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.* *. U.S. Environmental Protection Agency	12-P-0600
£ &M \ Dffiro r»f Incnprtnr	July 25, 2012
^ (fcjl z Office of Inspector General
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' At a Glance
Why We Did This Review
The Office of Inspector
General received a hotline
complaint concerning the
U.S. Environmental Protection
Agency's (EPA's) 2008 Lead;
Renovation, Repair, and
Painting Rule (Lead Rule).
We conducted this review to
evaluate how EPA determined
the costs and benefits of the
Lead Rule.
Background
The purpose of the Lead Rule
was to address lead-based paint
hazards created by renovation,
repair, and painting activities
that disturb lead-based paint in
target housing. Under the rule,
regulated businesses that
perform renovation, repair, or
painting activities must obtain
EPA certification and training,
and ensure that lead-safe work
practices are used for projects
that disturb lead-based paint.
Federal agencies are required to
analyze the costs and benefits
of significant regulatory
actions.
For further information, contact
our Office of Congressional and
Public Affairs at (202) 566-2391.
The full report is at:
www.epa.gov/oiq/reports/2012!
20120725-12-P-0600. pdf
Review of Hotline Complaint Concerning Cost and
Benefit Estimates for EPA's Lead-Based Paint Rule
What We Found
Although EPA stated that its economic analysis underwent extensive intra-
Agency review and was approved by the Office of Management Budget prior to
publication, EPA used limited data to develop its cost and benefit estimates for
the Lead Rule. We did not conclude that EPA violated policies or failed to follow
requirements in conducting its analysis. Rather, EPA conducted its economic
analysis under time pressures and subsequently used its discretion to complete its
analysis using some limited data and approaches. EPA's economic analyses were
limited in that:
•	The estimated cleaning and containment work practice costs to comply
with the rule were not based on a statistically valid survey.
•	EPA did not quantitatively analyze or include other costs outlined in
Agency guidance, such as costs due to increased consumer prices, costs
of unemployment, and costs to markets indirectly affected by the rule.
•	EPA did not include the cost to renovation businesses of securing
additional liability insurance.
•	EPA recommended additional work practices in a training program that,
while not required by the rule, would likely result in additional cost
because the regulated community would view these practices as required.
Further, an EPA science advisory committee reported that limitations in the
Agency's data for estimating intelligence quotient changes in children exposed to
lead dust during renovations would not adequately support a rigorous cost benefit
analysis. In our opinion, the data limitations in EPA's analyses limit the
reliability of the rule's stated cost and benefits. In public rulemaking documents,
EPA acknowledged several of the limitations. EPA's obligation under terms of a
settlement agreement to issue the Lead Rule by March 2008, the use of discretion
in conducting the economic analysis, and EPA's subsequent assumption that the
costs of the rule were low limited EPA's approach in estimating the cost and
benefits of the rule.
Recommendations/Agency Corrective Actions
We recommend that EPA reexamine the costs and benefits of the 2008 Lead Rule
and the 2010 amendment to determine whether the rule should be modified,
streamlined, expanded, or repealed. We also recommend that EPA add a
disclaimer to its training program materials to communicate the differences
between required and recommended work practices. In its response to the draft
report, EPA disagreed with the first recommendation. EPA agreed with the
second recommendation to clarify required work practices and made revisions.

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