often indicate a correlation between the presence of one or 

more metals (or total metals) and the negative effects observed. While, correlation may imply a 

relationship between two variables, it does not imply causation of effects. 

 In simulated microcosms or natural systems, environmental exposure to Pb in water and sediment 

has been shown to affect energy flow and nutrient cycling and benthic community structure. 

 In field studies, Pb contamination has been shown to significantly alter the aquatic environment 

through bioaccumulation and alterations of community structure and function. 

 Exposure to Pb in laboratory studies and simulated ecosystems may alter species competitive 

behaviors, predator-prey interactions, and contaminant avoidance behaviors. Alteration of these 

interactions may have negative effects on species abundance and community structure. 

 In natural aquatic ecosystems, Pb is often found coexisting with other metals and other stressors. 

Thus, understanding the effects of Pb in natural systems is challenging given that observed effects 

may be due to cumulative toxicity from multiple stressors. 

Aquatic Species Response/Mode of Action

 Recent research has suggested that due to the low solubility of Pb in water, dietary Pb (i.e., Pb 

adsorbed to sediment, particulate matter, and food) may contribute substantially to exposure and 

toxicity in aquatic biota. 

 Generally speaking, aquatic organisms exhibit three Pb accumulation strategies: (1) accumulation 

of significant Pb concentrations with a low rate of loss, (2) excretion of Pb roughly in balance 

with availability of metal in the environment, and (3) weak net accumulation due to very low 

metal uptake rate and no significant excretion. 

 Protists and plants produce intracellular polypeptides that form complexes with Pb. Macrophytes 

and wetland plants that thrive in Pb-contaminated regions have developed translocation strategies 

for tolerance and detoxification. 

 Like aquatic plants and protists, aquatic animals detoxify Pb by preventing it from being 

metabolically available, though their mechanisms for doing so vary. Invertebrates use lysosomalvacuolar systems to sequester and process Pb within glandular cells. They also accumulate Pb as 

deposits on and within skeletal tissue, and some can efficiently excrete Pb. Fish scales and 

mucous chelate Pb in the water column, and potentially reduce visceral exposure. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-38 

 Numerous studies have reported the effects of Pb exposure on blood chemistry in aquatic biota. 

Plasma cholesterol, blood serum protein, albumin, and globulin concentrations were identified as 

bioindicators of Pb stress in fish. 

 Nutrients affect Pb toxicity in aquatic organisms. Some nutrients seem capable of reducing 

toxicity. Exposure to Pb has not been shown to reduce nutrient uptake ability, though it has been 

demonstrated that Pb exposure may lead to increased production and loss of organic material 

(e.g., mucus and other complex organic ligands). 

 Avoidance responses are actions performed to evade a perceived threat. Some aquatic organisms 

have been shown to be quite adept at avoiding Pb in aquatic systems, while others seem incapable 

of detecting its presence. 

 The two most commonly reported Pb-element interactions are between Pb and calcium and 

between Pb and zinc. Both calcium and zinc are essential elements in organisms and the 

interaction of Pb with these ions can lead to adverse effects both by increased Pb uptake and by a 

decrease in Ca and Zn required for normal metabolic functions. 

Exposure/Response of Aquatic Species 

 The 1986 Lead AQCD reviewed data in the context of sublethal effects of Pb exposure. The 

document focused on describing the types and ranges of Pb exposures in ecosystems likely to 

adversely impact domestic animals. As such, the 1986 AQCD did not provide a comprehensive 

analysis of the effects of Pb to most aquatic primary producers, consumers, and decomposers. 

 Waterborne Pb is highly toxic to aquatic organisms, with toxicity varying with the species and 

life stage tested, duration of exposure, form of Pb tested, and water quality characteristics. 

 Among the species tested, aquatic invertebrates, such as amphipods and water fleas, were the 

most sensitive to the effects of Pb, with adverse effects being reported at concentrations as low as 

0.45 μg/L (range: 0.45 to 8000 μg/L). 

 Freshwater fish demonstrated adverse effects at concentrations ranging from 10 to >5400 μg/L, 

depending generally upon water quality parameters. 

 Amphibians tend to be relatively Pb tolerant; however, they may exhibit decreased enzyme 

activity (e.g., ALAD reduction) and changes in behavior (e.g., hypoxia response behavior). 

5.4.3.3 Critical Loads for Lead in Terrestrial and Aquatic Ecosystems 

 Critical loads are defined as threshold deposition rates of air pollutants that current knowledge 

indicates will not cause long-term adverse effects to ecosystem structure and function. A critical 

load is related to an ecosystem's sensitivity to anthropogenic inputs of a specific chemical. 

 The critical loads approach for sensitive ecosystems from acidification has been in use throughout 

Europe for about 20 years. Its application to Pb and other heavy metals in Europe is more recent. 

European critical load values for Pb have been developed but are highly specific to the bedrock 

geology, soil types, vegetation, and historical deposition trends in each European country. To 

date, the critical loads framework has not been used for regulatory purposes in the United States 

for any chemical. Considerable research is necessary before critical load estimates can be 

formulated for ecosystems extant in the United States. 

 Speciation strongly influences the toxicity of Pb in soil and water and partitioning between 

dissolved and solid phases determines the concentration of Pb in soil drainage water, but it has 

not been taken into account in most of the critical load calculations for Pb performed to date. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-39 

 Runoff of Pb from soil may be the major source of Pb into aquatic systems. However, little 

attempt has been made to include this source into critical load calculations for aquatic systems 

due to the complexity of including this source in the critical load models. 

In summary, due to the deposition of Pb from past practices (e.g., leaded gasoline, ore smelting) and the 

long residence time of Pb in many aquatic and terrestrial ecosystems, a legacy of environmental Pb 

burden exists, over which is superimposed much lower contemporary Pb loadings. The potential for 

ecological effects of the combined legacy and contemporary Pb burden to occur is a function of the 

bioavailability or bioaccessibility of the Pb, which, in turn, is highly dependent upon numerous site 

factors (e.g., soil organic carbon content, pH, water hardness). Moreover, while the more localized 

ecosystem impacts observed around smelters are often striking, these perturbations cannot be attributed 

solely to Pb. Many other stressors (e.g., other heavy metals, oxides of sulfur and nitrogen) can also act 

singly or in concert with Pb to cause such notable environmental impacts. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-40 

References: 

Agency for Toxic Substances and Disease Registry (ATSDR). 1999. Toxicological profile for lead. U.S. 

Department of Health and Human Services, Public Health Service. 

http://www.atsdr.cdc.gov/toxprofiles/tp13.html 

Center for the Child Care Workforce and Human Services Policy Center. 2002. "Estimating the Size and 

Components of the U.S. Child Care Workforce and Caregiving Population: Key Findings from 

the Child Care Workforce Estimate (Preliminary Report)," May 2002. 

Clean Air Scientific Advisory Committee (CASAC) Lead Review Panel. 2007a. Letter to Stephen 

Johnson. March 27, 2007. Available at: 

http://yosemite.epa.gov/sab/sabproduct.nsf/989B57DCD436111B852572AC0079DA8A/$File/casac07-003.pdf 

Clean Air Scientific Advisory Committee (CASAC) Lead Review Panel. 2007b. Letter to Stephen 

Johnson. September 27, 2007. Available at 

http://yosemite.epa.gov/sab/sabproduct.nsf/2DCD6EF49CDD37B285257364005F93E4/$File/casac07-007.pdf 

Dietrich, K. M., et al. 2004. Effect of Chelation Therapy on the Neuropsychology and Behavioral 

Development of Lead-Exposed Children After School Entry. Pediatrics, 114(1): 19-26. 

Knight, TE, and Kumar, MS. 2003. Lead toxicosis in cats-a review. J Feline Med Surg. October 5, 

(5):249-55. 

Kowalczyk, DF. 1976. Lead poisoning in dogs at the University of Pennsylvania Veterinary Hospital. J 

Am Vet Med Assoc., March 1, 168(5):428-32. 

Liu, X., et al. 2002. Do Children with Falling Blood Lead Levels Have Improved Cognition? Pediatrics, 

110(4): 787-791. 

Mulligan, G.M., Brimhall, D., and West, J. (2005). Child Care and Early Education Arrangements of 

Infants,Toddlers, and Preschoolers: 2001 (NCES 2006-039). U.S. Department of Education, 

National Center for Education Statistics. Washington, DC: U.S. Government Printing Office. 

Needleman, H. L.; Riess, J. A.; Tobin, M. J.; Biesecker, G. E.; Greenhouse, J. B. (1996) Bone Pb levels 

and delinquent behavior. JAMA J. Am. Med. Assoc. 275: 363-369. 

Rogan, W. J., et al. 2001. The effect of chelation therapy with succimer on neuropsychological 

development in children exposed to lead. New England Journal of Medicine, 344(19): 1421-

1426. 

Ruff, H. A., et al. 1993. Declining blood lead levels and cognitive changes in moderately lead-poisoned 

children. The Journal of the American Medical Association, 269(13): 1641-1646. 

Salkever, D. S. 1995. Updated estimates of earnings benefits from reduced exposure of children to 

environmental lead. Environmental Research, 70(1): 1-6. 

Stokes, L., et al. 1998. Neurotoxicity in young adults 20 years after childhood exposure to lead: the 

Bunker Hill experience. Occupational Environmental Medicine, 55: 507-516. 

U.S. Bureau of Labor Statistics. 2006. "Current Population Survey: Basic Monthly Survey." January 

2006. 

U.S. Census Bureau. 2003. American Housing Survey (AHS). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 5 5-41 

U.S. Department of Education. 2005. National Center for Education Statistics Early Childhood Program 

Participation Survey (NCES 2006-075). Washington, DC. 

(http://nces.ed.gov/nhes/dataproducts.asp#2005dp) 

U.S. Environmental Protection Agency (EPA). 1997. Exposure Factors Handbook. Office of Research 

and Development, National Center for Environmental Assessment. EPA/600/P-95/Fa, Fb, and 

Fc. 

U.S. Environmental Protection Agency (EPA). 2004. IRIS Database for Risk Assessment. Office of 

Research and Development, National Center for Environmental Assessment. Updated July 8, 

2004. http://www.epa.gov/iriswebp/iris/index.html 

U.S. Environmental Protection Agency (EPA). 2006a. Economic Analysis for the Renovation, Repair, 

and Painting Program Proposed Rule, February 2006. 

U.S. Environmental Protection Agency (EPA). 2006b. Air Quality Criteria for Lead (Final). 

EPA/600/R-5/144aF. Office of Research and Development. October. 

http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=158823 

U.S. Environmental Protection Agency (EPA). 2007. Revised Final Report on Characterization of Dust 

Lead Levels after Renovation, Repair, and Painting Activities. Prepared by Battelle (Columbus, 

OH) for the Office of Pollution Prevention and Toxics (Washington, D.C.). November 13, 2007. 

U.S. Environmental Protection Agency (EPA). 2008a. Child-Specific Exposure Factors Handbook. Office 

of Research and Development, National Center for Environmental Assessment. EPA/600/R0/096F. September 2008. 

U.S. Environmental Protection Agency (EPA). 2008b. Economic Analysis for the TSCA Lead 

Renovation, Repair, and Painting Program Final Rule for Target Housing and Child-Occupied 

Facilities. April 2008. 

Wilder Research Center. 2005. "Family, Friend and Neighbor Caregivers: Results of the 2004 Minnesota 

statewide household child care survey." December 2005. 

Wilder Research Center. 2001. "Staff recruitment and retention in early childhood care and education and 

school-age care." April 2001. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-1

6. Estimated Impacts of the Lead, Renovation, Repair, and Painting 

Rule Revisions 

In addition to the cost and benefit analyses presented in Chapters 4 and 5, several other types of impacts 

are important to consider in evaluating the effects of a regulation. This chapter presents the incremental 

impact of the revisions to the Lead Renovation, Repair and Painting (LRRP) Rule on: 

 paperwork burden, 

 the financial condition of small entities, 

 whether the regulation has a disproportionate effect on low-income and or minority persons, 

 the environmental health risk or safety risk to children due to the regulation, 

 State, local, and Tribal governments, and the private sector, 

 federalism, 

 the relationship between the Federal government and the Indian tribes, or on the distribution of 

power and responsibilities between the Federal government and Indian tribes, 

 energy effects, and 

 whether voluntary consensus standards are used in its regulatory activities. 

The demand for certified firms and renovators is predicted to increase as a result of the elimination of the 

opt-out provision, and therefore more firms and renovators are expected to seek certification and training 

as a result of the revisions. Separate impacts are estimated for these firms and individuals that are not 

projected to have sought certification and training without the elimination of the opt-out provision. 

Hereafter these entities are referred to as “opt-out entities.” Likewise, those firms and individuals that 

were estimated to have sought certification and training without the elimination of the opt-out provision 

are referred to as “currently regulated entities.” The impacts of the revisions to the rule on the opt-out 

entities include all the costs associated with the requirements of the revised LRRP rule. In contrast, the 

only impacts of the rule on the currently regulated entities are those associated with the recordkeeping 

checklist requirement. 

6.1 Paperwork Reduction Act 

The Paperwork Reduction Act of 1995 (PRA) (superseding the PRA of 1980), as implemented by the 

Office of Management and Budget (OMB), requires that agencies submit a supporting statement to OMB 

for any information collection that solicits the same data from more than nine parties. The PRA seeks to 

ensure that Federal agencies balance their need to collect information with the paperwork burden imposed 

on the public by the collection. 

The definition of “information collection” includes activities required by regulations such as permit 

development, monitoring, recordkeeping, and reporting. The term “burden” refers to the “time, effort, or 

financial resources” the public expends to provide information to or for a Federal agency, or to otherwise 

fulfill statutory or regulatory requirements. PRA paperwork burden is measured in terms of annual time 

and financial resources the public devotes to meet one-time and recurring information requests (44 U.S.C. 

3502(2); 5 C.F.R. 1320.3(b)). 

Information collection activities may include: 

 reviewing rule requirements; 

 using technology to collect, process, and disclose information; 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-2

 adjusting existing practices to comply with requirements; 

 searching data sources; 

 completing and reviewing the response; and 

 transmitting or disclosing information. 

Agencies must provide information to OMB on the parties affected, the annual reporting burden, and the 

annualized cost of responding to the information collection. 

6.1.1 RRP Entity Paperwork Burden 

6.1.1.1 Certification and Recordkeeping 

LRRP contractors performing regulated RRP work are estimated to spend approximately half an hour to 

fill out and mail the Application for Renovator Certification when they are applying for initial 

certification or re-certification (which occurs every five years). It is estimated that these entities will 

spend an average of three hours to familiarize themselves with the RRP rule’s requirements when 

becoming certified. Entities performing RRP tasks on target housing units will spend, on average, about 

five hours annually for recordkeeping tasks. These activities add up to an average burden in the first year 

of 7.8 hours per contractor. At a loaded wage rate of $31.64, the paperwork cost in the first year will 

average $263 per firm (See Table 6-1). Additional costs are minor; these costs include an application 

printout, one photocopy for personal records, an envelope, and a stamp. The total first year information 

collection cost is estimated to average $263 per contractor. Every five years entities must complete the 

certification form to apply for re-certification as well as keep records that demonstrate compliance with 

the RRP Rule. The total time required during a re-certification year is 5.3 hours at a cost of $168 per 

contractor. In years when entities do not need to apply for certification or re-certification, contractors will 

only incur the five-hour recordkeeping burden at a cost of $152. 

Table 6-1: Costs to Firms Associated with Information 

Collection ($2005) 

 Opt-Out Residential Contractors 

First 

Year/Initial 

Certification 

Year 

ReCertification 

Year 

Other Years 

Rule familiarization (3 

hours) 

$94.93 $0 $0 

Certification form (0.5 

hours) 

$15.82 $15.82 $0 

Recordkeeping (4.8 hours 

per entity) 

$151.89 $151.89 $151.89 

2 photocopies $0.16 $0.16 $0 

1 envelope $0.02 $0.02 $0 

1 stamp1 $0.37 $0.37 $0 

Total2 $263 $168 $152 

1. Costs have not been updated from 2005 dollars in order to facilitate 

comparison with previous information collection requests, which were also 

in 2005 dollars. Consistent with this, postage costs have not been updated to 

2009. 

2. Rounded to nearest dollar. 

Source: EPA Calculations and U.S. Bureau of Labor Statistics 2005.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-3

6.1.1.2 Recordkeeping Checklist Provision Requirements 

The revisions to the 2008 LRRP rule would require all renovation firms to provide a copy of the records 

demonstrating compliance with the training and work practice requirements of the RRP rule to the owner 

and, if different, the occupant of the building being renovated or the operator of the child-occupied 

facility. Specifically, renovation firms would have to provide this information to owners and occupants in 

a short, easily-read checklist or other form within thirty days of the completion of work. If optional dust 

clearance is performed in lieu of cleaning verification, the renovation firm must provide a copy of the dust 

wipe sampling report(s) to the owner of the building that was renovated as well as to the occupants, if 

different. For renovations occurring in common areas of target housing or child-occupied facilities, the 

renovation firm can post instructions to tenants on how to obtain this information. 

