100,000 999,999 183.98 $ 186.24 $ 98.21 $ 257.75 $ 8.17 $ 7.87 $ 5.21 $ 12.52 $

1,000,000+ 86.04 $ 86.46 $ 47.14 $ 120.41 $ 4.91 $ 4.65 $ 3.11 $ 7.73 $

All Sizes 545.44 $ 549.03 $ 297.70 $ 769.10 $ 32.84 $ 32.21 $ 19.95 $ 48.78 $

< 100 0.67 $ 0.66 $ 0.36 $ 1.03 $ 0.12 $ 0.12 $ 0.07 $ 0.17 $

100 499 1.32 $ 1.31 $ 0.72 $ 2.00 $ 0.33 $ 0.33 $ 0.19 $ 0.48 $

500 999 0.85 $ 0.84 $ 0.46 $ 1.30 $ 0.13 $ 0.13 $ 0.07 $ 0.20 $

1,000 3,299 1.89 $ 1.88 $ 1.04 $ 2.80 $ 0.26 $ 0.26 $ 0.15 $ 0.38 $

3,300 9,999 1.29 $ 1.28 $ 0.71 $ 1.90 $ 0.11 $ 0.11 $ 0.06 $ 0.16 $

10,000 49,999 0.55 $ 0.55 $ 0.30 $ 0.76 $ 0.03 $ 0.03 $ 0.02 $ 0.04 $

50,000 99,999  $  $  $  $  $  $  $  $

100,000 999,999 0.41 $ 0.41 $ 0.22 $ 0.57 $ 0.02 $ 0.02 $ 0.01 $ 0.03 $

1,000,000+  $  $  $  $  $  $  $  $

All Sizes 6.99 $ 6.95 $ 3.82 $ 10.36 $ 1.00 $ 1.00 $ 0.56 $ 1.46 $

552.43 $ 555.97 $ 301.52 $ 779.46 $ 33.85 $ 33.22 $ 20.52 $ 50.24 $

< 100 8.34 $ 8.34 $ 7.19 $ 9.53 $ 0.98 $ 0.98 $ 0.91 $ 1.05 $

100 499 33.19 $ 33.18 $ 28.04 $ 38.38 $ 3.68 $ 3.68 $ 3.38 $ 3.98 $

500 999 20.18 $ 20.18 $ 17.00 $ 23.34 $ 1.96 $ 1.96 $ 1.80 $ 2.12 $

1,000 3,299 39.43 $ 39.42 $ 32.35 $ 46.54 $ 3.00 $ 3.00 $ 2.73 $ 3.26 $

3,300 9,999 65.91 $ 65.86 $ 53.53 $ 78.34 $ 2.55 $ 2.55 $ 2.33 $ 2.76 $

10,000 49,999 59.09 $ 59.08 $ 53.39 $ 64.79 $ 5.03 $ 5.03 $ 4.76 $ 5.30 $

50,000 99,999 14.96 $ 14.96 $ 13.38 $ 16.53 $ 1.28 $ 1.28 $ 1.20 $ 1.36 $

100,000 999,999 29.70 $ 29.71 $ 26.43 $ 32.95 $ 2.83 $ 2.83 $ 2.64 $ 3.02 $

1,000,000+ 3.38 $ 3.38 $ 2.97 $ 3.79 $ 0.43 $ 0.43 $ 0.40 $ 0.46 $

All Sizes 274.18 $ 274.11 $ 234.29 $ 314.20 $ 21.73 $ 21.73 $ 20.16 $ 23.31 $

< 100 3.17 $ 3.17 $ 2.73 $ 3.62 $ 0.37 $ 0.37 $ 0.35 $ 0.40 $

100 499 5.04 $ 5.04 $ 4.25 $ 5.81 $ 0.55 $ 0.55 $ 0.51 $ 0.60 $

500 999 2.47 $ 2.47 $ 2.07 $ 2.87 $ 0.23 $ 0.23 $ 0.21 $ 0.25 $

1,000 3,299 1.61 $ 1.61 $ 1.32 $ 1.90 $ 0.10 $ 0.10 $ 0.09 $ 0.11 $

3,300 9,999 0.46 $ 0.46 $ 0.38 $ 0.55 $ 0.01 $ 0.01 $ 0.01 $ 0.02 $

10,000 49,999 0.10 $ 0.10 $ 0.09 $ 0.11 $ 0.01 $ 0.01 $ 0.01 $ 0.01 $

50,000 99,999 0.02 $ 0.02 $ 0.02 $ 0.02 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $

100,000 999,999 0.03 $ 0.03 $ 0.03 $ 0.03 $ 0.00 $ 0.00 $ 0.00 $ 0.00 $

1,000,000+  $  $  $  $  $  $  $  $

All Sizes 12.90 $ 12.90 $ 10.87 $ 14.91 $ 1.29 $ 1.29 $ 1.18 $ 1.39 $

287.08 $ 287.01 $ 245.16 $ 329.11 $ 23.02 $ 23.02 $ 21.34 $ 24.70 $

839.51 $ 842.98 $ 546.68 $ 1,108.57 $ 56.86 $ 56.23 $ 41.86 $ 74.94 $ System Size ( population served) Capital Costs CWSs NTNCWSs Subtotal Subtotal Median Value 90 Percent Confidence Bound Total Ground Water Surface Water CWSs NTNCWSs O& M Costs Mean Value Median Value 90 Percent Confidence Bound Source Mean Value System Classification Table VI. D 7. Total Initial Capital Costs and Steady State O& M Costs ($ Millions/ Year).

Notes: All valuesEstimates are discounted to 2003 and given in 2003 dollars. Detail may not add to totals due to independent rounding. Source: Exhibit J. 1a, USEPA 2005a. 211 c. Monitoring costs. Because systems already sample for the Stage 1 DBPR, costs for additional routine monitoring are determined by the change in the number of samples to be collected from the Stage 1 to the Stage 2 DBPR. The Stage 2 DBPR monitoring requirements for systems are based only on population served and source water type, while the Stage 1 DBPR requirements are also based on the number of treatment plants. With this modification in monitoring scheme, the average system will have no change in monitoring costs. The number of samples required is estimated to increase for some systems but actually decrease from the Stage 1 to the Stage 2 DBPR for many systems. Table VI. D 8 summarizes the estimated additional routine monitoring costs for systems. 212 Total Additional Compliance Samples per Year Total Labor Costs Total Sampling Costs Total Costs Total Burden ( Hours) Total Burden ( FTEs) A B C D E F= E/ 2080 ( 692) 7,844 $ ( 166,169) $ ( 158,325) $ 348 0.17 ( 3,571) ( 58,617) $ ( 857,050) $ ( 915,667) $ ( 2,369) ( 1.14)

3,594 91,070 $ 862,541 $ 953,611 $ 3,594 1.73 ( 10,496) ( 273,425) $ ( 2,204,194) $ ( 2,477,619) $ ( 10,496) ( 5.05)

1,452 40,671 $ 305,021 $ 345,692 $ 1,452 0.70 609 19,041 $ 127,915 $ 146,956 $ 609 0.29 128 3,996 $ 26,846 $ 30,843 $ 128 0.06 24 735 $ 4,939 $ 5,674 $ 24 0.01 National Totals ( 8,953) ( 168,684) $ ( 1,900,150) $ ( 2,068,834) $ ( 6,711) ( 3.23)

793 26,209 $ 190,302 $ 216,511 $ 1,173 0.56 5,777 143,617 $ 1,386,523 $ 1,530,140 $ 5,777 2.78 552 14,385 $ 115,964 $ 130,349 $ 552 0.27 ( 277) ( 8,665) $ ( 58,213) $ ( 66,879) $ ( 277) ( 0.13)

( 209) ( 6,546) $ ( 43,976) $ ( 50,522) $ ( 209) ( 0.10)

National Totals 6,636 169,000 $ 1,590,600 $ 1,759,600 $ 7,015 3.37 0 0 $ 0 $ 0 $ 0 0.00 0 0 $ 0 $ 0 $ 0 0.00 96 2,433 $ 23,040 $ 25,473 $ 96 0.05 0 0 $ 0 $ 0 $ 0 0.00 16 500 $ 3,360 $ 3,860 $ 16 0.01   $  $  $ 0 0.00   $  $  $ 0 0.00   $  $  $ 0 0.00 National Totals 112 2,933 $ 26,400 $ 29,333 $ 112 0.05 1,241 27,552 $ 297,860 $ 325,412 $ 1,241 0.60 1,393 34,481 $ 334,297 $ 368,779 $ 1,393 0.67 63 1,633 $ 13,163 $ 14,796 $ 63 0.03 9 270 $ 1,815 $ 2,085 $ 9 0.00   $  $  $ 0 0.00 National Totals 2,705 63,936 $ 647,135 $ 711,072 $ 2,705 1.30 Grand Totals 500 67,185 $ 363,986 $ 431,171 $ 3,122 1.50   5   Disinfecting Ground Water Only NTNCWSs > 500,000 < 500 500 9,999 10,000 99,999 100,000 499,999 10,000 49,999 50,000 249,999 250,000 999,999 1,000,000 4,999,999 Surface Water and Mixed NTNCWSs < 500 500 3,299 3,300 9,999 500 9,999 10,000 99,999 100,000 499,999 > 500,000 1,000,000 4,999,999   5   Disinfecting Ground Water Only CWSs < 500 3,300 9,999 10,000 49,999 50,000 249,999 250,000 999,999 Surface Water and Mixed CWSs Size Category < 500 500 3,299 Table VI. D 8. Total Additional Routine Monitoring Costs for Systems.

Notes: ( A) IncludesShows the difference in total additional ( or fewer) compliance monitoring samples from Stage 1 to Stage 2 for disinfecting systems and systems predicted to install disinfection for the GWR. Source: Exhibits H. 8a and H. 8b, USEPA 2005a. 213 Total Hours Average Hours per State Cost/ Labor Hour Total Cost Cost per State A B = A/ 57 C D E = D/ 57 Implementation Activities Public Notification 11,856 208 33.60 $ 398,362 $ 6,989 $

Regulation Adoption and Program Development 59,280 1,040 33.60 $ 1,991,808 $ 34,944 $

Training State Staff 29,640 520 33.60 $ 995,904 $ 17,472 $

Training PWS Staff and Technical Assistants 118,560 2,080 33.60 $ 3,983,616 $ 69,888 $

Updating Data Management System 11,856 208 33.60 $ 398,362 $ 6,989 $

Subtotal 231,192 4,056 7,768,051 $ 136,282 $

Monitoring Plan Activities Monitoring Plans 27,464 482 33.60 $ 926,016 $ 16,246 $

IDSE Activities IDSE Monitoring 66,312 1,163 33.60 $ 2,228,095 $ 39,089 $

Additional Routine Monitoring Activities Recordkeeping and Compliance Tracking 47,424 832 33.60 $ 1,593,446 $ 27,955 $

Operational Evaluation Costs 3,398 60 33.60 $ 114,173 $ 2,003 $

Subtotal 50,822 892 1,707,619 $ 29,958 $

Grand Total 375,790 6,593 12,629,781 $ 221,575 $ 3. State/ Primacy agency costs To estimate State/ Primacy Agency costs, the estimated number of full time equivalents ( FTEs) required per activity is multiplied by the number of labor hours per FTE, the State/ Primacy Agency hourly wage, and the number of States/ Primacy Agencies. EPA estimated the number of FTEs required per activity based on experience implementing previous rules, such as the Stage 1 DBPR. State/ Primacy Agency costs are summarized in Table VI. D 9.

