Economic
Analysis
of
Proposed
Effluent
Guidelines
and
Standards
for
the
Construction
and
Development
Category
May
2002
Economic
Analysis
of
Proposed
Effluent
Guidelines
and
Standards
for
the
Construction
and
Development
Category
May
2002
United
States
Environmental
Protection
Agency
Office
of
Water
(
4303T)
1200
Pennsylvania
Avenue,
NW
Washington,
DC
20460
www.
epa.
gov/
waterscience/
guide/

EPA­
821­
R­
02­
008
ACKNOWLEDGMENTS
AND
DISCLAIMER
The
Construction
and
Development
Effluent
Guidelines
proposed
rule
and
support
documents
were
prepared
by
the
C&
D
Project
Team:
Eric
Strassler,
Project
Manager;
Jesse
Pritts,
P.
E.
,
Engineer;
George
Denning,
Economist;
Karen
Maher,
Environmental
Assessor;
and
Michael
G.
Lee,
Attorney.
Technical
support
for
this
Economic
Analysis
was
provided
by
Eastern
Research
Group,
Inc.
(
ERG)
,
of
Lexington,
MA.

Neither
the
United
States
government
nor
any
of
its
employees,
contractors,
subcontractors
or
other
employees
makes
any
warranty,
expressed
or
implied,
or
assumes
any
legal
liability
or
responsibility
for
any
third
party'
s
use
of,
or
the
results
of
such
use
of,
any
information,
apparatus,
product
or
process
discussed
in
this
report,
or
represents
that
its
use
by
such
a
third
party
would
not
infringe
on
privately
owned
rights.
Mention
of
trade
names
or
commercial
products
does
not
constitute
endorsement
by
EPA
or
recommendation
for
use.
CONTENTS
Page
EXECUTIVE
SUMMARY
ES.
1
INTRODUCTION
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ES­
1
ES.
2
INDUSTRY
PROFILE
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ES­
2
ES.
2.1
Data
Sources
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2
ES.
2.2
Industry
Description
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3
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2.2.1
Number
of
Establishments
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6
ES.
2.2.2
Employment
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ES.
2.2.3
Revenues
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8
ES.
2.2.4
Number
of
Potentially
Regulated
Businesses
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ES.
2.2.5
Small
Entities
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11
ES.
2.3
Industry
Dynamics
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12
ES.
3
REGULATORY
OPTIONS
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14
ES.
3.1
Current
Regulatory
Status
of
the
C&
D
Industry
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ES­
14
ES.
3.2
Summary
of
Proposed
Regulatory
Options
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15
ES.
4
ECONOMIC
IMPACT
ANALYSIS
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16
ES.
4.1
Impacts
on
Model
Construction
Projects
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17
ES.
4.2
Impacts
on
Model
Construction
Firms
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18
ES.
4.2.1
Impacts
on
Model
Firm
Financial
Ratios
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18
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4.2.2
Closures
and
Employment
Losses.
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20
ES.
4.2.3
Barriers
to
Entry
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22
ES.
4.3
Impacts
on
National
Construction
Markets
and
the
National
Economy
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24
ES.
5
SMALL
ENTITY
IMPACT
ANALYSIS
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26
ES.
5.1
Definition
of
Affected
Small
Entities
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5.2
Small
Entity
Impacts
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27
ES.
6
BENEFITS
ANALYSIS
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ES.
6.1
Benefits
Methodology
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ES.
6.2
Environmental
Assessment
and
Benefits
Analysis
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ES.
6.2.1
Overview
of
Environmental
Assessment
and
Benefits
Analysis
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ES­
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ES.
6.2.2
Avoided
Water
Treatment
Costs
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ES­
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ES.
6.2.3
Avoided
Loss
of
Water
Storage
Capacity
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ES.
6.2.4
Avoided
Navigational
Dredging
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ES.
6.2.5
Non­
quantified
Benefits
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ES­
32
ES.
7
SOCIAL
COSTS
AND
BENEFITS
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ES­
32
ES.
8
ANALYSIS
OF
OTHER
IMPACTS
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33
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8.1
Unfunded
Mandates
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33
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8.2
Environmental
Justice
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33
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8.3
Children
 
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Health
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34
ES.
9
REFERENCES
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ES­
35
i
CONTENTS
(
cont.
)

Page
CHAPTER
ONE
INTRODUCTION
1.1
EXISTING
REGULATORY
FRAMEWORK
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1­
2
1.1.1
NPDES
Permit
Regulation
of
the
C&
D
Industry
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1­
2
1.2
PURPOSE
OF
THE
PROPOSED
RULE
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1­
4
1.3
INDUSTRIES
AFFECTED
BY
THE
PROPOSED
C&
D
EFFLUENT
GUIDELINES
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1­
5
1.4
OVERVIEW
OF
KEY
DATA
SOURCES
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1­
6
1.5
REPORT
ORGANIZATION
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1­
7
CHAPTER
TWO
ECONOMIC
PROFILE
OF
THE
CONSTRUCTION
AND
DEVELOPMENT
INDUSTRY
2.1
INTRODUCTION
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2­
1
2.1.1
Recent
Trends
in
the
C&
D
Industry
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2­
2
2.1.2
Data
Sources
Used
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2­
3
2.1.3
Organization
of
this
Chapter
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2­
4
2.2
INDUSTRY
DEFINITION
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2­
5
2.2.1
Basis
for
Regulation
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2­
5
2.2.2
Industry
Definition
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2­
6
2.3
INDUSTRY
CHARACTERISTICS
.
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2­
8
2.3.1
Establishment­
Level
Data
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2­
9
2.3.1.1
Number
and
Size
of
Establishments
.
.
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2­
9
2.3.1.2
Legal
Form
of
Organization
.
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2­
13
2.3.1.3
Geographic
Distribution
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2­
15
2.3.1.4
Employment
.
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2­
15
2.3.1.5
Payrolls
and
Benefits
.
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2­
17
2.3.1.6
Specialization
.
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2­
18
2.3.2
Firm­
Level
Data
.
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2­
21
2.3.2.1
Number
and
Size
of
Firms
.
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2­
21
2.3.2.2
Firm­
Level
Revenues
.
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2­
22
2.3.3
Number
of
Small
Entities
.
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2­
25
2.3.4
Entities
Not
Covered
by
the
Proposed
Rule
.
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2­
26
2.3.4.1
Establishments
Engaged
in
Remodeling
.
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2­
26
2.3.4.2
Establishments
That
Are
Not
NPDES
Permttees
.
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2­
27
2.3.5
Number
of
Potentially
Affected
Entities
.
.
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2­
28
2.4
MARKET
SUPPLY
AND
DEMAND
.
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2­
30
2.4.1
Characteristics
of
Construction
Supply
.
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2­
31
2.4.1.1
Residential
Building
.
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2­
31
2.4.1.2
Nonresidential
Building
.
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2­
37
ii
CONTENTS
(
cont.
)

Page
2.4.1.3
Heavy
Construction
.
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2­
40
2.4.1.4
Characterization
of
Supply
.
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2­
45
2.4.1.5
Supply
Trends
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2­
47
2.4.2
Characteristics
of
Construction
Demand
.
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.
2­
51
2.4.2.1
Demand
Factors
Affecting
Construction
and
Development
Activities
.
.
.
.
.
2­
51
2.4.2.2
Housing
Demand
and
Elasticity
.
.
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2­
52
2.4.2.3
Impact
of
Regulation
on
Housing
Demand
.
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2­
53
2.4.2.4
Trends
in
New
Homes
Sold
.
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2­
54
2.4.2.5
Nonresidential
Demand
Characteristics
.
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2­
55
2.4.2.6
Heavy
Construction
Demand
Characteristics
.
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2­
56
2.5
ECONOMIC
AND
FINANCIAL
CHARACTERISTICS
.
.
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2­
59
2.5.1
Value
of
Work
Done
.
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2­
59
2.5.2
Selected
Costs
.
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2­
64
2.5.2.1
All
Costs
.
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2­
64
2.5.2.2
Machinery
and
Equipment
Costs
.
.
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2­
64
2.5.3
Capital
Expenditures
and
Depreciation
.
.
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2­
68
2.5.4
Value
of
Inventories
.
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2­
69
2.6
KEY
BUSINESS
INDICATORS
AND
RATIOS
.
.
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2­
71
2.7
INDUSTRY
GROWTH
.
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2­
77
2.8
INTERNATIONAL
COMPETITIVENESS
.
.
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2­
79
2.9
REFERENCES
.
.
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.
2­
80
Appendix
2A
Additional
Detailed
5­
Digit
NAICS
Tables
Appendix
2B
Specialization
Within
the
C&
D
Industries,
Categorized
by
Value
of
Construction
Work
Appendix
2C
Definitions
of
Key
Business
Ratios
from
Dun
&
Bradstreet
Appendix
2D
Summary
Statistics
for
the
C&
D
Industries,
by
NAICS
Code
CHAPTER
THREE
DESCRIPTION
OF
PROPOSED
RULE
AND
REGULATORY
OPTIONS
3.1
EFFLUENT
LIMITATIONS
GUIDELINES
AND
STANDARDS
.
.
.
.
.
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.
.
3­
1
3.2
REQUIREMENTS
UNDER
THE
EXISTING
CONSTRUCTION
GENERAL
PERMIT
.
.
.
.
3­
2
3.3
SUMMARY
OF
REGULATORY
OPTIONS/
TECHNOLOGY
ALTERNATIVES
.
.
.
.
.
.
.
.
.
3­
3
3.3.1
Option
1
.
.
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3­
4
3.3.2
Option
2
.
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3­
5
3.3.3
Option
3
.
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.
3­
11
iii
CONTENTS
(
cont.
)

Page
CHAPTER
FOUR
ECONOMIC
IMPACT
METHODOLOGY
4.1
OVERVIEW
OF
ECONOMIC
IMPACT
ANALYSIS
METHODOLOGY
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
1
4.1.1
Compliance
and
Baseline
Assumptions
.
.
.
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.
4­
2
4.1.2
Cost
Pass
Through
Assumptions
.
.
.
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4­
3
4.1.3
Operation
and
Maintenance
Costs
.
.
.
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4­
6
4.1.4
Impacts
Associated
With
NSPS
.
.
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4­
6
4.2
IMPACTS
ON
MODEL
PROJECTS
.
.
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4­
7
4.2.1
Description
of
Model
Project
Approach
.
.
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4­
8
4.2.2
Treatment
of
Nonbuilding
Construction
Projects
.
.
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4­
9
4.2.3
Description
of
Model
Projects
.
.
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4­
9
4.2.3.1
Residential
Single­
family
Development
.
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4­
10
4.2.3.2
Residential
Multifamily
Development
.
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4­
13
4.2.3.3
Commercial
Development
.
.
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4­
13
4.2.3.4
Industrial
Development
.
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4­
14
4.2.4
Cost
Pass
Through
Assumptions
.
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4­
14
4.2.5
Inputs
to
the
Model
Project
Analysis
.
.
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4­
14
4.2.6
Model
Project
Analysis
Approach
.
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4­
17
4.2.6.1
Baseline
Model
Project
Performance
.
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4­
17
4.2.6.2
Results
of
Model
Project
Analysis
.
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4­
18
4.2.7
Model
Nonbuilding
Project
Analysis
.
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4­
22
4.3
IMPACTS
ON
MODEL
ESTABLISHMENTS
.
.
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4­
25
4.3.1
Model
Establishment
Analysis
.
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4­
25
4.3.1.1
Inputs
to
the
Model
Establishment
Analysis
.
.
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4­
25
4.3.1.2
Balance
Sheet
and
Income
Statement
for
Model
Establishment
.
.
.
.
.
.
.
.
.
.
4­
26
4.3.1.3
Methodology
for
Analysis
of
Regulatory
Impacts
on
Model
Establishment
.
.
.
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4­
28
4.3.1.4
Analysis
of
Financial
Ratios
for
Model
Establishment
.
.
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4­
30
4.3.1.5
Compliance
Cost
Inputs
into
Financial
Ratio
Analysis
.
.
.
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.
4­
33
4.3.2
Extension
of
Model
Facility
Analysis
to
Project
Industry
Closures
.
.
.
.
.
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.
.
.
4­
35
4.3.2.1
Estimation
of
Affected
Establishments
and
Employment
.
.
.
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.
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.
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.
4­
35
4.3.2.2
Closure
and
Employment
Impacts
Based
on
Financial
Ratio
Analysis
.
.
.
.
.
4­
38
4.3.2.3
Closure
and
Employment
Impacts
Based
on
Cashflow
Analysis
.
.
.
.
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.
.
.
4­
41
4.3.3
Analysis
of
Barriers
to
Entry
.
.
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4­
44
4.4
NATIONAL
COMPLIANCE
COSTS
.
.
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4­
45
4.4.1
National
Estimates
of
Disturbed
Acreage
.
.
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4­
45
4.4.2
Distribution
of
Acreage
by
Project
Type
.
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4­
46
4.4.3
Distribution
of
Acreage
by
Project
Size
.
.
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4­
54
4.4.4
Estimates
of
Acreage
Covered
by
Option
2
.
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4­
55
4.4.5
Operation
and
Maintenance
Costs
.
.
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4­
58
iv
CONTENTS
(
cont.
)

Page
4.5
IMPACTS
ON
THE
NATIONAL
HOUSING
MARKET
.
.
.
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4­
58
4.5.1
Description
of
National
Housing
Market
Model
.
.
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4­
58
4.5.1.1
Complete
Cost
Pass
Through
and
Housing
Affordability
.
.
.
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4­
58
4.5.1.2
National
Partial
Equilibrium
Modeling
.
.
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4­
63
4.5.1.3
Regional
Partial
Equilibrium
Modeling
and
the
Housing
Opportunity
Index
.
.
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4­
66
4.5.2
Inputs
to
the
National
Housing
Market
Model
.
.
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.
4­
69
4.5.3
Multifamily
and
Non­
Residential
Construction
Market
Models
.
.
.
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.
4­
69
4.6
NET
ECONOMIC
IMPACTS
.
.
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4­
72
4.6.1
Welfare
Effects
.
.
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4­
72
4.6.2
Regional
Impacts
.
.
.
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4­
73
4.6.3
International
Trade
.
.
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4­
74
4.7
GOVERNMENT
IMPACTS
.
.
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4­
75
4.7.1
Administrative
Costs
.
.
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4­
75
4.7.2
Compliance
Costs
.
.
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4­
75
4.8
REFERENCES
.
.
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4­
76
Appendix
4A
Data
and
Modeling
Assumptions
for
Model
Project
Analysis
Appendix
4B
Detailed
Description
of
Model
Parameters
and
Assumptions
Appendix
4C
Characteristics
of
Model
Establishments
CHAPTER
FIVE
ECONOMIC
IMPACT
ANALYSIS
RESULTS
5.1
OVERVIEW
OF
ECONOMIC
IMPACT
ANALYSIS
METHODOLOGY
.
.
.
.
.
.
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.
5­
1
5.2
ANALYSIS
OF
IMPACTS
ON
MODEL
PROJECTS
.
.
.
.
.
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5­
2
5.2.1
Cost
Pass
Through
Considerations
.
.
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5­
3
5.2.2
Model
Project
Baseline
Performance
.
.
.
.
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.
5­
3
5.2.3
Results
of
Model
Project
Analyses
.
.
.
.
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5­
5
5.2.4
Nonbuilding
Project
Analysis
Results
.
.
.
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.
5­
6
5.3
ANALYSIS
OF
NATIONAL
COMPLIANCE
COSTS
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
.
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.
.
.
.
5­
7
5.4
ANALYSIS
OF
IMPACTS
ON
MODEL
ESTABLISHMENTS
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
5­
10
5.4.1
Building
Construction
.
.
.
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5­
10
5.4.2
Nonbuilding
Construction
.
.
.
.
.
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5­
14
5.5
ANALYSIS
OF
IMPACTS
ON
CLOSURES
AND
EMPLOYMENT
LOSSES
.
.
.
.
.
.
.
.
.
.
.
5­
16
5.5.1
Facility
Closures
.
.
.
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5­
17
5.5.2
Employment
Losses
.
.
.
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.
5­
18
5.6
ANALYSIS
OF
BARRIER
TO
ENTRY
.
.
.
.
.
.
.
.
.
.
.
.
.
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5­
20
5.6.1
Building
Construction
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5­
20
5.6.2
Nonbuilding
Construction
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5­
22
v
CONTENTS
(
cont.
)

Page
5.7
ANALYSIS
OF
IMPACTS
ON
NATIONAL
CONSTRUCTION
MARKETS
.
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5­
23
5.7.1
Residential
Construction
Markets
.
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5­
24
5.7.1.1
Housing
Affordability
.
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5­
24
5.7.1.2
Housing
Opportunity
Index
.
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5­
24
5.7.1.3
Single­
Family
Housing
Prices
and
Quantities
.
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5­
26
5.7.1.4
Multifamily
Housing
Prices
and
Quantities
.
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5­
26
5.7.2
Non­
Residential
Construction
Markets
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5­
27
5.7.2.1
Commercial
Space
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5­
27
5.7.2.2
Industrial
Space
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5­
28
5.7.3
Output
and
Employment
.
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5­
29
5.7.4
Changes
in
Welfare
Measures
.
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5­
30
5.7.5
Regional
Effects
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5­
31
5.8
IMPACTS
ON
GOVERNMENTAL
UNITS
.
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5­
35
5.8.1
Construction
Program
Administration
.
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5­
35
5.8.2
Government
Construction
Costs
.
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5­
36
5.9
OTHER
IMPACTS
.
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5­
37
5.9.1
Requirements
of
Executive
Order
12866
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5­
37
5.9.2
Environmental
Justice
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5­
39
5.9.3
Children
 
s
Health
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5­
39
5.10
REFERENCES
.
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5­
41
Appendix
5A
Closure
and
Employment
Loss
Analysis
Results
 
Cash
Flow
Analysis
Appendix
5B
Sensitivity
Analysis
for
the
National
Partial
Equilibrium
Model
Appendix
5C
Baseline
Analysis
CHAPTER
SIX
INITIAL
REGULATORY
FLEXIBILITY
ANALYSIS
6.1
INTRODUCTION
TO
THE
INITIAL
REGULATORY
FLEXIBILITY
ANALYSIS
.
.
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6­
1
6.2
INITIAL
ASSESSMENT
.
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6­
2
6.2.1
Definition
of
Affected
Small
Entities
.
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6­
2
6.2.2
Number
of
Small
Businesses
Affected
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6­
4
6.2.2.1
Number
of
Establishments
Affected
.
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6­
5
6.2.2.2
Number
of
Businesses
Affected
.
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6­
6
6.2.2.3
Number
of
Small
Businesses
Affected
.
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6­
9
6.3
EPA
COMPLIANCE
WITH
RFA
REQUIREMENTS
.
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6­
10
6.3.1
Outreach
and
Small
Business
Advocacy
Review
.
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6­
10
6.3.2
EPA
 
s
Initial
Regulatory
Flexibility
Analysis
.
.
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6­
11
6.3.2.1
Reasons
EPA
is
Considering
the
Proposed
Rule
.
.
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6­
12
6.3.2.2
Objectives
and
Legal
Basis
for
the
Proposed
Rule
.
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6­
12
6.3.2.3
Description
and
Estimate
of
Number
of
Small
Entities
Affected
.
.
.
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.
.
.
6­
14
vi
CONTENTS
(
cont.
)

Page
6.3.2.4
Description
of
Proposed
Recordkeeping,
Reporting,
and
Other
Requirements
.
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6­
15
6.3.2.5
Identification
of
Relevant
Federal
Rules
That
May
Duplicate,
Overlap,
or
Conflict
with
the
Proposed
Regulations
.
.
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6­
16
6.3.2.6
Significant
Regulatory
Alternatives
.
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6­
17
6.4
EPA
 
S
ANALYSIS
OF
SMALL
BUSINESS
IMPACTS
.
.
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6­
18
6.4.1
Classification
of
Model
Facilities
for
Impact
Analysis
.
.
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6­
18
6.4.2
Revenue
Test
Methodology
.
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6­
21
6.4.2.1
Development
of
Revenue
Distributions
.
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6­
22
6.4.2.2
Application
of
Revenue
Distributions
to
Estimating
Small
Business
Impacts
.
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6­
24
6.4.3
Small
Business
Impact
Analysis
Results
.
.
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6­
26
6.5
REFERENCES
.
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6­
31
CHAPTER
SEVEN
BENEFITS
METHODOLOGY
7.1
PREVIOUS
APPROACHES
TO
BENEFITS
ASSESSMENT
.
.
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.
7­
1
7.2
BENEFITS
CATEGORIES
CONSIDERED
.
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7­
2
7.2.1
Decreased
Erosion
and
Sediment
Generation
.
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7­
4
7.2.1.1
Water
Storage
Capacity
.
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7­
4
7.2.1.2
Navigational
Dredging
.
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7­
6
7.2.2
Reduced
In­
Stream
TSS
and
Sediment
Concentration
.
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.
7­
7
7.2.3
Non­
Quantified
Benefits
.
.
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7­
9
7.2.3.1
Water
Contact
Recreation
.
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7­
9
7.2.3.2
Biodiversity
Effects
.
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7­
10
7.2.3.3
Other
Sources
of
Benefits
.
.
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7­
10
7.3
CONCLUSION
.
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7­
11
7.4
REFERENCES
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7­
12
CHAPTER
EIGHT
BENEFITS
ASSESSMENT
RESULTS
8.1
ENVIRONMENTAL
ASSESSMENT
RESULTS
.
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8­
1
8.2
BENEFITS
ASSESSMENT
RESULTS
.
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8­
1
8.3
REFERENCES
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8­
3
vii
CONTENTS
(
cont.
)

Page
CHAPTER
NINE
COSTS
AND
BENEFITS
OF
THE
PROPOSED
RULE
9.1
INTRODUCTION
.
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9­
1
9.2
SOCIAL
COSTS
OF
THE
RULE
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9­
1
9.2.1
Direct
Social
Costs
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9­
1
9.2.1.1
Compliance
Costs
.
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9­
2
9.2.1.2
Government
Regulatory
Costs
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9­
2
9.2.2
Social
Welfare
Losses
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9­
3
9.2.3
Transitional
Effects
.
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9­
4
9.3
INDIRECT
EFFECTS
.
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9­
4
9.4
COMPARISON
OF
ESTIMATED
COSTS
AND
BENEFITS
.
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9­
5
CHAPTER
TEN
UNFUNDED
MANDATES
REFORM
ACT
10.1
INTRODUCTION
.
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10­
1
10.2
ANALYSIS
AND
RESULTS
.
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10­
2
10.3
REFERENCES
.
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10­
5
DOCUMENT
INDEX
.
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11­
1
viii
LIST
OF
TABLES
Table
Page
ES­
1
Industry
Definition
for
Construction
and
Development
Industry
Profile
.
.
.
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.
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.
.
ES­
5
ES­
2
Number
of
Establishments
in
Construction
and
Development
Industries,
1997
vs.
1992
.
.
.
ES­
6
ES­
3
Number
of
Employees
in
the
Construction
and
Development
Industries,
Establishments
with
Payroll
.
.
.
.
.
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ES­
7
ES­
4
Value
of
Construction
Work
.
.
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ES­
8
ES­
5
Number
of
Establishments
Potentially
Affected
by
the
Proposed
Rule
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
ES­
10
ES­
6
Estimated
Number
of
Small
Businesses
Potentially
Affected
by
the
Proposed
Rule
.
.
.
.
.
ES­
12
ES­
7
Housing
Supply
and
Demand
 