6.1.1.3 Recordkeeping Checklist Provision Unit Costs 

Labor Costs 

Under a separate requirement of the 2008 LRRP rule, renovation firms must complete and retain a copy 

of the checklist for enforcement purposes. Therefore, renovation firms would only incur the incremental 

labor costs of photocopying and distributing the checklist as a result of the additional recordkeeping 

checklist provision requirement. EPA assumed this burden to be three minutes at a loaded wage rate of 

$31.64 per hour. 

Material Costs 

The recordkeeping checklist provision would require renovation firms to supply a copy of the checklist to 

the owner of the affected building, or if different, the occupant of the affected target housing unit or 

operator of the child-occupied facility, and to post the checklist in a common area. Therefore, renovation 

firms performing work in target housing or public and commercial buildings would incur an incremental 

cost of eight cents per page to photocopy materials. 

Table 6-2 shows the costs per event of the checklist provision requirements. 

6.1.1.4 Number of Events Affected by the Recordkeeping Checklist Provision 

The recordkeeping checklist provision would apply to firms affected by the 2008 LRRP rule and to firms 

predicted to seek certification as a result of the elimination of the opt-out provision. Under Option A, the 

Table 6-2: Cost of the Recordkeeping Checklist Provision per Event 

 Target Housing Events Public and Commercial Building Events 

 Owner Renter 

In-house / 

Landlord b 

Contractor 

– Owner c 

Contractor 

– Renter d 

Labor Cost a $1.58 $1.58 $1.58 $1.58 $1.58 

Material Cost e $0.08 $0.16 $0.08 $0.16 $0.24 

Total Cost $1.66 $1.74 $1.66 $1.74 $1.82 a

 Based on a burden of 3 minutes, at a wage rate of $31.64, based on Bureau of Labor Statistics 

(SOC 47-1011)

b

 RRP is performed by the owner of a public or commercial building. 

c

 RRP is performed by a contractor in an owner-occupied public or commercial building. 

d

 RRP is performed by a contractor in a renter-occupied public or commercial building. e

 The average price of a photo copy at Copy Cop, Kinko’s, Staples, and Office Max is eight 

cents; c

the average cost of a business envelope at Staples, Office Max, and Office Depot 

Source: EPA Calculations. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-4

entire stock of firms necessary to meet demand, including those working in target housing and public or 

commercial building COFs, would incur recordkeeping checklist costs starting in the first year. Firms 

performing work in owner-occupied target housing would be required to distribute one copy of the 

checklist while firms performing work in renter-occupied target housing would be required to provide 

copies to the owner and occupant. If the work occurs in the common area of an apartment building, the 

checklist, or information on how to obtain the checklist, can be posted on a sign in the common area. 

The recordkeeping checklist provision also applies to firms performing work in public or commercial 

building COFs. Child-occupied facilities that perform work with their own staff must post the checklist, 

or information on how to obtain the checklist, on a sign that is accessible to parents or guardians of the 

children. Similarly, landlords who perform work with their own staff would have to supply one copy of 

the checklist attached to a sign in the area where the work is being performed. Contractors who perform 

work in owner-occupied COFs must provide two copies of the checklist: one copy to the operator of the 

COF and one copy to be posted on a sign in the COF. In addition to the two copies required in owneroccupied events, contractors working in renter-occupied COFs must also provide the owner of the 

building with a third copy of the checklist. 

Table 6-3 presents the number of events affected by the checklist provision in the first and second years 

of the revisions’ implementation by event type under Option A. 

6.1.2 Training Provider Paperwork Burden 

EPA has also estimated the information collection burden imposed on Training Providers. No Training 

Providers are estimated to become accredited as a result of the revisions to the 2008 LRRP rule; therefore, 

they would not incur an incremental paperwork burden of accreditation and re-accreditation. However, 

since the elimination of the opt-out provision implies an increase in training course demand, it is 

estimated that training providers would incur an incremental paperwork burden related to course 

notification. To comply with the 2008 LRRP rule, Training Providers must keep records on both the 

courses they provide and the students they train. In addition, they must notify EPA before offering each 

course (to facilitate EPA’s enforcement activities) and after each course (so EPA has a record of the 

individuals who have completed the course). 

Table 6-3: Number of Events Affected by the Checklist Provision Under Option A by Event Type 

Target Housing Events Public and Commercial Building Events 

All Events Owner Renter 

In-house / 

Landlord b 

Contractor 

– Owner c 

Contractor 

– Renter d 

Year 1 

Option A 18,684,176 8,731,495 9,572,191 100,057 267,533 12,900 

Year 2 a 

Option A 18,607,571 8,695,696 9,532,945 99,647 266,436 12,847 a Assumed to decline by 0.41 percent each year after the second year, accounting for the decline in the stock of 

pre-1978 structures. 

b

 RRP is performed by the owner of a public or commercial building. 

c

 RRP is performed by a contractor in an owner-occupied public or commercial building. 

d

 RRP is performed by a contractor in a renter-occupied public or commercial building. 

See Table 4-1 for options descriptions. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-5

6.1.2.1 Burden Associated with Notification Requirements 

It is assumed that the pre-notification for each class requires an average of 0.15 hours and that each postnotification requires 1.54 hours. The post notifications are more time consuming because the Training 

Provider must send records pertaining to each student who attended the course. Approximately 12 

percent of courses will also require a re-notification, which is also estimated to take 0.15 hours. These 

activities add up to an average of 1.7 clerical hours per course. The number of courses offered per year 

depends on the number of individuals who need to be trained. As the revisions to the 2008 LRRP rule 

would eliminate the opt-out provision, more renovators are predicted to seek training. It is assumed that 

under Option A, Training Providers would offer an extra 30 courses in the first year, or a total of 90 

hours, for the added renovator demand. It is assumed that each notification requires one photocopy, one 

envelope, and one stamp; thus approximately two of each of these items are required per course. Under 

Option A, the incremental cost of notifications in the first year is approximately $2,772 per Training 

Provider. There would be approximately 6 extra courses offered per Training Provider in the second and 

third years, with a notification cost of about $550 per year. 

6.1.2.2 Total Burden and Cost per Training Provider 

As shown in Table 6-4, accredited training providers would incur an incremental $2,772 of paperwork 

costs in the first year due to added demand resulting from the elimination of the opt-out provision under 

Option A. 

Table 6-4: Incremental Costs to Training Providers Associated with Information Collection, 

Option A 

Notification Costs 

 Year 1 of the RRP 

Rule (30 Courses) 

Year 2 of the RRP 

Rule (6 Courses)

Year 3 of the RRP 

Rule (6 Courses)

Notification Activities Burden 

Hours 

Cost Burden 

Hours 

Cost Burden 

Hours 

Cost 

Clerical time burden a 90 $2,120 18 $424 18 $422 

Photocopies b $5.13 $1.03 $1.02 

Envelopes c $1.28 $0.26 $0.26 

Stamps d $23.71 $4.74 $4.72 

Digital Photos $621.85 $124.37 $123.86 

Total $2,772 $554 $552 

* Rounded to nearest dollar. 

Sources: aWages: Bureau of Labor Statistics (Major Occupational Group D: Administrative Support Occupations, 

Including Clerical); b The average price of a photo copy at Copy Cop, Kinkos, Staples, and Office Max is eight cents; c

The average cost of a business envelope at Staples, Office Max, and Office Depot dU.S. Postal Service

6.1.3 Total Paperwork Burden on RRP Firms and Training Providers 

Table 6-5 presents the total paperwork burden incurred by all RRP firms and training providers in the first 

and second years of the revisions’ implementation. For training providers, total notification burden was 

estimated by multiplying the per-entity burden estimates in Table 6-4 by the number of training providers 

in each year. For RRP firms, total certification and recordkeeping burden was estimated by multiplying 

the per firm burden estimates in Table 6-1 by the number of firms undergoing certification or recertification, or not becoming certified in each year. For checklist costs, the number of events per firm 

was first estimated by dividing the events shown in Table 6-3 by the total number of firms complying 

with the checklist provision in each year. Second, this number was multiplied by the estimated checklist 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-6

labor burden of three minutes (0.05 hours) to produce hours per RRP firm. Finally, this number was 

multiplied by the total number of firms, yielding the total checklist burden. 

Table 6-5: Total Paperwork Burden Resulting from the Revisions to the 2008 LRRP 

Rule 

Type of Entity Activity Burden Hours 

per Entity 

Number of 

entities 

Total 

Burden 

Hours 

Year 1 

Training Providers Notification 90 168 15,127 

Certification Year Firms 8.3 111,426 924,836 

Re-Certification Firms 5.3 0 0 

Non-Certification Firms 4.8 0 0 

RRP Entities Certified as a 

Result of Eliminating the 

Opt-Out Provision 

Checklist 3.3 111,426 363,578 

RRP Entities Regulated under 

the 2008 LRRP Rule Checklist 2.7 211,721 570,631 

Year 1 Total - All Firms and Training Providers 323,315 1,874,172 

Year 2 

Training Providers Notification 18 167 3,013 

Certification Year Firms 8.3 19,974 165,788 

Re-Certification Firms 5.3 2,219 11,763 

Non-Certification Firms 4.8 88,775 426,122 

RRP Entities Certified as a 

Result of Eliminating the 

Opt-Out Provision 

Checklist 3.3 110,969 362,087 

RRP Entities Regulated under 

the 2008 LRRP Rule Checklist 2.7 210,853 568,291 

Year 2 Total – All Firms and Training Providers 321,990 1,537,064 

Year 3

Training Providers Notification 18 167 3,001 

Certification Year Firms 8.3 19,893 165,108 

Re-Certification Firms 5.3 2,210 11,715 

Non-Certification Firms 4.8 88,411 424,374 

RRP Entities Certified as a 

Result of Eliminating the 

Opt-Out Provision 

Checklist 3.3 110,514 360,603 

RRP Entities Regulated under 

the 2008 LRRP Rule Checklist 2.7 209,989 565,961 

Year 3 Total – All Firms and Training Providers 320,670 1,530,762 

3 Year Average

Training Providers Notification 42 168 7,047 

Certification Year Firms 8.3 50,431 418,577 

Re-Certification Firms 5.3 1,477 7,826 

Non-Certification Firms 4.8 59,062 283,499 

RRP Entities Certified as a 

Result of Eliminating the 

Opt-Out Provision 

Checklist 3.3 110,970 362,089 

RRP Entities Regulated under 

the 2008 LRRP Rule Checklist 2.7 210,855 568,295 

3 Year Average Total – All Firms and Training Providers 321,992 1,647,332 

6.2 Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) of 1980, amended by the Small Business Regulatory Enforcement 

Fairness Act (SBREFA) of 1996, requires regulators to assess the effects of regulations on small entities 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-7

including businesses, nonprofit organizations, and governments. In some instances, agencies are also 

required to examine regulatory alternatives that may reduce adverse economic effects on significantly 

impacted small entities. The RFA requires agencies to prepare an initial and final regulatory flexibility 

analysis for each rule unless the Agency certifies that the rule will not have a significant economic impact 

on a substantial number of small entities. The RFA, however, does not specifically define “a significant 

economic impact on a substantial number” of small entities. Sections 603 and 604 of the RFA require 

that regulatory flexibility analyses identify the types and estimate the numbers of small entities to which 

the rule will apply. It also requires a description of the rule requirements to which small entities will be 

subject and any regulatory alternatives, including exemptions and deferral, which would lessen the rule’s 

burden on small entities. 

The 2008 LRRP Rule requires that all entities that perform renovation, repair and painting work for 

compensation in target housing or public and commercial buildings with COFs become certified by EPA, 

ensure that their employees are trained as either renovators or workers, and use lead-safe work practices 

when disturbing lead-based paint, other than events that qualify for the minor maintenance exception. 

This analysis considers the incremental impacts of the revisions to the 2008 LRRP rule on small entities 

in the affected construction, real estate, and child-occupied facility industry sectors. The revisions to the 

2008 LRRP rule eliminates the opt-out provision for entities performing work in owner-occupied target 

housing units that are not COFs and where no child under the age of 6 or pregnant woman resides. It is 

predicted that this revision would result in additional firms and renovators seeking certification and 

training. Therefore, only those small entities that would not have otherwise obtained certification (“optout entities”) would incur certification, training, work practice, and cleaning verification costs under the 

revisions. 

In addition, the revisions to the 2008 LRRP rule include a new recordkeeping checklist provision 

requirement. The checklist provision requires that renovation firms working in target housing provide the 

owner and, if a rental unit, the occupant with a copy of the RRP compliance checklist. Firms working in 

public or commercial building COFs must provide the owner and, if necessary, the operator of the COF 

with a copy of the checklist, as well as post the compliance information in a location visible to parents or 

guardians. The requirements of the checklist provision apply both to firms affected by the 2008 LRRP 

rule and to firms that would be affected by the elimination of the opt-out provision. 

Therefore, the revisions to the 2008 LRRP rule affect small entities that provide childcare for 

compensation including private sector firms (e.g. daycare centers and family daycare); small governments 

(particularly school districts) and non-profit organizations; small construction-related contracting firms 

that provide RRP services to residences or public or commercial buildings containing COFs; and property 

managers and lessors who lease space to COFs and use their own staff to conduct RRP work in their 

buildings. 

The impacts on training providers are not analyzed because the rule will result in an increased demand for 

their services. Therefore training providers will incur positive rather than negative impacts. Although the 

rule may also result in additional costs for training providers (i.e. costs of additional recordkeeping and 

submitting notifications), training providers are expected to recoup these costs via tuition fees. These 

tuition fees are accounted for elsewhere in the analysis in the estimation of training costs that are incurred 

by the other entities subject to the rule. 

6.2.1 Definitions of Small Entity 

The Regulatory Flexibility Act defines a small government as a government of a city, county, town, 

school district or special district with a population of less than 50,000. A small non-profit organization is 

defined as any not-for-profit enterprise which is independently owned and operated and is not dominant 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-8

in its field. The RFA relies on the definition of a “small business” found in the Small Business Act, 

which authorizes the Small Business Administration (SBA) to develop definitions for “small business.” 

For this analysis, EPA uses SBA’s definition of a small business for each industry. 

For many industry sectors, the SBA definition of a small business is based on revenues, where revenue 

standards vary by industry. In establishing revenue standards, SBA considers a number of economic and 

market characteristics that may allow a firm to exercise dominance in an industry. These standards 

represent the maximum revenue that a for-profit enterprise may have and still qualify as a small business. 

The twelve NAICS codes listed in Table 6-6 are the general and specialty contractors this rule will likely 

impact. Their respective SBA thresholds are also listed. The twelve NAICS codes are followed with two 

NAICS codes for residential real estate industries, two NAICS codes for nonresidential real estate 

industries, and one NAICS code for child day care services that are also likely to be affected by the rule. 

Table 6-6: SBA Revenue Thresholds for Small Business by NAICS Code 

NAICS Industry Description 

SBA Revenue 

Threshold 

(Millions $) 

General and Specialty Contractor Industries 

236118 Residential remodelers $33.5 

236220 Commercial Building Construction $33.5 

238170 Siding contractors $14 

238350 Finish carpentry contractors $14 

238290 Other building equipment contractors $14 

238390 Other building finishing contractors $14 

238340 Tile and terrazzo contractors $14 

238220 Plumbing and HVAC contractors $14 

238150 Glass and glazing contractors $14 

238320 Painting and wall covering contractors $14 

238210 Electrical contractors $14 

238310 Drywall and insulation contractors $14 

Property Owners and Managers 

531120 Lessors of nonresidential buildings (except miniwarehouses) $7 

531312 Nonresidential property managers $2 

531311 Residential Property Managers $2 

531110 Lessors of Residential Buildings and Dwellings $7 

Providers of Day Care Services, Pre-Kindergarten and Kindergarten 

624410 Child day care services $7 

Source: U.S. Small Business Administration, 2008 

The RFA classifies small entities as small businesses, small non-profit organizations, or small 

governments. Property managers and lessors, and construction-related contractors, are all assumed to be 

for profit operations. All daycare providers operating in individual homes (frequently referred to as 

family daycare) are assumed to be for-profit operations. Daycare centers can be operated by for-profit or 

non-profit organizations. Kindergartens and pre-kindergartens refer to facilities in either public schools 

(governmental) or in private schools (assumed to be non-profits). These classifications are summarized in 

the following table. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-9

6.2.2 General Assumptions and Approach 

This analysis measures the potential incremental impacts of the revisions to the 2008 LRRP Rule on small 

businesses in terms of annual compliance costs as a percentage of annual revenues, referred to as the cost 

impact ratio.1

 This approach is based on the premise that the cost impact percentage is an appropriate 

measure of an entity’s ability to afford the costs attributable to a regulatory change. For purposes of 

determining small entity impacts, comparing annual compliance costs to annual revenues provides a 

reasonable indication of the magnitude of the regulatory burden relative to a commonly available and 

objective measure of a company’s business volume. Where regulatory costs represent a very small 

fraction of a typical establishment’s revenue, the impacts of a regulation are likely to be minimal. 

This analysis considers eight different groups of entities: public school districts, private schools, daycare 

centers, family daycare, construction contractors (residential and non-residential), and property lessors 

and managers (residential and non-residential). The goal of this analysis is to evaluate the incremental 

impacts of the revisions to the 2008 LRRP Rule on small entities in a typical year. In order to develop a 

realistic portrayal of the long-term effects of the rule on small entities, annualized costs of the rule, rather 

than first-year costs, are used to measure its impacts. Furthermore, when presenting the number of 

businesses affected, the analysis presents the annual average number of businesses, rather than first or 

second year estimates of affected businesses. 

