conomic conomic Analysis Analysis for the for the ong ong Term 2 Enhanced Surface Water Treatment Rule Term 2 Enhanced Surface Water Treatment Rule E L PREPARED FOR:

U. S. ENVIRONMENTAL PROTECTION AGENCY Office of Ground Water and Drinking Water PREPARED BY:

THE CADMUS GROUP, INC. 1901 North Fort Myer Drive Suite 900 Arlington, VA 22209 US EPA CONTRACT: 68 C 02 026 Work Assignment: 1 21 June 2003 Proposal Draft LT2ESWTR EA Economic Analysis for the LT2ESWTR Proposal June 2003 i Contents Appendices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . v Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii Acronyms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xii Health Risk Reduction and Cost Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . xv Executive Summary ES. 1 Need for the Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 1 ES. 2 Consideration of Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 2 ES. 3 Summary of the LT2ESWTR Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 3 ES. 4 National Benefits and Costs of the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 5 ES. 4.1 Benefit Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 5 ES. 4.2 National and Household Cost Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 9 ES. 5 National Net Benefits and Summary of Comparison of Alternatives . . . . . . . . . . . . . ES 11 Chapter 1: Introduction 1.1 Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 1 1.1.1 Monitoring and Treatment Requirements for Filtered Systems . . . . . . . . . . . . . 1 1 1.1.2 Monitoring and Treatment Requirements for Unfiltered Systems . . . . . . . . . . . 1 6 1.1.3 Requirements for Existing Uncovered Finished Water Reservoirs . . . . . . . . . . 1 6 1.1.4 Disinfection Profiling and Benchmarking Requirements . . . . . . . . . . . . . . . . . 1 7 1.1.5 Implementation Timeline . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 7 1.2 Document Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8 Chapter 2: Statement of Need for the Proposal 2.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 2.2 Description of the Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 1 2.3 Risk Balancing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 2 2.4 Public Health Concerns to Be Addressed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 2.4.1 Cryptosporidium . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 3 2.4.2 Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 6 2.5 Regulatory History . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 7 2.5.1 Statutory Authority for Promulgating the Rule . . . . . . . . . . . . . . . . . . . . . . . . 2 7 2.5.2 1979 Total Trihalomethane Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8 2.5.3 1989 Total Coliform Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8 2.5.4 1989 Surface Water Treatment Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 8 2.5.5 1996 Information Collection Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 9 2.5.6 1998 Interim Enhanced Surface Water Treatment Rule . . . . . . . . . . . . . . . . . 2 9 2.5.7 1998 Stage 1 Disinfectants and Disinfection Byproducts Rule . . . . . . . . . . . . 2 10 2.5.8 2000 Proposed Ground Water Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 10 2.5.9 2001 Filter Backwash Recycling Rule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 11 2.5.10 2002 Long Term 1 Enhanced Surface Water Treatment Rule . . . . . . . . . . . . 2 11 Economic Analysis for the LT2ESWTR Proposal June 2003 ii 2.5.11 2003 Proposed Stage 2 Disinfectants and Disinfection Byproducts Rule . . . . . 2 11 2.6 Economic Rationale for Regulation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2 12 Chapter 3: Consideration of Regulatory Alternatives 3.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 3.2 Development Process for Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1 3.3 Specific Regulatory Alternatives Considered in this EA . . . . . . . . . . . . . . . . . . . . . . . . 3 2 3.3.1 Summary of Bin Classification and Treatment Requirements for Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 2 3.3.2 Additional Treatment for Direct Filtration Systems . . . . . . . . . . . . . . . . . . . . . 3 4 3.4 Alternative Monitoring Approaches Considered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 3.4.1 Indicators of Microbial Contamination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 5 3.4.2 Cryptosporidium Monitoring Strategies for Bin Classification . . . . . . . . . . . . . 3 6 Chapter 4: Baseline Conditions 4.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1 4.2 Data, Tools, and Processes Used in Baseline Development . . . . . . . . . . . . . . . . . . . . . 4 2 4.2.1 ICR and ICRSS Observed Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 3 4.2.2 ICR and ICRSS Modeled Data and Method for Estimating Source Water Occurrence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 6 4.2.3 Surface Water Analytical Tool ( SWAT) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 4.3 Industry Profile . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 4.3.1 Public Water System Characterization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 8 4.3.2 Systems, Plants, and Population Subject to the LT2ESWTR . . . . . . . . . . . . . 4 10 4.3.3 Water Treatment Plant Design and Average Daily Flows . . . . . . . . . . . . . . . 4 17 4.4 Baseline for Unfiltered Plants ( Pre LT2ESWTR) . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 20 4.4.1 Treatment Characterization for Unfiltered Plants . . . . . . . . . . . . . . . . . . . . . 4 20 4.4.2 Number of Unfiltered Systems, Plants, and Population Served . . . . . . . . . . . 4 21 4.4.3 Source Water Cryptosporidium Occurrence for Unfiltered Plants . . . . . . . . . 4 22 4.4.4 Finished Water Cryptosporidium Occurrence for Unfiltered Plants . . . . . . . . . 4 23 4.5 Baselines for Filtered Plants ( Pre LT2ESWTR) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 25 4.5.1 Treatment Characterization for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . 4 25 4.5.2 Number of Filtered Plants and Population Served . . . . . . . . . . . . . . . . . . . . . 4 28 4.5.3 Source Water Cryptosporidium Occurrence for Filtered Plants . . . . . . . . . . . 4 31 4.5.4 Finished Water Cryptosporidium Occurrence for Filtered Plants . . . . . . . . . . 4 34 4.5.5 Comparison of EPA Finished Water Cryptosporidium Estimates with Aboytes et al. ( 2000) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 40 4.5.6 Predicted Bin Classification for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . 4 41 4.6 Baseline for Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . . . . . . . . . . 4 42 4.7 Households Incurring Costs Due to the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . 4 45 4.8 Summary of Uncertainties in Development of LT2ESWTR Baselines . . . . . . . . . . . . . 4 48 Chapter 5: Benefits Analysis 5.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 1 5.2 Quantified Health Benefits from Reduction in Exposure to Cryptosporidium . . . . . . . . . 5 2 5.2.1 Overview of Risk Assessment Methodology . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 5.2.2 Hazard Identification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 Economic Analysis for the LT2ESWTR Proposal June 2003 iii 5.2.3 Dose Response Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7 5.2.4 Exposure Assessment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 14 <IP_ADDRESS> Distribution of Infectious Cryptosporidium in Finished Water . . . . . . 5 14 <IP_ADDRESS> Distribution of Individual Daily Drinking Water Consumption . . . . . . 5 21 <IP_ADDRESS> Population Affected by the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . 5 22 5.2.5 Risk Model Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 25 5.2.6 Individual Annual Risk Distributions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 31 5.2.7 General Population Risk   Number of Cases Avoided . . . . . . . . . . . . . . . . . . . 5 33 <IP_ADDRESS> Unfiltered Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 35 <IP_ADDRESS> Filtered Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 39 5.2.8 Reduction in Sensitive Subpopulation Risk . . . . . . . . . . . . . . . . . . . . . . . . . 5 39 5.3 Monetized Benefits from Reduction in Exposure to Cryptosporidium Resulting from the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 39 5.3.1 Value of Reduction in Cryptosporidiosis Cases . . . . . . . . . . . . . . . . . . . . . . 5 40 <IP_ADDRESS> Value of Illnesses Avoided . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 40 <IP_ADDRESS> Value of Avoiding Fatal Cases of Cryptosporidiosis . . . . . . . . . . . . . 5 50 <IP_ADDRESS> Measuring Benefits Over the LT2ESWTR Implementation Schedule . 5 50 <IP_ADDRESS> Adjustment for Income Elasticity . . . . . . . . . . . . . . . . . . . . . . . . . . 5 51 <IP_ADDRESS> Present Value of Future Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . 5 53 <IP_ADDRESS> Summary of Quantified Benefits of LT2ESWTR . . . . . . . . . . . . . . . 5 53 5.3.2 Monetization of Benefits to Sensitive Subpopulations . . . . . . . . . . . . . . . . . . 5 56 5.4 Other Benefits of LT2ESWTR Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 56 5.4.1 Reduction in Outbreak Risk . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 56 5.4.2 Costs to Households to Avert Infection . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 57 5.4.3 Enhanced Aesthetic Water Quality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 58 5.4.4 Risk Reduction from Co occurring and Emerging Pathogens . . . . . . . . . . . . 5 58 5.4.5 Benefits from Other Rule Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 58 5.4.6 Summary of Nonquantified Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 59 5.5 Summary of Uncertainties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 60 5.6 Comparison of Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 60 Chapter 6: Cost Analysis 6.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1 6.1.1 Cost Description and Assumptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 2 6.2 Summary of the National Costs of the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . 6 5 6.3 Rule Implementation Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 11 6.3.1 PWSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 11 6.3.2 States and Other Primacy Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 12 6.4 Source Water Monitoring for Initial Bin Classification Costs . . . . . . . . . . . . . . . . . . . 6 13 6.4.1 PWSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 13 6.4.2 State and Other Primacy Agency Cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 13 6.5 Treatment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 14 6.5.1 Toolbox Options and Unit Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 16 <IP_ADDRESS> Toolbox Options Not Considered . . . . . . . . . . . . . . . . . . . . . . . . . . 6 16 <IP_ADDRESS> Technologies Considered for the LT2ESWTR Cost Analysis . . . . . . . 6 17 6.5.2 Compliance Forecast and Technology Selection . . . . . . . . . . . . . . . . . . . . . 6 21 6.5.3 Capital and Annual Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 22 Economic Analysis for the LT2ESWTR Proposal June 2003 iv 6.6 Costs of Treatment for Unfiltered Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 23 6.7 Costs for Benchmarking and Technology Reporting Requirements . . . . . . . . . . . . . . 6 24 6.8 Costs of Treatment for Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . 6 24 6.8.1 Unit Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 25 6.8.2 Compliance Forecast and Technology Selection . . . . . . . . . . . . . . . . . . . . . 6 25 6.8.3 Total Annual Treatment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 26 6.9 Future Source Water Monitoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 27 6.10 Household Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 28 6.11 Unquantified Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 29 6.12 Summary of Uncertainties and Sensitivity Analyses . . . . . . . . . . . . . . . . . . . . . . . . . 6 30 6.12.1 Cryptosporidium Occurrence Data Sets . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 31 6.12.2 Sensitivity Analysis of Influent Bromide Levels on Technology Selection for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 32 6.13 Comparison of Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 33 Chapter 7: Economic Impact Analysis 7.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 1 7.2 Regulatory Flexibility Act and Small Business Regulatory Enforcement Fairness Act . . . 7 1 7.3 Small System Affordability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3 7.4 Feasible Treatment Technologies for All Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 3 7.5 Effect of Compliance with the Proposed LT2ESWTR on the Technical, Managerial, and Financial Capacity of Public Water Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 4 7.5.1 Requirements of the Preferred Proposed Regulatory Alternative . . . . . . . . . . . 7 5 7.5.2 Systems Subject to the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 6 7.5.3 Impact of the LT2ESWTR on System Capacity . . . . . . . . . . . . . . . . . . . . . . 7 6 7.5.4 Derivation of Proposed LT2ESWTR Scores . . . . . . . . . . . . . . . . . . . . . . . . . 7 6 7.6 Paperwork Reduction Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 12 7.7 Unfunded Mandates Reform Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 13 7.7.1 Social Benefits and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 15 7.7.2 Disproportionate Budgetary Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 17 7.7.3 Macroeconomic Effects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 21 7.7.4 Consultation with Small Governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 21 7.7.5 Consultation with State, Local, and Tribal Governments . . . . . . . . . . . . . . . . 7 22 7.7.6 Regulatory Alternatives Considered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 22 7.7.7 Impacts on Small Governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 22 7.8 Indian Tribal Governments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 23 7.9 Impacts on Sensitive Subpopulations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 28 7.9.1 Impacts on the Immunocompromised . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 28 7.9.2 Protection of Children from Environmental Health Risks and Safety Risks . . . 7 28 7.10 Environmental Justice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 30 7.11 Federalism . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 31 7.12 Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 31 Chapter 8: Comparison of Benefits and Costs of the LT2ESWTR 8.1 Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 Economic Analysis for the LT2ESWTR Proposal June 2003 v 8.2 Summary of National Benefits, Costs, and Net Benefits of the Preferred Regulatory Alternative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 1 8.2.1 National Benefits Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 4 8.2.2 National Cost Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 7 8.2.3 National Net Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 9 8.3 Comparison of Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 11 8.3.1 Comparison of Benefits and Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12 8.3.2 Cost Effectiveness Measures . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 31 8.4 Effect of Uncertainties on the Benefit Cost Comparisons . . . . . . . . . . . . . . . . . . . . . 8 35 8.5 Summary of Benefit and Cost Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 37 Chapter 9: References Economic Analysis for the LT2ESWTR Proposal June 2003 vi Appendices Appendix A: Pre LT2ESWTR Removal Credit Appendix B: Characterizing Cryptosporidium Concentration and Methods for Predicting Plant Binning Appendix C: Benefits Appendix D: National Costs for Rule Implementation and Monitoring Appendix E: Unit Costs for Technologies Considered in the LT2ESWTR Appendix F: Technology Selection Forecast Methodology Appendix G: Technology Selection Results Appendix H: Treatment Costs for Filtered and Unfiltered Plants Appendix I: Unit Costs for Uncovered Finished Water Reservoirs Appendix J: Estimation of Household Costs Appendix K: Additional Information on the Approach For Valuing Time Losses Appendix L: Calculations Supporting The Cost of Illness ( COI) Analysis Appendix M: Small Community Surface Water and GWUDI Systems by State Appendix N: Dose Response Infectivity Analysis Appendix O: Assigning LT2ESWTR Costs and Benefits Appendix P: Sensitivity Analyses for Cost of Illness Values Appendix Q: Treatment Costs for Filtered and Unfiltered Plants Appendix R: Sensitivity Analysis for AIDS Related Mortality Rate Appendix S: Analysis of Individual Risk by Initial Bin Appendix T: Risk Assessment Model   Program and Data Files Appendix U: Cost Models Appendix V: Total Annualized Costs for Rule Alternatives Appendix W: Screening Analysis Economic Analysis for the LT2ESWTR Proposal June 2003 vii Exhibits Exhibit ES. 1 Overview of Key LT2ESWTR Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 4 Exhibit ES. 2 Implementation Timeline for LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 5 Exhibit ES. 3 Summary of Nonquantified Benefit and Groups Affected . . . . . . . . . . . . . . . . . . . . . . . . ES 6 Exhibit ES. 4 Summary of Annual Avoided Illnesses and Deaths . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 7 Exhibit ES. 5a Summary of Monetized Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 8 Exhibit ES. 5b Summary of Monetized Benefits   Traditional Cost of Illness . . . . . . . . . . . . . . . . . . . ES 8 Exhibit ES. 6 Summary of System Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 10 Exhibit ES. 7 Summary of Annual Household Cost Increases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 11 Exhibit ES. 8a Comparison of Mean Net Benefits for All Regulatory Alternatives   Enhanced Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 12 Exhibit ES. 8b Comparison of Mean Net Benefits for All Regulatory Alternatives   Traditional Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 12 Exhibit ES. 9a Comparison of Mean . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 14 Exhibit ES. 9b Comparison of Mean   Traditional Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . ES 15 Exhibit 1.1 Filtered Systems Bin Classification and Treatment Requirements . . . . . . . . . . . . . . . . . . . . 1 3 Exhibit 1.2 Microbial Toolbox Components for the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5 Exhibit 1.3 Implementation Time Line for LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 8 Exhibit 2.1 Reported Cryptosporidiosis Outbreaks in U. S. Drinking Water Systems . . . . . . . . . . . . . . . 2 5 Exhibit 3.1 Summary of Bin Requirements for Filtered Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 4 Exhibit 3.2 Probability of Misclassification for Monitoring and Binning Strategies Considered for the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 7 Exhibit 4.1 ICR and ICRSS Comparison . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 4 Exhibit 4.2 Methodology for " Linking" Consecutive Surface Water CWSs and NTNCWSs to Their Selling Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 13 Exhibit 4.3a Number of Unlinked and Linked Surface Water and GWUDI CWSs, Number of Plants, and Population Served, by Ownership and System Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 14 Exhibit 4.3b Number of Unlinked and Linked Surface Water and GWUDI NTNCWSs, Number of Plants, and Population Served, by Ownership and System Size . . . . . . . . . . . . . . . . . . . . . . . 4 14 Exhibit 4.3c Number of Unlinked and Linked Surface Water and GWUDI TNCWSs, Number of Plants, and Population Served, by Ownership and System Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 15 Exhibit 4.4a Filtered Plant Average Daily and Design Flow by System Size . . . . . . . . . . . . . . . . . . . . 4 19 Exhibit 4.4b Unfiltered Plant Average Daily and Design Flow by System Size . . . . . . . . . . . . . . . . . . 4 20 Exhibit 4.5 Treatment Baseline for Unfiltered Plants By System Size . . . . . . . . . . . . . . . . . . . . . . . . . 4 22 Exhibit 4.6 Observed ICR Source Water Total Oocyst Occurrence for Unfiltered Plants . . . . . . . . . . . 