The Design Builder's Blog

EPA Announces Plan To Inspect Contractors For RRP Compliance

The Boston EPA Office, in an effort to improve compliance with laws that protect children from lead paint poisoning, has announced it will be sending letters to approximately 200 home renovation and painting contractors, property management companies and landlords in and around New Haven, Conn. announcing a compliance assistance and enforcement initiative.  According to an April 7, 2014 press release the EPA letter outlines steps EPA will be taking to increase compliance by these entities with the EPA RRP Rule.

EPA says they will offer compliance assistance

According to the press release the letter EPA is sending to New Haven-area contractors, landlords and property management companies invites these entities to an information session to be held at the New Haven Health Department office on April 16, 2014 from 3 to 6 pm where EPA says it will provide an overview of the RRP Rule requirements, and introduce an expedited settlement offer for one violation of the RRP Rule. It’s not clear from the press release what the settlement will be or what violations they are referring to. 

In addition to the information session, during April and May, EPA says it will offer compliance assistance on the RRP Rule to companies and the public in the New Haven area.   The press release did not offer any details on what type of compliance assistance would be offered.

WARNING: EPA also says they will also be inspecting to verify compliance

The letter will also notify the contractors that EPA will be inspecting a number of them in June 2014.  According to the press release EPA lead inspectors will inspect numerous renovation, painting and property management companies in the New Haven area regarding their compliance with the RRP Rule. The inspections may be followed up with enforcement.

Besides increasing protection for children’s health, EPA says it aims to ensure a “level playing field” for individuals and companies that are already complying with the RRP Rule.  To extend its reach, EPA says it is coordinating with many agencies, including the New Haven Health Department and the Connecticut Department of Public Health on this initiative.

Why New Haven CT and who might be next?

EPA says it is doing this initiative in the New Haven area because public health records indicate that New Haven has one of the highest rates of childhood lead exposure in New England. 

So, will contractors be happy about this?

The RRP Rule has caused much controversy in the remodeling industry.  Some contractors want to see the rule go away altogether.  Others are OK with the rule and its purpose, but have complained that the lack of enforcement and the ineffective public outreach efforts to date have made it difficult to compete with business that do not comply; due to the additional costs related to rule compliance. 

Time will tell whether this intuitive will help improve compliance in any significant way and or really have any effect on leveling the playing field.   Either way it’s likely that EPA will use the findings and enforcement of this initiative to capture the attention of contractors in the New Haven area.  Contractors outside of CT may also want to consider that this may be a test program that could eventually be put in place in other areas of the country.

If anyone reading this receives one of the letters I hope you will share it with me so I can share it here at the Design/Builders Blog.

Current State of the RRP Rule; An EPA performance Report Card

Back in April of 2012 I published a blog where I offered a report card on how I thought the EPA was doing regarding the RRP Rule.  In this blog I offer an update on the RRP Rule as of October 2013.   I had prepared and presented this information at the Lead & Healthy Housing Northeast Regional ConferenceLead & Healthy Housing Northeast Regional Conference on October 9, 2013 in Mystic, CT.  

Overall the performance of the EPA has continued to be dismal.  

As you will see from the information I provide below, due to the lack of accountability and the poor business practices of EPA, the purpose of the rule, to protect children from lead poisoning due to renovations, has definitely been compromised.   Many, including me, are also of the opinion that due to EPA's handling of the rule more children are at risk of lead poisoning. 

I hope by sharing this information, those who are in favor of protecting children from the dangers of lead due to renovations will make it a strategic priority to hold EPA accountable to rethink the practicality of the rule.  Hold them accountable to establishing and using objective metrics that measure EPA and the rule's performance.  And, most importantly, to make sure if performance objectives are not achieved those responsible for those objectives will be identified and removed from their positions.   The health and well-being of our nation's children are too important to tolerate the kind of performance the EPA has demonstrated to date.  If you agree, make sure you speak to your political representatives and get their commitment to hold EPA accountable.