The SBA size standards are measured at the firm or parent company level. Conceptually, the small entity 

analysis would also be conducted at that level. Due to data limitations, this small entity analysis is 

conducted at the establishment level rather than at the firm or parent company level for most sectors. 

Census information was available primarily at the establishment level, making a firm or parent company 

analysis unfeasible. The only sectors where firm-level data are used are non-residential managers and 

lessors, and public schools. Because establishments, and not organizations, are analyzed, an assumption 

is made that none of the small establishments are subsidiaries of larger organizations. This assumption 

leads to an overestimate of the number of small independent establishments affected by the rule. 

Furthermore, since organization-level revenues of multi-establishment businesses are higher than 

establishment revenues, the use of establishment data may result in higher cost-impact ratios than actually 

exist. 

The cost-impact ratios estimated for the residential and non-residential real estate industries (NAICS 

531110, 531311, 531120, 531312) in this small entity analysis are based on employment and revenue data 

for employer establishments only. It is assumed that the majority of non-residential property lessors and 

 

1

 For private schools, where adequate revenue data were not available, costs are compared to annual expenditures. 

Table 6-7: Small Entity Classifications 

Type of Entity Business Non-Profit Governmental 

Day Care Centers X X -- 

Kindergartens and PreKindergartens in 

Public Schools 

-- -- X 

Kindergartens and PreKindergartens in 

Private Schools 

-- X -- 

Property Managers and 

Lessors X -- -- 

Construction-Related 

Contractors X -- -- 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-10

managers are businesses with employees. Further, the analysis assumes that a self-employed lessor or 

manager is likely to hire a contractor to perform work on his property, particularly in a non-residential 

building. 

6.2.2.1 Costs Incurred by Small Establishments 

This small entity analysis evaluates the incremental impacts of the revisions to the 2008 LRRP rule on 

small entities under Option A, as it has the highest cost impact implications (see Section 4.1 for option 

definitions). To estimate the costs incurred by the small entities subject to the requirements of the rule, 

this analysis calculates the number of people trained, certifications sought, and events performed by each 

of the small entities in a typical year under Option A. As explained at the beginning of this section, only 

opt-out contractors would incur incremental costs for certification, training, work practices, and cleaning 

verification under the revisions. However, all entities, currently regulated and opt-out, would incur 

recordkeeping checklist provision costs. Therefore, the following sections present costs for currently 

regulated and opt-out entities separately. 

Average Annualized Unit Cost Estimates 

Unit training costs were calculated by annualizing the total 50-year costs of training renovators and 

workers performing RRP projects in opt-out housing under Option A, then dividing this total by the 

average annual number of renovators and workers trained by these establishments. Similarly, the 

annualized total costs of maintaining certification, complying with work practice standards, and 

disseminating the checklist under Option A were divided by the average annual number of firms certified, 

and events, respectively. This single set of average annualized unit costs was used to calculate total costs 

to small entities working in opt-out housing. Annualized unit checklist costs for entities currently 

regulated under the 2008 LRRP rule were similarly calculated. The use of annual numbers of firms, 

individuals, and events in calculating average annualized costs takes into account the fact that the pre1978 housing and building stock is expected to decrease by 0.41 percent per year due to demolition of a 

portion of the building stock. 

The numbers of events, individuals, and firms were averaged over the 50 years covered in this analysis 

using the following formula: 

 Annual Average = 

 Where: 

 A1 = First year number of events, individuals or firms 

 A2 = Second year number of events, individuals or firms 

 r = (1 – 0.41% demolition rate), or 0.9959 

 n = 50 years covered by the analysis 

Table 6-8 presents these calculations and the resulting average annualized unit costs. 

[A1+(A2*(1-rn))/(1-r)] 

50
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-11

6.2.3 Residential Contractors and Real Estate Industries 

Establishments that perform RRP work in opt-out housing will incur the costs of training and 

certification, as well as the cost of using lead-safe work practices during projects that disturb lead-based 

paint. In order to distribute the total costs of the rule between small and large establishments, EPA 

assumed that the compliance cost incurred by each establishment is a function of the number of regulated 

renovation events that the establishment performs in a typical year. For each of eleven residential 

contractor NAICS groups and two residential real estate NAICS groups, EPA calculated the average 

annualized numbers of small opt-out entities seeking certification, workers being trained by small opt-out 

entities, and events being performed by small opt-out entities. These averages were calculated separately 

for non-employer and employer firms. Using the average annualized unit costs, EPA calculated the 

average annualized total costs to small opt-out entities affected by the revisions. The use of annualized 

costs provides a more accurate representation of the long-term (typical year) impacts of the rule than 

would be provided by first or second year costs. 

The following six steps were used to calculate the cost-impact ratios for the target housing contractor and 

residential real estate industries. To estimate the impacts of the revisions on small opt-out entities in the 

affected industries, the following calculations were performed for each NAICS industry: 

Step 1: Certified establishments were classified as either small or large businesses depending on their 

revenues. Self-employed contractors were considered separately from small employer establishments, 

and therefore there are two small business categories for each residential contractor NAICS group. 

Step 2: Census data were used to characterize a “typical” small establishment (in terms of revenues and 

number of employees) in each of the affected industry sectors. 

Step 3: The average number of regulated events performed by an establishment each year was estimated 

by multiplying the ratio of regulated events to trained personnel by the establishment employment size. 

Step 4: An average work practice compliance cost per event2

, certification cost per firm, training cost per 

renovator, certification per worker, and checklist cost per event were calculated for Option A using the 

 

2

 The work practice cost per event includes the cost to landlords and contractors of complying with the prerenovation education regulations. 

Table 6-8: Average Annualized Unit Cost Calculations under Option A 

 Total 

Annualized 50-

Year Cost 

50-year Average Number of 

Individuals Trained, Entities 

Certified or Events 

Performed 

Average cost per 

individual, entity, or 

event 

Entities Certified/Events Performed as a Result of Eliminating the Opt-Out Provision 

Renovator training $15,170,737 114,987 individuals trained $132 per individual 

Worker training $4,896,824 171,867 individuals trained $28 per individual 

Firm certification $26,174,511 100,933 entities certified $259 per entity 

Work practices a $218,315,631 6,586,819 events performed $33 per event 

Checklist Costs $11,552,179 6,586,819 events performed $2 per event 

Entities/Events Regulated under the 2008 LRRP Rule 

Checklist Costs $18,885,435 10,337,937 events performed $2 per event 

a. Work practice costs include the cost of posting a project-specific sign and pamphlet. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-12

total annualized 50-year costs to entities working in owner-occupied, opt-out target housing and the 

incremental 50-year average number of renovation events, renovators/workers trained, and firms certified 

as a result of the revisions to the 2008 LRRP rule. For currently regulated entities, numbers were only 

generated for checklist costs. 

Step 5: For opt-out entities (i.e., those working in housing previously eligible for the opt-out provision), 

total establishment compliance costs were calculated by multiplying the number of events performed, the 

number of renovators trained, and the number of firms becoming certified by the corresponding average 

annualized cost under Option A. For currently regulated entities, numbers were only generated for 

checklist costs. 

Step 6: Cost-impact ratios were calculated for a typical small establishment in each industry sector by 

dividing the total compliance costs incurred by the establishment (Step 5) by the establishment’s revenues 

(Step 2). These cost impact ratios were calculated both for non-employer and small employer NAICS 

groups separately and combined. 

6.2.3.1 Number of Small Residential Contractors and Real Estate Entities Affected by the 

Revisions 

The data used in this analysis were drawn primarily from the 2002 U.S. Economic Census. As discussed 

in Chapter 2, Census data were used to estimate the number of non-employer establishments (selfemployed contractors) in the affected construction industries. The 2002 Census also provides data on the 

number, revenue and employment of establishments with payroll by revenue bracket for each of the 

eleven construction industry sectors affected by the rule. In Chapter 2, these data were used to classify 

construction establishments into two main size classes – establishments with annual revenues of less than 

$10 million, and establishments with annual revenues of $10 million or more. The percent of 

establishments, employees, net value of construction and total value of business contributed by 

establishments in each revenue bracket can be found in Chapter 2. 

Because 2002 Census data on the number of establishments by revenue bracket was not available at the 

time the estimates were developed, 1997 Census data was used to estimate the percent of establishments 

in each industry that qualify for small business status. These percentages, as well as the percent of 

industry revenues and employment contributed by small and large establishments, are presented in 

Chapter 2. 

The Small Business Administration revenue thresholds for establishments in the construction sectors are 

currently set at $33.5 million for Residential Remodelers and at $14 million for the ten specialty 

contractor industries. However, in applying the U.S. Economic Census data to the SBA definition of 

small business, it is not possible to estimate the exact number of construction establishments that have 

revenues below the SBA threshold because the U.S. Economic Census groups all establishments with 

revenues of $10 million or more into one revenue bracket. Applying the U.S. Economic Census data 

therefore requires either under or overestimating the number of small businesses affected by the rule. On 

the one hand, using data for the entire industry would overestimate the number of small businesses 

affected by the rule. It would also underestimate the rule’s impact on small businesses because the 

impacts would be calculated using the revenues of large businesses in addition to small businesses. On 

the other hand, applying the closest, albeit lower, revenue bracket would underestimate the number of 

small businesses affected by the rule while at the same time overestimating the impacts. For example, 

because the $10 million cut-off is below the SBA threshold for the Residential Remodeler industry, using 

the U.S. Economic Census data may lead to an underestimate of the number of small businesses in this 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-13

sector, although likely a small underestimate.3 At the same time, using these data may lead to a slight 

overestimate of the impacts of the rule, as the average revenues of small businesses will appear smaller 

when larger establishments (those with revenues of $10 to $33.5 million) are left out. See Section 6.2.2 

for a discussion of assumptions that may result in an overestimation of the number of affected small 

businesses. Moreover, using data on all businesses regardless of size would defeat the purpose of 

estimating impacts on small business. EPA has chosen to be more conservative in estimating the cost 

impacts of the rule on small businesses by using the $10 million threshold for construction industry 

sectors. 

As with the Residential Remodelers and the ten specialty contractor industries discussed above, it is not 

possible to estimate the exact number of small Residential Property Manager establishments or Lessor of 

Residential Buildings and Dwellings establishments because Census-defined revenue brackets group 

establishments with revenues of $1 million to $5 million and $5 million to $10 million, respectively. For 

the same reasons set forth above (the Agency had the choice to either overestimate or underestimate the 

impacts), the Agency has chosen to overestimate the impacts. Thus, EPA has applied the U.S. Economic 

Census data for establishments with revenues of less than $1 million to Residential Property Managers, 

and the U.S. Census Economic data for establishments with revenues of less than $5 million to Lessor of 

Residential Buildings.4

In order to estimate the number of certified small establishments with paid employees, EPA assumed that 

the number of certified small employers is proportional to the total number of small employer 

establishments in the industry. The total number of certified establishments in each industry (calculated 

in Chapter 4) was multiplied by the percentage of establishments in that industry with revenues below the 

revenue thresholds described above. For the eleven residential construction industry sectors, the resulting 

number of small employer establishments was added to the total number of certified self-employed 

contractors to obtain the total number of small certified establishments. 

Table 6-9 shows the 50-year average number of small businesses affected by the revisions. The number 

of affected businesses is predicted to decrease proportionally to the number of regulated events, which in 

turn decline at an annual rate of 0.41 percent (see Chapter 4 for discussion). 

 

3

 Because 99.7 percent of Residential Remodeler establishments earn less than $10 million per year, any 

underestimate of the number of establishments is likely to be minimal.

4 Approximately 85 percent of Residential Property Manager establishments earn less than $1 million per year, and 

about 99 percent of Lessor of Residential Buildings and Dwellings establishments earn less than $5 million per year.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-14

6.2.3.2 Training and Certification Costs – Residential Contractors 

Number of Firms Certified and Individuals Trained – Residential Contractors 

As described above, the number of certified small establishments with paid employees was estimated 

assuming that the number of certified small employers is proportional to the total number of small 

employer establishments in the industry. The total number of certified establishments in each industry 

(calculated in Chapter 4) was multiplied by the percentage of establishments in that industry with 

revenues below the revenue thresholds described above in section 6.2.3. The number of small employer 

establishments in each NAICS group estimated to obtain certification as a result of eliminating the opt-out 

provision is presented in Table 6-10. 

In order to estimate the number of renovators trained by each small employer establishment, the estimated 

number of certified firms in each sector was multiplied by the expected number of renovators per 

establishment for that sector. See Section 4.4.1.1 for a description of how the expected number of 

renovators per establishment was estimated. 

In order to estimate the number of employees of an average small establishment in each affected industry, 

EPA used U.S. Economic Census data to determine the portion of each industry’s employees that work 

for small businesses. This percentage was applied to the estimated number of trained renovators and 

workers in each sector to calculate the number of trained renovators and workers employed by small 

certified establishments. For each of the construction industry sectors, the total number of employees 

(including non-employers5

 who are trained as renovators) was divided by the total number of small 

establishments to calculate an average small business employment size. 

Table 6-10 presents the 50-year average number of renovators trained by small certified employer firms, 

the percent of the workforce employed by small establishments,6

 and the estimated numbers of trained 

workers employed by small certified establishments in each NAICS group under Option A. Only entities 

that would seek certification as a result of the elimination of the opt-out provision would incur additional 

certification and training costs.

 

5

 Also referred to as “self-employed” individuals.

6

 See Section 2.5.1 of Chapter 2 for discussion of these percentages.

Table 6-9: 50-Year Average Number of Small Residential 

Contractors and Real Estate Establishments Affected, Option A 

Entities Certified as a Result of Eliminating the Opt-Out Provision 

Non-Employer Establishments a 74,821 

Employer Establishments 25,841 

Total Small Establishments 100,662 

Entities Regulated under the 2008 LRRP Rule b 

Non-Employer Establishments a 96,422 

Employer Establishments 55,096 

Total Small Establishments 151,517 

a. Also referred to as “self-employed” individuals. 

b. These entities are currently regulated under the 2008 LRRP rule. Under the 

revisions, they only incur checklist costs. 

Source: EPA Calculations 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

Chapter 6 

Table 6-10: 50-Year Average Number of Firms Certified and Professionals Trained by Small Residential Contractor EEstablishments, Option A 

NAICS Description 

Number of 

Small 

Employer 

Firms 

Certified

Number of 

Certified 

Renovators 

Per 

Employer 

Firm

Number of 

Renovators 

Trained by 

Employer 

Firms

Workforce 

Employed by 

Small and 

Large Certified 

Firms

% Workforce 

Employed by 

Small 

Employers a,b 

236118 Residential remodelers 9,571 1 9,571 38,097 95% 238170 Siding contractors 684 1 684 4,563 90% 238350 Finish carpentry contractors 3,619 1 3,619 20,392 86% 238290 Other building equipment contractors 395 3 1,185 8,866 60% 238390 Other building finishing contractors 228 3 683 3,503 81% 238340 Tile and terrazzo contractors 516 1 516 3,781 91% 238220 Plumbing and HVAC contractors 4,791 2 9,582 58,288 70% 238150 Glass and glazing contractors 280 2 561 2,773 82% 238320 Painting and wall covering contractors 2,011 1 2,011 13,996 92% 238210 Electrical contractors 2,918 2 5,835 41,548 68% 238310 Drywall and insulation contractors 828 3 2,485 16,588 64% Total, Small Construction Establishments 25,841 36,732 212,396 

a. EPA applied U.S. Economic Census data regarding: entities with less than $10 million in revenues to establishments in the 11 co

entities with less than $1 million in revenues to Residential Property Manager establishments; and entities with less than $5 milliLessors of Residential Real Estate. 

b. Percentages shown for presentation purposes only. Calculations used unrounded ratio of small establishment data to industry dat

c. Total number of trained employees working for small construction establishments is the sum of trained personnel working for sm

total number of certified self-employed contractors. The number of workers trained by small employer firms is calculated as the by small and large certified firms multiplied by the percentage of the workforce employed by small employers, less the number oby small employer establishments.

Source: U.S. Census Bureau 2000d; U.S. Census Bureau 2004; U.S. Census Bureau 2005 b-e,g,h; U.S. Small Business A
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-16

Table 6-11 presents the 50-year average number of certified firms and renovators trained for nonemployer residential contractor establishments. Since non-employer establishments consist of single 

individuals, each self-employed individual must obtain a firm certification and renovator training. 

Table 6-11: 50-Year Average Number of Firms Certified and Renovators Trained 

by Small Residential Contractor Non-Employer Establishments, Option A 

NAICS Description 

Number of Small Non-Employer 

Firms Certified and Renovators 

Trained

236118 Residential remodelers 22,522 

238170 Siding contractors 1,651 

238350 Finish carpentry contractors 19,170 

238290 Other building equipment contractors 664 

238390 Other building finishing contractors 1,222 

238340 Tile and terrazzo contractors 2,739 

238220 Plumbing and HVAC contractors 6,162 

238150 Glass and glazing contractors 685 

238320 Painting and wall covering contractors 10,639 

238210 Electrical contractors 4,869 

238310 Drywall and insulation contractors 4,497 

Total, Small Construction Establishments 74,821 

Source: U.S. Census Bureau 2000e, U.S. Small Business Administration 2005. 