4 23 Exhibit 4.7 Modeled Source Water Cryptosporidium Occurrence ICR Data for Unfiltered Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 24 Exhibit 4.8 Predicted System Binning for Unfiltered Systems, Based on Central Tendency of Cryptosporidium Occurrence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 25 Exhibit 4.9 Percentage of Plants with Pre LT2ESWTR Cryptosporidium Log Reduction Credits for Existing Technologies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 26 Exhibit 4.10 Predicted Percentage of Plants Using Advanced Technologies Following Implementation of the Stage 2 DBPR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 27 Economic Analysis for the LT2ESWTR Proposal June 2003 viii Exhibit 4.11 Treatment Baseline for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 30 Exhibit 4.12 Summary of Observed Source Water Cryptosporidium Total Oocyst Occurrence   Filtered Plant Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 31 Exhibit 4.13 Modeled Source Water Cryptosporidium Occurrence ICR Data for Filtered Systems . . . . 4 32 Exhibit 4.14 Modeled Source Water Cryptosporidium Occurrence ICRSSM Data . . . . . . . . . . . . . . . . 4 33 Exhibit 4.15 Modeled Source Water Cryptosporidium Occurrence ICRSSL Data . . . . . . . . . . . . . . . . 4 33 Exhibit 4.16 Comparison of Modeled Source Water Cryptosporidium Occurrence by Data Set, Median Curves Only . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 34 Exhibit 4.17 Predicted Ranges of Cryptosporidium Reduction Pre LT2ESWTR . . . . . . . . . . . . . . . . . 4 36 Exhibit 4.18a Distribution of Cryptosporidium Reduction in Small Systems Pre LT2ESWTR, Standard Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 38 Exhibit 4.18b Distribution of Cryptosporidium Reduction in Large Systems Pre LT2ESWTR, Standard Estimate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 38 Exhibit 4.18c Distribution of Cryptosporidium Reduction in Small Systems Pre LT2ESWTR, Estimate With 0.5 Log Reduction Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 38 Exhibit 4.18d Distribution of Cryptosporidium Reduction in Large Systems Pre LT2ESWTR, Estimate With 0.5 Log Reduction Credit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 38 Exhibit 4.19a Predicted Finished Water Cryptosporidium Occurrence Pre LT2ESWTR, Small Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 39 Exhibit 4.19b Predicted Finished Water Cryptosporidium Occurrence Pre LT2ESWTR, Large Systems . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 39 Exhibit 4.20 Predicted System Binning for Preferred Alternative, Based on Central Tendency of Cryptosporidium Occurrence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 41 Exhibit 4.21 Baseline Numbers of Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . . . . . . 4 42 Exhibit 4.22 Baseline Number of Uncovered Finished Water Reservoirs in Systems of Each Size Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 43 Exhibit 4.23 Surface Area and Flows for Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . 4 45 Exhibit 4.24 Universe of Households Affected by Rule Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . 4 46 Exhibit 4.25 Baseline Numbers of Households Incurring Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 47 Exhibit 4.26 Households Paying Treatment Costs for Uncovered Reservoirs . . . . . . . . . . . . . . . . . . . 4 47 Exhibit 4.27 Mean Household Water Usage Rates by System Size . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 48 Exhibit 4.28 Summary of Uncertainties Affecting LT2ESWTR Baseline Estimates . . . . . . . . . . . . . . . 4 49 Exhibit 5.1 Risk Assessment Model Categories . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 3 Exhibit 5.2 Health Risk Assessment Framework for Cryptosporidium . . . . . . . . . . . . . . . . . . . . . . . . . 5 5 Exhibit 5.3 Symptoms of 205 Patients with Confirmed Cases of Cryptosporidiosis During the Milwaukee Outbreak . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 7 Exhibit 5.4 Percent of Plants With Pre LT2ESWTR Treatment Credit . . . . . . . . . . . . . . . . . . . . . . . . 5 19 Exhibit 5.5a Actual Log Removal Achieved for Systems without Credits . . . . . . . . . . . . . . . . . . . . . . 5 20 Exhibit 5.5b Actual Log Removal Achieved for Systems with Credits . . . . . . . . . . . . . . . . . . . . . . . . 5 21 Exhibit 5.6 Distribution of Individual Daily Drinking Water Consumption . . . . . . . . . . . . . . . . . . . . . 5 22 Exhibit 5.7 Number of Systems, Population Served, and Annual National Exposure by System Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 23 Exhibit 5.8 Individual Exposure by System Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 24 Exhibit 5.9 Flowchart of Risk Model   Step 1: Computing Annual Individual Risk of Illness . . . . . . . . . 5 26 Exhibit 5.10 Overview of Risk Assessment Model Parameters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 29 Exhibit 5.11 Secondary Spread and Secondary Attack Rates Associated with Cryptosporidiosis Outbreaks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 32 Economic Analysis for the LT2ESWTR Proposal June 2003 ix Exhibit 5.12 Annual Individual Risk Distributions Based Upon ICR Occurrence Data Set, Filtered CWSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 34 Exhibit 5.13 Annual Individual Risk Distributions Based Upon ICR Occurrence Data Set, Unfiltered CWSs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 35 Exhibit 5.14 Annual Cases of Illness and Deaths Avoided for the LT2ESWTR, Preferred Alternative, Unfiltered Systems, by Data Set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 37 Exhibit 5.15 Annual Cases of Illness and Deaths Avoided Due to the LT2ESWTR, Preferred Alternative, All Filtered Systems, by Data Set . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 38 Exhibit 5.16 Direct Medical Costs of a Case of Cryptosporidiosis . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 44 Exhibit 5.17 Days Lost and Days with Lost Productivity, by Severity of Illness . . . . . . . . . . . . . . . . . 5 46 Exhibit 5.18 Weighted Average Days Lost for Work, Caregivers, and Productivity . . . . . . . . . . . . . . . 5 46 Exhibit 5.19 Value of Time, 2000 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 47 Exhibit 5.20 Total Loss Per Case, Enhanced and Traditional COI, 2000 . . . . . . . . . . . . . . . . . . . . . . . 5 48 Exhibit 5.21 Yearly Total Loss Per Case, Enhanced and Traditional COI . . . . . . . . . . . . . . . . . . . . . . 5 49 Exhibit 5.22 Mean of Yearly Values for a Statistical Life . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 52 Exhibit 5.23 Annualized Benefits of Illnesses and Deaths Avoided, Preferred Alternative, Enhanced Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 54 Exhibit 5.24 Annualized Benefits of Illnesses and Deaths Avoided, Preferred Alternative, Traditional Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 55 Exhibit 5.25 Summary of Nonquantified Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 59 Exhibit 5.26 Summary of Uncertainties Affecting LT2ESWTR Benefits Estimates . . . . . . . . . . . . . . . 5 62 Exhibit 5.27 Annual Cases of Illness and Deaths Avoided from the LT2ESWTR for Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 63 Exhibit 5.28a Summary of Estimated Present Values of Annual Illnesses and Deaths Avoided from LT2ESWTR for Regulatory Alternatives, Enhanced Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 64 Exhibit 5.28b Summary of Estimated Present Values of Annual Illnesses and Deaths Avoided from LT2ESWTR for Regulatory Alternatives, Traditional Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 65 Exhibit 6.1 E. coli and Cryptosporidium Laboratory Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 4 Exhibit 6.2 Number of Systems and Plants Expected to Incur Costs, Preferred Alternative . . . . . . . . . . 6 6 Exhibit 6.3 Initial Capital and One Time Nominal Costs, Preferred Alternative . . . . . . . . . . . . . . . . . . . 6 8 Exhibit 6.4a Annualized Total Costs, Preferred Alternative, at 3 Percent . . . . . . . . . . . . . . . . . . . . . . 6 10 Exhibit 6.4b Annualized Total Costs, Preferred Alternative, at 7 Percent . . . . . . . . . . . . . . . . . . . . . . 6 10 Exhibit 6.5 Present Value of System Implementation Total Costs by System Size, Preferred Alternative 6 12 Exhibit 6.6 Initial Source Water Monitoring Present Value Costs at 3 and 7 Percent, Preferred Alternative, by System Size . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 14 Exhibit 6.7 Methodology for Estimating Treatment Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 15 Exhibit 6.8 Advanced Technologies Considered for the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . 6 19 Exhibit 6.9 Technology Selection Forecast for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 22 Exhibit 6.10 Treatment Costs for Filtered and Unfiltered Plants, Preferred Alternative . . . . . . . . . . . . . 6 23 Exhibit 6.11 Technology Selection for Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . . 6 26 Exhibit 6.12 Total Annualized Cost for Uncovered Finished Water Reservoirs . . . . . . . . . . . . . . . . . . 6 27 Exhibit 6.13 Present Value Costs for Future Monitoring, Preferred Alternative . . . . . . . . . . . . . . . . . . 6 27 Exhibit 6.14 Summary of Annual Per Household Cost Increases, Preferred Alternative . . . . . . . . . . . . 6 29 Exhibit 6.15 Summary of Uncertainties Affecting LT2ESWTR Cost Estimates . . . . . . . . . . . . . . . . . . 6 30 Exhibit 6.16 Sensitivity of Treatment Cost to Selection of Cryptosporidium Occurrence Distribution . . 6 32 Economic Analysis for the LT2ESWTR Proposal June 2003 x Exhibit 6.17 Sensitivity of Technology Selection to Influent Bromide Concentration for Filtered Plants . 6 33 Exhibit 6.18a Comparison by Regulatory Alternative of Total Costs, Annualized at 3 Percent for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 34 Exhibit 6.18b Comparison by Regulatory Alternative of Total Costs, Annualized at 7 Percent for Filtered Plants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 34 Exhibit 7.1a Estimated Impacts of the Proposed LT2ESWTR on Small Systems' Technical, Managerial, and Financial Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8 Exhibit 7.1b Estimated Impacts of the Proposed LT2ESWTR on Large Systems' Technical, Managerial, and Financial Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 9 Exhibit 7.2 Average Annual Burden Hours and Costs for the LT2ESWTR Information Collection Request 3 Year Approval Period . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 13 Exhibit 7.3 Annualized Value of Public and Private Costs for the LT2ESWTR ( Annualized at 3 and 7 Percent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 14 Exhibit 7.4 Total Annualized Benefits and Costs of Regulatory Alternatives ($ Millions, 2000$) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 16 Exhibit 7.5 Percent of Population of CWSs Served by Small Surface and GWUDI Systems by State . . 7 20 Exhibit 7.6 Number of Small Surface and GWUDI Systems by State . . . . . . . . . . . . . . . . . . . . . . . . 7 21 Exhibit 7.7 Numbers of Indian Tribal Public Water Systems Using Surface Water Sources . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 25 Exhibit 7.8 Number of Tribal Systems and Percent of Systems Nationally That Will Incur Costs Due to the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 26 Exhibit 7.9a Estimates of the Total Annualized Costs Incurred by Indian Tribal Public Water Systems Due to the LT2ESWTR ( Annualized at 3 Percent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 27 Exhibit 7.9b Estimates of the Total Annualized Costs Incurred by Indian Tribal Public Water Systems Due to the LT2ESWTR ( Annualized at 7 Percent) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 27 Exhibit 7.10 Total Increased Annual National Energy Usage Attributable to the LT2ESWTR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 33 Exhibit 7.11 Sample Calculation for Determining Increase in Energy Usage: Chlorine Dioxide . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 35 Exhibit 8.1a Summary of Nominal Benefit and Cost Estimates by Year Incurred, Preferred Alternative, ICR Data Set, Enhanced COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2 Exhibit 8.1b Summary of Nominal Benefit and Cost Estimates by Year Incurred, Preferred Alternative, ICR Data Set, Traditional COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 3 Exhibit 8.2 Summary of Nonquantified Benefits and Groups Affected . . . . . . . . . . . . . . . . . . . . . . . . . 8 4 Exhibit 8.3 Summary of Annual Avoided Illnesses and Deaths, Preferred Alternative . . . . . . . . . . . . . . 8 5 Exhibit 8.4a Summary of Quantified Benefits, Preferred Alternative   Enhanced Cost of Illness . . . . . . . 8 6 Exhibit 8.4b Summary of Quantified Benefits, Preferred Alternative   Traditional Cost of Illness . . . . . . 8 6 Exhibit 8.5 Summary of the Costs for the LT2ESWTR Preferred Regulatory Alternative . . . . . . . . . . . . 8 8 Exhibit 8.6a Mean Net Benefits, Preferred Alternative   Enhanced Cost of Illness . . . . . . . . . . . . . . . . . 8 9 Exhibit 8.6b Mean Net Benefits, Preferred Alternative   Traditional Cost of Illness . . . . . . . . . . . . . . . 8 10 Exhibit 8.7a Breakeven Points, Enhanced COI ( Number of Avoided Illnesses Needed to Break Even with Cost Estimates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 11 Exhibit 8.7b Breakeven Points, Traditional COI ( Number of Avoided Illnesses Needed to Break Even with Cost Estimates) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 11 Exhibit 8.8 Summary of Binning and Treatment Scenarios for Filtered Systems for All Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 12 Economic Analysis for the LT2ESWTR Proposal June 2003 xi Exhibit 8.9 Comparison of Number of Illnesses and Deaths Avoided for All Regulatory Alternatives . . . 8 14 Exhibit 8.10a Comparison of Annualized Value of Illnesses and Deaths Avoided for All Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 15 Exhibit 8.10b Comparison of Annualized Value of Illnesses and Deaths Avoided for All Regulatory Alternatives, Traditional COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 16 Exhibit 8.11 Comparison of Costs for All Regulatory Alternatives . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 17 Exhibit 8.12a Comparison of Mean Net Benefits for All Regulatory Alternatives   Enhanced COI . . . . . 8 18 Exhibit 8.12b Comparison of Mean Net Benefits for All Regulatory Alternatives   Traditional COI . . . . 8 19 Exhibit 8.13a Incremental Net Benefits for All Alternatives, By Data Set, Enhanced COI . . . . . . . . . . . 8 21 Exhibit 8.13b Incremental Net Benefits for All Alternatives, By Data Set, Traditional COI . . . . . . . . . . 8 22 Exhibit 8.14a Upper End of 90 Percent Confidence Bound as a Percent of Mean Estimate of Benefits, By Data Set, Annualized at 3 Percent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 24 Exhibit 8.14b Upper End of 90 Percent Confidence Bound as a Percent of Mean Estimate of Benefits, By Data Set, Annualized at 3 Percent, Traditional COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 25 Exhibit 8.15a Comparison of Regulatory Alternatives Ranked by Net Benefits, 3 Percent Cost  Enhanced COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 27 Exhibit 8.15b Comparison of Regulatory Alternatives Ranked by Net Benefits, 7 Percent Cost  Enhanced COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 28 Exhibit 8.16a Comparison of Regulatory Alternatives Ranked by Net Benefits, 3 Percent Cost  Traditional COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 29 Exhibit 8.16b Comparison of Regulatory Alternatives Ranked by Net Benefits, 7 Percent Cost  Traditional COI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 30 Exhibit 8.17a Range of Annualized Costs at Mean Benefit Level, All Regulatory Alternatives    Enhanced Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 32 Exhibit 8.17b Range of Annualized Costs at Mean Benefit Level, All Regulatory Alternatives   Traditional Cost of Illness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 33 Exhibit 8.18 Cost per Illness or Death Avoided, By Data Set, COI Type . . . . . . . . . . . . . . . . . . . . . . 8 35 Exhibit 8.19 Effects of Uncertainties on the National Estimates of Benefits and Costs . . . . . . . . . . . . . 8 36 Economic Analysis for the LT2ESWTR Proposal June 2003 xii Acronyms and Notations AIDS Acquired Immunodeficiency Syndrome AIPC All Indian Pueblo Council AMWA Association of Metropolitan Water Agencies ASDWA Association of State Drinking Water Administrators AWWA American Water Works Association CC PCR Cell culture and polymerase chain reaction CCR Consumer Confidence Report Rule ( 1998) CDBG Community Development Block Grant CDC Centers for Disease Control and Prevention CFE Combined Filter Effluent CFU Colony forming unit CL2 Chlorine CLM Chloramines CLO2 Chlorine Dioxide COI Cost of Illness CPI Consumer Price Index CSFII Continuing Survey of Food Intakes by Individuals CWS Community Water System CWSS Community Water Systems Survey DBPs Disinfection Byproducts DWSRF Drinking Water State Revolving Fund EA Economic Analysis EO Executive Order FACA Federal Advisory Committees Act FBRR Filter Backwash Recycling Rule ( May, 2001) FR Federal Register FS Flowing stream FTE Full time Equivalent Employee GDP Gross Domestic Product GWR Ground Water Rule ( proposed 2000) GWUDI Ground Water Under the Direct Influence of Surface Water HAA5 Haloacetic Acids [ total of five] HPC Heterotrophic Plate Count HRRCA Health Risk Reduction and Cost Analysis ICR Information Collection Request ICR Information Collection Rule ( 1996) ICRSS Information Collection Rule Supplemental Survey ICRSSM Information Collection Rule Supplemental Survey Medium Systems ICRSSL Information Collection Rule Supplemental Survey Large Systems ICMA International City/ County Management Association IDSE Initial Distribution System Evaluation IESWTR Interim Enhanced Surface Water Treatment Rule ( 1998) IMS Immunomagnetic separation IRFA Initial Regulatory Flexibility Analysis IRIS Integrated Risk Information System Economic Analysis for the LT2ESWTR Proposal June 2003 xiii LCR Lead and Copper Rule ( 1992) LRAA Locational Running Annual Average LSP Lab Spiking Program LT1ESWTR Long Term 1 Enhanced Surface Water Treatment Rule ( January, 2002) LT2ESWTR Long Term 2 Enhanced Surface Water Treatment Rule ( under development) MCL Maximum Contaminant Level MCLG Maximum Contaminant Level Goal MCMC Markov Chain Monte Carlo [ algorithm] M DBP Microbial Disinfectants/ Disinfection Byproducts [ Advisory Committee] MF Microfiltration MG Million gallons MGD Million Gallons per Day mg/ L Milligrams per Liter MRDL Maximum Residual Disinfectant Level MRDLG Maximum Residual Disinfectant Level Goal MRL Minimum Reporting Level MWRA Massachusetts Water Resources Authority NCSL National Conference of State Legislatures NCWS Noncommunity water system NF Nanofiltration NGA National Governors' Association NIH National Institutes of Health NLC National League of Cities NODA Notice of Data Availability NPDWR National Primary Drinking Water Regulations NRDC Natural Resources Defense Council NRWA National Rural Water Association NTNCWS Nontransient Noncommunity Water System NTU Nephelometric Turbidity Unit O3 Ozone OGWDW Office of Ground Water and Drinking Water OMB Office of Management and Budget O& M Operations and Maintenance O& P Overhead and Profit POE Point of entry POU Point of Use ppb Parts per Billion ppm Parts per Million PWS Public Water System PWSS Public Water Systems Supervision [ Grants Program] QA/ QC Quality Assurance/ Quality Control RAA Running Annual Average RF Roughing Filter RFA Regulatory Flexibility Act RIA Regulatory Impact Analysis RL Reservoir/ Lake RO Reverse Osmosis RUS Rural Utility Service Economic Analysis for the LT2ESWTR Proposal June 2003 xiv SAB Science Advisory Board SBAR Small Business Advocacy Review SBREFA Small Business Regulatory Enforcement Fairness Act SDWA Safe Drinking Water Act ( 1974) SDWIS Safe Drinking Water Information System SER Small Entity Representative SF Secondary Filter SW Surface Water SWAT Surface Water Analytical Tool Stage 1 DBPR Stage 1 Disinfectants and Disinfection Byproducts Rule ( 1998) Stage 2 DBPR Stage 2 Disinfectants and Disinfection Byproducts Rule ( under development) SWTR Surface Water Treatment Rule ( 1989) T& C Technologies and Cost TCR Total Coliform Rule ( 1989) TMF Technical, Managerial, and Financial TNCWS Transient Noncommunity Water System TOC Total Organic Carbon TT Treatment Technique TTHMs Total Trihalomethanes TTHMR Total Trihalomethane Rule ( 1979) TWG Technical Workgroup UF Ultrafiltration UMRA Unfunded Mandates Reform Act USDA United States Department of Agriculture UV Ultraviolet [ Light Disinfection] µ g/ L Micrograms per Liter VSL Value of a Statistical Life WC Watershed Control WTP Willingness to Pay Economic Analysis for the LT2ESWTR Proposal June 2003 xv Health Risk Reduction and Cost Analysis Under the Safe Drinking Water Act ( SDWA) Amendments of 1996, when proposing a national primary drinking water regulation that includes an maximum contaminant level ( MCL), the U. S. Environmental Protection Agency ( EPA or the Agency) must conduct a health risk reduction and cost analysis ( HRRCA). A HRRCA addresses seven requirements, all of which are addressed in this Economic Analysis ( EA) for the Long Term 2 Enhanced Surface Water Treatment Rule ( LT2ESWTR).