Historical
Data
and
Projections
for
2001­
­
2010
.
.
.
.
.
.
.
.
.
ES­
14
ES­
8
Summary
of
Regulatory
Options
Proposed
by
EPA
.
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ES­
15
ES­
9a
Weighted
Average
Change
in
Sales
Price
to
Buyer
.
.
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.
ES­
18
ES­
9b
Weighted
Average
Change
in
Builder­
Developer
Profit
.
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.
ES­
18
ES­
10
Impact
of
Compliance
Costs
on
Model
Firm
Financials
 
Zero
Percent
Cost
Pass
Through
.
.
.
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.
.
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.
ES­
20
ES­
11
Estimated
Facility
Closures
 
Zero
Percent
Cost
Pass
Through
.
.
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.
ES­
21
ES­
12
Estimated
Facility
Closures
 
Estimated
Cost
Pass
Through
.
.
.
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.
ES­
22
ES­
13
Barrier
to
Entry
Analysis
 
Zero
Percent
Cost
Pass
Through
.
.
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.
ES­
23
ES­
14
Estimated
National
Costs
of
ESC
Controls
.
.
.
.
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.
.
ES­
24
ES­
15a
Estimated
Number
of
Small
Business­
Owned
Establishments
with
Compliance
Costs
Exceeding
1
Percent
of
Revenues
.
.
.
.
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.
.
ES­
28
ES­
15b
Estimated
Number
of
Small
Business­
Owned
Establishments
with
Compliance
Costs
Exceeding
3
Percent
of
Revenues
.
.
.
.
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.
ES­
29
ES­
16
Environmental
Measures
.
.
.
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.
.
ES­
30
ES­
17
Point
Estimates
of
Benefits
by
Category
.
.
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.
ES­
31
ES­
18
Social
Costs
and
Benefits
of
Options
.
.
.
.
.
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.
.
.
ES­
33
1­
1
Industries
Potentially
Affected
by
Proposed
Rulemaking
.
.
.
.
.
.
.
.
.
.
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.
.
.
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.
.
.
.
.
.
.
1­
5
2­
1
Number
of
Establishments
in
Construction
and
Development
Industries,
1997
vs.
1992
.
.
.
.
.
2­
3
2­
2
Comparison
of
Major
Data
Sources
.
.
.
.
.
.
.
.
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.
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.
.
.
2­
4
2­
3
Industry
Definitions
for
Construction
and
Development
Industry
Profile
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
7
2­
4
Number
of
Establishments
in
the
Construction
and
Development
Industry,
Based
on
the
1997
Census
of
Construction
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
10
2­
5
Number
of
Small
Entities
with
Payrolls
in
the
Construction
and
Development
Industry,
Based
on
Employment
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
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.
.
.
.
.
.
.
.
2­
12
2­
6
Number
of
Small
Establishments
in
the
Construction
and
Development
Industry,
Based
on
Value
of
Business
Done
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
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.
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.
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.
.
.
.
.
.
.
.
2­
12
2­
7
Number
of
Establishments
in
the
Construction
and
Development
Industry
with
Payroll,
by
Legal
Form
of
Organization
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
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.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
14
2­
8
Number
of
Employees
in
the
Construction
and
Development
Industries,
Establishments
with
Payrolls
1997
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
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.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
16
2­
9
Payroll
and
Benefits
for
Employees
in
the
Construction
Industry
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
19
2­
10
Specialization
within
NAICS
23321,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
2­
20
2­
11
Employer
Firms
and
Establishments
by
Employment
Size
of
Firm
by
NAICS
Codes
.
.
.
.
.
.
2­
22
2­
12
Employer
Firms
and
Establishments
by
Revenue
Size
Class
(
1997)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
24
ix
LIST
OF
TABLES
(
cont.
)

Table
Page
2­
13
Number
of
Firms
and
Establishments
Above
and
Below
SBA
Thresholds
for
Small
Business
Definition
Based
on
Data
from
SBA
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
25
2­
14
Number
of
Affected
Establishments
in
the
Construction
and
Development
Industry
.
.
.
.
.
.
.
2­
30
2­
15
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permits
in
Permit­
Issuing
Places
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
35
2­
16
New
Privately
Owned
Housing
Units
Authorized
 
Valuation
for
Regions
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
37
2­
17
Estimated
Number
of
Nonresidential
Building
Permits
for
1997,
by
Region
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
39
2­
18
Highway
Statistics
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
41
2­
19
Highway
Capital
Outlay
by
Improvement
Type
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
44
2­
20
Selected
Statistics
for
Establishments
by
Single­
Family
Housing
Starts
Size
Class
.
.
.
.
.
.
.
.
2­
46
2­
21
Construction
Cost
Comparison
for
Low
Impact
Development
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
50
2­
22
Impact
of
Regulatory­
Driven
Delays
on
Housing
Affordability
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
53
2­
23
New
One­
Family
Houses
Sold
and
For
Sale
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
54
2­
24
Value
of
Construction
Work
by
Project
Ownership
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
58
2­
25
Value
and
Net
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
62
2­
26
Value
of
Construction
Work
by
Type
of
Construction
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
63
2­
27
Selected
Costs
in
the
Construction
Industry
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
66
2­
28
Additional
Selected
Costs
in
the
Construction
Industry
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
67
2­
29
Capital
Expenditures
in
the
Construction
Industry
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
69
2­
30
Total
Value
of
Inventories
for
Construction
Industry
Establishments
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
70
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
73
2­
32
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permit,
1981­
1999
.
.
.
.
.
.
.
.
.
2­
78
2­
33
Value
of
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permits,
1991­
1999
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
79
2A­
1
Detailed
Number
of
Establishments
in
the
C&
D
Industry
with
Payroll
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2A­
1
2A­
2
Detailed
Number
of
Small
Establishments
in
the
C&
D
Industry
with
Payroll,
by
Employment
Size
Class
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2A­
3
2A­
3
Value
of
Construction
Work
by
Type
of
Construction
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2A­
4
2B­
1
Specialization
within
NAICS
23311
(
Land
subdivision
and
land
development)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
1
2B­
2
Specialization
within
NACIS
23321
(
Single­
family
housing
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
3
2B­
3
Specialization
within
NAICS
23322
(
Multifamily
housing
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
5
2B­
4
Specialization
within
NAICS
23331
(
Manufacturing
and
industrial
building
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
7
2B­
5
Specialization
within
NAICS
23332
(
Commercial
and
institutional
building
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
9
2B­
6
Specialization
within
NAICS
23411
(
Highway
and
street
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
11
2B­
7
Specialization
within
NAICS
23412
(
Bridge
and
tunnel
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
13
2B­
8
Specialization
within
NAICS
23491
(
Water,
sewer,
and
pipeline
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
15
x
LIST
OF
TABLES
(
cont.
)

Table
Page
2B­
9
Specialization
within
NAICS
23492
(
Power
and
communication
transmission
lines
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
17
2B­
10
Specialization
within
NAICS
23493
(
Industrial
non­
building
structure
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
19
2B­
11
Specialization
within
NAICS
23499
(
All
other
heavy
construction)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
21
2B­
12
Specialization
within
NAICS
23593
(
Excavation
contractors)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
23
2B­
13
Specialization
within
NAICS
23494
(
Wrecking
and
demolition
contractors)
,
Categorized
by
Value
of
Construction
Work
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2B­
25
2D­
1
Summary
Statistics
for
the
C&
D
Industry
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2D­
1
3­
1
Summary
of
Regulatory
Options
Being
Co­
Proposed
by
EPA
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
3­
3
4­
1
Costs
Incurred
at
Various
Stages
of
a
Residential
Construction
Project
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
15
4­
2
Model
Parameters
and
Data
Sources
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
16
4­
3
Baseline
Economic
Model
of
a
Hypothetical
7.5­
Acre
Residential
Development
.
.
.
.
.
.
.
.
.
.
4­
20
4­
4
Illustrated
Impact
of
Incremental
Storm
Water
Control
Requirements
on
Model
Project
Under
Proposed
Rule
Option
1
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
21
4­
5
Obligation
of
Federal­
Aid
Highway
Funds
for
Selected
Highway
Improvements
and
Functional
Classifications
­
1995
to
2000
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
24
4­
6
Model
Single­
Family
Residential
Construction
Firm
Financial
Data
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
28
4­
7
Impact
of
Compliance
Costs
on
Developer­
Builder
 
s
Balance
Sheet
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
30
4­
8
Number
of
Establishments
in
the
Construction
and
Development
Industry
Adjusted
for
Regulatory
Option
Coverage
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
37
4­
9
Employment
in
the
Construction
and
Development
Industry
Adjusted
for
Regulatory
Option
Coverage
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
37
4­
10
Acres
Converted
from
Undeveloped
to
Developed
State,
1992­
1997
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
47
4­
11
New
Single­
Family
and
Multifamily
Housing
Units
Authorized,
1995­
1997
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
48
4­
12
Average
and
Median
Lot
Size
for
New
Single­
Family
Housing
Units
Sold,
1995­
1997
.
.
.
.
.
4­
49
4­
13
Average
Building
Square
Footage
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
51
4­
14
Typical
Building
Sizes
and
Size
Ranges
by
Type
of
Building
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
52
4­
15
National
Estimates
of
Land
Area
Developed
Per
Year
Based
on
Building
Permit
Data
.
.
.
.
.
4­
53
4­
16
National
Estimates
of
Land
Area
Disturbed
Based
on
National
Resources
Inventory
Totals
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
54
4­
17
Distribution
of
Permits
by
Site
Size
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
56
4­
18
Estimates
of
Acreage
Affected
Under
Proposed
Rule
Option
2
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
4­
57
4­
19
Change
in
Housing
Affordability
 
Sample
Calculation
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
4­
61
4­
20
Household
Information
for
Imputing
Changes
in
Ownership
Possibilities
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4­
62
4A­
1
Model
Project
Parameters
and
Data
Sources
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
.
4A­
1
4C­
1
Model
Establishment
Characteristics
Based
on
Census
Data
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4C­
1
4C­
2
Model
Establishment
Characteristics
Based
on
Dun
and
Bradstreet
Data
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
4C­
2
4C­
3
Financial
Ratio
Data
by
Quartile
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
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.
.
.
4C­
3
xi
LIST
OF
TABLES
(
cont.
)

Table
Page
5­
1
Baseline
Sales
Price
and
Profit
Conditions
for
the
Model
Projects
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
4
5­
2a
Impact
of
Regulatory
Options
on
Model
Project
Financials
 
100
Percent
Cost
Pass
Through,
All
Project
Sizes
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
6
5­
2b
Impact
of
Regulatory
Options
on
Model
Project
Financials
 
Zero
Percent
Cost
Pass
Through,
All
Project
Sizes
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
5­
6
5­
3a
Estimated
National
Costs
of
Storm
Water
Control
Options
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
8
5­
3b
Calculation
of
Total
Cost
per
Unit
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
9
5­
4
Impact
of
Regulatory
Options
on
Financial
Performance
for
Model
Firm
Single­
Family
Residential
Construction,
10­
24
Housing
Units
Starts
Class
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
12
5­
5a
Impact
of
Regulatory
Options
on
Model
Firm
Financial
Performance
 
Zero
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
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.
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.
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.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
13
5­
5b
Impact
of
Regulatory
Options
on
Model
Firm
Financial
Performance
 
Estimated
Actual
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
14
5­
6
Impact
of
Proposed
Rule
on
Model
Firm
Financials
 
Highway
Construction
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
16
5­
7a
Estimated
Facility
Closures
 
Zero
Percent
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
17
5­
7b
Estimated
Facility
Closures
 
Estimated
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
18
5­
8a
Estimated
Employment
Losses
 
Zero
Percent
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
19
5­
8b
Estimated
Employment
Losses
 
Estimated
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
19
5­
9a
Barrier
to
Entry
Analysis
 
Zero
Percent
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
21
5­
9b
Barrier
to
Entry
Analysis
 
Estimated
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
22
5­
10
Barrier
to
Entry
Analysis
 
Highway
Construction
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
23
5­
11
Impact
of
Erosion
and
Sediment
Control
Costs
on
Housing
Affordability
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
24
5­
12
Single­
Family
Residential
Average
HOI
by
Census
Division
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
25
5­
13
Single­
Family
Residential
Percentage
Change
in
HOI
by
Census
Division
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
25
5­
14
Single­
Family
Residential
Changes
in
Price
and
Quantity
from
Baseline
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
26
5­
15
Multifamily
Residential
Changes
in
Price
and
Quantity
from
Baseline
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
27
5­
16
Commercial
Changes
in
Price
and
Quantity
from
Baseline
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
28
5­
17
Industrial
Changes
in
Price
and
Quantity
from
Baseline
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
28
5­
18
Changes
in
Output
and
Total
Employment
from
Baseline
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
30
5­
19
Changes
in
Social
Welfare
Measures
 
All
Sectors
Combined
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
31
5­
20
Loss
of
Output
to
the
Construction
Industry
by
State
and
Use
Category
for
Option
2
.
.
.
.
.
.
5­
32
5­
21
Net
Change
in
Total
Employment
by
State
and
Use
Category
Under
Proposed
Rule
Option
2
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
34
5­
22
Costs
to
Establish
Construction
Programs
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5­
36
5A­
1
Estimated
Closures
as
a
Percent
of
Total
Establishments,
Cash
Flow
Method
(
Zero
Cost
Pass
Through)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5A­
1
5A­
2
Estimated
Closures
as
a
Percent
of
Total
Establishments,
Cash
Flow
Method
(
with
Cost
Pass
Through)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5A­
1
5A­
3
Estimated
Employment
Losses
as
a
Percent
of
Total
Employment,
Cash
Flow
Method
(
Zero
Cost
Pass
Through)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5A­
2
5A­
4
Estimated
Employment
Losses
as
a
Percent
of
Total
Employment
(
with
Cost
Pass
Through)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5A­
2
5B­
1
Sensitivity
Tests
with
Alternative
Elasticities
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5B­
2
5C­
1
Costs
of
Phase
II
Erosion
and
Sediment
Control,
by
Site
Size
(
$
1997)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
3
xii
LIST
OF
TABLES
(
cont.
)

Table
Page
5C­
2
Estimated
National
Costs
of
Erosion
and
Sediment
Controls
 
Alternative
Baseline
.
.
.
.
.
.
.
5C­
4
5C­
3
Social
Costs
and
Benefits
of
Erosion
and
Sediment
Controls
 
Alternative
Baseline
.
.
.
.
.
.
.
5C­
4
5C­
4a
Impact
of
Combined
Phase
II
and
Proposed
Effluent
Guidelines
Costs
on
Model
Project
Financials
 
100
Percent
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
5
5C­
4b
Impact
of
Combined
Phase
II
and
Proposed
Effluent
Guidelines
Costs
on
Model
Project
Financials
 
Zero
Percent
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
5
5C­
5
Impact
of
Combined
Phase
II
and
Effluent
Guidelines
Costs
on
Model
Firm
Financials
 
Zero
Percent
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
7
5C­
6
Estimated
Facility
Closures
 
Zero
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
10
5C­
7
Estimated
Employment
Losses
 
Zero
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
11
5C­
8
Impact
of
Erosion
and
Sediment
Control
Costs
on
Housing
Affordability
 
Alternative
Baseline
(
No
Phase
II
Compliance)
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
12
5C­
9
Changes
in
Output
and
Total
Employment
from
the
Alternate
Baseline
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
5C­
13
6­
1
SBA
Small
Business
Definitions
for
the
Construction
and
Development
Industry
.
.
.
.
.
.
.
.
.
.
6­
4
6­
2
Number
of
Affected
Establishments
in
the
Construction
and
Development
Industry
.
.
.
.
.
.
.
.
6­
6
6­
3
Ratio
of
Businesses
to
Establishments
by
Employment
Class
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6­
7
6­
4
Estimated
Number
of
Firms
by
Employment
Class,
and
Revenues
per
Establishment
.
.
.
.
.
.
.
6­
8
6­
5
Estimated
Number
of
Small
Businesses
Potentially
Affected
by
the
Proposed
Rule
.
.
.
.
.
.
.
6­
10
6­
6
Key
Model
Facility
Data
by
Housing
Starts
Classification
Category
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6­
19
6­
7a
Estimated
Number
of
Small
Business
Owned
Establishments
with
Compliance
Costs
Exceeding
1
Percent
of
Revenues
 
Zero
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6­
27
6­
7b
Estimated
Number
of
Small
Business
Owned
Establishments
with
Compliance
Costs
Exceeding
3
Percent
of
Revenues
 
Zero
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6­
28
6­
7c
Estimated
Number
of
Small
Business
Owned
Establishments
with
Compliance
Costs
Exceeding
1
Percent
of
Revenues
 
Estimated
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6­
29
6­
7d
Estimated
Number
of
Small
Business
Owned
Establishments
with
Compliance
Costs
Exceeding
3
Percent
of
Revenues
 
Estimated
Cost
Pass
Through
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
6­
30
7­
1
Environmental
Measures
from
the
Baseline
Environmental
Assessment
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
7­
3
7­
2
Sample
Calculation
of
Avoided
Loss
of
Water
Storage
Capacity
.
.
.
.
.
.
.
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.
7­
5
7­
3
Sample
Calculation
of
Avoided
Navigational
Dredging
.
.
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.
.
.
7­
7
7­
4
Sample
Calculation
of
Avoided
Water
Treatment
Costs
.
.
.
.
.
.
.
.
.
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.
.
.
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.
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.
.
.
.
.
.
.
7­
9
8­
1
Total
Suspended
Sediment
(
TSS)
 
Differences
from
Baseline
.
.
.
.
.
.
.
.
.
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.
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.
8­
2
8­
2
Benefits
Estimates
.
.
.
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.
8­
2
9­
1
Social
Costs
and
Benefits
.
.
.
.
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.
.
.
.
9­
5
10­
1
Impacts
of
Proposed
Rule
Compliance
Costs
on
Government
Units
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
10­
4
xiii
LIST
OF
FIGURES
Figure
Page
ES­
1
Historical
Data
on
Housing
Construction
.
.
.
.
.
.
.
.
.
.
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.
.
.
ES­
13
2­
1
Number
of
Establishments
in
the
C&
D
Industries,
by
State
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
2­
15
2­
2
Seasonal
Trends
for
Employment
in
the
C&
D
Industries
.
.
.
.
.
.
.
.
.
.
.
.
.
.
.
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.
.
2­
17
2­
3
New
Privately
Owned
Housing
Units
Authorized,
Seasonally
Adjusted
Annual
Rate
.
.
.
.
.
.
2­
34
4­
1
Pre­
and
Post­
Regulatory
Cumulative
Distribution
Function
for
Current
Ratio
.
.
.
.
.
.
.
.
.
.
.
4­
39
4­
2
Baseline
Distribution
Function
with
Bounds
for
Facility
Cashflow
.
.
.
.
.
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.
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.
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.
4­
43
6­
1
Baseline
Distribution
Functions
for
Facility
Revenues
.
.
.
.
.
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.
6­
23
xiv
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EXECUTIVE
SUMMARY
ES.
1
INTRODUCTION
The
deposition
of
sediment
from
construction
site
runoff
has
contributed
to
the
loss
of
capacity
in
small
streams,
lakes,
and
reservoirs,
leading
to
the
necessity
for
mitigation
efforts
such
as
dredging
or
replacement.
In
response,
the
U.
S.
Environmental
Protection
Agency
(
EPA)
is
proposing
several
options
to
address
storm
water
discharges
from
construction
sites.
As
one
option,
EPA
would
establish
inspection
and
certification
requirements
that
would
be
incorporated
into
the
storm
water
permits
issued
by
EPA
and
States,
with
other
permit
requirements
based
on
the
best
professional
judgement
of
the
permit
authority.
As
another
option,
EPA
would
establish
technology­
based
effluent
limitation
guidelines
and
standards
(
ELGs)
for
storm
water
discharges
from
construction
sites
required
to
obtain
National
Pollutant
Discharge
Elimination
System
(
NPDES)
permits.
The
final
option
would
involve
no
incremental
regulation.
EPA
would
allow
technology­
based
permit
requirements
to
continue
to
be
established
based
upon
the
best
professional
judgment
of
the
permit
authority.

This
Economic
Analysis
(
EA)
summarizes
EPA
 
s
analysis
of
the
estimated
compliance
costs
and
the
economic
impacts
that
may
be
incurred
by
regulated
entities
within
the
construction
and
development
(
C&
D)
industry
as
a
result
of
the
proposed
regulations.
The
EA
describes
the
proposed
regulatory
options
considered
by
EPA.
Financial
impacts
to
establishments
in
the
C&
D
industry,
potential
impacts
on
consumers
of
C&
D
industry
output,
and
market
and
other
secondary
impacts
such
as
industry
employment
are
also
covered
here.
This
EA
also
responds
to
requirements
for
small
business
analyses
under
the
Regulatory
Flexibility
Act
(
RFA)
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
and
for
cost­
benefit
analyses
under
Executive
Order
12866
and
the
Unfunded
Mandates
Reform
Act
(
UMRA)
.

ES­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
2
INDUSTRY
PROFILE
ES.
2.1
Data
Sources
EPA
relied
on
existing
data
sources,
including
academic
literature,
industry
trade
associations,
and
government
data
such
as
that
provided
by
the
U.
S.
Census
Bureau.
Major
data
sources
are
discussed
in
more
detail
where
they
are
used
to
support
sections
of
this
analysis.

Of
primary
importance
in
the
early
development
of
this
EA
was
the
1997
Census
of
Construction,

conducted
by
the
U.
S.
Census
Bureau.
The
Census
provided
information
on
the
industry
sectors
potentially
affected
by
the
proposed
rule,
as
well
as
characteristics
of
each
sector
such
as
employment
and
revenue
levels.
EPA
used
other
reports
from
the
Census
Bureau,
including:

 
Report
C25
 
Characteristics
of
New
Housing
 
Report
C40
 
Building
Permits
 
Report
C20
 
Housing
Starts
 
Report
C30
 
Value
Put
in
Place
These
reports
were
used
to
develop
and
support
the
various
economic
models
used
in
this
analysis.

