Document ID: EPA-HQ-OW-2002-0039-0286
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2003-08-05T04:00Z

Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
1
7.
Economic
Impact
Analysis
7.1
Introduction
As
part
of
the
rulemaking
process,
EPA
is
required
to
address
the
direct
and
indirect
burdens
that
the
LT2ESWTR
may
place
on
certain
types
of
governments,
businesses,
and
populations.
This
chapter
presents
the
analyses
performed
by
EPA
in
accordance
with
the
following
12
Federal
mandates.

1.
The
Regulatory
Flexibility
Act
(
RFA)
of
1980,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
of
1996.
2.
Analysis
of
small
system
affordability
to
determine
variance
technologies
in
accordance
with
Section
1415(
e)(
1)
of
the
1996
Safe
Drinking
Water
Act
(
SDWA)
Amendments.
3.
Feasible
technologies
available
to
all
systems
as
required
by
Section
1412(
b)(
4)(
E)
of
the
1996
SDWA
Amendments.
4.
Technical,
financial,
and
managerial
capacity
assessment
as
required
by
Section
1420(
d)(
3)
of
the
1996
Amendments
to
SDWA.
5.
Paperwork
Reduction
Act
(
a
separate
Information
Collection
Request
document
contains
the
complete
analysis).
6.
Unfunded
Mandates
Reform
Act
(
UMRA)
of
1995.
7.
Executive
Order
13175
(
Consultation
and
Coordination
with
Indian
Tribal
Governments).
8.
Impacts
on
sensitive
subpopulations
as
required
by
Section
1412(
b)(
3)(
c)(
i)
of
the
1996
SDWA
Amendments.
9.
Executive
Order
13045
(
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks).
10.
Executive
Order
12898
(
Federal
Actions
to
Address
Environmental
Justice
in
Minority
Populations
and
Low­
Income
Populations).
11.
Executive
Order
13132
(
Federalism).
12.
Executive
Order
13211
(
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use).

Many
of
the
requirements
and
executive
orders
listed
above
call
for
an
explanation
of
why
the
rule
is
necessary,
the
statutory
authority
for
the
rule,
and
the
primary
objectives
that
the
rule
is
intended
to
achieve
(
refer
to
Chapter
2
for
more
information
regarding
the
objectives
of
the
rule).
More
specifically,
they
are
designed
to
assess
the
financial
and
health
effects
of
the
rule
on
sensitive,
low­
income,
and
Tribal
populations
as
well
as
on
small
systems.
The
chapter
also
examines
how
much
additional
capacity
systems
will
need
to
meet
LT2ESWTR
requirements
and
whether
there
are
existing,
feasible
technologies
and
treatment
techniques
available
to
meet
rule
requirements.

7.2
Regulatory
Flexibility
Act
and
Small
Business
Regulatory
Enforcement
Fairness
Act
The
RFA
generally
requires
an
agency
to
prepare
a
regulatory
flexibility
analysis
for
any
rule
subject
to
notice
and
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
other
statute,
unless
the
Agency
certifies
that
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities
(
5
USC
603(
a)).
EPA
must
analyze
the
impacts
of
a
regulation
on
all
1
Revenue
information
was
used
whenever
available.
When
it
was
not
available,
different
measures,
such
as
sales
or
annual
operating
expenditures,
were
used.

Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
2
entities
and
individually
for
each
type
of
entity,
including
PWSs
run
by
small
businesses,
small
governments,
and
small
organizations.

The
RFA
provides
default
definitions
for
each
type
of
small
entity,
discussed
in
more
detail
in
Appendix
W.
The
RFA
also
authorizes
an
agency
to
use
alternative
definitions
for
each
category
of
small
entity,
"
which
are
appropriate
to
the
activities
of
the
agency"
after
proposing
the
alternative
definition(
s)
in
the
Federal
Register
and
taking
comment
(
5
USC
secs.
601(
3)
­
(
5)).
In
assessing
the
impacts
of
the
LT2ESWTR
on
small
entities,
EPA
considered
small
entities
to
be
PWSs
serving
10,000
or
fewer
persons,
which
is
the
cut­
off
level
specified
by
Congress
in
the
1996
Amendments
to
SDWA
for
small
system
flexibility
provisions.

EPA
conducted
a
screening
analysis
to
determine
if
the
LT2ESWTR
would
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities
(
see
Appendix
W).
In
this
analysis,
EPA
evaluated
the
potential
economic
impact
of
the
rule
on
small
entity
PWSs
by
comparing
annualized
compliance
costs
as
a
percentage
of
annual
revenues1
for
different
small
entity
classifications.
Chapter
4
of
this
EA
provides
data
on
small
entity
PWSs
potentially
subject
to
the
LT2ESWTR,
and
Chapter
6
discusses
actions
systems
would
need
to
take
to
comply
with
the
rule
and
their
associated
costs.
Using
information
from
these
two
chapters,
along
with
additional
information
from
the
Safe
Drinking
Water
Information
System
(
SDWIS),
the
Community
Water
System
Survey
(
CWSS),
and
the
U.
S.
Census,
EPA
conducted
a
quantitative
analysis
of
small
system
impacts
resulting
from
the
rule.

Based
on
the
information
presented
in
Appendix
W,
EPA
certifies
that
the
LT2ESWTR
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
EPA
has
determined
that
274
small
entity
PWSs,
which
are
2.3
percent
of
all
small
entity
PWSs
affected
by
the
LT2ESWTR,
will
experience
an
impact
of
1
percent
or
greater
of
average
annual
revenues.
Thus,
relative
to
the
economic
impact
condition
of
1
percent
or
greater
of
annual
revenues,
the
LT2ESWTR
is
well
below
the
criteria
of
1,000
systems
or
20
percent
of
systems
for
presuming
that
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
Further,
the
Agency
has
determined
that
31
small
entity
PWSs,
which
are
0.3
percent
of
all
small
entity
PWSs
subject
to
the
LT2ESWTR,
will
experience
an
impact
of
3
percent
or
greater
of
average
annual
revenues.
Thus,
relative
to
the
economic
impact
condition
of
3
percent
or
greater
of
annual
revenues,
the
LT2ESWTR
is
well
below
the
criteria
of
100
systems
or
20
percent
of
systems
for
presuming
that
the
rule
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.

Because
EPA
has
certified
that
the
LT2ESWTR
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities,
the
Agency
has
not
conducted
an
Initial
Regulatory
Flexibility
Analysis
(
IRFA)
or
a
Final
Regulatory
Flexibility
Analysis
(
FRFA).
Despite
this
certification,
the
Agency
conducted
extensive
evaluations
on
how
to
minimize
the
impact
of
the
rule
on
small
entity
PWSs,
in
accordance
with
Section
603
of
the
RFA.

Summary
of
the
SBREFA
Process
The
RFA,
as
amended
by
SBREFA,
and
Section
203
of
UMRA
require
EPA
to
provide
small
governments
with
an
opportunity
for
timely
and
meaningful
participation
in
the
regulatory
development
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
3
process.
EPA
provided
stakeholders,
including
small
governments,
with
several
opportunities
to
provide
input
on
the
LT2ESWTR.
For
example,
EPA
conducted
three
outreach
conference
calls
to
solicit
feedback
and
information
from
the
Small
Entity
Representatives
(
SERs)
on
issues
regarding
LT2ESWTR
impacts
on
small
systems.
SERs
included
small
system
operators,
local
government
officials,
and
small
nonprofit
organizations.

During
the
first
call,
held
on
January
28,
2000,
EPA
presented
an
overview
of
the
SDWA,
as
amended
in
1996
and
SBREFA.
Issues
and
schedules
for
the
LT2ESWTR
rules
were
also
discussed.
The
second
call
was
held
on
February
25,
2000.
EPA
presented
the
stakeholders
with
an
overview
of
the
EPA
regulatory
development
process
and
background
on
the
development
of
the
Stage
2
Microbial­
Disinfectants/
Disinfection
Byproduct
(
M­
DBP)
Rules,
particularly
regarding
health
risks,
issues/
options
identified
by
the
Federal
Advisory
Committees
Act
(
FACA)
Committee,
and
Disinfection
Byproduct
(
DBP)
and
microbial
occurrence
in
small
systems.
The
third
meeting
was
held
on
April
7,
2000.
EPA
presented
SERs
with
a
cost
estimate
and
an
impact
analysis
for
selected
regulatory
options.
In
addition,
EPA
presented
SERs
with
schedules
for
the
FACA
and
SBREFA
processes.

These
three
outreach
calls
generated
a
wide
range
of
information,
issues,
and
technical
input
from
SERs.
To
provide
SERs
with
a
foundation
for
commenting
on
these
rules,
EPA
provided
them
with
extensive
background
information.
In
general,
the
SERs
were
concerned
about
the
impact
of
these
proposed
rules
on
small
water
systems
(
because
of
their
small
staff
and
limited
budgets),
small
systems'
ability
to
acquire
the
technical
and
financial
capability
to
implement
requirements,
maintaining
the
flexibility
to
tailor
requirements
to
their
needs,
and
limitations
of
small
systems.
The
Agency
used
the
feedback
received
during
these
meetings
in
developing
the
LT2ESWTR.
EPA
also
mailed
a
draft
version
of
the
preamble
to
the
attendees
of
these
meetings.

The
Agency
convened
a
Small
Business
Advocacy
Review
(
SBAR)
Panel,
in
accordance
with
the
RFA
as
amended
by
SBREFA,
to
address
small
entity
concerns,
including
those
of
small
local
governments.
EPA
convened
the
SBAR
Panel
after
completing
the
consultation
meetings
with
SERs
on
the
LT2ESWTR.
Eight
of
the
small
entities
represented
small
governments.
SERs'
concerns
were
provided
to
the
SBAR
Panel
when
the
panel
convened
on
April
25,
2000.

7.3
Small
System
Affordability
Section
1415(
e)(
1)
of
SDWA
applies
to
most
rules
and
allows
States
to
grant
variances
to
small
water
systems
in
lieu
of
complying
with
a
maximum
contaminant
level
(
MCL)
if
EPA
determines
that
no
nationally
affordable
compliance
technologies
exist
for
that
system
size/
water
quality
combination.
The
system
must
then
install
an
EPA­
listed
variance
treatment
technology
(
Section
1412(
b)(
15))
that
makes
progress
toward
the
MCL,
if
not
necessarily
reaching
it.
Section
1415(
e)(
6)(
B)
of
SDWA,
however,
applies
to
the
LT2ESWTR
and
states
that
a
variance
shall
not
be
available
under
the
above
noted
subsection
for
a
"
national
primary
drinking
water
regulation
for
a
microbial
contaminant
(
including
a
bacterium,
virus,
or
other
organism)
or
an
indicator
or
treatment
technique
for
a
microbial
contaminant."
This
EA
does
not
identify
affordable
compliance
technologies
or
variance
treatment
technologies
because
the
LT2ESWTR
is
a
regulation
to
control
a
microbial
contaminant.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
4
7.4
Feasible
Treatment
Technologies
for
All
Systems
In
accordance
with
Section
1412(
b)(
4)(
E)
of
the
1996
SDWA
Amendments,
EPA
examined
whether
there
were
existing,
feasible
technologies
and
treatment
techniques
available
that
would
allow
systems
to
meet
the
LT2ESWTR
requirements.
EPA
determined
that
filtered
systems
of
all
sizes
could
meet
the
LT2ESWTR
requirements
using
ultraviolet
light
(
UV).
Small
systems
could
potentially
meet
the
requirements
using
cartridge
filtration,
while
medium
and
large
systems
could
use
ozone.
According
to
the
toolbox
of
treatment
techniques
(
described
in
Chapter
6),
UV
can
achieve
3
log
reduction
of
Cryptosporidium,
cartridge
filtration
may
achieve
up
to
a
2
log
reduction,
and
ozone
can
achieve
2
log
reduction
at
reasonable
doses.
In
fact,
many
small
systems
are
predicted
to
choose
cartridge
filtration
or
UV
as
treatment
techniques.

The
LT2ESWTR
requires
unfiltered
systems
to
use
two
disinfectants.
Considering
studies
that
show
UV
can
achieve
greater
reduction
of
Cryptosporidium
at
higher
doses,
it
is
feasible
for
unfiltered
systems
to
achieve
3
log
reduction
using
two
different
technologies.

All
uncovered
finished
water
reservoirs
can
meet
the
LT2ESWTR
requirements
by
covering
their
reservoirs
or
treating
the
effluent.

7.5
Effect
of
Compliance
with
the
Proposed
LT2ESWTR
on
the
Technical,
Managerial,
and
Financial
Capacity
of
Public
Water
Systems
Section
1420(
d)(
3)
of
SDWA,
as
amended,
requires
that,
in
promulgating
a
National
Primary
Drinking
Water
Regulation
(
NPDWR),
the
Administrator
shall
include
an
analysis
of
the
likely
effect
of
compliance
with
the
regulation
on
the
technical,
managerial,
and
financial
(
TMF)
capacity
of
PWSs.
The
following
analysis
fulfills
this
statutory
obligation
by
identifying
the
incremental
impact
that
the
LT2ESWTR
will
have
on
the
TMF
of
regulated
water
systems.
Analyses
presented
in
this
document
only
reflect
the
impact
of
new
or
revised
requirements,
as
established
by
the
LT2ESWTR;
the
impacts
of
previously
established
requirements
on
system
capacity
are
not
considered.

Overall
water
system
capacity
is
defined
in
Guidance
on
Implementing
the
Capacity
Development
Provisions
of
the
Safe
Drinking
Water
Act
Amendments
of
1996
(
USEPA
1998c)
as
the
ability
to
plan
for,
achieve,
and
maintain
compliance
with
applicable
drinking
water
standards.
Capacity
encompasses
three
components:
technical,
managerial,
and
financial.
Technical
capacity
is
the
operational
ability
of
a
water
system
to
meet
SDWA
requirements.
Key
issues
of
technical
capacity
include:

°
Source
water
adequacy
 
Does
the
system
have
a
reliable
source
of
water
with
adequate
quantity?
Is
the
source
generally
of
good
quality
and
adequately
protected?

°
Infrastructure
adequacy
 
Can
the
system
provide
water
that
meets
SDWA
standards?
What
is
the
condition
of
its
infrastructure,
including
wells
or
source
water
intakes,
treatment
and
storage
facilities,
and
distribution
systems?
What
is
the
infrastructure's
life
expectancy?
Does
the
system
have
a
capital
improvement
plan?

°
Technical
knowledge
and
implementation
 
Are
the
system's
operators
certified?
Do
the
operators
have
sufficient
knowledge
of
applicable
standards?
Can
the
operators
effectively
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
5
implement
this
technical
knowledge?
Do
the
operators
understand
the
system's
technical
and
operational
characteristics?
Does
the
system
have
an
effective
O&
M
program?

Managerial
capacity
is
the
ability
of
a
water
system's
managers
to
make
financial,
operating,
and
staffing
decisions
that
enable
the
system
to
achieve
and
maintain
compliance
with
SDWA
requirements.
Key
issues
include:

°
Ownership
accountability
 
Are
the
owners
clearly
identified?
Can
they
be
held
accountable
for
the
system?

°
Staffing
and
organization
 
Are
the
operators
and
managers
clearly
identified?
Is
the
system
properly
organized
and
staffed?
Do
personnel
understand
the
management
aspects
of
regulatory
requirements
and
system
operations?
Do
they
have
adequate
expertise
to
manage
water
system
operations
(
i.
e.,
to
conduct
implementation,
IDSE,
additional
routine
monitoring,
and
significant
excursion
evaluation
activities
to
meet
the
LT2ESWTR
requirements)?
Do
personnel
have
the
necessary
licenses
and
certifications?

°
Effective
external
linkages
 
Does
the
system
interact
well
with
customers,
regulators,
and
other
entities?
Is
the
system
aware
of
available
external
resources,
such
as
technical
and
financial
assistance?

Financial
capacity
is
a
water
system's
ability
to
acquire
and
manage
sufficient
financial
resources
to
allow
the
system
to
achieve
and
maintain
compliance
with
SDWA
requirements.
Key
issues
include:

°
Revenue
sufficiency
 
Do
revenues
cover
costs?

°
Creditworthiness
 
Is
the
system
financially
healthy?
Does
it
have
access
to
capital
through
public
or
private
sources?

°
Fiscal
management
and
controls
 
Are
adequate
books
and
records
maintained?
Are
appropriate
budgeting,
accounting,
and
financial
planning
methods
used?
Does
the
system
manage
its
revenues
effectively?

7.5.1
Requirements
of
the
Preferred
Proposed
Regulatory
Alternative
This
capacity
analysis
is
presented
only
for
the
Preferred
Alternative,
although
EPA
took
similar
considerations
into
account
in
the
selection
of
the
Preferred
Alternative
over
the
other
alternatives.
This
consideration
led
to
the
incorporation
of
less
expensive
rule
features
for
systems
with
fewer
capabilities.
For
example,
there
is
a
possibility
that
a
better,
less
burdensome
indicator
test
for
Cryptosporidium
can
be
developed
based
on
the
results
of
the
source
water
monitoring
conducted
by
large
systems.
If
that
is
the
case,
the
burden
on
small
systems
will
be
less
than
that
estimated
here.
Further,
the
schedule
for
small
systems
to
begin
monitoring
is
2
years
after
large
systems.
This
time
extension
may
increase
familiarity
with
these
tests
and
perhaps
lower
the
costs
of
laboratory
analysis.
Beyond
the
design
of
the
rule,
the
options
available
for
small
systems
to
comply
were
factored
into
the
decision
tree
of
available
technologies.
The
decision
tree
is
discussed
in
detail
in
Chapter
6
and
Appendix
F.

This
capacity
analysis
is
based
on
the
ICR
data
set.
Analysis
of
the
ICR
data
set
predicts
the
highest
level
of
occurrence
and,
therefore,
the
greatest
challenges
that
water
systems
may
face.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
6
Although
two
other
data
sets
are
available
(
ICR
Supplemental
Survey
data
for
medium
systems
(
ICRSSM)
and
ICR
Supplemental
Survey
data
for
large
systems
(
ICRSSL)),
these
project
that
fewer
plants
will
need
additional
treatment
and
project
fewer
technical,
financial,
and
managerial
challenges.
EPA
used
the
ICR
data
set
to
develop
the
most
conservative
capacity
impact
analysis.

The
LT2ESWTR
establishes
five
new
requirements
that
may
affect
the
TMF
capacity
of
affected
PWSs:

1.
Monitoring
for
E.
coli
(
first
or
second
round)

2.
Monitoring
for
Cryptosporidium
(
first
or
second
round)

3.
Installation
of
treatment
(
filtered
systems)

4.
Installation
of
treatment
(
unfiltered
systems)

5.
Cover
or
disinfect
reservoir
discharge
In
addition,
personnel
from
systems
regulated
under
the
LT2ESWTR
will
need
to
familiarize
themselves
with
the
rule
and
its
requirements.

7.5.2
Systems
Subject
to
the
LT2ESWTR
The
LT2ESWTR
will
apply
to
all
PWSs
that
treat
surface
water
or
GWUDI.
However,
because
systems
purchasing
surface
water
or
GWUDI
may
incur
costs
through
rate
increases,
EPA
estimates
that
the
LT2ESWTR
may
affect
11,403
CWSs,
821
NTNCWSs
and
1,912
TNCWSs
 
14,136
systems
in
all
(
see
Exhibit
4.3).
While
most
will
not,
some
systems
may
require
increased
TMF
capacity
to
comply
with
the
new
requirements,
or
will
need
to
tailor
their
compliance
approaches
to
match
their
capacities.
Refer
to
section
7.5.4
for
a
detailed
discussion
of
the
changes
in
TMF
capacity
for
small
and
large
systems.

7.5.3
Impact
of
the
LT2ESWTR
on
System
Capacity
The
estimates
presented
in
Exhibit
7.1
reflect
the
anticipated
impact
of
the
LT2ESWTR
on
system
capacity
based
on
the
expected
measures
that
systems
will
be
required
to
adopt.
The
extent
of
the
expected
impact
of
a
particular
requirement
on
system
capacity
is
estimated
using
a
scale
of
0­
5,
where
0
represents
a
requirement
that
is
not
expected
to
have
any
impact,
1
represents
a
requirement
that
is
expected
to
have
a
minimal
impact,
and
5
represents
a
requirement
that
is
expected
to
have
a
very
significant
impact
on
system
capacity.
Criteria
used
to
develop
the
scores
and
associated
impacts
are
discussed
further
in
section
7.5.4.

These
impacts
are
assessed
separately
for
small
systems
(
Exhibit
7.1a)
and
for
large
systems
(
Exhibit
7.1b).
This
distinction
is
necessary
because
most
large
systems
will
face
fewer
challenges
in
implementing
the
rule
than
most
small
systems.
For
both
large
and
small
systems,
EPA
evaluated
the
capacity
impact
of
each
requirement
on
those
systems
affected
by
that
particular
requirement.
For
example,
EPA
only
evaluated
the
impact
of
the
Cryptosporidium
monitoring
requirement
on
small
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
7
systems
that
are
required
to
monitor
for
Cryptosporidium
as
a
consequence
of
the
results
of
their
E.
coli
monitoring.
In
many
cases,
the
requirements
only
affect
a
small
percentage
of
systems/
plants.
The
exhibits,
therefore,
also
display
the
number
of
systems
and
percent
of
systems/
plants
(
of
the
subset
of
small
or
large
systems/
plants)
estimated
to
be
affected
by
each
specific
requirement.

7.5.4
Derivation
of
Proposed
LT2ESWTR
Scores
EPA
developed
a
5­
point
scoring
system
to
analyze
the
impact
compliance
with
all
new
regulations
will
have
on
the
technical,
managerial,
and
financial
capacity
of
PWSs.
For
each
regulation,
it
is
necessary
to
complete
the
following
steps:

1.
Determine
the
type
and
number
of
PWSs
to
which
the
regulation
applies
2.
List
all
of
the
requirements
of
the
regulation
3.
Determine
the
type
and
number
of
PWSs
to
which
each
requirement
applies
4.
Evaluate
the
impact
of
each
requirement
on
the
capacity
of
affected
PWSs
The
determination
of
the
universe
of
affected
systems
and
the
evaluation
of
the
capacity
impact
of
individual
requirements
requires
the
use
of
the
cost
and
technical
information
contained
in
SDWIS,
EAs
developed
for
other
rules,
information
collection
requests,
and
other
supporting
documentation
for
the
rule.
These
data
sources
are
also
used
to
develop
a
qualitative
description
of
the
expected
response
of
affected
systems
to
each
requirement.

The
overall
evaluation
of
the
impact
of
a
requirement
on
the
affected
systems,
presented
in
Exhibits
7.1a
and
7.1b,
is
based
on
the
impact
each
requirement
has
on
nine
sub­
categories
of
capacity
 
three
sub­
categories
under
each
of
the
broader
divisions
of
technical,
managerial,
and
financial
capacity.
Within
these
sub­
categories,
scores
are
assigned
based
on
the
additional
capacity
affected
systems
will
need
to
develop
to
comply
with
a
requirement.

To
ensure
the
ability
to
make
cross­
rule
comparisons,
to
standardize
the
assignment
of
numerical
scores,
and
to
minimize
the
subjectivity
of
the
scoring
system,
the
requirements
made
on
systems
by
the
regulation
in
question
are
compared
to
the
requirements
of
those
regulations
for
which
capacity
impact
analyses
have
already
been
conducted
(
e.
g.,
Arsenic
Rule,
Radon
Rule,
Filter
Backwash
Recycling
Rule,
and
LT1ESWTR).
Similar
requirements
will
be
assigned
similar
impact
scores.
Once
initial
scores
have
been
assigned,
they
are
reviewed
by
the
EPA
Small
System
Coordinator
and
other
EPA
staff
to
ensure
that
the
scores
are
representative
of
the
extent
of
the
impact
of
each
requirement
on
the
universe
of
affected
systems.