Table VI. D 9. State/ Primacy Agency Cost Summary.

Notes: All states/ primacy agencies are assumed to incur some costs for each activity. Source: Exhibits H. 17 to H. 20, USEPA 2005a.

4. Non quantified costs All significant costs that EPA has identified have been quantified. In some instances, EPA did not include a potential cost element because its effects are relatively minor and difficult to estimate. For example, it may be less costly for a small system to merge with neighboring systems than to add advanced treatment. Such changes have both costs ( legal fees and connecting 214 infrastructure) and benefits ( economies of scale). Likewise, procuring a new source of water would have costs for new infrastructure, but could result in lower treatment costs. Operational costs such as changing storage tank operation were also not considered as alternatives to treatment. These might be options for systems with a single problem area with a long residence time. In the absence of detailed information needed to evaluate situations such as these, EPA has included a discussion of possible effects where appropriate. In general, however, the expected net effect of such situations is lower costs to PWSs. Thus, the EA tends to present conservatively high estimates of costs in relation to non quantified costs.

E. Household Costs of the Stage 2 DBPR EPA estimates that, as a whole, households subject to the Stage 2 DBPR face minimal increases in their annual costs. Approximately 86 percent of the households potentially subject to the rule are served by systems serving at least 10,000 people; these systems experience the lowest increases in costs due to significant economies of scale. Households served by small systems that add treatment will face the greatest increases in annual costs. Table VI. D 9E 1 summarizes annual household cost increases for all system sizes. 215 Total Number of Households Served Mean Annual Household Cost Increase Median Annual Household Cost Increase 90th Percentile Annual Household Cost Increase 95th Percentile Annual Household Cost Increase Percentage of Annual Household Cost Increase < $ 12 Percentage of Annual Household Cost Increase < $ 120 All Systems 101,553,868 0.62 $ 0.03 $ 0.36 $ 0.98 $ 99% 100% All Small Systems 14,261,241 2.20 $ 0.10 $ 0.79 $ 2.57 $ 97% 100% SW < 10,000 3,251,893 4.58 $ 0.79 $ 2.69 $ 7.24 $ 95% 99% SW > 10,000 62,137,350 0.46 $ 0.02 $ 0.35 $ 1.81 $ 99% 100% GW < 10,000 11,009,348 1.49 $ 0.02 $ 0.39 $ 0.99 $ 98% 100% GW > 10,000 25,155,277 0.13 $ 0.00 $ 0.03 $ 0.08 $ 100% 100%

Total Number of Households Served Mean Annual Household Cost Increase Median Annual Household Cost Increase 90th Percentile Annual Household Cost Increase 95th Percentile Annual Household Cost Increase Percentage of Household Cost Increase < $ 12 Percentage of Household Cost Increase < $ 120 All Systems 10,161,304 5.53 $ 0.80 $ 10.04 $ 22.40 $ 92% 99% All Small Systems 591,623 46.48 $ 18.47 $ 168.85 $ 197.62 $ 38% 89% SW < 10,000 285,911 43.05 $ 13.79 $ 173.53 $ 177.93 $ 47% 85% SW > 10,000 9,060,119 2.83 $ 0.80 $ 6.98 $ 11.31 $ 96% 100% GW < 10,000 305,712 49.69 $ 16.65 $ 109.86 $ 197.62 $ 31% 92% GW > 10,000 509,562 5.97 $ 1.37 $ 26.82 $ 33.84 $ 79% 100% Households Served by Plants Adding Treatment Households Served by All Plants Table VI. D 9E 1. Annual Household Cost Increases.

Notes: Detail may not add to total due to independent rounding. Number of households served by systems adding treatment will be higher than households served by plants adding treatment because an entire system will incur costs even if only some of the plants for that system add treatment ( this would result in lower household costs, however). Source: Exhibit 7.15, USEPA 2005a.

F. Incremental Costs and Benefits of the Stage 2 DBPR Incremental costs and benefits are those that are incurred or realized in reducing DBP exposures from one alternative to the next more stringent alternative. Estimates of incremental costs and benefits are useful in considering the economic efficiency of different regulatory options considered by the Agency. Generally, the goal of an incremental analysis is to identify the regulatory option where net social benefits are maximized. However, the usefulness of this analysis is constrained when major benefits and/ or costs are not quantified or not monetized.

Also, as pointed out by the Environmental Economics Advisory Committee of the Science Advisory Board, efficiency is not the only appropriate criterion for social decision making ( USEPA 2000ei).

For the proposed Stage 2 DBPR, presentation of incremental quantitative benefit and cost 216 comparisons may be unrepresentative of the true net benefits of the rule because a significant portion of the rule's potential benefits are not quantified, particularly potential reproductive and developmental health effects ( see Section VI. C) and the cost effective risk targeting strategy.

Table VI. F 1 shows the incremental monetized costs and benefits for each regulatory alternative.

Evaluation of this table shows that incremental costs generally fall within the range of incremental benefits for each more stringent alternative. Equally important, the addition of any benefits attributable to the non quantified categories would add to the benefits without any increase in costs.

Table VI. F 1 shows that the Preferred Alternative is the least cost alternative. A comparison of Alternative 1 with the Preferred Alternative shows that Alternative 1 would have approximately the same benefits as the Preferred Alternative. The costs of Alternative 1 are greater due to the additional control of bromate. However, the benefits of Alternative 1 are less than the Preferred Alternative because the Agency is not able to estimate the additional benefits of reducing the bromate MCL. Alternative 1 was determined to be unacceptable due to the potential for increased risk of microbial exposure. Both benefits and costs are greater for Alternative 2 and Alternative 3 as compared to the Preferred Alternative. However, these regulatory alternatives do not have the risk targeted design of the Preferred Alternative. Rather, implementation of these stringent standards would require a large number of systems to change treatment technology. The high costs of these regulatory alternatives and the drastic shift in the nation's drinking water practices were considered unwarranted at this time. ( See Section VI. A of this preamble for a description of regulatory alternatives.) 217 Annual Costs Annual Benefits Incremental Costs Incremental Benefits Incremental Net Benefits A B C D E= D C Preferred 79 $ 1,531 $ 79 $ 1,531 $ 1,452 $

Alternative 11 254 $ 1,377 $ Alternative 2 422 $ 5,167 $ 343 $ 3,637 $ 3,294 $ Alternative 3 634 $ 7,130 $ 212 $ 1,962 $ 1,750 $ Preferred 79 $ 763 $ 79 $ 763 $ 684 $

Alternative 11 254 $ 686 $ Alternative 2 422 $ 2,575 $ 343 $ 1,812 $ 1,469 $ Alternative 3 634 $ 3,552 $ 212 $ 978 $ 765 $

Preferred 77 $ 1,246 $ 77 $ 1,246 $ 1,170 $

Alternative 11 242 $ 1,126 $ Alternative 2 406 $ 4,227 $ 330 $ 2,981 $ 2,651 $ Alternative 3 613 $ 5,832 $ 207 $ 1,605 $ 1,399 $ Preferred 77 $ 621 $ 77 $ 621 $ 544 $

Alternative 11 242 $ 561 $ Alternative 2 406 $ 2,105 $ 330 $ 1,484 $ 1,154 $ Alternative 3 613 $ 2,904 $ 207 $ 799 $ 593 $ Footnote 1 Footnote 1 Footnote 1 Footnote 1 WTP for Non Fatal Bladder Cancer Cases Rule Alternative Lymphoma Bronchitis Bronchitis Lymphoma 3 Percent Discount Rate 7 Percent Discount Rate Table VI. F 1. Incremental Costs and Benefits of the Stage 2 DBPR.

Notes: Estimates are discounted to 2003 and given in 2003 dollars. Based on TTHM as an indicator, Villanueva et al. ( 2003) for baseline risk, and smoking/ lung cancer cessation lag model. Assumes 26 percent of cases are fatal, 74 percent are non fatal ( USEPA 1999b). EPA recognizes that benefits may be as low as zero since causality has not yet been established between exposure to chlorinated water and bladder cancer. Footnote 1: Alternative 1 appears to have fewer benefits than the Preferred Alternative because it does not incorporate the IDSE, as explained in Chapter 4. Furthermore, this EA does not quantify the benefits of reducing the MCL for bromate ( and potentially associated cancer cases), a requirement that is included only in Alternative 1. This means that Alternative 1 is dominated by the Preferred Alternative in this analysis ( having higher costs than the Preferred Alternative but lower benefits), and so it is not included in the incremental comparison of alternatives ( Columns C  E). OMB states this in terms of comparing cost effectiveness ratios, but the same rule applies to an incremental cost, benefits, or net benefits comparison: " When constructing and comparing incremental cost effectiveness ratios, [ analysts] ... should make sure that inferior alternatives identified by the principles of strong and weak dominance are eliminated from consideration." ( OMB Circular A 4, p. 10) Source: Exhibit 9.13, USEPA 2005a.

G. Benefits From the Reduction of Co occurring Contaminants Installing certain advanced technologies to control DBPs has the added benefit of controlling other drinking water contaminants in addition to those specifically targeted by the Stage 2 DBPR. For example, membrane technology installed to reduce DBP precursors can also reduce or eliminate many other drinking water contaminants ( depending on pore size), including those that EPA may regulate in the future. Removal of any contaminants that may face regulation 218 could result in future cost savings to a water system. Because of the difficulties in establishing which systems would be affected by other current or future rules, no estimate was made of the potential cost savings from addressing more than one contaminant simultaneously.