HRRCA Crosswalk Summary HRRCA Requirement Addressed in Economic Analysis Quantifiable and nonquantifiable health risk reduction benefits Chapter 5 ( All sections and exhibits) Chapter 8 ( Sections 8.2, 8.3; Exhibits 8.1   8.4, 8.6, 8.7, 8.9, 8.10, 8.12 17)

Quantifiable and nonquantifiable health risk reduction benefits from co occurring contaminants Chapter 5 ( Section 5.4.4)

Quantifiable and nonquantifiable costs Chapter 6 ( All sections and exhibits) Chapter 7 ( Sections 7.2, 7.6, 7.7, 7.8, 7.12; Exhibits 7.2, 7.3, 7.4, 7.9) Chapter 8 ( Sections 8.2, 8.3; Exhibit 8.1, 8.5, 8.8, 8.11, 8.18)

Incremental costs and benefits associated with regulatory alternatives Chapter 5 ( Section 5.6; Exhibit 5.28) Chapter 6 ( Sections 6.12; Exhibit 6.18) Chapter 8 ( Section 8.3; Exhibits 8.13, 8.17)

Effects of the contaminants on the general population and sensitive subpopulations Chapter 5 ( Sections 5.2.2 and 5.2.8) Chapter 7 ( Section 7.9)

Increased health risk that may occur as a result of compliance Chapter 2 ( Section 2.3)

Other relevant factors ( quality and uncertainty of information) Chapter 4 ( Section 4.8; Exhibit 4.28) Chapter 5 ( Section 5.5; Exhibit 5.26) Chapter 6 ( Section 6.11; Exhibit 6.15) Chapter 8 ( Section 8.4; Exhibit 8.19) 1The key outcomes of the 1992 1993 regulatory negotiation effort were to proceed with rules addressing DBPs and microbial pathogens in two stages and to collect relevant information from PWSs for use in the development of these rules and the analysis of their impacts. This two stage approach was subsequently incorporated into the 1996 Safe Drinking Water Act ( SDWA) Amendments. The first stage of the M DBP rulemaking process culminated with the joint promulgation of the Stage 1 DBPR and the Interim Enhanced Surface Water Treatment Rule ( IESWTR) by EPA in December 1998.

Economic Analysis for LT2ESWTR Proposal June 2003 ES 1 Executive Summary This document presents the Economic Analysis ( EA), prepared by the U. S. Environmental Protection Agency ( EPA), of the benefits and costs of the proposed Long Term 2 Enhanced Surface Water Treatment Rule ( LT2ESWTR). Executive Order 12866 requires federal agencies to conduct an analysis of the benefits and costs of proposed and final rules that cost over $ 100 million annually.