A
system
regulated
under
a
single
very
challenging
requirement
(
rated
a
5
in
Exhibit
7.1),
and
a
system
that
must
meet
two
or
more
somewhat
less
challenging
requirements
(
for
example,
one
rated
a
4
and
another
a
3
in
Exhibit
7.1)
may
need
to
raise
their
rates
to
consumers,
introduce
new
fees,
train
new
workers,
or
buy,
install,
and
operate
new
capital
equipment
to
meet
rule
requirements.
Systems
that
must
only
read
the
rule
to
determine
if
they
will
need
to
comply,
or
systems
that
must
meet
requirements
with
impact
scores
of
1
or
in
some
cases
2,
will
not
have
to
make
major
changes
to
the
way
in
which
they
conduct
business
to
comply
with
the
LT2ESWTR.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
8
Exhibit
7.1a
Estimated
Impacts
of
the
Proposed
LT2ESWTR
on
Small
Systems'
Technical,
Managerial,
and
Financial
Capacity
(
0
=
no
impact,
1
=
minimal
impact,
and
5
=
very
significant
impact)

Requirement
Number
and
Percent
of
Small
Plants
Technical
Capacity
Managerial
Capacity
Financial
Capacity
Source
Water
Adequacy
Infrastructure
Adequacy
Technical
Knowledge
&
Implementation
Ownership
Accountability
Staffing
&
Organization
Effective
External
Linkages
Revenue
Sufficiency
Credit
Worthiness
Fiscal
Mgmt.
&

Controls
Familiarization
with
requirements
of
the
rule
5,682
(
100%)
1
0
0
1
0
1
0
0
0
0
Monitoring
for
E.
coli
(
first
and
second
round)
5,792
(
97.2%)
2
0
0
0
1
0
0
1
0
0
Monitoring
for
Cryptosporidium
(
first
and
second
round)
2,016
(
33.8%)
2
0
0
2
1
0
1
3
0
1
Installation
of
treatment
(
filtered
systems)
(
Bins
2
and
3)
2,070
(
32.5%)
0
2
3
2
2
2
4
3
2
Installation
of
treatment
(
filtered
systems)
(
Bin
4)
128
(
2.0%)
0
4
5
2
4
3
5
4
3
Installation
of
treatment
(
unfiltered
systems)
54
(
0.8%)
2
4
4
2
3
3
5
4
5
Cover
or
disinfect
reservoir
discharge
32
(
0.5%)
0
3
3
2
2
3
5
3
3
1Number
and
percent
of
small
systems.
2This
cell
contains
only
the
number
and
percentage
of
systems
expected
to
be
affected
by
first
round
monitoring
requirements.
The
number
of
systems
participating
in
the
second
round
of
monitoring
is
expected
to
be
smaller.
However,
the
capacity
rankings
for
monitoring
consider
the
actual
number
of
systems
conducting
the
first
and
second
rounds.
Note:
To
enable
the
quantification
of
the
impact
of
these
requirements
on
system
capacity,
the
requirements
believed
to
have
the
most
and
least
impact
on
affected
systems
(
i.
e.,
the
installation
of
treatment
by
systems
placed
into
Action
Bin
4,
and
familiarization
with
the
requirements
of
the
rule,
respectively),
were
analyzed
first,
as
described
in
section
7.5.4.
These
initial
analyses
were
then
used
as
the
basis
against
which
the
relative
impacts
of
the
remaining
requirements
were
assessed.
The
impact
estimates
developed
for
each
requirement
were
also
compared
to
those
developed
for
the
Arsenic
Rule
and
the
Stage
2
DBPR
to
ensure
cross­
rule
consistency
and
enable
cross­
rule
comparisons.
The
scores
presented
above
represent
the
worst­
case
scenario;
the
requirements
of
this
rule
are
expected
to
have
less
impact
on
the
capacity
of
most
systems
affected
by
each
requirement.
Analysis
is
based
on
data
modeled
from
the
ICR
data
set,
because
that
data
set
predicts
the
highest
level
of
occurrence
and,
therefore,
the
greatest
challenges
systems
will
face.
Source:
Number
and
percent
of
plants/
systems
impacted
by
each
requirement
are
derived
from
systems
serving
#
10,000
(
Exhibit
6.2).
Number
of
small
plants
making
treatment
changes
from
Appendix
G,
Exhibits
G.
37
 
G.
39.
Estimates
by
bins
derived
from
LT2ESWTR
Cost
Model
(
Appendix
U).
Impact
on
capacity
described
in
section
7.5.4.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
9
Exhibit
7.1b
Estimated
Impacts
of
the
Proposed
LT2ESWTR
on
Large
Systems'
Technical,
Managerial,
and
Financial
Capacity
(
0
=
no
impact,
1
=
minimal
impact,
and
5
=
very
significant
impact)

Requirement
Number
and
Percent
of
Large
Plants
Technical
Capacity
Managerial
Capacity
Financial
Capacity
Source
Water
Adequacy
Infrastructure
Adequacy
Technical
Knowledge
&
Implementation
Ownership
Accountability
Staffing
&
Organization
Effective
External
Linkages
Revenue
Sufficiency
Credit
Worthiness
Fiscal
Mgmt.
&

Controls
Familiarization
with
requirements
of
the
rule1
1,384
(
100%)
0
0
1
0
1
0
0
0
0
Monitoring
for
E.
coli
(
first
and
second
round)
1,774
(
99.6%)
2
0
0
0
1
0
0
0
0
0
Monitoring
for
Cryptosporidium
(
first
and
second
round)
1,774
(
99.6%)
2
0
0
2
1
0
1
1
0
1
Installation
of
treatment
(
filtered
plants)
(
Bins
2,
3,
4)
695
(
33.6%)
0
3
3
2
3
2
2
2
2
Installation
of
treatment
(
unfiltered
plants)
37
(
1.8%)
2
2
4
2
3
3
2
2
3
Cover
or
disinfect
reservoir
discharge
106
(
5.1%)
0
2
2
2
1
2
4
2
2
1Number
and
percent
of
large
systems.
2This
cell
contains
only
the
number
and
percentage
of
systems
expected
to
be
affected
by
first
round
monitoring
requirements.
The
number
of
systems
participating
in
the
second
round
of
monitoring
is
expected
to
be
smaller.
The
rankings
for
capacity
for
monitoring
include
both
the
first
and
second
rounds.
Note:
To
quantify
the
impact
of
these
requirements
on
system
capacity,
the
requirements
believed
to
have
the
most
and
the
least
impact
on
affected
systems
(
i.
e.,
the
installation
of
treatment
by
systems
placed
into
Action
Bin
4,
and
familiarization
with
the
requirements
of
the
rule,
respectively),
were
analyzed
first,
as
described
in
section
7.5.4.
These
initial
analyses
were
then
used
as
the
basis
against
which
the
relative
impact
of
the
remaining
requirements
was
assessed.
The
impact
estimates
developed
for
each
requirement
were
also
compared
to
those
developed
for
the
Arsenic
Rule
and
the
Stage
2
DBPR
to
ensure
cross­
rule
consistency
and
to
enable
cross­
rule
comparisons.
The
scores
presented
above
represent
the
worst­
case
scenario;
analysis
is
based
on
data
modeled
from
the
ICR
data
set,
because
that
data
set
predicts
the
highest
level
of
occurrence
and,
therefore,
the
greatest
challenges
systems
will
face.
Source:
Number
and
percent
of
plants/
systems
impacted
by
each
requirement
derived
from
surface
water
and
GWUDI
CWSs,
NTNCWSs,
and
TNCWSs
serving
>
10,000
people
subject
to
the
LT2ESWTR
(
Exhibit
6.2).
Number
and
percent
of
large
filtered
plants
making
treatment
changes
from
Appendix
G,
Exhibits
G.
37
 
G.
39
(
sum
of
CWSs,
NTNCWSs,
and
TNCWSs
serving
more
than
10,000
people)
and
unfiltered
systems
are
derived
from
Exhibit
4.5.
Number
of
systems
required
to
cover
or
disinfect
reservoir
discharge
are
derived
from
Exhibit
4.22.
Impact
on
capacity
is
determined
relative
to
previous
regulations
based
on
the
cost
and
number
of
systems/
plants
that
require
additional
capacity
to
comply
with
each
requirement,
as
described
in
section
7.5.4.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
10
Small
Water
Systems
(
Those
Serving
10,000
or
Fewer
People)

Although
most
small
systems
will
likely
face
only
a
minimal
challenge
to
their
technical
and
managerial
capacity
as
a
result
of
efforts
to
familiarize
themselves
with
LT2ESWTR
and
comply
with
the
requirements
for
monitoring
of
E.
coli
(
Exhibit
7.1a),
systems
monitoring
Cryptosporidium
will
require
additional
assistance.
In
addition,
systems
with
source
waters
that
trigger
them
to
monitor
for
Cryptosporidium
will
need
to
pay
for
higher
sampling
costs
since
these
systems
have
not
previously
performed
the
strict
sampling
protocols
that
are
part
of
EPA's
approved
analytical
method.
To
meet
these
challenges,
it
is
likely
that
systems
will
need
to
develop
or
enhance
linkages
with
technical
and
financial
assistance
providers
(
including
State
extension
agents).

Exhibit
7.1a
indicates
that
installation
of
some
new
treatment
technologies
will
pose
significant
challenges
to
small
systems'
technical,
managerial,
and
financial
capacity;
the
less
the
current
level
of
treatment,
the
greater
the
impact
will
be.
As
with
Cryptosporidium
monitoring,
the
development
and
enhancement
of
external
linkages
will
be
very
important
to
systems
that
must
install
new
equipment.
Technical
and
financial
assistance
providers
can
help
systems
analyze
their
needs
as
well
as
the
tradeoffs
between
cost
and
health
protection.
In
addition,
they
may
be
able
to
assist
systems
in
finding
the
funding
necessary
to
install
and
operate
new
equipment.

The
requirement
to
obtain
additional
log­
removal
credits
will
likely
challenge,
to
a
significant
degree,
the
financial
capacity
of
some
of
the
small
systems
affected,
especially
since
those
systems
may
not
have
included
the
costs
associated
with
complying
with
the
LT2ESWTR
in
their
long­
term
financial
plans.
Incurring
these
costs
will
tend
to
reduce
a
system's
credit
rating
since
it
will
be
forced
to
direct
more
of
its
revenue
to
new
equipment,
and
systems
(
or
entities
owning
the
systems)
may
be
required
to
issue
bonds
or
obtain
loans.
It
is
also
evident
from
Exhibit
7.1a
that
the
impacts
of
the
LT2ESWTR
on
the
capacity
of
systems
assigned
to
Bins
2,
3,
and
4
will
be
similar.

The
scores
presented
in
Exhibit
7.1
apply
to
those
systems
most
heavily
affected,
although
there
are
relatively
few.
For
example,
for
the
very
small
systems
(
serving
500
or
fewer
people)
that
are
required
to
add
treatment
technologies
to
comply
with
the
requirements
of
Bins
2
and
3,
10
percent
or
fewer
are
predicted
to
install
UV
(
see
Appendix
F).
Of
those
very
small
systems
that
are
predicted
to
require
an
additional
2.5
log
treatment
(
as
required
by
Action
Bin
4),
all
must
install
UV.
UV
requires
little
involvement
for
the
operator
since
UV
can
be
monitored
on­
line.
Only
systems
with
the
capability
to
handle
this
technology
are
expected
to
use
it.
The
rest
will
be
able
to
rely
on
low­
cost,
uncomplicated
bag
and
cartridge
filters.

Small
plants
serving
between
500
and
10,000
people
may
install
microfiltration
or
ultrafiltration
(
MF/
UF)
to
comply;
however,
fewer
than
one­
third
of
1
percent
of
those
requiring
treatment
are
expected
to
choose
MF/
UF.
MF/
UF
requires
a
daily
integrity
test
that
stops
finished
water
production,
so
only
those
few
systems
that
have
the
capability
would
make
such
a
choice.
For
those
in
Action
Bin
4,
only
1
percent
are
projected
to
use
MF/
UF,
with
90
percent
using
UV
and
the
rest
using
combinations
of
technologies.

Those
few
systems
that
do
not
now
filter
their
water
will
be
required
to
provide
an
additional
2
or
3
log
disinfection
under
LT2ESWTR.
In
many
cases,
the
financial
capacity
of
these
systems
will
be
affected
since
they
may
need
to
revise
their
budgeting
process
to
account
for
new
capital
and
O&
M
expenses.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
11
Systems
that
rely
entirely
on
purchased
water
will
experience
negligible
technical
and
managerial
impacts,
if
any.
The
responsibility
of
implementing
the
necessary
changes
inherent
in
LT2ESWTR
will
fall
upon
those
systems
selling
water,
not
those
purchasing
it.
The
latter
will
not
be
responsible
for
implementing
any
technical
changes
and
will
only
experience
economic
effects
associated
with
their
supplier's
compliance
with
LT2ESWTR.
There
may
be
some
revenue
sufficiency
issues
involved;
however,
any
additional
costs
that
result
will
eventually
be
applied
to
consumers,
resulting
in
little
effect
on
small
purchased
systems.

Finally,
the
capacity
of
small
systems
required
to
install
a
cover
or
to
provide
post­
reservoir
disinfection
will
be
affected
to
approximately
the
same
degree
as
the
capacity
of
those
filtered
systems
that
must
install
additional
treatment
based
on
their
Action
Bin.
In
both
cases,
system
staff
will
need
to
learn
to
operate
and
maintain
new
equipment.
System
management
will
need
to
ensure
the
presence
of
adequately
trained
staff
and
will
need
to
explain
the
need
for
the
additional
equipment
to
customers
and
rate
boards.
The
systems
also
will
face
significant
new
costs,
potentially
requiring
adjustments
to
the
rate
structure,
billing
practices,
and
capital
planning
practices.

The
overall
impacts
on
small
systems'
technical,
managerial,
and
financial
capacity
vary.
Monitoring
and
familiarization
with
new
rules
will
have
no
significant
effects
on
small
systems,
with
the
exception
of
moderate
revenue
constraints
on
those
systems
that
need
to
implement
monitoring
for
Cryptosporidium.
It
should
be
noted
that
all
second­
round
monitoring
will
impose
reduced
impacts.
The
largest
impacts
will
occur
as
a
result
of
attaining
2.5
log
treatment
levels,
covering
uncovered
reservoirs,
or
disinfecting
reservoir
discharge.

Large
Water
Systems
(
Those
Serving
at
Least
10,000
People)

Large
regulated
systems
will
likely
not
face
more
than
a
minimal
challenge
to
their
technical
and
managerial
capacity
as
a
result
of
efforts
to
familiarize
themselves
with
the
LT2ESWTR
and
monitor
for
E.
coli
(
Exhibit
7.1b).
The
three
monitoring
requirements
established
under
the
LT2ESWTR,
however,
vary
substantially
in
their
impact
on
system
capacity.
While
measuring
turbidity
levels
and
monitoring
coliforms
will
have
a
minimal
effect,
monitoring
for
Cryptosporidium
may
require
increased
system
management,
technical
assistance,
and
cost
of
sampling.
However,
even
the
largest
monitoring
impacts
will
not
be
very
significant.
Those
systems
serving
more
than
100,000
people
have
already
upgraded
to
meet
Cryptosporidium
monitoring
needs
(
and
collected
such
samples
under
the
ICR);
therefore,
systems
serving
between
10,000
and
100,000
people
will
experience
the
majority
of
monitoring
impacts.

Exhibit
7.1b
shows
that
the
installation
of
new
treatment
technology
will
pose
moderate
challenges
to
large
systems'
technical,
managerial,
and
financial
capacity.
As
with
Cryptosporidium
monitoring,
the
development
and
enhancement
of
external
linkages
will
be
very
important
to
systems
that
must
install
new
equipment.

The
requirement
to
obtain
additional
log­
removal
credits
will
likely
challenge
only
the
financial
capacity
of
systems
to
a
small
degree.
Incurring
costs
might
reduce
a
system's
credit
rating
since
it
will
be
forced
to
direct
more
of
its
revenue
to
new
equipment,
and
may
be
required
to
issue
bonds
or
obtain
loans.
The
LT2ESWTR
will
have
essentially
similar
impacts
on
the
capacity
of
large
systems
assigned
to
different
Action
Bins
because
similar
technologies
are
expected
to
be
installed
in
spite
of
varying
requirements.

Large
systems
that
rely
on
purchased
water
will
only
experience
minimal
impacts
since
the
responsibility
of
meeting
the
requirements
of
LT2ESWTR
will
fall
primarily
on
systems
selling
water.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
12
Systems
purchasing
water
will
only
experience
economic
effects
associated
with
their
supplier's
compliance
with
LT2ESWTR
and
any
additional
costs
will
ultimately
be
applied
to
consumers.
Therefore,
the
LT2ESWTR
will
have
little
effect
on
large
systems
purchasing
water.

The
capacity
of
systems
required
to
install
a
cover
or
to
provide
post­
reservoir
disinfection
will
be
affected
to
a
greater
degree
than
the
capacity
of
those
filtered
systems
that
must
install
additional
treatment.
In
both
cases,
system
staff
will
need
to
learn
how
to
operate
and
maintain
new
equipment.
System
management
will
need
to
ensure
the
presence
of
adequately
trained
staff
and
will
need
to
explain
the
need
for
the
additional
equipment
to
customers
and
rate
boards.
Additionally,
the
systems
will
face
significant
new
costs
that
could
require
adjustments
to
rate
structures,
billing
practices,
and
capital
planning
methods.

Overall,
EPA
assumed
that
large
systems
will
have
the
technical,
financial,
and
managerial
capacity
to
implement
LT2ESWTR
requirements
based
on
the
scale
and
complexity
of
their
operations.
The
nature
of
their
operations
generally
assures
that
they
have
access
to
the
technical
and
managerial
expertise
to
carry
out
all
activities
required
by
the
LT2ESWTR.
It
is
also
generally
easier
for
large
systems
to
fund
capital
improvements
than
small
systems,
since
costs
can
be
spread
over
a
larger
customer
base,
making
them
smaller
on
a
per­
household
basis.

7.6
Paperwork
Reduction
Act
The
information
collection
requirements
for
the
LT2ESWTR
have
been
submitted
for
approval
to
the
Office
of
Management
and
Budget
(
OMB)
under
the
Paperwork
Reduction
Act,
44
USC
3501
et
seq.
The
information
collected
as
a
result
of
this
rule
will
allow
the
States/
Primacy
Agencies
and
EPA
to
determine
appropriate
requirements
for
specific
systems
and
evaluate
compliance
with
the
rule.

The
Paperwork
Reduction
Act
requires
EPA
to
estimate
the
burden
on
PWSs
and
States/
Primacy
Agencies
of
complying
with
the
rule.
Burden
means
the
total
time,
effort,
and
financial
resources
required
to
generate,
maintain,
retain,
disclose,
or
provide
information
to
or
for
a
Federal
agency.
This
burden
includes
the
time
needed
to
conduct
these
activities:

°
Review
instructions
°
Develop,
acquire,
install,
and
employ
technology
and
systems
for
the
purposes
of
collecting,
validating,
verifying,
processing,
maintaining,
and
disclosing
information
°
Adjust
the
existing
ways
to
comply
with
any
previously
applicable
instructions
and
requirements
°
Train
personnel
to
respond
to
information
collected
°
Search
data
sources
°
Complete
and
review
the
collection
of
information
°
Transmit
or
otherwise
disclose
the
information
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
13
Burden
Hours
Labor
Cost
Capital
Cost
Non­
Labor
Cost
Average
Annual
Cost
Water
Systems
Implementation
18,980
519,306
$
­
$
­
$
519,306
$
E.
coli
monitoring
18,643
245,153
$
­
$
1,665,430
$
1,910,583
$
Cryptosporidium
monitoring
7,686
191,845
$
­
$
8,139,590
$
8,331,435
$
Reporting
6,685
187,367
$
­
$
­
$
187,367
$
States
and
Territories
Implementation
77,064
2,226,379
$
­
$
­
$
2,226,379
$
Reporting
16,796
485,236
$
­
$
­
$
485,236
$
Total
145,854
3,855,287
$
­
$
9,805,020
$
13,660,306
$
For
the
first
3
years
after
publication
of
the
final
LT2ESWTR
in
the
Federal
Register,
the
major
information
requirements
pertain
to
implementation
activities
for
States/
Primacy
Agencies
and
PWSs,
covering
uncovered
finished
water
reservoirs,
monitoring
activities
for
large
systems,
and
preparation
for
monitoring
activities
by
small
systems.
The
information
collection
requirements
are
mandatory
under
Part
141
of
the
NPDWRs.
The
calculation
of
LT2ESWTR
information
collection
burden
and
costs
can
be
found
in
the
Information
Collection
Request
for
the
Long
Term
2
Enhanced
Surface
Water
Treatment
Rule
(
USEPA
2003b).

The
total
burden
associated
with
LT2ESWTR
requirements
over
the
3
years
covered
by
the
Information
Collection
Request
is
437,563
hours,
an
average
of
145,854
hours
per
year.
The
total
cost
over
the
3­
year
clearance
period
is
$
41.0
million,
an
average
of
$
13.7
million
per
year
(
simple
average
over
3
years).
(
These
estimates
are
based
on
modeled
results
of
the
ICR
Cryptosporidium
occurrence
data
set.)
EPA
assumes
that
the
systems
affected
by
the
LT2ESWTR
have
already
purchased
the
basic
equipment
required
for
monitoring
and
reporting.
Therefore,
there
are
no
capital
start
 
up
costs
associated
with
information
collection
under
this
rule.
The
average
burden
per
response
(
i.
e.,
the
amount
of
time
needed
for
each
activity
that
requires
a
collection
of
information)
is
1.47
hours;
the
average
cost
per
response
is
$
138.12.
Exhibit
7.2
provides
a
summary
of
the
results
of
the
Information
Collection
Request
calculations.

Exhibit
7.2
Average
Annual
Burden
Hours
and
Costs
for
the
LT2ESWTR
Information
Collection
Request
3­
Year
Approval
Period
Note:
Data
represent
burden
and
cost
for
only
the
3­
year
ICR
approval
period.
Data
are
based
on
nominal
(
or
undiscounted)
values.
Detail
may
not
add
due
to
independent
rounding.

Source:
Information
Collection
Request
for
the
Long
Term
2
Enhanced
Surface
Water
Treatment
Rule
(
USEPA
2003b).

7.7
Unfunded
Mandates
Reform
Act
Title
II
of
UMRA
of
1995,
P.
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
UMRA
Section
202,
EPA
generally
must
prepare
a
written
statement,
including
a
benefit­
cost
analysis,
for
proposed
and
final
rules
with
"
Federal
mandates"
that
may
result
in
expenditures
by
State,
Local,
and
Tribal
governments,
in
the
aggregate,
or
by
the
private
sector,
of
$
100
million
or
more
in
any
given
year.
Before
promulgating
an
EPA
rule
for
which
a
written
statement
is
needed
under
Section
202,
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
14
Publicly
Owned
PWS
Costs
$
45.7
­
69.0
$
50.2
­
75.2
62.2%
­
62.4%
State
Costs
$
0.9
­
1.0
$
1.2
­
1.2
1.3%
­
0.9%
Tribal
Costs
$
0.1
­
0.2
$
0.1
­
$
0.2
0.1%
­
0.1%
Total
Public
Costs
$
46.7
­
70.1
$
51.5
­
76.6
63.6%
­
63.4%
Total
Private
Costs
$
26.8
­
40.4
$
29.4
­
44.1
36.4%
­
36.6%
Total
Costs
$
73.5
­
110.5
$
80.9
­
120.7
100.0%
­
100.0%
Percent
of
Total
Cost
Range
of
Annualized
Costs
(
Million$,
2000$)

3%
Discount
Rate
7%
Discount
Rate
Section
205
of
UMRA
requires
EPA
to
identify
and
consider
a
reasonable
number
of
regulatory
alternatives
and
to
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
final
rule
an
explanation
why
that
alternative
was
not
adopted.

Before
EPA
establishes
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,
including
Tribal
governments,
EPA
must
have
developed
a
small
government
agency
plan
under
Section
203
of
UMRA.
The
plan
must
provide
for
notifying
potentially
affected
small
governments;
allowing
officials
of
affected
small
governments
to
have
meaningful
and
timely
input
in
the
development
of
EPA
regulatory
proposals
with
significant
Federal
intergovernmental
mandates;
and
informing,
educating,
and
advising
small
governments
on
compliance
with
the
regulatory
requirements.

EPA
has
determined
that
this
rule
contains
a
Federal
mandate
that
may
result
in
expenditures
of
$
100
million
or
more
for
State,
Local,
and
Tribal
governments,
in
the
aggregate
or
the
private
sector
in
any
one
year,
as
shown
in
Exhibit
7.3.

Exhibit
7.3
Annualized
Value
of
Public
and
Private
Costs
for
the
LT2ESWTR
(
Annualized
at
3
and
7
Percent)

Note:
The
ranges
reflect
the
difference
between
the
ICRSSL
(
lowest)
and
ICR
(
highest)
modeled
Cryptosporidium
occurrence
distributions.
The
percentages
of
total
cost
in
the
last
column
were
calculated
only
for
the
3
percent
discount
rate.
Detail
may
not
add
due
to
independent
rounding.

Source:
"
Publicly
owned
PWS
costs"
are
from
the
total
system
cost
in
Exhibit
6.4,
multiplied
by
the
proportion
of
PWSs
that
are
publicly
owned
according
to
SDWIS.
"
State
costs"
are
from
Exhibit
6.4.
"
Tribal
costs"
are
from
Exhibit
7.9
for
the
high
end
of
each
range
in
this
exhibit
and
are
assumed
to
represent
the
same
proportion
of
total
costs
in
the
low
end
of
the
range.
"
Total
private
costs"
include
costs
for
all
privately
owned
PWSs
and
are
calculated
by
subtracting
total
public
costs
from
total
costs.

Thus,
the
LT2ESWTR
is
subject
to
the
requirements
of
Sections
202
and
205
of
UMRA,
and
EPA
is
obligated
to
prepare
a
written
statement
addressing
the
following
items:

°
The
authorizing
legislation
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
15
°
Benefit­
cost
analysis,
including
an
analysis
of
the
extent
to
which
the
costs
of
State,
Local
and
Tribal
governments
will
be
paid
for
by
the
Federal
government
°
Estimates
of
future
compliance
costs
and
disproportionate
budgetary
effects
°
Macroeconomic
effects
°
A
summary
of
EPA's
consultation
with
State,
Local,
and
Tribal
governments
and
their
concerns,
including
a
summary
of
the
Agency's
evaluation
of
those
comments
and
concerns
°
Identification
and
consideration
of
regulatory
alternatives
and
the
selection
of
the
least
costly,
most
cost­
effective,
or
least
burdensome
alternative
that
achieves
the
objectives
of
the
rule
The
legislative
authority
for
the
LT2ESWTR
is
discussed
in
Chapter
2.
The
remaining
items
are
discussed
below,
but
are
also
addressed
in
other
chapters
of
this
EA,
such
as
Chapters
3
and
6.

7.7.1
Social
Benefits
and
Costs
The
social
benefits
are
those
that
accrue
primarily
to
the
public
through
increased
protection
from
illness
and
potential
death
caused
by
exposure
to
microbial
pathogens
in
drinking
water.
To
assign
a
monetary
value
to
the
reductions
in
illness,
EPA
used
a
cost­
of­
illness
measure.
This
is
considered
to
be
a
lower­
bound
estimate
of
actual
benefits
because
it
does
not
include
the
pain
and
discomfort
associated
with
the
illness.
Mortalities
were
valued
using
a
value
of
statistical
life
estimate
consistent
with
EPA
policy.
Chapter
5
presents
the
benefits
analysis,
which
includes
both
qualitative
and
monetized
benefits
of
improvements
to
health
and
safety.
The
potential
nonquantifiable
benefits
may
include
reduced
risks
to
sensitive
subpopulations,
reduced
outbreak
risks
and
response
costs,
reduced
averting
behavior
(
e.
g.,
boiling
tap
water
or
purchasing
bottled
water),
reduced
risk
from
co­
occurring
pathogens,
increased
source
water
monitoring,
increased
regulation
of
unfiltered
systems,
and
covering
or
treating
finished
water
reservoirs.
In
addition,
certain
nonhealth­
related
benefits
may
exist,
such
as
enhanced
aesthetic
water
quality.
The
estimated
annualized
quantified
benefit
for
the
traditional
cost
of
illness
(
COI)
for
the
Preferred
Alternative
of
the
LT2ESWTR
using
a
3­
percent
discount
rate
ranges
from
$
253
to
$
967
million
(
or
$
216
to
$
826
million
using
a
7­
percent
discount
rate)
(
Exhibit
7.4).
Similarly,
the
estimated
annualized
quantified
benefit
using
the
enhanced
COI
ranges
from
$
374
to
$
1,445
million
(
or
$
318
to
$
1,230
million
using
a
7­
percent
discount
rate).