Total Certification and Training Costs to Small Residential Contractor Establishments 

To estimate small residential contractor training and certification costs, the numbers of individuals and 

firms in Table 6-9 and Table 6-10 were multiplied by the average annualized costs of training a single 

certified renovator and worker and maintaining certification from Table 6-8. The resulting average 

annualized training and certification costs are presented in Table 6-12. 

 

6.2.3.3 Work Practice Costs – Small Residential Contractors and Real Estate Establishments 

Number of Events Performed Annually by Small Residential Contractor and Real Estate 

Establishments 

As discussed in Section 6.2.2 and the beginning of this section, this analysis attributes the work practice 

costs of the rule to establishments on a per-event basis. In order to estimate the total number of events 

performed by establishments in each of the affected industries and in order to distribute these events 

between small and large establishments, EPA assumed that the number of events performed by each 

establishment is proportional to the number of people the establishment employs. Furthermore, EPA 

Table 6-12: Average Annualized Training and Certification Costs for Small Residential Contractors 

and Real Estate Establishments, Option A 

Regulatory Option 

Certified 

Renovator 

Training Costa

Worker 

Training 

Costa

Certification 

Costa

Total Training/ 

Certification 

Costa

Average 

Training and 

Certification 

Cost/ 

Establishment 

Option A $14,717,780 $3,636,882 $26,104,233 $44,458,895 $442 

a. Total costs are calculated using unrounded unit costs. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-17

assumed that the number of events performed by each trained employee will be the same across all 

industries including Residential Property Managers and Lessors of Residential Buildings and Dwellings. 

If property managers and lessors perform fewer events than estimated here, the impacts on these 

establishments will be slightly smaller and the impacts on construction firms will be larger. 

The number of events per small establishment in a particular industry was calculated as follows: 

EPA estimated the 50-year average number of events per certified renovator or worker by calculating the 

ratio of the total number of regulated RRP events to the total number of trained personnel (using the 50-

year averages). Because the number of people trained, as estimated in Chapter 4, was assumed to be 

proportional to the regulated housing stock and the number of regulated events, the number of RRP 

events per employee does not change over time and is approximately the same across options. 

To estimate the average number of events performed by a small establishment in a given industry, the 

establishment’s average employment size was multiplied by the average number of events per person. 

Table 6-13 presents the 50-year average estimated number of events per small establishment. 

Total Work Practice Compliance Costs – Residential Contractors and Real Estate Establishments 

Table 6-8 presents the annualized average per event costs of the rule. For opt-out entities, these costs 

include the cost of using lead-safe work practices and complying with the recordkeeping checklist 

provision requirements. For entities currently regulated under the 2008 LRRP rule, costs are limited to 

meeting the checklist provision requirements. Multiplying the average work practice and checklist cost 

per small establishment by the total 50-year average number of small entities (see Section 6.2.3 for a 

description of the derivation of this number) yields the total annualized work practice costs above and 

beyond the 2008 LRRP rule. These costs are presented in Table 6-14. 

Table 6-13: 50-Year Average Annual Number of Events performed by Small Residential 

Contractors and Real Estate Establishments, by Option 

Regulatory 

Option 

Average Small 

Employment 

Size 

Average Number 

of Annual Events 

Per Employee 

Total Number of 

Small 

Establishments 

Total Annual 

Number of 

Events Per Small 

Establishment 

Entities Certified as a Result of Eliminating the Opt-Out Provision 

Option A 2.4 23.0 100,662 54.6 

Entities Regulated under the 2008 LRRP Rule 

Option A 2.2 23.0 151,517 51.1 

Number of Events = (Events/Employee) X (Establishment Employment Size)
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-18

Table 6-14: Average Annualized Work Practice and Checklist Costs for Small Residential 

Contractors and Real Estate Establishments 

Regulatory 

Option 

Avg. Events per 

Small Estab. 

Annualized 

Average WPC 

per Event b

50-year Avg. 

Number of 

Small Estab. 

Total Work 

Practice Costs a

Avg. Work 

Practice Costs 

per Small Estab. 

Entities Certified as a Result of Eliminating the Opt-Out Provision 

Option A 55 $35 100,662 $191,680,462 $1,904 

Entities Regulated under the 2008 LRRP rule c

Option A 51 $2 151,517 $14,158,517 $93 

a. Total costs are calculated using unrounded unit costs. 

b. Includes the cost of using lead-safe work practices and complying with the recordkeeping checklist 

provision requirements. 

c. These entities are currently regulated under the 2008 LRRP rule. Under the revisions, they only incur 

checklist costs. 

6.2.3.4 Residential Contractors and Real Estate Industry Revenues 

Cost-impact ratio analysis compares the cost of a regulation to a firm’s (in this case, establishment’s) total 

revenues, not just to its revenues from the regulated activity. As such, for construction establishments, 

the costs of the rule were compared to the total value of business done rather than just to the total value of 

construction work. For real estate establishments, total revenues were used. Because no revenue data are 

available specifically for establishments expected to seek certification under the regulations, EPA 

assumed that average revenues of these businesses do not differ significantly from industry averages. 

EPA calculated the revenues of a small certified construction business as a weighted average of small 

employer and non-employer revenues. The 2002 U.S. Economic Census presents data on the number and 

total value of business done by construction establishments with total annual revenues of $0 to $10 

million and $10 million or more. To estimate the average revenues of small employers in each of the 

affected construction sectors, the total value of business done by establishments in the $0 to $10 million 

bracket was divided by the total number of establishments in that bracket. Since the Census presents 

revenue figures in year 2002 dollars, the resulting average revenues were inflated to 2005 dollars using 

the Consumer Price Index.7 Per-establishment revenues for non-employers were estimated for the cost 

impact ratio analysis by dividing non-employer revenues (inflated to 2005 dollars) by the number of nonemployer establishments in each industry. Average revenues of certified small establishments are 

presented in Table 6-15. Because 2002 data on the number of establishments by revenue bracket was not 

available at the time the estimates were developed, 1997 data was used to estimate the percent of 

establishments in each industry that qualify for small business status. EPA also used 1997 Census data to 

calculate the percent of industry revenues contributed by these establishments. These percentages were 

then applied to the 2002 numbers of establishments and industry revenue figures to estimate the number 

and revenues of small and large employers in each industry. Average small and large employer revenues 

(calculated by dividing the revenues of establishments in each industry and revenue bracket by the 

corresponding number of establishments) were inflated to 2005 dollars using the Consumer Price Index.8

 

The resulting estimates are presented in Table 6-15. 

 

7 All items, US city average, Series Id: CUUR0000SA0. Used annual data for 2002 and half-year data for 2005.

8 All items, US city average. Series Id: CUUR0000SA0.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-19

Table 6-15: Average Revenues of Small Businesses Affected by the 

Revisions to the 2008 LRRP Rule 

NAICS Industry Description 

Small Business 

Revenues 

(2005$) 

236118 Residential remodelers $182,932 

238170 Siding contractors $201,569 

238350 Finish carpentry contractors $100,713 

238290 Other building equipment contractors $585,771 

238390 Other building finishing contractors $231,442 

238340 Tile and terrazzo contractors $130,097 

238220 Plumbing and HVAC contractors $432,677 

238150 Glass and glazing contractors $336,858 

238320 Painting and wall covering contractors $86,839 

238210 Electrical contractors $351,694 

238310 Drywall and insulation contractors $240,488 

Total Average, Construction Establishments $200,654 

531311 Residential Property Managers $342,477 

531110 Lessors of Residential Real Estate $821,350 

Total Average, All Industries $270,621 

Weighted average of employer and non-employer revenues. 

Source: EPA Calculations; U.S. Census Bureau 2005b,d,e; U.S. Small Business 

Administration 2005; U.S. Census Bureau 2004; U.S. Census Bureau 2000d. 

6.2.3.5 Impacts on Small Residential Contractors and Real Estate Establishments 

Impacts of the rule on small residential contractors and real estate industries are measured by comparing 

the costs of the rule incurred by an establishment to the establishment’s revenues. The impacts on small 

residential contractors and real estate establishments were estimated by first summing the total annualized 

work practice, training, certification, and checklist costs incurred by these entities under Option A and 

dividing these total costs by the number of establishments. Average costs per establishment were then 

divided by average revenues to calculate a cost-to-revenue ratio. These calculations, and the resulting 

cost-to-revenue ratios, are presented in Table 6-16. 

Table 6-16: Cost-to-Revenue Ratios for Small Residential Contractors and Real Estate 

Industries 

Regulatory 

Option 

Total Regulated 

Small Entities 

Total Cost of Rule 

to Small Entities, 

Annualized 

Average Cost of 

Rule per Small 

Entity 

Estimated Average 

Small Entity 

Revenues 

Cost-toRevenue Ratio

Entities Certified as a Result of Eliminating the Opt-Out Provision 

Option A 100,662 $236,139,357 $2,346 $200,654 1.17% 

Entities Regulated under the 2008 LRRP rule 

Option A 151,517 $14,158,517 $93 $270,621 0.03% 

Table 6-17 and Table 6-18 present the impacts of the rule on small residential contractors and real estate 

industries, by NAICS group, for non-employer and employer establishments both separately and 

combined. Impact estimates for non-employers should be interpreted with caution, as some non-
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-20

employers may have issues related to under-reporting of income, which would tend to tend to exaggerate 

the average impact ratio for this class of small entities. According to GAO, many sole proprietors 

underreport their income, with a small proportion accounting for the bulk of understatements (GAO 1994 

and 2007). According to IRS estimates reported by GAO, sole proprietors underreported their net income 

by 57 percent in 2001 (GAO 2007). The IRS estimates address net income (i.e., revenues minus 

expenses), while the small entity analysis compares compliance costs to revenues. According to IRS 

figures, underreporting of gross income makes up at least half of the misreporting of net income. A key 

reason for this underreporting is that the income of the self-employed is not subject to withholding and 

only a portion of that income is subject to information reporting by third parties (GAO 2007). The IRS 

estimates that at least 61 percent of sole proprietors underreported their income, and the IRS recognizes 

that these are underestimates because detecting underreported income is difficult, especially cash receipts 

(GAO 2007). Although at least 61 percent of sole proprietors had understated taxes, the amounts were 

skewed with half of sole proprietors understating less than $903. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-21

Table 6-17: Cost-to-Revenue Ratios: Small Residential Opt-Out Contractors 

NAICS Industry Description Number of 

Small 

Entities 

Costs Revenues CostImpact 

Ratio

Non-Employers 

236118 Residential remodelers 22,522 $26,859,669 $770,756,554 3.48% 

238170 Siding contractors 1,651 $1,968,998 $53,964,403 3.65% 

238350 Finish carpentry contractors 19,170 $22,862,741 $584,426,239 3.91% 

238290 Other building equipment contractors 664 $792,106 $26,185,272 3.03% 

238390 Other building finishing contractors 1,222 $1,457,683 $93,180,896 1.56% 

238340 Tile and terrazzo contractors 2,739 $3,266,353 $104,907,180 3.11% 

238220 Plumbing and HVAC contractors 6,162 $7,348,212 $355,583,972 2.07% 

238150 Glass and glazing contractors 685 $817,238 $41,699,973 1.96% 

238320 Painting and wall covering contractors 10,639 $12,687,560 $268,203,516 4.73% 

238210 Electrical contractors 4,869 $5,807,332 $196,163,184 2.96% 

238310 Drywall and insulation contractors 4,497 $5,363,614 $411,012,261 1.30% 

Total, Small Construction Establishments 74,821 89,231,508 $2,906,083,450 3.07% 

Employers 

236118 Residential remodelers 9,571 $33,508,732 $5,100,156,306 0.66%

238170 Siding contractors 684 $3,666,976 $416,601,038 0.88%

238350 Finish carpentry contractors 3,619 $15,851,721 $1,710,792,708 0.93%

238290 Other building equipment contractors 395 $4,672,804 $594,195,609 0.79%

238390 Other building finishing contractors 228 $2,483,098 $242,376,493 1.02%

238340 Tile and terrazzo contractors 516 $3,032,663 $318,585,066 0.95%

238220 Plumbing and HVAC contractors 4,791 $36,185,129 $4,383,307,838 0.83%

238150 Glass and glazing contractors 280 $2,027,869 $283,550,692 0.72%

238320 Painting and wall covering contractors 2,011 $11,382,881 $830,281,509 1.37%

238210 Electrical contractors 2,918 $24,808,785 $2,542,547,280 0.98%

238310 Drywall and insulation contractors 828 $9,287,190 $869,800,401 1.07%

Total, Small Construction Establishments 25,841 $146,907,849 $17,292,194,938 0.85% 

Employers and Non-Employers Combined 

236118 Residential remodelers 32,093 $60,368,402 $5,870,912,860 1.03%

238170 Siding contractors 2,335 $5,635,975 $470,565,440 1.20%

238350 Finish carpentry contractors 22,790 $38,714,462 $2,295,218,947 1.69%

238290 Other building equipment contractors 1,059 $5,464,910 $620,380,881 0.88%

238390 Other building finishing contractors 1,450 $3,940,781 $335,557,389 1.17%

238340 Tile and terrazzo contractors 3,255 $6,299,016 $423,492,246 1.49%

238220 Plumbing and HVAC contractors 10,953 $43,533,341 $4,738,891,810 0.92%

238150 Glass and glazing contractors 966 $2,845,108 $325,250,665 0.87%

238320 Painting and wall covering contractors 12,650 $24,070,441 $1,098,485,025 2.19%

238210 Electrical contractors 7,787 $30,616,117 $2,738,710,465 1.12%

238310 Drywall and insulation contractors 5,326 $14,650,805 $1,280,812,661 1.14%

Total, Small Construction Establishments 100,662 $236,139,357 $20,198,278,388 1.17% 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-22

Table 6-18: Cost-to-Revenue Ratios: Small Residential Currently Regulated Contractors and Real 

Estate Industries 

NAICS Industry Description Number of 

Small 

Entities 

Costs Revenues CostImpact 

Ratio

Non-Employers 

236118 Residential remodelers 29,024 $1,217,671 $993,273,413 0.12% 

238170 Siding contractors 2,128 $89,264 $69,543,887 0.13% 

238350 Finish carpentry contractors 24,705 $1,036,472 $753,149,670 0.14% 

238290 Other building equipment contractors 856 $35,910 $33,744,941 0.11% 

238390 Other building finishing contractors 1,575 $66,083 $120,082,153 0.06% 

238340 Tile and terrazzo contractors 3,530 $148,079 $135,193,807 0.11% 

238220 Plumbing and HVAC contractors 7,940 $333,128 $458,240,807 0.07% 

238150 Glass and glazing contractors 883 $37,049 $53,738,725 0.07% 

238320 Painting and wall covering contractors 13,710 $575,185 $345,633,677 0.17% 

238210 Electrical contractors 6,275 $263,273 $252,795,354 0.10% 

238310 Drywall and insulation contractors 5,796 $243,157 $529,671,202 0.05% 

531311 Residential Property Managers 0 $0 $0 n.a. 

531110 Lessors of Residential Real Estate 0 $0 $0 n.a. 

Total 96,422 $4,045,271 $3,745,067,637 0.11% 

Employers 

236118 Residential remodelers 12,335 $1,392,431 $6,572,567,737 0.02%

238170 Siding contractors 881 $151,354 $536,873,456 0.03%

238350 Finish carpentry contractors 4,664 $642,342 $2,204,697,324 0.03%

238290 Other building equipment contractors 509 $197,176 $765,739,451 0.03%

238390 Other building finishing contractors 293 $106,696 $312,350,411 0.03%

238340 Tile and terrazzo contractors 665 $123,918 $410,560,343 0.03%

238220 Plumbing and HVAC contractors 6,174 $1,525,317 $5,648,765,636 0.03%

238150 Glass and glazing contractors 361 $86,568 $365,411,571 0.02%

238320 Painting and wall covering contractors 2,592 $465,307 $1,069,983,179 0.04%

238210 Electrical contractors 3,760 $1,039,851 $3,276,578,839 0.03%

238310 Drywall and insulation contractors 1,068 $390,767 $1,120,911,146 0.03%

531311 Residential Property Managers 5,824 $1,247,867 $1,994,528,285 0.06% 

531110 Lessors of Residential Real Estate 15,970 $2,743,652 $13,117,019,660 0.02% 

Total 55,096 $10,113,246 $37,395,987,038 0.03% 

Employers and Non-Employers Combined 

236118 Residential remodelers 41,359 $2,610,103 $7,565,841,150 0.03%

238170 Siding contractors 3,008 $240,617 $606,417,342 0.04%

238350 Finish carpentry contractors 29,369 $1,678,815 $2,957,846,994 0.06%

238290 Other building equipment contractors 1,365 $233,085 $799,484,392 0.03%

238390 Other building finishing contractors 1,868 $172,779 $432,432,564 0.04%

238340 Tile and terrazzo contractors 4,195 $271,997 $545,754,150 0.05%

238220 Plumbing and HVAC contractors 14,114 $1,858,444 $6,107,006,443 0.03%

238150 Glass and glazing contractors 1,244 $123,617 $419,150,296 0.03%

238320 Painting and wall covering contractors 16,302 $1,040,492 $1,415,616,856 0.07%

238210 Electrical contractors 10,035 $1,303,124 $3,529,374,192 0.04%

238310 Drywall and insulation contractors 6,863 $633,924 $1,650,582,349 0.04%

531311 Residential Property Managers 5,824 $1,247,867 $1,994,528,285 0.06% 

531110 Lessors of Residential Real Estate 15,970 $2,743,652 $13,117,019,660 0.02% 

Total 151,517 $14,158,517 $41,141,054,675 0.03%
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-23

6.2.4 Non-Residential Contractors 

Non-residential contractors (i.e., those working in public or commercial building COFs) are currently 

regulated under the 2008 LRRP Rule and are not affected by the removal of the opt-out provision. 

