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$16M Deficit in EPA Lead-Paint Program

Friday, March 1, 2013

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Costs are exceeding collections to the tune of $16.4 million when it comes to federal oversight of lead-based paint rules, according to a new audit.

That’s the word from the Environmental Protection Agency’s Office of Inspector General in a report dated Feb. 20, just days before deep cuts in the federal budget were scheduled to take place.

The analysis, based on EPA’s “rough estimates,” showed unrecovered costs of $16.4 million for fiscal years 2010 through 2014, according to the report.

EPA image of painted home
Photos: EPA

EPA's lead-based paint abatement and RRP programs are operating at a deficit, according to an audit done by the EPA's Inspector General.

 “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,” the inspector general said.

“A fees rule update could result in additional revenue of up to $16.4 million per five-year cycle.”

Why the Deficit?

The audit offered several reasons for why the agency was not recovering its costs. Auditors said:

  • Renovation, Repair, and Painting (RRP) firm participation is lower than projected.
  • EPA has not conducted a biennial cost review to determine its actual costs and decide whether it needs to adjust fees to reflect changes in costs.
  • The current fee structure does not take into account all indirect costs needed to recover the full cost of administering the lead-based paint program.

EPA is charged with administering and regulating national training and certification systems for lead abatement (Lead-Based Paint Activities Program) and renovation activities (RRP), pursuant to the Toxic Substances Control Act.

table

The EPA inspector general found that the agency overestimated the level of firm participation in the RRP program. EPA’s 2009 economic analysis estimated the number of certification applications from firms subject to the regulations at 212,000 for the first year (2011) and 72,000 (2012) for the second year.

The abatement program requires that all lead-based paint activities be conducted according to certain work practice standards. That program became effective March 2000.

The RRP program, which became fully effective in April 2010, requires RRP activities that disturb lead-based paint to be conducted using lead-safe work practices.

Both programs allow states, territories and tribes to become authorized to administer and enforce the program in place of EPA. Currently, EPA has authorized 39 states, the District of Columbia, Puerto Rico, and three tribes for the abatement program and 12 states for the RRP program, according to the report.

Fees Raising Plan

TSCA authorizes EPA to establish fees to recover costs of administering and enforcing the standards and requirements applicable to lead-based paint training programs and contractors.

The inspector general found that although collections exceeded costs by $8.9 million in fiscal year 2010, the same was not true for 2011 through 2014, where costs exceeded collections by $25.3 million, which accounts for the net difference of $16.4 million.

contractor

Fees may go up for contractors seeking lead-safe certification.

In the report, the inspector general recommends that the agency’s March 2009 fees rule be updated to reflect the amount of fees necessary to recover program costs and apply indirect cost rates to all applicable direct costs to obtain full cost of the program.

In addition, it was also recommended the agency’s chief financial officer conduct biennial cost reviews.

The inspector general found no issue with the EPA’s handling of money after it was collected through the programs, noting that internal controls over fee collection were "generally effective."

EPA's Reaction

While it agreed with the recommendations and planned corrective actions, the agency initially expressed concern that the report was based on “preliminary data” from a rough cost estimate.

“The preliminary data was not an authoritative and complete statement of program costs,” EPA said.

The federal agency said that it would need to conduct a “much more accurate cost study after implementing the program for a full five -year certification cycle.”

The inspector general agreed that the agency needed a more accurate cost study, noting, however, that EPA should obtain a cost study every other year by conducting biennial cost reviews.

“EPA agrees and plans to conduct a biennial cost review of the lead-based paint program in FY 2013,” the report said.

The inspector general said the agency could help the federal government save money and cut unnecessary costs by collecting more lead fees and recovering more of its costs.

   

Tagged categories: EPA; Government; Lead; Lead paint abatement; Lead Renovation, Repair and Painting Rule (LRRP)

Comment from Karren Marincovich, (3/1/2013, 3:19 AM)

Goes to show government programs always run to the deficit. What's a travesty is that the whole program is a money grab, not intended to resolve lead paint abatement, but merely that of fee collection.


Comment from William Feliciano, (3/1/2013, 10:06 AM)

Looking at the chart, the EPA estimated 212,000 certifications the first year, and only 72,000 the second year. How'd they get a 212,000 figure for the first? The actual numbers came in at 87,000 the first year and 13,000 the next. Wow. Huge dispcrepancy. Looks like someone forgot that housing construction, and the economy, crashed after 2008.


Comment from Barry Lamm, (3/1/2013, 10:18 AM)

I suspect the recession has caused a lot of painters to go out of business, so, they are no longer around to take the certification courses. Also, since less money is coming in, there's less available to pay the high salaries of the government people running the program. They are probably making more money pushing paper around than the painters in the field are making doing all that physical labor scraping, cleaning and painting.


Comment from Tom Schwerdt, (3/1/2013, 11:10 AM)

Not in NYC at ~$75/hr for a painter (even if that includes benefits)


Comment from Bill Connor, Jr., (3/2/2013, 7:04 PM)

How many painters have not signed up due to the outrageous overkill in the containment requirements? How many painters are still working on pre 1978 homes and taking little or no common sense precautions? You know, the ones who underbid by half your bid?


Comment from Catherine Brooks, (3/4/2013, 10:14 AM)

The irony of the budget shortfall is that more enforcement of RRP would have brought in more fees, which, in turn, brings about more press, which in turn, demonstrates that the danger and laws are real. Many complaints of the law still focus on the uncertified firms winning the lower bid jobs from customers who aren't educated about the health risks they accept with hiring these contractors. If the certified firms (and general public) increase their whistle-blowing about the under-the-radar, dangerous, uncertified operators, the public awareness will keep building in the press. Participate in this massive need for public awareness by supporting the upcoming documentary "MisLead-America's Secret Epidemic" www.misleadmovie.com. You can do something personal and positive!


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