Measuring
the
social
costs
of
the
rule
requires
identifying
affected
entities
by
ownership
(
public
or
private),
considering
regulatory
alternatives,
calculating
regulatory
compliance
costs,
and
estimating
any
disproportionate
impacts.
Chapter
6
of
this
document
details
the
cost
analysis
performed
for
the
LT2ESWTR.
Under
the
Preferred
Alternative,
the
likely
compliance
scenario
is
expected
to
result
in
total
annualized
costs
of
approximately
$
73
to
$
111
million
using
a
3­
percent
discount
rate
(
or
$
81
to
$
121
million
using
a
7­
percent
discount
rate).
Exhibit
7.4
summarizes
the
range
of
annualized
costs
and
benefits
for
each
regulatory
alternative.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
16
Regulatory
Alternative
Enhanced
COI
Range
of
Annualized
Benefits
(
3%)
Traditional
COI
Range
of
Annualized
Benefits
(
3%)
Enhanced
COI
Range
of
Annualized
Benefits
(
7%)
Traditional
COI
Range
of
Annualized
Benefits
(
7%)
Range
of
Annualized
Costs
(
3%)
Range
of
Annualized
Costs
(
7%)
Alternative
A1
$
457
­
$
1,482
$
305
­
$
989
$
389
­
$
1,260
$
260
­
$
845
$
361
$
388
Alternative
A2
$
397
­
$
1,461
$
268
­
$
977
$
338
­
$
1,243
$
229
­
$
834
$
100
­
$
134
$
108
­
$
145
Alternative
A3
(
Preferred
Alternative)
$
374
­
$
1,445
$
253
­
$
967
$
318
­
$
1,230
$
216
­
$
826
$
73
­
$
111
$
81
­
$
121
Alternative
A4
$
328
­
$
1,349
$
225
­
$
907
$
279
­
$
1,148
$
192
­
$
775
$
37
­
$
59
$
41
­
$
65
Exhibit
7.4
Total
Annualized
Benefits
and
Costs
of
Regulatory
Alternatives
($
Millions,
2000$)

Source:
Benefits
from
Exhibits
5.28a­
b.
3
%
Costs
from
Exhibit
O.
3d,
Column
K
+
Exhibit
O.
4d,
Column
M.
7%
Costs
from
Exhibit
O.
3e,
Column
K
+
Exhibit
O.
4e,
Column
M.

Various
Federal
programs
exist
to
provide
financial
assistance
to
State,
Local,
and
Tribal
governments
in
complying
with
this
rule.
The
Federal
government
provides
funding
to
States
that
have
primary
enforcement
responsibility
for
their
drinking
water
programs
through
the
Public
Water
Systems
Supervision
(
PWSS)
Grants
Program.
States
may
use
these
funds
to
develop
primacy
programs
or
to
contract
with
other
State
agencies
to
assist
in
the
development
or
implementation
of
their
primacy
programs.
However,
they
may
not
use
these
funds
to
contract
with
regulated
entities
(
i.
e.,
water
systems).
States
may
use
PWSS
Grants
to
set
up
and
administer
a
State
program
that
includes
such
activities
as
public
education,
testing,
training,
technical
assistance,
development
and
administration
of
a
remediation
grant
and
loan
or
incentive
program
(
excluding
the
actual
grant
or
loan
funds),
or
other
regulatory
or
nonregulatory
measures.

Additional
funding
is
available
from
other
programs
administered
by
EPA
or
other
Federal
agencies.
These
include
EPA's
Drinking
Water
State
Revolving
Fund
(
DWSRF),
the
U.
S.
Department
of
Agriculture's
Rural
Utilities'
Loan
and
Grant
Program,
and
the
Department
of
Housing
and
Urban
Development's
Community
Development
Block
Grant
(
CDBG)
Program.

SDWA
authorizes
the
EPA
Administrator
to
award
capitalization
grants
to
States,
which
in
turn
can
provide
low­
cost
loans
and
other
types
of
assistance
to
eligible
PWSs.
The
DWSRF
assists
PWSs
with
financing
the
costs
of
infrastructure
needed
to
achieve
or
maintain
compliance
with
SDWA
requirements.
Each
State
has
considerable
flexibility
to
determine
the
design
of
its
DWSRF
Program
and
to
direct
funding
toward
its
most
pressing
compliance
and
public
health
protection
needs.
States
may
also,
on
a
matching
basis,
use
up
to
10
percent
of
their
DWSRF
allotments
for
each
fiscal
year
to
assist
in
running
the
State
drinking
water
program.
In
addition,
States
have
the
flexibility
to
transfer
a
portion
of
funds
from
their
Clean
Water
State
Revolving
Fund
accounts
to
their
DWSRF
accounts.

A
State
can
use
the
financial
resources
of
the
DWSRF
to
assist
small
systems.
In
fact,
a
minimum
of
15
percent
of
a
State's
DWSRF
grant
must
be
used
to
provide
infrastructure
loans
to
systems
serving
10,000
or
fewer
people.
Two
percent
of
the
State's
grant
is
set­
aside
funding
that
can
only
be
used
to
provide
technical
assistance
to
small
systems.
In
addition,
up
to
14
percent
of
the
State's
grant
may
be
used
to
provide
technical,
managerial,
and
financial
assistance
to
all
system
sizes.
For
small
systems
that
are
disadvantaged,
up
to
30
percent
of
a
State's
DWSRF
may
be
used
for
increased
loan
subsidies.
Tribes
have
separate
set­
aside
funding
that
they
can
use
under
the
DWSRF.
2
"...[
T]
he
agency
shall
prepare
a
written
statement
containing.
.
.
(
3)
estimates
by
the
agency,
if
and
to
the
extent
that
the
agency
determines
that
accurate
estimates
are
reasonably
feasible,
of.
.
.
(
B)
any
disproportionate
budgetary
effects
of
the
Federal
mandate
upon
any
particular
regions
of
the
nation
or
particular
State,
Local,
or
Tribal
government,
urban
or
rural
or
other
types
of
communities,
or
particular
segments
of
the
private
sector..."
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
17
In
addition
to
the
DWSRF,
money
is
available
from
the
Department
of
Agriculture's
Rural
Utility
Service
(
RUS)
and
Housing
and
Urban
Development's
CDBG
Program.
RUS
provides
loans,
guaranteed
loans,
and
grants
to
improve,
repair,
or
construct
water
supply
and
distribution
systems
in
rural
areas
and
towns
with
a
population
of
up
to
10,000
people.
In
fiscal
year
2002,
RUS
had
over
$
1.5
billion
of
available
funds
for
water
and
environmental
programs.
Also,
three
sources
of
funding
exist
under
the
CDBG
program
to
finance
building
and
improvements
of
public
facilities
such
as
water
systems.
These
include:
1)
direct
grants
to
communities
with
populations
over
200,000;
2)
direct
grants
to
States,
which
in
turn
are
awarded
to
smaller
communities,
rural
areas,
and
coloñas
in
Arizona,
California,
New
Mexico,
and
Texas;
and
3)
direct
grants
to
U.
S.
territories
and
trusts.
The
CDBG
budget
for
fiscal
year
2002
totaled
over
$
4.3
billion.

7.7.2
Disproportionate
Budgetary
Effects
UMRA
is
intended
to
reduce
the
burden
of
Federal
mandates
that
are
not
accompanied
by
adequate
Federal
funding
on
State,
Local,
and
Tribal
governments.
Section
202
of
UMRA
requires
an
analysis
of
possible
disproportionate
budgetary
effects
of
certain
classes
of
rules,
in
which
LT2ESWTR
falls.
2
This
analysis
is
required
if
EPA
determines
that
accurate
estimates
are
reasonably
feasible.
The
specific
concern
is
disproportionate
budgetary
effects
of
the
LT2ESWTR
upon
certain
areas
or
industries:

°
Any
particular
regions
of
the
United
States
°
Any
particular
State,
Local,
or
Tribal
government
°
Urban
or
rural
or
other
types
of
communities
°
Any
segment
of
the
private
sector
This
EA
has
considered
how
best
to
interpret
and
comply
with
these
requirements.
The
remainder
of
this
section
describes
ways
to
consider
these
requirements,
whether
meaningful
data
can
be
provided,
and
whether
accurate
estimates
are
possible.
The
general
conclusion
for
this
section,
however,
is
that
there
is
little
basis
and
insufficient
data
to
make
accurate
estimates
of
budgetary
impacts
that
differ
among
groups,
regions,
governments,
types
of
communities,
or
segments
of
the
private
sector.
Further,
from
all
of
the
Agency's
analysis
and
consultations,
the
Agency
believes
the
rule
will
treat
similarly
situated
systems
(
in
terms
of
size,
water
quality,
available
data,
installed
technology,
and
presence
of
uncovered
finished
reservoirs)
in
similar
(
proportionate)
ways,
without
regard
to
geographic
location,
type
of
community,
or
segment
of
industry.
The
LT2ESWTR
is
a
rule
where
requirements
are
proportional
to
risk.
In
this
analysis,
the
estimates
of
occurrence
are
different
only
for
filtered
and
unfiltered
systems,
reflecting
the
judgment
that
differentiation
along
these
other
specific
characteristics
(
regions,
type
of
government,
and
so
forth)
is
not
possible
with
the
available
data.
Although
some
groups
may
have
differing
budgetary
effects
as
a
result
of
the
LT2ESWTR,
those
costs
are
proportional
to
the
need
for
additional
monitoring
and
risk
posed
(
degree
of
treatment
required).
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
18
Most
of
the
following
analyses
begin
with
national
data
and
then
break
out
those
data,
when
possible,
using
other
measures.
Because
the
data
and
estimates
are
national
in
scope,
breakouts
by
region
or
other
parameters
tend
to
be
merely
proportional
extensions
based
on
a
characteristic,
not
"
bottom­
up"
estimates
of
actual
differences
among
types
of
systems,
communities,
or
economic
sectors.
Thus,
the
analyses
may
not
reveal
true
differences
attributable
to
the
impacts
of
the
rule
alternatives
on
various
regions.
The
local
conditions
at
each
regulated
entity
drive
the
actual
cost
impacts
of
the
rule
(
e.
g.,
the
level
of
Cryptosporidium
in
the
source
water)
and
these
data
are
not
available.
In
fact,
the
LT2ESWTR
requires
most
systems
to
test
their
water
to
determine
the
impact
of
the
rule
on
their
system,
a
process
that,
in
time,
could
generate
that
information.

When
considering
disproportionate
impacts,
it
is
necessary
to
consider
whom
the
LT2ESWTR
affects.
The
rule,
by
definition,
covers
some
communities
and
a
segment
of
the
private
sector.
Most
of
those
communities
and
PWSs
that
use
surface
water
or
GWUDI
and
those
having
uncovered
finished
water
reservoirs
will
incur
some
costs.
Communities
and
PWSs
that
use
only
ground
water
or
have
no
uncovered
finished
water
reservoirs
will
avoid
these
costs,
although
they
may
have
to
comply
with
other
rules
to
which
surface
water
systems
may
not
be
subject.
In
an
economic
sense,
these
differences
between
communities
and
utilities
do
not
disadvantage
one
group
over
the
other
because
the
systems
are
not
in
a
national
market
that
allows
for
direct
competition
for
customers.
In
general,
those
systems
are
better
considered
local
natural
monopolies.

Regions
There
are
no
specific
data
available
that
suggest
that
the
compliance
costs
and
other
effects
of
LT2ESWTR
will
cause
disproportionate
budgetary
effects
by
region.
LT2ESWTR
is
a
national
mandate
and
applies
uniformly
to
all
States.
These
effects
will
be
felt
at
the
system
level,
with
most
systems
primarily
facing
monitoring,
rather
than
treatment,
costs.
Some
contaminants
in
drinking
water
are
distributed
unevenly
across
regions.
The
data
available
on
the
occurrence
of
Cryptosporidium,
however,
indicate
that
it
is
prevalent
nationwide.
More
data
on
Cryptosporidium
occurrence
will
become
available
after
the
monitoring
required
by
the
rule
is
completed.

Although
Cryptosporidium
levels
do
not
show
strong
regional
patterns,
it
is
still
possible
that
budgetary
effects
could
differ
between
regions.
There
is
no
direct
measure
of
potential
budgetary
impacts
by
regions,
but
proxy
measures
are
considered.
One
possible
proxy
for
potential
regional
impacts
is
the
projection
that
smaller
systems
will
be
subject
to
greater
impacts
on
their
financial
capacity
(
including
revenue
sufficiency)
(
Exhibit
7.1a)
and
that
small
systems
will
face
greater
budgetary
pressures,
particularly
if
installing
treatment,
because
of
economies
of
scale
(
this
effect
is
seen
in
higher
average
household
costs
for
those
served
by
small
PWSs).
Regions
have
varying
proportions
of
small,
medium,
and
large
systems
that
supply
public
water.
To
the
extent
that
some
regions
are
more
dependent
on
small
systems,
the
regions
as
a
whole
could
be
considered
more
likely
to
face
greater
impacts
on
budgets
of
many
small
entities,
even
if
there
is
no
"
regional
budget."

To
show
what
proxy
measures
based
on
dependency
on
small
systems
might
reveal,
two
measures
are
used.
The
first
is
the
percent
of
the
population
of
a
State
that
is
served
by
small,
rather
than
large,
systems.
Exhibit
7.5
indicates
that
the
States
that
have
more
dependence
on
small
water
systems
tend
to
be
lower­
population
States
such
as
Vermont,
West
Virginia,
and
Alaska.
Most
relevant
to
this
analysis,
no
regional
patterns
are
apparent.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
19
The
second
proxy
measure
used
is
the
absolute
number
of
small
systems.
Not
surprisingly,
this
tends
to
correlate
with
high
total
population,
with
New
York,
California,
and
Texas
among
the
largest.
Again,
no
regional
patterns
are
evident.

This
analysis
concludes
that
accurate
estimates
are
not
reasonably
feasible,
but
significant
regional
impacts
are
not
expected.
Further,
tests
with
proxy
measures
support
the
conclusion
of
no
regional
disproportionate
budgetary
impacts.

State,
Local,
or
Tribal
Governments
There
is
no
expectation
that
there
will
be
disproportionate
budgetary
effects
upon
State,
Local,
or
Tribal
governments.
Costs
are
expected
to
be
proportional
to
the
risk
posed,
even
if
unevenly
distributed
among
systems
and
perhaps
types
of
systems.
Furthermore,
there
are
no
accurate
estimates
to
address
the
differing
budgetary
effects
of
LT2ESWTR
on
State,
Local
or
Tribal
governments.

There
are
few
data
available
that
bear
on
this
issue.
Exhibit
7.3
breaks
out
national­
level
costs
for
public
PWSs,
Tribal
costs,
and
State
costs,
but
only
allocates
costs
to
these
categories
rather
than
revealing
any
disproportionate
impacts
on
the
budgets
of
these
groups.
Exhibits
7.5
and
7.6
show
expected
larger
impacts
in
particular
States
based
only
on
their
dependence
on
small
systems.
Even
using
dependence
on
small
systems
as
a
measure,
an
accurate
distribution
of
potential
impacts
will
not
be
available
until
after
the
monitoring
phase
is
complete.

Urban
and
Rural
There
are
no
data
that
distinguish
between
the
budgetary
effects
of
LT2ESWTR
on
urban
versus
rural
areas,
and
there
is
no
expectation
that
one
kind
of
area
will
pay
disproportionately
higher
costs
than
the
other.

The
only
data
available
that
may
be
relevant
are
the
cost
differences
that
are
expected
to
exist
between
small
and
larger
systems.
The
analyses
in
this
EA,
based
on
the
Technology
and
Cost
Document
(
USEPA
2003a),
estimate
that
there
are
economies
of
scale:
as
the
population
served
increases,
average
costs
of
service
decrease.
If
it
is
assumed
that
rural
systems
are
smaller
than
urban
systems,
the
latter
may
face
smaller
per­
household
costs
than
rural
systems.
However,
this
variation
does
not
imply
an
effect
that
is
disproportionate
to
risk.
The
variations
in
costs
will
not
predominantly
fall
along
the
lines
of
population
served
(
although
population
served
can
be
used
as
a
proxy),
but
will
specifically
depend
on
which
treatment
bin
a
water
system
is
assigned
to
 
depending
on
the
level
of
treatment
that
systems'
water
needs.
Further,
many
large
systems
are
suburban
systems,
and
many
systems
sell
water
to
other,
sometimes
rural,
systems.
Again,
there
is
no
expectation
of
disproportionate
budgetary
impact,
based
on
the
design
of
the
rule
and
known
patterns
of
occurrence,
and
accurate
estimates
are
not
now
feasible.

Segments
of
the
Private
Sector
Only
one
segment
of
the
private
economy
is
directly
affected
by
this
rule
 
drinking
water
providers.
Section
7.5
discusses
the
budgetary
impacts
on
this
sector.
An
indirect
indicator
of
the
reasonableness
of
the
cost
of
the
LT2ESWTR
is
the
agreement
achieved
by
the
Stage
2
M­
DBP
FACA
Committee
on
major
rule
elements.
Based
on
this
agreement,
the
budgetary
impact
could
not
disproportionately
affect
drinking
water
providers
since
it
is
explicitly
proportionate
to
risk.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
20
24%

45%

40%
9%

11%

34%
4%
15%

12%
9%

11%

28%
20%
11%

23%
1%
8%
34%
20%
16%

28%

4%
6%

17%

12%

35%

8%
6%
18%
9%
16%

6%
25%
17%
9%
4%
11%

10%
8%
8%

36%
20%

3%
3%

<
1%
3%
5%
7%

24%

Small
Community
Surface
Water
and
GWUDI
Systems
over
the
United
States
>
20%
(
9)

11­
20%
(
8)

0­
10%
(
40)
D.
C.
0%

American
Samoa
Guam
N.
Mariana
Islands
Puerto
Rico
100%

2%

0%

5%

Virgin
Islands
32%
4%

Palau
100%
Exhibit
7.5
Percent
of
Population
of
CWSs
Served
by
Small
Surface
and
GWUDI
Systems
by
State
Source:
Appendix
M.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
21
45
97
117
159
173
13
520
33
85
789
683
414
588
308
220
28
34
53
71
56
55
117
12
21
125
210
241
46
5
178
132
126
39
348
464
266
17
191
83
219
360
322
42
52
30
1
56
39
12
256
Number
of
Small
CWSs
201
to
400
(
10)
101
to
200
(
11)

0
to
100
(
30)
D.
C.
0
American
Samoa
Guam
N.
Mariana
Islands
Puerto
Rico
10
1
0
172
Virgin
Islands
133
401
or
more
(
6)

Palau
14
Exhibit
7.6
Number
of
Small
Surface
and
GWUDI
Systems
by
State
Source:
Appendix
M.

7.7.3
Macroeconomic
Effects
Under
UMRA
Section
202,
EPA
is
required
to
estimate
the
potential
macroeconomic
effects
of
the
regulation.
These
include
effects
on
productivity,
economic
growth,
full
employment,
and
creation
of
Gross
Domestic
Product
(
GDP)
(
USEPA
2000e).
In
2000,
real
GDP
was
$
9,224
billion;
thus,
a
rule
would
have
to
cost
at
least
$
23
billion
annually
to
have
a
measurable
effect.
A
regulation
with
a
smaller
aggregate
effect
is
unlikely
to
have
any
measurable
impact,
unless
it
is
highly
focused
on
a
particular
geographic
region
or
economic
sector.
The
LT2ESWTR
should
not
have
a
measurable
effect
on
the
national
economy;
the
total
annualized
costs
for
the
Preferred
Regulatory
Alternative
range
from
$
73
to
$
111
million
to
$
81
to
$
121
million
using
a
3
and
7
percent
discount
rate,
respectively.
Using
these
annualized
figures
as
a
measure,
the
annual
cost
of
the
LT2ESWTR
is
an
insignificant
fraction
of
a
$
23
billion
annual
cost
that
would
be
considered
a
measurable
macroeconomic
impact.
Thus,
annualized
LT2ESWTR
costs
measured
as
a
percentage
of
the
national
GDP
will
only
decline
over
time
as
GDP
grows.

7.7.4
Consultation
with
Small
Governments
Before
the
Agency
establishes
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,
including
Tribal
governments,
it
must
have
developed,
under
Section
203
of
UMRA,
a
small
government
agency
plan.
The
plan
must
provide
for
the
notification
of
potentially
affected
small
governments,
enabling
officials
of
affected
small
governments
to
have
meaningful
and
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
22
timely
input
in
the
development
of
EPA
regulatory
proposals
with
significant
Federal
intergovernmental
mandates
and
informing,
educating,
and
advising
small
governments
on
compliance
with
the
regulatory
requirements.
EPA
consulted
with
small
governments
to
address
impacts
of
regulatory
requirements
in
the
LT2ESWTR
that
might
significantly
or
uniquely
affect
small
governments.
A
variety
of
stakeholders,
including
small
governments,
were
provided
with
several
opportunities
to
participate
early
in
the
regulatory
development
process,
as
described
in
section
7.2.

7.7.5
Consultation
with
State,
Local,
and
Tribal
Governments
Section
204
of
UMRA
requires
the
Agency
to
develop
an
effective
process
to
permit
elected
officers
of
State,
Local,
and
Tribal
governments
(
or
their
designated
authorized
employees)
to
provide
meaningful
and
timely
input
in
the
development
of
regulatory
proposals
that
contain
significant
Federal
intergovernmental
mandates.
Consistent
with
these
provisions,
EPA
held
consultations
with
affected
governmental
entities
prior
to
proposal
of
the
rule,
as
described
in
sections
7.2
and
7.8.
EPA
conducted
four
outreach
conference
calls,
discussed
in
section
7.2,
and
contacted
each
of
the
12
Native
American
Drinking
Water
State
Revolving
Fund
Advisors
to
invite
them,
and
representatives
of
their
organizations,
to
participate
in
the
meetings.
In
addition
to
the
conference
calls,
EPA
presented
the
LT2ESWTR
at
several
health,
environmental,
and
Native
American
conferences.

Representatives
from
State,
Local,
and
Tribal
governments
were
also
involved
with
the
development
of
the
Agreement
in
Principle,
which
was
developed
early
in
the
regulatory
process.
EPA
provided
the
Association
of
State
Drinking
Water
Administrators
(
ASDWA)
with
an
opportunity
to
comment
before
officially
proposing
the
LT2ESWTR.
EPA
accepted
comments
from
ASDWA
and
other
Federal
Advisory
Committee
Act
(
FACA)
members,
such
as
the
National
League
of
Cities
(
NLC),
on
a
draft
of
the
LT2ESWTR
posted
on
its
web
site
and,
to
the
extent
possible,
comments
were
incorporated
into
the
rule.

In
addition
to
these
efforts,
EPA
will
educate,
inform,
and
advise
small
systems,
including
those
run
by
small
governments,
about
the
LT2ESWTR
requirements.
The
Agency
is
developing
plain­
English
guidance
that
will
explain
what
actions
a
small
entity
must
take
to
comply
with
the
rule.
Also,
the
Agency
has
developed
fact
sheets
that
concisely
describe
various
aspects
and
requirements
of
the
LT2ESWTR.
Additional
details
on
Tribal
involvement
in
the
rulemaking
process
can
be
found
in
section
7.8.

7.7.6
Regulatory
Alternatives
Considered
As
required
under
Section
205
of
UMRA,
EPA
considered
several
regulatory
alternatives
and
numerous
methods
to
identify
systems
most
at
risk
to
microbial
contamination.
Chapter
3
provides
a
detailed
discussion
of
these
alternatives.
EPA
chose
the
Preferred
Regulatory
Alternative
because
it
provided
substantial
benefits
at
an
acceptable
level
of
costs.
In
addition,
the
FACA
Committee
recommended
the
Preferred
Regulatory
Alternative
in
the
Stage
2
M­
DBP
Agreement
in
Principle.

7.7.7
Impacts
on
Small
Governments
EPA
has
determined
that
this
rule
contains
no
regulatory
requirements
that
might
significantly
or
uniquely
affect
small
governments.
As
described
in
section
7.2,
EPA
has
certified
that
this
proposed
rule
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
23
will
not
have
a
significant
economic
impact
on
a
substantial
number
of
small
entities.
Estimated
annual
expenditures
by
small
systems
for
the
LT2ESWTR
range
from
$
7.9
to
$
13
million
at
a
3
percent
discount
rate.
While
the
treatment
requirements
of
the
LT2ESWTR
apply
uniformly
to
both
small
and
large
PWSs,
large
systems
bear
a
majority
of
the
total
costs
of
compliance
with
the
rule.
This
is
due
to
the
fact
that
large
systems
treat
a
majority
of
the
drinking
water
that
originates
from
surface
water
sources.

7.8
Indian
Tribal
Governments
Executive
Order
13175,
entitled
"
Consultation
and
Coordination
with
Indian
Tribal
Governments"
(
65
FR
67249;
November
9,
2000),
requires
EPA
to
develop
"
an
accountable
process
to
ensure
meaningful
and
timely
input
by
Tribal
officials
in
the
development
of
regulatory
policies
that
have
Tribal
implications."
The
Executive
Order
defines
"
policies
that
have
Tribal
implications"
to
include
regulations
that
have
"
substantial
direct
effects
on
one
or
more
Indian
Tribes,
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
Executive
Order
13175,
EPA
may
not
issue
a
regulation
that
has
Tribal
implications,
that
imposes
substantial
direct
compliance
costs,
and
that
is
not
required
by
statute,
unless
the
Federal
government
provides
the
funds
necessary
to
pay
the
direct
compliance
costs
incurred
by
Tribal
governments,
or
EPA
consults
with
Tribal
officials
early
in
the
process
of
developing
the
proposed
regulation
and
develops
a
Tribal
summary
impact
statement.