However, these entities would incur recordkeeping checklist provision costs under the revisions to the 

2008 LRRP rule. Since this analysis estimates the incremental costs of the revisions, the following 

sections present the potential cost impacts of the checklist provision only. 

Jobs that are not performed in-house by public and private schools, non-residential property 

managers/lessors, and daycare centers will be performed by general and specialty contractors including 

painters, electricians, plumbers/HVAC specialists, and non-residential building contractors. Under the 

revisions to the 2008 LRRP rule, 3,223 establishments are expected to incur checklist costs in the first 

year as a result of the checklist provision for projects in public or commercial building COFs. Because 

different contractors are generally expected to work in public or commercial buildings and target housing, 

this analysis considers impacts on these groups of establishments separately. 

This analysis assumes that only contractors with employees will work on COFs in public or commercial 

buildings.9

 Furthermore, the types of jobs performed in public or commercial building COFs are 

generally less varied than those in target housing. Events in COFs are assumed to consist primarily of 

painting, window/door replacement, and plumbing and electrical projects. As such, it is likely that most 

of these projects will be performed by painting, plumbing/HVAC, electrical and commercial contractors 

(NAICS 236320, 238210, 238320 and 236220, respectively). 

6.2.4.1 Number of Small Non-Residential Contractors Affected by the Revisions 

To estimate the number of construction establishments working in public or commercial building COFs, 

the percentage of newly trained workers and supervisors that those establishments employ, the number of 

jobs they perform and their average revenues, the following assumptions are made: 

 The number of additional contractors obtaining training and certification in each sector is 

proportional to the number of jobs likely to be performed by each type of contractor. For 

example, since painting jobs are estimated to make up 5 percent of all jobs performed by 

contractors in public or commercial building COFs, 5 percent of the 3,223 contractor 

establishments estimated to incur checklist costs are assumed to be painting contractors. Table 6-

19 presents the distribution of jobs by job type, describes the assumptions made to assign these 

jobs to each type of contractor, and presents estimates of the number of contractor establishments 

incurring checklist costs in the first year under Option A. 

 These currently regulated contractors are only assumed to perform projects in public or 

commercial building COFs. In reality, however, these additional contractors may perform some 

residential work and some commercial work, while contractors with employees that were 

included in the residential contractor section of this analysis may also do some of the nonresidential COF work. As such, to define the size and revenue of the average small firm working 

in public or commercial building COFs, the numbers of certified non-residential contractors with 

employees were added to the pool of pre-existing certified residential employer establishments in 

the corresponding sectors. The percent of small establishments in each sector, percent of workers 

employed (and thus jobs performed) by these establishments, and percent of total value of 

business earned by these establishments were calculated using 2002 Economic Census data on the 

number of small establishments and employees working for small establishments (U.S. Census 

 

9

 In contrast, the analysis of target housing contractors assumes that both employer and non-employer (i.e., selfemployed) contractors will work on COFs in target housing. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-24

Bureau 2005a). Average revenues of small establishments were estimated by dividing the total 

value of business earned by establishments with revenues below $10 million in each sector by the 

total number of establishments with revenues below $10 million in that sector. The results of 

these calculations are presented for Option A in Table 6-20. Note that because only 

establishments with employees are assumed to work in public or commercial building COFs, 

average revenues of small establishments in Table 6-20 are higher than the average revenues of 

residential construction establishments, which include self-employed contractors. 

Table 6-19: Estimated Number of Non-Residential Contractors by NAICS Sector 

Type of Event 

Type of Contractor 

performing Event 

Number of 

Events 

Percent of 

all 

Contractor 

Events 

Estimated 

first-year 

number of 

contractors 

Painting 

NAICS 238320 - Painting 

Contractors 13,448 4.8% 155 

Window/ Door 

NAICS 236220 - Commercial 

Building Contractors 6,943 2.5% 80 

Unscheduled maintenance 

(Non-plumbing/ 

electrical)a

NAICS 236220 - Commercial 

Building Contractors 

2,192 0.8% 25 

Plumbing 

(Routine and 

unscheduled)b

NAICS 238210 - 

Plumbing/HVAC contractors 

128,926 46.0% 1,482 

Electrical 

(Routine and 

unscheduled) b

NAICS 238220 - Electrical 

Contractors 

128,926 46.0% 1,482 

Total Jobs 280,434 3,223 

a. The majority of unscheduled maintenance events are expected to be plumbing or electrical 

events, which must be performed by a specialized contractor. It is assumed, however, that 

every other year, one of the unscheduled maintenance events in each building will be a 

painting or window/door project (for example, a soccer ball may break a window that will 

then need to be replaced). 

b. To simplify the analysis, it is assumed that half of the scheduled plumbing and electrical 

projects and all other unscheduled maintenance projects will be performed by plumbers and 

the other half by electricians. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-25

6.2.4.2 Recordkeeping Checklist Costs – Non-Residential Contractors 

Number of Events Performed by Small Establishments – Non-Residential Contractors 

On average, 98 percent of the 3,223 non-residential construction contractor establishments that will incur 

checklist costs in the first year as a result of the revisions to the LRRP Rule under Option A are small 

businesses. Since the number of jobs performed by an establishment is proportional to the number of 

people that establishment employs, these small businesses are expected to perform 69 percent of the nonresidential COF contractor jobs as a result of the 2008 LRRP rule. Table 6-21 presents the total number 

of small contractor establishments incurring recordkeeping checklist costs and the number of events in the 

first year under Option A. 

Table 6-21: First Year Number of Small Non-Residential Contractor Establishments 

and Jobs Performed 

Total, non-residential COF contractor Small, non-residential COF contractor

Establishments Events Establishments Events 

Option A 3,223 280,434 3,164 193,957 

To estimate typical annual small businesses impacts this analysis estimated the 50-year average number 

of certified firms and regulated events given that the number of certified firms is expected to decrease 

proportionally to the size of the regulated housing stock. These estimates are presented in Table 6-22. 

Table 6-22: 50-Year Average Annual Number of Small Certified Establishments 

and Jobs Performed 

Regulatory Option Number of Firms with 

Checklist Costs Number of Jobs Performed 

Option A 2,300 175,693 

Table 6-20: Estimated Numbers and Characteristics of Small Non-Residential Contractors 

NAICS 

Contractor Description 

Estab., 

Residential 

Estab., 

NonResidentialEst., 

Total 

Percent 

Small 

Number 

Small 

Percent 

Workers 

at Small 

Estab. 

Average 

Revenues of 

Small Estab.

238220 - Plumbing/ 

HVAC 11,200 1,482 12,681 97.9% 12,410 70.1% $850,881 

238210 - Electrical 

contractors 6,824 1,482 8,306 97.9% 8,132 67.9% $809,692 

236220 - Commercial 

building contractors 0 105 105 88.1% 93 41.4% $1,750,332 

238320 - Painting/ wall 

covering 4,615 155 4,770 99.7% 4,757 91.5% $380,165 

Total/ Weighted Avg. 

Small Non-Residential 

Contractor Firm 

22,639 3,223 25,862 98.2% 25,391 69.2% $752,783 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-26

Total Recordkeeping Checklist Costs 

To estimate total checklist costs incurred by small non-residential construction establishments working in 

public or commercial buildings housing COFs, the 50-Year average annual number of events performed 

by these establishments (approximately 61 per firm) was multiplied by the sum of average annualized 

recordkeeping checklist cost per event ($2; see Table 6-8). Table 6-23 presents the resulting annualized 

total and average checklist costs to small non-residential construction establishments. 

Table 6-23: Average Annualized Checklist Costs for Non-Residential Contractors 

Regulatory Option 

Average 

Annual Events 

Performed 

Annualized 

Avg. Checklist 

Cost per event 

Total Checklist 

Costs a

Average Checklist 

Costs per Small 

Establishment 

Option A 175,693 $2 $320,957 $112 

a. Total costs are calculated using unrounded unit costs. 

6.2.4.3 Impacts of the Revisions on Non-Residential Contractors 

Impacts of the rule on small non-residential contractors are measured by comparing the costs of the rule 

incurred by an establishment to the establishment’s revenues. The impacts on small non-residential 

contractors were estimated by first dividing the total checklist costs under Option A by the number of 

establishments. Average costs per establishment were then divided by average revenues to calculate a 

cost-to-revenue ratio. These calculations, and the resulting cost-to-revenue ratios, are presented in Table 

6-24. 

6.2.5 Non-Residential Property Lessors and Managers 

Non-residential property lessors and managers are currently regulated under the 2008 LRRP Rule and are 

not affected by the removal of the opt-out provision. However, these entities would incur recordkeeping 

checklist provision costs under the revisions to the 2008 LRRP rule. As this analysis estimates the 

incremental costs of the revisions, the following sections present the potential cost impacts of the 

checklist provision, only. 

Lessors and managers of pre-1978 public or commercial (non-residential) buildings that rent space to 

daycare centers and perform regulated projects on their own properties will incur recordkeeping checklist 

costs under the revision to the 2008 LRRP rule. As discussed in Chapter 4, this analysis estimates that 

13,279 daycare centers will rent space in pre-1978 non-residential buildings in the first year. On average 

(over 50 years), 12,028 daycare centers are expected to rent space in pre-1978 buildings each year under 

Option A. Because daycare centers are only one of many types of establishments renting non-residential 

space and because the LRRP Rule applies only to centers in buildings constructed prior to 1978, the 

analysis also assumes that each property manager or lessor firm owns only one non-residential building 

containing a COF. As such, the number of affected lessor/manager firms is equivalent to the number of 

Table 6-24: Cost-to-Revenue Ratios for Non-Residential Contractors 

Regulatory 

Option 

Total Small 

Contractor 

Establishments 

Total Cost of Rule

to Small 

Contractor 

Establishments 

Average Cost of 

Rule per Small 

Contractor 

Establishments 

Average Small 

Contractor 

Establishment 

Revenues 

Cost-toRevenue Ratio

Option A 2,866 $320,957 $112 $752,783 0.01% 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-27

affected daycare centers renting space or 12,028 firms under Option A. Due to the lack of data on the 

extent to which these firms perform renovation work in their own buildings, this analysis assumes that 

they will behave similarly to the operators of other public or commercial buildings with child-occupied 

facilities, namely that they will perform all of their own painting and window/door carpentry projects as 

well as an average of one unscheduled maintenance project per building every year. 

6.2.5.1 Number of Non-Residential Property Lessors and Managers Affected by the Revisions to 

the 2008 LRRP Rule 

Lessors and managers of non-residential properties fall under NAICS 531120 and 531312, respectively. 

In order to estimate the number of regulated firms in each of these sectors, it is assumed that the percent 

of regulated firms in each industry is equivalent to the total percent of firms in that industry. In other 

words, since Lessors of Non-Residential Buildings (NAICS 531120) make up 73 percent of 

establishments in NACIS 531120 and 531312 combined, 73 percent of the 12,028 lessor/manager firms 

affected by the rule under Option A are also assumed to fall in this sector, while the remaining 27 percent 

are assumed to fall under NAICS 531312 (Calculated based on U.S. Census Bureau 2005f). 

As discussed Section 2.4.2 of Chapter 2, 96 percent of Lessors of Non-Residential Real Estate, and 81 

percent of Non-Residential Property Managers qualify for small business status under the SBA definition 

of a small business in these sectors (U.S. Census Bureau 2005f). This analysis assumes that the size 

distribution of regulated firms mirrors the size distribution of the entire non-residential property lessor 

and manager industry. Table 6-25 presents the resulting estimates of the number of small non-residential 

property lessors and managers affected by the revisions to the 2008 LRRP rule under Option A in a 

typical year. 

6.2.5.2 Recordkeeping Checklist Costs – Non-Residential Property Lessors and Managers 

The estimation of checklist costs incurred by each property lessor or manager is based on the average 

number of events per building and the average checklist costs per event. 

Total Checklist Compliance Costs – Non-Residential Property Lessors and Managers 

The annual number of events performed by each of these firms is estimated to be 0.71 events per year. 

This average number of events was multiplied by the 50-year average number of small lessor/manager 

firms to estimate the number of regulated projects performed by these businesses in a typical year. The 

total number of regulated events, in turn, was multiplied by the annualized checklist costs per event (see 

Table 6-8) to calculate these firms’ total annualized checklist costs. Table 6-26 presents these estimates, 

as well as the average checklist costs per small firm. 

Table 6-25: Average Annual Number of Small Non-Residential Property Lessors and 

Managers 

Option A 

A. Total number of firms leasing to daycare centers 12,028 

B. Number of firms in NAICS 531120 (73% of A) 8,782 

C. Number of firms in NAICS 531312 (27% of A) 3,246 

D. Number of firms in NAICS 531120 that are small (96% of B) 8,417 

E. Number of firms in NAICS 531312 that are small (81% of C) 2,639 

Total Number of Regulated Small Firms (D+E) 11,056 

Regulated Small Firms as % of All Regulated Firms 92% 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-28

6.2.5.3 Impacts of the Revisions on Non-Residential Property Lessors and Managers 

This small entity analysis measures the incremental impacts of the revision to the 2008 LRRP rule on 

small non-residential property lessors and managers by comparing rule costs incurred by these firms to 

the weighted average revenue of small firms in NAICS 531120 and 531312, calculated based on 2002 

Census Data. The weighted average revenue figure of $111,460 was inflated to 2005 dollars using the 

Consumer Price Index to obtain estimated revenues of $126,256. The impacts on small non-residential 

property lessors and managers were estimated by first dividing checklist costs incurred by these entities 

under Option A by the number of establishments. Average costs per establishment were then divided by 

average revenues to calculate a cost-to-revenue ratio. 

The average annual numbers of businesses affected, average annualized per-business costs and revenues, 

and the resulting cost-to-revenue ratio are presented in Table 6-27. 

Table 6-27: Cost-to-Revenue Ratios for Non-Residential Property Managers and Lessors 

Regulatory 

Option 

Total Small 

Lessor/ Manager 

Firms 

Total Cost of Rule 

to Small Lessor/ 

Manager Firms 

Average Cost of 

Rule per Small 

Lessor/ Manager 

Firm 

Average Small 

Lessor/ Manager 

Firm Revenues 

Cost-toRevenue Ratio

Option A 11,056 $14,422 $1 $126,256 0.001% 

6.2.6 Daycare Centers (Small Non-Profits) 

Daycare centers are currently regulated under the 2008 LRRP Rule and are not affected by the removal of 

the opt-out provision. However, these entities would incur recordkeeping checklist provision costs under 

the revisions to the 2008 LRRP rule. As this analysis estimates the incremental costs of the revisions, the 

following sections present the potential cost impacts of the checklist provision, only. 

6.2.6.1 Number of Small, Non-Profit Daycare Centers Affected by the Revisions to the 2008 LRRP 

Rule 

As discussed in Chapter 2, there are an estimated 87,840 daycare centers in the United States. These 

daycare centers include facilities that provide day care outside of a residential home and outside of 

schools. Assuming a 75% compliance rate, and adjusting the total number of centers for building age 

using HUD data on the age of education buildings, an estimated 38,210 daycare centers will be affected 

by the revisions to the 2008 LRRP Rule in the first year under Option A.10 As discussed in Chapter 4, 

because of their locations, for-profit daycare centers are expected to hire outside contractors to perform 

their renovations and repairs or to have their landlord handle these activities. The costs and impacts for 

these events are accounted for in the sections of this chapter dealing with contractors and landlords. 

 

10 Based on 2003 HUD data, 58 percent of all education buildings were constructed before 1978, and 55 percent of 

the pre-1978 buildings were constructed before 1960.

Table 6-26: Checklist Costs of Non-Residential Property Lessors and Managers 

Regulatory Option Total In-House 

Events 

Annualized 

Avg. Checklist 

Costs per event 

Total Checklist 

Costs a

Average Checklist 

Costs per Small 

Firm 

Option A 7,895 $2 $14,422 $1 

a. Total costs are calculated using unrounded unit costs. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-29

Daycare centers located in religious establishments such as churches or synagogues, however, frequently 

use their own staff to perform some of their RRP events. According to the HUD survey of child care 

centers (HUD 2003), approximately 73 percent of daycare centers located in churches and other religious 

establishments use their own (or the religious organization’s) staff to perform painting projects. This 

analysis assumes that, similar to public school districts and private schools, these establishments will also 

use their own staff to perform all window/door carpentry work as well as one unscheduled maintenance 

project every year. 