Other
data
sources
used
to
create
a
profile
of
the
C&
D
industry
included
focus
group
sessions
with
the
National
Association
of
Home
Builders
(
NAHB)
and
various
NAHB
publications,
the
Economic
Analysis
for
the
Final
Phase
II
NPDES
Storm
Water
Regulations,
and
a
report
on
the
remodeling
industry
by
the
Joint
Center
for
Housing
Studies
at
Harvard
University,
in
addition
to
a
variety
of
academic
literature.

ES­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
2.2
Industry
Description
The
construction
industry
plays
an
integral
role
in
the
nation
 
s
economy,
contributing
approximately
five
percent
of
the
Gross
Domestic
Product.
Establishments
in
this
industry
are
involved
in
a
wide
variety
of
activities,
from
land
development
and
subdivision
to
homebuilding,
construction
of
nonresidential
buildings
and
other
structures,
heavy
construction
work
(
including
roadways
and
bridges)
,

and
a
myriad
of
special
trades
such
as
plumbing,
roofing,
electrical,
excavation,
and
demolition
work.

C&
D
activity
affecting
water
quality
typically
involves
site
selection
and
planning,
and
land­
disturbing
tasks
during
construction
such
as
clearing,
excavating
and
grading.
Disturbed
soil,
if
not
managed
properly,
can
be
easily
washed
off­
site
during
storm
events.
Storm
water
discharges
generated
during
construction
activities
can
cause
an
array
of
physical,
chemical
and
biological
impacts.

Several
characteristics
of
the
construction
industry
affect
the
structure
of
this
economic
analysis:

 
Individuals
(
e.
g.
,
homebuyers)
are
often
the
direct
customers
of
the
construction
industry.
With
individuals
as
the
direct
consumer
it
is
necessary
to
address
issues
such
as
cost
pass
through
and
the
impacts
of
regulations
on
housing
affordability.

 
The
construction
industry
is
dominated
by
small
businesses.
As
a
result,
EPA
carefully
considered
the
impacts
on
small
businesses
in
accordance
with
the
Regulatory
Flexibility
Act
(
RFA)
,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
.

 
There
are
complex
and
varying
relationships
between
developers
and
builders,
resulting
in
a
variety
of
different
business
models.
Developers
may
undertake
all
improvement
and
sell
completed
lots
directly
to
builders,
act
as
builders
themselves
and
remain
onsite
to
build
out
the
development,
or
sell
some
lots
and
retain
others
to
build
on.

 
Construction
activities
are
highly
localized.
This
suggests
that
a
regional
approach
to
analysis
may
be
helpful
in
accounting
for
varying
market
conditions.

 
The
standard
industry
definitions
include
a
large
number
of
establishments
primarily
engaged
in
remodeling
activities.
Such
establishments
are
less
likely
to
be
involved
in
land
disturbing
activities.

For
the
purposes
of
this
economic
analysis,
the
 
C&
D
industries
 
are
broadly
defined
to
include
those
establishments
within
the
construction
sector
(
NAICS
23)
that
may
be
involved
in
activities
that
ES­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
disturb
the
ground
at
construction
sites.
This
includes
site
clearing
or
site
preparation
activities
such
as
tree
removal,
excavation,
blasting,
scraping,
grading,
etc.
EPA
believes
that
many
establishments
in
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
234
(
Heavy
construction)
are
likely
to
engage
in
such
activities
on
a
regular
basis.
Establishments
within
selected
5­
digit
industries
that
are
part
of
NAICS
235
(
Special
trade
contractors)
may
also
engage
in
land­
disturbing
activities.
These
may
include
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.

However,
as
discussed
in
Section
VI.
A
in
the
preamble
of
the
proposed
rule,
Special
trade
contractors
are
typically
subcontractors
and
not
identified
as
NPDES
permittees.
Table
ES­
1
identifies
the
industry
sectors
that
may
be
covered
by
the
proposed
regulations.

ES­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
1.
Industry
Definitions
for
Construction
and
Development
Industry
Profile
NAICS
Code
Industry
Relevant
SIC
Codes
233
Building,
developing,
and
general
contracting
2331
Land
subdivision
and
development
23311
Land
subdivision
and
development
6552
Land
subdividers
and
developers,
except
cemeteries
2332
Residential
building
construction
23321
Single­
family
housing
construction
1521
General
contractors
 
single­
family
houses
1531
Operative
builders
(
partial)
8741
Management
services
(
partial)

23322
Multifamily
housing
construction
1522
General
contractors
 
residential
buildings
other
than
single­
family
(
partial)
1531
Operative
builders
(
partial)
8741
Management
services
(
partial)

2333
Nonresidential
building
construction
23331
Manufacturing
and
industrial
building
construction
1531
Operative
builders
(
partial)
1541
General
contractors
 
industrial
buildings
and
warehouses
(
partial)
8741
Management
services
(
partial)

23332
Commercial
and
institutional
building
construction
1522
General
contractors
 
residential
buildings,
other
than
single­
family
(
partial)
1531
Operative
builders
(
partial)
1541
General
contractors
 
industrial
buildings
and
warehouses
(
partial)
1542
General
contractors
 
nonresidential
buildings
except
industrial
buildings
and
warehouses
8741
Management
services
(
partial)
234
Heavy
Construction
2341
Highway,
street,
bridge,
and
tunnel
construction
23411
Highway
and
street
construction
1611
Highway
and
street
construction
contractors,
except
elevated
highways
8741
Management
services
(
partial)

23412
Bridge
and
tunnel
construction
1622
Bridge,
tunnel,
and
elevated
highway
construction
2349
Other
heavy
construction
23491
Water,
sewer,
and
pipeline
construction
1623
Water,
sewer,
pipeline,
and
communications
and
power
line
construction
(
partial)
8741
Management
services
(
partial)

23492
Power
and
communication
transmission
line
construction
1623
Water,
sewer,
pipeline,
and
communications
and
power
line
construction
(
partial)
8741
Management
services
(
partial)

23493
Industrial
nonbuilding
structure
construction
1629
Heavy
construction,
n.
e.
c.
(
partial)
8741
Management
services
(
partial)

23499
All
other
heavy
construction
1629
Heavy
construction,
n.
e.
c.
(
partial)
7353
Heavy
construction
equipment
rental
and
leasing
(
partial)
8741
Management
services
(
partial)
235
Special
trade
contractors
23593
Excavation
contractors
1794
Excavation
work
special
trade
contractors
23594
Wrecking
and
demolition
contractors
1795
Wrecking
and
demolition
work
special
trade
contractors
Source:
U.
S.
Census
Bureau
(
2000)
.

ES­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
2.2.1
Number
of
Establishments
In
1997,
there
were
a
total
of
261,617
establishments
with
payroll
in
the
C&
D
industries.
This
represented
39.8
percent
of
all
establishments
in
the
construction
sector
(
NAICS
23)
and
4.1
percent
of
all
U.
S.
business
establishments.
Between
1992
and
1997,
the
number
of
establishments
with
payroll
in
the
C&
D
industries
increased
from
235,789
to
261,617,
an
increase
of
11.0
percent
(
see
Table
ES­
2)
.

This
overall
modest
increase
masks
some
significant
offsetting
changes
in
establishment
counts
within
individual
industries,
as
defined
under
NAICS,
i.
e.
,
:

 
The
number
of
establishments
in
the
land
development
sector
(
NAICS
2331)
decreased
by
46.6
percent;

 
There
was
a
13.5
percent
increase
in
the
number
of
establishments
in
residential
and
nonresidential
building
construction
(
NAICS
233,
except
2331)
;

 
The
number
of
establishments
in
heavy
construction
increased
by
14.5
percent;

 
There
was
a
33.0
percent
increase
in
the
number
of
special
trades
contractor
establishments
(
NAICS
235)
,
including
a
31.2
percent
increase
among
excavation
contractors
and
a
59.6
percent
increase
among
demolition
contractors.

Table
ES­
2.
Number
of
Establishments
in
Construction
and
Development
Industries,
1997
vs
1992
NAICS
Industry
Number
of
Establishments
1992
1997
Pct.
Change
1992­
1997
233,
exc.
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
168,407
191,101
13.5%

2331
Land
development
and
subdevelopment
15,338
8,185
­
46.6%

234
Heavy
construction
37,180
42,557
14.5%

235
a
Special
trade
contracting
14,864
19,771
33.0%

Subtotal
235,789
261,617
11.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000)
.

ES­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
2.2.2
Employment
In
1997,
employment
in
the
C&
D
industries
totaled
nearly
2.4
million
workers.
This
represented
41.6
percent
of
all
construction
sector
employment
(
NAICS
23)
and
2.3
percent
of
all
employment
in
U.
S.

business
establishments.
Table
ES­
3
shows
a
distribution
of
employment
by
NAICS
industry.
NAICS
2331
(
Land
subdivision
and
land
development)
accounts
for
41,827
employees
(
1.8
percent
of
the
total)
,

the
rest
of
NAICS
233
(
Building,
developing,
and
general
contracting)
accounts
for
1.3
million
employees,

or
55.2
percent
of
the
total.
A
total
of
880,400
or
37.3
percent
of
the
total
are
employed
in
NAICS
234
(
Heavy
construction)
,
and
NAICS
23593
and
23594
(
Excavation
contractors
and
Wrecking
and
demolition
contractors)
employ
135,057
(
5.7
percent
of
the
total)
.
1
Table
ES­
3.
Number
of
Employees
in
the
Construction
and
Development
Industries,
Establishments
With
Payroll,
1997
NAICS
Industry
Number
of
Employees
Percent
of
Total
233,
except
23311
Building,
developing,
and
general
contracting,
except
land
subdivision
and
land
development
1,301,126
55.2%

23311
Land
subdivision
and
land
development
41,827
1.8%

234
Heavy
construction
880,400
37.3%

235
a
Special
trade
contractors
135,057
5.7%

TOTALS
2,358,410
100.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000)
.

Construction
is
a
seasonal
activity
in
many
parts
of
the
country,
and
employment
data
from
the
industry
bear
this
out.
In
1997
employment
of
construction
workers
was
lowest
in
March
at
1.59
million
and
highest
in
August
at
1.83
million.

1
A
comparison
to
1992
employment
levels
(
comparable
to
that
shown
in
Table
ES­
2)
is
not
easily
made
because
of
the
change
from
SIC
to
NAICS
basis
between
the
1992
and
1997
Census
periods.

ES­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
2.2.3
Revenues
Overall,
the
value
of
construction
work
completed
in
the
C&
D
industries
was
$
525.3
billion
in
1997.
This
represents
an
increase
of
58.8
percent
over
the
$
330.6
billion
in
(
nominal)
value
recorded
in
1992.
NAICS
233
(
Building
and
developing)
accounted
for
$
368.0
billion
or
70.0
percent
of
the
total
overall
value
in
1997.
Value
of
work
for
heavy
construction
contractors
(
NAICS
234)
was
$
127.8
billion
or
24.4
percent
of
the
total,
while
special
trade
contractors
(
NAICS
23593
and
23594)
completed
work
valued
at
$
15.9
billion,
representing
3.0
percent
of
total
revenues.
The
average
value
of
construction
work
done
per
establishment
ranges
from
$
0.8
million
per
year
for
special
trades
to
$
3.0
million
per
year
for
heavy
construction.

Table
ES­
4.
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

NAICS
Description
Value
of
Construction
Work
a
(
$
1,000)

Total
Per
Establishment
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdivision
$
368,006,098
$
1,926
2331
Land
subdivision
and
land
development
$
13,635,521
$
1,666
234
Heavy
construction
$
127,841,600
$
3,004
235
b
Special
trade
contractors
$
15,910,770
$
805
TOTAL
$
525,393,989
$
2,008
a
Value
of
construction
work
includes
all
value
of
construction
work
done
during
1997
for
construction
work
performed
by
general
contractors
and
special
trade
contractors.
Included
is
new
construction,
additions
and
alterations
or
reconstruction,
and
maintenance
and
repair
construction
work.
Also
included
is
the
value
of
any
construction
work
done
by
reporting
establishments
for
themselves.

b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000)
.

ES.
2.2.4
Number
of
Potentially
Regulated
Businesses
EPA
took
several
steps
to
define
the
number
of
C&
D
establishments
that
may
be
affected
by
the
proposed
regulations.
The
analysis
began
with
all
C&
D
establishments
as
defined
in
Table
ES­
1,
using
ES­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
data
from
the
1997
Census
of
Construction.
EPA
next
estimated
the
number
of
C&
D
establishments
primarily
engaged
in
remodeling
work,
using
data
from
the
National
Association
of
Home
Builders
(
NAHB)
and
the
Joint
Center
for
Housing
Studies
at
Harvard
University
(
Joint
Center)
.
These
were
excluded
because
they
were
judged
unlikely
to
engage
in
land
disturbing
activities.
The
final
step
was
to
estimate
the
number
of
C&
D
establishments
who
are
unlikely
to
disturb
more
than
one
acre
of
land.
This
was
done
to
exclude
establishments
that
fall
below
the
regulatory
coverage
of
the
proposed
rule.
2
A
number
of
establishments
classified
in
the
C&
D
industries
are
primarily
engaged
in
remodeling
activities.
These
establishments
are
not
expected
to
be
affected
under
the
proposed
rule
because
they
are
unlikely
to
engage
in
any
land­
disturbing
activities.
The
Joint
Center
(
2001)
recently
published
a
report
focused
solely
on
the
remodeling
industry.
This
report
classified
establishments
that
derive
at
least
half
of
their
revenues
from
remodeling
activities
as
remodelers.
When
defined
in
this
manner,
the
study
found
that
62,400
establishments
classified
as
general
contractors/
builders
in
1997
were
actually
remodelers.
The
study
goes
further
to
identify
establishments
classified
in
various
special
trades
(
e.
g.
,

carpentry,
plumbing)
that
are
primarily
engaged
in
remodeling,
but
provides
no
estimates
for
the
special
trades
industries
that
form
part
of
the
C&
D
industries
as
defined
for
this
proposed
rule
(
i.
e.
,
in
NAICS
23593
Excavation
contractors
and
23594
Wrecking
and
demolition
contractors)
.
3
The
report
does
not
address
remodeling
activities
conducted
by
establishments
in
NAICS
234
(
Heavy
construction)
,
however,

EPA
does
not
believe
that
many
establishments
in
this
sector
are
principally
engaged
in
remodeling
activities.

EPA
believes
that
builders
who
construct
only
a
few
houses
per
year
are
also
unlikely
to
be
affected
by
the
proposed
rule,
because
such
builders
are
unlikely
to
build
on
sites
over
one
acre
in
size.
A
special
report
on
the
homebuilding
industry,
published
by
the
Census
Bureau
(
Rappaport
and
Cole,
2000)
,

estimates
the
number
of
establishments
according
to
the
number
of
housing
units
started
each
year.
In
2
An
additional
step
used
in
the
analysis
of
Option
2
was
to
estimate
the
number
of
C&
D
establishments
that
disturb
only
5
acres
of
land
or
more.
Option
2
would
not
apply
to
sites
below
5
acres
in
size.

3
The
Joint
Center
study
does
provide
an
estimate
for
the
number
of
remodelers
classified
in
 
miscellaneous
special
trades
 
(
(
NAICS
2359)
,
which
includes
NAICS
23593
and
23594,
but
several
other
industries
as
well.
The
number
of
remodelers
classified
primarily
in
NAICS
23593
and
23594
may
not
be
large,
however,
since
the
total
number
in
NAICS
2359
is
only
6,600.

ES­
9
­
­

­
­

­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
1997,
the
number
of
establishments
that
built
between
one
and
four
houses
(
the
smallest
builder
size
category)
was
50,661.

From
Table
ES­
2,
EPA
estimates
that
the
total
number
of
establishments
in
the
C&
D
industry
is
261,617.
Subtracting
the
62,400
remodeling
establishments
and
the
50,661
establishments
that
start
between
one
and
four
houses
per
year
leaves
148,556
establishments
potentially
affected
by
the
proposed
rule.
Table
ES­
5,
below,
shows
the
number
of
establishments
in
the
C&
D
industry,
adjusted
for
the
number
of
remodelers
and
small­
scale
builders.
4
Table
ES­
5.
Number
of
Establishments
Potentially
Affected
by
the
Proposed
Rule
NAICS
Industry
Establishments
With
Payroll
Number
Percent
of
Total
2331
Land
development
and
subdivision
8,185
3.1%

23321
Single­
family
residential
building
construction
138,849
53.1%

23322
Multi­
family
residential
building
construction
7,543
2.9%

2333
Nonresidential
construction
44,710
17.1%

234
Heavy
construction
42,557
16.3%

235
a
Special
trade
contracting
19,771
7.6%

SUBTOTAL
261,617
100.0%

Minus
Remodeling
Establishments
62,400
Minus
Establishments
Starting
1
­
4
Houses
per
Year
50,661
Number
of
Potentially
Affected
Establishments
148,556
a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Figures
may
not
add
to
totals
due
to
rounding.
See
also
the
footnote
below.
Source:
U.
S.
Census
Bureau
(
2000)
;
Rappaport
and
Cole
(
2000)
;
Joint
Center
(
2001)
.

4
EPA
believes,
in
addition,
that
a
majority
of
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
will
not
be
affected
by
the
proposed
rule
because
they
act
as
subcontractors
to
the
actual
NPDES
storm
water
permittee,
who
will
most
often
be
a
developer
or
general
contractor.
EPA
has
included
these
establishments
in
the
universe
of
potentially
affected
establishments
shown
in
Table
ES­
5,
but
has
excluded
them
from
the
economic
impact
analysis
summarized
below.
For
further
details,
see
Section
2.3.4.

ES­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
2.2.5
Small
Entities
Small
entities
are
defined
by
the
Small
Business
Administration
(
SBA)
according
to
size
standards
based
on
either
number
of
employees
or
annual
revenue
(
13
CFR
121)
.
For
all
of
the
C&
D
industries,
the
size
standards
are
based
on
annual
revenues.
The
SBA
revenue
thresholds
for
the
C&
D
industry
range
from
$
5.0
million
for
NAICS
233110
(
Land
subdivision
and
land
development)
to
$
27.5
million
for
the
majority
of
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
234
(
Heavy
construction)
.
5
As
shown
in
Table
ES­
6,
95,753
potentially
affected
C&
D
businesses,
representing
98.6
percent
of
all
potentially
affected
businesses
in
the
C&
D
industry,
fall
below
the
SBA­
defined
revenue
thresholds
for
this
industry
and
therefore
may
be
qualified
as
small
businesses.

Note
that
for
this
analysis,
due
to
data
limitations
for
the
land
development
industry
(
NAICS
23311)
EPA
accounted
for
these
establishments
by
assigning
them
to
the
four
building
construction
industries
(
single­
family
residential,
multifamily
residential,
commercial
6
,
and
industrial)
based
on
the
share
of
affected
establishments
represented
by
each
sector.
7
EPA
likewise
lacked
financial
data
for
establishments
in
the
special
trades
industries
(
NAICS
235)
but
decided
to
exclude
these
establishments
from
the
small
entity
analysis
rather
than
have
them
represented
by
model
firms
that
are
dissimilar
in
their
characteristics.
In
general,
EPA
believes
establishments
in
NAICS
235
will
not
be
affected
by
the
proposed
rule.
Chapter
Six
of
this
report
provide
further
detail
on
EPA
 
s
approach
to
the
small
entity
analysis.

5
For
those
industries
with
a
$
27.5
million
SBA
cutoff,
the
table
shows
the
number
of
firms
and
establishments
with
revenues
below
$
25.0
million
(
the
next
closest
SBA
data
break
point)
.
For
industries
with
a
$
11.5
million
SBA
cutoff,
figures
shown
are
for
firms
and
establishments
with
revenues
below
$
7.5
million.

6
See
section
ES.
4.1
for
a
description
of
the
commercial
construction
industry.

7
Implicitly,
this
means
that
establishments
in
the
land
development
industry
are
represented
by
model
facilities
in
each
of
the
four
building
construction
industries.
Prior
to
doing
this,
EPA
compared
industry
characteristics
such
as
average
employment,
revenues,
and
assets
across
industries
and
found
them
to
be
similar.

ES­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
6.
Estimated
Number
of
Small
Businesses
Potentially
Affected
by
the
Proposed
Rule.

NAICS
Potentially
Affected
Establishment
s
Potentially
Affected
Businesses
Potentially
Affected
Small
Businesses
Small
Businesses
as
a
Percent
of
Total
for
Individual
Industry
Number
Percent
of
total
233210:
Single­
family
housing
construction
34,070
34,041
34,004
35.5%
99.9%

233220:
Multifamily
housing
construction
4,603
4,597
4,571
4.8%
99.4%

233310:
Manufacturing
and
industrial
building
construction
7,742
7,719
7,498
7.8%
97.1%

233320:
Commercial
and
institutional
building
construction
39,810
39,587
39,013
40.7%
98.6%

23411
Heavy
Construction
11,270
11,141
10,667
11.1%
95.7%

Total
97,495
97,085
95,753
100.0%
98.6%

Source:
EPA
estimates
(
see
Chapter
Six)
.

ES.
2.3
Industry
Dynamics
For
purposes
of
the
economic
analysis,
EPA
has
selected
1997
as
the
baseline
year.
In
part
this
reflects
the
availability
of
data
from
the
1997
Census
of
Construction,
but
in
addition
EPA
believes
1997
to
be
reasonably
representative
year
for
the
affected
industries.
Before
reaching
this
conclusion,
EPA
examined
historical
activity
data
for
the
construction
industry,
reviewed
analyses
of
recent
trends,
and
looked
at
projections
for
the
future.
As
a
result
of
this
review,
EPA
concluded
the
following:

 
Historically,
construction
activity
has
been
highly
cyclical.
Data
from
1959
through
2001
for
new
housing
units
authorized
by
building
permit
show
an
overall
growth
trend
that
is
punctuated
by
cyclical
swings
(
see
Figure
ES­
1)
.
These
reach
highs
in
1972,
1978,
and
1986
and
lows
in
1974,
1982,
and
1991.

 
Since
1991,
the
industry
has
been
on
a
fairly
continuous
growth
trend.
Single­
family
housing,
for
example,
grew
from
an
annual
level
of
0.7
million
new
units
in
1991
to
1.2
million
new
units
in
1999,
which
represents
an
average
annual
growth
rate
of
8.2
percent.

ES­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
During
this
same
period,
real
GDP
grew
by
an
average
of
4.1
percent
per
year
(
BEA,
2002)
.

 
Structural
changes
in
the
market
have
made
construction
less
cyclical
than
before.
In
a
recent
analysis,
the
NAHB
identifies
several
factors
that
have
contributed
to
reducing
the
cyclicality
of
housing
market
activity.
These
include
the
easing
of
rules
on
credit
availability,
the
subsequent
development
of
adjustable­
rate
mortgage
instruments,
and
the
maturation
of
the
secondary
market
for
mortgage­
backed
securities
(
NAHB,
no
date)
.