ES. 1 Need for the Rule Over 14,000 public water systems ( PWSs), serving approximately 180 million people in the United States and its Territories, use surface water, including ground water under the direct influence ( GWUDI) of surface water, as their source. These sources often carry microbial pathogens, such as Giardia, E. coli, and Cryptosporidium. Among pathogens in drinking water, Cryptosporidium is of particular concern because it is resistant to standard drinking water disinfectants, such as chlorine. Ingestion of Cryptosporidium causes cryptosporidiosis, a gastrointestinal illness, and health effects in sensitive subpopulations may be severe, including risk of death. There is no effective drug or treatment available to cure cryptosporidiosis ( Framm and Soave 1997). The LT2ESWTR provides additional protection of public health by requiring PWSs with the highest measured source water levels of Cryptosporidium to provide additional treatment for this pathogen. These vulnerable systems include both filtered systems with elevated levels of Cryptosporidium in their source water and all unfiltered systems ( i. e., systems meeting the filtration avoidance criteria of the Surface Water Treatment Rule ( 40 CFR 141.71)), which currently provide little treatment for Cryptosporidium. The LT2ESWTR will also reduce the public health risk associated with uncovered finished water reservoirs, which are susceptible to microbial contamination, including Cryptosporidium.

EPA will also be proposing the Stage 2 Disinfectants and Disinfection Byproducts Rule ( Stage 2 DBPR), which addresses disinfection byproduct ( DBP) formation. These rules are to be promulgated concurrently to ensure that protection against microbial pathogens is not compromised by efforts to reduce DBP formation. The Stage 2 DBPR and LT2ESWTR represent the final stage of a two stage strategy to reduce risk from microbial pathogens and DBPs that was developed in a regulatory negotiation effort in 1992 and 1993.1 These rules reflect recommendations presented by the Stage 2 Microbial and Disinfection Byproducts ( M DBP) Federal Advisory Committee Agreement in Principle, signed in September 2000 ( USEPA 2000i). 2The term " log treatment" is used to express the expected percent reduction of a contaminant. For example, 1 log treatment is expected to provide 90 percent reduction of a contaminant and 2 log treatment provides 99 percent reduction. Compliance with the log treatment requirements is not based on quantifying the actual reduction; instead, other finished water quality or operational conditions are used to determine compliance. This is consistent with the previous SWTRs where EPA assumes systems achieve a given log removal of Giardia and viruses if their effluent turbidity meets certain standards.

Economic Analysis for LT2ESWTR Proposal June 2003 ES 2 ES. 2 Consideration of Regulatory Alternatives The Stage 2 M DBP Advisory Committee met from March 1999 to September 2000 to evaluate whether and to what degree EPA should revise or establish additional microbial standards to protect public health. The committee reached consensus on an approach for addressing Cryptosporidium risk in unfiltered systems and microbial risk in uncovered finished water reservoirs without formally identifying alternative regulatory approaches. However, for filtered systems, several alternatives were considered. All alternatives involved a treatment compliance scheme where systems have a " toolbox" of treatment and managerial options for meeting additional Cryptosporidium treatment requirements. Three of the four alternatives ( A2 A4) base the treatment requirements on a plant's Cryptosporidium levels in source water, thus requiring a period of source water monitoring. The fourth would require a uniform treatment target regardless of source water Crytosporidium levels. The four alternatives considered for filtered systems are the following:

° Alternative 1: For all systems, 2 log Cryptosporidium treatment2 in addition to that required for the IESWTR and Long Term 1 Enhanced Surface Water Treatment Rule ( LT1ESWTR).

° Alternative 2: Systems having mean source water Cryptosporidium levels of 0.03 to less than 0.1 oocysts/ L must achieve an additional 0.5 log Cryptosporidium treatment. Systems with 0.1 1.0 oocysts/ L must add 1.5 log treatment, and systems with greater than 1.0 oocysts/ L must add 2.5 log treatment. Additional treatment requirements as stated are for systems using conventional treatment or equivalent. Requirements for systems with other treatment types may differ.

° Alternative 3 ( Preferred Alternative): Systems having mean source water Cryptosporidium levels of 0.075 1.0 oocysts/ L must achieve an additional 1.0 log treatment for Cryptosporidium. Systems with 1.0 3.0 oocysts/ L must achieve 2.0 log additional treatment, and systems with greater than 3.0 oocysts/ L must achieve 2.5 log additional treatment. Additional treatment requirements as stated are for systems using conventional treatment or equivalent. Requirements for systems with other treatment types may differ.

° Alternative 4: Systems having mean source water Cryptosporidium levels of 0.1 1.0 oocysts/ L must achieve 0.5 log additional treatment for Cryptosporidium and systems that have greater than 1.0 oocysts/ L must achieve 1.0 log additional treatment. Additional treatment requirements as stated are for systems using conventional treatment or equivalent. Requirements for systems with other treatment types may differ. Economic Analysis for LT2ESWTR Proposal June 2003 ES 3 In this EA, EPA estimates and compares the costs and benefits of all regulatory alternatives. The cost and benefit data presented in section ES. 4 are for the Preferred Regulatory Alternative, while section ES. 5 presents comparisons of the cost and benefit estimates for the regulatory alternatives.

ES. 3 Summary of the LT2ESWTR Requirements The LT2ESWTR applies to all PWSs that use surface water or GWUDI ( excluding those that purchase all their water). It builds on the SWTR, IESWTR, and the LT1ESWTR by improving control of microbial pathogens, specifically Cryptosporidium. Unlike the previous rules, the LT2ESWTR bases treatment requirements on a system's source water Cryptosporidium concentration and type of treatment provided. This rule requires systems to monitor their source water for Cryptosporidium, and based on the results, to meet one of four levels of treatment for Cryptosporidium ( with the first level requiring no additional treatment). The levels of treatment needed will be reassessed in the future based on a second round of source water monitoring.

For systems that do not provide filtration, the LT2ESWTR requires 2 or 3 log inactivation of Cryptosporidium, depending on source water monitoring results. The rule also requires systems with uncovered finished water reservoirs to either cover the reservoirs or provide additional treatment to the reservoir effluent unless the state determines that existing risk mitigation is adequate. There are also requirements for calculating benchmarks of disinfection performance to help evaluate future changes to the disinfection process.

Exhibit ES. 1 illustrates each rule activity for the Preferred Regulatory Alternative. The implementation schedule for small and large systems differs, and Exhibit ES. 2 presents the implementation timeline. Economic Analysis for LT2ESWTR Proposal June 2003 ES 4 Systems subject to the LT2ESWTR Public water systems using surface water or ground water under direct influence of surface water that are subject to the SWTR.

Disinfection Profiling and Benchmarking Community and nontransient noncommunity water systems must calculate disinfection profiles for both Giardia and viruses, except for small systems with E. coli and total trihalomethanes ( TTHMs) and five haloacetic acids ( HAA5) below certain levels and systems that provide at least 5.5 log treatment for Cryptosporidium. Monitoring may be required to establish a benchmark if historical data cannot be used.

Requirements for Uncovered Finished Water Reservoirs All systems with uncovered finished water reservoirs must either cover the reservoir or treat reservoir discharge to the distribution system to achieve 4 log virus inactivation, unless the state/ primacy agency determines that existing risk mitigation is adequate.

Monitoring and Treatment Requirements for Unfiltered Systems Systems that do not provide filtration and meet all the filtration avoidance criteria of the SWTR must provide 2 log of Cryptosporidium inactivation if their Cryptosporidium occurrence level is less than or equal to 1 oocyst in 100 liters, or provide 3 log of Cryptosporidium inactivation if their Cryptosporidium occurrence level is greater than 1 oocyst in 100 liters. Large systems monitor their source water monthly for Cryptosporidium for 2 years and small systems monitor twice per month for 1 year. Initial Monitoring for Filtered Systems Systems must conduct initial Cryptosporidium monitoring to establish bin classification under the LT2ESWTR. Systems purchasing all of their water or providing at least 5.5 log of treatment do not have to monitor or provide additional treatment. Also, systems with at least 2 years of historical Cryptosporidium data that are equivalent in sample number, frequency, and data quality to data collected under the LT2ESWTR may submit their data to EPA for consideration in determining bin classification in lieu of additional Cryptosporidium compliance monitoring.

Medium and Large Systems ( serving at least Small Systems ( serving < 10,000 people) 10,000 people) Source water monitoring will begin 2 years after the large and Systems will be required to medium systems initiate source water Cryptosporidium monitor their raw water sources at least once per monitoring. Monitoring is on a delayed schedule while EPA month for a minimum of 2 years for continues to evaluate indicators and system characterization Cryptosporidium, E. coli, and turbidity. scenarios for predicting Cryptosporidiumoccurrence. In the absence of a new surrogate indicator, small systems will conduct 1 year of biweekly E. coli source water monitoring and will conduct Cryptosporidium monitoring if E. coli levels exceed specified trigger values.

Bin Classification and Treatment Requirement for Filtered Systems For those required to monitor for Cryptosporidium, the results of initial monitoring will be used to place them into an " action bin," which defines the additional levels of Cryptosporidium removal that must be achieved Systems whose Cryptosporidium occurrence is less than 0.075 oocysts/ L have no additional treatment requirements. Systems whose oocyst occurrence is 0.075 or more, but < 1.0/ L must provide an additional 1 log of treatment. Systems whose oocyst occurrence is equal to or greater than 1.0/ L but less than 3.0/ L must provide an additional 2 log of treatment. Systems whose oocyst occurrence is equal to or greater than 3.0/ L must provide an additional 2.5 logs of treatment.

Microbial Toolbox for Meeting Additional Treatment Requirements Systems can select from a " toolbox" of treatment or management options.

Reassessment and Future Monitoring Six years after initial bin classification, filtered systems will be required to conduct a second round of monitoring to reasses s the source water quality. Two years prior to this reassessment ( 4 years after initial binning), EPA plans to initiate a stakeholder process to review available methods to determine the appropriate analytical method, monitoring frequency, and monitoring location for the second round of national assessment monitoring. In addition, the state/ primacy agency will assess any significant changes in the watershed and source water as part of the sanitary survey process and determine appropriate follow up action in response to source water changes, which could include actions from the microbial toolbox. Unfiltered systems must meet Cryptosporidium inactivation requirements using O 3, ClO 2, or UV. Exhibit ES. 1 Overview of Key LT2ESWTR Requirements Economic Analysis for LT2ESWTR Proposal June 2003 ES 5 States Crypto Monitoring Apply for Primacy Comply with Stage 2A Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Large and Medium Filtered and Unfiltered Systems ( Serving > 10,000 People)

Bin Determination Treatment Installation Small Filtered Systems ( Serving < 10,000 People)

E. Coli monitoring CryptoMonitoring Bin Determination Treatment Installation Bin Determination Crypto Compliance Crypto Compliance Crypto Compliance Small Unfiltered Systems ( Serving < 10,000 People) CryptoMonitoring Final Stage 2 DBPR & LT2ESWTR Rules Promulgated Treatment Installation ( possible 2  year extension)

( possible 2  year extension)

( possible 2  year extension) Exhibit ES. 2 Implementation Timeline for LT2ESWTR ES. 4 National Benefits and Costs of the LT2ESWTR The benefits resulting from implementation of the LT2ESWTR are due to reductions in infectious Cryptosporidium oocsysts reaching the consumer. EPA quantified the benefits of this rule in terms of avoided endemic cryptosporidiosis illnesses and associated deaths avoided. Cryptosporidium can reach the consumer when there is a significant breakdown in the treatment process or during normal operating conditions. This EA focuses on the benefits resulting from reducing the continuous, relatively low levels of Cryptosporidium exposure that can occur even under normal operating conditions. Although requiring additional treatment is expected to also reduce the likelihood of an outbreak, these benefits are not quantified.

The costs incurred for LT2ESWTR activities are associated with rule implementation, source water monitoring, disinfection benchmarking, and adding treatment. Economic Analysis for LT2ESWTR Proposal June 2003 ES 6 ES. 4.1 Benefit Estimates The quantified benefits of the LT2ESWTR are the estimated reduction in the number of endemic illnesses and deaths associated with Cryptosporidium under LT2ESWTR conditions. There are also benefits that cannot currently be quantified but are likely to be substantial. These are summarized in Exhibit ES. 3 and discussed in Chapter 5.

Exhibit ES. 3 Summary of Nonquantified Benefit and Groups Affected Type of Benefit Nonquantified Benefits Group( s) Affected Health benefits Reduction in risk to sensitive subpopulations ( mortality for those with AIDS and other sensitive subpopulations has been included) Immunocompromised individuals served by systems that make changes to or add treatment.

Reduction in health risk during outbreaks ( and response costs) All individuals served by systems that make changes to or add treatment, including those now served by uncovered finished water reservoirs, ( between 34 and 55 million people). Reduction in co occurring/ emerging pathogen risk Reduction in endemic morbidity and mortality risk associated with uncovered finished water reservoirs All individuals receiving water from uncovered finished water reservoirs.

Nonhealth Benefits Improved aesthetic water quality All individuals served by systems that make changes to or add treatment that is likely to reduce taste and odor problems ( e. g., ozone).

Costs of averting behaviors Potentially all households served by systems covered by the rule, either because monitoring confirms low levels of risk or because the addition of treatment assures low levels of risk.

EPA developed a risk assessment model to incorporate several factors and their uncertainties for predicting the illnesses and deaths avoided. Specifically, the variables in the model are source water occurrence of Cryptosporidium, infectivity, treatment, consumption, morbidity, and mortality. To allow a comparison of benefits with the cost of implementing the rule, the benefit estimates are monetized by calculating a cost of illness ( COI) and using a value of a statistical life and applying those factors to the number of avoided illnesses and deaths, respectively.