The number of daycare centers located in religious establishments was estimated with data from the HUD 

survey of child care centers (HUD 2003). According to these data, 41 percent of all daycare centers are 

situated in churches or other similar organizations. (In contrast, the US Census reports that about 35 

percent of daycare centers located outside of schools are non-profits (U.S. Census Bureau 2005c).) The 

other 59 percent of daycare centers are assumed to use outside contractors for their RRP work rather than 

in-house staff. Because the estimate of centers that are in religious settings is relatively large and there is 

no independent data on other non-profits, this analysis estimates that about 30 percent of daycare centers 

(0.73*0.41=.299) will perform their own renovation work and thus incur direct work practice, training, 

and certification costs.11 Because all of these establishments are treated as though they are operated by 

religious organizations, all daycare centers considered in the small entity analysis are considered to be 

non-profit organizations. As the RFA defines independently owned and operated not-for-profit 

enterprises that are not dominant in their field as “small organizations,” all the non-profit organizations 

operating these day care centers are assumed to qualify as small entities. This assumption may 

overestimate the number of impacted small non-profits, since some of these non-profit organizations may 

not be small entities. 

 Table 6-28 presents the number of daycare centers regulated under Option A in a typical year, the total 

number of daycare centers operated by non-profit organizations (based on the number in religious 

organizations), and the number expected to perform some renovation work in-house. The estimation of 

annual average numbers of centers accounts for the fact that, after the first year, the number of regulated 

daycare centers is expected to decrease by 0.41 percent per year due to building demolition. 

6.2.6.2 Recordkeeping Checklist Costs – Non-Profit Daycare Centers 

The estimation of work practice costs incurred by each daycare center is based on the average number of 

events per-building performed in-house and the average work practice costs per event. 

 

11 Given the small size of the HUD survey sample, and the difference between the HUD and Census figures, the 

estimate may include some non-profits operating daycare facilities that are not in religious settings but perform 

their own repair work. Other non-profit daycare facilities may be hiring outside contractors, the same as forprofit daycare facilities are assumed to do.

 Table 6-28: Average Annual Number of Non-Profit Daycare Centers Performing their Own Work 

Regulatory Option (A) Total Number 

of Daycare 

Centers 

(B) Number of Centers in 

Non-Profit Organizations 

(41% of A) 

(C) Number of Centers 

Doing RRP Work Inhouse (73% of B) 

Option A 34,612 14,339 10,481 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-30

Total Checklist Compliance Costs – Non-Profit Daycare Centers 

Staff in non-profit daycare centers (such as those operated by religious establishments) are expected to 

perform in-house all painting and window/door carpentry work in their building as well as one 

unscheduled maintenance event every year. Center staff are expected to perform 0.71 events per year inhouse. 

As discussed in 6.2.2, the average annualized checklist cost per event in COFs in public and commercial 

buildings is $2 under Option A (see Table 6-8). Multiplying this average cost by the total 50-year 

average annual number of events in daycare centers that perform their own work yields the total 

annualized checklist costs incurred by these centers in an average year. The total annual number of 

events is the product of 0.71 and the number of centers doing in-house RRP work from Table 6-28. 

These costs, and average per-center checklist costs, are presented in Table 6-29. 

Table 6-29: 50-Year Average Annualized Work Practice Costs for Non-Profit Daycare 

Centers 

Regulatory Option Total In-House 

Events 

Annualized 

Avg. Checklist 

per event 

Total Checklist 

Costs a

Average Checklist 

Costs per Small 

Center 

Option A 7,484 $2 $13,672 $1 

a. Total costs are calculated using unrounded unit costs. 

6.2.6.3 Non-Profit Daycare Center Expenditures 

In analyzing impacts of the revisions to the 2008 LRRP rule on an entity, the analysis conceptually should 

compare rule costs to the revenues or expenditures of an entire organization. As such, costs of the rule to 

non-profit daycare centers should be compared to the revenues or expenditures of the parent organization 

(such as the religious organization that operates them), rather than a single center. Due to a lack of data 

both on the structure of these organizations and on their finances, such a comparison was not possible. 

Instead, this analysis is based on daycare center revenues. Ten state childcare industry impact studies 

were reviewed to obtain daycare center revenue data.12 Nine of these studies did not differentiate between 

revenues of non-profit and for-profit centers. The Virginia Economic Impact of the Child Care Industry

report (Voices of Virginia’s Children 2004), however, provided revenue data specific to religiously 

affiliated daycare centers. The state reported annual total revenues of $236 million for its 929 religious 

daycare facilities or average revenues (inflated to 2005$) of $287,605 (U.S. Bureau of Labor Statistics 

2006). This figure was used to measure the incremental impacts of the revisions to the 2008 LRRP rule 

on non-profit centers. 

6.2.6.4 Impacts on Non-Profit Daycare Centers 

The impacts on non-profit daycare centers were estimated by first dividing total annualized checklist costs 

incurred by these entities under Option A by the number of centers. Average costs per center were then 

divided by average revenues to calculate a cost-to-revenue ratio. These calculations and the resulting 

ratios are presented in Table 6-30. 

 

12 Data were available for the following states: Oklahoma, New Jersey, Iowa, Hawaii, Ohio, Kansas, South Carolina, 

West Virginia, Louisiana, Virginia, New York, South Dakota, Indiana, Maine and Massachusetts.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-31

6.2.7 Public Schools (Small Governments) 

The RFA defines a small government jurisdiction as the government of a city, county, town, school 

district or special district with a population of less than 50,000. This economic analysis relies on National 

Center for Education Statistics (NCES) Common Core of Data (CCD) survey data to estimate the number 

of school districts that have schools with pre-kindergarten or kindergarten programs, the number of such 

schools per district, and district revenues.13 Furthermore, for most districts, a cross-reference system with 

the 2000 Decennial Census provides a means for estimating the size of the population served by the 

district. 

Public schools are currently regulated under the 2008 LRRP Rule and would seek certification before the 

removal of the opt-out provision. However, these entities would incur recordkeeping checklist provision 

costs under the revisions to the 2008 LRRP rule. As this analysis estimates the incremental costs of the 

revisions, the following sections present only the potential cost impacts of the checklist provision. 

6.2.7.1 Number of Small Public School Districts Affected by the Revisions to the 2008 LRRP Rule 

Number of Small Public School Districts 

As discussed in Chapter 2, there are approximately 18,000 public school districts in the United States. 

Based on CCD data, 14,473 of these school districts have at least one school with a kindergarten or pre-K 

program; in total, these districts have 52,129 such schools (NCES 2006b,c). Of the 14,473 school 

districts, 13,330 serve a population of fewer than 50,000 people. These 13,330 districts have a total of 

26,779 schools with kindergartens or pre-kindergartens (NCES 2006b,c,g). These counts are not limited 

to pre-1978 schools. 

Since the Regulatory Flexibility Analysis is only concerned with the direct costs of regulation, this small 

entity analysis only considers the costs that school districts will incur if they perform regulated 

renovation, repair, or painting projects using their own maintenance staff instead of hiring a contractor. 

Costs and impacts associated with work performed by a contractor are accounted for in the contractor 

section of this analysis. 

As discussed in Chapter 4, this analysis assumes that public schools will perform all painting and 

carpentry events using in-house staff. In addition, they are assumed to perform one of the unscheduled 

maintenance events in each building using in-house staff each year.14 Thus, all small school districts that 

have at least one pre-1978 building will incur recordkeeping checklist costs under the revisions to the 

2008 LRRP rule. 

 

13 It is possible that government agencies also operate some of the childcare facilities included in the daycare center 

counts throughout this economic analysis. Due to insufficient data, it was not possible to estimate the number 

of such government-run facilities, or the number or size of the agencies that operate them. As such, this small 

government impact analysis is limited to public school districts.

14 The analysis assumes that all electrical, plumbing and HVAC work, as well as the remaining unscheduled 

maintenance projects, are contracted out.

Table 6-30: Cost-to-Revenue Ratios for Non-Profit Daycare Centers 

Regulatory 

Option 

Total Daycare 

Centers Doing 

Work 

Total Cost of Rule 

to Daycare 

Centers 

Average Cost of 

Rule per Daycare 

Center 

Estimated Average 

Daycare Center 

Revenues 

Cost-toRevenue Ratio

Option A 10,481 $13,672 $1 $287,605 0.0005% 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-32

Number of Small Public Schools Affected by the Revisions to the 2008 LRRP Rule 

The number of small school districts with at least one regulated building was estimated based on the 

number of school buildings in the district and the likelihood that any one of the buildings is old enough to 

be regulated. Using 2003 HUD data, 58 percent of school buildings are estimated to have been built 

before 1978, and 55 percent of the pre-1978 buildings are estimated to have built before 1960 (U.S. HUD 

2003). Thus, for example, under Option A the probability that any particular school building was built 

after 1978 is 0.42 (1-0.58). The likelihood that a district has no pre-1978 buildings is a function of the 

number of buildings and 0.42 as follows15: 

 (0.42)^X, where X is the number of schools with kindergarten or pre-kindergarten in the district 

For example, a district with three buildings has a (0.42)*(0.42)*(0.42) = 0.074 probability of containing 

no pre-1978 buildings. Using this approach, 92.6 percent of districts with three buildings are estimated to 

have at least one building that is pre-1978. To estimate the average number of pre-1978 buildings in a 3-

building district with at least one pre-1978 building, the total number of buildings in 3-building districts 

was multiplied by the percent of all schools constructed before 1978 (58 percent) and divided by the 

number of districts with at least one pre-1978 building. 

 Table 6-31 presents the 50-year average numbers of small school districts with at least one pre-1978 

building and the average number of buildings in these districts under Option A. The use of 50-year 

average, rather than first or second year numbers accounts for the fact that, after the first year, the 

numbers of regulated districts and pre-1978 schools are expected to decrease by 0.41 percent per year due 

to building demolition. 

6.2.7.2 Recordkeeping Checklist Costs – Public Schools 

The estimation of checklist costs incurred by each district is based on the number of regulated buildings 

in these districts, the average number of events per-building performed in-house, and the average 

checklist costs per event. 

Number of Events Performed Annually by Schools in Small Districts – Public Schools 

Public and private schools (except for private schools with less than 100 students) are expected to perform 

in-house all painting and window/door carpentry work as well as an average of one unscheduled 

maintenance event per building every year using their own staff. (Private schools with fewer than 100 

students are assumed to contract out all of their RRP work instead of doing RRP work in-house.) School 

maintenance staffs are expected to perform 2.9 maintenance events per building per year. 

 

15 It is assumed that the age of each building is independent of the age of all other buildings in the district. This may 

somewhat overestimate the number of districts that have at least one pre-1978 buildings. But data are not 

available to calculate the joint probabilities.

 Table 6-31: Number of Regulated Small School Districts and Public School Buildings

Regulatory Option 

Number of Small School 

Districts with at Least 1 

Regulated Building a

Total Number of 

Regulated Buildings 

in Small Districts 

Average Number of 

Regulated Buildings 

per Small District 

Option A 6,492 10,552 1.6 

a. A regulated building is defined as having a kindergarten or pre-kindergarten program. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-33

Table 6-32 presents the total and average numbers of events performed by public school districts in a 

typical year under Option A. 

Table 6-32: Average Annual Number of Events performed by Public School Staff 

Regulatory 

Option 

Number of 

Small 

Districts 

Total Number 

of Buildings in 

Small Districts 

Average Inhouse 

Events per 

Building 

Total In-House 

Events 

Average 

Number of Inhouse Events 

per District 

Option A 6,492 10,552 2.87 30,246 4.7 

Total Checklist Compliance Costs 

As discussed in 6.2.2, the average annualized checklist cost per event in COFs in public or commercial 

buildings is $2 (see Table 6-8). Multiplying this average cost by the average annual number of events in 

small school districts yields the total annualized checklist costs incurred by small districts in a typical 

year. These costs, and resulting checklist costs per district, are presented in Table 6-33. 

Table 6-33: Average Annualized Checklist Costs for Public Schools 

Regulatory Option Total In-House 

Events 

Annualized 

Avg. Checklist 

Cost per Event 

Total Checklist 

Costs a

Average Checklist 

Costs per Small 

District 

Option A 30,246 $2 $55,254 $9 

a. Total costs are calculated using unrounded unit costs. 

6.2.7.3 Public School Revenues 

The impact of the revisions to the 2008 LRRP rule on small government jurisdictions is estimated by 

comparing the estimated incremental costs of the revisions to the annual government revenues of small 

regulated jurisdictions. Revenue data for school districts is available from NCES’s Common Core of 

Data “Local Education Agency (School District) Finance Survey (F-33)” dataset (NCES 2006d). Small 

districts include local school boards, supervisory unions, regional education agencies, and other agencies, 

which primarily include charter schools. Revenue data are available for the vast majority of districts. 

Average revenues for all small districts were estimated by a) calculating the average revenues of each 

type of district based on available data, b) multiplying the average revenues by the total number of 

districts of that type, then c) summing the resulting total revenues and dividing by the total number of 

small districts. This approach presumes that there is no non-response bias among districts within each 

category. 

 Table 6-34 presents small district revenue calculations and resulting estimates. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-34

6.2.7.4 Impact of the Revisions to the 2008 LRRP Rule on Small Public School Districts 

Table 6-33 presents the total annualized recordkeeping checklist costs incurred by small public school 

districts as well as the average annualized costs per small district. Average annualized costs are then 

divided by annual district revenues, as calculated in Table 6-35, to obtain a cost-to-revenue ratio. 

 

 Table 6-35: Cost-to-Revenue Ratios for Small Public Schools 

Regulatory 

Option 

Total Regulated 

Small Districts 

Total Cost of Rule 

to Small Districts

Average Cost of 

Rule per Small 

District 

Estimated Average 

Small District 

Revenues 

(Million $) 

Cost-toRevenue Ratio

Option A 6,492 $55,254 $9 $15.5 0.0001% 

6.2.8 Private Schools (Small Non-Profits) 

Private schools are currently regulated under the 2008 LRRP Rule and are not affected by the removal of 

the opt-out provision. However, these entities would incur recordkeeping checklist provision costs under 

the revisions to the 2008 LRRP rule. As this analysis estimates the incremental costs of the revisions, the 

following sections present the potential cost impacts of the checklist provision, only. 

6.2.8.1 Number of Small Private Schools 

As discussed in Chapter 2, according to the 2003-2004 NCES Private School Universe Survey Data, there 

are a total of 26,531 private schools with kindergarten or pre-kindergarten programs in the United States 

(NCES 2006e,f). Based on HUD data, 58 percent, or 15,387 of these schools were constructed before 

1978, and 55 percent of the pre-1978 buildings, or 8,463 schools, were constructed before 1960. Because 

no data source providing the number of private schools at different revenue levels was identified, all 

private schools are considered to be small entities. In other words, the analysis assumes that each private 

school is independently run and is not part of a larger organization. As such, the analysis may 

overestimate the number of affected non-profit organizations and the impacts of the rule on these entities. 

 Table 6-34: Estimated Annual Revenues for Small Public School Districts 

District Type 

Total 

Small 

Districts 

Small 

Districts w/ 

Revenue Data

Total Small 

District Revenues 

Reported 

(Million $) 

Average 

Reported 

Revenues 

(Million $) 

Estimated 

Total 

Revenues 

(Million $) 

Estimated 

Average 

Revenues 

(Million $) 

Local School District 

(A)a

 10,930 10,868 $179,530 $16.5 $180,554 $16.5 

Local School District 

(B) a 1,200 1,197 $13,926 $11.6 $13,961 $11.6 

Supervisory Union 84 76 $1,186 $15.6 $1,311 $15.6 

Regional Education 

Agency 167 158 $7,612 $48.2 $8,046 $48.2 

Other (Charter School) 949 773 $2,074 $2.7 $2,546 $2.7 

Total 13,330 13,072 $204,329 $15.6 $206,419 $15.5 

a. There are two different types of local school districts in NCES data – independent districts and districts that 

are connected to a supervisory union office. These local school districts are combined in Chapters 2 and 4, 

but are treated separately in estimating weighted average revenues. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-35

Similar to public schools, private schools will only incur direct costs as a result of this rule if they use 

their own maintenance staff to perform regulated RRP work. Schools that perform regulated jobs inhouse will incur recordkeeping checklist costs as a result of the revisions to the 2008 LRRP rule. This 

analysis assumes that private schools with fewer than 100 students will contract out all of their renovation 

and repair work because of their small size, and costs and impacts associated with work performed by a 

contractor are accounted for in the contractor section of this analysis. Private schools serving more than 

100 students are assumed to use their own staff to perform all painting and window/door carpentry work 

as well as perform an average of one unscheduled maintenance event every two years and to hire 

contractors to perform all other renovation, addition, and alteration projects. 

As discussed in detail in Chapter 2, based on NCES’s Private School Universe survey data, 41 percent of 

private schools with a kindergarten and/or pre-kindergarten have fewer than 100 students. Table 6-36 

presents the total number of private schools regulated under Option A in a typical year, the number of 

schools with fewer than 100 students, and the number of schools with more than 100 students. The use of 

average annual numbers accounts for the fact that after the first year, the numbers of pre-1978 schools are 

expected to decrease by 0.41 percent per year due to building demolition. 

6.2.8.2 Recordkeeping Checklist Costs – Private Schools 

Schools are expected to perform an average of approximately 2.9 events in-house per year. Table 6-37 

presents the total number of private schools regulated in the first year under Option A, the total number of 

events performed in these schools, and the total annualized checklist costs associated with these events. 