 
An
NAHB
report
called
The
Next
Decade
for
Housing
predicts
that
over
the
2001­
2010
period
the
nation
will
build
an
average
of
1.82
million
new
homes
per
year,
up
from
an
average
of
1.66
million
per
year
over
the
1991­
2000
(
see
Table
ES­
7)
.

 
A
surprising
feature
of
the
most
recent
economic
slowdown
is
that
it
has
had
almost
a
negligible
effect
on
construction
activity,
and
new
home
construction
in
particular.
As
NAHB
 
s
chief
economist
wrote
in
early
2002,
 
Believe
it
or
not,
2001
turned
out
to
be
a
record
year
for
sales
of
both
new
and
existing
homes,
despite
three
quarters
of
economic
recession
and
the
shock
of
the
terrorist
attacks.
 
(
(
Seiders,
2002)
.

1959
1964
1969
1974
1979
1984
1989
1994
1999
Year
0
500
1,000
1,500
Thousands
of
units
1
unit
2­
4
units
5
units
or
more
Source:
http:
/
/
www.
census.
gov/
pub/
const/
bpann.
pdf
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permits
in
Permit­
Issuing
Places
Annual
Data
Figure
ES­
1.
Historical
data
on
housing
construction.

ES­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
7.
Housing
Supply
and
Demand
­
Historical
Data
and
Projections
for
2001­
2010
(
all
data
are
in
thousands
and
represent
annual
changes)

1971­
1980
1981­
1990
1991­
2000
2001­
2010
proj
.

Change
in
households
1,578
1,281
1,137
1,255
Change
in
vacancies
151
219
184
223
Net
removals
333
214
343
344
Total
Demand
2,062
1,714
1,664
1,822
New
single­
family
housing
units
1,110
979
1,108
1,203
New
multifamily
housing
units
602
491
257
343
Mobile
homes
349
244
298
276
Total
Supply
2,062
1,714
1,664
1,822
Source:
NAHB
(
no
date)
;
based
on
Bureau
of
the
Census
data
and
NAHB
forecasts.

Based
on
this
review,
EPA
concluded
that
data
from
the
year
1997
provide
a
reasonable
basis
for
characterizing
the
industries
likely
to
be
affected
by
the
proposed
ELG.
In
particular,
EPA
concluded
that
there
is
nothing
to
suggest
that
1997
represents
a
particularly
robust
year,
or
that
during
the
coming
years
in
which
the
industry
will
have
to
adapt
to
the
requirements
of
the
ELG
it
will
be
in
a
relatively
weak
position,
compared
to
the
profile
presented
here.

ES.
3
REGULATORY
OPTIONS
ES.
3.1
Current
Regulatory
Status
of
the
C&
D
Industry
The
Construction
General
Permit
(
CGP)
,
published
in
1992
and
revised
in
1998,
directs
those
seeking
an
NPDES
permit
from
EPA
to
prepare
a
storm
water
pollution
prevention
plan
(
SWPPP)
for
certain
construction
activities.
The
CGP
also
calls
for
installation
of
temporary
sediment
basins
for
construction
sites
with
disturbed
area
of
10
acres
or
more.
The
permit
lists
a
variety
of
options
and
goals
for
other
erosion
and
sediment
controls
(
ESCs)
,
but
none
are
required.
A
description
of
ESCs
is
to
be
contained
in
the
SWPPP.
Options
and
goals
for
post­
construction
storm
water
best
management
practices
(
BMPs)
are
also
contained
in
the
CGP,
but
none
are
required.
As
with
ESCs,
selected
BMPs
ES­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
are
to
be
described
in
the
SWPPP.
Further
discussion
of
current
storm
water
regulations
affecting
construction
activities
can
be
found
in
Chapter
One.

The
C&
D
industry
ELG
would
complement
the
existing
NPDES
permitting
program
by
setting
minimum
technology­
based
national
standards
for
active
construction
ESCs
and
requiring
inspection
and
certification
of
ESC
practices.
The
proposed
regulatory
options
considered
by
EPA
are
described
below.

ES.
3.2
Summary
of
Proposed
Regulatory
Options
EPA
is
proposing
BAT/
BPT/
BCT/
NSPS
guidelines
and
standards
for
active
construction
phase
erosion
and
sediment
control
under
the
proposed
ELG.
The
specific
options
under
consideration
are
summarized
in
Table
ES­
8
and
described
in
detail
in
Chapter
Three
of
this
EA.
All
three
options
are
co
­

proposed,
none
is
identified
as
 
preferred.
 
Table
ES­
8.
Summary
of
Regulatory
Options
Proposed
by
EPA
Option
Description
Regulatory
Mechanism
Applicability
Option
1
Inspection
and
Certification
of
Construction
Site
Erosion
and
Sediment
Controls
Amendment
to
NPDES
storm
water
permitting
regulations
Construction
sites
disturbing
1
acre
or
more
Option
2
 
Codification
 
of
the
Construction
General
Permit
(
CGP)
plus
Inspection
and
Certification
Requirements
Effluent
limitation
guidelines
Construction
sites
disturbing
5
acres
or
more
Option
3
No
Additional
Regulation
(
Baseline)
N/
A
All
sites
EPA
has
defined
the
baseline
for
the
proposed
rule
as
full
compliance
with
the
construction
requirements
of
the
final
Phase
I
and
Phase
II
NPDES
storm
water
regulations.
EPA
also
conducted
a
supplemental
analysis
that
takes
into
account
the
fact
that
some
states
have
not
fully
implemented
the
construction
permitting
requirements
of
the
final
Phase
II
NPDES
storm
water
rule.
The
deadline
for
compliance
with
these
requirements
is
March
10,
2003.
The
alternative
baseline
scenario
considers
the
ES­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
combined
impact
of
the
Phase
II
NPDES
storm
water
rule
and
ELG
regulations.
Since
EPA
does
not
have
current
information
on
the
extent
of
implementation
of
the
construction
permitting
requirements
of
the
Phase
II
NPDES
storm
water
rule,
the
supplemental
analysis
assumes
that
all
affected
activities
incur
the
combined
cost
of
the
Phase
II
NPDES
storm
water
rule
and
ELG
requirements.

ES.
4
ECONOMIC
IMPACT
ANALYSIS
The
economic
impact
analysis
models
the
economic
impacts
of
the
proposed
rule
from
several
different
perspectives.
EPA
has
developed
a
series
of
model
projects
to
analyze
the
economic
achievability
of
regulatory
alternatives
at
the
project
level.
These
models
are
based
on
representative
project
characteristics
for
single­
family
residential,
multifamily
residential,
commercial,
and
industrial
projects
of
various
sizes.
For
example,
the
single­
family
residential
model
project
reflects
national
averages
for
typical
lot
size,
number
of
housing
units
built,
size
of
housing
units,
etc.
as
well
as
project
financial
characteristics
such
as
lot
prices,
development
costs,
permitting
costs,
construction
costs,
and
project
financing
alternatives.
A
second
type
of
modeling
simulates
the
impacts
of
the
regulatory
options
at
the
establishment
and/
or
firm
level
(
most
construction
firms
operate
only
a
single
establishment)
.

These
models
build
on
the
project­
level
models
to
account
for
the
level
of
activity
(
number
and
mix
of
projects)
a
typical
firm
is
involved
with
in
a
typical
year.
EPA
assesses
the
potential
for
business
closure
and
employment
losses
using
the
firm­
level
model
analysis.
The
third
level
of
analysis
focuses
on
the
impacts
of
the
regulatory
options
on
the
national
markets
affected
by
regulations
on
construction
and
development
activities.
The
primary
focus
of
this
analysis
is
on
the
residential
sector
in
terms
of
changes
in
house
sales
prices
due
to
the
proposed
regulations,
but
EPA
has
also
analyzed
the
effects
of
the
regulations
on
the
commercial
and
industrial
sectors.
These
models
are
described
in
detail
in
Chapter
Four
of
this
report.
In
that
chapter
EPA
provides
a
detailed
discussion
of
the
data
sources
and
methodologies
used
for
each
type
of
model
(
project­
,
firm­
,
and
market­
level)
.
Chapter
Five
contains
the
results
of
these
analyses.
8
8
The
model
projects
were
developed
with
input
from
industry
representatives
and
from
literature
sources
to
ensure
they
are
representative
of
projects
undertaken
by
firms
likely
to
be
affected
by
the
proposed
ELG.
The
model
firms
are
developed
using
mean
or
median
values
for
firm
characteristics
as
reported
in
the
1997
Census
of
Construction.
See
Chapter
Four
for
more
extensive
discussion
of
the
modeling
methodologies.

ES­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
4.1
Impacts
on
Model
Construction
Projects
Section
ES.
3
described
the
approach
used
by
EPA
to
develop
model
projects
that
assess
the
impact
of
the
various
regulatory
options
on
the
financial
performance
of
the
project
and
to
determine
the
incremental
project­
level
costs
that
would
result.
EPA
developed
models
for
the
following
four
project
types:

 
Single­
family
residential
 
Multifamily
residential
 
Commercial
9
 
Industrial
EPA
prepared
multiple
versions
of
each
project
type
to
reflect
a
range
of
project
sizes
 
1,
3,
7.5,

25,
70,
and
200
acres.
EPA
also
analyzed
each
model
project
under
two
cost
pass
through
(
CPT)

scenarios.
In
the
100
percent
CPT
scenario
the
developer/
builder
passes
on
100
percent
of
the
regulatory
cost
to
the
buyer
or
consumer.
The
impacts
are
felt
by
consumers
in
the
form
of
changes
in
the
sales
prices
of
the
building
or
housing
unit.
In
the
zero
CPT
scenario
the
developer/
builder
absorbs
all
of
the
regulatory
costs
and
the
impact
is
reflected
in
a
change
in
pre­
tax
profits.
The
baseline
project
sales
price
is
calculated
in
the
models
and
varies
according
to
project
type
and
size.
The
baseline
pre­
tax
profit
is
set
at
10
percent
of
building
sales
price
based
on
input
from
industry.
Tables
ES­
9a
and
ES­
9b
present
the
weighted
average
changes
in
price
to
consumers
and
in
pre­
tax
developer/
builder
profit
for
all
regulatory
options.
Values
in
Table
ES­
9
are
weighted
based
on
the
distribution
of
acreage
by
project
type
and
size.

Changes
in
project
cost
to
buyers
under
100
percent
cost
pass
through
range
from
0.04
percent
to
0.07
percent
(
single
family)
for
Option
2
(
Table
ES­
9)
,
and
are
below
0.1
percent
for
Option
1.
Changes
in
builder
profit
under
zero
cost
pass
through
range
from
­
0.35
percent
(
commercial)
to
­
0.65
percent
(
single
family)
for
Option
2.
Builder
impacts
are
no
worse
than
­
0.13
percent
for
Option
1.
More
complete
comparisons
appear
in
Chapter
Five,
Table
5­
2.

9
For
the
purposes
of
this
analysis,
the
commercial
construction
industry
included
hotels/
motels,
amusement,
religious,
parking
garages,
service
stations,
hospitals,
offices,
public
works
(
including
roads
and
highways)
,
educational,
stores,
and
other
nonresidential
buildings.

ES­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
9a.
Weighted
Average
Change
in
Sales
Price
to
Buyer
(
All
Site
Sizes)
100
Percent
Cost
Pass
Through
Option
Percent
Change
in
Project
Price
to
Buyer
Single­
family
Multifamily
Commercial
Industrial
1
0.01%
0.01%
0.01%
0.01%

2
0.07%
0.04%
0.04%
0.06%

3
0.00%
0.00%
0.00%
0.00%

Source:
EPA
estimates
(
see
Chapter
Five)
.

Table
ES­
9b.
Weighted
Average
Change
in
Builder­
Developer
Profit
(
All
Site
Sizes)
Zero
Cost
Pass
Through
Option
Percent
Change
in
Developer/
Builder
Profit
Single
Multi
Commercial
Industrial
1
­
0.12%
­
0.07%
­
0.07%
­
0.13%

2
­
0.65%
­
0.38%
­
0.35%
­
0.54%

3
0.00%
0.00%
0.00%
0.00%

Source:
EPA
estimates
(
see
Chapter
Five)
.

ES.
4.2
Impacts
on
Model
Construction
Firms
ES.
4.2.1
Impacts
on
Model
Firm
Financial
Ratios
To
analyze
impacts
of
the
proposed
rule
at
the
level
of
the
facility,
EPA
developed
model
facilities
based
on
1997
Census
of
Construction
data,
Census
special
studies
on
the
housing
industry,
and
Dun
&

Bradstreet
financial
data.
EPA
constructed
income
statements
and
balance
sheets
for
each
model
facility
by
scaling
D&
B
data
to
represent
different
sized
facilities
based
on
Census
revenue
figures.
EPA
calculated
incremental
compliance
costs
per
establishment,
then
used
these
model
establishment
income
statements
and
balance
sheets
to
estimate
the
post
regulatory
value
of
the
following
financial
ratios
considered
especially
significant
to
the
construction
industry:

ES­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
Gross
Profit
Ratio
 
Return
on
Net
Worth
 
Current
Ratio
 
Debt
to
Equity
Ratio
EPA
expressed
impacts
to
the
model
establishments
engaged
in
the
model
construction
projects
in
terms
of
the
percent
change
from
baseline
value
to
post­
regulatory
value
for
each
financial
ratio.

Table
ES­
10
shows
changes
in
the
financial
ratios
under
each
regulatory
option,
with
the
range
in
outcomes
reflecting
simulations
run
using
varying
assumptions
of
model
firm
size
and
average
project
size
(
see
Chapter
Four
for
further
details)
.
10
Return
on
net
worth
is
the
most
sensitive
ratio
and
shows
the
largest
change
in
value,
followed
in
descending
order
by
the
gross
profit,
debt
to
equity,
and
current
ratios.

Also,
with
the
exception
of
the
return
on
net
worth
ratio,
the
multifamily
model
establishment
tends
to
incur
larger
impacts
to
its
financial
ratios
than
do
the
other
industry
sectors.

Under
the
more
costly
Option
2,
return
on
net
worth
is
projected
to
decrease
as
much
as
5.85
percent
in
the
single­
family
sector
and
3.0
percent
in
the
multifamily
sector,
but
less
than
1.5
percent
in
the
commercial
and
industrial
sectors.
The
gross
profit
ratio
is
projected
to
decrease
by
as
much
as
1
percent
in
the
multifamily
sector,
and
from
about
0.3
to
0.5
percent
in
the
remaining
sectors.
The
debt
to
equity
ratio
is
projected
to
worsen
by
as
much
as
0.6
percent
for
multifamily
sector
establishments;

changes
in
this
ratio
range
from
0.21
percent
(
single­
family)
to
0.31
percent
(
commercial)
for
the
remaining
sectors.
The
largest
impact
on
the
current
ratio
again
occurs
in
the
multifamily
sector
(
a
decrease
of
0.16
percent)
,
with
changes
of
0.05
in
the
other
three
sectors.
Note
that
the
figures
presented
in
this
table
assume
zero
CPT.

10
The
table
shows
results
for
the
four
building
construction
industries
(
single­
family
residential,
multifamily
residential,
commercial,
and
industrial)
.
EPA
conducted
a
separate
analysis
for
the
heavy
construction
industry,
which
found
similar
(
i.
e.
,
very
small)
impacts.
See
Table
5­
6.

ES­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
10.
Impact
of
Compliance
Costs
on
Model
Firm
Financials
­
­
Zero
Cost
Pass
Through
Construction
Industry
and
Regulatory
Option
Percent
Change
in
Financial
Ratios,
From
Baseline
a
Gross
Profit
Return
on
Net
Worth
Current
Ratio
Debt
to
Equity
Min.
Max.
Min.
Max.
Min.
Max.
Min.
Max.

Single­
family
residential
Option
1
0.000%
­
0.230%
0.000%
­
2.540%
0.000%
­
0.020%
0.000%
0.900%

Option
2
0.000%
­
0.520%
0.000%
­
5.850%
0.000%
­
0.050%
0.000%
0.210%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Multifamily
residential
Option
1
0.000%
­
0.310%
0.000%
­
0.990%
0.000%
­
0.050%
0.000%
0.200%

Option
2
0.000%
­
0.950%
0.000%
­
3.070%
0.000%
­
0.160%
0.000%
0.640%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Commercial
Option
1
0.000%
­
0.170%
0.000%
­
0.530%
0.000%
­
0.020%
0.000%
0.130%

Option
2
0.000%
­
0.400%
0.000%
­
1.250%
0.000%
­
0.050%
0.000%
0.310%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Industrial
Option
1
0.000%
­
0.140%
0.000%
­
0.430%
0.000%
­
0.020%
0.000%
0.120%

Option
2
0.000%
­
0.320%
0.000%
­
1.020%
0.000%
­
0.050%
0.000%
0.280%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

a
Ranges
(
minimum
and
maximum)
reflect
results
across
model
firms
of
varying
sizes.
Source:
EPA
estimates
(
see
Chapter
Five)
.

ES.
4.2.2
Closures
and
Employment
Losses
To
estimate
facility
closures,
EPA
generalized
its
model
facility
analysis
above
by
constructing
a
cumulative
distribution
function
for
the
return
on
net
worth,
current,
and
debt
to
equity
ratios
using
the
quartile
values
found
in
D&
B.
EPA
assumed
financial
distress
occurs
if
the
post
regulatory
value
of
an
individual
ratio
falls
below
the
lowest
quartile
benchmark.
EPA
used
a
weighted
average
of
financial
ES­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
distress
indicators
under
the
three
financial
ratios
as
its
estimate
of
the
incremental
probability
of
closure
due
to
the
proposed
rule.
Multiplying
this
probability
by
the
number
of
establishments
represented
by
the
model
results
in
the
projected
number
of
closures.
Multiplying
the
projected
number
of
closures
by
average
facility
employment
results
in
estimated
direct
employment
impacts.

Under
Option
2,
the
largest
number
of
establishment
closures
is
projected
to
occur
in
the
commercial
sector
(
43
closures)
,
followed
by
the
single­
family
residential
sector
(
13
closures)
.
Closures
as
a
percent
of
total
establishments
in
the
sector
are
largest
in
the
commercial
sector
where
about
0.1
percent
of
the
total
are
estimated
to
close.
Employment
impacts
as
a
percent
of
each
sector
 
s
total
employment
are
roughly
proportional
to
closure
impacts.
Adjusting
for
CPT,
as
in
Table
ES­
12,

decreases
the
projected
closure
impacts
significantly.

Table
ES­
11.
Estimated
Facility
Closures
Zero
Cost
Pass
Through
Option
Single­
Family
Multifamily
Commercial
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
4
0.005%
1
0.022%
11
0.028%

2
13
0.015%
3
0.065%
43
0.108%

3
0
0.000%
0
0.000%
0
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
2
0.026%
0
0.000%
18
0.012%

2
7
0.090%
26
0.230%
92
0.063%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
(
see
Chapter
Five)
.

ES­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
12.
Estimated
Facility
Closures
Estimated
Cost
Pass
Through
Option
Single­
Family
Multifamily
Commercial
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
1
0.001%
0
0.000%
1
0.003%

2
2
0.002%
0
0.000%
4
0.010%

3
0
0.000%
0
0.000%
0
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
0
0.000%
0
0.000%
2
0.001%

2
1
0.013%
3
0.027%
10
0.007%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
(
see
Chapter
Five)
.

ES.
4.2.3
Barriers
to
Entry
The
proposed
rule
should
not
present
a
barrier
to
new
establishments
entering
the
construction
industry.
This
proposal
does
not
generate
additional
costs
to
start
a
new
construction
company,
nor
does
it
create
a
difference
in
project
costs
between
existing
firms
and
new
entrants
(
such
as
development
fees
or
input
prices)
.
Such
cost
differentials,
if
they
existed,
would
represent
a
barrier
to
new
industry
entrants.

The
impact
of
the
proposed
rule
will
essentially
be
felt
through
increased
borrowing
requirements
to
finance
construction
projects.
On
the
surface
this
should
affect
both
existing
and
new
firms
equally.

New
entrants
may
be
affected
indirectly,
however,
in
that
the
requirements
may
marginally
increase
their
start
up
capital
needs,
in
order
to
qualify
for
the
somewhat
larger
short
term
construction
loans
required
to
undertake
a
project.
EPA
examined
the
ratio
of
compliance
costs
to
current
and
total
assets
to
determine
if
new
market
entrants
would
need
a
significant
amount
of
additional
capital
to
obtain
construction
loans
to
start
a
project.
Note
that
existing
firms
would
face
the
same
burden
 
this
does
not
represent
a
cost
differential
between
new
and
existing
firms.

ES­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
 
s
analysis
indicates
that
compliance
costs
would
represent
a
maximum
of
0.82
percent
of
model
establishments
 
current
assets
(
(
0.6
percent
of
total
assets)
under
Option
2.
As
above,
the
maximum
projected
impact
occurs
in
the
multifamily
sector.
For
the
other
sectors,
compliance
costs
represent
less
than
0.3
percent
of
current
assets.
This
methodology
is
conservative
because
it
does
not
account
for
the
fact
that
a
firm
would
typically
be
expected
to
finance
20
percent
of
the
incremental
compliance
costs
from
their
own
financial
resource
to
obtain
the
loan
 
not
the
full
amount
as
assumed
here.
11
Table
ES­
13.
Barrier
to
Entry
Analysis
­
­
Zero
Cost
Pass
Through
Option
Comb.
Compliance
Costs
Divided
by:
Current
Assets
Total
Assets
Min
Max
Min
Max
Single­
family
Residential
1
0.000%
0.100%
0.000%
0.070%
2
0.000%
0.230%
0.000%
0.170%
3
0.000%
0.000%
0.000%
0.000%

Multifamily
Residential
1
0.000%
0.260%
0.000%
0.190%
2
0.000%
0.820%
0.000%
0.600%
3
0.000%
0.000%
0.000%
0.000%

Commercial
1
0.000%
0.120%
0.000%
0.090%
2
0.000%
0.270%
0.000%
0.220%
3
0.000%
0.000%
0.000%
0.000%

Industrial
1
0.000%
0.110%
0.000%
0.080%
2
0.000%
0.250%
0.000%
0.190%
3
0.000%
0.000%
0.000%
0.000%
Source:
EPA
estimates
(
see
Chapter
Five)
.

11
The
table
shows
results
for
the
four
building
construction
industries
(
single­
family
residential,
multifamily
residential,
commercial,
and
industrial)
.
EPA
conducted
a
separate
analysis
for
the
heavy
construction
industry,
which
found
similar
(
i.
e.
,
very
small)
impacts.
See
Table
5­
10.