For source water occurrence, there are three data sets   labeled as ICR, ICRSSM, and ICRSSL. The ICR data set is from the Information Collection Rule data set of all large systems. The ICRSSM and ICRSSL are the supplemental survey data sets of 40 medium size systems and 40 large systems. EPA judges each of these data sets to be equally likely to represent the true distribution of Cryptosporidium in Economic Analysis for LT2ESWTR Proposal June 2003 ES 7 Lower ( 5th % ile) Upper ( 95th % ile) Lower ( 5th % ile) Upper ( 95th % ile)

ICR 1,018,915 169,358 2,331,467 141 25 308 ICRSSL 256,173 45,292 560,648 37 7 78 ICRSSM 498,363 84,724 1,177,415 70 13 157 ICR 720,668 119,694 1,647,796 100 18 218 ICRSSL 181,387 32,179 396,845 26 5 55 ICRSSM 352,611 59,942 833,290 50 9 111 Annual Average over 25 years Total after Full implementation Data Set Annual Illnesses Avoided Annual Deaths Avoided Mean 90% Confidence Bound Mean 90% Confidence Bound source waters for all systems. All benefit and cost analyses are carried out using each data set to provide a range of possible benefits and costs. In addition to using the three occurrence data sets, this EA monetizes benefits with two values of cost of illness   referred to as Enhanced and Traditional.

Exhibit ES. 4 summarizes the estimates of avoided illnesses and deaths as a result of the LT2ESWTR. Exhibits ES. 5a and ES. 5b summarize the monetized value of those estimates for Enhanced and Traditional cost of illness values ( annualized over a 25 year period and discounted at 3 percent and 7 percent).

Exhibit ES. 4 Summary of Annual Avoided Illnesses and Deaths Source: Chapter 8, Exhibit 8.3. Economic Analysis for LT2ESWTR Proposal June 2003 ES 8 Lower ( 5th % ile) Upper ( 95th % ile)

ICR 1,445 $ 198 $ 3,666 $ ICRSSL 374 $ 52 $ 959 $ ICRSSM 715 $ 96 $ 1,849 $

ICR 1,230 $ 168 $ 3,120 $ ICRSSL 318 $ 44 $ 816 $ ICRSSM 609 $ 81 $ 1,577 $ Annualized Value ( at 7%, 25 Years) Annualized Value ( at 3%, 25 Years) Data Set Value of Benefits ($ Millions, 2000$)

Mean 90% Confidence Bound Lower ( 5th % ile) Upper ( 95th % ile)

ICR 967 $ 105 $ 2,713 $ ICRSSL 253 $ 27 $ 713 $ ICRSSM 481 $ 50 $ 1,372 $

ICR 826 $ 89 $ 2,315 $ ICRSSL 216 $ 23 $ 610 $ ICRSSM 411 $ 43 $ 1,172 $ Annualized Value ( at 3%, 25 Years)

Annualized Value ( at 7%, 25 Years) Data Set Value of Benefits ($ Millions, 2000$)

Mean 90% Confidence Bound Exhibit ES. 5a Summary of Monetized Benefits   Enhanced Cost of Illness [ 1]

Exhibit ES. 5b Summary of Monetized Benefits   Traditional Cost of Illness [ 1]

Notes: [ 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Source: Chapter 8, Exhibits 8.4a and 8.4b. 3Derived from Exhibit 6.3 using ICR data.

Economic Analysis for LT2ESWTR Proposal June 2003 ES 9 ES. 4.2 National and Household Cost Estimates The total national costs of the LT2ESWTR include costs to systems and States/ Primacy Agencies for implementation and compliance. Specifically, this EA estimates costs for all rule activities including: rule implementation, source water monitoring, disinfection benchmarking, adding treatment, and compliance reporting. EPA assumes nearly all surface water and GWUDI systems will incur rule implementation and initial source water monitoring costs. Disinfection benchmarking and compliance reporting are estimated for only those systems predicted to add treatment.

Approximately 90 percent3 of the estimated total national costs are for systems to meet additional treatment requirements. EPA developed a " least cost" approach to modeling treatment costs. The following series of steps were used to develop treatment cost estimates for compliance with the rule.

1. Predict the percent of systems falling into each bin from modeled source water occurrence 2. Model unit costs for each treatment technology 3. Develop a technology forecast for each bin using the least cost approach and estimates of maximum use of any one technology 4. Calculate the number of plants selecting each technology 5. Multiply the number of plants per technology by the technology unit cost Exhibit ES. 6 summarizes the system costs associated with the LT2ESWTR. Economic Analysis for LT2ESWTR Proposal June 2003 ES 10 Lower ( 5th % ile) Upper ( 95th % ile) Lower ( 5th % ile) Upper ( 95th % ile)

ICR 1,795 $ 1,549 $ 2,042 $ 52 $ 49 $ 54 $ ICRSSL 1,208 $ 1,041 $ 1,379 $ 32 $ 31 $ 34 $ ICRSSM 1,412 $ 1,218 $ 1,612 $ 39 $ 36 $ 41 $

Lower ( 5th % ile) Upper ( 95th % ile) Lower ( 5th % ile) Upper ( 95th % ile) ICR 111 $ 98 $ 123 $ 121 $ 107 $ 135 $ ICRSSL 73 $ 65 $ 82 $ 81 $ 71 $ 91 $ ICRSSM 86 $ 76 $ 96 $ 94 $ 83 $ 106 $ Nominal Costs Total Annualized Costs at 7% Mean 90% Confidence Bound Mean 90% Confidence Bound Data Set Total Annualized Costs at 3% Data Set Capital and One Time ( Nominal at Full Implementation)

Mean 90% Confidence Bound Mean 90% Confidence Bound Operations and Maintenance ( Nominal at Full Implementation) Exhibit ES. 6 Summary of System Costs ($ Millions, 2000$)

Source: Exhibit 8.11.

EPA assumes that systems will generally pass the costs of a new regulation on to their customers in the form of rate increases. Household costs, which are in units of $ per household per year, are estimated to provide a measure of the increase in water bills that could be expected to result from the LT2ESWTR. Exhibit ES. 7 summarizes household costs for those systems predicted to require additional treatment. Economic Analysis for LT2ESWTR Proposal June 2003 ES 11 System Type/ Size Households Mean Median 90th Percentile 95th Percentile Percent of Systems with Household Cost Increase < $ 12 Percent of Systems with Household Cost Increase < $ 120 All CWS 65,816,979 $ 1.68 $ 0.13 $ 4.06 $ 7.57 98.37% 99.99% CWS   £ 10,000 3,318,012 $ 4.61 $ 1.34 $ 13.04 $ 14.92 87.88% 99.88%

All CWS 65,816,979 $ 1.07 $ 0.03 $ 3.24 $ 5.43 99.31% 100.00% CWS   £ 10,000 3,318,012 $ 2.68 $ 0.80 $ 6.10 $ 9.39 95.71% 99.95%

All CWS 65,816,979 $ 1.28 $ 0.03 $ 3.48 $ 6.47 99.07% 100.00% CWS   £ 10,000 3,318,012 $ 3.27 $ 0.80 $ 6.62 $ 13.04 93.90% 99.93% All Systems  ICR All Systems  ICRSSL All Systems  ICRSSM Exhibit ES. 7 Summary of Annual Household Cost Increases[ 1]

($ per Year, 2000$)

[ 1] Annualized at discount rates varied by system size and ownership ( see Appendix J, Exhibit J. 2). Source: Exhibit 6.14.

ES. 5 National Net Benefits and Summary of Comparison of Alternatives The national net benefits for each of the regulatory alternatives are shown in Exhibit ES. 8. The annualized net national benefits for the Preferred Alternative range from $ 181 million to $ 1.34 billion, depending on occurrence, cost of illness assumptions, and discounts rates used.

From Exhibit ES. 8, several important economic questions can be answered. First, the Preferred Alternative ( A3) has positive net benefits, a key threshold test of the reasonableness of a regulation. This is also true for Alternatives A2 and A4 under all combinations of occurrence, cost of illness, and discount rates, and true for Alternative A1 for most of the combinations. Second, this exhibit shows that the Preferred Alternative ( A3) is the superior alternative ( shows the highest net benefits) under more of the combinations than any other alternative. Alternative A4 has the highest net benefits under most conditions with the Traditional cost of illness. Economic Analysis for LT2ESWTR Proposal June 2003 ES 12 3%, 25 Years 7%, 25 Years A1 1,121 $ 873 $ A2 1,327 $ 1,098 $ A3  Preferred 1,335 $ 1,109 $ A4 1,290 $ 1,083 $

A1 96 $ 1 $ A2 298 $ 230 $ A3  Preferred 300 $ 237 $ A4 291 $ 238 $

A1 435 $ 289 $ A2 630 $ 509 $ A3  Preferred 629 $ 514 $ A4 592 $ 493 $ ICRSSL Data Set Rule Alternative Annualized Value ICR ICRSSM 3%, 25 Years 7%, 25 Years A1 628 $ 457 $ A2 843 $ 688 $ A3  Preferred 856 $ 705 $ A4 848 $ 710 $

A1  56 $  128 $ A2 168 $ 120 $ A3  Preferred 180 $ 135 $ A4 188 $ 151 $

A1 170 $ 66 $ A2 386 $ 303 $ A3  Preferred 395 $ 317 $ A4 388 $ 321 $ Data Set Rule Alternative Annualized Value ICRSSM ICR ICRSSL Exhibit ES. 8a Comparison of Mean Net Benefits for All Regulatory Alternatives   Enhanced Cost of Illness ($ Millions, 2000$)

Exhibit ES. 8b Comparison of Mean Net Benefits for All Regulatory Alternatives   Traditional Cost of Illness ($ Millions, 2000$)

Notes: [ 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Source: Exhibits 8.12a and 8.12b. Economic Analysis for LT2ESWTR Proposal June 2003 ES 13 Another key economic test is whether the proposed rule is cost effective. Exhibits ES. 9a and ES. 9b each show four graphs that provide information on this test. The mean benefit for each alternative is plotted against the range of costs that correspond to the mean benefit level. The graphs show all alternatives are cost effective and no alternative provides additional benefits at the same or lower cost. Economic Analysis for LT2ESWTR Proposal June 2003 ES 14 $ 1,125 $ 1,150 $ 1,175 $ 1,200 $ 1,225 $ 1,250 $ 1,275 Alt 4 Alt. 3 Alt. 2 Alt. 1 $ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 $ 350 $ 400 $ 450 $ 500 $ 300 $ 325 $ 350 $ 375 $ 400 $ 425 $ 450 $ 475 Alt. 4 Alt. 3 Alt. 2 Alt. 1 $ 250 $ 270 $ 290 $ 310 $ 330 $ 350 $ 370 $ 390 $ 410 Alt. 4 Alt. 3 Alt. 2 Alt. 1 3 Percent Discount Rate 7 Percent Discount Rate ICR Data Set Costs ($ Millions)

ICRSSL Data Set Costs ($ Millions)

Mean of Benefits ($ Millions) Mean of Benefits ($ Millions) $ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 $ 350 $ 400 $ 450 $ 500 $ 1,325 $ 1,350 $ 1,375 $ 1,400 $ 1,425 $ 1,450 $ 1,475 $ 1,500 Alt. 4 Alt. 3 Alt. 2 Alt. 1 $ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 $ 350 $ 400 $ 450 $ 600 $ 650 $ 700 $ 750 $ 800 $ 850 Alt. 4 Alt. 3 Alt. 2 Alt. 1 $ 520 $ 560 $ 600 $ 640 $ 680 $ 720 Alt. 4 Alt. 3 Alt. 2 Alt. 1 ICRSSM Data Set Costs ($ Millions) Exhibit ES. 9a Comparison of Mean   Enhanced Cost of Illness [ 1] Economic Analysis for LT2ESWTR Proposal June 2003 ES 15 $ 750 $ 775 $ 800 $ 825 $ 850 Alt 4 Alt. 3 Alt. 2 Alt. 1 $ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 $ 350 $ 400 $ 450 $ 500 $ 200 $ 225 $ 250 $ 275 $ 300 $ 325 Alt. 4 Alt. 3 Alt. 2 Alt. 1 $ 180 $ 200 $ 220 $ 240 $ 260 $ 280 Alt. 4 Alt. 3 Alt. 2 Alt. 1 3 Percent Discount Rate 7 Percent Discount Rate ICR Data Set Costs ($ Millions)

ICRSSL Data Set Costs ($ Millions)

Mean of Benefits ($ Millions) Mean of Benefits ($ Millions) $ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 $ 350 $ 400 $ 450 $ 500 $ 900 $ 925 $ 950 $ 975 $ 1,000 Alt. 4 Alt. 3 Alt. 2 Alt. 1 ICRSSM Data Set Costs ($ Millions)

$ 0 $ 50 $ 100 $ 150 $ 200 $ 250 $ 300 $ 350 $ 400 $ 450 $ 400 $ 425 $ 450 $ 475 $ 500 $ 525 $ 550 Alt. 4 Alt. 3 Alt. 2 Alt. 1 $ 520 $ 540 $ 560 $ 580 $ 600 $ 620 $ 640 $ 660 $ 680 $ 700 Alt. 4 Alt. 3 Alt. 2 Alt. 1 Exhibit ES. 9b Comparison of Mean   Traditional Cost of Illness [ 1]

Notes: [ 1] The traditional COI only includes valuation for medical costs and lost work time ( including some portion of unpaid household production). The enhanced COI also factors in valuations for lost personal time ( non work time) such as child care and homemaking ( to the extent not covered by the traditional COI), time with family, and recreation, and lost productivity at work on days when workers are ill but go to work anyway. Source: Exhibit 8.7. Economic Analysis for LT2ESWTR Proposal June 2003 ES 16 The Preferred Alternative ( A3) was also evaluated against the other alternatives with respect to key uncertainty variables. EPA conducted a series of sensitivity analyses to examine the effects of exaggerating one uncertain variable while holding all others constant. These analyses tested the following uncertainty variables: the assumptions regarding loss of productivity and the value of nonwork time in computing the cost of illness, the value of AIDS related mortality rate, and the overall value of benefits ( presented in Appendix P, Appendix R, and Chapter 8, respectively). In addition to the sensitivity analyses, the main body of the EA carries two possible values for the cost of illness. Further, uncertainty in the occurrence of Cryptosporidium in source water is addressed by carrying out separate analyses throughout the EA for the three possible occurrence distributions as well as sensitivity analyses on the occurrence distributions. The results of all tests show that benefits still exceed costs for the Preferred Alternative, it remains the favored alternative in the majority of conditions analyzed, and no other alternative performs as well across the range of possible occurrence and values for benefits.

