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6.2. Lead-Based Paint Hazard Reduction

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Title X of The Residential Lead-Based Paint Hazard Reduction Act of 1992 added to the Toxic Substances Control Act (TSCA) a new title, Title IV – Lead Exposure Reduction. While lead-based paint was banned in 1978, many older buildings contain lead-based paints. The document TSCA Title IV, Sections 402(a) and 404: Target Housing and Child-Occupied Facilities Final Rule Regulatory Impact Analysis reviews a rule that implements two sections of Title IV making it clear that the objective of the rule is to place a floor under the variable quality of abatement services to achieve a reduction in lead exposure.

"Section 402 mandates that all individuals engaged in lead-based paint activities in target housing and child-occupied facilities be properly trained, that training programs be accredited, and that contracting firms be certified. It also requires EPA to establish standards for performing lead-based paint activities that are reliable, effective and safe. Section 404 authorizes states to administer and enforce the standards and regulations established under Sections 402 and 406. … Section 404 also requires EPA to develop a model State Program that may be adopted by States seeking to administer and enforce a State program under this Title." (p. 1-1)

"Target housing includes all housing units built before 1978 except housing for the elderly or persons with disabilities (unless a child who is less than 6 years old resides in the unit) and any zero bedroom unit. Child-occupied facilities (COFs) include schools, preschools, day care facilities, and other buildings or units within a building constructed prior to 1978 where a child 6 years of age or younger spends at least 3 hours a day two days a week." (p. 4-6)

The document considers no regulatory alternatives but the final regulation differs from an earlier proposed one.

Costs

The costs of the program fall into three categories:

Work Practice Standards: Costs resulting from the imposition of reliable, effective and safe standards for performing lead-based paint activities;
Training, Accreditation, and Certification Requirements: Costs resulting from the training and certification requirements (including the accreditation of training providers) for lead-based paint inspection, risk assessment, and abatement personnel; and
Program Administration: Costs of establishing and operating State, Indian Tribe, or Federal programs to administer, monitor, and enforce the standards, regulations, or other requirements established under 402(a). (p. 5-1)

Costs are incremental. That is, they are the excess over what would be incurred absent the regulation.

Work practice standards costs are proportional to the activity levels of the abatement tasks: inspections, screenings, risk assessments, abatements. Ibid., pp. 5-3 to 5-8. These activity levels are assumed from experience. At a three percent discount rate, the present value of these costs for the rule’s first 50 years is $637 million. Ibid., p. 5-17.

Training, accreditation and certification costs of the various abatement specialists are also dependent on activity levels but in a complex fashion that captures training, refresher training, and turnover and accounts for the opportunity cost of time spent in training. Ibid., pp. 5-8 to 5-14. The comparable present value for these costs is $228 million. Ibid., p. 5-22.

Costs of enforcement are expected to be borne by the states and are also sensitive to the level of activity. Ibid., pp. 5-22 to 5-25. The comparable present value for these costs is $249 million. Ibid., Exhibit 5.13, p. 5-25. The total of these three costs is $1,114 million. Ibid., p. 5-24.

Benefits

The benefits section enumerates a large number of potential benefits of the rule but quantifies and monetizes only one of them due to lack of exposure and dose-response functions for lead. That category is neurological (intelligence) damage to infants and children less than 7 years old living in abated residential units and visiting COFs. (p. 6-3,) No economic benefits are estimated for possible reductions in ecological damage. And instead of estimating the incremental benefits of the rule, the document estimates total benefits, which include benefits not related to the rule.

That is, the benefits in one category, intelligence damage to children, will be overstated by measuring total rather than incremental benefits but all other categories will go unmeasured. The lead-intelligence model is detailed and considers exposure, blood lead level response distribution and the dose-response relationship between blood lead and intelligence. The near final step is an empirical relationship between IQ and income.

"The average benefits to infants and children from completely abating housing units with interior paint lead content greater than 1 mg/cm2 and in deteriorated condition, or in good condition on friction surfaces, or soil levels greater than 5,000 ppm, are about $9,000. This includes benefits accruing to not only the current resident children, but also potential future residents that may occupy the abated unit at some time during the next 50 years." (p. 6-28)

The present value of benefits from 49 years of residential abatements at a 3 percent discount rate is $13.1 billion. Ibid., p. 6-28. A similar but less rigorous benefit study is made for abating child-occupied facilities. Here, the result is a benefit per abatement of $268 thousand and a comparable present value of $3 billion. Ibid., p. 6-32. The total, of course, is $16.1 billion.