ES­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
4.3
Impacts
on
National
Construction
Markets
and
the
National
Economy
EPA
developed
a
series
of
regional
market
models
to
estimate
the
impact
of
compliance
costs
of
the
proposed
regulation
on
markets
for
new
construction.
In
addition,
a
national
partial
equilibrium
model
estimated
changes
in
the
national
market
for
new
single­
family
homes.
The
results
of
these
models
were
aggregated
to
estimate
the
national
impacts
of
the
regulation.

Table
ES­
14
summarizes
the
annual
national
costs
to
builders
of
each
option
in
terms
of
the
incremental
cost
ESC
management
over
the
cost
under
the
baseline
conditions.

Table
ES­
14.
Estimated
National
Costs
of
ESC
Controls
All
dollar
values
in
constant,
pre­
tax,
1997
dollars
Option
National
Costs
by
Type
of
Construction
(
$
millions)
Total
(
$
millions)
Single­
family
Multifamily
Commercial
Industrial
1
$
24.1
$
11.9
$
78.4
$
3.7
$
118.1
2
$
121.5
$
59.4
$
277.3
$
11.0
$
469.2
3
$
0.0
$
0.0
$
0.0
$
0.0
$
0.0
National
Costs
per
Unit
by
Type
of
Construction
$
/
house
$
/
sq
ft
$
/
sq
ft
$
/
sq
ft
1
$
16.91
$
0.003
$
0.007
$
0.008
2
$
90.79
$
0.019
$
0.031
$
0.030
3
$
0.00
$
0.000
$
0.000
$
0.000
Source:
EPA
estimates
(
see
Chapter
Five)
.

EPA
 
s
literature
review
(
Chapter
Four)
suggests
the
long­
run
supply
of
housing
is
considered
highly
elastic
while
demand
for
new
housing
construction
is
relatively
inelastic.
Under
these
conditions,

changes
in
costs
are
passed
through
to
home
buyers
without
a
large
loss
in
sales.
Non­
residential
consumers
are
more
price
sensitive
and
passed
through
costs
contribute
to
a
larger
reduction
in
construction
in
many
markets.
The
decrease
in
number
of
units
sold
varied
by
option
combination
from:

 
0.0
to
0.02
percent
for
single­
family
housing
 
0.0
to
0.01
percent
for
multifamily
housing
 
0.0
to
0.07
percent
for
commercial
construction
and
 
0.0
to
0.32
percent
for
industrial
construction
ES­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Additional
analyses
of
the
single­
family
housing
market
assessed
the
impact
of
the
regulation
on
the
affordability
of
newly
constructed
homes.
One
measure
was
the
number
of
households
that
would
no
longer
qualify
for
a
mortgage
to
buy
the
model
median
priced
new
home.
In
the
most
costly
option
combination,
29,100
households
that
would
have
qualified
for
a
mortgage
in
the
baseline
would
no
longer
qualify
when
all
of
the
compliance
costs
were
included
in
the
home
price.
As
a
percent
of
households
that
qualified
in
the
baseline
the
percentage
no
longer
qualifying
ranged
from
0
to
0.15%
.

Another
measure
of
affordability
is
the
Housing
Opportunity
Index
(
HOI)
which
measures
the
proportion
of
households
in
a
housing
market
that
can
afford
the
median
priced
home.
Across
more
than
200
metropolitan
areas
modeled,
HOI
changed
by
a
maximum
of
0.02
percent
for
Option
1
and
0.11
percent
for
Option
2.

The
model
firm
analysis
showed
the
number
of
jobs
that
may
be
lost
in
the
construction
industry.

These
losses
have
effects
throughout
the
economy
as
laid
off
workers
consume
less
and
fewer
projects
are
undertaken.
The
market
model
generated
estimates
of
these
indirect
employment
losses.
The
reduction
in
construction
activity
generates
national
employment
losses
in
all
industries
of
6,000
jobs
under
Option
2.
These
losses
are
offset,
however,
by
spending
to
implement
the
program
which
creates
new
jobs.
EPA
 
s
analysis
indicates
that
this
stimulus
effect
is
larger
than
the
loss
of
activity
and
produces
a
net
increase
of
7,200
new
jobs
under
Option
2.
Compliance
costs
passed
on
to
consumers
reduce
the
resources
consumers
have
for
other
goods
and
services
as
they
spend
more
on
storm
water
management.

This
again
creates
a
drag
on
employment.
The
net
loss
in
jobs
in
the
national
economy
is
280
for
Option
1
and
1,400
for
Option
2.

Finally,
the
market
models
also
estimate
the
social
cost
of
the
regulation.
Given
the
relatively
small
shifts
in
supply
and
inelastic
demand
the
social
cost,
or
deadweight
loss,
of
the
regulation
is
only
$
200,000
for
the
most
costly
option.

ES­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
5
SMALL
ENTITY
IMPACT
ANALYSIS
In
accordance
with
the
Regulatory
Flexibility
Act
(
RFA,
5
U.
S.
C.
et
seq.
,
Public
Law
96­
354)
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
of
1996,
EPA
has
considered
the
effects
that
the
proposed
C&
D
regulations
may
have
on
small
entities.
The
RFA
generally
requires
an
agency
to
prepare
a
regulatory
flexibility
analysis
of
any
rule
subject
to
notice
and
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
any
other
statute
unless
the
agency
certifies
that
the
rule
will
not
have
a
 
significant
impact
on
a
substantial
number
of
small
entities.
 
12
For
this
proposed
rulemaking,
EPA
could
not
conclude
that
costs
are
sufficiently
low
to
justify
such
 
certification.
 
Instead,
EPA
conducted
outreach
to
small
businesses,
convened
a
Small
Business
Advocacy
Review
(
SBAR)
panel,
and
prepared
an
Initial
Regulatory
Flexibility
Analysis
(
IRFA)
.

Chapter
Six
details
the
IRFA
and
presents
EPA
 
s
assessment
of
the
impacts
of
the
proposed
regulations
on
small
businesses
in
the
C&
D
industry.

ES.
5.1
Definition
of
Affected
Small
Entities
The
RFA
defines
a
 
small
entity
 
as
a
small
not­
­
for­
profit
organization,
small
governmental
jurisdiction,
or
small
business.
EPA
expects
that
the
principal
impact
of
the
proposed
C&
D
regulations
on
small
entities
will
fall
on
(
1)
small
businesses
that
undertake
C&
D
activities
and
(
2)
small
governmental
units
involved
in
permitting
C&
D
activities.

Small
businesses
are
defined
(
with
some
exception)
according
to
the
size
standards
established
by
the
Small
Business
Administration
(
SBA)
.
SBA
establishes
criteria
for
identifying
small
businesses
based
on
either
the
number
of
employees
or
annual
revenues
(
13
CFR
121)
.
13
Qualifying
revenue
levels
vary
12
The
preparation
of
an
IRFA
for
a
proposed
rule
does
not
foreclose
certifying
no
significant
impact
for
the
final
rule
(
USEPA,
1999)
.

13
Employees
counted
in
determining
size
includes
all
individuals
employed
on
a
full­
time,
part­
time,
temporary
or
other
basis.
Employment
is
measured
as
the
average
number
of
employees
for
each
pay
period
over
the
previous
12
months.
For
standards
based
on
revenues,
SBA
uses
the
average
revenues
over
the
last
three
completed
fiscal
years.

ES­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
by
NAICS
code
and
differ
among
NAICS
industries.
Within
the
C&
D
industry
there
is
a
range
of
qualifying
revenue
levels,
from
$
5.0
million
for
NAICS
23311
(
Land
subdivision
and
development)
,
to
$
27.5
million
for
the
majority
of
industries
within
NAICS
233
and
234.
For
businesses
in
the
special
trades
sector
(
as
defined
for
this
proposed
rule)
,
the
small
business
revenue
threshold
is
$
11.5
million.

See
Table
ES­
6
above
for
the
number
of
establishments
in
the
C&
D
industry
that
fall
below
these
revenue
thresholds.

ES.
5.2
Small
Entity
Impacts
EPA
has
conducted
an
IRFA
for
the
proposed
rule.
The
IRFA
includes
a
description
and
estimates
of
the
following:

 
Number
of
small
businesses
that
will
be
affected;

 
The
reporting,
recordkeeping,
and
other
compliance
requirements
of
the
proposed
rule;

 
Any
Federal
rules
that
may
duplicate,
overlap,
or
conflict
with
the
proposed
rule;

 
Any
significant
regulatory
alternatives
to
the
proposed
rule
that
would
accomplish
the
stated
objectives
of
the
applicable
statutes
and
which
minimize
impacts
to
small
businesses.

As
presented
in
Table
ES­
6,
approximately
97,085
businesses
are
potentially
affected
by
the
proposed
rule;
over
98
percent
of
these
businesses
(
95,753)
may
be
classified
as
small
businesses.
EPA
assessed
the
impacts
to
small
businesses
by
examining
the
ratio
of
estimated
compliance
costs
to
firm
revenues.
Impacts
are
determined
by
the
number
and
percentage
of
firms
incurring
costs
that
exceed
one
percent
and
three
percent
of
revenues.
EPA
relied
on
the
model
facility
approach
to
assess
the
impacts
of
the
proposed
rule
on
small
businesses.
Each
model
facility
actually
represents
a
set
of
approximately
similar
firms
(
e.
g.
,
similar
levels
of
employment
within
some
bounded
range)
with
revenues
that
form
a
statistical
distribution
around
the
model
facility
 
s
revenue
figure.
These
distributions
were
used
to
estimate
the
number
and
percentage
of
small
business­
owned
establishments
in
each
industry
sector
that
incur
compliance
costs
exceeding
one
and
three
percent
of
revenues.
The
results
are
presented
as
ranges
that
represent
the
lower
and
upper
bounds
of
the
impacts
calculated
by
EPA.

ES­
27
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Additional
detail
on
EPA
 
s
methods
may
be
found
in
Chapter
Six,
Section
6.4.
Table
ES­
15a
presents
the
results
of
the
one
percent
revenue
test
and
Table
ES­
15b
presents
the
results
for
the
three
percent
test.

Table
ES­
15a.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
1
Percent
of
Revenues
Zero
Percent
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
47
0.000%
0.138%
0
5
0.000%
0.110%
0
62
0.000%
0.159%

2
40
140
0.118%
0.412%
8
18
0.175%
0.395%
18
234
0.046%
0.599%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
12
0.000%
0.160%
0
0
0.000%
0.000%
0
126
0.000%
0.000%

2
2
36
0.270%
0.480%
36
199
1.863%
0.337%
104
627
0.109%
0.109%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
(
see
Chapter
Six)
.

ES­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
15b.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
3
Percent
of
Revenues
Zero
Percent
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
15
0.000%
0.044%
0
2
0.000%
0.044%
0
21
0.000%
0.054%

2
0
45
0.000%
0.133%
0
6
0.000%
0.132%
0
77
0.000%
0.197%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
4
0.000%
0.053%
0
0
0.000%
0.000%
0
42
0.000%
0.044%

2
0
12
0.000%
0.160%
0
65
0.000%
0.607%
0
205
0.000%
0.214%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
(
see
Chapter
Six)
.

ES.
6
BENEFITS
ANALYSIS
The
key
categories
of
benefits
examined
for
the
proposed
rule
include
decreased
stream
channel
sedimentation
and
reduced
in­
stream
total
suspended
solids
(
TSS)
and
sediment
concentration.

ES.
6.1
Benefits
Methodology
EPA
 
s
Environmental
Assessment
estimates
the
impact
of
the
proposed
regulation
on
several
measures
of
environmental
quality
with
implications
for
social
well­
being.
Sediment
in
waterways,
for
example,
imposes
costs
on
society
through
the
degradation
of
water
quality,
and
filling
in
of
water
storage
impoundments
and
navigational
channels.
EPA
estimated
the
monetary
benefits
of
the
regulation
by
connecting
these
environmental
measures
to
the
related
costs
they
would
continue
to
impose
on
society
in
ES­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
the
absence
of
the
proposed
regulations.
Such
avoided
cost
benefit
valuation
methods
yield
lower
bound
estimates
of
value.
Since
the
methodology
for
assessing
and
quantifying
each
benefit
category
differs
the
sections
below
present
only
a
summary
of
the
benefits
methodology.
More
complete
details
can
be
found
in
Chapter
Seven.

ES.
6.2
Environmental
Assessment
and
Benefits
Analysis
ES.
6.2.1
Overview
of
Environmental
Assessment
and
Benefits
Analysis
The
environmental
effects
of
the
options
were
measured
in
terms
of
reductions
in
discharge
of
sediment.
Option
1
is
expected
to
result
in
discharge
of
2.6
to
7.9
million
fewer
tons
of
total
solids
annually.
Option
2
is
expected
to
result
in
discharge
of
11.1
million
fewer
tons
annually.
These
reductions
contribute
to
savings
in
dredging
costs
for
water
storage
impoundments
and
navigational
channels.
Table
ES­
16
summarizes
the
results
of
the
environmental
assessment.
More
complete
results
are
shown
in
Table
8­
2.
These
estimates
are
the
starting
point
for
benefit
valuation.

Table
ES­
16.
Environmental
Measures
(
thousand
tons
per
year)

Source:
EPA
estimates
(
See
Chapter
Eight)
.
Decrease
from
baseline
in:
Option
1
Option
2
Low
High
Settleable
solids
Turbidity
producing
solids
2,110
527
6,330
1,583
8,901
2,225
Total
solids
2,638
7,913
11,127
ES.
6.2.2
Avoided
Water
Treatment
Costs
Turbid
water
requires
pretreatment
before
it
can
be
used
in
industrial
or
municipal
water
systems.

By
removing
turbidity­
producing
solids
from
streams,
the
proposed
regulation
reduces
the
need
for
pretreatment,
saving
water
users
money.
The
total
benefit
shown
in
Table
ES­
17
is
quite
small,
as
storm
ES­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
water
runoff
is
only
one
source
of
turbidity
so
its
removal
does
not
obviate
the
need
for
pretreatment
entirely.
The
marginal
costs
of
pretreatment
are
also
quite
low.

ES.
6.2.3
Avoided
Loss
of
Water
Storage
Capacity
Reservoirs
and
impoundments
serve
many
purposes
but
generally
cannot
function
if
they
fill
with
silt.
This
estimate
of
value
for
this
benefit
category
is
based
on
the
costs
of
dredging
sediment
that
settles
in
reservoirs.
Only
a
small
portion
of
sediment
reaches
water
bodies
that
would
be
dredged
if
filled,
so
benefits
for
this
category
are
relatively
small.

ES.
6.2.4
Avoided
Navigational
Dredging
Like
water
storage
capacity,
navigational
channels
must
be
dredged
when
they
fill
with
sediment.

Keeping
sediment
out
of
streams
reduces
the
need
for
dredging.
Only
a
small
share
of
streams
flow
to
commercial
waterways
and
harbors
so
this
benefit
is
also
relatively
small.

Table
ES­
17.
Point
Estimates
of
Benefits
by
Category
(
$
1997
million
per
year)

Option
Benefit
Category
Total
Water
Treatment
Water
Storage
Navig.
Dredging
1
$
0.1
$
7.1
$
2.6
$
9.7
2
$
0.2
$
15.0
$
5.4
$
20.6
3
 
 
 
$
0.0
Source:
EPA
estimates
(
see
Chapter
Eight)
.

ES­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
6.2.5
Non­
quantified
Benefits
Several
categories
of
benefits
discussed
in
other
studies
were
considered
for
this
benefit
assessment.
For
the
most
part,
the
benefits
expected
to
be
derived
from
these
categories
are
relatively
small
and
difficult
to
quantify.
Therefore,
EPA
discusses
the
following
categories
qualitatively,
rather
than
attempting
to
quantify
them:

 
Water
contact
recreation
 
Biodiversity
effects
 
Wetland
preservation
 
Other
sources
of
benefits
(
decrease
in
clogged
roadside
and
irrigation
ditches)

Chapter
Seven
provides
more
detailed
explanation
and
discussion
of
these
qualitative
benefits
categories.

ES.
7
SOCIAL
COSTS
AND
BENEFITS
The
social
costs
of
the
proposed
regulation
represent
the
real
commitment
of
resources
by
society
to
administering,
implementing,
and
enforcing
the
rule.
Direct
social
costs
include
the
compliance
costs
of
construction
firms,
administration
costs
of
governments,
and
operation
and
maintenance
costs
of
home
owners,
municipalities,
industrial
and
commercial
property
owners.
This
regulation
is
not
expected
to
have
substantial
indirect
social
costs
because
it
does
not
propose
any
radical
changes
in
the
production
process
or
technology.
The
anatomy
of
the
market
for
new
construction
also
limits
the
loss
of
social
welfare.

Table
ES­
18
compares
the
sum
of
these
social
costs
with
the
benefits
estimated
in
Chapter
Eight
and
discussed
above.
The
social
costs
are
greater
than
the
monetized
benefits.

ES­
32
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
ES­
18.
Social
Costs
and
Benefits
of
Options
(
1997
$
Million
per
year)

Option
Installation,

Design
and
Permitting
Operation
and
Maintenance
Government
Costs
Deadweight
Loss
Total
Social
Costs
Total
Benefits
1
$
118.1
$
421.2
$
0.0
$
0.0
$
48.0
$
0.0
$
0.0
$
0.3
$
0.0
$
0.0
$
0.2
$
0.0
$
118.2
$
9.7
$
20.6
$
0.0
2
$
469.6
3
$
0.0
Source:
EPA
estimates
(
see
Chapter
Nine)
.

ES.
8
ANALYSIS
OF
OTHER
IMPACTS
ES.
8.1
Unfunded
Mandates
EPA
has
determined
that
the
proposed
C&
D
regulations
may
contain
a
federal
mandate
that
may
result
in
expenditures
of
$
100
million
or
more
for
the
private
sector
in
any
one
year.
Accordingly,
EPA
has
prepared
a
written
statement
in
accordance
with
section
202
of
the
UMRA.
In
addition,
EPA
has
determined
that
the
proposed
C&
D
regulations
do
not
include
a
federal
mandate
that
may
result
in
estimated
costs
of
$
100
million
or
more
to
either
state,
local,
or
tribal
governments
in
the
aggregate.
Nor
do
the
proposed
regulations
contain
regulatory
requirements
that
might
significantly
or
uniquely
affect
small
governments.
Therefore,
this
proposal
is
not
subject
to
the
requirement
of
section
203
of
the
UMRA.

ES.
8.2
Environmental
Justice
EPA
has
determined
that
the
proposed
C&
D
regulations
will
not
disproportionately
affect
minority
or
low­
income
populations,
nor
will
they
have
disproportionately
high
health
or
environmental
effects.

ES­
33
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
8.3
Children
 
s
Health
EPA
has
determined
that
the
proposed
C&
D
regulations
do
not
have
any
significant
implications
in
regard
to
children
 
s
health
or
safety.

ES­
34
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
ES.
9
REFERENCES
BEA,
2002.
Bureau
of
Economic
Analysis.
National
income
and
product
accounts
tables.
Available
at
http:
/
/
www.
bea.
doc.
gov/
bea/
dn/
nipaweb/
index.
asp
Joint
Center
2001.
Remodeling
homes
for
changing
households.
(
Joint
Center
for
Housing
Studies
of
Harvard
University)
.

NAHB
no
date.
The
Next
Decade
for
Housing.
National
Association
of
Home
Builders.
Available
at
http:
/
/
www.
nahb.
com/
facts/
nextdecadeforecast.
pdf.

Rappaport
B.
A.
,
T.
A.
Cole.
(
U.
S.
Census
Bureau,
Manufacturing
and
Construction
Division)
.
2000.
Construction
sector
special
study:
Housing
starts
statistics­
­
A
profile
of
the
homebuilding
industry.

Seiders
2001.
David
Seiders.
Housing
and
the
Economy
in
the
Aftermath
of
the
September
11
Attacks
on
America.
National
Association
of
Home
Builders,
January
31,
2002.
Available
at
http:
/
/
www.
nahb.
com/
news/
Jan31­
02seiderscommentary.
htm.

U.
S.
Census
Bureau.
2000.
1997
Economic
census:
Construction,
United
States.
Various
Reports.
Available
at
http:
/
/
www.
census.
gov/
epcd/
ec97/
us/
US000_
23.
HTM.

U.
S.
EPA.
1999.
Revised
Interim
Guidance
for
EPA
Rulewriters:
Regulatory
Flexibility
Act
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act.
March
29.
Available
at
http:
/
/
www.
epa.
gov/
sbrefa/
documents/
igui99.
pdf.

U.
S.
Small
Business
Administration.
1998.
Statistics
of
U.
S.
Businesses:
Firm
Size
Data
[
HTML
Files
]
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

ES­
35
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
ONE
INTRODUCTION
The
U.
S.
Environmental
Protection
Agency
(
EPA)
is
proposing
some
options
to
address
storm
water
discharges
from
construction
sites.
As
one
option,
EPA
is
proposing
technology­
based
effluent
limitation
guidelines
and
standards
(
ELGs)
for
storm
water
discharges
from
construction
sites
required
to
obtain
National
Pollutant
Discharge
Elimination
System
(
NPDES)
permits.
As
another
option,
EPA
is
proposing
not
to
establish
ELGs
for
storm
water
discharges
from
those
sites,
but
to
allow
technology­

based
permit
requirements
to
continue
to
be
established
based
upon
the
best
professional
judgment
of
the
permit
authority
A
third
option
would
establish
inspection
and
certification
requirements
that
would
be
incorporated
into
the
discharge
permits
issued
by
EPA
and
States,
with
other
permit
requirements
based
on
the
best
professional
judgement
of
the
permit
authority.
The
regulatory
proposals,
if
implemented,
are
expected
to
significantly
reduce
the
amount
of
sediment
discharged
from
construction
sites.
The
deposition
of
sediment
originating
from
construction
sites
has
contributed
to
the
loss
of
capacity
in
small
streams,
lakes,
and
reservoirs,
leading
to
the
necessity
for
mitigation
efforts
such
as
dredging
or
replacement.

This
Economic
Analysis
(
EA)
summarizes
EPA
 
s
analysis
of
the
incremental
compliance
costs
and
the
economic
impacts
that
may
be
incurred
by
regulated
entities
within
the
C&
D
industry.
The
EA
details
EPA
 
s
proposed
regulation
and
the
alternative
regulatory
options
considered
by
EPA.
The
report
covers
financial
impacts
to
establishments
in
the
C&
D
industry,
potential
impacts
on
consumers
of
C&
D
industry
output,
and
market
and
other
secondary
impacts
on
the
national
economy,
such
as
employment
and
output.
The
EA
also
undertakes
small
business
analyses
under
the
Regulatory
Flexibility
Act
(
RFA)

as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
,
cost­
benefit
analyses
under
Executive
Order
12866
and
the
Unfunded
Mandates
Reform
Act
(
UMRA)
.
EPA
also
addresses
the
issues
of
environmental
justice
and
children
 
s
health.

