November 3, 2010

Lead; Clearance and Clearance Testing Requirements

Proposed Rule
Summary

Score: 29 / 60

Additional details
Agency
Environmental Protection Agency
Regulatory Identification Number
2070-AJ57
Agency Name
Environmental Protection Agency
Rule Publication Date
05/06/2010
Comment Closing Date
08/06/2010

RULE SUMMARY

EPA is proposing several revisions to the 2008 Lead Renovation, Repair, and Painting Program (RRP) rule that established accreditation, training, certification, and recordkeeping requirements as well as work practice standards for persons performing renovations for compensation in most pre-1978 housing and child-occupied facilities. EPA is particularly concerned about dust-lead hazards generated by renovations because of the well documented toxicity of lead, especially to younger children. This proposal includes additional requirements designed to ensure that lead-based paint hazards generated by renovation work are adequately cleaned after renovation work is finished and before the work areas are re-occupied. Specifically, EPA is proposing to require dust wipe testing after many renovations covered by the RRP rule. For a subset of jobs involving demolition or removal of plaster through destructive means or the disturbance of paint using machines designed to remove paint through high-speed operation, such as power sanders or abrasive blasters, this proposal would also require the renovation firm to demonstrate, through dust wipe testing, that dust-lead levels remaining in the work area are below regulatory levels.