H. Potential Risks From Other Contaminants Along with the reduction in DBPs from chlorination such as TTHM and HAA5 as a result of the Stage 2 DBPR, there may be increases in other DBPs as systems switch from chlorine to alternative disinfectants. For all disinfectants, many DBPs are not regulated and many others have not yet been identified. EPA will continue to review new studies on DBPs and their occurrence levels to determine if they pose possible health risks. EPA continues to support regulation of TTHM and HAA5 as indicators for chlorination DBP occurrence and believes that operational and treatment changes made because of the Stage 2 DBPR will result in an overall decrease in risk.

1. Emerging DBPs Iodo DBPs and nitrogenous DBPs including halonitromethanes are DBPs that have been recently been reported ( Richardson et al. 2002, Richardson 2003). One recent occurrence study sampled quarterly at twelve surface water plants using different disinfectants across the U. S. for several iodo THMs and halonitromethane species ( Weinberg et al. 2002). The concentrations of iodo THMs and halonitromethane in the majority of samples in this study were less than the analytical minimum reporting levels; plant average concentrations of iodo THM and halonitromethane species were typically less than 0.002 mg/ L, which is an order of magnitude lower than the corresponding average concentrations of TTHM and HAA5 at those same plants.

Chloropicrin, a halonitromethane species, was also measured in the ICR with a median concentration of 0.00019 mg/ L across all surface water samples. No occurrence data exist for the 219 iodoacids due to the lack of a quantitative method and standards. Further work on chemical formation of iodo DBPs and halonitromethanes is needed.

Iodoacetic acid was found to be cytotoxic and genotoxic in Salmonella and mammalian cells ( Plewa et al. 2004a) as were some of the halonitromethanes ( Kundu et al. 2004; Plewa et al.

2004b). Although potent in these in vitro screening studies, further research is needed to determine if these DBPs are active in living systems. No conclusions on human health risk can be drawn from such preliminary studies.

2. N nitrosamines Another group of nitrogenous DBPs are the N nitrosamines. A number of N nitrosamines exist, and N nitrosodimethylamine ( NDMA), a probable human carcinogen ( IRISUSEPA 1993),

has been identified as a potential health risk in drinking water. NDMA is a contaminant from industrial sources and a potential disinfection byproduct from reactions of chlorine or chloramine with nitrogen containing organic matter and from some polymers used as coagulant aids. Studies have produced new information on the mechanism of formation of NDMA, but there is not enough information at this time to draw conclusions regarding a potential increase in NDMA occurrence as systems change treatment. Although there are studies that examined the occurrence of NDMA in some water systems, there are no systematic evaluations of the occurrence of NDMA and other nitrosamines in US waters. Recent studies have provided new occurrence information that shows NDMA forms in both chlorinated and chloraminated systems.

Barrett et al. ( 2003) reported median concentrations of less than 2ng/ L for the seven chlorine systems studied and less than 3 ng/ L for 13 chloramine systems. Another study demonstrated that factors other than disinfectant type may play an important role in the formation of NDMA ( Schreiber and Mitch 2005). More research is underway to determine the extent of NDMA occurrence in drinking water systems. EPA is also considering proposinghas proposed 220 monitoring for NDMA under Unregulated Contaminant Monitoring Rule 2 ( 70 FR 49094, at 49103, August 22, 2005) ( USEPA 2005m).

Risk assessments have estimated that the 10 6 lifetime cancer risk level is 7 ng/ L based on induction of tumors at multiple sites. NDMA is also present in food, tobacco smoke, and industrial emissions, and additional research is underway to determine the relative exposure of NDMA in drinking water to these other sources.

3. Other DBPs Some systems, depending on bromide and organic precursor levels in the source water and technology selection, may experience a shift to higher ratios, or concentrations, of brominated DBPs while the overall TTHM or HAA5 concentration may decrease. In some instances where alternative disinfectants are used, levels of chlorite and bromate may increase as a result of systems switching to chlorine dioxide or ozone, respectively. However, EPA anticipates that changes in chlorite and bromate concentration as a result of the Stage 2 DBPR will be minimal ( USEPA 2005a). For most systems, overall levels of DBPs, as well as brominated DBP species,

should decrease as a result of this rule. EPA continues to believe that precursor removal is a highly effective strategy to reduce levels of DBPs.

EPA also considered the impact this rule may have on microbial contamination that may result from altering disinfection practices. To address this concern, the Agency developed this rule jointly with the Long Term 2 Enhanced Surface Water Treatment Rule ( LT2ESWTR). EPA expects that the LT2ESWTR provisions will prevent increases in microbial risk resulting from the Stage 2 DBPR.

I. Effects of the Contaminant on the General Population and Groups within the General Population that are Identified as Likely to be at Greater Risk of Adverse Health Effects 221 EPA's Office of Water has historically considered risks to sensitive subpopulations ( including fetuses, infants, and children) when establishing drinking water assessments, advisories and other guidance, and standards ( USEPA 1989) ( 56 FR 3526, January 310, 1991) ( USEPA 1991). In the case of Stage 2 DBPR, maximizing health protection for sensitive subpopulations requires balancing risks to achieve the recognized benefits of controlling waterborne pathogens while minimizing risk of potential DBP toxicity. Experience shows that waterborne disease from pathogens in drinking water is a major concern for children and other subgroups ( e. g., the elderly,

immunocompromised, and pregnant women) because of their greater vulnerabilities ( Gerba et al.

1996). EPA believes DBPs may also potentially pose risks to fetuses and pregnant women ( USEPA 1998a). In addition, because the elderly population ( age 65 and above) is naturally at a higher risk of developing bladder cancer, their health risks may further increase as a result of longterm DBP exposure ( National Cancer Institute 2002).

In developing this rule, risks to sensitive subpopulations, including children, were taken into account in the assessments of disinfectants and DBPs. More details on sensitive subpopulations can be found in the Economic Analysis for today's rule ( USEPA 2005a). For each of the DBPs included in the Stage 2 DBPR, the maximum contaminant level goals ( MCLG)

are derived using the most sensitive endpoint among all available data and an intraspecies uncertainty factor of 10 which accounts for human variability including sensitive subpopulations,

like children. The Agency has evaluated several alternative regulatory options and selected the one that balances cost with significant benefits, including those for sensitive subpopulations. The Stage 2 DBPR will result in a potential reduction in cancer risk and a potential reduction in reproductive and developmental risk to fetuses and pregnant women. It should be noted that the LT2ESWTR, which accompanies this rule, reduces pathogens in drinking water and further protects sensitive subpopulations. See Section VII. G for a discussion of EPA's requirements 222 under Executive Order 13045.

J. Uncertainties in the Risk, Benefit, and Cost Estimates for the Stage 2 DBPR For today's final rule, EPA has estimated the current baseline risk from exposure to DBPs in drinking water and projected the risk reduction and cost for various rule alternatives. There is uncertainty in the risk calculation, the benefit estimates, the cost estimates, and the interaction with other regulations. The Stage 2 DBPR EA has an extensive discussion of relevant uncertainties ( USEPA 2005a). This section briefly summarizes the major uncertainties. Table VI. J 1 presents a summary of uncertainty in the cost and benefit estimates, refers to the section or appendix of the EA where the information is introduced, and estimates the potential effects that each may have on national cost and benefit estimates.

EPA believes that uncertainty in the compliance forecast has a potentially large influence on cost and benefit estimates for today's rule. Thus, the Agency has attempted to quantify the uncertainty by giving equal weight to two different compliance forecast approaches. One compliance forecast approach is based on the SWAT predictions, and the other is based on the " ICR Matrix Method." The ICR Matrix Method uses the same basic approach as SWAT, but uses TTHM and HAA5 data from the ICR directly to estimate the percent of plants changing technology to comply with the Stage 2 DBPR and the resulting DBP reduction. To characterize the uncertainty of the compliance forecast results, EPA assumes a uniform distribution between SWAT and ICR Matrix Method results ( USEPA 2005a). That is, the cost and benefit estimates presented in the preamble represent the midpoint between costs and benefits estimated using the SWAT model, and those estimated using the ICR Matrix Method. Cost estimates using the SWAT model are about 25% lower than the midpoint estimates, while those using the ICR Matrix Method are about 25% higher. Benefits estimated using the SWAT model are about 30% lower 223 than the midpoint estimates, while those using the ICR Matrix Method are about 30% higher.

EPA believes the compliance forecast may be overstated because the technology decision tree does not consider low cost, non treatment system improvements that could be used to comply with the Stage 2 DBPR. These improvements, including things like flushing more frequently and managing storage facilities to reduce water age, could be used by systems to reduce TTHM and HAA5 levels for specific locations in their distribution system to meet Stage 2 DBPR MCLs. Thus, the standard compliance forecast method as developed during the M/ DBP FACA ( with a 20 percent safety margin) is a reasonable estimation. However, SWAT does not explicitly consider the IDSE. To address uncertainty in the impact of the IDSE on the compliance forecast, EPA revised the compliance forecast methodology, assigning equal probability to 20 and 25 percent operational safety margins. EPA believes the 25 percent safety margin is a reasonable high end estimate of system response to account for the influences of the IDSE. EPA used a spatial variability analysis to determine the appropriate safety margin to use to estimate the impact of the IDSE on the compliance forecast.

These alternative approaches for the compliance forecast estimate are used to represent a range of possible results and are incorporated into the cost and benefit models using Monte Carlo probability functions. EPA believes this approach helps inform the reader of the likely magnitude of the impact of the uncertainties.

In addition to quantifying some uncertainties in the compliance forecasts, EPA has explicitly accounted for uncertainty in estimated treatment technology costs. Treatment costs are modeled using a triangular distribution of ± 30 percent for Capital, and ± 15 percent for O& M costs to recognize that the assumptions for cost analysis to produce the national average are uncertain For the cost estimates, uncertainty also exists in baseline data inputs, such as the total 224 number of disinfecting plants and their typical average and design flow rates. Other cost model inputs such as labor rates and laboratory fees also contain uncertainties. In these cases, EPA has evaluated available data and estimated a cost input value to represent the average of all water systems nationally. EPA recognizes that there is uncertainty in this average and variability in the characteristics of individual systems. The influence of these uncertainties on national cost estimates is expected to be fairly minor.

For the benefits estimates, uncertainty exists in model inputs such as the estimated PAR values and the cessation lag models. EPA considered three equally valid approaches to estimate attributable risk: ( 1) a range of risk derived from individual studies, ( 2) a risk estimate from a meta analysis, and ( 3) a risk estimate from a pooled analysis. To quantify uncertainty in cessation lag, three independent cessation lag models derived from three different epidemiological studies are used. Also, two functional forms are used for each of these data sets and uncertainty in the parameters of those functions is included in the analysis. As noted previously, causality has not been established between DBP levels and cancer endpoints, so the lower bound of potential risk reductions may be as low as zero.