This
chapter
begins
with
a
discussion
of
the
current
regulatory
environment
in
the
C&
D
industry.

Section
1.2
presents
EPA
 
s
reasons
for
proposing
this
rule
while
Section
1.3
identifies
the
potentially
1­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
affected
sectors
of
the
C&
D
industry.
Section
1.4
provides
an
overview
of
key
data
sources
used
in
the
development
of
this
EA,
and
Section
1.5
provides
an
outline
for
the
remainder
of
this
report.

1.1
EXISTING
REGULATORY
FRAMEWORK
The
Federal
Water
Pollution
Control
Act,
also
known
as
the
Clean
Water
Act
(
CWA)
,
was
passed
by
Congress
in
1972
to
 
restore
and
maintain
the
chemical,
physical,
and
biological
integrity
of
the
nation
 
s
waters
 
(
(
33
U.
S.
C.
§
1251
(
(
a)
)
,
sometimes
referred
to
as
 
fishable,
swimmable
 
criteria.
.
The
CWA
establishes
a
comprehensive
program
for
protecting
our
nation
 
s
waters.
Among
its
core
provisions,
the
CWA
prohibits
the
discharge
of
pollutants
from
a
point
source
to
waters
of
the
U.
S.
,

except
those
authorized
by
a
NPDES
permit.
Under
Title
III,
the
CWA
also
provides
for
the
development
of
technology­
based
effluent
limitations
that
are
imposed
through
the
NPDES
permit
framework
to
control
direct
discharges
of
pollutants.

The
CWA
was
amended
in
1987
to
require
implementation
of
a
comprehensive
national
program
for
addressing
municipal
and
industrial
storm
water
discharges
(
Water
Quality
Act
of
1987,
Pub.
L.
100­
4,

February
4,
1987)
.
CWA
Section
402(
p)
requires
that
industrial,
municipal
and
other
storm
water
dischargers
designated
by
EPA
obtain
NPDES
permits.
In
response
to
these
amendments
EPA
has
promulgated
two
rules
that
contain
provisions
affecting
the
C&
D
industry.
These
regulations,
commonly
referred
to
as
the
Phase
I
and
Phase
II
storm
water
rules,
require
NPDES
permits
for
construction
activities
disturbing
more
than
one
acre
and
discharging
storm
water.
Phase
I
was
promulgated
on
November
16,
1990
(
55
FR
47990)
,
with
permit
requirements
taking
effect
in
1992.
Phase
II
was
promulgated
on
December
22,
1999
(
64
FR
68722)
.

1.1.1
NPDES
Permit
Regulation
of
the
C&
D
Industry
The
C&
D
industry
is
currently
regulated
under
NPDES
permit
requirements
for
construction
activities
disturbing
more
than
one
acre.
Construction
activities
disturbing
five
acres
or
more
are
covered
under
the
Phase
I
requirements
while
construction
activities
disturbing
between
one
acre
and
five
acres
1­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
are
covered
under
the
Phase
II
requirements.
(
Applications
for
permits
for
storm
water
discharges
associated
with
small
construction
activity
under
the
Phase
II
rule,
however,
are
not
due
until
March
10,

2003.
)
The
NPDES
regulations
affecting
the
construction
and
development
industry
are
implemented
through
EPA
 
s
Construction
General
Permit
(
CGP)
in
states
without
their
own
authorized
NPDES
program.

The
CGP
requires
permittees
to
prepare
a
storm
water
pollution
prevention
plan
(
SWPPP)
for
C&
D
activities.
The
permit
lists
options
and
goals
for
other
erosion
and
sediment
controls
(
ESCs)
,
and
the
SWPP
must
contain
a
description
of
any
ESCs
used,
but
there
are
no
required
elements.
1
Options
and
goals
for
post­
construction
best
management
practices
(
BMPs)
are
also
contained
in
the
CGP,
but
none
are
specifically
required.
As
with
ESCs,
those
BMPs
selected
for
use
must
be
described
in
the
SWPPP.

The
Phase
II
regulations
also
provide
waivers
for
construction
activities
disturbing
between
one
and
five
acres
of
land
in
instances
where:

 
Activity
occurs
during
a
negligible
rainfall
period
(
rainfall
erosivity
factor
of
less
than
five)
,
or
 
A
Total
Maximum
Daily
Load
(
TMDL)
or
equivalent
analysis
addresses
the
pollutants
of
concern
leading
to
a
determination
that
storm
water
controls
are
not
necessary
for
construction
activity.
(
64
FR
68735)
.

These
waivers
acknowledge
that
variance
in
regional
factors
such
as
climate,
annual
rainfall
patterns,
and
existing
hydrology
affect
the
incidence
and
magnitude
of
storm
water
runoff.

The
CGP
is
the
vehicle
through
which
the
NPDES
storm
water
regulations
are
implemented
for
construction
activities.
There
is
a
national
CGP
issued
by
EPA
which
applies
in
those
areas
where
EPA
Regions
1,
2,
3,
5,
7,
8,
9
and
10
are
the
NPDES
permitting
authorities.
In
addition,
EPA
Regions
4
and
6
have
their
own
version
of
the
CGP
which
applies
only
in
those
areas
where
the
respective
Region
is
the
1
For
sites
with
10
acres
or
more
of
disturbed
area,
the
CGP
does
require
installation
of
temporary
sediment
basins.

1­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
NPDES
permitting
authority.
Other
NPDES
programs
also
require
permits,
and
as
with
most
of
these
other
programs,
the
NPDES
storm
water
permits
may
be
issued
through
one
of
EPA
 
s
ten
regions
(
as
described
above)
or
through
an
authorized
state/
territory
NPDES
permitting
authority.
At
this
time
44
states
have
NPDES
permitting
authority.
2
EPA
itself
issues
storm
water
permits
in
nondelegated
states,

on
tribal
lands,
and
in
most
territories.

EPA
 
s
CGP
currently
covers
large
(
5
acres
or
larger)
construction
activities;
NPDES
permitting
authorities
are
expected
to
develop
and
issue
storm
water
permits
for
small
(
between
1
and
5
acres)

construction
activities
by
December
8,
2002.
EPA
expects
that
the
national
CGP
and
the
general
permits
currently
in
use
by
NPDES
permitting
authorities
will
be
used
as
templates
for
the
small
construction
permits.
EPA
 
s
CGP
is
valid
for
a
five
year
period,
after
which
time
the
permit
will
be
reviewed
and
renewed
for
another
5­
year
period.
The
CGP
was
originally
issued
in
1992
and
revised
in
1998
and
thus
is
due
for
renewal
in
2003.
EPA
plans
to
incorporate
the
small
construction
activity
permitting
requirements
into
its
national
CGP
at
the
time
of
the
permit
 
s
renewal.

1.
2
PURPOSE
OF
THE
PROPOSED
RULE
The
existing
NPDES
storm
water
regulations
require
construction
site
operators
to
manage
construction
site
runoff,
but
do
not
require
any
specific
level
of
control.
One
of
the
proposed
regulatory
options
(
Option
2)
would
establish
effluent
limitation
guidelines
in
the
form
of
minimum
standards
for
design
and
implementation
of
erosion
and
sediment
controls
used
during
the
active
phase
of
construction.

Existing
compliance
determination
practices
for
construction
site
storm
water
controls
rely
principally
on
site
inspections
by
local
governments,
however
enforcement
efforts
are
reported
to
be
uneven
nationwide,
largely
due
to
limited
enforcement
resources
a
the
Federal,
State
and
local
levels.

Option
2
would
also
establish
minimum
requirements
for
conducting
site
inspections
and
providing
2
All
states
with
the
exception
of
Alaska,
Arizona,
District
of
Columbia,
Idaho,
Massachusetts,
New
Hampshire
and
New
Mexico
have
some
level
of
NPDES
permitting
authority.
Even
in
those
states
with
NPDES
permitting
authority,
EPA
may
be
responsible
for
issuing
permits
for
activities
conducted
at
federal
facilities
and/
or
on
tribal
lands.

1­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
certification
as
to
the
design
and
completion
of
various
aspects
of
those
controls.
These
requirements
could
strengthen
the
current
permit
program.
Another
regulatory
option
(
Option
1)
would
establish
the
same
site
inspection
and
certification
requirements,
but
without
the
ESC
standards.

1.
3
INDUSTRIES
AFFECTED
BY
THE
PROPOSED
C&
D
EFFLUENT
GUIDELINES
This
report
focuses
on
the
major
C&
D
industries
potentially
affected
by
the
proposed
ELG
requirements.
Table
1­
1
identifies
these
industries
according
to
both
their
North
American
Industry
Classification
System
(
NAICS)
and
Standard
Industrial
Classification
(
SIC)
codes.
3
A
detailed
description
of
these
C&
D
industries
may
be
found
in
Chapter
Two
of
this
report.

3
The
NAICS
system
recently
replaced
the
SIC
system.

1­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
1­
1.
Industries
Potentially
Affected
by
Proposed
Rulemaking
Regulated
Entities
North
American
Industry
Classification
System
Code
(
NAICS)
Standard
Industrial
Classification
Codes
(
SIC)
a
Land
subdivision
and
development
23311
6552
Single­
family
housing
construction
23321
1521,
1531,
8741
Multifamily
housing
construction
23322
1522,
1531,
8741
Manufacturing
and
industrial
building
construction
23331
1531,
1541,
8741
Commercial
and
institutional
building
construction
23332
1522,
1531,
1541,
1542,
8741
Highway
and
street
construction
23411
1611,
8741
Bridge
and
tunnel
construction
23412
1622,
8741
Water,
sewer,
and
pipeline
construction
23491
1623,
8741
Power
and
communication
transmission
line
construction
23492
1623,
8741
Industrial
nonbuilding
structure
construction
23493
1629,
8741
All
other
heavy
construction
23499
1629,
7353,
8741
Excavation
contractors
23593
1794
Wrecking
and
demolition
contractors
23594
1795
Source:
U.
S.
Census
Bureau
1997
Census
of
Construction
a
Some
parts
of
the
Standard
Industrial
Classification
Codes
are
included
in
other
North
American
Industry
Classification
Codes.

1.
4
OVERVIEW
OF
KEY
DATA
SOURCES
A
common
data
source
used
to
support
the
development
of
many
past
ELGs
is
the
CWA
Section
308
industry
survey.
For
this
proposed
rule,
however,
EPA
determined
that
such
a
survey
should
not
be
undertaken.
This
determination
necessitated
the
use
of
existing
data
sources,
including
academic
literature,
industry
trade
associations,
and
government
data
such
as
that
provided
by
the
U.
S.
Census
Bureau.
Major
data
sources
are
discussed
in
more
detail
where
they
are
used
to
support
sections
of
this
analysis.
This
section
provides
an
overview
of
several
key
sources
and
their
importance
to
the
economic
analysis
of
the
proposed
C&
D
ELG.

1­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Of
primary
importance
in
the
development
of
this
EA
were
the
1992
and
1997
Censuses
of
Construction,
conducted
by
the
U.
S.
Census
Bureau.
The
Census
provided
information
on
the
industry
sectors
potentially
affected
by
the
proposed
rule,
as
well
as
characteristics
of
each
sector
such
as
employment
and
revenue
levels.
Also
used
were
several
other
reports
from
the
Census
Bureau,

including:
4
 
Report
C20
 
Housing
Starts
 
Report
C25
 
Characteristics
of
New
Housing,
,

 
Report
C30
 
Value
Put
in
Place,
,

 
Report
C40
 
Building
Permits
All
of
these
reports
contributed
to
the
various
economic
models
developed
for
this
EA.

The
U.
S.
Department
of
Agriculture
 
s
(
USDA
 
s)
Natural
Resources
Inventory
(
NRI)
was
used
to
determine
the
amount
of
disturbed
acreage
caused
by
urbanization
and
new
development.
This
information
was
important
to
the
environmental
assessment,
the
benefits
assessment,
and
as
a
way
to
determine
the
rate
of
new
development.

EPA
also
used
data
collected
from
permits
issued
by
existing
NPDES
permitting
authorities.

Currently,
regulation
of
C&
D
activity
is
triggered
when
a
builder/
developer
files
a
notice
of
intent
(
NOI)

with
the
permitting
authority.
Permitting
authorities
record
these
NOIs
in
order
to
track
development
within
their
jurisdiction.
EPA
obtained
copies
of
NOI
databases
for
NPDES­
approved
states
and
for
those
non­
authorized
states
where
EPA
acts
as
the
NPDES
permitting
authority.
5
The
databases
contained
a
wide
variety
of
information,
such
as
total
site
size,
disturbed
acreage,
project
type
(
e.
g.
,

residential,
nonresidential)
,
and
project
ownership
status
(
public
or
private)
.
EPA
planned
to
use
this
information
to
estimate
the
number
of
storm
water
starts.
The
databases,
however,
lacked
the
level
of
detail
EPA
needed
to
use
the
data
to
its
full
advantage.
In
addition,
inconsistencies
in
the
type
of
data
4
These
reports
are
available
at
the
following
web
address:
http:
/
/
www.
census.
gov/
const/
www/
.

5
NPDES
permits
are
fully
administered
by
EPA
in
six
States
plus
Washington,
DC.
In
other
States
EPA
acts
as
the
permitting
authority
for
activities
on
Indian
and/
or
Federal
lands
only.

1­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
collected
and
coverage
made
it
difficult
to
compare
the
databases
with
one
another.
Although
EPA
could
not
use
these
databases
in
the
manner
hoped,
they
were
useful
for
generating
rough
estimates
of
the
number
of
permits
issued
nationwide,
as
a
check
on
the
permit
estimates
reported
by
the
Census
Bureau.

EPA
did
not
conduct
further
analysis
on
these
databases
prior
to
the
proposal
of
this
rule.

An
additional
source
of
information
for
the
development
of
the
economic
analysis
(
described
in
Section
4.2)
was
a
series
of
focus
groups
held
with
representatives
of
the
National
Association
of
Home
Builders
(
NAHB)
.
These
focus
groups
helped
EPA
understand
the
process
of
construction
project
development
and
provided
estimates
of
data
elements
most
helpful
in
building
economic
models.
These
estimates
were
particularly
useful
when
national­
level
data
from
other
sources
(
such
as
the
Census
Bureau)
were
not
available.

Some
of
the
data
and
methodologies
used
in
the
Phase
II
EA
were
also
used
in
this
rulemaking
effort.
These
sources
and
methods
were
described
in
detail
in
Chapters
Four,
Five,
and
Six.

1.
5
REPORT
ORGANIZATION
This
EA
report
is
organized
as
follows:

!
Chapter
2
contains
the
Industry
Profile,
which
provides
background
information
on
the
establishments
and
industry
sectors
potentially
affected
by
the
proposed
rule.

!
Chapter
3
summarizes
the
Proposed
Effluent
Guidelines
Regulations
and
discusses
the
regulatory
options
considered
by
EPA.

!
Chapter
4
,
Economic
Impact
Analysis
Methodology,
explores
the
data,
methodology,
and
analyses
used
in
the
determination
of
project,
establishment,
and
market
level
impacts
due
to
incremental
storm
water
control
costs
incurred
under
the
proposed
regulation.

!
Chapter
5
presents
the
impacts
of
the
proposed
rule
for
the
model
project,
model
establishment,
and
national
market.
This
chapter
also
includes
a
discussion
of
other
potential
impacts
of
the
proposed
rule
according
to
Executive
Order
12866
including
regional
and
social
impacts.

1­
8
!
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
!
Chapter
6
contains
information
on
the
Initial
Regulatory
Flexibility
Analysis
(
IRFA)
and
the
small
business
analysis
under
the
Regulatory
Flexibility
Act
(
RFA)
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
.

!
Chapter
7
presents
the
Benefits
Methodology
by
which
EPA
identifies,
qualifies,
quantifies,
and
where
possible
monetizes
the
benefits
associated
with
reduced
storm
water
runoff.

!
Chapter
8
presents
the
Environmental
Assessment
and
Benefits
Analysis,
which
assesses
the
nationwide
benefits
of
the
proposed
regulation
following
the
methodology
outlined
in
the
previous
chapter.

!
Chapter
9
looks
at
the
Costs
and
Benefits
of
the
Proposed
C&
D
ELG
using
the
benefits
assessment
described
in
Chapter
8.
Here,
EPA
presents
an
assessment
of
the
nationwide
costs
and
benefits
of
the
proposed
regulation
pursuant
to
Executive
Order
12866
and
the
Unfunded
Mandates
Reform
Act
(
UMRA)
.

!
Chapter
10
presents
a
discussion
of
UMRA.

1­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
TWO
PROFILE
OF
THE
CONSTRUCTION
AND
DEVELOPMENT
INDUSTRIES
2.1
INTRODUCTION
The
construction
and
development
(
C&
D)
industry
plays
an
integral
role
in
the
nation
 
s
economy,
contributing
approximately
five
percent
of
the
Gross
Domestic
Product.
Establishments
in
this
industry
are
involved
in
a
wide
variety
of
activities,
from
land
development
and
subdivision
to
homebuilding,
construction
of
nonresidential
buildings
and
other
structures,
heavy
construction
work
(
including
roadways
and
bridges)
,
and
a
myriad
of
special
trades
such
as
plumbing,
roofing,
electrical,

excavation,
and
demolition
work.
C&
D
activity
affecting
water
quality
typically
involves
site
selection
and
planning,
and
land­
disturbing
tasks
during
construction
such
as
clearing,
excavating
and
grading.

Disturbed
soil,
if
not
managed
properly,
can
be
easily
washed
off­
site
during
storm
events.
Storm
water
discharges
generated
during
construction
activities
can
cause
an
array
of
physical,
chemical
and
biological
impacts.
EPA
 
s
proposed
effluent
guidelines
for
the
C&
D
industry
seek
to
reduce
the
environmental
and
economic
effects
of
storm
water
runoff
from
construction
sites.

Several
characteristics
of
the
C&
D
industry
affect
the
structure
of
this
economic
analysis:

 
Individuals
(
e.
g.
,
homebuyers)
are
often
the
direct
customers
of
the
C&
D
industry.
With
individuals
as
the
direct
consumer
it
is
necessary
to
address
issues
such
as
cost
passthrough
and
the
impacts
of
regulations
on
housing
affordability.

 
There
are
complex
and
varying
relationships
between
developers
and
builders,
resulting
in
a
variety
of
different
business
models.
Developers
may
undertake
all
site
improvements
and
sell
completed
lots
directly
to
builders,
act
as
builders
themselves
and
remain
onsite
to
build
out
the
development,
or
some
combination
of
the
two.

 
The
C&
D
industry
is
dominated
by
small
businesses.
As
a
result,
EPA
will
carefully
consider
the
impacts
on
small
businesses
in
accordance
with
the
Regulatory
Flexibility
Act,
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
(
SBREFA)
.

 
C&
D
activities
are
highly
localized.
This
suggests
that
a
regional
approach
to
analysis
is
appropriate
to
account
for
varying
market
conditions.

2­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
The
standard
industry
definitions
include
a
large
number
of
establishments
primarily
engaged
in
remodeling
activities,
who
are
less
likely
to
be
involved
in
land
disturbing
activities.

The
C&
D
industry
as
defined
for
this
proposed
rule
is
comprised
of
four
main
industry
groups
that
will
further
affect
the
structure
of
this
analysis:

 
Land
development
and
subdivision
 
Residential
construction
 
Nonresidential
construction
 
Heavy
construction
These
four
industry
groups
encompass
those
parts
of
the
industry
most
likely
to
engage
in
land
disturbing
activities.
Land
disturbing
activities
are
further
described
in
the
Development
Document
(
EPA,
2002a)
and
the
impacts
of
these
activities
are
described
in
the
Environmental
Assessment
(
EPA,

2002b)
.

2.
1
.
1
Recent
Trends
in
the
C&
D
Industry
Between
1992
and
1997,
the
number
of
establishments
with
payroll
in
the
C&
D
industries
overall
increased
from
235,789
to
261,617,
an
increase
of
11.0
percent
(
see
Table
2­
1)
.
This
overall
modest
increase
masks
some
significant
offsetting
changes
in
establishment
counts
within
individual
industries,
as
defined
under
the
North
American
Industrial
Classification
System
(
NAICS)
,
i.
e.
:

 
The
number
of
establishments
in
the
land
development
industry
group
(
NAICS
2331)
decreased
by
46.6
percent;
1
1
The
decrease
in
the
number
of
developers
may
have
been
a
response
to
changes
in
tax
laws
and
the
Financial
Institutions
Reform,
Recovery,
and
Enforcement
Act
(
FIRREA)
of
1989
(
Pub.
L.
101­
73,
August
9,
1989)
and
the
1993
implementing
regulations.
The
objective
of
FIRREA
and
the
implementing
regulations
was
to
correct
events
and
policies
that
led
to
a
high
rate
of
bankruptcies
in
the
thrift
industry
in
the
late
1980s.
The
regulations
changed
lending
practices
by
financial
institutions,
requiring
a
higher
equity
position
for
most
projects,
with
lower
loan­
to­
value
ratios,
and
more
documentation
from
developers
and
builders.
(
Kone,
2000)
.

2­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
There
was
a
13.5
percent
increase
in
the
number
of
establishments
in
residential
and
nonresidential
construction
(
NAICS
233,
except
2331)
;

 
The
number
of
establishments
in
heavy
construction
increased
by
14.5
percent;

 
There
was
a
33.0
percent
increase
in
the
number
of
special
trades
contractor
establishments,
(
NAICS
235)
,
including
a
31.2
percent
increase
among
excavation
contractors
and
a
59.6
percent
increase
among
demolition
contractors.

Table
2­
1
Number
of
Establishments
in
Construction
and
Development
Industries,
1997
vs
1992
NAICS
Industry
1992
1997
Pct.
Change
233,
exc.
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
168,407
191,101
13.5%

2331
Land
development
and
subdevelopment
15,338
8,185
­
46.6%

234
Heavy
construction
37,180
42,557
14.5%

235
a
Special
trade
contracting
14,864
19,771
33.0%

Subtotal
235,789
261,617
11.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2.
1
.
2
Data
Sources
Used
Several
data
sources
are
used
in
this
profile
chapter
to
characterize
the
C&
D
industry.
The
primary
data
source
is
the
1997
Census
of
Construction
(
herein
referred
to
as
Census)
,
conducted
every
five
years
by
the
U.
S.
Census
Bureau.
A
second
data
source
comes
from
the
U.
S.
Small
Business
Administration
(
SBA)
.
The
SBA
data
is
used
because
it
provides
firm­
level
data
that
is
necessary
for
economic
modeling
purposes
and
for
the
small
entity
analysis
(
the
Census
data
is
reported
at
the
level
of
the
construction
establishment,
not
the
firm)
.
Table
2­
2
compares
the
Census
data
with
that
from
SBA
in
order
to
further
clarify
the
differences
and
identify
how
each
are
used
in
this
Economic
Analysis.
The
majority
of
this
chapter
uses
data
from
the
1997
Census
to
profile
the
C&
D
industry,
since
that
source
provides
a
greater
level
of
detail
on
industry
characteristics.