EPA
has
concluded
that
this
proposed
rule
may
have
Tribal
implications,
because
it
may
impose
substantial
direct
compliance
costs
on
Tribal
governments.
There
are
67
Tribal
water
systems
serving
a
population
of
78,956
(
see
Exhibit
7.7).
As
presented
in
Exhibit
7.9a,
they
will
bear
an
annualized
cost
of
$
135,974,
at
a
3
percent
discount
rate,
to
implement
this
proposed
rule
($
138,910
at
a
7
percent
discount
rate).
Accordingly,
EPA
provides
the
following
Tribal
summary
impact
statement
as
required
by
Section
5(
b)
of
Executive
Order
13175.
The
Federal
government
will
not
specifically
provide
the
funds
necessary
to
pay
costs
for
Tribal
systems
associated
with
the
LT2ESWTR
because
EPA
consulted
with
Tribal
officials
early
in
the
process
of
developing
the
proposed
regulation.

EPA
consulted
with
Tribal
officials
in
a
variety
of
ways
to
permit
them
to
have
meaningful
and
timely
input
into
development
of
the
LT2ESWTR.
The
most
extensive
participation
of
Tribes
was
on
the
Federal
Advisory
Committee
through
a
representative
of
the
All
Indian
Pueblo
Council
(
AIPC),
which
is
associated
with
approximately
20
Tribes.
This
Tribal
FACA
participant
may
have
represented
a
wider
group
of
Tribes
than
the
AIPC.
In
February
1999,
at
the
Las
Vegas
EPA/
Inter­
Tribal
Council
of
Arizona,
a
number
of
Tribal
representatives
requested
the
AIPC
representative
to
be
the
FACA
representative
for
Federal
Tribes,
given
his
knowledge
of
drinking
water
systems.

In
addition
to
obtaining
FACA
Tribal
input,
EPA
presented
the
LT2ESWTR
at
the
16th
Annual
Consumer
Conference
of
the
National
Indian
Health
Board,
the
Environmental
Council's
Annual
Conference,
and
the
EPA/
Inter­
Tribal
Council
of
Arizona,
Inc.
Tribal
consultation
meeting.
Over
900
attendees
representing
Tribes
from
across
the
country
attended
the
National
Indian
Health
Board's
Consumer
Conference
and
over
100
Tribes
were
represented
at
the
annual
conference
of
the
National
Tribal
Environmental
Council.
Representatives
from
15
Tribes
participated
at
the
EPA/
Inter­
Tribal
Council
of
Arizona
meeting.
At
the
first
two
conferences,
an
EPA
representative
conducted
two
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
24
workshops
on
EPA's
drinking
water
program
and
upcoming
regulations,
including
the
LT2ESWTR.
EPA
sent
the
presentation
materials
and
meeting
summary
to
over
500
Tribes
and
Tribal
organizations.

Fact
sheets
describing
the
requirements
of
the
proposed
rule
and
requesting
Tribal
input
were
distributed
at
an
annual
EPA
Tribal
meeting
in
San
Francisco,
and
at
a
Native
American
Water
Works
Association
meeting
in
Scottsdale,
Arizona.
EPA
also
worked
through
its
Regional
Indian
Coordinators
and
the
National
Tribal
Operations
Committee
to
raise
awareness
of
the
development
of
the
proposed
rule.
In
addition,
EPA
mailed
all
Federal
Tribes
LT2ESWTR
fact
sheets
in
November
2000.

A
few
Tribes
responded
by
requesting
more
information
and
expressing
concern
about
having
to
implement
too
many
regulations.
Members
of
the
Tribal
Caucus
of
the
National
Tribal
Operations
Committee
provided
comment.
Those
who
provided
comment
noted
that
the
rule
would
certainly
have
a
benefit.
They
also
expressed
a
concern
about
infrastructure
costs
and
that
no
funding
was
attached
to
the
rule.
In
response
to
Tribal
input,
EPA
explained
the
health
protection
benefit
expected
to
be
gained
by
this
proposed
rule
to
one
Tribal
representative
who
responded.
EPA
directed
those
who
asked
for
more
information
to
the
Agreement
in
Principle
on
the
EPA
website.

EPA
sent
a
detailed
fact
sheet
to
all
Tribes
and
invited
them
to
participate
in
a
conference
call
on
January
24,
2002.
The
fact
sheet
explained
the
need
for
the
LT2ESWTR
and
its
impact
on
Tribal
water
systems.
During
the
meeting,
Tribes
continued
to
express
concern
about
implementing
new
regulations
without
additional
funding
sources.
EPA
explained
that
capital
projects
related
to
the
rule
would
rank
high
on
lists
of
current
funding
sources
due
to
the
health
risks
associated
with
Cryptosporidium.

Tribal
Summary
Impact
Statement
EPA
performed
an
analysis
to
estimate
the
impact
of
the
LT2ESWTR
on
Tribal
systems.
EPA
has
identified
67
Indian
Tribal
systems
that
might
be
subject
to
the
LT2ESWTR.
As
seen
in
Exhibit
7.7,
all
but
one
Tribal
system
is
classified
as
small
(
serving
10,000
or
fewer
people).

EPA
has
estimated
the
costs
for
Indian
Tribal
systems
to
comply
with
the
LT2ESWTR,
based
on
the
assumption
that
the
percentages
of
systems
expected
to
incur
costs
for
each
size
category
will
be
the
same
for
Tribal
systems
as
for
systems
nationwide.
The
costs
for
Tribal
systems
are
calculated
in
two
steps.
First,
the
number
of
Indian
Tribal
systems
in
each
size
category
is
multiplied
by
the
percentage
of
systems
nationally
in
each
size
category
expected
to
incur
costs
for
various
rule
activities
(
e.
g.,
E.
coli
monitoring,
Cryptosporidium
monitoring,
additional
treatment).
Second,
the
average
cost
of
each
rule
requirement
is
multiplied
by
the
number
of
Tribal
systems
expected
to
incur
costs.

Exhibit
7.8
shows
the
percentage
of
systems
expected
to
incur
costs
in
various
categories
based
on
the
ICR
Cryptosporidium
occurrence
data
set.
For
example,
EPA
projects
that
among
systems
serving
10,000
or
fewer
people,
33.8
percent
would
be
triggered
into
monitoring
for
Cryptosporidium
and
88.1
percent
would
conduct
future
E.
coli
monitoring.
Among
systems
serving
more
than
10,000
people,
99.6
percent
of
plants
would
monitor
for
Cryptosporidium
and
71.9
percent
would
conduct
future
E.
coli
monitoring.

Exhibits
7.9a
and
b
show
annualized
costs
per
system
for
various
compliance
activities
including
implementation,
monitoring,
and
treatment
based
on
the
ICR
occurrence
data
set.
Each
cost
has
been
annualized
at
3
percent
over
25
years.
Costs
for
individual
systems
would
vary
around
these
averages,
depending
on
the
circumstances
of
the
particular
system.
For
example,
E.
coli
monitoring
costs
would
be
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
25
lower
for
those
systems
that
could
do
the
analysis
onsite,
as
opposed
to
shipping
samples
to
a
commercial
laboratory,
and
only
a
fraction
of
small
systems
would
be
required
to
monitor
for
Cryptosporidium.
Many
systems
would
incur
no
additional
treatment
costs,
while
a
fraction
would
be
required
to
provide
additional
treatment
as
a
result
of
their
bin
assignment.

Exhibit
7.7
Numbers
of
Indian
Tribal
Public
Water
Systems
Using
Surface
Water
Sources
System
Size
(
Population
Served)
Number
of
Systems
Community
Water
Systems
<
100
14
101
­
500
20
501
­
1000
7
1,001
­
3,300
14
3,301
­
10,000
4
10,001
­
50,000
1
Transient
Noncommunity
Water
Systems
<
100
5
101
­
500
1
Nontransient
Noncommunity
Water
Systems
3,301
­
10,000
1
Source:
EPA
SDWIS
Database,
September
2000.

EPA
estimates
that
annualized
monitoring
costs
per
system
would
range
from
$
322
to
$
906
(
the
cost
differential
arises
because
only
a
fraction
of
small
systems
monitor
for
Cryptosporidium).
The
mean
annualized
treatment
cost
per
system
would
range
from
$
263
to
$
22,557
and
the
total
mean
annualized
costs
per
system
are
projected
to
range
from
$
792
to
$
23,979.
These
costs
result
in
an
estimated
total
annualized
cost
to
Indian
Tribes,
including
Primacy
Agency
costs,
of
$
153,428
for
the
LT2ESWTR,
as
shown
in
Exhibit
7.9a.
(
All
costs
in
this
paragraph
are
based
on
a
3­
percent
discount
rate.)
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
26
Exhibit
7.8
Number
of
Tribal
Systems
and
Percent
of
Systems
Nationally
That
Will
Incur
Costs
Due
to
the
LT2ESWTR
Percent
of
Plants
[
Systems]
Nationally
Incurring
Cost
System
Size
(
Population
Served)
Number
of
Tribal
System
s
Implementation
[
Systems]
Initial
E.
coli
Monitoring1
Initial
Crypto
Monitoring2
Future
E.
coli
Monitoring3
Future
Crypto
Monitoring
Adding
Treatment4
<
10,000
66
100.0%
96.4%
33.8%
84.0%
29.2%
23.0
­
35.4%

>
10,000
1
100.0%
99.6%
99.6%
71.5%
71.5%
23.2
­
35.4%

1All
systems
would
be
required
to
conduct
E.
coli
monitoring,
unless
a
system
currently
provides
at
least
5.5
log
Cryptosporidium
treatment.
2Small
systems
are
required
to
monitor
for
Cryptosporidium
only
if
source
water
E.
coli
concentration
exceeds
the
trigger
value.
Based
on
the
ICR
occurrence
data
set,
EPA
estimates
a
maximum
of
35
percent
of
systems
that
monitor
for
E.
coli
will
be
triggered
into
Cryptosporidium
monitoring.
3Systems
would
be
required
to
conduct
another
round
of
monitoring
6
years
after
the
initial
bin
assignment.
This
monitoring
would
not
be
required
for
those
systems
that
provide
at
least
5.5
log
Cryptosporidium
treatment.
4EPA
estimates
that
13.5
to
38.5
percent
of
all
plants
(
including
plants
that
purchase
water)
would
incur
costs
for
additional
treatment
as
a
result
of
being
assigned
to
Bins
2­
4.
Note:
Percentages
for
systems
serving
more
than
10,000
people
represent
the
probability
that
one
system/
plant
will
incur
costs
from
each
requirement.

Sources:
Percentages
derived
from
Exhibits
6.2
and
4.11.
Percentages
are
assumed
to
be
the
same
for
Tribal
plants/
systems
as
for
those
nationwide.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
27
A
B
C
D
E
F
=
B+
C+
D+
E
G
=
A*
F
60
$
125,228
14
$
11
$
322
$
197
$
263
$
792
$
11,095
20
$
11
$
354
$
240
$
526
$
1,131
$
22,626
7
$
13
$
322
$
208
$
1,160
$
1,703
$
11,921
14
$
13
$
322
$
219
$
1,824
$
2,378
$
33,288
4
$
13
$
386
$
263
$
4,918
$
5,580
$
22,319
1
$
13
$
906
$
504
$
22,557
$
23,979
$
23,979
6
$
7,850
5
$
11
$
334
$
243
$
544
$
1,131
$
5,655
1
$
13
$
334
$
232
$
1,617
$
2,196
$
2,196
Total
NTNCWS
1
$
2,896
1
$
13
$
322
$
219
$
2,342
$
2,896
$
2,896
Total
Annualized
Costs
for
All
System
Types
$
135,974
Annualized
Costs
for
One
Primacy
Agency
[
1]
$
17,454
Total
Annualized
Tribal
Costs
$
153,428
1,001­
3,300
3,301­
10,000
[
1]
10,001­
50,000
1,001­
3,300
Total
TNCWS
£
100
501­
1,000
£
100
101­
500
System
Size
(
Population
Served)

501­
1,000
Mean
Cost
per
System
­
Treatment
Mean
Cost
per
System
­
Total
Estimated
Total
Tribal
Costs
Total
CWS
Number
of
Tribal
Systems
Implementation
Cost
per
System
Monitoring
Cost
per
System
Future
Monitoring
Cost
per
System
A
B
C
D
E
F
=
B+
C+
D+
E
G
=
A*
F
60
$
128,090
14
$
15
$
412
$
178
$
239
$
844
$
11,823
20
$
15
$
453
$
218
$
482
$
1,167
$
23,349
7
$
17
$
412
$
189
$
1,072
$
1,690
$
11,831
14
$
17
$
412
$
199
$
1,714
$
2,342
$
32,790
4
$
17
$
494
$
239
$
4,775
$
5,525
$
22,102
1
$
20
$
1,279
$
514
$
24,381
$
26,194
$
26,194
6
$
7,946
5
$
15
$
427
$
220
$
497
$
1,159
$
5,795
1
$
17
$
427
$
211
$
1,496
$
2,152
$
2,152
Total
NTNCWS
1
$
2,874
1
$
17
$
412
$
199
$
2,246
$
2,874
$
2,874
Total
Annualized
Costs
for
All
System
Types
$
138,910
Annualized
Costs
for
One
Primacy
Agency
[
1]
$
21,079
Total
Annualized
Tribal
Costs
$
159,989
£
100
501­
1,000
1,001­
3,300
1,001­
3,300
3,301­
10,000
[
1]
10,001­
50,000
Total
TNCWS
Total
CWS
£
100
101­
500
501­
1,000
Future
Monitoring
Cost
per
System
Mean
Cost
per
System
­
Treatment
Mean
Cost
per
System
­
Total
Estimated
Total
Tribal
Costs
System
Size
(
Population
Served)
Number
of
Tribal
Systems
Implementation
Cost
per
System
Monitoring
Cost
per
System
Exhibit
7.9a
Estimates
of
the
Total
Annualized
Costs
Incurred
by
Indian
Tribal
Public
Water
Systems
Due
to
the
LT2ESWTR
(
Annualized
at
3
Percent)

Exhibit
7.9b
Estimates
of
the
Total
Annualized
Costs
Incurred
by
Indian
Tribal
Public
Water
Systems
Due
to
the
LT2ESWTR
(
Annualized
at
7
Percent)

1
The
Primacy
Agency
cost
for
the
one
Tribe
that
has
primacy
is
based
on
the
average
costs
for
State
primacy
(
sum
of
all
costs
listed
in
Exhibit
O.
5d­
e
divided
by
total
number
of
primacy
agencies
(
57)).
Note:
Detail
may
not
add
to
total
due
to
independent
rounding.
Sources:
[
A]
Number
and
categories
of
Tribal
systems
taken
from
SDWIS
Database,
September
2000.
[
B]
Implementation
costs
taken
from
Appendix
D,
Exhibit
D.
10,
annualized,
then
divided
by
the
total
number
of
systems
to
calculate
costs
per
system.
[
C]
Monitoring
costs
taken
from
Appendix
D,
Exhibits
D.
12,
D.
14,
and
D.
16,
annualized,
then
divided
by
the
total
number
of
systems
to
calculate
costs
per
system.
[
D]
Future
monitoring
costs
taken
from
Appendix
D,
Exhibits
D.
32,
D.
35,
and
D.
38,
annualized,
then
divided
by
the
total
number
of
systems
to
calculate
costs
per
system.
[
E]
System
costs
taken
from
Appendix
H,
Exhibit
H.
1,
annualized,
then
divided
by
the
total
number
of
systems
to
calculate
costs
per
system.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
28
7.9
Impacts
on
Sensitive
Subpopulations
EPA's
Office
of
Water
has
historically
considered
risks
to
sensitive
subpopulations,
including
children)
in
establishing
drinking
water
assessments,
advisories
or
other
guidance,
and
standards.
Maximizing
health
protection
for
sensitive
subpopulations
requires
balancing
risks
to
achieve
the
recognized
benefits
of
controlling
waterborne
pathogens
while
minimizing
risk
of
potential
DBP
toxicity.
A
primary
purpose
of
LT2ESWTR
is
to
improve
control
of
microbial
pathogens,
specifically
the
protozoan
Cryptosporidium.
The
health
effect
of
cryptosporidiosis
on
sensitive
subpopulations
is
much
more
severe
and
debilitating
than
on
the
general
population.
These
sensitive
subpopulations
include
the
young,
the
elderly
(
especially
those
weakened
by
other
conditions),
the
malnourished
and
disease­
impaired
(
especially
those
with
diabetes),
and
a
broad
category
of
those
with
compromised
immune
systems,
such
as
Acquired
Immune
Deficiency
Syndrome
(
AIDS)
patients,
people
with
lupus
or
cystic
fibrosis,
transplant
recipients,
and
individuals
undergoing
chemotherapy
(
Rose
1997).
The
Agency
has
evaluated
several
regulatory
alternatives
and
selected
the
alternative
that
balances
cost
with
providing
significant
benefits.
It
should
be
noted
that
the
Stage
2
DBPR,
which
is
being
promulgated
concurrently
with
this
rule,
reduces
DBP
concentrations
in
drinking
water
and
achieves
the
goal
of
increasing
the
protection
of
children.

Research
outlining
the
potential
health
benefits
of
the
LT2ESWTR
to
both
sensitive
subpopulations
and
the
general
public
is
discussed
in
greater
detail
in
the
Occurrence
and
Exposure
Assessment
for
the
Long
Term
2
Enhanced
Surface
Water
Treatment
Rule
(
USEPA
2003c)
as
well
as
in
Chapter
5
of
this
EA.

7.9.1
Impacts
on
the
Immunocompromised
As
stated
in
Chapter
5,
mortality
as
a
result
of
cryptosporidiosis
is
a
much
greater
risk
for
sensitive
subpopulations,
particularly
for
immunocompromised
individuals,
than
it
is
for
the
general
population.
The
duration
and
severity
of
the
disease
are
significant:
whereas
the
disease
may
hospitalize
1
percent
of
the
immunocompetent
population
with
very
little
risk
of
mortality
(<
0.001),
Cryptospor­
idium
infections
are
associated
with
a
high
rate
of
mortality
in
the
immunocompromised
(
50
percent)
(
Rose
1997).

The
duration
of
cryptosporidiosis
in
those
with
compromised
immune
systems
is
considerably
longer
than
in
those
with
competent
immune
systems,
with
more
severe
symptoms
often
requiring
lengthy
hospital
stays.
For
subpopulations
that
are
immunocompromised,
the
cost
of
illness
(
COI)
from
cryptosporidiosis
would
be
much
greater
than
that
for
the
general
population.
During
a
1993
outbreak
in
Milwaukee,
33
AIDS
patients
with
cryptosporidiosis
accounted
for
400
hospital­
days
at
a
cost
of
nearly
$
760,000
(
Rose
1997).
COI
due
to
these
hospital­
days
alone
is
estimated
at
$
23,000
per
patient
($
760,000/
33
patients).
In
addition,
of
the
54
deaths
in
the
Milwaukee
outbreak,
46
were
AIDS
patients.

Based
on
of
the
severity
of
illness
and
the
high
costs
of
treatment
experienced
by
the
immunocompromised
as
a
result
of
Cryptosporidium
infection,
the
Agency
expects
LT2ESWTR
to
have
a
disproportionately
positive
impact
on
all
sensitive
subpopulations
mentioned
earlier.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
29
7.9.2
Protection
of
Children
from
Environmental
Health
Risks
and
Safety
Risks
Executive
Order
13045
(
62
FR
19885;
April
23,
1997)
applies
to
any
rule
initiated
after
April
21,
1998,
that
(
1)
is
determined
to
be
"
economically
significant"
as
defined
under
Executive
Order
12866;
and
(
2)
concerns
an
environmental,
health,
or
safety
risk
that
EPA
has
reason
to
believe
may
have
a
disproportionate
effect
on
children.
If
the
regulatory
action
meets
both
criteria,
EPA
must
evaluate
the
environmental,
health,
or
safety
effects
of
the
planned
rule
on
children,
and
explain
why
the
planned
regulation
is
preferable
to
other
potentially
effective
and
reasonably
feasible
alternatives
considered
by
the
Agency.

Not
only
is
this
final
rule
subject
to
the
Executive
Order
because
it
is
economically
significant
as
defined
in
Executive
Order
12866,
but
EPA
has
reason
to
believe
that
the
environmental
health
or
safety
risk
addressed
by
this
action
may
have
a
disproportionate
effect
on
children.
As
a
matter
of
policy,
EPA
therefore
has
examined
the
environmental
health
effects
of
Cryptosporidium
on
children.
The
risk
of
illness
and
death
due
to
cryptosporidiosis
depends
on
several
factors
including
age,
nutrition,
exposure,
genetic
variability,
disease,
and
the
immune
status
of
the
individual.

Young
children
are
of
particular
concern
since
they
are
more
susceptible
than
adults
to
cryptosporidiosis,
and
the
risk
of
mortality
resulting
from
diarrhea
is
greatest
in
the
very
young
and
elderly
(
Rose
1997;
Gerba
et
al.
1996;
Fayer
and
Ungar
1986).
Based
on
data
presented
in
the
Occurrence
and
Exposure
Assessment
for
the
Long
Term
2
Enhanced
Surface
Water
Treatment
Rule
(
USEPA
2003c),
children
under
5
years
of
age
make
up
approximately
6.9
percent
of
the
total
population
served
by
surface
water
and
GWUDI
sources.
An
infected
child
can
also
spread
the
disease
to
other
children
or
family
members,
and
evidence
of
such
secondary
transmission
of
cryptosporidiosis
has
been
found
in
a
number
of
outbreak
investigations
(
Casemore
1990;
Cordell
et
al.
1997;
Frost
et
al.
1997).

During
the
1993
Milwaukee
drinking
water
outbreak,
associated
mortalities
in
children
were
reported.
Also,
children
with
laboratory­
confirmed
cryptosporidiosis
were
more
likely
to
have
an
underlying
disease
that
altered
their
immune
status
(
Cicirello
et
al.,
1997).
In
that
study,
the
observed
association
between
increasing
age
of
children
and
increased
numbers
of
laboratory­
confirmed
cryptosporidiosis
suggested
to
the
authors
that
the
data
are
consistent
with
increased
tap
water
consumption
of
older
children.
However,
due
to
data
limitations,
this
observation
could
not
be
adequately
analyzed.

Chapell
et
al.
(
1999)
found
that
prior
exposure
to
Cryptosporidium
through
the
ingestion
of
a
low
oocyst
dose
provides
limited
protection
from
infection
and
illness.
It
is
not
known,
however,
whether
this
immunity
is
life­
long
or
temporary.
Data
also
indicate
that
either
mothers
confer
short­
term
immunity
to
their
children
or
that
babies
have
reduced
exposure
to
Cryptosporidium,
resulting
in
a
decreased
incidence
of
infection
during
the
first
year
of
life.
For
example,
in
a
survey
of
over
30,000
stool
sample
analyses
from
different
patients
in
the
United
Kingdom,
the
1­
5
year
age
group
suffered
a
much
higher
infection
rate
than
individuals
less
than
1
year
of
age.
For
children
under
1
year
of
age,
those
older
than
6
months
showed
a
higher
rate
of
infection
than
individuals
aged
fewer
than
6
months
(
Casemore
1990).
Children
may
be
in
contact
with
environmentally
contaminated
surfaces
and
may
not
have
established
immunity
against
the
disease
(
DuPont
et
al.
1995).
Although
children
consume
less
water
than
adults
and
would,
therefore,
be
expected
to
have
less
exposure
to
Cryptosporidium
oocycsts,
studies
show
that
cryptosporidiosis
occurrence
is
greater
in
children
(
Casemore
1990).
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
30
EPA
has
not
been
able
to
quantify
the
health
effects
for
children
as
a
result
of
Cryptosporidiumcontaminated
drinking
water.
However,
the
result
of
the
LT2ESWTR
will
be
a
reduction
in
the
risk
of
illness
for
the
entire
population,
including
children.
Because
available
evidence
indicates
that
children
may
be
more
vulnerable
to
cryptosporidiosis
than
the
rest
of
the
population,
the
LT2ESWTR
would,
therefore,
result
in
greater
risk
reduction
for
children
than
for
the
general
population.

7.10
Environmental
Justice
Executive
Order
12898
(
59
FR
7629)
establishes
a
Federal
policy
for
incorporating
environmental
justice
into
Federal
agency
missions
by
directing
agencies
to
identify
and
address
disproportionately
high
adverse
human
health
or
environmental
effects
of
its
programs,
policies,
and
activities
on
minority
and
low­
income
populations.
The
Agency
has
considered
environmental
justice­
related
issues
concerning
the
potential
impacts
of
this
action
and
consulted
with
minority
and
low­
income
stakeholders.

Two
aspects
of
the
LT2ESWTR
comply
with
the
order
that
requires
the
Agency
to
consider
environmental
justice
issues
in
the
rulemaking
and
to
consult
with
stakeholders
representing
a
variety
of
economic
and
ethnic
backgrounds.
These
are:
(
1)
the
overall
nature
of
the
rule,
and
(
2)
the
convening
of
a
stakeholder
meeting
specifically
to
address
environmental
justice
issues.

The
Agency
built
on
the
efforts
conducted
during
the
development
of
the
Interim
Enhanced
Surface
Water
Treatment
Rule
(
IESWTR)
to
comply
with
Executive
Order
12898.
On
March
12,
1998,
the
Agency
held
a
stakeholder
meeting
to
address
various
components
of
pending
drinking
water
regulations
and
how
they
might
impact
sensitive
subpopulations,
minority
populations,
and
low­
income
populations.
This
meeting
was
a
continuation
of
stakeholder
meetings
that
started
in
1995
to
obtain
input
on
the
Agency's
Drinking
Water
Programs.
Topics
discussed
included
treatment
techniques,
costs
and
benefits,
data
quality,
health
effects,
and
the
regulatory
process.
Participants
were
national,
State,
Tribal,
municipal,
and
individual
stakeholders.
EPA
conducted
the
meeting
by
video
conference
call
among
11
cities.
The
major
objectives
for
the
March
12,
1998,
meeting
were
the
following:

°
To
solicit
ideas
from
stakeholders
on
known
issues
concerning
current
drinking
water
regulatory
efforts.

°
To
identify
key
areas
of
concern
to
stakeholders.

°
To
receive
suggestions
from
stakeholders
concerning
ways
to
increase
representation
of
communities
in
OGWDW
regulatory
efforts.

In
addition,
EPA
developed
a
plain­
English
guide
for
this
meeting
to
assist
stakeholders
in
understanding
the
multiple
and
sometimes
complex
issues
surrounding
drinking
water
regulations.