Alternative A3 was recommended by the Stage 2 Microbial Disinfectants and Disinfection Byproducts ( Stage 2 M DBP) Advisory Committee. Based on the recommendation, and supported by EPA's evaluations of benefits and costs, EPA selected Alternative A3 as the proposed rule. 1 IESWTR ( 63 FR 69477 December 1998), LT1ESWTR ( 67 FR 1811 January 2002)

Economic Analysis for the LT2ESWTR Proposal June 2003 1 1 1. Introduction This document presents an analysis of the costs and benefits of the proposed Long Term 2 Enhanced Surface Water Treatment Rule ( LT2ESWTR). The analysis is performed and presented in compliance with Executive Order 12866, Regulatory Planning and Review ( 58 Federal Register ( FR) 51735), which requires that the U. S. Environmental Protection Agency ( EPA) estimate the economic impact of rules costing over $ 100 million annually and submit the analysis in conjunction with publishing the rule.

This chapter provides a summary of the LT2ESWTR in section 1.1 and describes the organization of this Economic Analysis ( EA) in section 1.2.

1.1 Summary The LT2ESWTR builds on the Interim Enhanced Surface Water Treatment Rule ( IESWTR) and the Long Term 1 Enhanced Surface Water Treatment Rule ( LT1ESWTR) by improving control of microbial pathogens, specifically the contaminant Cryptosporidium1. The LT2ESWTR also addresses the risk risk tradeoffs posed by the simultaneous control of microbial pathogens and disinfection byproducts ( DBPs). The disinfectants commonly used to kill microorganisms react with naturally occurring organic and inorganic matter in source water, forming DBPs that are known to have adverse health effects ( including cancer, developmental, and reproductive effects). In order to balance the risks posed by DBPs and microbial pathogens and to facilitate compliance decisions by water systems, the LT2ESWTR will be promulgated concurrently with the Stage 2 Disinfection Byproducts Rule ( DBPR). The LT2ESWTR applies to all community water systems ( CWSs) and noncommunity water systems ( NCWSs) that use surface water or ground water under the direct influence of surface water ( GWUDI) as a source.

The intent of the LT2ESWTR is to supplement existing microbial treatment requirements for systems where additional public health protection is needed. The rule will require filtered systems to monitor their source water for Cryptosporidium. Based on monitoring results, filtered systems must meet one of four levels of treatment for Cryptosporidium ( with the first level requiring no additional treatment). All unfiltered systems, which are not currently required to provide any treatment for Cryptosporidium, must achieve 2 or 3 log Cryptosporidium inactivation, depending on their source water Cryptosporidium levels. The rule also requires systems with uncovered finished water reservoirs to either cover the reservoirs or provide additional treatment to reservoir effluent. Rule provisions are described in detail below.

1.1.1 Monitoring and Treatment Requirements for Filtered Systems Systems first monitor source water Cryptosporidium concentrations and based on those results, are assigned to different treatment " bins." Within each bin, systems will choose technologies from a " toolbox" of options for ensuring Cryptosporidium removal or inactivation from treated water. The bins 2 Systems must meet all requirements of the analytical methods for Cryptosporidium, which include analysis of two matrix spiked samples.

Economic Analysis for the LT2ESWTR Proposal June 2003 1 2 for source waters with higher concentrations of Cryptosporidium involve treatment options providing higher levels of inactivation and/ or removal.

Initial Monitoring for Bin Classification   Systems Serving at Least 10,000 People Medium and large filtered systems ( those serving at least 10,000 people) will be required to monitor their raw water sources for Cryptosporidium at each plant at least once per month for a minimum of 2 years. Bin classification will be based on one of the following:

° The highest 12 month running annual average Cryptosporidium concentration ( in oocysts/ liter) if samples are taken monthly ( 24 samples total), or ° The 2 year mean Cryptosporidium concentration. The facility may conduct monitoring twice per month for 24 months ( 48 samples total) or perform additional sampling and include these results in the calculation of the mean, but the additional samples must be evenly distributed over the 2 year monitoring period.

Cryptosporidium analysis must be conducted in accordance with EPA Method 1622/ 23 using a sample volume of at least 10 liters. 2 Samples must also be analyzed for E. coli and turbidity. The E. coli and turbidity data will be used by EPA and stakeholders to evaluate methods for predicting Cryptosporidium occurrence.

Systems with at least 2 years of historical Cryptosporidium data that are equivalent in sample number, frequency, and quality to data required under the LT2ESWTR may use these data to determine bin classification, in lieu of additional Cryptosporidium compliance monitoring, if EPA approves the use of these data.

Monitoring for medium and large systems starts no later than 6 months after promulgation of the LT2ESWTR. Systems will submit monitoring data to EPA on an ongoing basis, ( i. e., as data are generated, they will be entered into an EPA database). At the end of the 2 year monitoring period, EPA will give the results to the States/ Primacy Agencies, who will then work with their systems to determine appropriate compliance steps.

Initial Monitoring for Bin Classification   Systems Serving Fewer than 10,000 People Source water monitoring for small systems ( those serving fewer than 10,000 people) will begin 2 years after the medium and large systems initiate source water Cryptosporidium monitoring. The required monitoring is on a delayed schedule so EPA can incorporate information on E. coli and turbidity collected by the medium and large systems into monitoring requirements ( EPA will examine these data and their use as indicators of Cryptosporidium). In the absence of a new indicator, small systems will conduct 1 year of biweekly E. coli source water monitoring and will be required to conduct Cryptosporidium monitoring only if E. coli concentrations exceed the following levels:

° An annual mean concentration greater than 10 E. coli per 100 mL for lake and reservoir source waters Economic Analysis for the LT2ESWTR Proposal June 2003 1 3 ° An annual mean concentration greater than 50 E. coli per 100 mL for flowing stream source waters Systems that do not exceed these levels are assumed to have a Cryptosporidium concentration of less than 0.075 oocysts/ L and are placed in Bin 1 ( see Exhibit 1.1). Small systems that exceed the E. coli levels mentioned above would be required to conduct semimonthly Cryptosporidium monitoring for a 1 year period, beginning 6 months after the conclusion of E. coli monitoring. Bin classification for small systems conducting Cryptosporidium monitoring is based on the arithmetic mean concentration of the 24 Cryptosporidium samples.

All filtered systems that provide 5.5 log of treatment for Cryptosporidium by the date they are required to start source water monitoring are exempt from monitoring and subsequent bin classification. To meet the requirement for 5.5 log of treatment, systems using conventional treatment would be required to provide 2.5 log of additional treatment, and systems using direct filtration would be required to provide 3 log of additional treatment.

Bins and Treatment Requirements   All System Sizes Exhibit 1.1 presents the bins for filtered systems according to treatment plant type. Systems must meet Cryptosporidium treatment requirements by using one of the treatment options in the " microbial toolbox" or by demonstrating performance equivalent to or exceeding the required treatment. Systems have 3 years after initial bin classification to meet the treatment requirements associated with the bin. States/ Primacy Agencies may grant systems a 2 year extension to comply if capital investments are necessary. Economic Analysis for the LT2ESWTR Proposal June 2003 1 4 Exhibit 1.1 Filtered Systems Bin Classification and Treatment Requirements If your source water Cryptosporidium concentration ( oocysts/ L) is... Your bin classification is... And if you use the following filtration treatment in full compliance with existing regulations, then your additional treatment requirements are...

Conventional Filtration Direct Filtration Slow Sand or Diatomaceous Earth Filtration Alternative Filtration Technologies < 0.075 1 No additional treatment No additional treatment No additional treatment No additional treatment > 0.075 and < 1.0 21 1 log treatment 1.5 log treatment 1 log treatment As determined by the State2 > 1.0 and < 3.0 33 2 log treatment 2.5 log treatment 2 log treatment As determined by the State4 > 3.0 43 2.5 log treatment 3 log treatment 2.5 log treatment As determined by the State5 [ 1] Systems may use any technology or combination of technologies from the microbial toolbox. [ 2] Total Cryptosporidium treatment must be at least 4.0 log. 3Systems must achieve at least 1 log of the required treatment using ozone, chlorine dioxide, ultraviolet light ( UV), membranes, bag/ cartridge filters, or bank filtration. [ 4] Total Cryptosporidium treatment must be at least 5.0 log. [ 5] Total Cryptosporidium treatment must be at least 5.5 log.

The total Cryptosporidium treatment required for Bins 2, 3, and 4 is 4.0 log, 5.0 log, and 5.5 log, respectively. The additional treatment requirements in Exhibit 1.1 are based on a determination that conventional, slow sand, and diatomaceous earth filtration plants in compliance with the IESWTR or LT1ESWTR achieve an average of 3 log removal of Cryptosporidium ( the 2 log credit for Cryptosporidium under the IESWTR and LT1ESWTR is based on the minimum removal expected with these types of filtration). Therefore, conventional, slow sand, and diatomaceous earth filtration plants will require an additional 1.0 to 2.5 log additional treatment to meet the total removal requirement, depending on the bin they are placed in.

EPA has determined that direct filtration plants achieve an average 2.5 log removal of Cryptosporidium ( their removal is less than in conventional filtration because they lack a sedimentation process). Consequently, under the LT2ESWTR, direct filtration plants in Bins 2   4 must provide 0.5 log more in additional treatment than conventional plants to meet the total Cryptosporidium removal requirement.

Microbial Toolbox for Meeting Additional Treatment Requirements To meet the Cryptosporidium treatment requirements for the bin in which they are classified, filtered systems can select from a " toolbox" of treatment or management options. The technologies and management strategies in the microbial toolbox, along with their log treatment credits, are presented in Economic Analysis for the LT2ESWTR Proposal June 2003 1 5 Exhibit 1.2. Systems do not get the log credit automatically when they install these technologies; they must show they are meeting certain operational or other criteria specific to the technology. Log credit under existing rules ( e. g., the IESWTR and LT1ESWTR) works much the same way. Systems currently using ozone, chlorine dioxide, ultraviolet light ( UV), or membranes in addition to conventional treatment may receive credit for those technologies toward meeting bin requirements if they meet the LT2ESWTR criteria for the chosen technology. Economic Analysis for the LT2ESWTR Proposal June 2003 1 6 Exhibit 1.2 Microbial Toolbox Components for the LT2ESWTR ( To be used in addition to existing treatment)

Toolbox Option Log Credit Source Toolbox Components Watershed control program 0.5 Alternative source/ intake management None, but conduct source water monitoring concurrently at both sources or under both intake management plans and determine bin based on the lower mean concentration Pre Filtration Toolbox Components Presedimentation basin with coagulation 0.5 Two stage lime softening 0.5 Bank filtration 0.5 or 1.0, depending on setback Treatment Performance Toolbox Components Combined filter performance 0.5 Individual filter performance 1.0 Demonstration of performance State approved1 Additional Filtration Toolbox Components Bag filters 1.0 Cartridge filters 2.0 Membrane filtration As demonstrated2 Second stage filtration 0.5 Slow sand filters 2.5 Inactivation Toolbox Components Chlorine dioxide As demonstrated3 Ozone As demonstrated3 UV As demonstrated2 [ 1] State must approve the method used to demonstrate performance and must approve the log credit claimed by the system. [ 2] Credit for membrane filtration and UV is based on the results of challenge testing and reactor validation testing, respectively. [ 3] Credit for chlorine dioxide and ozone is based on CT values achieved ( CT is the product of disinfectant concentration and contact time). Economic Analysis for the LT2ESWTR Proposal June 2003 1 7 Reassessment and Future Monitoring Six years after initial bin classification, systems will be required to conduct a second round of monitoring to reassess source water conditions for bin assignments. Two years before this reassessment ( 4 years after initial binning), EPA plans to initiate a stakeholder process to review available analytical methods for detecting Cryptosporidium. If there are new, improved methods, EPA, with stakeholder input, will determine the appropriate analytical method, monitoring frequency, and monitoring locations for the second round of national assessment monitoring. In the absence of an improved Cryptosporidium detection method, monitoring will follow EPA Method 1622/ 23. Systems that provide a total of 5.5 log treatment for Cryptosporidium are not subject to future monitoring.

In addition to the reassessment and re binning described above, the State/ Primacy Agency will assess any significant changes in the watershed and source water as part of the sanitary survey process. They will then determine what follow up action is appropriate in response to source water changes, which could include actions from the microbial toolbox.