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
The Federal Register notice is available via regulations.gov with a keyword or RIN search. It can also be found via intuitive links, 5 clicks from the EPA home page. However, the Regulatory Impact Analysis can be found only on regulations.gov using a keyword search, not the RIN, and we had to contact EPA to find out what keywords to use.
3/5
2. How verifiable are the data used in the analysis?
Data sources are almost always fully cited, with links provided for more than half. Cost data are based on surveys of fewer than ten firms; RIA reproduces the survey scripts and reports individual survey responses and averages.
5/5
3. How verifiable are the models and assumptions used in the analysis?
Studies cited to justify cost and benefit assumptions, but not market failure assumptions. Analysis of chosen option over-estimates costs by assuming that the renovation firm must re-clean surfaces if they fail inspection the first time. No reason given for this assumption. "Dust Study" used to estimate effects of cleaning practices was peer-reviewed, though reviewers noted it did not involve a representative sample of buildings. An extensive set of tables shows all cost calculations.
3/5
4. Was the analysis comprehensible to an informed layperson?
Preamble is a good example of how to write a Federal Register notice in "plain English." Executive Summary of the RIA provides a good guide to major findings. Recitation of information/assumptions in the RIA is tedious but not difficult to understand. First part of section 5 is a repetitious summary of information already provided elsewhere. Some parts of the RIA use economics jargon, though it is usually explained. Some knowledge of the original rule is necessary to fully understand this one.
4/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
2/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The materials accompanying the rule list numerous specific health and environmental effects of lead exposure, and presumably the rule is intended to reduce these. Specific outcomes linked to specific provisions of the rule are less clear. When the regulation requires renovators to clean to certain standards, the benefit is improved health outcomes that result from reduced exposure to lead. When it only requires that the customer receive test results (which accounts for the vast majority of costs), "improved consumer information" is listed as a vague benefit with no clear outcome that results.
4/5
Does the analysis identify how these outcomes are to be measured?
EPA counts the number of people affected but does not measure value of information, reduction in lead exposure, or any ultimate outcomes. It insists on referring to the number of people affected as the number "protected," with no calculation of the percent of people who actually would have been harmed.
1/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
When cleaning is required, this would reduce lead exposure, hence reducing lead levels in blood and improving health outcomes. Test result disclosure is supposed to "improve information," leading consumers to purchase more lead-safe renovations. This latter effect assumes consumers value lead-safe renovation. Direct link to health effects is not so clearly explained.
3/5
Does the analysis present credible empirical support for the theory?
EPA cites studies to demonstrate the dangers of lead in blood. It cites evidence that renovation increases lead levels in blood and that lead exposure leads to health problems. It also presents evidence from field studies showing that cleaning reduces lead exposure. But in the vast majority of cases, this regulation requires only disclosure. EPA cites no evidence that disclosure leads to improved health outcomes or has value for consumers.
2/5
Does the analysis adequately assess uncertainty about the outcomes?
RIA acknowledges numerous unknowns that make it reluctant to try to measure the outcomes. So, uncertainty is acknowledged, but the analysis doesn't do much about it.
1/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
3/5
Does the analysis identify a market failure or other systemic problem?
Two possible market failures are mentioned: externalities and inadequate information.
5/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
Externalities may occur because owners/managers of rental property do not take benefits of lead abatement to renters into account. Externalities may occur in owner-occupied housing because owners do not consider benefits to future purchasers or neighbors. Renovation firms may have inadequate information about the effectiveness of their cleaning if they do not test for dust afterward. No explanation of why renovators have inadequate incentives to decide whether to gather this information. Property owners and renters may not have adequate information about effectiveness of renovators' cleanup or about lead hazards at a particular property. Analysis contains a paradox: to predict benefits it assumes this information is valuable to consumers, but it does not explain why the information is not currently provided.
3/5
Does the analysis present credible empirical support for the theory?
The RIA presents no empirical evidence that the externality or inadequate information problems actually exist, nor does it measure their magnitude. For example, no survey evidence is presented to assess consumers' knowledge about lead hazards or their confidence in contractors, and no evidence is presented showing whether the effects on neighbors are large or small, or whether property values reflect the degree of lead safety. The discussion is wholly theoretical, followed by an assertion that the quantity of lead-safe renovation practices "is likely to be" inefficiently low. In the preamble, EPA cites empirical evidence that current cleaning verification ("white glove" test) sometimes allows hazardous levels of lead to remain. One study suggests that surfaces that pass cleaning verification have concentrations below hazard levels 91-97 percent of time; another shows greater variability. EPA never defines the "acceptable" level of accuracy.
2/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
Uncertainty about accuracy of cleaning verification could be interpreted as inverse of uncertainty about the size of the problem, But this is not analyzed.
1/5
7. How well does the analysis assess the effectiveness of alternative approaches?
3/5
Does the analysis enumerate other alternatives to address the problem?
Multiple options analyzed, with variation in several dimensions (detailed below).
5/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
Analysis considers several thresholds (amounts of renovation work) that would trigger requirements, a requirement that a third party must perform the dust wipe sampling, a requirement for dust wipe testing only, and a requirement that contractors must always bring lead levels down to EPA's standards. These are reasonably diverse tweaks on the same basic approach of requiring dust wipe testing after the renovation work is done.
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
A chart presents the number of individuals "protected" under the three alternative thresholds. Analysis says the other options would protect the same number of individuals but at a different (unmeasured) level of protection. Since the analysis does not really measure outcomes, listing the number of individuals affected does not say much about outcomes.
1/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
Baseline number of renovation events assumes an opt-out provision is removed, as EPA proposed in Oct. 2009. Fifty-year cost calculations assume that pre-1978 housing stock declines each year at historical rate, so the size of the housing stock with lead paint decreases over time. However, no change is acknowledged that might affect consumer demand for lead paint testing, cleaning, or information.
3/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Monetary outlays are calculated for all alternatives.
5/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
Expenditures on dust wipe testing, cleaning, and training are estimated.
5/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
Analysis notes that some renovators may find it more cost-effective to have their own trained staff in-house. Analysis briefly speculates that renovators may be able to pass on costs to homeowners if homeowners value lead-safe practices. Demand is likely less elastic for child-occupied facilities because these usually have to be licensed and can't use do-it-yourself as an option. Economic theory section suggests that price of lead-safe renovation will rise, but this is efficient. Cost estimates are provided, but no actual price estimates are provided.
3/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
RIA explicitly declines to estimate costs associated with behavioral changes. Analysis mentions that homeowners can opt to do renovations themselves, and this is not covered by the regulation. Economic theory section notes that the effect of this regulation on the amount of do-it-yourself work and total quantity of renovations in ambiguous. RIA assumes no change in the amount of renovation because no estimates of demand elasticity are available. So, the possibility of these costs is recognized, but they are not estimated.
1/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
Some passing acknowledgements about cost uncertainties (eg, small survey sample sizes), but no analysis of uncertainty.
1/5
Does the analysis identify the alternative that maximizes net benefits?
Since benefits are not measured, net benefits are not calculated.
0/5
Does the analysis identify the cost-effectiveness of each alternative considered?
Since benefits are not measured, cost-effectiveness is not calculated.
0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
An appendix with graphs discusses how elasticities of supply and demand affect the likelihood that costs will be passed on to consumers. This is not quantified due to the absence of elasticity estimates for renovations. Tables show costs for different kinds of renovations. Effects on small businesses are calculated, but costs are somewhat misleadingly divided by total revenues rather than revenues from the regulated renovation events.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Analysis estimates number of adults, children under 6, and pregnant women in housing affected by the proposed rule. Since the analysis does not calculate benefits, it does not show how the benefits are distributed among these groups. Analysis also shows the number of low-income children "protected" by the rule.
2/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
The preamble states that this rule is the result of a court settlement. Thus, it is unlikely that the RIA affected the decision
1/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
The RIA did not calculate net benefits. However, for a few marginal decisions, the preamble indicates that the EPA sought to balance costs or practicality vs. likely benefits. EPA recognized that test costs could be a substantial portion of the costs of small projects, and that requiring test certification in all cases would prevent customers from re-occupying their homes while they wait for test results. So there was some sensitivity to net benefit considerations even though net benefits were not calculated. None of these tradeoffs mentioned in the preamble were considered in the RIA.
2/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
No goals or measures established. In cases where additional cleanup is now required, the EPA could conduct something like the "dust study" in the future to assess the effectiveness of the regulation, using the exposure standards to set the goals.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
No discussion of data, and it is not clear that the EPA already has data that could be used to monitor the regulation's outcomes.
0/5
 
Total 29 / 60