2­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
2
Comparison
of
Major
Data
Sources
Characteristic
Data
Source
Census
of
Construction
SBA
Level
of
Detail
Establishment
a
Firm
b
(
company)
and
establishment
Source
of
Data
Survey
(
sent
to
approx.
130,000
establishments
from
a
universe
of
650,000)
County
Business
Patterns
SUSB
report,
which
ultimately
relies
on
administrative
records
data
How
the
Data
are
Applied
in
this
Analysis
Industry­
level
analysis
to
determine
the
number
of
potentially
affected
establishments
Firm­
level
analysis,
for
purposes
of
determining
the
number
of
potentially
affected
firms
considered
 
small
 
by
SBA
size
standards
a
The
Census
Bureau
defines
an
establishment
as
 
a
relatively
permanent
office
or
other
place
of
business
where
the
usual
business
activities
related
to
construction
are
conducted
 
(
(
U.
S.
Census
Bureau,
2000a)
.
b
A
firm
is
considered
to
be
an
aggregation
of
the
establishments
owned
by
a
single
company;
therefore,
one
firm
may
be
comprised
of
several
establishments.

2.1.3
Organization
of
this
Chapter
The
purpose
of
this
industry
profile
is
to
provide
an
overview
of
the
C&
D
industries,
describe
their
key
characteristics
and
structure,
and
analyze
current
and
historical
trends.
Section
2.2
describes
the
process
that
EPA
used
to
identify
and
define
the
industry
for
the
purposes
of
the
proposed
rule.

Section
2.3
presents
characteristics
of
the
C&
D
industry,
including
both
industry
and
firm­
level
data.

Section
2.4
discusses
supply
and
demand
factors
in
the
C&
D
industry
while
Section
2.5
describes
various
economic
and
financial
characteristics
of
the
industry.
Section
2.6
looks
at
key
business
indicators
and
ratios.
Section
2.7
covers
industry
growth
and
trends,
and
Section
2.8
takes
a
brief
look
at
international
competition
in
the
C&
D
industry.

2­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.2
INDUSTRY
DEFINITION
2.2.1
Basis
for
Regulation
The
proposed
rule
will
cover
establishments
within
the
construction
sector
(
NAICS
23)
that
disturb
the
land
at
construction
sites
of
one
acre
or
more.
2
These
land­
disturbing
activities
may
include
site
preparation
and
site
clearing
tasks
such
as
tree
removal,
excavation,
blasting,
scraping,
and
grading,

and
are
generally
accomplished
with
the
aid
of
heavy
equipment
such
as
skidders,
bulldozers,
backhoes,

excavators,
and
graders.
These
activities
may
destabilize
soils
and
create
conditions
that
allow
storm
water
to
accumulate
and
flow
across
the
site.
This
increase
in
storm
water
flow
can
cause
erosion
and
lead
to
the
transport
of
soil
particles
and
attached
pollutants,
which
eventually
may
be
conveyed
offsite
and
discharged
into
receiving
waters.
Both
the
increased
flow
and
associated
pollutant
and
sediment
loads
that
result
from
land­
disturbing
activities
can
negatively
impact
the
biological,
physical,
and
chemical
characteristics
of
the
receiving
waters.

The
proposed
effluent
guidelines
will
build
upon
the
Phase
I
and
Phase
II
storm
water
regulations
promulgated
under
the
National
Pollutant
Discharge
Elimination
System
(
NPDES)
,
as
well
as
upon
EPA
 
s
storm
water
construction
general
permit
(
CGP)
.
The
CGP
is
the
vehicle
through
which
Phase
I
regulations
are
being
implemented,
and
upon
revision
in
2003
it
will
also
reflect
the
Phase
II
regulations.
The
CGP
also
will
be
the
vehicle
through
which
the
proposed
rule
is
implemented.
The
proposed
rule
will
also
build
upon
current
state
and
local
storm
water
control
requirements
by
adding
increased
specificity
and
consistency
to
these
requirements.
See
Chapter
Three
for
more
information
on
the
proposed
rule.
The
methodology
chapter
provides
further
detail
on
the
planned
implementation
of
the
proposed
rule.

2
The
Bureau
of
the
Census
classifies
industries
according
to
the
North
American
Industrial
Classification
System,
or
NAICS.
Under
the
NAICS,
economic
activity
is
first
divided
into
twenty
broad
2­
digit
industry
codes.
One
of
these
is
Construction
(
NAICS
23)
.
Each
2­
digit
industry
is
further
subdivided
into
3­
,
4­
,
and
5­
digit
level
industries.

2­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.2.2
Industry
Definition
For
the
purposes
of
this
economic
analysis,
the
 
C&
D
industries
 
are
assumed
to
include
those
establishments
within
the
construction
sector
(
NAICS
23)
that
may
be
involved
in
activities
that
disturb
the
ground
at
construction
sites.
This
includes
site
clearing
or
site
preparation
activities
such
as
tree
removal,
excavation,
blasting,
scraping,
grading,
etc.
EPA
believes
that
many
establishments
in
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
234
(
Heavy
construction)
are
likely
to
engage
in
such
activities
on
a
regular
basis.
Establishments
within
selected
5­
digit
industries
that
are
part
of
NAICS
235
(
Special
trade
contractors)
may
also
engage
in
land­
disturbing
activities.
The
latter
may
include
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.

However,
as
discussed
in
Section
VI.
A
in
the
preamble
of
the
proposed
rule,
Special
trade
contractors
are
typically
subcontractors
and
not
identified
as
NPDES
permittees.
Table
2­
3
identifies
the
industries
that
may
be
covered
by
the
proposed
regulations.

2­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
3
Industry
Definitions
for
Construction
and
Development
Industry
Profile
NAICS
Code
Industry
Relevant
SIC
Codes
a
233
Building,
developing,
and
general
contracting
2331
Land
subdivision
and
development
23311
Land
subdivision
and
development
6552
Land
subdividers
and
developers,
except
cemeteries
2332
Residential
building
construction
23321
Single­
family
housing
construction
1521
General
contractors
 
single­
family
houses
1531
Operative
builders
(
partial)
8741
Management
services
(
partial)

23322
Multifamily
housing
construction
1522
General
contractors
 
residential
buildings
other
than
single­
family
(
partial)
1531
Operative
builders
(
partial)
8741
Management
services
(
partial)

2333
Nonresidential
building
construction
23331
Manufacturing
and
industrial
building
construction
1531
Operative
builders
(
partial)
1541
General
contractors
 
industrial
buildings
and
warehouses
(
partial)
8741
Management
services
(
partial)

23332
Commercial
and
institutional
building
construction
1522
General
contractors
 
residential
buildings,
other
than
single­
family
(
partial)
1531
Operative
builders
(
partial)
1541
General
contractors
 
industrial
buildings
and
warehouses
(
partial)
1542
General
contractors
 
nonresidential
buildings
except
industrial
buildings
and
warehouses
8741
Management
services
(
partial)
234
Heavy
Construction
2341
Highway,
street,
bridge,
and
tunnel
construction
23411
Highway
and
street
construction
1611
Highway
and
street
construction
contractors,
except
elevated
highways
8741
Management
services
(
partial)

23412
Bridge
and
tunnel
construction
1622
Bridge,
tunnel,
and
elevated
highway
construction
2349
Other
heavy
construction
23491
Water,
sewer,
and
pipeline
construction
1623
Water,
sewer,
pipeline,
and
communications
and
power
line
construction
(
partial)
8741
Management
services
(
partial)

23492
Power
and
communication
transmission
line
construction
1623
Water,
sewer,
pipeline,
and
communications
and
power
line
construction
(
partial)
8741
Management
services
(
partial)

23493
Industrial
nonbuilding
structure
construction
1629
Heavy
construction,
n.
e.
c.
(
partial)
8741
Management
services
(
partial)

23499
All
other
heavy
construction
1629
Heavy
construction,
n.
e.
c.
(
partial)
7353
Heavy
construction
equipment
rental
and
leasing
(
partial)
8741
Management
services
(
partial)
235
Special
trade
contractors
23593
Excavation
contractors
1794
Excavation
work
special
trade
contractors
23594
Wrecking
and
demolition
contractors
1795
Wrecking
and
demolition
work
special
trade
contractors
a
NAICS
recently
replaced
the
SIC
(
Standard
Industrial
Classification)
System.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
seen
in
Table
2­
3,
each
NAICS
industry
is
comprised
of
one
or
more
industries
defined
under
the
former
Standard
Industrial
Classification
(
SIC)
system.
With
the
1997
Census,
the
Census
Bureau
switched
from
reporting
data
on
an
SIC
basis
to
an
NAICS
basis,
thereby
making
it
difficult
to
compare
data
from
1997
with
that
from
the
1992
and
earlier
Census
reporting
periods.
Within
this
economic
profile
the
objective
is
to
provide
data
at
the
most
detailed
level
as
possible,
while
still
maintaining
the
ability
to
provide
meaningful
comparisons
between
1997
and
earlier
Census
periods.
With
this
in
mind,

most
of
the
statistical
tables
contained
in
this
profile
reflect
the
following
industry
breakdown:
3
NAICS
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
subdivision
and
land
development
NAICS
2331
Land
subdivision
and
land
development
NAICS
234
Heavy
construction
NAICS
235
Special
trades
contractors
a
a
Covered
industries
to
include
NAICS
23593
(
Excavation
contractors)
and
NAICS
23594
(
Wrecking
and
demolition
contractors)
only,
when
possible.

2.3
INDUSTRY
CHARACTERISTICS
Several
steps
are
used
to
define
the
number
of
C&
D
establishments
that
may
be
affected
by
the
proposed
regulations.
First,
EPA
identifies
all
C&
D
establishments
as
defined
above
using
data
from
the
1997
Census
of
Construction.
Second,
EPA
estimates
the
number
of
establishments
classified
as
C&
D
establishments
that
are
primarily
engaged
in
remodeling
work,
using
data
from
the
National
Association
of
Home
Builders
(
NAHB)
and
the
Joint
Center
for
Housing
Studies
at
Harvard
University
(
Joint
Center)
.
Third,
EPA
estimates
the
number
of
establishments
classified
as
C&
D
establishments
that
are
engaged
in
C&
D
activities
but
are
unlikely
to
disturb
more
than
one
acre
of
land,
using
data
from
Census
and
various
secondary
sources.
Section
2.3.1
looks
at
the
industry­
wide
characteristics
of
C&
D
establishments,
including
number
and
size
of
establishments,
employment,
and
geographic
distribution
of
3
Some
detailed
breakdowns
may
be
available
only
at
the
3­
digit
NAICS
level,
in
which
case
separate
data
for
NAICS
2331
cannot
be
provided
and
will
be
included
with
data
for
all
of
NAICS
233.
NAICS
233,
except
2331,
includes
data
for
both
residential
and
nonresidential
construction
activities.
Where
more
detailed
data
are
available
they
are
included
in
this
profile.
In
some
cases
data
at
a
more
detailed
NAICS
level
is
available
(
e.
g.
,
5­
digit
NAICS)
but
was
considered
too
detailed
to
present
in
the
body
of
this
profile.
The
availability
of
such
data
is
noted
throughout
the
profile,
and
reference
is
made
to
Appendix
2A
where
such
tables
are
presented.

2­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
establishments.
Section
2.3.2
describes
firm­
level
data
for
the
C&
D
industry.
Section
2.3.3
describes
the
number
of
small
entities,
and
section
2.3.4
looks
at
the
number
of
entities
in
the
C&
D
industry
that
disturb
less
than
one
acre
during
the
normal
course
of
business.
The
estimated
number
of
potentially
affected
establishments
is
presented
in
Section
2.3.5.

2.3.1
Establishment­
Level
Data
This
section
presents
data
for
all
establishments
within
the
C&
D
industry
as
defined
in
Section
2.2,
based
primarily
on
1997
Census
of
Construction
sources.
Included
is
information
on
the
number
and
size
of
establishments,
geographic
distribution,
employment,
payroll
and
benefits,
and
level
of
specialization.

2.3.1.1
Number
and
Size
of
Establishments
Data
from
the
Census
of
Construction
indicate
there
were
a
total
of
261,617
establishments
with
payrolls
in
the
C&
D
industries
in
1997
(
i.
e.
,
NAICS
233,
234,
23593,
and
23594;
see
Table
2­
4)
.
Of
these,
the
largest
number
of
establishments
are
in
NAICS
233
(
Building,
developing,
and
general
contracting)
.
This
subsector
includes
199,289
establishments,
representing
76.2
percent
of
all
C&
D
establishments.
Within
NAICS
233,
single­
family
home
construction
(
NAICS
23321)
accounted
for
the
majority
of
establishments
(
138,849
out
of
199,289
or
69.7
percent)
.

Land
development
and
subdevelopment
(
NAICS
2331)
accounted
for
8,185
establishments
or
3.1
percent
of
all
establishments
in
the
C&
D
industries.
NAICS
234
(
Heavy
construction)
includes
42,557
establishments
or
16.3
percent
of
the
total.
Of
these,
27
percent
are
primarily
highway
and
street
construction
contractors,
another
27
percent
are
contractors
that
work
on
water,
sewer,
pipeline,

communications
and
power
line
projects,
and
43
percent
are
engaged
in
other
types
of
heavy
construction
(
All
other
heavy
construction)
.
Within
the
special
trades
contractors
subsector
(
NAICS
235)
,
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
together
account
for
2­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
19,771
establishments,
or
7.6
percent
of
the
C&
D
industries
total.
Excavation
contractors
account
for
over
90
percent
of
these
establishments.

Table
2­
4
Number
of
Establishments
in
the
Construction
and
Development
Industry,
Based
on
the
1997
Census
of
Construction
NAICS
Industry
Establishments
With
Payrolls
Number
Percent
of
Total
233
Building,
developing,
and
general
contracting
199,289
76.2%

2331
Land
development
and
subdivision
8,185
3.1%

23321
Single­
family
residential
building
construction
138,849
53.1%

23322
Multi­
family
residential
building
construction
7,543
2.9%

2333
Nonresidential
construction
44,710
17.1%

234
Heavy
construction
42,557
16.3%

235
a
Special
trade
contracting
19,771
7.6%

SUBTOTAL
261,617
100.0%

a
Covered
industries
include
NAICS
23593
(
excavation
contractors)
and
NAICS
23594
(
wrecking
and
demolition
contractors)
only.

Across
the
board,
the
C&
D
industries
are
dominated
by
small
establishments.
4
As
shown
in
Table
2­
5,
Census
reports
that
some
60.6
percent
of
establishments
with
payrolls
have
fewer
than
5
employees,
77.8
percent
have
fewer
than
10
employees,
and
87.1
percent
have
fewer
than
20
employees.
5
Overall,
only
1.1
percent
of
C&
D
establishments
with
payrolls
have
100
or
more
employees.
On
average,
establishments
in
NAICS
234
(
Heavy
construction)
are
somewhat
larger
than
those
in
the
other
NAICS,
with
a
lower
percentage
of
establishments
appearing
in
each
of
the
smaller
establishment
size
classes.

4
Establishments
are
officially
defined
as
 
small
 
by
the
SBA
according
to
size
standards
based
on
either
number
of
employees
or
annual
revenue
(
13
CFR
121)
.
Qualifying
revenue
levels
differ
among
NAICS
industries,
and
within
the
C&
D
industries
there
is
a
range
of
qualifying
revenue
levels,
from
$
5.0
million
for
NAICS
23311
(
Land
subdivision
and
development)
to
$
27.5
million
for
the
majority
of
industries
within
NAICS
233
and
234.
A
more
detailed
review
of
industry
size
distribution
based
on
the
SBA
definitions
will
be
presented
as
part
of
the
Small
Entity
Impact
Analysis.

5
And,
as
noted
above,
some
450,338
establishments
in
the
C&
D
industries
have
no
employees.

2­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
preponderance
of
small
establishments
is
equally
apparent
when
analyzed
on
the
basis
of
revenue
size
class.
Overall
in
1997,
37.1
percent
of
establishments
with
payrolls
had
annual
revenues
below
$
250,000;
54.7
percent
had
annual
revenues
below
$
500,000;
and
69.6
percent
had
annual
revenues
below
$
1.0
million.
These
data
are
shown
in
Table
2­
6.
Only
9,118
establishments,

representing
3.5
percent
of
the
total,
had
annual
revenues
in
excess
of
$
10.0
million.
Section
2.3.1.7
contains
more
information
on
small
entities
in
the
C&
D
industry
and
the
small
business
analysis
is
presented
in
Chapter
Six
of
this
EA.

In
addition
to
the
small
establishments
with
payrolls,
a
large
number
of
establishments
 
some
450,338
in
1997
6
 
operate
with
no
paid
employees
and
are
not
included
in
the
totals
in
Tables
2­
4
through
2­
6.
Available
data
suggests
these
establishments
are
very
small
relative
to
establishments
with
payrolls.
While
employer
establishments
in
NAICS
233
and
234
had
$
517.7
billion
in
receipts
for
1997,

nonemployer
establishments
had
only
$
36.5
billion
in
receipts,
which
represents
only
7
percent
of
the
receipts
of
employer
establishments.

6
Includes
establishments
in
NAICS
233
and
234
only.
Data
on
nonemployer
establishments
was
not
available
at
the
5­
digit
NAICS
level
for
NAICS
235,
thus
information
for
NAICS
23593
and
23594
could
not
be
separated
from
the
rest
of
NAICS
2359
(
Other
special
trade
contractors)
.
Including
all
nonemployer
establishments
in
NAICS
2359
(
339,521)
,
the
total
number
of
such
establishments
in
the
C&
D
industries
is
789,859.

2­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
5
Number
of
Small
Establishments
with
Payrolls
in
the
Construction
and
Development
Industry,
Based
on
Employment
NAICS
Industry
Total
Establishments
with
less
than
5
employees
Establishments
with
less
10
employees
Establishments
with
less
than
20
employees
No.
Percent
of
Total
No.
Percent
of
Total
No.
Percent
of
Total
233
a
Building,
developing,
and
general
contracting
199,289
138,926
69.7%
172,079
86.3%
187,672
94.2%

234
Heavy
construction
42,557
18,956
44.5%
26,802
63.0%
33,337
78.3%

235
b
Special
trade
contractors
19,771
700
c
3.5%
4,690
23.7%
6,833
34.6%

TOTAL
261,617
158,582
60.6%
203,571
77.8%
227,842
87.1%
than
a
Data
below
the
3­
digit
NAICS
(
i.
e.
,
for
NAICS
2331
Land
development
and
subdevelopment)
not
publishable.
b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
c
Data
for
NAICS
23593
(
Excavation
contractors)
not
included
in
this
calculation
because
data
did
not
meet
publication
standards.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

Table
2­
6
Number
of
Small
Establishments
in
the
Construction
and
Development
Industry,
Based
on
Value
of
Business
Done
NAICS
Industry
Total
Establishments
with
less
than
$
250,000
in
business
Establishments
with
less
than
$
500,000
in
business
Establishments
with
less
than
$
1
million
in
business
No.
Percent
of
Total
No.
Percent
of
Total
No.
Percent
of
Total
233
a
Building,
developing,
and
general
contracting
199,289
83,536
41.9%
118,493
59.5%
147,917
74.2%

234
Heavy
construction
42,557
13,364
31.4%
20,238
47.6%
26,726
62.8%

235
b,
c
Special
trade
contractors
19,771
269
1.4%
4,344
22.0%
7,385
37.4%

TOTAL
261,617
97,169
37.1%
143,075
54.7%
182,028
69.6%

a
Data
below
the
3­
digit
NAICS
(
i.
e.
,
for
NAICS
2331
Land
development
and
subdevelopment)
not
publishable.
b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
c
Figures
may
be
low
due
to
lack
of
sufficient
data
for
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
for
values
under
$
250,000.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

The
overall
average
level
of
receipts
among
nonemployer
establishments
is
$
81,000
versus
$
1.98
million
for
establishments
with
payrolls.
A
recent
study
by
the
Joint
Center
for
Housing
Studies
of
2­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Harvard
University
indicates
that
a
substantial
number
of
the
nonemployer
establishments
 
at
least
141,000
of
those
classified
as
general
building
contractors
(
NAICS
233)
 
are
actually
remodelers
(
Joint
Center
2001)
.
7
The
Joint
Center
estimates
do
not
account
for
nonemployer
establishments
outside
NAICS
233
(
i.
e.
,
NAICS
234
(
Heavy
construction)
or
235
(
Special
trades)
.
As
discussed
further
in
Section
2.3.2,
EPA
has
reviewed
available
data
on
such
nonemployer
establishments
and
concluded
that
most
are
unlikely
to
be
affected
by
the
proposed
rules.

2.3.1.2
Legal
Form
of
Organization
The
Census
Bureau
defines
construction
establishments
according
to
how
they
are
organized
legally,
using
the
following
classification
scheme:
(
a)
corporations,
(
b)
proprietorships,
(
c)
partnerships,

and
(
d)
other.
In
1997,
a
total
of
173,602
C&
D
establishments
with
payrolls
(
66.4
percent
of
the
total)

were
organized
as
corporations
(
see
Table
2­
7)
.
A
further
64,733
(
24.7
percent)
were
organized
as
proprietorships
while
14,313
(
5.5
percent)
operated
as
partnerships
and
8,969
(
3.5
percent)
operated
under
some
other
legal
form
of
organization.
Organization
as
a
corporation
is
most
prevalent
in
NAICS
2331
(
Land
subdivision
and
development)
,
at
76.6
percent,
and
least
prevalent
in
NAICS
235
(
Special
trade
contractors)
,
at
61.6
percent.
See
Appendix
2A
for
more
detailed
industry­
level
data.

7
The
estimate
of
141,000
establishments
is
probably
an
underestimate.
The
Joint
Center
applied
the
percentage
of
establishments
with
payrolls
known
to
be
remodelers
to
the
nonemployer
establishments.
In
practice,
remodelers
probably
account
for
a
larger
percentage
of
nonemployer
establishments
than
employer
establishments.
As
the
report
states,
 
(
o)
ur
procedures
thus
generate
a
conservative
estimate
of
the
number
of
businesses
concentrating
their
activities
in
residential
remodeling
 
(
(
Joint
Center,
2001,
p.
35)
.