1.1.2 Monitoring and Treatment Requirements for Unfiltered Systems Unfiltered systems that already have 3 log Cryptosporidium treatment in place prior to the date they would have to start monitoring are exempt from monitoring and additional Cryptosporidium inactivation requirements. Otherwise, large unfiltered systems must monitor Cryptosporidium in their source water monthly for at least 2 years, and small unfiltered systems must monitor semimonthly for 12 months. All unfiltered systems must determine their treatment requirements based on the arithmetic mean Cryptosporidium concentration. If their average Cryptosporidium concentration is less than or equal to 0.01 oocyst/ L, systems must provide 2 log Cryptosporidium inactivation. If their average Cryptosporidium concentration is greater than 0.01 oocysts/ L, they must provide 3 log Cryptosporidium inactivation.

Monitoring for unfiltered systems will be based on the same schedule as monitoring for filtered systems, although unfiltered systems are not required to monitor E. coli or turbidity. As with the filtered systems, unfiltered systems must conduct a second round of Cryptosporidium monitoring six years after the initial bin assignment.

In addition to the new Cryptosporidium inactivation requirements, the LT2ESWTR will require unfiltered systems to continue to meet the filtration avoidance criteria under the 1989 SWTR and to continue provide inactivation for Giardia and viruses. The overall inactivation requirements ( i. e., 4 log virus, 3 log Giardia, and 2 or 3 log Cryptosporidium) must be met using a minimum of two disinfectants. Additionally, each of two disinfectants must meet the total inactivation for one of the three pathogens. For example, a system could use UV to inactivate 2 log of Cryptosporidium and Giardia and use chlorine to inactivate 4 log of viruses and 1 log Giardia.

1.1.3 Requirements for Existing Uncovered Finished Water Reservoirs The LT2ESWTR builds on the IESWTR and LT1ESWTR, which require covers only for new finished water reservoirs. The LT2ESWTR will establish requirements for all systems with existing uncovered finished water reservoirs. Systems must either cover the reservoir or treat reservoir discharge to the distribution system to achieve 4 log virus inactivation, unless the State/ Primacy Agency determines Economic Analysis for the LT2ESWTR Proposal June 2003 1 8 that existing risk mitigation is adequate. Risk mitigation plans must address physical access, surface water run off, animal and bird waste, and continuing water quality assessment at a minimum.

1.1.4 Disinfection Profiling and Benchmarking Requirements The LT2ESWTR includes a disinfection profile and benchmark requirement to ensure that any significant change in disinfection, whether for byproduct control under the Stage 2 DBPR, improved Cryptosporidium control under the LT2ESWTR, or both, does not significantly compromise existing Giardia and virus protection. A disinfection profile is a graphical representation of a system's level of Giardia and viral inactivation measured during the course of 1 or more year( s). A benchmark is the lowest monthly average of microbial inactivation during the disinfection profile period.

The profiling requirements under the LT2ESWTR are similar to those promulgated under the IESWTR and LT1ESWTR and are applicable to: 1) systems required to conduct Cryptosporidium source water monitoring and 2) small surface water systems that do not have to conduct Cryptosporidium source water monitoring but that have Stage 1 DBPR TTHM annual average results of at least 56 µ g/ L or HAA5 annual average results of at least 42 µ g/ L. The LT2ESWTR requires these systems to prepare a disinfection profile that characterizes current levels of Giardia lamblia and virus inactivation throughout the plant over the course of one year. The profile may be developed using equivalent historical data. If a system subsequently proposes to make a significant change to its disinfection practice, then the LT2ESWTR requires the system to calculate a disinfection benchmark and consult with the state regarding how the proposed change will affect that benchmark.

1.1.5 Implementation Timeline Exhibit 1.3 shows the timeline of LT2ESWTR activities. The schedule for monitoring and compliance with treatment requirements differs between large and small systems. Economic Analysis for the LT2ESWTR Proposal June 2003 1 9 States Crypto Monitoring Apply for Primacy Comply with Stage 2A Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10 Year 11 Large and Medium Filtered and Unfiltered Systems ( Serving > 10,000 People)

Bin Determination Treatment Installation Small Filtered Systems ( Serving < 10,000 People)

E. Coli monitoring Crypto Monitoring Bin Determination Treatment Installation Bin Determination Crypto Compliance Crypto Compliance Crypto Compliance Small Unfiltered Systems ( Serving < 10,000 People) Crypto Monitoring Final Stage 2 DBPR & LT2ESWTR Rules Promulgated Treatment Installation ( possible 2 year extension)

( possible 2 year extension)

( possible 2 year extension) Exhibit 1.3 Implementation Time Line for LT2ESWTR 1.2 Document Organization This EA is organized into the following chapters:

° Chapter 2 identifies public health concerns addressed by the rule and provides a 20 year regulatory history that includes a description of relevant National Primary Drinking Water Regulations ( NPDWRs). It also explains the statutory authority for promulgating the LT2ESWTR and economic rationale for choosing a regulatory approach.

° Chapter 3 describes the regulatory alternatives considered for the LT2ESWTR and the process for developing them.

° Chapter 4 characterizes the baseline conditions that are expected to exist ( including system inventory, treatment, and water quality data) before systems complete the monitoring and begin making treatment changes to meet the LT2ESWTR requirements. Because of the 3 The compliance deadline for the IESWTR and Stage 1 DBPR occurred recently ( January 2002) for large and medium surface water systems.

Economic Analysis for the LT2ESWTR Proposal June 2003 1 10 timing of the IESWTR, LT1ESWTR, and Stage 1 DBPR3, EPA had to predict the changes in treatment and water quality made by systems as a result of these rules to characterize Pre LT2ESWTR baseline conditions.

° Chapter 5 reviews available toxicological and epidemiological data related to Cryptosporidium and presents the public health and economic benefits ( both quantifiable and unquantifiable) of this rule. It compares the benefits of the four regulatory alternatives, and presents several sensitivity analyses.

° Chapter 6 presents an estimate of the costs of implementing the rule to the drinking water industry, households, and States/ Primacy Agencies. It also compares the costs of the four regulatory alternatives.

° Chapter 7 discusses distributional analyses performed to evaluate the effects of the rule on different segments of the population. It also considers various executive orders and requirements, including the Regulatory Flexibility Act ( RFA) and Unfunded Mandates Reform Act ( UMRA).

° Chapter 8 summarizes and compares the rule's benefit and cost estimates. ( Note: It does several things, not limited to whether $ B > $ C  and not focused on that comparison specifically.) The results for the Preferred Regulatory Alternative are discussed and compared to the other regulatory alternatives considered. Economic Analysis for the LT2ESWTR Proposal 2 1 June 2003 2. Statement of Need for the Proposal 2.1 Introduction This chapter presents the need for the LT2ESWTR by identifying the public health concerns that this rule will address. Included is a discussion of related regulations that shows that these public health concerns are not adequately addressed by other rules. Lastly, this chapter discusses the economic rationale for the rule. The remaining sections are organized as follows:

2.2 Description of the Issue 2.3 Risk Balancing 2.4 Public Health Concerns to be Addressed 2.4.1 Cryptosporidium 2.4.2 Uncovered Finished Water Reservoirs 2.5 Regulatory History 2.5.1 Statutory Authority for Promulgating the Rule 2.5.2 1979 Total Trihalomethane Rule 2.5.3 1989 Total Coliform Rule 2.5.4 1989 Surface Water Treatment Rule 2.5.5 1996 Information Collection Rule 2.5.6 1998 Interim Enhanced Surface Water Treatment Rule 2.5.7 1998 Stage 1 Disinfectants and Disinfection Byproducts Rule 2.5.8 2000 Proposed Ground Water Rule 2.5.9 2001 Filter Backwash Recycling Rule 2.5.10 2002 Long Term 1 Enhanced Surface Water Treatment Rule 2.5.11 2003 Proposed Stage 2 Disinfectants and Disinfection Byproducts Rule 2.6 Economic Rationale for Regulation 2.2 Description of the Issue Over 14,000 public water systems ( PWSs), serving approximately 180 million people in the United States and its territories, use surface water or ground water under the direct influence of surface water ( GWUDI) as their source. These sources carry microbial contaminants, some of which pose significant risks to public health. The U. S. Environmental Protection Agency ( EPA or the Agency) is particularly concerned about Cryptosporidium because it is resistant to many commonly used drinking water disinfectants, such as chlorine, and it poses significant health risks, including death. Moreover, there is no effective drug available to cure cryptosporidiosis, the health condition caused by Cryptosporidium infection ( Framm and Soave 1997). The primary issue of concern addressed by this rule is the risk to public health in water supplies with inadequate Cryptosporidium treatment.

The 1989 SWTR requires most surface water and GWUDI systems to physically remove microbial contaminants through filtration. ( Exemptions to this filtration requirement are granted to systems that meet specified avoidance criteria.) Types of filtration systems include the following: Economic Analysis for the LT2ESWTR Proposal 2 2 June 2003 ° Conventional treatment   coagulation, flocculation, and sedimentation of particles, followed by granular media filtration.

° Direct filtration   coagulation and flocculation followed by rapid sand filtration, but no sedimentation basin. This type of filtration system is designed for low turbidity waters.

° Slow sand and diatomaceous earth filtration   filters that work at very low flow rates without the use of a coagulant in pretreatment.

° Alternative filtration   other technologies, including membranes and bag and cartridge filters.

Current regulations specify the performance of filtration systems in terms of filtered water turbidity limits. Turbidity is a measure of the clarity of water and is quantified in nephelometric turbidity units ( NTU). The 1989 SWTR required all surface water and GWUDI systems using rapid sand filtration technologies to meet combined filter effluent turbidity limits of 0.5 NTU, 95 percent of the time. The 1998 Interim Enhanced Surface Water Treatment Rule ( IESWTR) requires improved filtration performance by lowering the turbidity standard to 0.3 NTU, 95 percent of the time ( with a maximum of 1 NTU at any time) for large systems using rapid sand filtration. The 2002 LT1ESWTR extended this requirement to small systems. At this lower limit, EPA believes that systems are generally achieving a minimum of 2 log ( 99 percent) removal of Cryptosporidium. Slow sand and diatomaceous earth filtration systems can achieve at least 2 log removal at a higher effluent turbidity of 1 NTU 95 percent of the time because of differences in their removal mechanisms. While the degree of Cryptosporidium reduction achieved under these standards may provide adequate public health protection for some source waters, EPA recognizes that some systems may have higher levels of contamination where additional protection is warranted. Methods such as additional filtration, the use of alternative disinfectants such as ozone or ultraviolet light ( UV), improved source water protection, or other treatment and management initiatives can help systems achieve additional protection against Cryptosporidium.

The LT2ESWTR also addresses the risk of microbial pathogen contamination in unfiltered systems, which lack the protective barriers from Cryptosporidium that filtered systems provide. The rule requires unfiltered systems to provide at least 2 log inactivation of Cryptosporidium; the amount of disinfection will depend on the results of source water Cryptosporidium monitoring. The rule also requires the use of two disinfectants to meet Cryptosporidium and existing ( those for Giardia and viruses) inactivation requirements .

Lastly, the LT2ESWTR addresses health risks posed by uncovered finished water reservoirs. There are approximately 140 uncovered reservoirs that hold finished water, not including those that are scheduled to be covered or taken off line, ranging in size from a few thousand to more than three billion gallons. While the IEWSTR and LT1ESWTR require systems to cover all new finished water reservoirs, the LT2ESWTR builds on these rules by addressing existing uncovered finished water reservoirs.

2.3 Risk Balancing EPA expects some systems to change treatment practices in response to the Stage 2 Disinfectants and Disinfection Byproducts Rule ( DBPR) requirements. These changes have the potential to increase the occurrence of microbial pathogens in drinking water as systems alter the use of disinfectants to comply with the new disinfection byproduct ( DBP) requirements. DBPs result from Economic Analysis for the LT2ESWTR Proposal 2 3 June 2003 chemical reactions between disinfectants and organic and inorganic compounds in the water. Some DBPs are associated with adverse health risks, including adverse developmental and reproductive health effects and cancer. The LT2ESTWR, therefore, has additional disinfection profiling and benchmarking provisions to help ensure that systems maintain control of microbial risks as they take steps to reduce the formation of DBPs.

EPA is making a concerted effort to understand and balance risks from DBPs, risks from microbes, and the costs and benefits of addressing those risks in its rulemaking efforts. To allow for simultaneous compliance and balancing of risks between microbial pathogens and DBPs, EPA is promulgating the LT2ESWTR concurrently with the Stage 2 DBPR. For detailed information regarding the Stage 2 DBPR, see the draft Economic Analysis for the Stage 2 Disinfectants and Disinfection Byproducts Rule ( USEPA 2003d).

2.4 Public Health Concerns to Be Addressed In 1990, EPA's Science Advisory Board ( SAB), an independent panel of experts established by Congressional mandate, cited drinking water contamination as one of the most important environmental risks and indicated that disease causing microbial contaminants ( i. e., bacteria, protozoa, and viruses) pose a particularly high health risk due to the large populations that are directly exposed to them ( SAB and USEPA 1990). Information on waterborne disease outbreaks from the U. S. Centers for Disease Control and Prevention ( CDC) underscores this concern. Data collected by CDC indicates that between 1971 and 1998, 689 waterborne disease outbreaks, caused by various types of contamination, were reported ( Craun and Calderon 1996; Levy et al. 1998; Barwick et al. 2000). However, since the effective date of the SWTR ( 1993), the rate of outbreaks has decreased. From 1993 to 1995, 10 to 15 outbreaks were reported annually. From 1996 to 1998 ( the most recent year for which data are available), there were five to seven outbreaks per year ( Kramer et al. 1996a, Levy et al. 1998, Barwick et al. 2000).