Total checklist costs are estimated by multiplying the average annual number of events by the average 

annualized checklist cost per event ($2; see Table 6-8). Average annualized checklist costs per private 

school are calculated by dividing total checklist costs by the number of affected schools. 

6.2.8.3 Impact of the Revisions to the 2008 LRRP Rule on Small Private Schools 

Conceptually, impacts on non-profit establishments such as schools might be measured in terms of the 

ratio of rule costs to annual operating expenses. Due to the scarcity of data on private school operating 

expenditures (schools are excluded from the U.S. Economic Census, and NCES does not have a financial 

Table 6-36: Average Annual Number of Private Schools with Kindergarten or PreKindergarten 

Regulatory Option 

Total Number of 

Private Schools with 

Kindergarten or 

Pre-Kindergarten 

Percent of 

Private 

Schools with 

<100 Students 

Number of 

Private Schools 

with <100 

Students 

Number of 

Private Schools 

with >100 

Students 

Option A 10,454 41% 4,280 6,174 

Table 6-37: Average Checklist Costs for Private Schools 

Regulatory 

Option 

Number of 

Private Schools 

w>100 Students 

Total Annual 

Number of Inhouse Events 

Total Annualized 

Checklist Costs a

Average 

Annualized 

Checklist Costs per 

School 

Option A 6,174 17,697 $32,329 $5 

a. Total costs are calculated using unrounded unit costs. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-36

data set for private schools), annual private school expenditures are approximated based on estimated 

operating expenses per student obtained from a 1995 study by NCES entitled Estimates of Expenditures 

for Private K-12 Schools and information on the number of students enrolled at each school as reported in 

NCES’s 2003-2004 Private School Universe Survey data set. 

Based on NCES data (1995), this analysis estimates that private school expenditures average about $3,377 

(2005$) per child per year. Appendix 6A explains the derivation of this estimate in detail. 

To estimate average private school expenditures for schools with over 100 students operating prekindergarten or kindergarten programs, the average number of students per school meeting this criteria 

was calculated based on 2003-2004 NCES survey data (NCES 2006f). Schools for which no total student 

enrollment data was available were assumed to have the average enrollment at schools with more than 

100 students where student data was provided. Using these assumptions, the average private school with 

over 100 students was estimated to serve 283 students per year. As such, average expenditures for private 

schools are estimated to be $3,377*283, or $956,697. 

Impacts on private schools were estimated by dividing the total annualized checklist costs incurred by 

these schools under Option A by the number of regulated schools. Average costs per school were then 

divided by average expenditures to calculate a cost-to-expenditure ratio. These calculations and the 

resulting ratio are presented in Table 6-38. 

Table 6-38: Cost-to-Expense Ratios for Private Schools 

Regulatory 

Option 

Total Regulated 

Private Schools 

with > 100 kids 

Total Cost of Rule 

to Private Schools

Average Cost of 

Rule per Private 

school 

Estimated Average 

Small School 

Expenditures 

Cost-toExpenditure 

Ratio 

Option A 6,174 $32,329 $5 $956,697 0.001% 

6.2.9 Summary of the Revisions to the 2008 LRRP Rule Impacts on Small Governments, 

Non-Profit Organizations, and Small For-Profit Businesses 

The vast majority of entities in the industries affected by the revisions to the 2008 LRRP rule are small. 

As a result of the revisions, approximately 289,250 small entities would incur costs under Option A, 

incremental to impacts associated with the 2008 LRRP rule. Of the total, 100,662 small residential 

contractors would seek certification as a result of the removal of the opt-out provision; therefore, they 

would incur training, certification, work practice, and checklist costs. The remaining 188,588 small 

entities, who are currently regulated by the 2008 LRRP rule, would only incur the incremental costs of the 

recordkeeping checklist provisions. 

6.2.9.1 Incremental Impacts of the Revisions – Opt-Out Entities 

The average annualized incremental cost of the revisions to a typical small opt-out entity is estimated to 

range from $1,700 to $5,200 under Option A, depending on the number of renovation, repair, and 

painting events undertaken by a small opt-out entity in the industry sector involved. As shown in Table 

6-39, under Option A, the incremental cost impact of the revisions to the 2008 LRRP rule on small optout entities ranges from 0.87 percent to 2.19 percent of revenues depending on the industry sector. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-37

Table 6-40 presents the total number of small for-profit businesses and the average cost-to-revenue ratio 

for that category. It is estimated that under Option A, a total of 100,662 small for profit businesses would 

be affected by the program with average impacts of 1.17 percent. 

Table 6-40: Aggregate Small Opt-Out Entity Impacts 

 

Total Number of Small 

Entities Affected 

Average Impacts, 

All Small Entities 

Option A 

Small For-Profit Businesses 100,662 1.17% 

Total 100,662 

6.2.9.2 Incremental Impacts of the Revisions – Currently Regulated Entities 

The average annualized incremental cost of the revisions to a typical small currently regulated entity is 

estimated to range from $1 to $214 under Option A depending on the number of renovation, repair, and 

painting events undertaken by a small entity in the industry sector involved. As shown in Table 6-41, 

under Option A, the incremental cost impact of the revisions to the 2008 LRRP rule on small currently 

regulated entities ranges from about .0001 percent to .07 percent of revenues, depending on the industry 

sector. 

 Table 6-39: Typical-Year Number of Small Opt-Out Entities with RRP Events and 

Associated Cost-Impact Ratio 

 Option A 

Entity Type 

Number of 

Small 

Entities 

Cost-Impact 

Ratio 

Residential Contractors (working in target housing) 

Residential remodelers Business 32,093 1.03% 

Siding contractors Business 2,335 1.20% 

Finish carpentry contractors Business 22,790 1.69% 

Other building equipment contractors Business 1,059 0.88% 

Other building finishing contractors Business 1,450 1.17% 

Tile and terrazzo contractors Business 3,255 1.49% 

Plumbing and HVAC contractors Business 10,953 0.92% 

Glass and glazing contractors Business 966 0.87% 

Painting and wall covering contractors Business 12,650 2.19% 

Electrical contractors Business 7,787 1.12% 

Drywall and insulation contractors Business 5,326 1.14% 

Total 100,662 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-38

Table 6-42 presents the total number of small, currently-regulated governments, non-profit organizations, 

and small for-profit businesses, and the average cost-to-revenue ratios for each category. It is estimated 

that under Option A, a total of 188,588 small entities would be affected by the program, including 

165,440 small businesses with average impacts of 0.03 percent, 16,655 small non-profits with average 

impacts less than 0.0005 percent, and 6,492 small governments with average impacts less than 0.001 

percent. 

Table 6-42: Aggregate Small Entity Impacts on Entities Currently 

Regulated Under the 2008 LRRP rule 

 

Total Number of Small 

Entities Affected 

Average Impacts, 

All Small Entities 

Option A 

Small Governments 6,492 0.0001% 

Non-Profit Organizations 16,655 0.0005% 

Small For-Profit Businesses 165,440 0.03% 

Total 188,588 

 Table 6-41: Typical-Year Number of Small Entities with RRP Events Currently Regulated 

Under the 2008 LRRP Rule 

 Option A 

 Description Entity Type Number of 

Small 

Entities 

Cost-Impact 

Ratio 

Public School Districts Government 6,492 0.0001% 

Private Schools Non-Profit 6,174 0.0005% 

Daycare Centers Non-Profit 10,481 0.0005% 

Non-Residential Landlords Business 11,056 0.0010% 

Non-Residential Contractors (working in public or 

commercial building COFs) 

Business 2,866 0.01% 

Residential Contractors (working in target housing) 

Residential remodelers Business 41,359 0.03% 

Siding contractors Business 3,008 0.04% 

Finish carpentry contractors Business 29,369 0.06% 

Other building equipment contractors Business 1,365 0.03% 

Other building finishing contractors Business 1,868 0.04% 

Tile and terrazzo contractors Business 4,195 0.05% 

Plumbing and HVAC contractors Business 14,114 0.03% 

Glass and glazing contractors Business 1,244 0.03% 

Painting and wall covering contractors Business 16,302 0.07% 

Electrical contractors Business 10,035 0.04% 

Drywall and insulation contractors Business 6,863 0.04% 

Residential Property Managers Business 5,824 0.06% 

Lessors of Residential Real Estate Business 15,970 0.02% 

Total 188,588 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-39

6.2.9.3 Incremental Impacts of the Revisions – All Small Entities 

Table 6-43 presents the total number of small governments, non-profit organizations, and small for-profit 

businesses, and the average cost-to-revenue ratios for each category. It is estimated that under Option A, 

a total of 289,250 small entities would be affected by the program, including 266,102 small businesses 

with average impacts of 0.39 percent, 16,655 small non-profits with average impacts of about 0.0005 

percent, and 6,492 small governments with average impacts of about 0.0001 percent. 

Table 6-43: Aggregate Impacts on All Small Entities 

 

Total Number of Small 

Entities Affected 

Average Impacts, 

All Small Entities 

Option A 

Small Governments 6,492 0.0001% 

Non-Profit Organizations 16,655 0.0005% 

Small For-Profit Businesses 266,102 0.39% 

Total 289,250 

6.3 Unfunded Mandates Reform Act (UMRA) 

Title II of the Unfunded Mandates Reform Act of 1995, Pub. L. 104-4, establishes requirements for 

Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments, 

and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, 

including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that might result in 

expenditures by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 

million or more (when adjusted annually for inflation) in any one year.16

Before promulgating a regulation for which a written statement is needed, section 205 of the UMRA 

generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt 

the least costly, most cost-effective, or least burdensome alternative that achieves the objectives of the 

rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. 

Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective, 

or least burdensome alternative if the Administrator publishes with the rule an explanation of why that 

alternative was not adopted. Before EPA establishes any regulatory requirements that might significantly 

or uniquely affect small governments, including Tribal governments, it must have developed under 

section 203 of the UMRA a small government agency plan. The 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 regulatory proposals with significant 

intergovernmental mandates, and informing, educating, and advising small governments on compliance 

with regulatory requirements. This section identifies the government entities that may be affected by the 

revisions to the 2008 LRRP rule. 

 

16 When the original $100 million UMRA threshold is adjusted for inflation from 1995 to 2005 dollars using an 

implicit price deflator for gross domestic product, the result is a threshold of $118 million.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-40

6.3.1 Affected Government Entities 

The revisions to the 2008 LRRP rule will affect activities in publicly owned child-occupied facilities, 

specifically publicly owned housing and public schools.17 As with the private sector, the recordkeeping 

checklist provision will increase the cost of operating these facilities by requiring that a copy of the 

recordkeeping checklist be posted in an area available to parents of students. Each school district that 

uses its own in-house staff to perform RRP activities in regulated buildings is required to comply with the 

checklist provision. Thus, state and local governments will incur incremental costs of photocopying and 

posting the checklist during the renovation, repair, and painting of public school buildings.

While most of what is commonly referred to as public housing is owned by state or local governments 

and provided for the benefit of low-income and/or elderly households, other public entities (such as public 

colleges and universities) may provide housing regulated under the LRRP rule. As with the private 

sector, the revisions to the LRRP regulations will increase the cost of operating this housing by requiring 

that the recordkeeping checklist be made available to occupants. However, this is a very small cost, 

estimated to average $2 per renovation. 

6.3.2 Expenditures by State, Local, and Tribal Governments – Public School Districts 

State, local, and Tribal governments will incur the incremental costs imposed by the revisions to the 2008 

LRRP rule when public school districts engage in certain RRP activities.18 Based on available data and 

the economic analysis presented in Chapter 4 and Section 6.2, Section 6.3 assumes that all public school 

districts will perform all painting- and window/door carpentry tasks themselves, as well as some 

unscheduled maintenance and repairs. Public schools are assumed to hire third-party contractors to 

perform the remainder of their RRP work. Since all public school districts use their own staff to perform 

some of their RRP activities, all public school districts would need to comply with the recordkeeping 

checklist requirements outlined in Chapter 4.19 Table 6-44 presents the estimated total annualized 

incremental costs of the revisions that would be incurred by public school districts under Option A. 

 

17 It is possible that government agencies also operate some of the childcare facilities included in the daycare center 

counts throughout this economic analysis. Due to insufficient data, it was not possible to estimate the number 

of such government-run facilities, or the number or size of the agencies that operate them. As such, this 

Unfunded Mandates Reform Act is limited to public school districts.

18 As discussed in Chapter 4, states would be able to apply for, and receive authorization to administer these 

requirements, but would be under no obligation to do so. 

19 It is important to note that this analysis uses a 75 percent compliance rate. See Chapter 4 and the small entity 

analysis (Section 6.2) for a more comprehensive discussion of these cost estimates.

Table 6-44: Total Annualized Incremental Costs to All Public School Districts, Option A 

Average Annual 

Number of 

Districts Affected a

Average Annual 

Number of 

Buildings 

Affected a

Total Average 

Annual Number 

of Events b

Average 

Annualized Cost 

Per District 

(2005$) 

Total Annualized 

Cost (2005$) 

7,049 11,457 32,839 $9 $59,991 

a. In the first year, the COF Rule is expected to affect 7,782 public school districts and 12,648 school 

buildings in these districts. Every year thereafter, the number of affected districts and schools is 

expected to decrease by 0.41 percent as older buildings are demolished. The use of 50-year 

average numbers of districts and schools captures this annual decrease. 

b. Schools are expected to perform 2.87 events per year per building using their own maintenance 

staff (see Section 6.2 for more details). 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-41

The cost to revenue ratio for affected school districts is 0.00003 percent under Option A. These 

calculations are summarized in Table 6-45. 

Table 6-45: Cost-to-Revenue Ratios for Affected Public Schools 

Regulatory 

Option 

Average 

Annual 

Regulated 

Districts 

Total 

Annualized Cost 

of Rule to 

Districts 

Average 

Annualized Cost 

of Rule per 

District 

Estimated 

Average District 

Revenues (mil) 

Cost-toRevenue Ratio

Option A 7,049 $59,991 $9 $31.9 0.00003% 

6.4 Executive Order 13132 - Federalism 

Executive Order 13132, entitled Federalism (64 FR 43255, August 10, 1999), directs federal agencies to 

consider whether a rule has federalism implications (i.e. whether it has 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). 

As discussed in Chapter 4, states would be able to apply for and receive authorization to administer these 

requirements but would be under no obligation to do so. In the absence of a state authorization, EPA will 

administer these requirements. While the cost analysis assumes that EPA will administer and enforce the 

program in all places, it also assumes that states would incur similar costs if they administer and enforce 

the regulation. To the extent that they operate target housing or child-occupied facilities, states may incur 

costs due to the requirement that the recordkeeping checklist be made available to occupants. Given the 

low cost per event of providing the checklist, this rule is not expected to have a significant impact on 

states. 

6.5 Executive Order 13175 - Tribal Implications 

Executive Order 13175, entitled Consultation and Coordination with Indian Tribal Governments (59 FR 

22951, November 6, 2000), directs federal agencies to consider whether a rule has tribal implications (i.e. 

whether it has substantial direct effects on tribal governments, on the relationship between the Federal 

government and the Indian tribes, or on the distribution of power and responsibilities between the Federal 

government and Indian tribes). 

Under the revisions to the 2008 LRRP rule, Tribes would be able to apply for and receive authorization to 

administer these requirements on Tribal lands, but Tribes would be under no obligation to do so. In the 

absence of a Tribal authorization, EPA will administer these requirements. 

To the extent that Tribes operate target housing or child-occupied facilities, they may incur costs due to 

the requirement that the recordkeeping checklist be made available to occupants. The number of Tribal 

authorities that conduct renovation work on regulated properties is not known. However, given the low 

cost per event for providing the checklist, this rule is not expected to have a substantial direct effect on 

Tribes. 

6.6 Protection of Children from Environmental Health Risk and Safety Risks 

Under Executive Order 13045, a regulation must be reviewed if the regulatory action is economically 

significant and concerns an environmental health risk or safety risk that may disproportionately affect 

children. Since children are particularly susceptible to the IQ loss and adverse health effects caused by 

exposure to lead dust, a significant objective of the revisions to the 2008 LRRP rule is the protection of 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-42

children’s health. Removing the opt-out provision protects children under the age of six who spend a 

limited amount of time in housing (such as a relative or caregiver’s house) where a renovation has been 

performed under the opt-out provision; children who move into such housing when their family purchases 

it after such a renovation has been performed; and children who live in a property adjacent or near to 

owner-occupied housing where renovation has been performed under the opt-out provision. This analysis 

looks at the number of children in one of these groups – children who receive regular care in a house that 

does not meet the definition of a child-occupied facility. 

6.6.1 Target Housing Affected by the Elimination of the Opt-Out Provision 

Children Receiving Regular Care in Target Housing that is not a COF 

A target housing unit where a child visits regularly, but spends fewer that 6 hours a week is not 

considered a child-occupied facility. Therefore, these housing units, hereafter referred to as Regular Care 

Target Housing (RCTH) units, are eligible for the opt-out provision under the 2008 LRRP rule providing 

that there is no child under the age of six or pregnant woman that resides in the unit. Thus, children 

visiting RCTH may benefit from the elimination of the opt-out provision by reducing potential exposures 

to lead dust during these visits. 