The
LT2ESWTR
and
other
drinking
water
regulations
promulgated
or
under
development
are
expected
to
have
a
positive
effect
on
human
health
regardless
of
the
social
or
economic
status
of
a
specific
population.
The
LT2ESWTR
serves
to
provide
a
similar
level
of
drinking
water
protection
to
all
groups.
Where
water
systems
have
high
Cryptosporidium
levels,
they
must
treat
their
water
to
achieve
a
given
level
of
protection.
Further,
to
the
extent
that
levels
of
Cryptosporidium
in
drinking
water
might
be
disproportionately
high
now
among
minority
or
low­
income
populations
(
which
is
unknown),
the
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
31
LT2ESWTR
will
work
to
remove
those
differences.
Thus,
the
LT2ESWTR
meets
the
intent
of
Federal
policy
requiring
incorporation
of
environmental
justice
into
Federal
agency
missions.

The
LT2ESWTR
applies
uniformly
to
CWSs,
NTNCWSs,
and
TNCWSs
that
use
surface
water
or
GWUDI
as
their
source.
Consequently,
this
rule
provides
health
protection
from
pathogen
exposure
equally
to
all
income
and
minority
groups
served
by
surface
water
and
GWUDI
systems.

7.11
Federalism
Executive
Order
13132,
"
Federalism"
(
64
FR
43255;
August
10,
1999),
requires
EPA
to
develop
an
accountable
process
to
ensure
"
meaningful
and
timely
input
by
State
and
Local
officials
in
the
development
of
regulatory
policies
that
have
Federalism
implications."
"
Policies
that
have
Federalism
implications"
are
defined
in
the
executive
order
to
include
regulations
that
have
"
substantial
direct
effects
on
the
States,
on
the
relationship
between
the
national
government
and
the
States,
or
on
the
distribution
of
power
and
responsibilities
among
the
various
levels
of
government."

Under
Section
6(
b)
Executive
Order
13132,
EPA
may
not
issue
a
regulation
that
has
Federalism
implications,
imposes
substantial
direct
compliance
costs,
and
is
not
required
by
statute,
unless
the
Federal
government
provides
the
funds
necessary
to
pay
the
direct
compliance
costs
incurred
by
State
and
Local
governments,
or
consults
with
State
and
Local
officials
early
in
the
process
of
developing
the
proposed
regulation.

EPA
has
concluded
that
the
LT2ESWTR
may
have
Federalism
implications
because
it
will
impose
substantial
direct
compliance
costs
on
State
or
Local
governments.
It
contains
a
significant
intergovernmental
mandate
under
UMRA
Section
202,
i.
e.,
it
is
likely
to
result
in
expenditure
by
State,
Local,
and
Tribal
governments
in
the
aggregate
of
$
100
million
or
more
in
any
one
year.
The
aggregate
cost
to
these
entities
ranges
from
$
74
to
$
111
million
on
average
annually
at
a
3
percent
discount
rate.
Accordingly,
EPA
provides
the
following
Federalism
summary
impact
statement,
as
required
by
Section
6(
b)
of
Executive
Order
13132.

EPA
consulted
with
State
and
Local
officials
early
in
the
process
of
developing
the
LT2ESWTR
to
permit
them
to
have
meaningful
and
timely
input
into
its
development.
On
February
20,
2001,
EPA
held
a
dialogue
with
representatives
of
State
and
Local
governmental
organizations
including
those
that
represent
elected
officials.
Representatives
from
the
following
organizations
attended
the
consultation
meeting:
ASDWA,
the
National
League
of
Cities
(
NLC),
the
National
Governors'
Association
(
NGA),
the
National
Conference
of
State
Legislatures
(
NCSL),
the
International
City/
County
Management
Association
(
ICMA),
NLC,
the
County
Executives
of
America,
and
health
departments.
Attendees
posed
questions
ranging
from
a
basic
inquiry
into
how
Cryptosporidium
gets
into
water
to
more
detailed
queries
about
anticipated
implementation
guidance,
procedures,
and
schedules.
Some
of
the
State
and
Local
organizations
that
attended
this
meeting
were
also
participants
in
the
Stage
2
M­
DBP
Federal
Advisory
Committee
and
signed
the
Agreement
in
Principle.
In
addition,
EPA
consulted
with
a
mayor
in
the
SBREFA
consultation.
EPA
considered
all
input
from
these
consultations
in
the
development
of
the
LT2ESWTR.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
32
7.12
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use
Executive
Order
13211,
"
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use"
(
66
FR
28355;
May
22,
2001),
provides
that
agencies
shall
prepare
and
submit
to
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs,
OMB,
a
statement
of
Energy
Effects
for
certain
actions
identified
as
"
significant
energy
actions."
Section
4(
b)
of
Executive
Order
13211
defines
"
significant
energy
actions"
as
"
any
action
by
an
agency
(
normally
published
in
the
Federal
Register)
that
promulgates
or
is
expected
to
lead
to
the
promulgation
of
a
final
rule
or
regulation,
including
notices
of
inquiry,
advance
notices
of
proposed
rulemaking,
and
notices
of
proposed
rulemaking:
(
1)(
i)
that
is
a
significant
regulatory
action
under
Executive
Order
12866
or
any
successor
order,
and
(
ii)
is
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy;
or
(
2)
that
is
designated
by
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs
as
a
significant
energy
action."

The
LT2ESWTR
has
not
been
designated
by
the
Administrator
of
the
Office
of
Information
and
Regulatory
Affairs
as
a
significant
energy
action
because
it
is
not
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
or
use
of
energy.
This
determination
is
based
on
the
analysis
presented
below.

Energy
Supply
The
first
consideration
is
whether
the
LT2ESWTR
would
adversely
affect
the
supply
of
energy.
The
LT2ESWTR
does
not
regulate
power
generation,
either
directly
or
indirectly,
and
the
public
and
private
PWSs
that
the
LT2ESWTR
regulates
do
not,
as
a
rule,
generate
power.
Further,
the
cost
increases
borne
by
customers
of
PWSs
as
a
result
of
the
LT2ESWTR
are
a
low
percentage
of
the
total
cost
of
water,
except
for
a
very
few
small
systems
that
will
need
to
spread
the
cost
of
installing
advanced
technologies
over
a
narrow
customer
base.
Therefore,
the
customers
that
are
power
generation
utilities
are
unlikely
to
face
any
significant
effects
as
a
result
of
the
LT2ESWTR.
In
summary,
the
LT2ESWTR
does
not
regulate
the
supply
of
energy,
does
not
generally
regulate
the
utilities
that
supply
energy,
and
is
unlikely
significantly
to
affect
the
customer
base
of
energy
suppliers.
Thus,
the
LT2ESWTR
would
not
would
not
adversely
affect
the
supply
of
energy.

In
response
to
the
LT2ESWTR,
some
water
utilities
are
expected
to
increase
their
energy
use,
and
those
impacts
are
discussed
later
in
this
section.

Energy
Distribution
The
second
consideration
is
whether
the
LT2ESWTR
would
adversely
affect
the
distribution
of
energy.
The
LT2ESWTR
does
not
regulate
any
aspect
of
energy
distribution.
PWSs
that
are
regulated
by
the
LT2ESWTR
already
have
electrical
service.
The
proposed
rule
is
projected
to
increase
peak
electricity
demand
at
PWSs
by
only
0.02
percent
(
see
below).
Therefore,
EPA
assumes
that
the
existing
connections
are
adequate
and
that
the
LT2ESWTR
has
no
discernable
adverse
effect
on
energy
distribution.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
33
Energy
Use
The
third
consideration
is
whether
the
LT2ESWTR
would
adversely
affect
the
use
of
energy.
Because
some
PWSs
are
expected
to
add
treatment
technologies
that
use
electrical
power,
this
potential
impact
of
the
LT2ESWTR
on
the
use
of
energy
requires
further
evaluation.
The
analyses
that
underlay
the
estimation
of
costs
in
Chapter
6
are
national
in
scope
and
do
not
identify
specific
plants
or
systems
that
may
install
treatment
in
response
to
the
LT2ESWTR.
As
a
result,
no
analysis
of
the
effect
on
specific
energy
suppliers
is
possible
with
the
available
data.
The
approach
used
to
estimate
the
impact
of
energy
use,
therefore,
also
focuses
on
national­
level
impacts.
It
estimates
the
additional
energy
use
due
to
the
LT2ESWTR
and
compares
that
to
the
national
levels
of
power
generation
in
terms
of
average
and
peak
loads.

The
first
step
is
to
estimate
the
energy
used
by
the
technologies
expected
to
be
installed
as
a
result
of
the
LT2ESWTR.
Energy
use
is
not
directly
estimated
in
Technologies
and
Costs
Document
(
USEPA
2003a),
but
the
annual
cost
of
energy
for
each
technology
addition
or
upgrade
necessitated
by
the
LT2ESWTR
is
provided.
An
estimate
of
plant­
level
energy
use
is
derived
by
dividing
the
total
energy
cost
per
plant
for
a
range
of
flows
by
an
average
national
cost
of
electricity
of
$
0.076
per
kilowatt
hour
per
year
(
kWh/
y)
(
U.
S.
DOE
EIA
2002).
The
energy
use
per
plant
for
each
flow
range
and
technology
is
then
multiplied
by
the
number
of
plants
predicted
to
install
each
technology
in
a
given
flow
range.
The
energy
requirements
for
each
flow
range
are
then
added
to
produce
a
national
total.
No
electricity
use
is
subtracted
to
account
for
the
technologies
that
may
be
replaced
by
new
technologies,
resulting
in
a
conservative
estimate
of
the
increase
in
energy
use.
Results
of
the
analysis
are
shown
in
Exhibit
7.10
for
the
ICR,
ICRSSL,
and
ICRSSM
Cryptosporidium
occurrence
data
sets.
The
results
range
from
an
incremental
national
annual
energy
usage
of
126,876
megawatt
hours
(
mWh)
for
the
ICR
occurrence
data
sets
to
74,784
mWh
for
the
ICRSSL
occurrence
data
sets.

Exhibit
7.11
provides
a
sample
calculation
for
chlorine
dioxide
showing
the
increase
in
energy
usage
as
a
result
of
the
LT2ESWTR.

To
determine
if
the
additional
energy
required
for
systems
to
comply
with
the
rule
would
have
a
significant
adverse
effect
on
the
use
of
energy,
the
numbers
in
Exhibit
7.10
are
compared
to
the
national
production
figures
for
electricity.
According
to
the
U.
S.
Department
of
Energy's
Information
Administration,
electricity
producers
generated
3,800
million
mWh
of
electricity
in
2001
(
USDOE
EIA
2002).
Therefore,
even
using
the
highest
assumed
energy
use
for
the
LT2ESWTR
(
123,575,472
kWh/
y),
the
rule
would
result
in
only
a
0.003
percent
increase
in
annual
average
energy
use
when
fully
implemented.
This
calculation
is
shown
below:

1.
126,875,687
kWh/
y
*
(
mWh/
1,000
kWh)
=
126,876
mWh/
y
2.
126,876
mWh/
y
÷
3,800,000,000
mWh/
y
*
100
=
0.003%
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
34
Technology
Plants
Selecting
Technology
Total
Annual
Energy
Required
(
kWh/
yr)
Plants
Selecting
Technology
Total
Annual
Energy
Required
(
kWh/
yr)
Plants
Selecting
Technology
Total
Annual
Energy
Required
(
kWh/
yr)
A
B
C
D
E
F
ClO2
77
343,297
61
268,861
70
312,036
UV
998
86,827,218
490
52,212,046
632
64,515,863
O3
(
0.5
log)
26
12,524,670
19
10,328,359
21
11,467,703
O3
(
1.0
log)
24
12,456,132
12
6,119,824
21
10,759,696
O3
(
2.0
log)
9
7,324,561
0
35,259
2
1,787,144
MF/
UF
10
5,691,144
8
4,507,577
5
2,790,401
Bag
Filters
1,545
1,631,873
1,236
1,306,067
1,441
1,522,243
Cartridge
Filters
190
76,793
17
6,254
52
19,686
Total
2,878
126,875,687
1,844
74,784,249
2,244
93,174,772
ICR
ICRSSL
ICRSSM
Exhibit
7.10
Total
Increased
Annual
National
Energy
Usage
Attributable
to
the
LT2ESWTR
Sources:
[
A],
[
C],
and
[
E]
Plants
selecting
technology
taken
from
Appendix
G.
[
B],
[
D],
and
[
F]
Total
annual
energy
required
calculated
from
energy
costs
given
in
the
Technologies
and
Costs
Document
(
USEPA
2003a)
assuming
$
0.076/
kWh.

In
addition
to
average
energy
use,
the
impact
at
times
of
peak
power
demand
is
important.
To
examine
whether
increased
energy
usage
might
significantly
affect
the
capacity
margins
of
energy
suppliers,
their
peak
season
generating
capacity
reserve
was
compared
to
an
estimate
of
peak
incremental
power
demand
by
water
utilities.
Both
energy
use
and
water
use
peak
in
the
summer
months,
so
the
most
significant
effects
on
supply
would
be
seen
then.
In
the
summer
of
2001,
U.
S.
generation
capacity
exceeded
consumption
by
15
percent,
or
approximately
120,000
mW
(
USDOE
EIA
2002).
Assuming
around­
the­
clock
operation
of
water
treatment
plants,
the
total
energy
requirement
can
be
divided
by
8,760
hours
per
year
to
obtain
an
average
power
demand
of
14
mW
for
the
modeled
ICR
occurrence
distribution.
Assuming
that
power
demand
is
proportional
to
water
flow
through
the
plant
and
that
peak
flow
can
be
as
high
as
twice
the
average
daily
flow
during
the
summer
months,
about
29
mW
could
be
needed
for
treatment
technologies
installed
to
comply
with
the
LT2ESWTR.
This
is
only
0.024
percent
of
the
capacity
margin
available
at
peak
use.
This
calculation
is
presented
below:

1.
126,875,687
kWh/
y
*
(
y/
8,760
hr)
*
(
mW/
1,000
kW)*
2
=
29
mW
2.
29
mW
÷
120,000
mW
*
100
=
0.024%
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
35
Average
Daily
Flow
Total
No.
Number
of
Annual
Energy
Annual
Energy
Total
Energy
Usage
Flow
per
Plant
of
Plants
Cost
per
Plant
Requirement
for
Plants
Selecting
(
MGD)
Plants
Selecting
($/
plant/
yr)
(
kWhr/
plant/
yr)
(
kWhr/
year)

A
B
C
D
E
=
D/$
0.076
per
kWhr
F=
C*
E
CWSs
<
100
0.01
397
0
N/
A
N/
A
­
101
­
500
0.03
796
0
261
3,437
0
501
­
1,000
0.09
414
0
261
3,437
945
1,001
­
3,300
0.25
1009
1
261
3,437
2,310
3,301
­
10,000
0.63
1205
1
262
3,451
2,749
10,001
­
50,000
2.76
1188
40
275
3,624
144,209
50,001
­
100,000
5.08
435
15
282
3,708
54,127
100,001
­
1
Million
23.67
402
18
426
5,607
100,394
>
1
Million
109.71
61
2
1,117
14,697
34,718
NTNCWSs
<
100
0.01
242
0
N/
A
N/
A
­
101
­
500
0.03
269
0
261
3,437
0
501
­
1,000
0.09
97
0
261
3,437
226
1,001
­
3,300
0.21
67
0
261
3,437
156
3,301
­
10,000
0.67
22
0
262
3,453
51
10,001
­
50,000
3.48
8
0
279
3,666
979
50,001
­
100,000
12.43
1
0
329
4,326
144
100,001
­
1
Million
22.94
1
0
420
5,524
245
>
1
Million
­
0
0
0
0
0
TNCWSs
<
100
0.00
1234
0
N/
A
N/
A
­
101
­
500
0.03
486
0
261
3,437
0
501
­
1,000
0.09
81
0
261
3,437
188
1,001
­
3,300
0.29
67
0
261
3,437
156
3,301
­
10,000
0.72
31
0
263
3,455
72
10,001
­
50,000
2.63
10
0
274
3,607
1,226
50,001
­
100,000
7.90
3
0
298
3,924
400
100,001
­
1
Million
­
0
0
0
0
0
>
1
Million
­
0
0
0
0
0
TOTALS
8,526
77
89,976
343,297
System
Size
(
population
served)
Exhibit
7.11
Sample
Calculation
for
Determining
Increase
in
Energy
Usage:
Chlorine
Dioxide
(
ClO2
Dose
=
1.25
mg/
L)

Notes:
Detail
may
not
add
due
to
independent
rounding.

Sources:
[
A]
The
flows
are
taken
from
Exhibit
4.4a.
[
B]
The
baseline
number
of
filtered
plants,
taken
from
Exhibit
4.11,
and
added
to
the
number
of
unfiltered
plants,
taken
from
Exhibit
4.5.
[
C]
Number
of
plants
selecting
chlorine
dioxide
are
taken
from
Appendix
G
(
Exhibits
G.
37
 
G.
39).
[
D]
The
electricity
cost
per
plant
is
taken
from
the
Technologies
and
Costs
Document
(
USEPA
2003a).
[
E]
Electricity
cost
is
$
0.076/
KWh,
as
presented
in
the
Technologies
and
Costs
Document
(
USEPA
2003a).

Although
EPA
recognizes
that
not
all
regions
have
a
15
percent
capacity
margin
and
that
this
margin
varies
across
regions
and
through
time,
this
analysis
reflects
the
effect
of
the
rule
on
national
energy
supply,
distribution,
and
use.
While
certain
areas,
notably
California,
have
experienced
shortfalls
in
generating
capacity
in
the
recent
past,
a
peak
incremental
power
requirement
of
29
mW
nationwide
is
not
likely
to
significantly
change
the
energy
supply,
distribution,
or
use
in
any
given
area.

Conclusion
The
LT2ESWTR
is
not
a
"
significant
energy
action"
as
defined
in
Executive
Order
13211,
"
Actions
Concerning
Regulations
That
Significantly
Affect
Energy
Supply,
Distribution,
or
Use"
(
66
FR
28355
May
22,
2001)
because
it
is
not
likely
to
have
a
significant
adverse
effect
on
the
supply,
distribution,
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
7­
36
or
use
of
energy
(
based
on
annual
average
use
and
conditions
of
peak
power
demand).
Therefore,
a
statement
of
Energy
Effects
for
the
LT2ESWTR
has
not
been
prepared.

The
total
increase
in
energy
usage
by
water
systems
as
a
result
of
the
LT2ESWTR
is
predicted
to
be
approximately
127
million
kWh/
y,
which
is
less
than
four­
thousandths
of
1
percent
of
the
total
energy
produced
in
2001.
While
the
rule
may
have
some
adverse
energy
effects,
EPA
does
not
believe
that
this
constitutes
a
significant
adverse
effect
on
the
energy
supply.
8­
1
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
8.
Comparison
of
Benefits
and
Costs
of
the
LT2ESWTR
8.1
Introduction
This
chapter
presents
several
comparisons
of
the
benefits
and
costs
of
the
LT2ESWTR.
Section
8.2
focuses
on
the
benefits
and
cost
comparisons
of
the
Preferred
Regulatory
Alternative.
Section
8.3
presents
several
analyses
comparing
the
benefits
and
costs
of
all
four
regulatory
alternatives.
The
effect
of
uncertainties
on
these
estimates
is
discussed
in
section
8.4.
Finally,
section
8.5
presents
a
summary
of
the
conclusions
from
these
analyses.

For
comparison
purposes,
this
chapter
uses
best
estimates
of
both
benefits
and
costs.
These
estimates
are
discussed
in
Chapters
5
and
6,
respectively.
To
avoid
repetition,
this
chapter
assumes
the
reader
is
familiar
with
those
chapters,
the
data
sets
used,
and
the
analyses
performed.
The
remaining
sections
of
this
chapter
are
organized
as
follows.

8.2
Summary
of
National
Benefits,
Costs,
and
Net
Benefits
of
the
Preferred
Regulatory
Alternative
8.2.1
National
Benefits
Summary
8.2.2
National
Cost
Summary
8.2.3
National
Net
Benefits
8.3
Comparison
of
Regulatory
Alternatives
8.3.1
Comparison
of
Benefits
and
Costs
8.3.2
Cost­
Effectiveness
Measures
8.4
Effect
of
Uncertainties
on
the
Benefit­
Cost
Comparisons
8.5
Summary
of
Benefit
and
Cost
Comparisons
8.2
Summary
of
National
Benefits,
Costs,
and
Net
Benefits
of
the
Preferred
Regulatory
Alternative
This
section
summarizes
national
benefits,
costs,
and
net
benefits
of
the
Preferred
Regulatory
Alternative
for
the
LT2ESWTR.

The
rule
will
be
implemented
over
time,
not
instantly,
and
therefore,
the
treatment
costs
incurred
and
benefits
realized
by
the
affected
systems
and
population
they
serve
will
differ
by
year.
Exhibits
8.1a
and
8.1b
summarize
the
nominal
(
undiscounted)
benefit
and
cost
estimates
incurred
by
systems,
according
to
the
implementation
schedule
(
presented
in
Appendix
O,
Exhibit
O.
2),
over
the
25­
year
period
of
this
EA.
Exhibit
8.1a
shows
benefits
calculated
using
the
Enhanced
cost
of
illness
(
COI)
and
8.1b
shows
benefits
calculated
using
the
Traditional
COI
(
section
5.3
explains
the
two
COI
values).

It
is
assumed
that
implementation
of
this
rule
will
begin
in
2003.
In
the
first
several
years,
before
systems
have
installed
treatment,
no
benefits
are
realized,
but
costs
are
incurred
for
rule
implementation
and
monitoring.
Once
systems
begin
to
install
treatment,
illnesses
and
deaths
are
projected
to
be
avoided
in
the
year
following
installation
of
treatment
and
for
each
year
thereafter.
By
2013,
all
treatment
is
projected
to
have
been
installed;
therefore,
starting
in
2014,
the
level
of
illnesses
and
deaths
avoided
annually
is
estimated
to
be
constant
for
the
rest
of
the
period
of
analysis
(
through
2027).
8­
2
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Year
Benefits
Cost
Benefits
Cost
Benefits
Cost
A
B
C
D
E=
A+
C
F=
B+
D
2003
­
$
­
$
­
$
0.33
$
­
$
0.33
$
2004
­
$
0.014
$
­
$
26
$
­
$
26
$
2005
­
$
1.2
$
­
$
27
$
­
$
28
$
2006
­
$
11
$
­
$
14
$
­
$
25
$
2007
­
$
14
$
­
$
161
$
­
$
176
$
2008
­
$
14
$
182
$
313
$
182
$
327
$
2009
­
$
12
$
370
$
455
$
370
$
468
$
2010
11
$
25
$
1,127
$
320
$
1,137
$
346
$
2011
21
$
39
$
1,525
$
328
$
1,547
$
368
$
2012
65
$
30
$
1,936
$
47
$
2,001
$
77
$
2013
88
$
32
$
1,965
$
52
$
2,054
$
84
$
2014
112
$
9
$
1,996
$
47
$
2,108
$
57
$
2015
114
$
18
$
2,026
$
42
$
2,140
$
61
$
2016
116
$
22
$
2,058
$
42
$
2,173
$
64
$
2017
117
$
22
$
2,090
$
42
$
2,207
$
64
$
2018
119
$
9
$
2,122
$
42
$
2,242
$
52
$
2019
121
$
9
$
2,156
$
42
$
2,277
$
52
$
2020
123
$
9
$
2,190
$
42
$
2,313
$
52
$
2021
125
$
9
$
2,224
$
42
$
2,350
$
52
$
2022
127
$
9
$
2,260
$
42
$
2,387
$
52
$
2023
129
$
9
$
2,295
$
42
$
2,425
$
52
$
2024
131
$
9
$
2,332
$
42
$
2,463
$
52
$
2025
134
$
9
$
2,369
$
42
$
2,503
$
52
$
2026
136
$
9
$
2,407
$
42
$
2,543
$
52
$
2027
138
$
9
$
2,446
$
42
$
2,584
$
52
$
Total
1,928
$
343
$
38,076
$
2,344
$
40,004
$
2,687
$
Systems
<
10,000
Systems
>
10,000
All
systems
Exhibit
8.1a
Summary
of
Nominal
Benefit
and
Cost
Estimates
by
Year
Incurred,
Preferred
Alternative,
ICR
Data
Set,
Enhanced
COI[
1]

(
Millions$,
2000$)

Note:
[
1]
The
Traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
Enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Source:
Appendix
O,
Exhibit
O.
7a,
O.
7b,
and
O.
7d.
[
A]
Exhibit
O.
7d,
Columns
A+
C.
[
B]
Sum
of
Columns
A­
F,
Exhibit
O.
7a,
and
Columns
A­
F,
Exhibit
O.
7b.
[
C]
Exhibit
O.
7d,
Columns
B+
D.
[
D]
Sum
of
Columns
G­
J,
Exhibit
O.
7a
and
Columns
G­
L,
Exhibit
O.
7b.
8­
3
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Year
Benefits
Cost
Benefits
Cost
Benefits
Cost
A
B
C
D
E=
A+
C
F=
B+
D
2003
­
$
­
$
­
$
0.33
$
­
$
0.33
$
2004
­
$
0.014
$
­
$
26
$
­
$
26
$
2005
­
$
1.2
$
­
$
27
$
­
$
28
$
2006
­
$
11
$
­
$
14
$
­
$
25
$
2007
­
$
14
$
­
$
161
$
­
$
176
$
2008
­
$
14
$
126
$
313
$
126
$
327
$
2009
­
$
12
$
256
$
455
$
256
$
468
$
2010
7
$
25
$
777
$
320
$
784
$
346
$
2011
14
$
39
$
1,049
$
328
$
1,063
$
368
$
2012
42
$
30
$
1,326
$
47
$
1,369
$
77
$
2013
57
$
32
$
1,342
$
52
$
1,399
$
84
$
2014
72
$
9
$
1,358
$
47
$
1,431
$
57
$
2015
73
$
19
$
1,375
$
42
$
1,448
$
61
$
2016
74
$
22
$
1,391
$
42
$
1,465
$
64
$
2017
75
$
22
$
1,408
$
42
$
1,483
$
64
$
2018
76
$
9
$
1,425
$
42
$
1,501
$
52
$
2019
77
$
9
$
1,443
$
42
$
1,519
$
52
$
2020
78
$
9
$
1,460
$
42
$
1,538
$
52
$
2021
79
$
9
$
1,478
$
42
$
1,557
$
52
$
2022
80
$
9
$
1,496
$
42
$
1,576
$
52
$
2023
80
$
9
$
1,514
$
42
$
1,595
$
52
$
2024
81
$
9
$
1,533
$
42
$
1,615
$
52
$
2025
83
$
9
$
1,552
$
42
$
1,634
$
52
$
2026
84
$
9
$
1,571
$
42
$
1,654
$
52
$
2027
85
$
9
$
1,590
$
42
$
1,675
$
52
$
Total
1,214
$
343
$
25,472
$
2,344
$
26,687
$
2,688
$
Systems
<
10,000
Systems
>
10,000
All
systems
Exhibit
8.1b
Summary
of
Nominal
Benefit
and
Cost
Estimates
by
Year
Incurred,
Preferred
Alternative,
ICR
Data
Set,
Traditional
COI[
1]

(
Millions$,
2000$)

Note:
[
1]
The
Traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
Enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Source:
Appendix
O,
Exhibit
O.
7a,
O.
7b,
and
O.
7e.
[
A]
Exhibit
O.
7e,
Columns
A+
C.
[
B]
Sum
of
Columns
A­
F,
Exhibit
O.
7a,
and
Columns
A­
F,
Exhibit
O.
7b.
[
C]
Exhibit
O.
7e,
Columns
B+
D.
[
D]
Sum
of
Columns
G­
J,
Exhibit
O.
7a
and
Columns
G­
L,
Exhibit
O.
7b.
8­
4
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
8.2.1
National
Benefits
Summary
The
quantified
benefits
of
the
LT2ESWTR
derive
from
the
reduction
in
the
incidence
of
adverse
health
effects,
specifically
the
endemic
morbidity
and
mortality
from
cryptosporidiosis,
attributable
to
consumption
of
drinking
water
from
the
PWSs
affected
by
the
rule.
However,
the
value
of
other
additional
benefits
that
can
not
be
quantified
(
and
therefore
can
not
be
reflected
explicitly
in
quantitative
benefit­
cost
comparisons)
are
likely
to
be
substantial.
Exhibit
8.2
summarizes
the
nonquantified
benefits
and
Chapter
5
(
section
5.4.6)
describes
them
in
more
detail.
In
every
comparison
of
benefits
and
costs,
these
real,
but
nonquantified,
benefits
must
be
considered
in
addition
to
those
that
are
quantified.