In a number of different contexts over the past few years, the Agency has considered the relative merits and assumptions encountered when employing meta analyses. Cessation lag modeling is a relatively recent analysis that the Agency has incorporated into ourits risk analyses to more closelyappropriately model the actual impactstiming of our ruleshealth benefits. The specific papers upon which the Stage 2 analysis is based have been peer reviewed. However, the Agency believes that it is time to consider these Agency wide science issues in a broader sense with outside experts to better inform the Agency's future analyses.

For monetization of benefits, EPA uses two alternatives for valuing non fatal bladder cancer. Other uncertainties, such as the linear relationship between DBP reductions and 225 reductions in bladder cancer cases avoided, are discussed qualitatively.

In addition to the uncertainties quantified as part of the benefits evaluation, other uncertainties that have not been quantified could result in either an over or under estimation of the benefits. Two of the greatest uncertainties affecting the benefits of the Stage 2 DBPR,

benefits from potential reductions of cancers other than bladder and benefits from possible reductions in potential reproductive and developmental health effects, are unquantified. Both of these factors could result in an underestimation of quantified Stage 2 DBPR benefits. The potential magnitude of these benefits is discussed more fully in the EA. 226 Table VI. J 1. Effects of Uncertainties on National Estimates.

Assumptions for Which There Is Uncertainty Section with Full Discussion of Uncertainty Potential Effect on Benefit Estimate Potential Effect on Cost Estimates Underestimate Overestimate Unknown Impact Underestimate Overestimate Unknown Impact Uncertainty in the industry baseline ( SDWIS and 1995 CWSS data) 3.4 X X Uncertainty in observed data and predictive tools used to characterize DBP occurrence for the pre Stage 1 baseline 3.7 X X Uncertainty in predictive tools used to develop the compliance forecast for surface water systems ( SWAT and ICR Matrix Method) Chapter 5, Appendix A Quantified in primary analysis ( addresses potential underestimate or overestimate) Quantified in primary analysis ( addresses potential underestimate or overestimate)

Uncertainty in ground water compliance forecast methodologies Chapter 5, A and B X X Operational safety margin of 20% 5.2 X X Impacts of the IDSE on the compliance forecast for the Preferred Regulatory Alternative 5.3 Quantified in the primary analysis ( addresses potential underestimate) Quantified in the primary analysis ( addresses potential underestimate)

Uncertainty in the PAR value 6.1.1 Appendix E Quantified in the primary analysis ( addresses range of potential underestimate or overestimateeffects, but true values could lie outside range)

Reduction in TTHM and HAA5 used as proxies for all chlorination DBPs 6.3.3 X DBPs have a linear nothreshold dose response relationship for bladder cancer effects 6.2.1 X X Uncertainty in benefits valuation inputs 6.5.2 Quantified in the primary analysis ( addresses potential underestimate or overestimate)

Benefits of reduced cancers other than bladder cancer are not included in the quantitative analysis 6.7 Quantified in a sensitivity analysis ( addresses potential underestimate) Assumptions for Which There Is Uncertainty Section with Full Discussion of Uncertainty Potential Effect on Benefit Estimate Potential Effect on Cost Estimates Underestimate Overestimate Unknown Impact Underestimate Overestimate Unknown Impact 227 Value of potential reproductive and developmental health effects avoided is not quantified in the primary analysis 6.8 Quantifie d in an illustrativ e calculatio n ( address es potential underesti mate) X Treatment costs do not include costs for minor operational changes predicted by SWAT 7.4.1 X Median operational and water quality parameters considered for technology unit costs 7.4.1 X Economies of scale for combination treatment technologies not considered 7.4.1 X Possible UV chloramine synergy not taken into account 7.4.1 X Potential low cost alternatives to treatment not considered 7.4.2 X Uncertainties in unit costs 7.4.3 Quantified in primary analysis ( addresses potential overestimate or underestimate)

K. Benefit/ Cost Determination for the Stage 2 DBPR The Agency has determined that the benefits of the Stage 2 DBPR justify the costs. As discussed previously, the main concern for the Agency and the Advisory Committee involved in the Stage 2 rulemaking process was to provide more equitable protection from DBPs across the entire distribution system and reduce high DBP levels. The proposedfinal rule achieves this 228 objective using the least cost alternative by targeting sampling locations with high DBP levels and modifying how the annual average DBP level is calculated. This will reduce both average DBP levels associated with bladder cancer ( and possibly other cancers) and peak DBP levels which are potentially associated with reproductive and developmental effects. In addition, this rule may reduce uncertainty about drinking water quality and may allow some systems to avoid installing additional technology to meet future drinking water regulations.

Table VI. K 1 presents net benefits for the four regulatory alternatives evaluated by EPA.

This table shows that net benefits are positive for all four regulatory alternatives. Generally,

analysis of net benefits is used to identify alternatives where benefits exceed costs, as well as the alternative that maximizes net benefits. However, analyses of net benefits should consider both quantified and non quantified ( where possible) benefits and costs. As discussed previously with incremental net benefits, the usefulness of this analysis in evaluating regulatory alternatives for the Stage 2 DBPR is somewhat limited because many benefits from this rule are non quantified and non monetized.

Table VI. K 1 shows that the Preferred Alternative is the least cost alternative. The Preferred Alternative has higher mean net benefits than Alternative 1. Alternatives 2 and 3 have higher benefits than the Preferred Alternative but also much greater costs. These regulatory alternatives do not have the risk targeted design of the Preferred Alternative. Rather, a large number of systems would be required to make treatment technology changes to meet the stringent standards under these regulatory alternatives. Also, because causality has not been established between DBP exposure and bladder cancer, actual benefits may be as low as zero. EPA is promulgating the preferred regulatory alternative because the Agency believes that such a drastic shift in the nation's drinking water practices is not warranted at this time. 229 230 Rule Alternative WTP for Non Fatal Bladder Cancer Cases Mean Annual Costs Mean Annual Benefits Mean Net Benefits Preferred 78.8 $ 1,530.8 $ 1,452 $ A1 254.1 $ 1,376.6 $ 1,122 $ A2 421.7 $ 5,167.4 $ 4,746 $ A3 634.2 $ 7,129.6 $ 6,495 $

Preferred 78.8 $ 762.8 $ $ 684 A1 254.1 $ 685.9 $ 432 $ A2 421.7 $ 2,574.6 $ 2,153 $ A3 634.2 $ 3,552.2 $ 2,918 $

Preferred 76.8 $ 1,246.5 $ 1,170 $ A1 241.8 $ 1,126.4 $ 885 $ A2 406.4 $ 4,227.2 $ 3,821 $ A3 613.1 $ 5,832.4 $ 5,219 $

Preferred 76.8 $ 620.7 $ $ 544 A1 241.8 $ 560.8 $ 319 $ A2 406.4 $ 2,104.6 $ 1,698 $ A3 613.1 $ 2,903.8 $ 2,291 $ Lymphoma Bronchitis 7 Percent Discount Rate, 25 Years 3 Percent Discount Rate, 25 Years Lymphoma Bronchitis Table VI. K 1. Mean Net Benefits by Regulatory Alternative ($ Million).

Notes: Estimates are discounted to 2003 and given in 2003 dollars. Based on TTHM as an indicator, Villanueva et al. ( 2003) for baseline risk, and smoking/ lung cancer cessation lag model. Assumes 26 percent of cases are fatal, 74 percent are non fatal ( USEPA 1999b). EPA recognizes that benefits may be as low as zero since causality has not yet been established between exposure to chlorinated water and bladder cancer. Source: Exhibits 9.10 and 9.11, USEPA 2005a.

The Agency also compared the costs and benefits for each regulatory alternative by calculating which option is the most cost effective. The cost effectiveness analysis compares the cost of the rule per bladder cancer case avoided. This cost effectiveness measure is another way of examining the benefits and costs of the rule, but should not be used to compare alternatives because an alternative with the lowest cost per illness/ death avoided may not result in the highest net benefits. Table VI. K 2 shows the cost of the rule per case avoided. This table shows that cost per case avoided for the preferred alternative seems favorable when compared to the willingness to pay estimates. Additional information about this analysis and other methods of comparing benefits and costs can be found in the EA ( USEPA 2005a). 231 Table VI. K 2. Estimated Cost Per Discounted Case Avoided1 for the Regulatory Alternatives, using TTHM as DBP Indicator and Smoking/ Lung Cancer Cessation Lag Model ($ Millions, 2003$).

Rule Alternative Cost Per Case Avoided 3% 7% Preferred $ 0.363 $ 0.451 Alternative 1 $ 1.3018 $ 1.5742 Alternative 2 $ 0.562 $ 0.683 Alternative 3 $ 0.6157 $ 0.7469 Notes: 1 The cost effectiveness ratios are a potentially a high estimate because regulatory costs in the numerator are not adjusted by subtracting the avoided medical costs associated with cases avoided to produce a net cost numerator. Subtraction of theses costs would not be expected to alter the ranking of alternatives. In the case where thresholds of maximum public expenditure per case avoided are prescribed, defining the numerator more precisely by making such adjustments would be appropriate. Notes: In reference to conducting incremental CEA, OMB states that the analyst should make sure that " When constructing and comparing incremental cost effectiveness ratios, [ analysts] ... should make sure that inferior alternatives identified by the principles of strong and weak dominance are eliminated from consideration" ( OMB Circular A 4, p. 10). Alternative 1 is dominated by the Preferred Alternative and is therefore not included in the incremental analysis. The reason for this domination is mainly that the Preferred Alternative includes IDSE and Alternative 1 does not; and to a lesser degree because the bromate control included in Alternative 1 increases the costs but the benefits of this control are not quantified at this time. Alternative 2 is compared directly to the Preferred Alternative ( skipping Alternative 1) in this analysis. Cost per case avoided is in year 2003 dollars ($ Millions), discounted for the 25 year analysis period to year 2005. 1The cost effectiveness ratios are a conservative estimate in that the regulatory costs in the numerator are not adjusted by subtracting the medical costs associated with cases avoided to produce a net cost numerator. Adjustment of the numerator in this CEA would not alter the relative cost effectiveness of the alternatives or change their rankings because it involves the subtraction of a constant. In the case where thresholds of maximum public expenditure or minimum cases to be avoided are prescribed, defining the numerator more precisely by making such adjustments would be appropriate. Source: Exhibit 9.14, USEPA, 2005a.