The following is my summary of the state of the RRP Rule and EPA's performance to date, separated by subject categories:

Subject: Outreach about the Rule:

• On April 1, 2012 I gave the EPA a “D”, now I give them an “F”
• EPA has claimed to have done extensive outreach to consumers and the regulated community. 
• They list a variety of methods used and places where ads and announcements were placed.  
• According to a survey done by Professional Remodeler magazine, published in February 2012, 65% of remodelers surveyed estimated that less than 10% of their potential clients were aware of the rule.
• On an early 2012 webinar with EPA Officials Regarding RRP public awareness and enforcement efforts hosted by NCHH, I asked EPA officials if they were doing any tracking to check the actual effectiveness of their outreach efforts.  They were not. 
• Essentially the answer was that EPA is not a professional marketing organization and has no way of tracking results.   But they said they will be doing more outreach…
• If EPA's outreach efforts have not produced adequate results so far, perhaps those assigned to design and implement the outreach tactics need to be held accountable to established desired results.  Spending money on outreach efforts without also measuring results is not a sound strategy for success.

Subject: Getting Firms Certified

• EPA requires all firms doing renovation, repair and painting work on homes built prior to 1978 become EPA Certified Firms before performing or offering to perform such work.
• On April 1, 1012 I gave the EPA an “F”.  It’s still an “F”
• Before the rule came into effect EPA stated it estimated 211,000 firms engaged in renovation, repair and painting needed to become certified firms.  They also recognized there were other businesses that would need to become certified firms.
• In the first two years post-RRP rule (ending in April 2012), the EPA expected 284,000 firm certifications.  Only 100,000 firms were certified, or 35% of those expected.
• As of April 2012 EPA’s EPA web site claimed that EPA had certified 97,746 firms (118,885 firms including those approved by authorized states). 
• I could not find a recent number of certified firms on the EPA web site
• According to a report by the Joint Center for Housing Studies at Harvard University, in 2007 more than 650,000 businesses received a majority of their revenue by providing remodeling services.  The pie chart below is from the report.

 

 

• The Harvard numbers do not include the large number of part-time, semi-retired, and “moonlighting” contractors reporting gross revenues of less than $25,000.   
• I think we also know there are also many illegally operating contractors, operating under the radar, which did not make it into the census count. 
• Also, the count does not appear to consider other related business types such as plumbers, electricians, wood floor refinishers, exterminators (20,000), landlords, property management firms, banks that own foreclosed properties, housing authorities, or cities/towns and municipalities (18,443).

Subject: Enforcement

• There are 13 states that have taken over the rule so far.  That leaves 37 states plus American Samoa, District of Columbia, Guam, US Virgin Islands and Puerto Rico under administration and enforcement by EPA. 
• On April 1, 2012 I gave the EPA an “F”.  It’s still an “F”
• As of April 2012 EPA had only published one enforcement action.  Several have been published since then.
• I could not find a current number of enforcement actions.  I think the state of Massachusetts, which took over the rule in Massachusetts, as one state has done much more enforcement than EPA.
• Without a plan for adequate enforcement and the money to finance adequate enforcement, the rule in its current state is not a practical solution for protecting children.
• Without adequate enforcement, complying business are essentially being punished while non-complying businesses enjoy a financial advantage in the marketplace.  This problem is also facilitated due to the lack of effective public outreach.

Subject: Protecting Children

• On April 1, 1012 I gave the EPA an “Incomplete”.  It’s still incomplete.   So, because they haven’t provided any objective metrics, they now get an “F” from me.
• It is a fact that lead is poisonous and RRP activities can cause lead poisoning.
• EPA does not know how many children were actually poisoned by RRP activities before the rule came into effect.
• If you check any of the data it refers to RRP activities as the “likely source” of lead poisoning, not “the cause”.
• EPA still has no way to know if the RRP rule is making a difference or not. 
• Without knowing where EPA started and where we are now that the rule has been in place, EPA has no idea if what they have been doing is effective enough and or if or where it can improve effectiveness within the rule. 
• Unfortunately, the rule may also be causing more children to be poisoned than before the rule came into effect, because of EPA's inability to adequately enforce it. 
• As warned by the stakeholders before the rule came into place, the RRP Rule has fostered an underground economy of contractors purposely ignoring the rule to keep prices down and improve their ability to sell jobs.

Subject: Costs vs. Benefits

Note: Info below is directly from an EPA Office of Inspector General Report dated 7/25/12 titled: “Review of Hotline Complaint Concerning Cost and Benefit Estimates for EPA’s Lead-Based Paint Rule”

• 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.
• 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.

***From EPA FAQ: “And because EPA’s estimates reflect the cost to contractors, not the price paid by homeowners, the estimates do not include the contractor’s mark-up for profits."