Exhibit
8.2
Summary
of
Nonquantified
Benefits
and
Groups
Affected
Type
of
Benefit
Nonquantified
Benefits
Group(
s)
Affected
Health
related
Reduction
in
risk
to
sensitive
subpopulations
(
mortality
for
those
with
AIDS
and
other
sensitive
subpopulations
has
been
included)
Immunocompromised
individuals
served
by
systems
that
make
changes
to
or
add
treatment.

Reduction
in
health
risk
during
outbreaks
(
and
response
costs)
All
individuals
served
by
systems
that
make
changes
to
or
add
treatment,
including
those
now
served
by
uncovered
finished
water
reservoirs,
(
between
34
and
55
million
people).
Reduction
in
co­
occurring/
emerging
pathogen
risk
Reduction
in
endemic
morbidity
and
mortality
risk
associated
with
uncovered
finished
water
reservoirs
All
individuals
receiving
water
from
uncovered
finished
water
reservoirs.

Nonhealth
related
Improved
aesthetic
water
quality
All
individuals
served
by
systems
that
make
changes
to
or
add
treatment
that
is
likely
to
reduce
taste
and
odor
problems
(
e.
g.,
ozone).

Costs
of
averting
behaviors
Potentially
all
households
served
by
systems
covered
by
the
rule,
either
because
monitoring
confirms
low
levels
of
risk
or
because
the
addition
of
treatment
assures
low
levels
of
risk.

Before
presenting
the
detailed
review
of
benefits,
some
reminders
are
necessary
to
understand
the
graphs
and
tables
that
follow
in
this
chapter.
First,
quantified
benefits
have
been
calculated
separately
for
each
of
the
three
occurrence
data
sets,
two
COI
values,
and
two
discount
rates.
Second,
the
underlying
results
are
in
the
form
of
distributions
of
numbers.
These
values
are
obtained
from
a
twodimensional
Monte
Carlo
simulation,
the
dimensions
being
variability
and
uncertainty.
To
give
a
sense
of
the
extent
of
the
distributions,
data
are
summarized
using
central
tendency
estimates
and
usually
some
bounding
information.
For
example,
in
many
exhibits,
data
are
expressed
using
mean
values
and
the
approximate
90
percent
confidence
interval.
The
mean
value
represents
the
best
estimate
of
benefits,
and
8­
5
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)

ICR
1,018,915
169,358
2,331,467
141
25
308
ICRSSL
256,173
45,292
560,648
37
7
78
ICRSSM
498,363
84,724
1,177,415
70
13
157
ICR
720,668
119,694
1,647,796
100
18
218
ICRSSL
181,387
32,179
396,845
26
5
55
ICRSSM
352,611
59,942
833,290
50
9
111
Annual
Average
over
25
years
Annual
Total
after
Full
Implementation
Data
Set
Annual
Illnesses
Avoided
Annual
Deaths
Avoided
Mean
90
%
Confidence
Bound
Mean
90%
Confidence
Bound
the
upper
and
lower
bounds
capture
the
90
percent
confidence
interval
reflecting
uncertainty
in
that
best
estimate.

Exhibit
8.3
shows
two
kinds
of
estimates.
One
is
the
average
number
of
cases
avoided
annually
once
the
rule
is
fully
implemented
(
i.
e.,
when
all
systems
realize
benefits)
and
the
second
is
the
annual
average
over
the
25­
year
period.
The
second
estimates
are
lower
because
the
rule
is
implemented
over
time,
not
instantly.
This
figure
is
the
simple
average
of
the
illnesses
and
deaths
avoided
over
the
first
25
years,
including
years
in
which
no
treatment
is
yet
installed,
years
in
which
varying
percentages
of
treatment
have
been
installed,
and
years
at
full
implementation.

Exhibit
8.3
Summary
of
Annual
Avoided
Illnesses
and
Deaths,
Preferred
Alternative
Source:
Appendix
C,
Exhibit
C.
4
and
C.
5,
Columns
A­
F,
Rows
ICR­
A3,
ICRSSL­
A3,
and
ICRSSM­
A3.
Annual
Average
derived
from
Exhibits
C.
4
(
and
C.
5)
and
Exhibit
O.
2.

Exhibits
8.4a
and
8.4b
monetize
these
estimates
and
present
their
annualized
values
using
3
and
7
percent
discount
rates
and
Enhanced
and
Traditional
Cost­
of­
Illness
(
COI)
values.
The
calculation
also
includes
factors
for
income
elasticity
and
income
growth
that
vary
by
year.
The
COI
values
are
applied
to
cases
of
illness
avoided,
and
a
distribution
of
estimates
for
Value
of
a
Statistical
Life
(
VSL)
(
to
represent
uncertainty
in
the
estimate)
is
applied
to
deaths
avoided.
The
initial
value
for
COI
is
a
constant,
but
its
value
of
lost
time
in
any
year
is
adjusted
to
reflect
growth
in
real
income
as
described
in
Chapter
5.
The
data
in
Exhibit
8.4
represent
the
monetized
values
from
each
year,
discounted
to
Year
2000
dollars
(
to
obtain
present
values)
and
then
annualized
over
the
25­
year
period.
These
annualized
figures
represent
the
estimated
annual
number
of
illnesses
and
deaths
avoided
according
to
the
rule
schedule.
(
They
are
the
annualized
values
of
the
benefit
data
presented
in
Exhibit
8.1.)
8­
6
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)

ICR
1,445
$
198
$
3,666
$
ICRSSL
374
$
52
$
959
$
ICRSSM
715
$
96
$
1,849
$

ICR
1,230
$
168
$
3,120
$
ICRSSL
318
$
44
$
816
$
ICRSSM
609
$
81
$
1,577
$
Data
Set
Value
of
Benefits­
Enhanced
COI[
1]

($
Millions,
2000$)

Mean
90%
Confidence
Bound
Annualized
Value
(
at
3%,
25
Years)

Annualized
Value
(
at
7%,
25
Years)

Lower
(
5th
%
ile)
Upper
(
95th
%
ile)

ICR
967
$
105
$
2,713
$
ICRSSL
253
$
27
$
713
$
ICRSSM
481
$
50
$
1,372
$

ICR
826
$
89
$
2,315
$
ICRSSL
216
$
23
$
610
$
ICRSSM
411
$
43
$
1,172
$
Data
Set
Value
of
Benefits­
Traditional
COI[
1]

($
Millions,
2000$)

Mean
90%
Confidence
Bound
Annualized
Value
(
at
3%,
25
Years)

Annualized
Value
(
at
7%,
25
Years)
Exhibit
8.4a
Summary
of
Quantified
Benefits,
Preferred
Alternative
 
Enhanced
Cost
of
Illness[
1]

Exhibit
8.4b
Summary
of
Quantified
Benefits,
Preferred
Alternative
 
Traditional
Cost
of
Illness[
1]

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Source:
Exhibit
C.
4
(
3%)
and
C.
5
(
7%),
Columns
M­
O,
Rows
ICR­
A3,
ICRSSL­
A3,
and
ICRSSM­
A3.
8­
7
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
8.2.2
National
Cost
Summary
Exhibit
8.5
presents
a
national
cost
summary
that
reflects
all
costs
estimated
for
promulgating
the
proposed
LT2ESWTR.
The
costs
shown
are
based
on
detailed
information
presented
in
Chapter
6
for
the
Preferred
Regulatory
Alternative.
The
total
national
costs
of
the
LT2ESWTR
include
those
associated
with
implementation,
monitoring
for
bin
classification,
covering
reservoirs,
and
additional
treatment.
Each
cost
estimate
is
based
on
a
single
mean
distribution
from
estimates
made
for
each
data
set
and
the
binning
assignments
derived
from
that
distribution.
The
single
mean
distribution
represents
the
central
tendencies
of
the
entire
range
of
the
1,000
projected
occurrence
distributions
generated
independently
for
each
of
the
three
occurrence
data
sets.
(
See
Appendix
O
for
further
explanation
of
the
distribution
of
mean
cost
estimates.)

As
with
the
benefit
estimates,
the
estimates
of
the
national
annualized
costs
of
the
LT2ESWTR
are
not
point
estimates,
but
are
best
characterized
as
distributions.
For
national
costs,
the
distribution
reflects
the
uncertainty
in
the
estimate
of
capital
and
operation
and
maintenance
(
O&
M)
costs,
but
not
in
other
one­
time
costs
(
e.
g.,
implementation,
source
water
monitoring).
Also,
uncertainty
in
the
national
occurrence
distributions
within
the
three
data
sets
is
not
considered
in
the
cost
analysis
(
though
it
is
considered
in
the
benefits
analysis).

Exhibit
8.5
summarizes
cost
information
in
four
ways.
The
first
block
of
estimates
is
the
total
nominal
capital
and
one­
time
costs
in
2000$.
The
second
block
is
for
total
annual
O&
M
costs
once
all
treatment
has
been
installed
(
again
in
2000$).
Because
both
capital/
one­
time
costs
and
O&
M
costs
occur
over
time,
these
figures
are
also
discounted
to
present
values
(
Year
2000$),
and
then
annualized
over
25
years.
The
annualized
costs
(
at
both
3­
and
7­
percent
discount
rates)
are
shown
in
the
last
two
blocks
of
information.
8­
8
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)

ICR
(
mean
distribution)
1,795
$
1,549
$
2,042
$
52
$
49
$
54
$
111
$
98
$
123
$
121
$
107
$
135
$

ICRSSL
(
mean
distribution)
1,208
$
1,041
$
1,379
$
32
$
31
$
34
$
73
$
65
$
82
$
81
$
71
$
91
$

ICRSSM
(
mean
distribution)
1,412
$
1,218
$
1,612
$
39
$
36
$
41
$
86
$
76
$
96
$
94
$
83
$
106
$
3
percent,
25
Years
Annualized
Cost
7
Percent,
25
Years
Mean
Mean
90
Percent
Confidence
Bound
90
Percent
Confidence
Bound
Mean
Data
Set
Mean
90
Percent
Confidence
Bound
Total
Capital
and
One­
Time
Costs
(
At
Full
Implementation)
Annual
Operations
and
Maintenance
Costs
(
At
Full
Implementation)

90
Percent
Confidence
Bound
Exhibit
8.5
Summary
of
the
Costs
for
the
LT2ESWTR
Preferred
Regulatory
Alternative
($
Millions,
2000$)

Sources:
Appendix
O,
Exhibits
O.
3
and
O.
4.
Total
Capital
and
One­
Time
Costs:
Sum
of
Column
K,
Exhibit
O.
3a
and
Columns
A,
C,
E,
G,
I,
K,
Exhibit
O.
4a;
Rows
ICR­
A3,
ICRSSL­
A3,
and
ICRSSM­
A3.
Annual
Operations
and
Maintenance
Cost:
Sum
of
Columns
B,
D,
F,
H,
J,
and
L,
Exhibit
O.
4a;
Rows
ICR­
A3,
ICRSSL­
A3,
and
ICRSSM­
A3.
Annualized
Cost
at
3
Percent:
Column
K,
Exhibit
O.
3d
+
Column
M
Exhibit
O.
4d;
Rows
ICR­
A3,
ICRSSL­
A3,
and
ICRSSM­
A3.
Annualized
Cost
at
7
Percent:
Column
K,
Exhibit
O.
3e
+
Column
M
Exhibit
O.
4e;
Rows
ICR­
A3,
ICRSSL­
A3,
and
ICRSSM­
A3.
8­
9
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Data
Set
Mean
Benefits
Mean
Costs
Mean
Net
Benefits
ICR
$
1,445
$
111
1,335
$
ICRSSL
$
374
$
73
300
$
ICRSSM
$
715
$
86
629
$

ICR
$
1,230
$
121
1,109
$
ICRSSL
$
318
$
81
237
$
ICRSSM
$
609
$
94
514
$
3
Percent,
25
Years
7
Percent,
25
Years
8.2.3
National
Net
Benefits
Net
benefits
are
the
difference
between
the
estimated
value
of
human
health
benefits
from
the
LT2ESWTR
and
the
estimated
costs
of
complying
with
the
rule.
The
net
benefit
calculations
use
the
estimate
of
quantified
benefits
only
and
do
not
include
nonquantified
benefits.
All
of
the
comparisons
that
follow,
therefore,
should
be
considered
in
the
light
of
the
additional
benefits
that
are
likely
attributable
to
this
rule
but
were
not
quantified.

The
overall
conclusion
from
the
analyses
of
net
national
benefits
is
that
the
proposed
LT2ESWTR
meets
a
basic
economic
threshold
condition:
benefits
are
very
likely
to
exceed
costs.
This
is
shown
in
two
ways.
The
first
set
of
tables
are
the
net
benefits
for
the
Preferred
Alternative
based
on
the
mean
estimate
of
annualized
benefits
less
the
mean
estimate
of
annualized
costs
(
Exhibits
8.6a
and
8.6b).

Benefits
and
costs
were
not
computed
within
the
same
model,
and
the
confidence
bounds
characterizing
the
uncertainty
in
the
mean
benefits
and
cost
estimates
cannot
be
compared
directly
in
a
meaningful
way.
Consequently,
uncertainty
in
net
benefits
based
on
their
bounding
estimates
has
not
been
explicitly
quantified.
The
uncertainty
assessments
in
the
benefits
and
cost
do
indicate
that
the
uncertainty
in
the
value
of
the
benefits
is
greater
than
the
uncertainty
in
the
costs.

Exhibit
8.6a
Mean
Net
Benefits,
Preferred
Alternative
 
Enhanced
Cost
of
Illness[
1]
($
Millions,
2000$)
8­
10
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Data
Set
Mean
Benefits
Mean
Costs
Mean
Net
Benefits
ICR
$
967
$
111
856
$
ICRSSL
$
253
$
73
180
$
ICRSSM
$
481
$
86
395
$

ICR
$
826
$
121
705
$
ICRSSL
$
216
$
81
135
$
ICRSSM
$
411
$
94
317
$
3
Percent,
25
Years
7
Percent,
25
Years
Exhibit
8.6b
Mean
Net
Benefits,
Preferred
Alternative
 
Traditional
Cost
of
Illness
[
1]
($
Millions,
2000$)

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Source:
Exhibit
8.10,
8.11,
8.12,
Preferred
Alternative.

One
approach
for
evaluating
net
benefits
when
there
is
significant
uncertainty
in
the
quantified
benefits
relative
to
the
uncertainty
in
costs
is
a
"
Breakeven
Analysis."
Using
the
estimate
with
less
uncertainty
(
costs),
a
calculation
is
made
of
the
benefits
at
which
the
rule
would
"
break
even."
Comparing
this
breakeven
level
of
benefits
to
the
estimated
range
of
benefits
provides
another
measure
of
the
likelihood
that
the
Preferred
Regulatory
Alternative
will
have
net
positive
benefits.

In
this
analysis,
monetized
values
of
the
two
health
endpoints
 
illnesses
and
deaths,
are
compared
against
the
mean
cost
estimate.
This
method
does
not
take
into
account
the
timing
of
illnesses
and
deaths
avoided,
nor
does
it
incorporate
income
elasticities
into
the
value
of
cases
avoided.
The
cost
estimates
are
based
on
a
stream
of
costs,
discounted
into
Year
2000
dollars
(
present
value
calculation),
and
annualized
over
25
years.
Thus,
this
analysis
compares
the
annualized
compliance
costs
to
the
costs
of
illness
and
deaths
in
the
same
year
(
both
expressed
in
Year
2000$).
The
breakeven
point
is
where
the
benefits
value,
calculated
from
avoided
illnesses
and
deaths,
equals
the
cost
estimate.

Exhibits
8.7a
and
8.7b
present
the
number
of
illnesses
avoided
at
the
breakeven
point
using
Enhanced
COI
and
Traditional
COI.
The
number
of
deaths
avoided
are
not
included
in
the
exhibit
because
deaths
are
assumed
to
result
from
a
fixed
percentage
of
illnesses.
Deaths
increase
or
decrease
proportionally
with
illnesses
but
at
a
much
lower
rate,
therefore,
the
number
of
illnesses
provides
a
more
accurate
picture.
The
exhibits
also
present
the
mean
estimates
of
illnesses
avoided
to
show
that
the
estimated
benefits
are
well
above
the
breakeven
point.
8­
11
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
ICR
1,018,915
169,358
2,331,467
64,145
57,022
71,268
70,048
61,880
78,218
ICRSSL
256,173
45,292
560,648
41,437
36,708
46,269
45,638
40,202
51,200
ICRSSM
498,363
84,724
1,177,415
49,420
43,830
55,139
54,275
47,854
60,851
Data
Set
Breakeven
Cases
(
at
7
Percent,
25
Years)

Mean
90
Percent
Confidence
Bound
Breakeven
Cases
(
at
3
Percent,
25
Years)
90
Percent
Confidence
Bound
Mean
Annual
Avoided
Illnesses
Mean
90
Percent
Confidence
Bound
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
ICR
1,018,915
169,358
2,331,467
90,394
80,356
100,432
98,713
87,202
110,226
ICRSSL
256,173
45,292
560,648
57,719
51,133
64,450
63,572
55,999
71,319
ICRSSM
498,363
84,724
1,177,415
69,346
61,501
77,370
76,159
67,148
85,385
Data
Set
Annual
Avoided
Illnesses
Breakeven
Cases
(
at
3
Percent,
25
Years)
Breakeven
Cases
(
at
7
Percent,
25
Years)

Mean
90
Percent
Confidence
Bound
Mean
90
Percent
Confidence
Bound
Mean
90
Percent
Confidence
Bound
Exhibit
8.7a
Breakeven
Points,
Enhanced
COI[
1]

(
Number
of
Avoided
Illnesses
Needed
to
Break
Even
with
Cost
Estimates)

Exhibit
8.7b
Breakeven
Points,
Traditional
COI[
1]

(
Number
of
Avoided
Illnesses
Needed
to
Break
Even
with
Cost
Estimates)

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Sources:
Annual
Avoided
Illnesses
from
Exhibit
8.3.
Breakeven
Cases
derived
from
Exhibit
8.6,
Annualized
Cost
and
Appendix
C,
Exhibits
C.
6­
C.
9,
Columns
A­
C;
Row
­
All
System
Sizes,
ICR­
A3
and
ICRSSL­
A3.

If
the
value
of
nonquantified
benefits
could
be
included
in
the
breakeven
analysis,
the
number
of
cases
that
would
need
to
be
avoided
in
order
to
break
even
is
expected
to
be
even
lower
and
would
fall
even
farther
below
the
predicted
illness
reduction
for
all
occurrence
data
sets.
This
is
additional
confirmation
that
benefits
are
very
likely
to
exceed
costs.

8.3
Comparison
of
Regulatory
Alternatives
As
discussed
in
Chapter
3,
EPA
and
the
Stage
2
Microbial
and
Disinfection
Byproduct
(
M­
DBP)
Federal
Advisory
Committee
considered
numerous
regulatory
alternatives
for
the
LT2ESWTR.
Through
this
process,
potential
regulatory
alternatives
were
narrowed
to
four
major
alternatives
for
further
comprehensive
evaluation,
one
of
which
was
agreed
upon
by
the
Advisory
Committee
as
the
preferred
approach.
As
previously
mentioned,
the
rule
provisions
for
the
filtered
systems
were
the
only
ones
with
alternatives
(
that
is,
there
were
no
alternatives
identified
for
the
unfiltered
system
and
uncovered
finished
water
reservoir
provision
of
the
rule).
Detailed
benefit
and
cost
analyses
for
each
of
the
alternatives
are
presented
in
Chapters
5
and
6,
respectively,
and
are
summarized
in
this
chapter.
The
following
sections
8­
12
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
present
several
analyses
that
compare
the
Preferred
Regulatory
Alternative
to
the
other
three
alternatives.

Exhibit
8.8
Summary
of
Binning
and
Treatment
Scenarios
for
Filtered
Systems
for
All
Regulatory
Alternatives
Source
Water
Cryptosporidium
Monitoring
Results
(
oocysts/
L)
Additional
Cryptosporidium
Treatment
Requirements
Alternative
A1
2.0
log
inactivation
required
for
all
systems
Alternative
A2
<
0.03
No
action
>
0.03
and
<
0.1
0.5­
log
>
0.1
and
<
1.0
1.5­
log
>
1.0
2.5­
log
Alternative
A3
­
Preferred
Alternative
<
0.075
No
action
>
0.075
and
<
1.0
1­
log
>
1.0
and
<
3.0
2­
log
>
3.0
2.5­
log
Alternative
A4
<
0.10
No
action
>
0.1
and
<
1.0
0.5­
log
>
1.0
1­
log
Note:
Additional
treatment
requirements
are
in
addition
to
levels
already
required
under
existing
rules
(
Interim
Enhanced
Surface
Water
Treatment
Rule
and
Long
Term
1
Enhanced
Surface
Water
Treatment
Rule).

8.3.1
Comparison
of
Benefits
and
Costs
Exhibit
8.9
presents
a
summary
of
quantified
benefits
in
terms
of
illnesses
and
deaths
avoided.
Two
sets
of
numbers
are
shown
 
annual
after
full
implementation
and
annual
average
over
25
years.
The
first
set
represents
the
number
of
cases
avoided
once
all
systems
have
the
required
treatment
installed
(
year
2010).
The
second
set
takes
the
number
of
cases
avoided
each
year
over
a
25­
year
period
(
using
the
implementation
schedule
in
Exhibit
O.
2)
and
calculates
an
annual
average
of
those
25
values.
Exhibits
8.10a
and
8.10b
present
the
annualized
value
of
the
benefits
for
each
regulatory
alternative
using
Enhanced
and
Traditional
COI
values.
The
benefits
derive
only
from
treatment
improvements
made
as
a
result
of
being
in
an
Action
Bin
(
for
filtered
systems)
or
from
the
2
and
3
log
treatment
improvements
made
at
unfiltered
plants.
No
benefits
are
included
for
improvements
made
by
systems
with
uncovered
finished
water
reservoirs.
Further,
only
reductions
in
endemic
illness
and
mortality
associated
with
8­
13
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
cryptosporidiosis
(
as
opposed
to
those
that
occur
as
outbreaks)
are
included.
As
stated
previously,
unquantified
benefits
are
likely
significant.