L. Summary of Major Comments EPA received significant public comment on the analysis of benefits and costs of the proposed Stage 2 DBPR in the following areas: interpretation of health effects studies, derivation of benefits, use of SWAT, illustrative example, unanticipated risk issues, and valuation of cancer cases avoided. The following discussion summarizes public comment in these areas and EPA's responses.

1. Interpretation of health effects studies 232 EPA requested comment on the conclusions of the cancer health effects section and the epidemiology and toxicology studies discussed. A number of comments questioned the overall interpretation of the studies presented by EPA. A few comments pointed out missed studies.

Commenters also asked about concordance between cancer epidemiology and toxicology. Some commenters also felt EPA did not discuss the broad range of risks from DBPs other than the ones regulated.

The Agency continues to believe that, although there is not a causal link, the cancer literature points to an association between bladder cancer and potentially rectal and colon cancer and exposure to chlorinated surface water. EPA has included in today's preamble the literature that commenters pointed out as missing and expands on its discussion of non regulated DBPs.

EPA believes that a lack of bladder cancer effect in toxicological studies does not negate the findings in epidemiological studies at this time. Tumor site concordance between human and test animal is not necessary to determine carcinogenic potential. While there is evidence from human cancer epidemiology studies that lifetime consumption of the DBP mixture within chlorinated surface water poses a bladder cancer risk, the specific causative constituents have not been identified. EPA will continue to evaluate new mode of action data as it becomes available.

Several comments were received on EPA's characterization of the literature on reproductive and developmental health risk. Some commenters wanted EPA to characterize reproductive and developmental health effects more strongly, stating that current research shows more evidence for these effects than described in the proposed preamble. Others thought that EPA's characterization in the proposal was too strong, and that EPA had overemphasized these health concerns. Some commenters noted that certain published studies were missing from EPA's risk discussion.

EPA believes that the characterization of reproductive and developmental risks in the final 233 Stage 2 DBPR preamble is appropriate based on the weight of evidence evaluation of the reproductive and developmental epidemiology database described in Section III. C. EPA considered comments and incorporated additional and recent studies into its characterization of health risks in today's final preamble. While no causal link has been established, EPA's evaluation of the available studies continues to indicate a potential health hazard that warrants additional regulatory action beyond the Stage 1 DBPR. The inconsistencies and uncertainties remaining in the available science support the incremental nature of change in today's rule.

EPA did not include all findings from every study in the proposed DBPR preamble because the intent was to provide a summary overview and more importantly, the Agency's conclusions regarding the weight of evidence. Positive associations, especially statistically significant ones, should be given due notice. Negative findings are also important, but they can only indicate that no association was found, not provide evidence that an association does not exist. Because of this, EPA mentioned negative findings but did not focus on them. The epidemiology literature has inconsistencies in its findings on the relationship between various reproductive and developmental health effects and DBPs. In this final preamble, EPA describes how recent studies since the proposal further inform the perspective of overall risk from exposure to DBPs. EPA continues to believe that studies indicate a potential hazard.

2. Derivation of benefits EPA received numerous comments on the derivation of benefits from occurrence estimates for the Stage 2 DBPR. The majority of the comments provided addressed EPA's use of a cessation lag model to estimate the timing of benefits and a PAR analysis to estimate reduced risks. Several commenters opposed the cessation lag model proposed by EPA, suggesting that EPA use a longer cessation lag period or conduct a sensitivity analysis on the cessation lag exponent. 234 In the effort to develop a cessation lag model specific to DBPs, EPA reviewed the available epidemiological literature for information relating to the timing of exposure and response, but could not identify any studies that could, alone or in combination, support a specific cessation lag model for DBPs in drinking water. Thus, in keeping with the SAB recommendation to consider other models in the absence of specific cessation lag information ( USEPA 2001cd),

EPA explored the use of information on other carcinogens that could be used to characterize the influence of cessation lag in calculating benefits. The benefit analysis for today's rule uses three cessation lag models, which allows for a better characterization of uncertainty than did the approach used in the proposal. More details on this analysis are in the EA published with today's rule ( USEPA 2005a).

Additional comments were received on the use of PAR values derived from epidemiology studies to determine the number of bladder cancer cases attributable to DBP exposure. Some commenters remarked that there was not sufficient evidence in the epidemiology studies used to develop a reliable PAR estimate. A key issue expressed in the comments was that studies that developed the PAR estimates did not adequately control for confounders. One commenter supported EPA review of the Villanueva ( 2003) meta analysis, stating that this was the best available data on the issue.

EPA revised the methodology for calculating PAR values for bladder cancer associated with exposure to chlorinated drinking water by considering three different analytical approaches as described in Section V. B. 2. EPA used the PAR values from all three approaches to estimate the number of bladder cancer cases ultimately avoided annually as a result foof the Stage 2 DBPR.

AllTaken together, the three approaches are equally valid and give feasibleprovide a reasonable estimates of the range of potential risk. For simplicity, EPA used the Villanueva et al. ( 2003)

study to calculate the annual benefits of the rule. The benefit estimates derived from Villanueva et 235 al. ( 2003) capture a substantial portion of the overall range of results, reflecting the uncertainty in both the underlying OR and PAR values, as well as the uncertainty in DBP reductions for Stage 2.

More details on the PAR analysis can be found in the EA that accompanies today's final rule ( USEPA 2005a).

3. Use of SWAT Comments received on the use of SWAT for the compliance forecast claimed that the model probably underestimates DBP occurrence levels and hence underestimates compliance costs. Other commenters supported EPA's occurrence estimation methods and results. Some commenters added that monitoring under the IDSE will produce different results than monitoring for the ICR and that SWAT did not capture these changes.

EPA describes in detail the limitations of SWAT as well as all assumptions and uncertainties associated with the model in the EA published with today's rule. EPA believes that,

for the reasons stated below, the standard compliance forecast method using SWAT, as developed during the M DBP FACA, provides a reasonable prediction of national treatment changes and resulting DBP levels anticipated for the Stage 2 DBPR:

1. SWAT predictive equations for TTHM and HAA5 were calibrated to ICR observed TTHM and HAA5 data.

2. SWAT estimates are based on 12 months of influent water quality data, treatment train information, and related characteristics for the 273 ICR surface water plants. EPA believes thise ICR data provides a robust basis for the compliance forecast as it represents significant variability with respect to factors influencing DBP formation, including temperature, residence time, and geographical region.

3. EPA uses a " delta" approach to reduce the impact of uncertainty in SWAT's predictive equations for TTHM and HAA5. Under this approach, EPA compared SWAT predicted 236 results for pre Stage 1 data to modeled pre Stage 21) estimates the difference in technology and TTHM and HAA5 concentration predictions between pre Stage 1 and post Stage 1; 2) estimates the difference in technology and TTHM and HAA5 concentration predictions between pre Stage 1 and post Stage 2 data, which reduces potential inconsistencies in comparing observed and predicted data and reduces potential errors in technology selection and TTHM/ HAA5 occurrence resulting from SWAT. ; and 3) subtracts the result of the first estimate from the second estimate to predict the impacts between Stage 1 and Stage 2. Since each predictive estimate has bias in the same direction, EPA believes that this methodology minimized overall predictive error.

In response to commenters concerns about potential uncertainties in the SWAT predictions, EPA also developed the " ICR Matrix method." The ICR Matrix Method uses TTHM and HAA5 data from the ICR to estimate the percent of plants changing technology to comply with the Stage 2 DBPR and the resulting DBP reduction. The EA includes a detailed description of the ICR Matrix Method ( USEPA 2005a). In the analysis for today's rule, EPA gives equal weight to SWAT and ICR Matrix Method predictions in estimating Stage 2 compliance forecasts and resultant reductions in DBP exposure. The ICR Matrix Method is also used to estimate reductions in the occurrence of peak TTHM and HAA5 concentrations because SWAT predicted TTHM and HAA5 concentrations are valid only when considering national averages, not at the plant level.

EPA revised the Stage 2 DBPR compliance forecast methodology to quantify the potential impacts of the IDSE for large and medium surface water systems. For these systems, EPA predicted compliance implications using a safety margin of both 20 and 25 percent based on an analysis of spatial variability in TTHM and HAA5 occurrence. EPA assigned equal probability to the 20 and 25 percent safety margins because both alternatives are considered equally plausible. 237 These changes result in a wider uncertainty range for the compliance cost estimates than under the EA of the proposed rule. EPA assumes the 20 percent operational safety margin accounts for variability in small surface water systems and all ground water systems. Small systems are not expected to find significantly higher levels that affect their compliance as a result of the IDSE because their distribution systems are not as complex as large systems. Additionally, the IDSE is not expected to significantly impact the compliance forecast for ground water systems because they have more consistent source water quality and do not experience significant year to year variability in TTHM and HAA5 occurrence.

As some commenters noted, any underestimation in costs as a result of the compliance forecast is associated with an underestimation in the benefits. However, EPA believes that the current estimates of costs and benefits and the uncertainty analysis capture the overall net change in potential risks and benefits due to the rule. Accordingly, EPA adjusted both cost and benefits estimates based on the ICR Matrix Method and the impact of the IDSE for the upper end of the compliance forecast range.

4. Illustrative example Many comments were received on the illustrative calculation of fetal loss benefits included in the proposed EA. Many commenters recommended that EPA remove this calculation because of uncertainties in the underlying data. Other commenters, however, expressed support for this calculation because of the magnitude of thepotential benefits received, and suggested that EPA fully quantifyinclude these benefits in its primary analysis.

EPA believes that the reproductive and developmental epidemiologic data, although not conclusive, are suggestive of potential health effects in humans exposed to DBPs. EPA does not believe the available evidence provides an adequate basis for quantifying potential reproductive and developmental risks. Nevertheless, given the widespread nature of exposure to DBPs, the 238 importance our society places on reproductive and developmental health, and the large number of fetal losses experienced each year in the US ( nearly 1 million), the Agency believes that it is importantappropriate to provide some quantitative indication of the potential risk suggested by some of the published results on reproductive and developmental endpoints, despite the absence of certainty regarding a causal link between disinfection byproducts and these risks and the inconsistencies between studies. However, the Agency is unable at this time to either develop a specific estimate of the value of avoiding fetal loss or to use a benefit transfer methodology to estimate the value from studies that address other endpoints.

5. Unanticipated risk issues Comments were received that expressed concern about unanticipated risks that could result from the proposed Stage 2 DBPR. Several commenters remarked that regulation of TTHM and HAA5 would not control levels of other DBPs that may be more toxic than these indicator compounds, such as NDMA. Some commenters supported future research on the potential health effects of other DBPs. Other comments suggested that EPA further consider these risks when developing the final Stage 2 DBPR.