• The report clearly stated:
• “Sound data on the rule’s benefits were not available at the time of the rulemaking, and this limitation was known to EPA and its scientific advisory committee. However, EPA went forward with the rule because its benefit-cost analysis indicated that the rule generated substantial benefits, and because EPA was legally obligated to issue the rule.”
• “In our opinion, the data limitations in EPA’s analyses limit the reliability of the rule’s stated cost and benefits. 
• “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.

• In 2011, President Obama’s Executive Order 13563, Improving Regulation and Regulatory Review, directed all federal agencies to develop plans for periodically reviewing existing regulations to determine whether any should be modified, streamlined, expanded, or repealed.
• The 2008 Lead Rule and the 2010 amendment were not included in the scope of EPA’s regulatory review activities as required under Executive Order 13563.

Get Ready, Complying With the RRP Rule Will Get Much More Expensive

EPA to raise RRP fees

Businesses complying with the EPA RRP Rule should plan ahead for increased costs.  Because of EPA's mismanagement and lack of accountability regarding the RRP Rule, the actual costs to administer and enforce the rule have so far dramatically exceeded the fees collected from complying firms.   To address the shortfall of funds EPA plans to raise the fees related to the rule.  This will likely mean that the cost of firm certification and firm re-certifications will dramatically increase.  And, because the RRP rule is required to be self funding, it looks like EPA will need to raise the fees high enough to offset their losses since the program began, as well as their ongoing costs going forward.

The increased costs will definitely add to the advantages non-complying firms have been enjoying so far, further punishing legitimate businesses for complying.  I also predict the increased fees will promote more illegal work, therefore more kid will be needlessly poisoned because many in our our government are incompetent.

The amount of the EPA RRP fee increases is not yet known

Because EPA did not do an accurate estimate of program costs and revenues when they set their original fees, money coming in to support rule administration is not coming anywhere close to the actual costs.   If EPA were a for profit business they would already have gone out of business when it comes to RRP.   But, because the EPA and its leadership are not held to the same standards as for-profit businesses and business leaders, not only will they be allowed to continue operations, those at EPA who are responsible for the RRP rule get to keep their jobs and paychecks, despite such dismal performance.   And, rather than concentrate on fixing their business plan to create financial health, EPA can simply charge their customers more money.   The problem is that their customers, those who must comply with the rule, do not have any other options they can choose from to do business with.  

Here is a summary of information to help you understand what has happened and what to expect going forward

Note: Info below is from an EPA Office of Inspector General Report dated 2/20/13 titled "EPA Is Not Recovering All Its Costs of the Lead-Based Paint Fees Program”

• EPA had not conducted a formal cost study to determine its actual program costs before establishing fees.
• According to the report, EPA is losing money on the RRP program.
• Based on the agency’s estimates since the RRP rule went into effect in 2010, the total loss will amount to around $16.4 million by 2014.
• Fiscal year 2010, the first year of the rule, actually netted a profit of $8.9 million, but costs are exceeding fee collections by $25.3 million for 2011 through 2014.
• The report pointed out three issues contributing to the EPA’s unrecovered costs.

1. The agency has not conducted recommended biennial cost reviews to ensure that fees are in line with costs.  (Think WAG: "Wild Ass Guess")
2. The fee structure also does not take into account all the indirect costs needed to recover the cost of administering the RRP program.
3. RRP firm participation is lower than the EPA projected.

• The report says that by not recovering all of its program costs, “the federal government did not collect funds that otherwise could have been available to offset the federal budget deficit.” (In business speak this means they contributed to the deficit by operating beyond their means.) 
• The OIG recommends that the March 2009 fee schedule for the lead-based paint program be adjusted “to reflect the amount of fees necessary for the program to recover the costs of implementing and enforcing the program.”
• The report indicated that the EPA agrees with the recommendation and "intends" to take “corrective actions".  
• According to the report EPA agreed and plans to conduct a biennial cost review of the RRP program in Fiscal Year 2013.

Wrapping this up!

Here is what the EPA Inspector General had to say:

“The President’s Budget Message for FY 2012 states that reducing the long-term federal deficit must be a priority. The federal government is looking for ways to save money and cut unnecessary costs. We believe that EPA could help the federal government in this endeavor by collecting more lead fees to recover more of its costs"

So to save money and cut unnecessary costs, does your business raise its prices too?