Benefit-Cost Analysis

The document acknowledges that it is weaker on the benefits side than on the cost side:

"While there exist some uncertainties on the cost side, … a reasonable estimate can be made … Calculating the incremental benefits of 402(a) and 404 for all categories of benefits, however, is not possible at this time because much of the necessary information is unavailable. The estimation of benefits is limited by the lack of quantified information on the incremental reductions in human and ecosystem exposure that will result." (p. 8-1, emphasis in original)

The total benefits of one category and the incremental costs – $16.1 billion and $1.114 billion, respectively – are reproduced in the benefit-cost analysis chapter. Ibid., Exhibit 8.1, p. 8-2. The question of whether benefits exceed costs still remains, however, because the former number is an estimate of total, not incremental benefits. However, if the incremental rather than the total benefits of just this one category exceed costs, then the case is certainly made. The document suggests that such is the case:

"Even when restricted to the limited coverage of the effects of lead-based paint exposure that are included in this analysis, it is possible, and even likely, that the measured benefits associated with 402(a) and 404 will exceed the costs of the regulations. The total measured benefits of abatements are 14.45 times the incremental costs. Thus, if the TSCA 402(a) rule increases the measured benefits of target housing abatements (using current industrial practices) by as little as 7.5 percent, the benefits would exceed the costs of the regulation." (p. 8-6)

It is difficult to say how likely a 7.5 percent improvement is. However, the document elsewhere recounts studies indicating how ineffective and dangerous abatements have been and how much opportunity there is for improvement.

"Published medical and public health literature provides compelling anecdotal evidence of lead toxicity associated with poorly performed abatements." (p. 3-6)

"Despite the good intentions of people performing lead paint abatements in an attempt to lower the hazard to children from lead-based paint, recent reports indicate that the abatement often has the undesired effect of increasing, at least temporarily, the child’s blood lead." (p. 3-7)

[In one cited study, by] "six months following the abatements, it was clear that neither form of [unregulated] abatement resulted in long-term reductions of blood lead or house dust lead levels, leaving the occupant children at continued risk …." (p. 3-7)

"Amitai et al. provide evidence that while abatements can result in an immediate (and perhaps temporary) rise in the blood lead levels of residents, better procedures can result in both short-term decreases in blood lead levels, and larger long-term decreases." (p. 3-8)

Other Impacts

The document contains an analysis of the rule’s impact on small business as required by the Regulatory Flexibility Act. The analysis finds that compliance cost ranges, as a percentage of sales, from 0.6 percent to 3.2 percent with the percentage inversely related to size. Ibid., p. 9-6. The analysis concludes:

"Firms are likely to pass these costs on to their customers in the form of higher prices because the regulations apply to all firms … Therefore, the ratios … tend to overestimate the impacts. Since training and licensing costs are a small percent of operating costs, and these percentages are only slightly higher for small businesses than for large ones, the impact of this regulation on small businesses will be small, as is the differential between impacts on large and small businesses." (p. 9-9)

There is also an environmental justice analysis. As regards minority business:

"It is difficult to draw any conclusions as to whether there is a disproportionate effect on minority businesses and personnel." (p. 9-23)

Impacts on households are also considered:

"Most of the abatements under the Lead-Based Paint Hazard Reduction Act of 1992 will be voluntary, and wealthier households are more likely to have the means to abate an existing problem in their home .… Thus even though a national strategy of eliminating lead-based paint risks targets a problem affecting a greater share of poor households and African-Americans, the impact of income on the ability to undertake voluntary abatements may result in a more inequitable distribution of the risks in the future." (p. 9-32)

Lastly, the document investigates whether the rule creates any unfunded mandates under the Unfunded Mandates Reform Act of 1995 and concludes in the negative

"Because the rule implements mandates specifically and explicitly set forth by the Congress in TSCA section 404(a) and section 404 without the exercise of any political discretion by EPA." (p. 9-32)


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