EPA has addressed the occurrence of other DBPs in Section VI. H of this document and in the EA ( USEPA 2005a). Levels of some DBPs may increase because of treatment changes anticipated as a result of today's rule. However, these DBPs generally occur at much lower levels than TTHM and HAA5, often more than an order of magnitude less ( USEPA 2005f, Weinberg et al. 2002). For NDMA, studies have shown formation in both chlorinated and chloraminated systems ( Barrett et al. 2003 2003). The uncertainties surrounding NDMA formation make determinations regarding the impact of the Stage 2 DBPR difficult. In addition, other routes of exposure appear to be more significant than drinking water. Dietary sources of NDMA include preserved meat and fish products, beer and tobacco. EPA is looking at calculating the relative 239 source contribution of these routes of exposure compared to drinking water.

EPA continues to support the use of TTHM and HAA5 as indicators for DBP regulation.

The presence of TTHM and HAA5 is representative of the occurrence of many other chlorination DBPs; thus, a reduction in the TTHM and HAA5 generally indicates an overall reduction of DBPs. EPA also supports additional research on unregulated and unknown DBPs to ensure continual public health protection.

6. Valuation of cancer cases avoided A number of commenters remarked on the valuation of cancer cases avoided. Some commenters supported the use of value of statistical life ( VSL) analysis in monetizing the benefits of fatal bladder cancer cases avoided. Comments were also received in support of the addition of expected medical costs for treating fatal bladder cancer cases to the VSL estimates. Other commenters recommended that EPA further review the use of willingness to pay estimates used to value the non fatal cancer cases avoided. These comments stated concern over the similarity of bronchitis and lymphoma to bladder cancer and the resulting limitation of benefits transfer.

EPA thanks commenters for expressing support of the use of VSL and valuation of fatal bladder cancer cases. EPA acknowledges that the willingness to pay ( WTP) to avoid curable lymphoma or chronic bronchitis is not a perfect substitute for the WTP to avoid a case of nonfatal bladder cancer. However, non fatal internal cancers, regardless of type, generally present patients with very similar treatment, health, and long term quality of life implications, including surgery, radiation or chemotherapy treatments ( with attendant side effects), and generally diminished vitality over the duration of the illness. In the absence of more specific WTP studies,

EPA believes the WTP values for avoiding a case of curable lymphoma or a case of chronic bronchitis provides a reasonable, though not definitive, substitute for the value of avoiding nonfatal bladder cancer. 240 VII. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review Under Executive Order 12866, [ 58 FR 51735, ( October 4, 1993)] the Agency must determine whether the regulatory action is " significant" and therefore subject to OMB review and the requirements of the Executive Order. The Order defines " significant regulatory action" as one that is likely to result in a rule that may:

( 1) have an annual effect on the economy of $ 100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment,

public health or safety, or State, local, or Tribal governments or communities;

( 2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency;

( 3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or ( 4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in the Executive Order.

Pursuant to the terms of Executive Order 12866, it has been determined that this rule is a " significant regulatory action." As such, this action was submitted to OMB for review. Changes made in response to OMB suggestions or recommendations will be documented in the public record.

B. Paperwork Reduction Act The Office of Management and Budget ( OMB) has approved the information collection requirements contained in this rule under the provisions of the Paperwork Reduction Act, 44 241 U. S. C. 3501 et seq. and has assigned OMB control number 2040 XXXX2040 0265 ( USEPA 2005n).

The information collected as a result of this rule will allow the States and EPA to determine appropriate requirements for specific systems, and to evaluate compliance with the rule.

For the first three years after Stage 2 DBPR promulgation, the major information requirements involve monitoring activities, which include conducting the IDSE and submission of the IDSE report, and tracking compliance. The information collection requirements are mandatory ( Part 141), and the information collected is not confidential.

The estimate of annual average burden hours for the Stage 2 DBPR for systems and States is 2228,57629 hours. This estimate covers the first three years of the Stage 2 DBPR and most of the IDSE ( small system reports are not due until the fourth year). The annual average aggregate cost estimate is $ 9.18 million for operation and maintenance as a purchase of service for lab work and $ 6.46 million is associated with labor. The annual burden hour per response is 4.3518 hours.

The frequency of response ( average responses per respondent) is 67.8359 annually. The estimated number of likely respondents is 7,497202 per year ( the product of burden hours per response, frequency, and respondents does not total the annual average burden hours due to rounding). Because disinfecting systems have already purchased basic monitoring equipment to comply with the Stage 1 DBPR, EPA assumes no capital start up costs are associated with the Stage 2 DBPR ICR.

Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to 242 comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9. In addition, EPA is amending the table in 40 CFR part 9 of currently approved OMB control numbers for various regulations to list the regulatory citations for the information requirements contained in this final rule.

C. Regulatory Flexibility Act The Regulatory Flexibility Act ( RFA) generally requires an agency to prepare a regulatory flexibility analysis for any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small organizations, and small governmental jurisdictions.

The RFA provides default definitions for each type of small entity. Small entities are defined as: ( 1) a small business as defined by the Small Business Administrations's ( SBA)

regulations at 13 CFR 121.201; ( 2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and ( 3)

a small organization that is any " not for profit enterprise which is independently owned and operated and is not dominant in its field." However, the RFA also authorizes an agency to use alternative definitions for each category of small entity, " which are appropriate to the activities of the agency" after proposing the alternative definition( s) in the Federal Register and taking 243 comment. 5 U. S. C. 601( 3)  ( 5). In addition, to establish an alternative small business definition,

agencies must consult with SBA's Chief Council for Advocacy.

For purposes of assessing the impacts of today's rule on small entities, EPA considered small entities to be public water systems serving 10,000 or fewer persons. As required by the RFA, EPA proposed using this alternative definition in the Federal Register ( 63 FR 7620,

February 13, 1998), requested public comment, consulted with the Small Business Administration ( SBA), and finalized the alternative definition in the Consumer Confidence Reports regulation ( 63 FR 44511, August 19, 1998). As stated in that Final Rule, the alternative definition is applied to this regulation as well.

After considering the economic impacts of today's final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities.

The small entities regulated by this final rule are PWSs serving fewer than 10,000 people. We have determined that 10192 small surface water and ground water under the direct influence of surface water ( GWUDI) systems ( or 2.3816 % of all small surface water and GWUDI systems affected by the Stage 2 DBPR) will experience an impact of 1% or greater of average annual revenues. Of the 10192, 440 small surface water and GWUDI systems ( or 10.04% 94 % of all small surface water and GWUDI systems affected by the Stage 2 DBPR) will experience an impact of 3% or greater of average annual revenues. Further, 276354 small ground water systems ( or 1.0.802 % of all small ground water systems affected by the Stage 2 DBPR) will experience an impact of 1% or greater of average annual revenues. Of the 276354, 45 small ground water systems ( or 0.13 % of all small ground water systems affected by the Stage 2 DBPR) will experience an impact of 3 % 3% or greater of average annual revenues.

Although this final rule will not have a significant economic impact on a substantial number of small entities, EPA nonetheless has tried to reduce the impact of this rule on small 244 entities. The Stage 2 DBPR contains a number of provisions to minimize the impact of the rule on systems generally, and on small systems in particular. For example, small systems have a longer time frame to comply with requirements than large systems ( see § 141.600( c) and § 141.620.( c)). The final rule determines monitoring frequency based on population rather than plant based monitoring requirements ( see § 141.605 and § 141.621( a)) as proposed. Small systems will also have to take fewer samples than large systems due to the 40/ 30 waiver ( see § 141.603( a)), for which small, ground water systems are expected to be able to qualify for, and the very small system waiver ( see § 141.604).

Funding may be available from programs administered by EPA and other Federal agencies to assist small PWSs in complying with the Stage 2 DBPR. The Drinking Water State Revolving Fund ( DWSRF) assists PWSs with financing the costs of infrastructure needed to achieve or maintain compliance with SDWA requirements. Through the DWSRF, EPA awards capitalization grants to States, which in turn can provide low cost loans and other types of assistance to eligible PWSs. Loans made under the program can have interest rates between 0 percent and market rate and repayment terms of up to 20 years. States prioritize funding based on projects that address the most serious risks to human health and assist PWSs most in need.

Congress provided the DWSRF program $ 8 billion for fiscal years 1997 through 2004.

The DWSRF places an emphasis on small and disadvantaged communities. States must provide a minimum of 15% of the available funds for loans to small communities. A State has the option of providing up to 30% of the grant awarded to the State to furnish additional assistance to State defined disadvantaged communities. This assistance can take the form of lower interest rates, principal forgiveness, or negative interest rate loans. The State may also extend repayment terms of loans for disadvantaged communities to up to 30 years. A State can set aside up to 2%

of the grant to provide technical assistance to PWSs serving communities with populations fewer 245 than 10,000.

In addition to the DWSRF, money is available from the Department of Agriculture's Rural Utility Service ( RUS) and Housing and Urban Development's Community Development Block Grant ( CDBG) program. RUS provides loans, guaranteed loans, and grants to improve, repair, or construct water supply and distribution systems in rural areas and towns of up to 10,000 people.

In fiscal year 2003, RUS had over $ 1.5 billion of available funds for water and environmental programs. The CDBG program includes direct grants to States, which in turn are awarded to smaller communities, rural areas, and coloñas in Arizona, California, New Mexico, and Texas and direct grants to U. S. territories and trusts. The CDBG budget for fiscal year 2003 totaled over $ 4.4 billion.

Although not required by the RFA to convene a Small Business Advocacy Review ( SBAR) Panel because EPA determined that the proposed rule would not have a significant economic impact on a substantial number of small entities, EPA did convene a panel to obtain advice and recommendations from representatives of the small entities potentially subject to this rule's requirements. For a description of the SBAR Panel and stakeholder recommendations,

please see the proposed rule ( USEPA 2003a).