Exhibit
8.11
follows
with
a
presentation
of
the
quantified
costs.
The
annualized
total
costs
of
the
rule
include
costs
for
filtered
systems,
unfiltered
systems,
uncovered
reservoirs,
and
implementation
costs
for
systems
and
for
States/
Primacy
Agencies.
8­
14
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)

A1
1,048,583
172,409
2,410,265
144
25
316
A2
1,031,716
170,643
2,367,993
142
25
311
A3­
Preferred
1,018,915
169,358
2,331,467
141
25
308
A4
940,570
161,366
2,084,877
133
24
282
A1
323,915
53,589
757,802
44
8
99
A2
275,616
47,681
619,109
39
7
84
A3­
Preferred
256,173
45,292
560,648
37
7
78
A4
218,820
41,215
457,470
33
7
67
A1
563,930
92,474
1,367,370
77
14
177
A2
520,501
87,782
1,244,961
73
13
164
A3­
Preferred
498,363
84,724
1,177,415
70
13
157
A4
433,520
78,386
984,238
64
12
136
A1
741,482
121,920
1,704,465
102
18
224
A2
729,608
120,563
1,672,797
101
18
220
A3­
Preferred
720,668
119,694
1,647,796
100
18
218
A4
665,548
114,027
1,476,313
94
17
200
A1
228,954
37,833
535,640
31
6
70
A2
194,957
33,748
438,086
28
5
60
A3­
Preferred
181,387
32,179
396,845
26
5
55
A4
155,017
29,197
323,695
24
5
48
A1
398,636
65,244
968,724
55
10
125
A2
368,065
61,848
879,516
50
9
116
A3­
Preferred
352,611
59,942
833,290
50
9
111
A4
306,826
55,349
695,228
45
9
97
ICRSSM
ICRSSM
Annual
Average
over
25
years
ICR
ICRSSL
ICR
ICRSSL
Annual
Average
after
Full
implementation[
1]
90
Percent
Confidence
Bound
Data
Set
Annual
Illnesses
Avoided
Annual
Deaths
Avoided
Mean
Rule
Alternative
90
Percent
Confidence
Bound
Mean
Exhibit
8.9
Comparison
of
Number
of
Illnesses
and
Deaths
Avoided
for
All
Regulatory
Alternatives
Note:
[
1]
Full
implementation
occurs
7
years
after
rule
promulgation.
Source:
Appendix
C,
Exhibit
C.
4,
Columns
A­
F.
Annual
Average
derived
from
Exhibits
C.
4
and
Exhibit
O.
2.
8­
15
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
L
o
w
e
r
(
5
t
h
%
i
l
e
)
U
p
p
e
r
(
9
5
t
h
%
i
l
e
)

A
1
1
,
4
8
2
$
2
0
1
$
3
,
7
9
1
$

A
2
1
,
4
6
1
$
1
9
9
$
3
,
7
1
8
$
A
3
­
P
r
e
f
e
r
r
e
d
1
,
4
4
5
$
1
9
8
$
3
,
6
6
6
$

A
4
1
,
3
4
9
$
1
8
9
$
3
,
3
5
7
$

A
1
4
5
7
$
5
9
$
1
,
2
1
4
$

A
2
3
9
7
$
5
4
$
1
,
0
3
2
$
A
3
­
P
r
e
f
e
r
r
e
d
3
7
4
$
5
2
$
9
5
9
$
A
4
3
2
8
$
4
8
$
8
1
0
$

A
1
7
9
6
$
1
0
3
$
2
,
0
9
2
$

A
2
7
4
2
$
9
8
$
1
,
9
3
1
$

A
3
­
P
r
e
f
e
r
r
e
d
7
1
5
$
9
6
$
1
,
8
4
9
$
A
4
6
3
5
$
8
9
$
1
,
6
0
1
$

A
1
1
,
2
6
0
$
1
7
1
$
3
,
2
2
9
$
A
2
1
,
2
4
3
$
1
7
0
$
3
,
1
6
5
$
A
3
­
P
r
e
f
e
r
r
e
d
1
,
2
3
0
$
1
6
8
$
3
,
1
2
0
$
A
4
1
,
1
4
8
$
1
6
1
$
2
,
8
5
9
$

A
1
3
8
9
$
5
0
$
1
,
0
3
5
$
A
2
3
3
8
$
4
6
$
8
7
9
$
A
3
­
P
r
e
f
e
r
r
e
d
3
1
8
$
4
4
$
8
1
6
$

A
4
2
7
9
$
4
1
$
6
9
0
$

A
1
6
7
7
$
8
7
$
1
,
7
8
3
$
A
2
6
3
2
$
8
3
$
1
,
6
4
6
$

A
3
­
P
r
e
f
e
r
r
e
d
6
0
9
$
8
1
$
1
,
5
7
7
$

A
4
5
4
1
$
7
5
$
1
,
3
6
3
$
I
C
R
S
S
M
I
C
R
S
S
L
I
C
R
I
C
R
S
S
M
A
n
n
u
a
l
i
z
e
d
V
a
l
u
e
(
a
t
3
p
e
r
c
e
n
t
,
2
5
Y
e
a
r
s
)

I
C
R
I
C
R
S
S
L
A
n
n
u
a
l
i
z
e
d
V
a
l
u
e
(
a
t
7
P
e
r
c
e
n
t
,
2
5
Y
e
a
r
s
)
9
0
P
e
r
c
e
n
t
C
o
n
f
i
d
e
n
c
e
B
o
u
n
d
D
a
t
a
S
e
t
V
a
l
u
e
o
f
B
e
n
e
f
i
t
s
(
$
M
i
l
l
i
o
n
s
,
2
0
0
0
$
)

M
e
a
n
R
u
l
e
A
l
t
e
r
n
a
t
i
v
e
Exhibit
8.10a
Comparison
of
Annualized
Value
of
Illnesses
and
Deaths
Avoided
for
All
Regulatory
Alternatives,
Enhanced
COI[
1]
8­
16
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
L
o
w
e
r
(
5
t
h
%
i
l
e
)
U
p
p
e
r
(
9
5
t
h
%
i
l
e
)

A
1
9
8
9
$
1
0
6
$
2
,
7
8
4
$

A
2
9
7
7
$
1
0
5
$
2
,
7
4
4
$
A
3
­
P
r
e
f
e
r
r
e
d
9
6
7
$
1
0
5
$
2
,
7
1
3
$

A
4
9
0
7
$
1
0
1
$
2
,
5
2
3
$

A
1
3
0
5
$
3
1
$
8
8
6
$
A
2
2
6
8
$
2
8
$
7
6
4
$
A
3
­
P
r
e
f
e
r
r
e
d
2
5
3
$
2
7
$
7
1
3
$
A
4
2
2
5
$
2
5
$
6
1
6
$

A
1
5
3
1
$
5
3
$
1
,
5
4
2
$
A
2
4
9
8
$
5
1
$
1
,
4
3
4
$
A
3
­
P
r
e
f
e
r
r
e
d
4
8
1
$
5
0
$
1
,
3
7
2
$
A
4
4
3
2
$
4
6
$
1
,
2
0
4
$

A
1
8
4
5
$
9
1
$
2
,
3
7
4
$
A
2
8
3
4
$
9
0
$
2
,
3
3
9
$
A
3
­
P
r
e
f
e
r
r
e
d
8
2
6
$
8
9
$
2
,
3
1
5
$
A
4
7
7
5
$
8
6
$
2
,
1
5
5
$

A
1
2
6
0
$
2
6
$
7
5
7
$
A
2
2
2
9
$
2
4
$
6
5
2
$
A
3
­
P
r
e
f
e
r
r
e
d
2
1
6
$
2
3
$
6
1
0
$
A
4
1
9
2
$
2
2
$
5
2
7
$

A
1
4
5
4
$
4
5
$
1
,
3
1
7
$
A
2
4
2
5
$
4
4
$
1
,
2
2
5
$
A
3
­
P
r
e
f
e
r
r
e
d
4
1
1
$
4
3
$
1
,
1
7
2
$
A
4
3
6
9
$
4
0
$
1
,
0
2
9
$
D
a
t
a
S
e
t
R
u
l
e
A
l
t
e
r
n
a
t
i
v
e
V
a
l
u
e
o
f
B
e
n
e
f
i
t
s
(
$
M
i
l
l
i
o
n
s
,
2
0
0
0
$
)

M
e
a
n
9
0
P
e
r
c
e
n
t
C
o
n
f
i
d
e
n
c
e
B
o
u
n
d
A
n
n
u
a
l
i
z
e
d
V
a
l
u
e
(
a
t
3
p
e
r
c
e
n
t
,
2
5
Y
e
a
r
s
)

I
C
R
I
C
R
S
S
L
I
C
R
S
S
M
A
n
n
u
a
l
i
z
e
d
V
a
l
u
e
(
a
t
7
P
e
r
c
e
n
t
,
2
5
Y
e
a
r
s
)

I
C
R
I
C
R
S
S
L
I
C
R
S
S
M
Exhibit
8.10b
Comparison
of
Annualized
Value
of
Illnesses
and
Deaths
Avoided
for
All
Regulatory
Alternatives,
Traditional
COI[
1]

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Sources:
3
percent
data:
Appendix
C,
Exhibit
C.
4,
Columns
M­
O;
Rows
ICR,
ICRSSL,
and
ICRSSM
7
percent
data:
Appendix
C,
Exhibit
C.
5,
Columns
M­
O;
Rows
ICR,
ICRSSL,
and
ICRSSM
8­
17
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
Lower
(
5th
%
ile)
Upper
(
95th
%
ile)
A1
5,657
$
4,864
$
6,472
$
191
$
181
$
202
$
361
$
321
$
402
$
388
$
342
$
434
$
A2
2,156
$
1,881
$
2,439
$
65
$
62
$
68
$
134
$
120
$
148
$
145
$
130
$
161
$
A3­
Preferred
1,795
$
1,549
$
2,042
$
52
$
49
$
54
$
111
$
98
$
123
$
121
$
107
$
135
$
A4
931
$
810
$
1,054
$
29
$
27
$
30
$
58
$
53
$
66
$
65
$
58
$
72
$

A1
5,657
$
4,864
$
6,472
$
191
$
181
$
202
$
361
$
321
$
402
$
388
$
342
$
434
$
A2
1,607
$
1,405
$
1,809
$
47
$
45
$
49
$
100
$
90
$
110
$
108
$
97
$
120
$
A3­
Preferred
1,208
$
1,041
$
1,379
$
32
$
31
$
34
$
73
$
65
$
82
$
81
$
71
$
91
$
A4
568
$
497
$
641
$
17
$
16
$
18
$
37
$
33
$
41
$
41
$
36
$
45
$

A1
5,657
$
4,864
$
6,472
$
191
$
181
$
202
$
361
$
321
$
402
$
388
$
342
$
434
$
A2
1,820
$
1,588
$
2,053
$
53
$
51
$
56
$
113
$
101
$
124
$
122
$
109
$
136
$
A3­
Preferred
1,412
$
1,218
$
1,612
$
39
$
36
$
41
$
86
$
76
$
96
$
94
$
83
$
106
$
A4
675
$
589
$
761
$
21
$
20
$
22
$
44
$
39
$
48
$
48
$
43
$
53
$
ICRSSM
(
mean
distribution)
Data
Set
Mean
ICRSSL
(
mean
distribution)
ICR
(
mean
distribution)
90%
Confidence
Bound
Rule
Alternative
90%
Confidence
Bound
Mean
Operations
and
Maintenance
(
at
Full
Implementation)
Annualized
Value
(
at
3%,
25
Years)
Annualized
Value
(
at
7%,
25
Years)
90%
Confidence
Bound
Mean
90%
Confidence
Bound
Mean
Capital
and
One­
Time
(
at
Full
Implementation)
Exhibit
8.11
Comparison
of
Costs
for
All
Regulatory
Alternatives
($
Millions,
2000$)

[
1]
Operation
and
maintenance
costs
are
annual
costs
incurred
by
all
systems
upon
full
implementation
of
the
rule.
Sources:
Appendix
O,
Exhibits
O.
3
and
O.
4.
Total
Capital
and
One­
Time
Costs:
Sum
of
Column
K,
Exhibit
O.
3a
and
Columns
A,
C,
E,
G,
I,
and
K,
Exhibit
O.
4a.
Annual
Operations
and
Maintenance
Cost:
Sum
of
Columns
B,
D,
F,
H,
J,
and
L,
Exhibit
O.
4a.
Annualized
Cost
at
3
Percent:
Column
K,
Exhibit
O.
3d
+
Column
M
Exhibit
O.
4d.
Annualized
Cost
at
7
Percent:
Column
K,
Exhibit
O.
3e
+
Column
M
Exhibit
O.
4e.
8­
18
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
3%,
25
Years
7%,
25
Years
A1
1,121
$
873
$
A2
1,327
$
1,098
$
A3
­
Preferred
1,335
$
1,109
$

A4
1,290
$
1,083
$

A1
96
$
1
$
A2
298
$
230
$
A3
­
Preferred
300
$
237
$
A4
291
$
238
$

A1
435
$
289
$
A2
630
$
509
$
A3
­
Preferred
629
$
514
$
A4
592
$
493
$
ICRSSM
Rule
Alternative
Data
Set
Annualized
Value
ICRSSL
ICR
Net
Benefits
As
described
previously,
net
benefits
are
calculated
as
the
difference
between
the
monetized
benefits
and
cost
estimates.
Exhibit
8.12a
and
8.12b
present
net
benefits
based
on
the
annualized
present
value
of
quantified
benefits
at
3
and
7
percent
discount
rates
for
both
enhanced
and
traditional
cost
of
illness.
Adding
nonquantified
benefits
would
raise
the
overall
net
benefits.
The
data
are
based
on
the
mean
benefits
less
the
mean
values
for
costs.
Using
net
benefits
as
a
threshold
measure
shows
that
almost
all
alternatives
provide
benefits
that
exceed
their
costs,
based
on
their
average
values.

Maximum
Net
Benefits
Identifying
the
maximum
net
benefits
among
the
regulatory
alternatives
is
a
first
step
in
a
comparative
analysis
of
regulatory
alternatives.
The
bold
numbers
in
Exhibits
8.12a
and
8.12b
indicate
the
maximum
net
benefit
of
the
four
rule
alternatives.
Considering
the
combinations
of
occurrence
data
sets,
COI
values,
and
discount
rates,
the
Preferred
Regulatory
Alternative
(
A3)
had
the
maximum
net
benefits
of
the
alternatives
for
half
of
the
combinations.
However,
the
differences
are
often
slight
among
three
of
the
regulatory
alternatives
(
A2,
A3,
and
A4).
The
range
from
the
high
to
the
low
of
A2,
A3,
and
A4
is
1
to
10
percent
for
all
but
one
of
the
combinations.

Exhibit
8.12a
Comparison
of
Mean
Net
Benefits
for
All
Regulatory
Alternatives
 
Enhanced
COI
[
1]
(
Million
$/
Year)
8­
19
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
3%,
25
Years
7%,
25
Years
A1
628
$
457
$
A2
843
$
688
$
A3
­
Preferred
856
$
705
$
A4
848
$
710
$

A1
­
56
$
­
128
$
A2
168
$
120
$
A3
­
Preferred
180
$
135
$
A4
188
$
151
$

A1
170
$
66
$
A2
386
$
303
$
A3
­
Preferred
395
$
317
$
A4
388
$
321
$
ICRSSL
ICRSSM
Data
Set
Rule
Alternative
Annualized
Value
ICR
Exhibit
8.12b
Comparison
of
Mean
Net
Benefits
for
All
Regulatory
Alternatives
 
Traditional
COI
[
1]
(
Million
$/
Year)

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Sources:
3
percent
data:
Exhibit
8.10,
"
Mean"
column
­
Exhibit
8.11,
Annualized
Value
at
3
percent,
"
Mean"
column.
7
percent
data:
Exhibit
8.10,
"
Mean"
column
­
Exhibit
8.11,
Annualized
Value
at
7
percent,
"
Mean"
column.

Incremental
Net
Benefits
Rule
alternatives
can
also
be
compared
on
the
basis
of
their
incremental
net
benefits.
Generally,
the
goal
of
an
incremental
analysis
is
to
identify
the
regulatory
option
where
incremental
benefits
most
closely
equal
incremental
costs.
This
point
most
often
lies
between
two
alternatives
and
given
the
uncertainty
around
the
mean
cost
and
benefit
estimates,
either
of
those
alternatives
is
likely
to
be
closest
to
that
optimum
point.
For
example,
using
the
ICR
estimate
in
Exhibit
8.13a
and
a
3
percent
discount
rate,
Alternative
A4
has
a
net
benefit
of
$
1,291
million,
but
society
would
benefit
by
an
additional
$
45
million
(
total
of
$
1,335
million)
if
Alternative
A3
was
implemented.
Proceeding
to
the
next
stringent
alternative
(
A2)
provides
an
additional
$
16
million
in
benefits
at
a
cost
of
$
23
million,
yielding
a
negative
incremental
net
benefit.
If
alternatives
could
have
been
developed
on
a
more
continuous
scale
of
net
benefits,
some
alternative
with
a
stringency
between
Alternatives
A3
and
A2
would
have
been
optimal.

Exhibit
8.13a
and
8.13b
present
the
incremental
net
benefits
calculated
from
Enhanced
and
Traditional
COI
values.
Usually
an
incremental
analysis
implies
higher
levels
of
stringency
along
a
single
parameter,
with
each
alternative
providing
all
the
protection
of
the
previous
alternative,
plus
additional
protection.
However,
the
regulatory
alternatives
for
this
rule
base
treatment
requirements
on
a
system's
source
water
quality
(
except
for
A1).
As
a
result,
the
number
of
systems
requiring
additional
treatment,
8­
20
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
and
thus
population
affected
by
the
rule,
differ
between
the
alternatives.
With
net
benefits
calculated
at
different
occurrence
estimates,
COI
values,
and
discount
rates,
the
alternatives
bounding
the
incremental
net
benefit
point
of
zero
are
not
always
the
same;
however,
under
all
but
one
condition,
the
Preferred
Alternative
is
one
of
the
bounding
alternatives.
The
sensitivity
of
mean
benefit
estimates
in
this
analysis
is
illustrated
by
the
ranking
analysis
presented
in
section
8.4.
8­
21
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Annual
Costs
Annual
Benefits
Incremental
Costs[
1]
Incremental
Benefits
Incremental
Net
Benefits
A
B
C
D
E=
D­
C
A4
58
$
1,349
$
58
$
1,349
$
1,290
$
A3
­
Preferred
111
$
1,445
$
52
$
96
$
44
$
A2
134
$
1,461
$
23
$
16
$
­
8
$
A1
361
$
1,482
$
227
$
21
$
­
206
$

A4
37
$
328
$
37
$
328
$
291
$
A3
­
Preferred
73
$
374
$
37
$
46
$
9
$
A2
100
$
397
$
26
$
24
$
­
2
$
A1
361
$
457
$
261
$
59
$
­
202
$

A4
44
$
635
$
44
$
635
$
592
$
A3
­
Preferred
86
$
715
$
42
$
80
$
38
$
A2
113
$
742
$
26
$
27
$
1
$
A1
361
$
796
$
248
$
53
$
­
195
$

A4
65
$
1,148
$
65
$
1,148
$
1,083
$
A3
­
Preferred
121
$
1,230
$
56
$
82
$
26
$
A2
145
$
1,243
$
25
$
13
$
­
11
$
A1
388
$
1,260
$
242
$
18
$
­
225
$

A4
41
$
279
$
41
$
279
$
238
$
A3
­
Preferred
81
$
318
$
40
$
39
$
­
1
$
A2
108
$
338
$
27
$
20
$
­
7
$
A1
388
$
389
$
279
$
50
$
­
229
$

A4
48
$
541
$
48
$
541
$
493
$
A3
­
Preferred
94
$
609
$
47
$
68
$
21
$
A2
122
$
632
$
28
$
23
$
­
5
$
A1
388
$
677
$
265
$
45
$
­
220
$
Data
Set
Rule
Alternative
7
Percent
Discount
Rate
ICR
ICRSSL
ICRSSM
3
Percent
Discount
Rate
ICRSSM
ICRSSL
ICR
Exhibit
8.13a
Incremental
Net
Benefits
[
1]
for
All
Alternatives,
By
Data
Set,
Enhanced
COI
[
2]
($
Millions,
2000$)
8­
22
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Annual
Costs
Annual
Benefits
Incremental
Costs[
1]
Incremental
Benefits
Incremental
Net
Benefits
A
B
C
D
E=
D­
C
A4
58
$
907
$
58
$
907
$
848
$
A3
­
Preferred
111
$
967
$
52
$
60
$
8
$
A2
134
$
977
$
23
$
10
$
­
14
$
A1
361
$
989
$
227
$
13
$
­
214
$

A4
37
$
225
$
37
$
225
$
188
$
A3
­
Preferred
73
$
253
$
37
$
29
$
­
8
$
A2
100
$
268
$
26
$
15
$
­
11
$
A1
361
$
305
$
261
$
37
$
­
225
$

A4
44
$
432
$
44
$
432
$
388
$
A3
­
Preferred
86
$
481
$
42
$
50
$
7
$
A2
113
$
498
$
26
$
17
$
­
10
$
A1
361
$
531
$
248
$
33
$
­
215
$

A4
65
$
775
$
65
$
775
$
710
$
A3
­
Preferred
121
$
826
$
56
$
51
$
­
5
$
A2
145
$
834
$
25
$
8
$
­
16
$
A1
388
$
845
$
242
$
11
$
­
231
$

A4
41
$
192
$
41
$
192
$
151
$
A3
­
Preferred
81
$
216
$
40
$
24
$
­
16
$
A2
108
$
229
$
27
$
12
$
­
15
$
A1
388
$
260
$
279
$
31
$
­
248
$

A4
48
$
369
$
48
$
369
$
321
$
A3
­
Preferred
94
$
411
$
47
$
42
$
­
4
$
A2
122
$
425
$
28
$
14
$
­
14
$
A1
388
$
454
$
265
$
28
$
­
237
$
ICRSSM
7
Percent
Discount
Rate
ICR
ICRSSL
ICRSSL
ICRSSM
Data
Set
Rule
Alternative
3
Percent
Discount
Rate
ICR
Exhibit
8.13b
Incremental
Net
Benefits[
1]
for
All
Alternatives,
By
Data
Set,
Traditional
COI[
2]
($
Millions,
2000$)

Notes:
[
1]
Derivation:
Incremental
costs
are
the
cost
of
each
regulatory
alternative
minus
the
cost
of
the
next
least
expensive
alternative
(
which
is
zero
for
Alternative
A4,
the
least
expensive
alternative).
The
derivation
for
incremental
benefits
is
analogous
to
the
derivation
for
incremental
costs.
[
2]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Sources:
[
A]
Exhibit
8.11,
Annualized
Value
at
3
percent,
"
Mean"
column
and
Annualized
Value
at
7
percent,
"
Mean"
column.
[
B]
Exhibit
8.10,
"
Mean"
column.
8­
23
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Consideration
of
Uncertainty
in
the
Ranking
of
Alternatives
by
Net
Benefits
Cost
estimates
for
a
given
occurrence
level
contain
less
uncertainty
than
the
corresponding
estimates
of
benefits.
Benefit
estimates
have
significant
uncertainty
due
to
inputs
such
as
infectivity,
morbidity,
income
elasticity,
and
even
the
value
of
a
statistical
life.
In
addition,
quantified
benefits
constitute
only
a
portion
of
the
likely
total
benefits
from
this
rule.
Under
these
conditions,
it
is
important
to
assess
how
the
ranking
of
alternatives
will
change
as
estimates
of
possible
benefits
vary.
Using
two
COI
values
gives
a
snapshot
of
how
the
ranking
may
change.
This
analysis
goes
further
by
analyzing
how
the
ranking
changes
on
a
continuum
of
changing
benefits.

As
estimates
of
possible
benefits
proportionately
increase
while
cost
estimates
are
held
constant,
the
alternative
with
the
highest
net
benefits
shifts
from
Alternative
A4
to
Alternative
A3
(
the
Preferred
Alternative),
then
to
A2,
and
finally
to
A1
(
A4
being
the
least
protective
through
to
A1
being
the
most
protective).
Because
the
level
of
benefits
dictate
which
alternative
performs
best
and
how
well
each
performs
relative
to
the
other
alternatives,
the
selection
of
the
Preferred
Alternative
requires
examining
where
these
break
points
are,
and
how
the
relative
closeness
of
the
alternatives
to
each
other
varies.
The
selection
of
an
occurrence
data
set
and
discount
rate
affects
this
pattern
of
relationships
between
alternatives.
Graphs,
therefore,
were
constructed
for
all
combinations
of
occurrence
and
discount
rates
using
Enhanced
and
Traditional
COI
values.

Exhibits
8.14a
and
8.14b
show
the
95
percentile
values
of
benefit
estimates
for
each
alternative
and
how
much
greater
these
values
are
than
the
mean
benefit
estimates
(
as
a
percent
of
the
mean).
Exhibits
8.15
and
8.16
show
these
rankings
and
break
points
graphically.
Each
graph
has
four
lines
representing
the
four
alternatives.
On
the
horizontal
axis,
the
graphs
show
a
range
of
benefits,
expressed
as
multiples
of
the
calculated
benefits
shown
in
Exhibit
8.10.
The
entire
scale
shows
a
range
of
benefits
from
zero
to
as
much
as
five
times
the
calculated
benefits.
The
graphs
display
this
large
range
because
1)
the
range
of
quantified
benefits
at
the
90th
percentile
is
about
247
to
291
percent
of
mean
benefits
(
Exhibit
8.14),
and
2)
the
consideration
of
unquantified
benefits
dictates
that
the
analysis
consider
a
range
of
benefits
beyond
the
range
of
calculated
quantified
benefits.
Consequently,
a
five­
fold
range
is
reasonable
to
display.
The
vertical
axis
of
the
graphs
shows
the
relative
ranking
of
the
four
alternatives.
Specifically,
for
any
given
level
of
benefits,
one
alternative
will
yield
the
highest
net
benefits
(
shown
as
100
percent),
and
one
will
give
the
lowest
(
shown
as
zero
percent).
The
relative
benefits
of
the
remaining
two
alternatives
fall
somewhere
in
between.
Thus,
a
vertical
reading
of
the
graphs
shows
the
ranking
of
the
alternatives
at
that
level
of
benefits,
and
the
closeness
of
the
relative
rankings.
8­
24
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Mean
90
Percent
Confidence
Bound
A1
1,482
$
3,791
$
256%

A2
1,461
$
3,718
$
255%

A3
­
Preferred
1,445
$
3,666
$
254%

A4
1,349
$
3,357
$
249%

A1
457
$
1,214
$
266%

A2
397
$
1,032
$
260%

A3
­
Preferred
374
$
959
$
257%

A4
328
$
810
$
247%

A1
796
$
2,092
$
263%

A2
742
$
1,931
$
260%

A3
­
Preferred
715
$
1,849
$
258%

A4
635
$
1,601
$
252%
ICRSSM
90
Percent
Confidence
Bound
as
a
Percent
of
Mean
ICRSSL
ICR
Data
Set
Rule
Alternative
Benefits
($
Millions,
2000$)
Exhibit
8.14a
Upper
End
of
90
Percent
Confidence
Bound
as
a
Percent
of
Mean
Estimate
of
Benefits,
By
Data
Set,
Annualized
at
3
Percent,
Enhanced
COI[
1]

($
Millions,
2000$)
8­
25
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Mean
90
Percent
Confidence
Bound
A1
989
$
2,784
$
281%
A2
977
$
2,744
$
281%
A3
­
Preferred
967
$
2,713
$
281%
A4
907
$
2,523
$
278%

A1
305
$
886
$
291%
A2
268
$
764
$
285%
A3
­
Preferred
253
$
713
$
281%
A4
225
$
616
$
274%

A1
531
$
1,542
$
290%
A2
498
$
1,434
$
288%
A3
­
Preferred
481
$
1,372
$
285%
A4
432
$
1,204
$
279%
Data
Set
Rule
Alternative
Benefits
($
Millions,
2000$)
90
Percent
Confidence
Bound
as
a
Percent
of
Mean
ICRSSM
ICR
ICRSSL
Exhibit
8.14b
Upper
End
of
90
Percent
Confidence
Bound
as
a
Percent
of
Mean
Estimate
of
Benefits,
By
Data
Set,
Annualized
at
3
Percent,
Traditional
COI[
1]

($
Millions,
2000$)

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Upper
end
of
90
percent
confidence
bound
is
the
95th
percentile.
Source:
Exhibit
8.10.

