Drinking Water:

Revisions to EPA's Cost Analysis for the Radon Rule Would Improve Its Credibility and Usefulness

GAO-02-333: Published: Feb 22, 2002. Publicly Released: Feb 22, 2002.

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The Safe Drinking Water Act requires the Environmental Protection Agency (EPA) to set a drinking water standard for radon. In a proposed rule issued in November 1999, EPA presented a unique and complex drinking water regulation for radon. GAO found that EPA's analysis of the costs to implement the proposed radon rule has several strengths. EPA's estimates of the typical costs for water systems to buy and install radon removal technologies--a key determinant of total national costs--are reasonable for estimating national compliance costs. Moreover, EPA used recommendations from an expert panel to estimate the costs to install and maintain radon removal equipment. EPA also developed a range of annual cost estimates, rather than a single estimate, to account for uncertainty about the extent to which the less costly alternative standard will be adopted by states. EPA's analysis of the national annual costs to comply with its proposed radon drinking water rule has several limitations that, if corrected, would likely increase EPA's best estimate of these costs. EPA made two errors in estimating the various costs associated with programs to reduce radon levels in indoor air under the alternative standard--one that understated radon testing and mitigation costs by $37 million and another that overstated administrative costs by $31 million--resulting in a combined understatement of costs by $6 million. In addition, EPA's exclusion of "mixed" water systems, which use a mix of groundwater and surface water sources, effectively understated compliance costs by about $17 million.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: To provide information on the extent to which costs would change based on revisions to the risk estimates for radon emitted during water treatment by incorporating the National Academies updated risk estimate, EPA agreed to include a sensitivity analysis in the final rule on the extent to which costs and benefits may change based on revisions to the health risk estimates and by the use of updated air dispersion models. The agency plans to promulgate the final rule by January 2009. Providing a sensitivity analysis is responsive to our recommendation.

    Recommendation: To improve the credibility and usefulness of its economic analysis for the final drinking water rule on radon, the administrator, EPA, should require the Office of Water to revise its estimates of the risks from radon emitted during water treatment by incorporating the National Academy of Sciences' increased estimate of these risks, and by using the agency's current air quality models, and assess the extent to which the revised risk estimate would change costs.

    Agency Affected: Environmental Protection Agency

  2. Status: Closed - Implemented

    Comments: EPA agreed to include a range of assumptions regarding water system compliance with the alternative standard for the final rule, which the agency currently plans to promulgate by January 2009.

    Recommendation: To improve the credibility and usefulness of its economic analysis for the final drinking water rule on radon, the administrator, EPA, should require the Office of Water to revise its economic analysis to include less optimistic assumptions about how many water systems will use indoor air programs to comply with the rule.

    Agency Affected: Environmental Protection Agency

  3. Status: Closed - Implemented

    Comments: In response to the GAO recommendation and also advice from the National Drinking Water Advisory Council, EPA will implement the recommendation and include mixed water systems in the cost analysis for the final radon rule, which the agency currently plans to promulgate by January 2009.

    Recommendation: To improve the credibility and usefulness of its economic analysis for the final drinking water rule on radon, the administrator, EPA, should require the Office of Water to include mixed water systems in its economic analysis.

    Agency Affected: Environmental Protection Agency

  4. Status: Closed - Implemented

    Comments: EPA corrected the costs estimates of states' and water systems' costs for administration of indoor air programs, as GAO recommended. EPA currently plans to promulgate the final rule by January 2009.

    Recommendation: To improve the credibility and usefulness of its economic analysis for the final drinking water rule on radon, the administrator, EPA, should require the Office of Water to correct its estimates of states' and water systems' costs for administration of indoor air programs.

    Agency Affected: Environmental Protection Agency

  5. Status: Closed - Implemented

    Comments: As GAO recommended, EPA has corrected cost estimates for testing and treating radon in indoor air and will more clearly indicate that homeowners will bear these costs in the final rule. EPA currently plans to promulgate the final rule by January 2009.

    Recommendation: To improve the credibility and usefulness of its economic analysis for the final drinking water rule on radon, the administrator, EPA, should require the Office of Water to correct its cost estimates for testing and for treating radon in indoor air and disclose that homeowners are expected to bear these costs.

    Agency Affected: Environmental Protection Agency

  6. Status: Closed - Implemented

    Comments: EPA agreed to implement a systematic internal process to conduct agency-wide reviews of economic analyses for economic reports written for both proposed and final regulatory actions. This process was initiated in May 2004 by EPA's Deputy Assistant Administrator; EPA's Office of Policy, Economics, and Innovation issued subsequent guidance in 2005. Under this process, the initial analysis plans and final analyses that comprise the regulatory impact analyses for all major rules are subject to review and approval by EPA's National Center for Environmental Economics, an office separate from the program offices responsible for preparing the regulatory impact analyses. This requirement is responsive to GAO's recommendation that EPA implement standard procedures for conducting internal peer reviews of its economic analyses for major rules.

    Recommendation: To better ensure the quality of economic analyses for the radon rule and other major rules prepared by EPA, the administrator, EPA, should require the agency to expeditiously implement standard procedures for conducting internal peer reviews of its economic analyses. These procedures should include quality assurance measures to identify errors in calculations; check the reasonableness of assumptions and methodologies; and ensure that the documentation of the analyses is clear, transparent, accurate, and complete.

    Agency Affected: Environmental Protection Agency

 

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