D. Unfunded Mandates Reform Act Title II of the Unfunded Mandates Reform Act of 1995 ( UMRA), Public Law 104 4,

establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and Tribal governments and the private sector. Under section 202 of the UMRA,

EPA generally must prepare a written statement, including a cost benefit analysis, for proposed and final rules with " Federal mandates" that may result in expenditures to State, local and Tribal governments, in the aggregate, or to the private sector, of $ 100 million or more in any one year. 246 Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including Tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

EPA has determined that this rule does notmay contain a Ffederal mandate that may results in expenditures of $ 100 million or more for the State, lLocal, and Tribal governments, in the aggregate, or in the private sector in any one year. The total estimated annual public costs for this rule is $ 70.2 to $ 68.9 ( at a 3 and 7 percent discount rate, respectively) and the private costs is $ 16.0 to $ 15.4 ( at 3 and 7 percent rates, respectively). See the EA for more detail on these estimatesWhile the annualized costs fall below the $ 100 million threshold, the costs in some future years may be above the $ 100 million mark as public drinking water systems make capital investments and finance these through bonds, loans, and other means. EPA's year by year cost tables do not reflect that investments through bonds, loans, and other means spread out these costs over many years. The cost analysis in general does not consider that some systems may be 247 3% Discount Rate 7% Discount Rate Percent of 3% Grand Total Costs Percent of 7% Grand Total Costs Surface Water Systems Costs 41.4 $ 41.2 $ 53% 54% Ground Water Systems Costs 20.3 $ 19.2 $ 26% 25% State Costs 1.7 $ 1.7 $ 2% 2% Tribal Costs 0.4 $ 0.4 $ 1% 0% Total Public 63.8 $ 62.5 $ 81% 81% Surface Water Systems Costs 6.4 $ 6.3 $ 8% 8% Ground Water Systems Costs 8.5 $ 8.0 $ 11% 10% Total Private 15.0 $ 14.3 $ 19% 19% GRAND TOTAL 78.8 $ 76.8 $ 100% 100% eligible for financial assistance such as low interest loans and grants through such programs as the Drinking Water State Revolving Fund.

As noted earlier, today's final rule is promulgated pursuant to section 1412 ( b)( 1)( A) of the Safe Drinking Water Act ( SDWA), as amended in 1996, which directs EPA to promulgate a national primary drinking water regulation for a contaminant if EPA determines that the contaminant may have an adverse effect on the health of persons, occurs in PWSs with a frequency and at levels of public health concern, and regulation presents a meaningful opportunity for health risk reduction.

Section VI of this preamble discusses the cost and benefits associated with the Stage 2 DBPR. Details are presented in the Economic Analysis ( USEPA 2005a). Thus today's final rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Table VII. D 1 Public and Private Costs for the Stage 2 DBPR ( Annualized at 3 and 7 Percent, $ Millions)

Note: Detail may not add due to independent rounding. Estimates are discounted to 2003 and given in 2003 dollars. Source: Exhibits 3.2 and 7.5, USEPA 2005a.

To meet the UMRA requirement in section 202, EPA analyzed future compliance costs and possible disproportionate budgetary effects. The Agency believes that the cost estimates and regulatory alternatives indicated earlier and discussed in more detail in section VI of this 248 preamble, accurately characterize future compliance costs of today's rule.

In analyzing disproportionate impacts, EPA considered the impact on ( 1) different regions of the United States, ( 2) State, local, and Tribal governments, ( 3) urban, rural and other types of communities, and ( 4) any segment of the private sector. This analysis is presented in Chapter 7 of the Economic Analysis ( USEPA 2005a). EPA analyzed four regulatory alternatives and selected the least costly of these in accordance with UMRA Section 205.

EPA has determined that the Stage 2 DBPR contains no regulatory requirements that might significantly or uniquely affect small governments. The Stage 2 DBPR affects all size systems. As described in section VII. C, EPA has certified that today's rule will not have a significant economic impact on a substantial number of small entities. Average annual expenditures for small PWSsCWSs to comply with the Stage 2 DBPR range from $ 3127.57 to $ 296.71 million at a 3 and 7 percent discount rate, respectively.

Nevertheless, in developing this rule, EPA consulted with small governments. In preparation for the proposed Stage 2 DBPR, EPA conducted an analysis of small government impacts and included small government officials or their designated representatives in the rulemaking process Consistent with the intergovernmental consultation provisions of section 204 of the UMRA and Executive Order 12875, " Enhancing the Intergovernmental Partnership," EPA has already initiated consultations with the governmental entities affected by this rule. The consultations are described in the proposed rule ( 68 FR 49654, August 18, 2003).

E. Executive Order 13132: Federalism Executive Order 13132, entitled " Federalism" ( 64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure " meaningful and timely input by State and local 249 officials in the development of regulatory policies that have federalism implications." " Policies that have federalism implications" is defined in the Executive Order to include regulations that have " substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government."

This final rule does not have federalism implications. It will not have substantial direct effects on the States, on the relationship between national government and the States, or on the distribution of power and responsibilities among various levels of government, as specified in Executive Order 13132. The final rule has one time costs for implementation of approximately $ 7.8 million. Thus, Executive Order 13132 does not apply to this rule.

Although section 6 of Executive Order 13132 does not apply to this rule, in the spirit of Executive Order 13132, and consistent with EPA policy to promote communications between EPA and State and local governments, EPA nonetheless specifically solicited comment on the proposed rule from State and local officials and did consult with State and local officials in developing this rule. A description of that consultation can be found in the preamble to the proposed rule, 68 FR 49548, ( August 18, 2003).

F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments Executive Order 13175, entitled " Consultation and Coordination with Indian Tribal Governments" ( 65 FR 67249, November 9, 2000), requires EPA to develop " an accountable process to ensure meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications." Under Executive Order 13175, EPA may not issue a regulation that has Tribal implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the 250 direct compliance costs incurred by Tribal governments, or EPA consults with Tribal officials early in the process of developing the proposed regulation and develops a Tribal summary impact statement.

EPA has concluded that this final rule may have Tribal implications, because it may impose substantial direct compliance costs on Tribal governments, and the Federal government will not provide the funds necessary to pay those costs.

Accordingly, EPA provides the following Tribal summary impact statement as required by section 5( b). EPA provides further detail on Tribal impact in the Economic Analysis for the Stage 2 Disinfectants and Disinfection Byproduct Rule ( USEPA 2005a). Total Tribal costs are estimated to be approximately $ 403$ 391,113773 per year ( at a 3 percent discount rate) and this cost is distributed across 755 Tribal systems. The cost for individual systems depend on system size and source water type. Of the 755 Tribes that may be affected in some form by the Stage 2 DBPR, 654 use ground water as a source and 101 systems use surface water or GWUDI. Since the majority of Tribal systems are ground water systems serving fewer than 500 people,

approximately 415.26 percent of all Tribal systems will have to conduct an IDSE. As a result, the Stage 2 DBPR is most likely to have an impact on Tribes using surface water or GWUDI serving more than 500 people.

EPA consulted with Tribal officials early in the process of developing this regulation to permit them to have meaningful and timely input into its development. Moreover, in the spirit of Executive Order 13175, and consistent with EPA policy to promote communications between EPA and Tribal governments, EPA specifically solicited comment on the proposed rule from Tribal officials.

As required by section 7( a), EPA's Tribal Consultation Official has certified that the requirements of the Executive Order has been met in a meaningful and timely manner. A copy of 251 this certification has been included in the docket for this rule.

G. Executive order 13045: Protection of Children from Environmental Health Risks and Safety Risks Executive Order 13045: " Protection of Children from Environmental Health Risks and Safety Risks" ( 62 FR 19885, April 23, 1997) applies to any rule that: 1) is determined to be " economically significant" as defined under 12866, and; 2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

While this final rule is not subject to the Executive Order because it is not economically significant as defined in Executive Order 12866, EPA nonetheless has reason to believe that the environmental health or safety risk ( i. e., the risk associated with DBPs) addressed by this action may have a disproportionate effect on children. EPA believes that the Stage 2 DBPR will result in greater risk reduction for children than for the general population. The results of the assessments are contained in Section VI. I of this preamble and in the Economic Analysis ( USEPA 2005a). A copy of all documents has been placed in the public docket for this action.

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use This rule is not a " significant energy action" as defined in Executive Order 13211,

" Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use"

( 66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the 252 supply, distribution, or use of energy. This determination is based on the following analysis.

The first consideration is whether the Stage 2 DBPR would adversely affect the supply of energy. The Stage 2 DBPR does not regulate power generation, either directly or indirectly. The public and private utilities that the Stage 2 DBPR regulates do not, as a rule, generate power.

Further, the cost increases borne by customers of water utilities as a result of the Stage 2 DBPR are a low percentage of the total cost of water, except for a very few small systems that might install advanced technologies that must spread that cost over a narrow customer base. Therefore,

the customers that are power generation utilities are unlikely to face any significant effects as a result of the Stage 2 DBPR. In sum, the Stage 2 DBPR does not regulate the supply of energy,

does not generally regulate the utilities that supply energy, and is unlikely significantly to affect the customer base of energy suppliers. Thus, the Stage 2 DBPR would not translate into adverse effects on the supply of energy.

The second consideration is whether the Stage 2 DBPR would adversely affect the distribution of energy. The Stage 2 DBPR does not regulate any aspect of energy distribution.

The utilities that are regulated by the Stage 2 DBPR already have electrical service. As derived later in this section, the proposedfinal rule is projected to increase peak electricity demand at water utilities by only 0.009 percent. Therefore, EPA estimates that the existing connections are adequate and that the Stage 2 DBPR has no discernable adverse effect on energy distribution.

The third consideration is whether the Stage 2 DBPR would adversely affect the use of energy. Because some drinking water utilities are expected to add treatment technologies that use electrical power, this potential impact is evaluated in more detail. The analyses that underlay the estimation of costs for the Stage 2 DBPR are national in scope and do not identify specific plants or utilities that may install treatment in response to the rule. As a result, no analysis of the effect on specific energy suppliers is possible with the available data. The approach used to estimate the 253 impact of energy use, therefore, focuses on national level impacts. The analysis estimates the additional energy use due to the Stage 2 DBPR and compares that analysis to the national levels of power generation in terms of average and peak loads.

The first step in the analysis is to estimate the energy used by the technologies expected to be installed as a result of the Stage 2 DBPR. Energy use is not directly stated in Technologies and Costs for Control of Microbial Contaminantsthe Final Long Term 2 Enhanced Surface Water Treatment Rule and Final Stage 2 Disinfectants and Disinfection By ProductsByproducts Rule ( USEPA 2003d5g), but the annual cost of energy for each technology addition or upgrade necessitated by the Stage 2 DBPR is provided. An estimate of plant level energy use is derived by dividing the total energy cost per plant for a range of flows by an average national cost of electricity of $ 0.076/ kilowatt hours per year ( kWh/ yr) ( USDOE EIA 20024a). These calculations are shown in detail in the Economic Analysis for the Stage 2 DBPR ( USEPA 2005a). The energy use per plant for each flow range and technology is then multiplied by the number of plants predicted to install each technology in a given flow range. The energy requirements for each flow range are then added to produce a national total. No electricity use is subtracted to account for the technologies that may be replaced by new technologies, resulting in a conservative estimate of the increase in energy use. The incremental national annual energy usage is 0.12 million megawatt hours ( MWh).