What
conclusions
can
be
derived
from
the
graphs
of
the
actual
data?
Consider
the
first
graph
in
Exhibit
8.15a,
based
on
occurrence
distributions
modeled
from
the
ICR
data
set.
The
expected
pattern
is
depicted:
at
low
levels
of
benefits,
Alternative
A4
ranks
highest,
but
as
estimates
of
benefits
increase,
Alternative
A3
and
then
A2
have
the
highest
net
benefits.
Alternative
A1
will
eventually
become
the
alternative
with
highest
net
benefits,
but
at
a
level
of
benefits
beyond
the
scale
of
the
graph.
More
important,
the
graph
shows
that
A4
has
the
highest
net
benefits
only
for
low
estimates
of
benefits:
from
zero
benefits
to
about
50
percent
of
quantified
benefits.
Alternative
A3,
the
Preferred
Alternative,
has
the
highest
net
benefits
throughout
the
range
nearest
the
mean
quantified
benefits:
from
about
50
percent
to
150
percent
of
quantified
benefits
(
ICR
data
set).

Under
most
combinations
of
occurrence
data
sets,
discount
rates,
and
COI
values,
the
Preferred
Alternative
ranks
highest
near
the
mean
estimate
of
quantified
benefits.
The
relative
strength
of
this
alternative
across
all
scenarios
is
also
shown
by
the
fact
that
over
a
wide
range
of
zero
benefits
to
approximately
350
percent
of
quantified
benefits,
the
Preferred
Alternative
has
either
the
highest
or
second
highest
level
of
net
benefits.
8­
26
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Alternative
A4
appears
to
be
the
best
alternative
only
when
benefits
are
less
than
the
mean
estimated
values
of
the
various
data
sets,
and
for
a
few
of
the
data
sets
using
Traditional
COI
values
in
the
range
of
best
estimates.
However,
Alternative
A4'
s
relative
ranking
falls
rapidly
as
benefits
increase
and
taking
into
account
the
nonquantified
benefits,
A4
would
likely
not
be
the
best
alternative
for
any
of
the
estimates.

Alternative
A2
is
also
a
strong
alternative
over
a
wide
range
of
benefits
above
those
discussed
for
the
Preferred
Alternative.
If
total
benefits
are
substantially
greater
than
the
value
of
mean
quantified
benefits,
then
Alternative
A2
would
be
a
consistently
strong
choice.

Alternative
A1,
the
most
stringent
alternative,
is
not
a
strong
contender
unless
true
benefits
are
many
multiples
of
the
mean
quantified
benefits.
The
lowest
level
of
benefits
at
which
Alternative
A1
has
the
highest
net
benefits
is
at
about
450
percent
of
mean
quantified
benefits
(
ICRSSL,
Enhanced
COI,
3
percent).

Overall,
the
Preferred
Alternative
and
Alternative
A2
are
strong
alternatives
considering
both
the
range
of
quantified
benefits
(
with
an
upper
90
percent
confidence
bound
of
247
to
291
percent
of
mean
benefits)
and
the
significant
benefits
that
have
not
been
quantified.
The
M­
DBP
Federal
Advisory
Committee
and
EPA
selected
the
Preferred
Alternative
after
also
considering
other
factors
such
as
technical,
managerial,
and
financial
capacities
of
water
systems.
8­
27
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Rankings
of
Regulatory
Alternatives,
ICR
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
0.54)
(
1.49)

A3
Highest
Net
Benefits
Rankings
of
Regulatory
Alternatives,
ICRSSL
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
0.80)
(
1.10)

A3
Highest
Net
Benefits
Exhibit
8.15a
Comparison
of
Regulatory
Alternatives
Ranked
by
Net
Benefits,
3
Percent
Cost
Enhanced
COI
Rankings
of
Regulatory
Alternatives,
ICRSSM
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
0.53)
(
0.97)

A3
Highest
Net
Benefits
8­
28
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Rankings
of
Regulatory
Alternatives,
ICR
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
0.69)
(
1.86)
A3
Highest
Net
Benefits
Rankings
of
Regulatory
Alternatives,
ICRSSL
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
1.36)
(
1.04)

A3
Highest
Net
Benefits
Exhibit
8.15b
Comparison
of
Regulatory
Alternatives
Ranked
by
Net
Benefits,
7
Percent
Cost
Enhanced
COI
Rankings
of
Regulatory
Alternatives,
ICRSSM
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
1.21)
(
0.69)

A3
Highest
Net
Benefits
8­
29
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Rankings
of
Regulatory
Alternatives,
ICR
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
0.87)
(
2.41)
A3
Highest
Net
Benefits
Rankings
of
Regulatory
Alternatives,
ICRSSL
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
1.29)
(
1.78)

A3
Highest
Net
Benefits
Exhibit
8.16a
Comparison
of
Regulatory
Alternatives
Ranked
by
Net
Benefits,
3
Percent
Cost
Traditional
COI
Rankings
of
Regulatory
Alternatives,
ICRSSM
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
0.86)
(
1.57)

A3
Highest
Net
Benefits
8­
30
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Rankings
of
Regulatory
Alternatives,
ICR
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
1.10)
(
2.99)
A3
Highest
Net
Benefits
Rankings
of
Regulatory
Alternatives,
ICRSSL
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
2.19)
(
1.66)

A3
Highest
Net
Benefits
Exhibit
8.16b
Comparison
of
Regulatory
Alternatives
Ranked
by
Net
Benefits,
7
Percent
Cost
Traditional
COI
Rankings
of
Regulatory
Alternatives,
ICRSSM
Data
Set
(
by
Net
Benefits)

­
10%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
110%

0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
5
Multiple
of
Calculated
Benefits
Percent
of
Net
Benefits
Between
High
and
Low
Rank
Alt
A1
A2
A3
A4
(
1.95)
(
1.10)

A3
Highest
Net
Benefits
8­
31
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
$
3
0
0
5
4
8.3.2
Cost­
Effectiveness
Measures
Exhibits
8.17a
and
8.17b
show
the
annualized
value
of
benefits
and
costs
for
the
four
alternatives,
calculated
with
the
various
combinations
of
occurrence
data
sets,
COI
values,
and
discount
rates.
For
each
alternative,
the
graph
plots
the
mean
benefit
versus
its
corresponding
range
of
cost
estimates
(
a
90
percent
confidence
bound
shown
as
a
vertical
bar).
A
trend
line
connects
the
mean
estimate
of
costs
for
each
alternative.
These
graphs
help
to
visually
show
the
concept
of
cost­
effectiveness
and
to
compare
the
alternatives.

Cost­
effectiveness
 
Traditional
Approach
Cost­
effectiveness
analysis
is
a
policy
evaluation
tool
that
allows
comparisons
of
regulatory
alternatives.
The
concept
of
cost­
effectiveness
can
be
defined
simply
as
getting
the
greatest
benefits
for
a
given
expenditure
or
imposing
the
least
cost
for
a
given
level
of
benefits.
In
Exhibit
8.17,
the
test
would
be
to
see
if
any
alternative
was
to
the
right
and
completely
below
any
other
alternative.
If
so,
the
alternative
to
the
right
and
below
would
be
more
cost­
effective
and
"
dominate"
the
alternative
that
provided
fewer
benefits
at
higher
costs.

In
Exhibit
8.17,
some
graphs
show
the
lower
range
of
the
cost
estimate
for
Alternative
A2
extending
below
the
top
of
the
cost
range
for
Alternative
A3.
Does
this
mean
that
Alternative
A2
in
some
cases
"
dominates"
A3?
The
answer
is
no,
because
the
modeling
approach
that
generates
the
higher
portion
of
the
cost
range
for
Alternative
A3
also
generates
the
higher
portions
of
the
range
for
Alternative
A2.
Thus,
it
is
most
appropriate
to
compare
corresponding
values
from
each
range
to
determine
the
possibility
or
extent
of
overlap.
In
the
cases
shown,
therefore,
Alternative
A2
cannot
be
said
to
be
more
cost
effective
than
Alternative
A3.

In
the
strict
sense,
each
of
the
regulatory
alternatives
is
cost
effective
 
no
regulatory
alternative
provides
more
benefits
at
the
same
or
a
lower
cost
than
another,
and
no
alternative
can
achieve
lower
costs
for
the
same
or
a
greater
level
of
benefits
than
another.
Thus,
no
alternative
dominates
any
other
or
is
more
cost
effective.
Instead,
the
alternatives
offer
increasing
levels
of
benefits
at
increasing
levels
of
cost,
as
seen
in
Exhibit
8.17.

The
alternatives
shown
in
Exhibit
8.17
map
boundaries
of
cost­
effective
alternatives.
In
addition
to
allowing
a
visual
test
of
cost­
effectiveness,
the
exhibit
also
shows
information
graphically
about
the
incremental
benefits
of
each
alternative.
Compared
to
Alternative
A4,
the
Preferred
Alternative
achieves
significant
incremental
benefits
at
a
relatively
low
increase
in
costs.
The
step
to
Alternative
A2
achieves
more
benefits,
but
at
higher
incremental
rate.
The
step
to
Alternative
A1
achieves
a
similar
increase
in
benefits,
but
at
a
significantly
higher
cost.
The
Preferred
Alternative,
and
perhaps
Alternative
A2,
appear
to
be
good
values;
other
alternatives
have
either
significantly
fewer
benefits
for
similar
costs
or
greater
benefits,
but
at
dramatically
higher
costs.
8­
32
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
$
1,125
$
1,150
$
1,175
$
1,200
$
1,225
$
1,250
$
1,275
Alt
4
Alt.
3
Alt.
2
Alt.
1
$
0
$
50
$
100
$
150
$
200
$
250
$
300
$
350
$
400
$
450
$
500
$
300
$
325
$
350
$
375
$
400
$
425
$
450
$
475
Alt.
4
Alt.
3
Alt.
2
Alt.
1
$
250
$
270
$
290
$
310
$
330
$
350
$
370
$
390
$
410
Alt.
4
Alt.
3
Alt.
2
Alt.
1
3
Percent
Discount
Rate
7
Percent
Discount
Rate
ICR
Data
Set
Costs
($
Millions)

ICRSSL
Data
Set
Costs
($
Millions)

Mean
of
Benefits
($
Millions)
Mean
of
Benefits
($
Millions)
$
0
$
50
$
100
$
150
$
200
$
250
$
300
$
350
$
400
$
450
$
500
$
1,325
$
1,350
$
1,375
$
1,400
$
1,425
$
1,450
$
1,475
$
1,500
Alt.
4
Alt.
3
Alt.
2
Alt.
1
$
0
$
50
$
100
$
150
$
200
$
250
$
300
$
350
$
400
$
450
$
600
$
650
$
700
$
750
$
800
$
850
Alt.
4
Alt.
3
Alt.
2
Alt.
1
$
520
$
560
$
600
$
640
$
680
$
720
Alt.
4
Alt.
3
Alt.
2
Alt.
1
ICRSSM
Data
Set
Costs
($
Millions)
Exhibit
8.17a
Range
of
Annualized
Costs
at
Mean
Benefit
Level,
All
Regulatory
Alternatives
 
Enhanced
Cost
of
Illness
[
1]
8­
33
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
$
750
$
775
$
800
$
825
$
850
Alt
4
Alt.
3
Alt.
2
Alt.
1
$
0
$
50
$
100
$
150
$
200
$
250
$
300
$
350
$
400
$
450
$
500
$
200
$
225
$
250
$
275
$
300
$
325
Alt.
4
Alt.
3
Alt.
2
Alt.
1
$
1
8
0
$
200
$
220
$
240
$
2
6
0
$
280
Alt.
4
Alt.
3
Alt.
2
Alt.
1
3
Percent
Discount
Rate
7
Percent
Discount
Rate
ICR
Data
Set
Costs
($
Millions)

ICRSSL
Data
Set
Costs
($
Millions)

Mean
of
Benefits
($
Millions)
Mean
of
Benefits
($
Millions)
$
0
$
50
$
100
$
150
$
200
$
250
$
300
$
350
$
400
$
450
$
500
$
900
$
925
$
950
$
975
$
1,000
Alt.
4
Alt.
3
Alt.
2
Alt.
1
ICRSSM
Data
Set
Costs
($
Millions)

$
0
$
50
$
100
$
150
$
200
$
250
$
300
$
350
$
400
$
450
$
400
$
425
$
450
$
475
$
500
$
525
$
550
Alt.
4
Alt.
3
Alt.
2
Alt.
1
$
520
$
5
4
0
$
5
6
0
$
5
8
0
$
6
0
0
$
620
$
640
$
660
$
680
$
700
Alt.
4
Alt.
3
Alt.
2
Alt.
1
Exhibit
8.17b
Range
of
Annualized
Costs
at
Mean
Benefit
Level,
All
Regulatory
Alternatives
 
Traditional
Cost
of
Illness
[
1]

Notes
(
from
8.17a
and
8.17b):
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.
Source:
Exhibits
8.10
and
8.11.
8­
34
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
Cost
Per
Illness
Avoided
and
Cost
Per
Death
Avoided
Other
measures
related
to
cost­
effectiveness
are
available
for
analyzing
the
performance
of
the
alternatives.
These
measures
must
be
used
with
care,
and
they
should
not
be
used
alone
to
rank
the
alternatives.
The
first
measure
is
the
cost
for
each
illness
and
death
avoided.
EPA
has
performed
this
analysis
for
the
mean
quantified
benefits
of
the
LT2ESWTR,
resulting
in
a
cost
to
avoid
each
expected
illness
and
death
due
to
cryptosporidiosis
(
Exhibit
8.18).

Each
regulatory
alternative
prevents
both
illnesses
and
deaths,
but,
in
Exhibit
8.18
and
for
the
analysis
below,
illnesses
and
deaths
are
considered
separately.
EPA
has
estimated
the
mean
quantified
benefits
of
preventing
a
case
of
cryptosporidiosis
to
be
about
$
745
with
the
Enhanced
COI
approach
and
$
245
with
the
Traditional
COI
approach
(
2000$,
unadjusted
for
future
income
growth).
Most
alternatives
have
costs
per
case
of
illness
at
or
below
the
Enhanced
COI
value
(
using
present
value
of
costs
over
the
25
years
divided
by
the
illnesses
avoided
over
the
25­
year
period).
Only
Alternative
A1
using
occurrence
distribution
based
on
the
ICRSSL
data
set
exceeds
this
level.
If
the
Traditional
COI
is
used
for
comparison,
Alterative
A1
almost
never
meets
the
test.
Using
the
occurrence
distribution
based
on
the
ICRSSL
data
set,
Alternatives
A2
and
A3
also
do
not
meet
this
test.
Again,
this
is
considering
just
one
category
of
benefits
against
all
costs,
but
even
with
that
restriction,
three
of
the
alternatives,
including
the
Preferred
Alternative,
pass
this
test
of
being
consistently
worthwhile.

When
considering
the
values
of
deaths
avoided,
EPA
uses
a
distribution
to
represent
the
value
of
a
statistical
life.
For
this
simplified
test,
the
mean
value
of
$
7
million
can
be
used
for
comparison
(
2000$,
adjusted
for
future
income
elasticity,
section
5.3.1.2).
Again,
the
alternatives
perform
well;
almost
all
have
costs
per
life
saved
below
this
value
(
Alternative
A1
exceeds
this
value
in
one
of
the
four
possibilities:
3
percent,
ICRSSL).

The
alternatives
may
be
compared
to
a
standard
measure
(
as
above)
that
can
be
used
as
a
threshold.
Comparing
alternatives
to
one
another
using
these
measures,
however,
creates
difficulties.
This
is
because
ratios
of
numbers
can
be
misleading
compared
to
absolute
values
(
such
as
net
benefits).
As
an
example,
an
alternative
with
the
lowest
cost
per
illness
or
death
avoided
may
not
have
the
highest
net
benefits.
This
is
because
as
alternatives
reach
higher
and
higher
net
benefits,
the
marginal
benefits
are
usually
declining.
Thus,
an
optimal
alternative
(
in
an
economic
sense
of
highest
net
benefits)
usually
will
have
lower
average
benefits
than
alternatives
that
accomplish
less.
This
analysis
does
not
compare
alternatives
using
these
measures
because
it
is
not
expected
to
help
identify
the
optimal
alternative.
8­
35
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
3%
7%
3%
7%
3%
7%
3%
7%
A1
339
$
244
$
2.5
$
1.8
$
4.1
3.3
2.8
2.2
A2
128
$
93
$
0.9
$
0.7
$
11.0
8.6
7.3
5.8
A3
­
Preferred
107
$
78
$
0.8
$
0.6
$
13.2
10.3
8.8
6.9
A4
62
$
45
$
0.4
$
0.3
$
23.4
18.0
15.8
12.1
A1
1,098
$
789
$
8.0
$
5.7
$
1.3
1.0
0.8
0.7
A2
356
$
259
$
2.5
$
1.8
$
4.0
3.2
2.7
2.1
A3
­
Preferred
282
$
208
$
1.9
$
1.4
$
5.2
4.0
3.5
2.7
A4
165
$
122
$
1.1
$
0.8
$
9.1
7.1
6.3
1.2
A1
631
$
453
$
4.6
$
3.3
$
2.2
1.8
1.5
3.5
A2
213
$
155
$
1.6
$
1.1
$
6.7
5.2
4.5
4.4
A3
­
Preferred
170
$
125
$
1.2
$
0.9
$
8.4
6.5
5.7
4.4
A4
99
$
73
$
0.7
$
0.5
$
14.9
11.6
10.1
7.9
ICRSSM
Cost
Per
Illness
Avoided
($)
Cost
Per
Death
Avoided
($
Millions,
2000$)
Benefit/
Cost
Ratio
(
Enhanced
COI)

ICRSSL
ICR
Data
Set
Rule
Alternative
Benefit/
Cost
Ratio
(
Traditional
COI)
Exhibit
8.18
Cost
per
Illness
or
Death
Avoided,
By
Data
Set,
COI
Type
[
1]

Notes:
[
1]
The
traditional
COI
only
includes
valuation
for
medical
costs
and
lost
work
time
(
including
some
portion
of
unpaid
household
production).
The
enhanced
COI
also
factors
in
valuations
for
lost
personal
time
(
non­
work
time)
such
as
child
care
and
homemaking
(
to
the
extent
not
covered
by
the
traditional
COI),
time
with
family,
and
recreation,
and
lost
productivity
at
work
on
days
when
workers
are
ill
but
go
to
work
anyway.

Source:
Derived
from
Appendix
O,
3%
from
Exhibit
O.
5b,
column
K,
Exhibit
O.
3b,
column
K,
and
O.
4b,
column
M;
7%
from
Exhibit
O.
5c,
column
K,
Exhibit
O.
3c,
column
K,
and
Exhibit
O.
4c
column
M,
Row
­
Mean,
A1­
A4,
ICR
and
ICRSSL,
Present
Value,
3
and
7
percent,
and
Exhibit
8.3,
Annual
Illnesses
Avoided
and
Annual
Deaths
Avoided,
"
Mean"
columns,
Annual
Average
Over
25
Years.

Benefit­
Cost
Ratios
In
addition
to
an
evaluation
of
cost
per
illness
avoided,
EPA
has
evaluated
the
benefit/
cost
ratio
for
each
alternative.
This
measure
compares
the
ratio
of
the
overall
value
of
benefits
to
the
overall
costs
(
including
costs
to
the
States).
The
benefit­
cost
ratio
is
used
as
a
threshold
measure
of
costeffectiveness
Benefit/
cost
ratios
should
exceed
1,
that
is,
benefits
should
exceed
costs.
All
but
two
of
the
ratios
shown
in
Exhibit
8.18
are
above
this
cost­
effectiveness
threshold
based
on
mean
values
of
benefit
and
cost
estimates.
This
is
not
surprising
given
that
this
proportion
is
simply
another
way
of
expressing
the
results
of
section
8.2.3,
National
Net
Benefits.
If
the
nonquantified
benefits
were
included,
the
ratios
would
all
be
larger.

8.4
Effect
of
Uncertainties
on
the
Benefit­
Cost
Comparisons
Detailed
discussions
of
the
uncertainties
and
assumptions
associated
with
the
national
benefits
and
costs
are
contained
in
Chapters
5
and
6,
respectively.
Exhibit
8.19
is
a
summary
of
the
most
important
assumptions
and
their
effects
on
the
estimates.
The
conclusion
is
that
the
overall
uncertainties
regarding
the
occurrence
of
Cryptosporidium
in
drinking
water
have
been
greatly
reduced
over
the
past
several
years
through
many
data
collection
efforts,
the
most
significant
being
the
Information
Collection
Rule
and
the
ICR
Supplemental
Surveys.
The
result
is
that
many
uncertainties
have
been
identified,
researched,
and
where
possible,
resolved.
As
can
be
seen
in
Exhibit
8.19,
the
remaining
uncertainties
are
8­
36
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
inherent
in
the
data
and
represent
assumptions
where
the
direction
of
the
biases
is
unknown.
The
largest
uncertainty
that
affects
the
conclusions
in
this
EA
is
that
surrounding
the
infectivity
of
C.
parvum.

Exhibit
8.19
Effects
of
Uncertainties
on
the
National
Estimates
of
Benefits
and
Costs
Assumptions
for
Which
There
Is
Uncertainty
Section
with
Full
Discussion
of
Uncertainty
Effect
on
Estimates
Under­
estimate
Overestimate
Under­
or
Overestimate
Benefits
Not
all
benefits
are
quantified
8.2.1,
5.2.3
X
Infectivity
for
C.
parvum
estimated
from
three
known
isolates
5.2.3
X
Source
water
concentrations
estimated
using
three
data
sets,
calculation
of
central
tendencies,
and
bounds
5.2.4.1
X
Fraction
of
oocysts
that
are
infectious
(
represented
by
triangular
distribution)
5.2.4.1
X
Pre­
LT2
removal/
inactivation
using
triangular
distributions
(
with
uncertain
modes)
5.2.4.1
X
Value
of
illnesses
avoided
based
on
COI
data
rather
than
WTP
data
5.3.1.1
X
Costs
Using
ICR,
ICRSSL,
and
ICRSSM
occurrence
distribution
data
to
predict
plant
binning
4.5.3
X
Single
flow
used
to
evaluate
unit
costs
within
each
of
9
size
categories
6.5.1
X
Potentially
lower
cost
treatment
options
not
considered
6.5.1
X
Typical
water
quality
and
operating
parameters
used
to
estimate
unit
costs
6.5.1
X
8­
37
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
8.5
Summary
of
Benefit
and
Cost
Comparisons
The
following
is
a
summary
of
the
important
points
regarding
the
potential
net
benefits
of
the
LT2ESWTR.

The
Preferred
Alternative
passes
key
threshold
economic
criteria:

°
The
Preferred
Alternative
(
A3)
has
positive
net
benefits
(
Exhibit
8.12).
(
In
fact,
this
is
also
true
for
Alternatives
A2
and
A4,
and
true
for
Alternative
A1
under
10
of
the
12
possible
scenarios
of
occurrence,
COI
value,
and
discount
rate.)
In
other
words,
for
these
alternatives,
benefits
are
very
likely
to
exceed
costs
(
Exhibit
8.5)
and
have
a
benefit­
cost
ratio
greater
than
1.0
(
Exhibit
8.18).
This
conclusion
is
especially
strong
because
the
benefit
estimates,
which
do
not
include
the
value
of
the
unquantified
benefits,
are
underestimated.

°
The
number
of
illnesses
needed
to
break
even
relative
to
costs
is
well
below
the
mean
estimated
number
of
avoided
illnesses
and
deaths
(
Exhibits
8.7a
and
8.7b).

°
The
Preferred
Alternative
is
cost­
effective:
no
other
alternative
achieves
greater
benefits
at
the
same
cost
or
the
same
benefits
at
lower
cost
(
Exhibit
8.17).

°
The
Preferred
Alternative
is
cost­
effective
based
on
the
cost
of
the
rule
and
the
number
of
illnesses
avoided
and
the
number
of
deaths
avoided
(
this
is
also
true
for
Alternatives
A2
and
A4)
(
Exhibit
8.18).
Quantified
benefits
so
far
exceed
costs
for
these
alternatives
that
using
either
the
value
of
illnesses
or
deaths
avoided
alone
exceeds
this
threshold.

The
Preferred
Alternative
is
the
superior
alternative
across
a
wide
variety
of
measures
when
considering
all
combinations
of
occurrence
data
sets,
discount
rates,
and
COI
values:

°
The
Preferred
Alternative
shows
the
highest
mean
net
benefits
under
more
conditions
than
any
other
one
alternative
(
Exhibits
8.12,
8.15,
and
8.16).

°
In
the
analysis
of
incremental
benefits,
the
Preferred
Alternative
is
almost
always
one
of
the
two
possible
alternatives
that
are
nearest
the
optimal
net
benefit
point
(
Exhibit
8.13).

The
Preferred
Alternative
is
the
superior
alternative
when
benefits
are
near
the
average
values
estimated.
At
substantially
higher
levels
of
estimated
benefits,
Alternative
A2
becomes
economically
superior:

°
The
net
benefits
of
the
Preferred
Alternative
are
most
often
highest
near
the
mean
value
of
benefits
and
over
much
of
the
range
reflecting
uncertainty
in
benefits
estimates
(
Exhibits
8.15
and
8.16).
If
unquantified
benefits
were
determined
to
be
substantially
higher,
Alternative
A2
would
become
an
increasingly
better
choice
from
an
economic
perspective.

Alternative
A3
was
recommended
by
the
Stage
2
Microbial
Disinfectants
and
Disinfection
Byproducts
(
Stage
2
M­
DBP)
Advisory
Committee.
Based
on
this
recommendation,
and
supported
by
the
evaluations
presented
above,
EPA
selected
Alternative
A3
as
the
Preferred
Alternative.
Economic
Analysis
for
the
LT2ESWTR
Proposal
June
2003
9­
1
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Cases
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18.
Task
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Epidemiological
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giardiasis
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levels
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September
23.
Task
3.
Epidemiological
and
water
supply
information
from
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of
cryptosporidiosis
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levels
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