Table 6-46 presents the annual number of children visiting opt-out eligible RCTH where LBP is disturbed 

during RRP events that are protected by the removal of the opt-out provision. 

Table 6-46: Annual Number of Children Visiting Opt-Out 

Eligible RCTH Where LBP is Disturbed During an RRP Event 

that are Protected by the Removal of the Opt-out Provision 

Number of Children Under the Age of 6 Protected 

by the Rule each Yeara

Option 

First Year Second Yearb

A 16,215 16,149 

B 8,108 16,149 

C 0 16,149 

D 13,597 16,149 

E1 to E4c 16,215 16,149 

a. Assumes a 75% compliance rate. 

b. The stock of target housing, and therefore the number of individuals living in 

target housing, is assumed to decline by 0.41% per year (due to demolitions, 

conversions, etc,) based on Census data. 

c. Options E1 to E4 cover the same target housing universe and have the same 

effective date as Option A, but do not provide the same level of protection 

because they do not require all of the work practice standards under 40 CFR 

734.85. 

Since the opt-out provision is eliminated under Option A as soon as the rule becomes effective, all 

children receiving care in opt-out eligible RCTH performing RRP that disturbs LBP are protected in the 

first year. Since the opt-out provision under Option B is eliminated six months later (halfway through the 

beginning of the first year the rule is in place), the number of individuals protected under Option B in the 

first year is half the number estimated for Option A. Under Option C, the opt-out provision is eliminated a 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-43

year later. Under Option D the opt-out provision is eliminated as soon as the rule becomes effective for 

housing built before 1960. Options E1 through E4 have the same effective dates and universe of 

regulated structures as Option A, but consider alternative work practice requirements. As indicated in 

Table 6-46, the majority of the children that would be protected by the elimination of the opt-out 

provision reside in housing built before 1960 because of the higher likelihood of LBP in these housing 

units. Options E1 through E4 have the same effective dates and universe of regulated structures as Option 

A, but consider alternative work practice requirements. In the second year (starting June 2011), the optout provision would be eliminated under all options. 

6.7 Executive Order 13211 - Energy Effects 

Executive Order 13211, entitled Actions Concerning Regulations that Significantly Affect Energy Supply, 

Distribution, or Use (66 FR 28355, May 22, 2001), directs federal agencies to identify actions that will 

have a significant adverse energy effect. Adverse effects are defined as: 

 Reductions in crude oil supply in excess of 10,000 barrels per day; 

 Reductions in fuel production in excess of 4,000 barrels per day; 

 Reductions in coal production in excess of 5 million tons per year; 

 Reductions in natural gas production in excess of 25 million mcf per year; 

 Reductions in electricity production in excess of 1 billion kilowatt-hours per year or in excess of 

500 megawatts of installed capacity; 

 Increases in energy use required by the regulatory action that exceed any of the thresholds above; 

 Increases in the cost of energy production in excess of one percent; 

 Increases in the cost of energy distribution in excess of one percent; or 

 Other similarly adverse outcomes. 

The regulations under consideration will not significantly reduce energy production nor significantly 

increase energy costs. 

6.8 National Technology Transfer and Advancement Act 

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public 

Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs federal agencies to use voluntary consensus 

standards 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., materials 

specifications, test methods, sampling procedures, and business practices) that are developed or adopted 

by voluntary consensus standards bodies. The NTTAA directs federal agencies to provide Congress, 

through OMB, explanations when the Agency decides not to use available and applicable voluntary 

consensus standards. 

This rulemaking does not involve technical standards. Therefore, EPA is not considering the use of any 

voluntary consensus standards. 

6.9 Executive Order 12898 – Environmental Justice 

Under Executive Order 12898, when promulgating a regulation, EPA investigates whether there are 

disproportionately high and adverse human health or environmental effects on minority and low-income 

populations. The LRRP regulation requires that renovators, when undertaking renovation activities in 

regulated facilities, reduce the risk of exposure to lead by employing the use of safe work practices. In 

addition, renovators are required to undertake cleaning verification at the end of each project. This 

environmental justice analysis first summarizes a few important points to consider when viewing the 

results. Next a summary of the impacts from the regulation on minority and low-income populations in 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-44

target housing units and child-occupied facilities is presented. Racial minorities and low-income 

households stand to accrue benefits as a result of the revision to the LRRP rule. 

Following the work practice, cleaning, and cleaning verification steps specified in the rule will increase 

the costs for renovation, repair and painting activities that would be regulated as a result of the 

elimination of the opt-out provision from the 2008 LRRP rule. These additional costs may lead some 

lower income homeowners of properties in lower income neighborhoods to avoid using certified 

renovators or recommended practices. The incremental costs of the rule’s work practices are typically 

below $200, and for many jobs the cost is significantly below this figure.20 These costs are likely to be a 

small part of the total cost of the renovation, repair, and painting projects. EPA believes that these costs 

are unlikely to result in significant changes in consumer behavior. If however, the increased costs result 

in more projects being undertaken by uncertified firms or by do-it-yourselfers, the risks in these instances 

would be the same as in the baseline and would not constitute new risks resulting from the revisions. 

EPA believes that the revisions would result in new risks only if the increased costs caused individuals to 

delay work such as painting until lead-based paint began peeling and chipping, creating a lead hazard. 

Such delays are expected to occur infrequently given the revisions’ low cost per event. 

The revisions to the 2008 LRRP rule would only add recordkeeping checklist requirements for buildings 

that are ineligible for the opt-out provision. The checklist requirements are not expected to have 

disproportionately high and adverse human health or environmental effects on minority and low-income 

populations. 

6.9.1 Target Housing Currently Eligible for the Opt-Out Provision 

This section evaluates the distribution of renovation events in target housing units and the individuals 

protected across three race and two income groups. Although it would be preferable to perform a joint 

environmental justice analysis for the race and income groups, relevant data are not available to make 

these population inferences. Therefore, the analysis was performed separately for the race and income 

groups. 

6.9.1.1 Low Income 

EPA defines low income individuals as individuals whose income are below the level set by the federal 

government’s official poverty definition. Based on data from the 2000 Decennial Census, 12.4% of 

individuals were living below the poverty level (U.S. Census Bureau 2000a). The analysis evaluates 

whether the removal of the opt-out provision will have a disproportionately greater effect on low income 

individuals. 

The data in Table 6-47 presents the numbers of households below the poverty level that own their home. 

As a result of the elimination of the opt-out provision from the 2008 LRRP rule, more owner-occupied 

target housing events would be performed using the work practices required by the 2008 LRRP rule. 

Only households built prior to 1978 would potentially be affected by the revisions. About 4.5 percent of 

pre-1980 owner-occupied housing units have residents below the poverty line. 

 

20 This estimate is adjusted for baseline work practices and assumes a 75% compliance rate. See Chapter 4.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-45

Table 6-47: Number and Percentage of Householders Below 

Poverty by Year Housing Built by Tenure 

Owner Occupied Housing 

Year 

Housing 

Built

Total Below Poverty Percentage of All Owner 

Housing Below Poverty 

Pre-2000 4,371,712 6.26% 

Pre-1980 3,133,302 4.49% 

Pre-1960 1,765,185 2.53% 

Pre-1950 1,167,604 1.67% 

Source: U.S. Census Bureau 2000b.

6.9.1.2 Race: 

This section of the environmental justice analysis considers the impacts of the revisions across three race 

categories. The data in Table 6-48 compares the percentages of owners and renters for three categories of 

race, “White Alone,” “Black/African American Alone,” and “Asian Alone.” The 2000 Census data 

shows that Black/African American households and Asian households are almost as likely to reside in 

owner housing as rental housing. Because no data were available for race by age of housing unit, this 

analysis uses pre-2000 housing to provide a general idea of these proportions. 

6.9.2 Conclusions 

The revisions to the 2008 LRRP rule seeks to minimize the exposure of children and adults to lead-based 

paint hazards created during renovation, repair, and painting activities in certain types of owner-occupied 

target housing that are currently eligible for the opt-out provision. As such, EPA concludes that the 

revisions to the rule will not lead to disproportionately high and adverse human health or environmental 

effects on minority and low income populations in target housing units that would become regulated.

Table 6-48: Number and Percentage of Householders by Race by Tenure in 2000 

Race Total Percentage Owner Percentage Renter 

White Alone 83,715,168 71.27% 28.73% 

Black/African American Alone 11,977,309 46.33% 53.67% 

Asian Alone 3,117,356 53.24% 46.76% 

Source: U.S. Census Bureau 2000c. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-46

APPENDIX 6A – Estimating average per-pupil expenditures of private schools 

This appendix outlines the methodology used to estimate total annual private school expenditures for the 

small entity analysis. Total annual school expenditures were estimated based on per-student operating 

expense data and information on the number of students enrolled. This analysis used per-pupil 

expenditure values for 1991-92, first calculated in a working paper published by the National Center for 

Education Statistics (NCES) entitled “Estimates of Expenditures for Private K-12 Schools” (NCES 1995). 

The two mean per-pupil expenditure values (one for elementary schools and one for combined schools) 

presented were combined into one value - the private school per-pupil expenditure value - using selected 

weights. Finally, this value was inflated to 2005 dollars using the CPI. The inflated value was used to 

estimate the total expenditures of private schools with various sized student bodies. 

The NCES working paper divided 1991-92 Private School Survey (PSS) data into 19 mutually exclusive 

and exhaustive sectors of schools based on grade level (elementary, secondary, and combined elementary 

and secondary), and religious or other affiliation. The paper relied on expenditure data collected by three 

school associations (The National Catholic Education Association (NCEA), the Lutheran ChurchMissouri Synod (LCNS), and the National Association of Independent Schools (NAIS)) to calculate 

average annual per-student expenditures for their associated schools. Data from the three surveyed school 

associations accounted for 45% of the total private school as presented in the PSS (NCES 1995). For the 

remaining schools, NCES estimated two sets of per-student expenditures using data obtained from 

Catholic and Lutheran schools (referred to as the Catholic and Lutheran School Models, respectively). 

Table 6A-1 presents the number of schools and the annual per-student expenditures for the 19 sectors of 

schools using the Lutheran school data to estimate missing expenditure values. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-47

Table 6A-1: Estimated Per-pupil Expenditures of Private Schools by 

School Level and School Type (Based on the Lutheran Model) 

School Level and 

School Type Number of Schools 

Estimated Mean Per Pupil 

Expenditures 

Elementary Schools 

Catholic 7,645 $1,895 

Lutheran 1,563 $2,003 

NAIS Religious 124 $6,313 

NAIS Non-Sectarian 325 $8,807 

Other Religious 5,240 $2,003 

Other Non-Sectarian 2,084 $2,003 

Special Education 114 $8,807 

All Schools 17,093 $2,125 

Secondary Schools 

Catholic 1,244 $3,909 

Lutheran 87 $4,527 

NAIS Religious 91 $16,523 

NAIS Non-Sectarian 208 $58,730 

Other Religious 477 $4,527 

Other Non-Sectarian 342 $4,527 

Special Education 171 $17,261 

All Schools 2,620 $5,510 

Combined Schools 

NAIS Religious 95 $9,052 

NAIS Non-Sectarian 346 $9,662 

Other Religious 4,085 $4,527 

Other Non-Sectarian 943 $4,527 

Special Education 817 $9,662 

All Schools 6,285 $5,766 

Sources: NCES 1995 

The per-student expenditure estimates presented are based on the Lutheran School Model rather than the 

Catholic School Model because, based on the evidence presented in NCES’s study, Lutheran school data 

are likely to be more accurate. Specifically, when assessing the quality of the data, the working paper 

authors express concern over potential non-response bias and sampling error in the Catholic elementary 

and secondary school data. In addition, a comparison of the total operating expenses of private 

elementary and secondary schools generated by each model with an alternate estimate calculated annually 

by NCES indicated that while that both the Catholic and the Lutheran School Model estimates are below 

the alternative NCES estimates, the Lutheran School Model is the closer of the two.21 Therefore the 

Lutheran School Model was used in this analysis. 

To estimate per-student expenditures for schools likely to be affected by the revisions to the LRRP Rule, 

the school sectors most likely to contain schools with pre-kindergarten and kindergarten programs were 

 

21 The NCES estimate inflates private school data collected in the late 1970’s.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-48

identified in the NCES study. Table 6A-2 shows Table 6A-1 with an additional column indicating 

whether or not the estimated mean for that sector was included in the calculation for mean per-privateschool-pupil expenditure based on the assumptions made about the likelihood of that sector containing a 

kindergarten or pre-kindergarten program. An “x” indicates that the mean per-pupil expenditure value is 

included in the calculation. 

Table 6A-2: Estimated Per-pupil Expenditures of Private Schools by School 

Level, School Type, and Inclusion in the Calculation (Based on Lutheran 

School Model) 

School Level and 

School Type Number of Schools 

Estimated Mean Perpupil Expenditures Included in the 

Calculation 

Elementary Schools

Catholic 7,645 $1,895 

Lutheran 1,563 $2,003 x 

NAIS Religious 124 $6,313 

NAIS Non-Sectarian 325 $8,807 

Other Religious 5,240 $2,003 x 

Other Non-Sectarian 2,084 $2,003 x 

Special Education 114 $8,807 

All Schools 17,093 $2,125 

Secondary Schools 

Catholic 1,244 $3,909 

Lutheran 87 $4,527 

NAIS Religious 91 $16,523 

NAIS Non-Sectarian 208 $58,730 

Other Religious 477 $4,527 

Other Non-Sectarian 342 $4,527 

Special Education 171 $17,261 

All Schools 2,620 $5,510 

Combined Schools 

NAIS Religious 95 $9,052 

NAIS Non-Sectarian 346 $9,662 

Other Religious 4,085 $4,527 x 

Other Non-Sectarian 943 $4,527 x 

Special Education 817 $9,662 

All Schools 6,285 $5,766 

Sources: NCES 1995 

Of the 19 sectors, 6 are for secondary schools only. Since the working paper notes that secondary 

schools22 spend more than twice as much as elementary schools spend per pupil, and are the least likely, 

by definition, to contain a COF, they are excluded from the calculation of the mean per-pupil expenditure 

value. 

 

22 Defined as having a highest grade less than or equal to 12th and a lowest grade of greater than or equal to 6th.
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-49

For elementary schools23, the $2,003 mean per-pupil expenditure cost was selected. This value represents 

8,887 of the 17,093 (52%) elementary schools presented in the working paper. Though Catholic schools 

represent approximately 45 percent of all elementary schools, their associated mean per-pupil expenditure 

estimate is not used due to the potential bias discussed above. The remaining elementary school per-pupil 

expenditure values are between 3 and 4 times larger than the chosen value; however these means 

represent schools unlikely to be affected by the LRRP rule. For example, the mean per-pupil expenditure 

values presented for NAIS schools (449 of the 561 remaining schools) are much higher since “a relatively 

large proportion of NAIS schools are boarding schools and expenditures for dormitories are apparently 

included in the total operating expenditures for these schools.” It is unlikely that a COF would be found in 

a boarding school. The remaining 112 schools are special education elementary schools, which are more 

costly because of their unique needs and are also less likely to contain a COF. Furthermore, as the 

working paper notes, “preschool is probably less expensive than other grades,” and therefore, it is likely 

that the average across all elementary schools ($2,125) would overstate expenditures. 

For combined schools, the $4,527 mean per-pupil expenditure cost is used. 24 This value represents 5,028 

of the 6,285 (80%) combined schools presented in the working paper. The other mean per-pupil values 

are roughly double this value, pulling the mean for all combined schools up to $5,766. This higher value 

is not used as it most likely overstates the expenditures given that boarding schools and special education 

schools are again included in the calculation. 

In order to obtain one private school per-pupil expenditure value, the previously discussed elementary 

school and combined school data were weighted. The weights were based on the current proportions of 

elementary schools and combined schools with either a pre-kindergarten or kindergarten program. In 

order to calculate the weights, this analysis used the data set underlying the National Center for Education 

Statistics (NCES) report entitled “Characteristics of Private Schools in the United States: Results From 

the 2003-2004 Private School Universe Survey.” Note that it was assumed that per-student expenditures 

at K-terminal schools were the same as in elementary schools. 25

In 2003-2004, there were a total of 18,289 private elementary schools and 4,338 private combined schools 

with pre-K or kindergarten programs. Thus, a weight of 0.81 (18,289/22,627) was attached to the mean 

per-pupil elementary school expenditure value and a weight of 0.19 (4,338/22,627) was attached to the 

mean per-pupil combined school expenditure value. This calculation yields a final private school perpupil expenditure value of $2,426. 

Because the study is based on 1991-1992 PSS data, it was assumed that expenditure values were in 1992 

dollars. Taking into account inflation, $2,426 in 1992 dollars is equivalent to $3,377 in 2006 dollars (U.S. 

Bureau of Labor Statistics 2006). 

 

23 Defined as having a highest grade of less than or equal to 8th.

24 A combined school is defined as having a highest grade less than or equal to 12th and a lowest grade less than or 

equal to 5th.

25 A K-terminal school is defined as a school for which kindergarten is the highest grade. In the 2003-2004 PSS, Kterminals represented an estimated 22% of all private schools with either a kindergarten or pre-kindergarten 

program. 
Economic Analysis for the LRRP Opt-Out and Recordkeeping Final Rule 

 Chapter 6 6-50

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