The effects of waterborne disease are usually acute, resulting from a single or small number of exposures. Most waterborne pathogens cause gastrointestinal illness with diarrhea, abdominal discomfort, nausea, vomiting, or other symptoms. Most such cases involve a sudden onset and generally are of short duration in healthy people. Some pathogens ( e. g., Giardia and Cryptosporidium), however, may cause extended illness, lasting weeks or longer in otherwise healthy individuals. The infection can prove fatal for members of sensitive populations, such as the immunocompromised or the elderly. Other waterborne pathogens cause, or at least are associated with, more serious disorders such as hepatitis ( hepatitis A) ( Moore et al. 1993), peptic ulcers and gastric cancer ( Helicobacter pylori) ( Park et al. 2001, Sepulveda and Graham 2002), myocarditis ( group B coxsackievirus) ( Kim et al. 2001), meningitis ( group B coxsackievirus and echoviruses) ( Lee and Kim 2002, Amvrosieva et al. 2001), and many other diseases.

2.4.1 Cryptosporidium Cryptosporidium is of particular concern to EPA because, unlike pathogens such as viruses and bacteria, Cryptosporidium oocysts are resistant to inactivation using many common disinfection practices. Since the oocyst is especially resistant to chlorine disinfection, simply increasing existing chlorination dosage levels or contact time above those most commonly practiced in the United States is not effective. Other emerging disinfectant resistant pathogens, such as Microsporidia, Cyclospora, and Toxoplasma, are also a concern for similar reasons. Economic Analysis for the LT2ESWTR Proposal 2 4 June 2003 Cryptosporidiosis is a protozoal infection that usually causes 7 14 days of diarrhea, possibly accompanied by a low grade fever, nausea, and abdominal cramps in individuals with healthy immune systems ( Juranek 1998). It is caused by the ingestion of infectious oocysts, which are readily carried in water. The most common source of oocysts in water is the feces of infected hosts ( Perz et al. 1998; Rose 1997). Although cryptosporidiosis often occurs through ingestion of the infective oocysts from contaminated food or water, it may also result from direct or indirect contact with infected people or animals ( Casemore 1990; Juranek 1998; Rose 1997). Infected humans and other animals excrete oocysts, which can then be transmitted to others. Okhuysen et al. ( 1998) and Dupont et al. ( 1995) found through human volunteer feeding studies that a low dose of Cryptosporidium parvum ( or C. parvum) is sufficient to cause infection in healthy adults.

Some populations are at greater risk of serious illness or death from waterborne disease than the general population ( Frost et al. 1997). The sensitive populations include children ( especially the very young), the elderly, pregnant women, and the immunocompromised. These sensitive groups account for almost 20 percent of the population in the United States ( Gerba et al. 1996; USEPA 1998a). The severity and duration of illness are often greater in immunocompromised people than in healthy individuals, and death may result. For instance, of the people who died in the 1993 Milwaukee cryptosporidiosis outbreak, 85 percent had AIDS as the underlying cause of death ( Hoxie et al. 1997).

Cryptosporidium has caused a number of documented waterborne disease outbreaks. However, it is important to note that C. parvum was not identified as a human pathogen until 1976, and outbreaks attributed to cryptosporidiosis were not reported in the United States prior to 1984. The first report of an outbreak caused by Cryptosporidium was published during the development of the SWTR ( D'Antonio et al. 1985). EPA, CDC, and the Council of State and Territorial Epidemiologists have maintained a collaborative surveillance program for collection and periodic reporting of data on waterborne disease outbreaks since 1971. The CDC database and biennial CDC   EPA surveillance summaries include data reported voluntarily by the States on the incidence and prevalence of waterborne illnesses.

Between 1991, the first year the SWTR and Total Coliform Rule were in effective, and 2000, the most recent year for which data are available, 95 drinking water related outbreaks associated with confirmed or suspected microbiological causes occurred in PWSs. Twenty outbreaks occurred in PWSs with surface water sources; the remainder had wells or springs as sources. Etiology of outbreaks included Cryptosporidium; Giardia; bacteria such as Campylobacter jejuni, Shigella sonnei, and E. coli O157: H7; Norwalk like viruses and small round structured viruses; and acute gastrointestinal illness of unknown etiology ( AGI). These outbreaks are listed individually in Appendix A of the Occurrence and Exposure Assessment for the Long Term 2 Enhanced Surface Water Treatment Rule and are based on CDC surveillance summaries ( Moore et al. 1993, Kramer et al. 1996a, Levy et al. 1998, Barwick et al. 2000, Lee et al. 2002).

From 1984 to 2000, there were 10 reported outbreaks of cryptosporidiosis associated with drinking water in PWSs in the United States ( Moore et al. 1993; Kramer et al. 1996a; Craun 1996; Levy et al. 1998; Barwick et al. 2000, Lee et al. 2002). An additional outbreak occurred in a private well, and another 41 outbreaks occurred in recreational waters. Exhibit 2.1 summarizes the cryptosporidiosis outbreaks associated with drinking water. Economic Analysis for the LT2ESWTR Proposal 2 5 June 2003 Exhibit 2.1 Reported Cryptosporidiosis Outbreaks in U. S. Drinking Water Systems Year Location and System Type Cases of Illness Source Water Treatment Suspected Cause 1984 Braun Station, TX, CWS 117 ( confirmed) 2,000 ( estimated) Well Chlorination Sewagecontaminated well 1987 Carrollton, GA, CWS 13,000 ( estimated) River Conventional filtration/ chlorination; inadequate backwashing of some filters Treatment deficiencies 1991 Berks County, PA, NCWS 551 ( estimated) Well Chlorination Ground water under the influence of contaminated surface water 1992 Medford ( Jackson County and Talent), OR, CWS 3,000 ( estimated); combined total for Jackson County and Talent Spring/ River Chlorination/ package filtration plant Source not identified for Jackson County; treatment deficiencies at water treatment plant in Talent 1993 Milwaukee, WI, CWS 403,000 ( estimated) Lake Conventional filtration High source water contamination and treatment deficiencies 1993 Cook County, MN, NCWS 27 ( confirmed) Lake Filtered, chlorinated Possible sewage backflow from toilet/ septic tank 1994 Clark County, NV, CWS 103 ( confirmed); many were HIV positive River/ Lake Prechlorination, filtration and postfiltration chlorination Source not identified 1994 Walla Walla, WA, CWS 134 ( confirmed) Well None reported Sewage contamination 1998 Williamson County, TX, CWS 1,400 ( confirmed) Well Chlorinated Sewage contamination 2000 Florida, CWS 5 Well Chlorinated Broken well, treatment deficiencies Source: Craun et al. ( 1998), Barwick et al. ( 2000), and Lee et al. ( 2002).

Five of the 10 outbreaks in Exhibit 2.1 originated from surface water or possibly GWUDI supplied by PWSs serving fewer than 10,000 people. In total, the 10 outbreaks caused an estimated 421,337 cases of illness, the majority occurring in Milwaukee in 1993. These outbreaks demonstrate that when treatment is not operating optimally or when source water is highly contaminated, Cryptosporidium can be present in the finished drinking water and infect consumers, ultimately resulting in disease outbreaks.

The National Research Council concluded that the number of identified and reported outbreaks in the CDC database ( both for surface and ground waters) represents a small percentage of actual waterborne disease outbreaks ( National Research Council 1997). Most outbreaks in CWSs are not recognized until a sizable proportion of the population is ill ( Perz et al. 1998, Craun 1996). In addition to Economic Analysis for the LT2ESWTR Proposal 2 6 June 2003 the complications involved in identifying waterborne disease outbreaks, some States do not have active outbreak surveillance programs. Those that do exist are based on voluntary and confidential responses by State and local public health officials. Even when outbreaks are recognized, few are successfully traced to the drinking water source. Physicians, for instance, may not have sufficient community wide information to attribute gastrointestinal illness to any specific origin, such as a drinking water source. Many people who experience gastrointestinal illness ( predominantly manifested as diarrhea) do not seek medical attention, and some healthy adults with cryptosporidiosis may not suffer severe symptoms from the disease. Even if infected individuals consult a physician, Cryptosporidium is not identified by routine diagnostic tests for gastroenteritis and, therefore, tends to be under reported in the general population ( Craun 1996).

The limited number of reported cases of waterborne disease such as cryptosporidiosis may be due to the fact that a significant portion of these illnesses may be endemic ( i. e., not associated with an outbreak), and thus are even more difficult to recognize. One study, for example, found that 14 to 40 percent of the normal gastrointestinal illness in a community in Quebec was associated with treated drinking water from a surface water source ( Payment et al. 1997).

2.4.2 Uncovered Finished Water Reservoirs Many PWSs store treated drinking water in some type of reservoir before delivering it to their customers. Although good engineering practice dictates that such reservoirs be covered to prevent recontamination, there are currently no regulations that require existing reservoirs to be covered ( the IESWTR and LT1ESWTR require new reservoirs to be covered). The use of uncovered finished water reservoirs has been questioned since 1930 because of their susceptibility to contamination and subsequent threats to public health. Many sources of contamination can lead to the degradation of water quality in uncovered finished water reservoirs. These include, but are not limited to, surface water runoff, algal growth, insects and fish, bird and animal waste, airborne deposition, and human activity. Algal blooms are the most common problem in open reservoirs and can become a public health risk. Algae growth leads to the formation of DBPs and causes taste and odor problems. Algae also provide a food source for bacteria that decompose plant matter. Some blue green algae ( actually a type of bacteria called cyanobacteria) contain toxins that can induce headaches, fever, diarrhea, abdominal pain, nausea, and vomiting. Bird and animal wastes are other common and significant sources of contamination. These wastes may carry microbial contaminants such as coliform bacteria, viruses, and human pathogens, including Vibrio cholera, Salmonella, Mycobacteria, bacteria that cause typhoid fever, and Giardia in addition to Cryptosporidium ( USEPA 1999c). Microbial pathogens can also be found in surface water runoff along with agricultural chemicals, automotive wastes, turbidity, metals, and organic matter ( USEPA 1999c; LeChevallier et al. 1997b). In an effort to minimize contamination, systems have implemented controls, such as reservoir covers and liners, regular draining and washing, proper security and monitoring, bird and insect control programs, and drainage designed to prevent surface runoff from entering the reservoir ( USEPA 1999c).

Few studies quantitatively evaluate the impacts of uncovered finished water reservoirs on public health. LeChevallier et al. ( 1997b) compared the influent and the effluent water quality from six New Jersey reservoirs for a 1 year period to determine the impact of uncovered finished water storage reservoirs on water quality. There were significant increases in turbidity, particle counts, total coliform, fecal coliform, and heterotrophic plate count bacteria in the effluent compared to the influent. There was Economic Analysis for the LT2ESWTR Proposal 2 7 June 2003 also a significant decrease in the chlorine residual in the effluent samples, meaning little chlorine would be left to provide continued disinfection in the distribution system.

2.5 Regulatory History The primary responsibility for regulating the quality of drinking water lies with EPA. The Safe Drinking Water Act ( SDWA) establishes this responsibility and defines the mechanisms at the Agency's disposal to protect public health. EPA sets standards by identifying which contaminants should be regulated and by establishing the maximum levels of the contaminants allowed in drinking water specifying treatment techniques to reduce contaminant levels.

2.5.1 Statutory Authority for Promulgating the Rule Section 1412( b)( 1) of the 1996 SDWA reauthorization mandated new drinking water requirements. EPA's general authority to set Maximum Contaminant Level Goals ( MCLGs) and develop National Primary Drinking Water Regulations ( NPDWRs) was modified to apply to contaminants that " may have an adverse effect on the health of persons," are " known to occur or there is a substantial likelihood that the contaminant will occur in PWSs with a frequency and at levels of public health concern," and for which, " in the sole judgment of the Administrator, regulation of such contaminant presents a meaningful opportunity for health risk reductions for persons served by public water systems" ( SDWA 1412( b)( 1)( A)).

To regulate a contaminant, EPA first sets an MCLG at a level at which no known or anticipated adverse health effects occur. MCLGs are established solely on the basis of protecting public health and are not enforceable. EPA simultaneously sets an enforceable Maximum Contaminant Level ( MCL) as close as technologically feasible to the MCLG, while taking costs into consideration. If it is not feasible to measure the contaminant at levels presumed to have impacts on health, a treatment technique can be specified in place of an MCL. Water systems comply with a drinking water regulation by not exceeding the MCL or by meeting treatment technique requirements.

In addition to the general authorities cited above, SDWA Section 1412( b)( 2)( C) requires specifically that EPA promulgate the Final Enhanced Surface Water Treatment Rule ( ESWTR).

The Administrator shall promulgate an Interim Enhanced Surface Water Treatment Rule, a Final Enhanced Surface Water Treatment Rule, a Stage 1 Disinfectants and Disinfection Byproducts Rule, and a Stage 2 Disinfectants and Disinfection Byproducts Rule in accordance with the schedule published in volume 29, Federal Register, Page 6361 ( February 10, 1994), in Table III. 13 of the proposed Information Collection Rule.

The promulgation of the IESWTR and LT1ESWTR satisfied the statutory requirement for an interim rule, and the LT2ESWTR satisfies the requirement for a final rule and the Congressional intent to review and revise the IESWTR and LT1ESWTR based on data available from the Information Collection Rule ( ICR) and Information Collection Rule Supplemental Survey ( ICRSSs) ( see section 2.5.5). Also, to achieve the goals of the Stage 2 DBPR, the LT2ESWTR must be promulgated to achieve a balance between the risks of microbial pathogens and DBPs. Economic Analysis for the LT2ESWTR Proposal 2 8 June 2003 The following sections summarize the development of NPDWRs over the past 20 years.