According to the U. S. Department of Energy's Information Administration, electricity producers generated 3,848 million MWh of electricity in 2003 ( USDOE EIA 2004b). Therefore,

even using the highest assumed energy use for the Stage 2 DBPR, the rule when fully implemented would result in only a 0.003 percent increase in annual average energy use.

In addition to average energy use, the impact at times of peak power demand is important.

To examine whether increased energy usage might significantly affect the capacity margins of 254 energy suppliers, their peak season generating capacity reserve was compared to an estimate of peak incremental power demand by water utilities.

Both energy use and water use peak in the summer months, so the most significant effects on supply would be seen then. In the summer of 2003, U. S. generation capacity exceeded consumption by 15 percent, or approximately 160,000 MW ( USDOE EIA 2004b). Assuming around the clock operation of water treatment plants, the total energy requirement can be divided by 8,760 hours per year to obtain an average power demand of 143.0428 MW. A more detailed derivation of this value is shown in the Economic Analysis for the Stage 2 DBPR ( USEPA 2005a). Assuming that power demand is proportional to water flow through the plant and that peak flow can be as high as twice the average daily flow during the summer months, about 286.0855 MW could be needed for treatment technologies installed to comply with the Stage 2 DBPR. This is only 0.0187 percent of the capacity margin available at peak use.

Although EPA recognizes that not all areas have a 15 percent capacity margin and that this margin varies across regions and through time, this analysis reflects the effect of the rule on national energy supply, distribution, and use. While certain areas, notably California, have experienced shortfalls in generating capacity in the recent past, a peak incremental power requirement of 286.0855 MW nationwide is not likely to significantly change the energy supply,

distribution, or use in any given area. Considering this analysis, EPA has concluded that Stage 2 DBPR will not have any significant effect on the use of energy, based on annual average use and on conditions of peak power demand.

I. National Technology Transfer and Advancement Act As noted in the proposed rule, Section 12( d) of the National Technology Transfer and Advancement Act of 1995 (" NTTAA"), Public Law 104 113, section 12( d) ( 15 U. S. C. 272 note) 255 directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e. g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standard bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This action does notrulemaking involves technical standards. EPA proposed 13 methods,

however those methods are not in this final rule. The 13 methods have been added to another final rule [ Reference when published].

has decided to use two voluntary consensus methods for HAA5 ( Standard Method 6251 B, 1998 in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and Standard Method 6251 B 94, 1994 available at http:// www. standardmethods. org). In addition to these two consensus methods, EPA is also approving EPA Method 552.3 for HAA5, which also can be used to measure three unregulated HAAs that are not included in the consensus methods.

The unregulated HAAs are included in the EPA method because some water systems monitor for them in order to better understand their treatment processes and provide greater public health protection. EPA is approving two voluntary consensus standards for daily monitoring for chlorite ( Standard Method 4500 ClO 2 E, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and Standard Method 4500 ClO 2 E 00, 2000, available at http:// www. standardmethods. org). EPA Method 327.0, Revision 1.1 is also being approved for daily monitoring for both chlorite and chlorine dioxide in order to provide an alternative to the titration procedure that is required in the Standard Methods. EPA is approving a method from American Society for Testing and Materials International for bromate, chlorite and bromide analyses ( ASTM D 6581 00, 2000, ASTM International. Annual Book of ASTM Standards, 256 Volume 11.01, American Society for Testing and Materials International, 2001 or any year containing the cited version of the method may be used). EPA is also approving three EPA methods ( EPA Methods 317.0 Revision 2.0, 321.8, and 326.0) that provide greater sensitivity and selectivity for bromate than the ASTM consensus standard. These EPA methods are required in order to provide better process control for water systems using ozone in the treatment process and to allow for a reduced monitoring option. EPA Methods 317.0 Revision 2.0 and 326.0 can also be used to determine chlorite and bromide. Today's action approves eight voluntary consensus standards for determining free, combined, and total chlorine ( SM 4500 Cl D, SM 4500 Cl F, and 4500 Cl G, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and SM 4500 Cl D 00, SM 4500 Cl F 00, and 4500 Cl G 00, 2000 available at http:// www. standardmethods. org and ASTM D 1253 86( 96), 1996, ASTM International, Annual Book of ASTM Standards, Volume 11.01, American Society for Testing and Materials International, 1996 or any year containing the cited version of the method may be used and ASTM D 1253 03, 2003, ASTM International, Annual Book of ASTM Standards,

Volume 11.01, American Society for Testing and Materials International, 2004 or any year containing the cited version of the method may be used). EPA is approving four standards for determining total chlorine ( SM 4500 Cl E and SM 4500 Cl I, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and SM 4500 Cl E 00 and SM 4500 Cl I 00, 2000 available at http:// www. standardmethods. org). Two standards for determining free chlorine are approved in today's rule ( SM 4500 Cl H, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and SM 4500 Cl H 00, 2000 available at http:// www. standardmethods. org). Today's action approves three voluntary consensus standards for measuring chlorine dioxide ( 4500 ClO 2 D and 4500 ClO 2 E, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and 4500 ClO 2 257 E 00, 2000 available at http:// www. standardmethods. org). EPA is approving six standards for determining TOC and DOC ( SM 5310 B, SM 5310 C, and SM 5310 D, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and SM 5310 B 00, SM 5310 C 00, and SM 5310 D 00, 2000 available at http:// www. standardmethods. org). Two standards for determining UV 254 are approved in today's rule ( SM 5910 B, 1998, in the 20th Edition of Standard Methods for the Examination of Water and Wastewater and SM 5910 B 00,

2000 available at http:// www. standardmethods. org). EPA is also approving EPA Method 415.3 Revision 1.1 for the determination of TOC and SUVA ( DOC and UV 254 ). This EPA method contains method performance data that are not available in the consensus standards.

Copies of the ASTM standards may be obtained from the American Society for Testing and Materials International, 100 Barr Harbor Drive, West Conshohocken, PA 19428 2959. The Standard Methods may be obtained from the American Public Health Association, 1015 Fifteenth Street, NW, Washington, DC 20005.

J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations or Low Income Populations Executive Order 12898 establishes a Federal policy for incorporating environmental justice into Federal agency missions by directing agencies to identify and address disproportionately high and adverse human health or environmental effects of its programs,

policies, and activities on minority and low income populations. EPA has considered environmental justice related issues concerning the potential impacts of this action and consulted with minority and low income stakeholders. A description of this consultation can be found in the proposed rule ( USEPA 2003a). 258 K. Consultations with the Science Advisory Board, National Drinking Water Advisory Council,

and the Secretary of Health and Human Services In accordance with Section 1412 ( d) and ( e) of the SDWA, the Agency did consulted with the Science Advisory Board, the National Drinking Water Advisory Council ( NDWAC), and the Secretary of Health and Human Services on today's rule.

EPA met with the SAB to discuss the Stage 2 DBPR on June 13, 2001 ( Washington, DC),

September 25 26, 2001 ( teleconference), and December 10 12, 2001 ( Los Angeles, CA). Written comments from the December 2001 meeting of the SAB addressing the occurrence analysis and risk assessment were generally supportive. SAB comments are discussed in greater detail within the proposal.

EPA met with the NDWAC on November 8, 2001, in Washington, DC to discuss the Stage 2 DBPR proposal. The Advisory Committee generally supported the need for the Stage 2 DBPR based on health and occurrence data, but also stressed the importance of providing flexibility to the systems implementing the rule. The results of these discussions are included in the docket for the proposed rule.

L. Plain Language Executive Order 12866 requires each agency to write its rules in plain language. Readable regulations help the public find requirements quickly and understand them easily. They increase compliance, strengthen enforcement, and decrease mistakes, frustration, phone calls, appeals, and distrust of government. EPA made every effort to write this preamble to the final rule in as clear,

concise, and unambiguous manner as possible.

M. Analysis of the Likely Effect of Compliance with the Stage 2 DBPR on the Technical, 259 Managerial, and Financial Capacity of Public Water Systems Section 1420( d)( 3) of SDWA, as amended, requires that, in promulgating a National Primary Drinking Water Regulation ( NPDWR), the Administrator shall include an analysis of the likely effect of compliance with the regulation on the technical, managerial, and financial ( TMF)

capacity of PWSs. This analysis is described in more detail and can be found in the Economic Analysis ( USEPA 2005a). Analyses reflect only the impact of new or revised requirements, as established by the LT2ESWTR; the impacts of previously established requirements on system capacity are not considered.

EPA has defined overall water system capacity as the ability to plan for, achieve, and maintain compliance with applicable drinking water standards. Capacity encompasses three components: technical, managerial, and financial. Technical capacity is the physical and operational ability of a water system to meet SDWA requirements. This refers to the physical infrastructure of the water system, including the adequacy of source water and the adequacy of treatment, storage, and distribution infrastructure. It also refers to the ability of system personnel to adequately operate and maintain the system and to otherwise implement requisite technical knowledge. Managerial capacity is the ability of a water system to conduct its affairs to achieve and maintain compliance with SDWA requirements. Managerial capacity refers to the system's institutional and administrative capabilities. Financial capacity is a water system's ability to acquire and manage sufficient financial resources to allow the system to achieve and maintain compliance with SDWA requirements.

EPA estimated the impact of the Stage 2 DBPR on small and large system capacity as a result of the measures that systems are expected to adopt to meet the requirements of the rule ( e. g., selecting monitoring sites for the IDSE, installing/ upgrading treatment, operator training,

communication with regulators and the service community, etc.). The Stage 2 DBPR may have a 260 substantial impact on the capacity of the 1,743 plants in small systems and 518 plants in large systems that must make changes to their treatment process to meet the Stage 2 DBPR requirements. However, while the impact to these systems is potentially significant, only 3.8 percent of all plants regulated under the Stage 2 DBPR ( 2,261 of 60,220) will be affected by this requirement. Since individual systems may employ more than one plant, it is likely that fewer than 1,620 systems ( 3.4 percent of 48,293 systems) will be affected by this requirement. The new IDSE and monitoring requirements are expected to have a small impact on the technical and managerial capacity of small systems, a moderate impact on the financial capacity of some small systems, and a much smaller impact on large systems. The capacity of systems that must conduct an operational evaluation will only be impacted in a minor way, while those systems that must only familiarize themselves with the rule ( the large majority of systems) will not face any capacity impact as a result of the Stage 2 DBPR.

MN. Congressional Review Act The Congressional Review Act, 5 U. S. C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U. S. Senate, the U. S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A Major rule cannot take effect until 60 days after it is published in the Federal Register. This action is a " major rule" as defined by 5 U. S. C.

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