2­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
7
Number
of
Establishments
in
the
Construction
and
Development
Industry
with
Payrolls,
by
Legal
Form
of
Organization
NAICS
Description
Corporations
Proprietorships
Partnerships
Other
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
233
Building,
developing,
and
general
contracting,
except
land
subdivision
and
development
(
2331)
124,475
65.1%
50,235
26.3%
9,827
5.1%
6,567
3.4%
191,104
100.0%

2331
Land
subdivision
and
development
6,268
76.6%
327
4.0%
1,323
16.2%
267
3.3%
8,185
100.0%

234
Heavy
construction
30,682
72.1%
8,401
19.7%
2,115
5.0%
1,359
3.2%
42,557
100.0%

235
a
Special
trade
contractors
12,177
61.6%
5,770
29.2%
1,048
5.3%
776
3.9%
19,771
100.0%

TOTAL
173,602
66.4%
64,733
24.7%
14,313
5.5%
8,969
3.5%
261,617
100.0%

a
Covers
establishments
in
NAICS
23593
(
Excavation
Contractors)
and
23594
(
Wrecking
and
Demolition
Contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.1.3
Geographic
Distribution
Figure
2­
1
shows
a
geographic
distribution
of
establishments
by
state.
The
largest
concentrations
of
establishments
are
in
California,
New
York,
Texas,
Florida,
and
Pennsylvania.
Combined,
these
states
account
for
approximately
25
percent
of
all
C&
D
establishments
nationwide.

Figure
2­
1.
Number
of
establishments
in
the
C&
D
industries,
by
state,
1997.

2.3.1.4
Employment
In
1997,
establishments
with
payrolls
in
the
C&
D
industries
employed
a
total
of
nearly
2.4
million
workers.
Table
2­
8
shows
a
distribution
of
employment
by
NAICS
industry.
NAICS
2331
(
Land
subdivision
and
land
development)
accounts
for
41,827
employees
(
1.8
percent
of
the
total)
,
the
rest
of
2­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
NAICS
233
(
Building,
developing,
and
general
contracting)
accounts
for
1.3
million
employees,
or
55.2
percent
of
the
total.
A
total
of
880,400
or
37.3
percent
of
the
total
are
employed
in
NAICS
234
(
Heavy
construction)
,
and
NAICS
23593
and
23594
(
Excavation
contractors
and
Wrecking/
demolition
contractors)
employ
135,057
(
5.7
percent
of
the
total)
.

Table
2­
8
Number
of
Employees
in
the
Construction
and
Development
Industries
Establishments
With
Payrolls,
1997
NAICS
Industry
Number
of
Employees
Percent
of
Total
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
subdivision
and
land
development
1,301,126
55.2%

2331
Land
subdivision
and
land
development
41,827
1.8%

234
Heavy
construction
880,400
37.3%

235
a
Special
trade
contractors
135,057
5.7%

TOTALS
2,358,410
100.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

Construction
is
a
seasonal
activity
in
many
parts
of
the
country,
and
employment
data
from
the
industry
bear
this
out.
Figure
2­
2
shows
quarterly
employment
data
for
all
NAICS
in
the
C&
D
industries,

as
well
as
the
annual
average.
Overall,
employment
of
construction
workers
was
lowest
in
March
at
1.59
million
and
highest
in
August
at
1.83
million.

2­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
2­
2.
Seasonal
trends
for
employment
in
the
C&
D
industries,
1997.

2.3.1.5
Payrolls
and
Benefits
In
1997,
the
payrolls
of
all
C&
D
industries
totaled
$
76.8
million
(
see
Table
2­
9)
.
Of
this
number
$
48.3
million
(
62.9
percent)
went
to
construction
workers
and
$
28.5
million
(
37.1
percent)
went
to
other
2­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
employees.
8
In
addition,
the
C&
D
industries
incurred
$
11.2
million
in
legally
required
fringe
benefit
expenditures
and
$
6.5
million
in
voluntary
fringe
benefits,
for
a
total
of
$
17.6
million
in
fringe
benefits.
9
Table
2­
9
shows
detailed
data
on
payrolls
and
benefits
for
each
of
the
C&
D
industries.

2.3.1.6
Specialization
Specialization
in
the
C&
D
industries
refers
to
the
percent
of
establishment
revenues
earned
from
different
types
of
construction
activity.
Specialization
data
provide
some
insight
into
the
homogeneity
of
businesses
classified
within
the
same
NAICS
industry.
When
reporting
to
Census,
an
establishment
self­

reports
its
own
degree
of
specialization
by
type
of
construction,
based
on
the
percentage
of
revenue
earned
from
each
type
of
construction
work.
Table
2­
10
shows,
as
an
example,
the
specialization
of
establishments
in
NAICS
23321
(
Single­
family
home
construction)
across
the
 
type
of
construction
 
categories
defined
by
the
Census
Bureau,
and
the
revenues
earned
by
establishments
in
each
specialization
category.
10,
11
8
Construction
workers
include
all
workers
up
through
the
working
supervisor
level
directly
engaged
in
construction
operations,
such
as
painters,
carpenters,
plumbers,
and
electricians.
Included
are
journeymen,
mechanics,
apprentices,
laborers,
truck
drivers
and
helpers,
equipment
operators,
and
on­
site
recordkeepers
and
security
guards.
Other
employees
include
employees
in
executive,
purchasing,
accounting,
personnel,
professional,
technical
activities,
and
routine
office
functions.

9
Legally
required
contributions
include
Social
Security
contributions,
unemployment
compensation,
workman'
s
compensation,
and
State
temporary
disability
payments.
Voluntary
expenditures
include
life
insurance
premiums,
pension
plans,
insurance
premiums
on
hospital
and
medical
plans,
welfare
plans,
and
union
negotiated
benefits.

10
Due
to
high
degrees
of
variation
of
specialization
and
types
of
construction
among
NAICS
sectors,
detailed
tables
for
each
NAICS
in
the
C&
D
industries
are
presented
separately
in
Appendix
2B.

11
Because
the
Census
Bureau
only
considers
construction
establishments
to
be
specialized
if
they
earn
more
than
half
of
their
revenues
from
one
particular
type
of
construction,
the
total
value
of
construction
work
shown
in
these
tables
will
not
match
industry
totals,
which
cover
all
establishments,
including
those
that
are
not
specialized.

2­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
9
Payrolls
and
Benefits
for
Employees
in
the
Construction
Industry
(
Thousands
of
1997
Dollars)

NAICS
Industry
Payrolls
a
Fringe
Benefits
(
All
Employees)

Construction
workers
b
Other
employees
c
All
employees
d
Legally
required
expenditures
e
Voluntary
expenditures
f
Total
fringe
benefits
g
233
Building,
developing,
and
general
contracting
$
23,135,832
$
19,410,280
$
42,546,112
$
5,929,710
$
3,011,115
$
8,940,824
23311
Land
subdivision
and
land
development
$
254,247
$
1,255,526
$
1,509,773
$
164,669
$
71,648
$
236,317
23321
Single­
family
housing
construction
$
7,739,858
$
7,224,726
$
14,964,583
$
2,000,118
$
623,079
$
2,623,197
23322
Multifamily
housing
construction
$
1,022,265
$
744,361
$
1,766,627
$
255,879
$
76,644
$
332,523
23331
Manufacturing
and
industrial
building
construction
$
3,322,347
$
1,806,620
$
5,128,967
$
777,829
$
446,522
$
1,224,351
23332
Commercial
and
Institutional
building
construction
$
10,797,116
$
8,379,046
$
19,176,160
$
2,731,214
$
1,793,222
$
4,524,436
234
Heavy
construction
$
22,218,582
$
8,073,267
$
30,291,850
$
4,665,757
$
3,120,979
$
7,786,736
23411
Highway
and
street
construction
$
7,095,139
$
2,432,488
$
9,527,626
$
1,507,465
$
1,109,177
$
2,616,641
23412
Bridge
and
tunnel
construction
$
1,378,759
$
468,401
$
1,847,160
$
344,821
$
263,297
$
608,117
23491
Water,
sewer,
,
and
pipeline
construction
$
4,087,007
$
1,435,273
$
5,522,281
$
844,394
$
493,761
$
1,338,155
23492
Power
and
communication
transmission
line
construction
$
1,748,715
$
638,717
$
2,387,432
$
374,145
$
231,538
$
605,683
23493
Industrial
nonbuilding
structure
construction
$
2,734,020
$
988,343
$
3,722,363
$
486,625
$
302,813
$
789,439
23499
All
other
heavy
construction
$
5,174,943
$
2,110,046
$
7,284,989
$
1,108,307
$
720,394
$
1,828,701
235
h
Special
trade
contractors
$
2,940,440
$
1,005,609
$
3,946,050
$
582,157
$
329,925
$
912,082
23593
Excavation
contractors
$
2,525,857
$
828,017
$
3,353,874
$
483,764
$
283,952
$
767,716
23594
Wrecking
and
demolition
contractors
$
414,583
$
177,592
$
592,176
$
98,393
$
45,973
$
144,366
TOTAL
$
48,294,854
$
28,489,156
$
76,784,012
$
11,177,624
$
6,462,019
$
17,639,642
a
Payrolls
includes
the
gross
earnings
paid
in
the
calendar
year
1997
to
all
employees
on
the
payrolls
of
construction
establishments.
It
includes
all
forms
of
compensation
such
as
salaries,
wages,
commissions,
bonuses,
vacation
allowances,
sick
leave
pay,
prior
to
such
deductions
as
employees'
Social
Security
contribution,
withholding
taxes,
group
insurance,
union
dues,
and
savings
bonds.
b
Construction
workers
include
all
workers
up
through
the
working
supervisor
level
directly
engaged
in
construction
operations,
such
as
painters,
carpenters,
plumbers,
and
electricians.
Included
are
journeymen,
mechanics,
apprentices,
laborers,
truck
drivers
and
helpers,
equipment
operators,
and
on­
site
recordkeepers
and
security
guards.
c
Other
employees
include
employees
in
executive,
purchasing,
accounting,
personnel,
professional,
technical
activities,
and
routine
office
functions.
d
Sum
of
construction
workers
and
other
employees.
e
Legally
required
contributions
include
Social
Security
contributions,
unemployment
compensation,
workman'
s
compensation,
and
State
temporary
disability
payments.
f
Voluntary
expenditures
include
life
insurance
premiums,
pension
plans,
insurance
premiums
on
hospital
and
medical
plans,
welfare
plans,
and
union
negotiated
benefits.
g
Total
fringe
benefits
represent
the
expenditures
made
by
the
employer
during
1997
for
both
legally
required
and
voluntary
fringe
benefit
programs
for
employees.
h
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Specialized
establishments
in
NAICS
23321
(
i.
e.
,
those
that
earn
51
percent
or
more
of
revenues
from
one
type
of
construction)
may
be
specialized
in
either
detached
single­
family
housing
construction
or
attached
single­
family
housing
construction.
12
The
number
of
construction
type
specializations
may
depend
on
the
NAICS,
as
some
industry
definitions
encompass
a
broader
set
of
construction
activities
(
see
Appendix
2B)
.
Within
NAICS
23321,
establishments
specialized
51
percent
or
more
in
detached,

single­
family
housing
construction
performed
construction
work
valued
at
$
127.9
billion.

Establishments
100
percent
specialized
in
detached,
single­
family
housing
construction
performed
construction
work
worth
$
90.4
billion,
or
64.4
percent
of
all
work
done
by
establishments
with
specialization
in
construction
work.
Similarly,
for
establishments
specializing
in
construction
of
attached
single­
family
houses
by
51
percent
or
more,
the
value
of
work
was
$
12.5
billion,
and
52.8
percent
of
the
work
(
$
6.6
billion)
was
done
by
establishments
with
complete
specialization
in
attached
single­
family
houses.
Further
analysis
of
the
value
of
construction
work
performed
by
the
C&
D
industries
can
be
found
in
Section
2.7.1.

Table
2­
10
Specialization
within
NAICS
23321
(
Single­
Family
Home
Construction)
,
Categorized
by
Value
of
Construction
Work
(
Millions
of
1997
Dollars)

Type
of
Construction
with
Specialization
Estabs.
spec.
51
%
or
more
Estabs.
with
100
%
spec.
Estabs.
with
90
to
99
%
spec.
Estabs.
with
80
to
89
%
spec.
Estabs.
with
70
to
79
%
spec.
Estabs.
with
60
to
69
%
spec.
Estabs.
with
51
to
59
%
spec.

Single­
family
houses,
detached
$
127,870
$
90,434
$
14,615
$
7,040
$
6,600
$
6,603
$
2,574
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
12,534
$
6,623
$
1,292
$
877
$
1,074
$
1,693
$
971
Source:
U.
S.
Census
Bureau
(
2000a)
.

12
Although
they
may
earn
revenues
from
other
types
of
construction
(
e.
g.
,
highway
construction)
they
would
no
longer
be
classified
in
NAICS
23321
if
they
earned
51
percent
or
more
of
their
revenue
from
such
sources.

2­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.2
Firm­
Level
Data
The
SBA
Office
of
Advocacy
contracts
with
the
U.
S.
Census
Bureau
to
produce
firm­
level
data
for
U.
S.
industries.
Currently,
distributions
by
employment
size
are
available
on
an
NAICS
basis
for
1998,
and
distributions
by
receipt
size
are
available
on
an
SIC
basis
for
1997.

The
SBA
data
is
based
primarily
on
administrative
records
and
is
not
generated
in
conjunction
with,
nor
is
it
linked
to,
data
collected
through
the
Census
of
Construction.
As
a
result,
there
may
be
minor
inconsistences
between
data
reported
by
SBA
and
that
reported
by
the
Census
of
Construction.
13
The
SBA/
Census
data,
however,
is
the
only
firm­
level
data
available
for
C&
D
industries,
so
EPA
is
including
it
in
this
analysis
because
it
is
valuable
to
the
economic
modeling
and
the
small
entity
analysis,

which
applies
at
the
firm,
not
the
establishment,
level.
14
2.3.2.1
Number
and
Size
of
Firms
Table
2­
11
presents
the
number
of
firms
with
payrolls
(
firms
with
paid
employment)
and
number
of
establishments
in
the
C&
D
industries
in
1998.
15
These
data
indicate
that
a
majority
of
firms
operate
a
single
establishment,
and
have
fewer
than
20
employees.
Of
the
215,301
C&
D
firms
in
1998;

approximately
99
percent
of
these
operate
only
one
establishment,
and
94
percent
have
fewer
than
20
employees;
less
than
1
percent
of
firms
have
more
than
500
employees.
In
1998,
there
were
39,062
firms
in
heavy
construction
and
these
operated
40,091
establishments.
More
than
97
percent
of
the
heavy
13
For
example,
the
SBA
data
provide
estimates
of
the
number
of
establishments
operated
by
C&
D
firms.
These
establishment
counts,
however,
do
not
match
those
reported
in
the
Census
of
Construction.
This
is
partially
due
to
differences
in
coverage
(
the
SBA
data
include
administrative
establishments
while
the
Census
of
Construction
does
not)
as
well
as
differences
in
data
collection
methods.

14
For
clarification,
an
establishment
is
defined
as
 
a
relatively
permanent
office
or
other
place
of
business
where
the
usual
business
activities
related
to
construction
are
conducted
 
(
(
Census,
2000a)
.
A
firm
refers
to
the
aggregation
of
all
establishments
owned
by
one
company;
therefore
one
firm
may
consist
of
several
establishments.

15
"
The
data
excludes
non­
employer
businesses,
thus
excluding
many
self­
employed
individuals
(
employment
is
measured
in
March
so
firms
starting
after
March,
firms
closing
before
March
and
seasonal
firms
can
have
zero
employment)
.
"
SBA
Office
of
Advocacy
website,
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

2­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
construction
firms
operate
a
single
establishment
and
approximately
79
percent
of
heavy
construction
firms
have
fewer
than
20
employees.

Table
2­
11
Employer
Firms
and
Establishments
by
Employment
Size
of
Firm
by
NAICS
Codes,
1998
­
­
SBA
Data
Industry
NAICS
Firms
Establishments
Total
0
<
20
<
500
500+
Total
0
<
20
<
500
500+

Building,
developing,
&
general
contracting
233
215,301
38,904
202,969
214,921
380
216,893
38,907
203,020
215,478
1,415
Land
subdivision
&
land
development
23310
11,192
2,829
10,618
11,101
91
11,369
2,832
10,628
11,179
190
Single­
family
housing
const.
23321
153,029
29,168
149,240
152,937
92
153,561
29,168
149,253
153,108
453
Multifamily
housing
const.
23322
8,054
1,405
7,413
8,027
27
8,091
1,405
7,414
8,041
50
Mfg
&
industrial
building
construction
23331
6,842
720
5,470
6,775
67
6,904
720
5,471
6,784
120
Commercial
&
institutional
building
construction
23332
36,355
4,782
30,240
36,158
197
36,968
4,782
30,254
36,366
602
Heavy
construction
234
39,062
4,589
30,987
38,788
274
40,091
4,589
31,010
39,098
993
Highway
&
street
const.
23411
10,884
1,493
8,265
10,806
79
11,268
1,493
8,273
10,901
367
Bridge
&
tunnel
construction
23412
886
70
520
865
21
925
70
521
880
45
Water,
sewer,
&
pipeline
construction
23491
7,749
676
5,786
7,704
45
7,823
676
5,787
7,726
97
Power
&
communication
transmission
line
construction
23492
3,170
404
2,464
3,133
37
3,305
404
2,465
3,157
148
Industrial
nonbuilding
structure
construction
23493
641
52
411
575
66
709
52
411
583
126
All
other
heavy
construction
23499
15,860
1,894
13,541
15,758
102
16,061
1,894
13,553
15,851
210
Excavation
contractors
23593
23,209
4,310
22,145
23,201
8
23,240
4,310
22,145
23,223
17
Wrecking
&
demolition
contractors
23594
1,336
247
1,094
1,329
7
1,344
247
1,094
1,332
12
Source:
U.
S.
Small
Business
Administration
(
1998)
,
based
on
data
provided
by
the
U.
S.
Census
Bureau.

2.3.2.2
Firm­
Level
Revenues
Table
2­
12
shows
the
number
of
employer
firms
and
establishments,
in
1997,
based
on
NAICS
industry
and
revenue
size
class.
These
data
also
show
that
a
large
number
of
firms
in
the
C&
D
industries
2­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
are
small.
Approximately
three­
quarters
(
75.2
percent)
of
the
firms
in
the
target
industry
sectors
reported
under
$
1.0
million
in
revenues
for
1997
and
nearly
94
percent
of
firms
reported
revenues
under
$
5.0
million.

2­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
12
Firms
and
Establishments
with
Payrolls
by
Revenue
Size
Class
(
1997)
a
(
SBA
Data)

Description
FIRMS
ESTABLISHMENTS
b
Total
Number
of
Firms
<
$
1
Million
<
$
5
Million
<
$
7.5
Million
<
$
25
Million
<
$
100
Million
Over
$
100
Million
Total
Establish
­
ments
<
$
1
Million
<
$
5
Million
<
$
7.5
Million
<
$
25
Million
<
$
100
Million
Over
$
100
Million
Land
Subdivision
and
Development
11,036
7,744
10,207
10,501
10,851
10,948
88
11,205
7,746
10,218
10,514
10,896
11,018
186
Single­
Family
Housing
Construction
149,130
123,414
145,305
146,917
148,634
148,975
155
149,823
123,420
145,339
146,962
148,736
149,161
661
Multifamily
Housing
Construction
6,911
5,128
6,347
6,518
6,791
6,877
34
7,009
5,129
6,354
6,527
6,810
6,910
99
Manufacturing
and
Industrial
Building
Construction
7,950
4,674
6,841
7,156
7,692
7,879
71
8,075
4,675
6,847
7,166
7,713
7,914
160
Commercial
and
Institutional
Building
Construction
38,195
22,518
32,523
34,085
36,964
37,882
313
39,044
22,526
32,560
34,133
37,075
38,124
920
Highway
and
Street
Construction
10,778
5,683
8,681
9,291
10,320
10,679
99
11,117
5,683
8,689
9,302
10,349
10,758
359
Bridge
and
Tunnel
Construction
875
287
583
638
788
847
28
915
288
584
640
795
859
56
Water,
Sewer,
and
Pipeline
Construction
7,916
4,475
6,861
7,245
7,768
7,883
33
8,075
4,476
6,864
7,251
7,791
7,938
137
Power
and
Communication
Transmission
Line
Construction
2,781
1,572
2,411
2,546
2,729
2,770
11
2,837
1,572
2,412
2,548
2,738
2,789
48
Industrial
Nonbuilding
Structure
Construction
3,941
2,786
3,612
3,713
3,860
3,909
32
4,023
2,787
3,617
3,720
3,874
3,936
86
All
Other
Heavy
Construction
12,973
9,110
11,873
12,213
12,697
12,863
111
13,594
9,118
11,920
12,279
12,814
13,087
507
Excavation
Contractors
22,046
19,093
21,659
21,820
22,002
22,038
8
22,072
19,093
21,661
21,823
22,005
22,055
17
Wrecking
and
Demolition
Contractors
1,270
840
1,165
1,204
1,249
1,261
9
1,285
840
1,166
1,205
1,252
1,271
14
TOTAL
275,802
207,324
258,068
263,847
272,345
274,811
992
279,074
207,353
258,231
264,070
272,848
275,820
3,250
a
Data
are
for
1997.
SBA
does
not
report
revenue
size
class
data
in
NAICS
format
and
will
not
do
so
until
the
2002
Economic
Census
is
published.
These
figures
were
calculated
using
percentages
provided
in
the
Census
Bureau
 
s
NAICS
to
SIC
bridge,
which
is
available
at
www.
census.
gov/
epcd/
ec97brdg.
HTM.
b
The
number
of
establishments
reported
here
may
differ
from
the
number
reported
in
previous
tables
due
to
the
different
sources
used
(
see
Table
2­
2
and
accompanying
text
for
further
discussion)
.
Earlier
tables
are
based
on
data
from
the
1997
Economic
Census;
Table
2­
12
is
based
on
1997
data
from
SBA/
Census
and
was
converted
from
SIC
to
NAICS
for
the
purposes
of
this
analysis.
Source:
SBA
1998
2­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.3
Number
of
Small
Entities
Small
entities
are
defined
by
the
SBA
according
to
size
standards
based
on
either
number
of
employees
or
annual
revenue
(
13
CFR
121)
.
For
all
of
the
C&
D
industries,
the
size
standards
are
based
on
annual
revenues.
Table
2­
13
presents
the
SBA
revenue
thresholds
for
the
C&
D
industry,
which
range
from
$
5.0
million
for
NAICS
233110
(
Land
subdivision
and
land
development)
to
$
27.5
million
for
the
majority
of
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
234
(
Heavy
construction)
.
An
estimated
189,805
C&
D
businesses,
representing
99.5
percent
of
all
businesses
in
the
C&
D
industry,
fall
below
the
SBA­
defined
revenue
thresholds
for
this
industry
and
therefore
may
be
qualified
as
small
businesses.
Table
2­
13
shows
the
total
estimated
number
of
businesses
and
total
small
businesses
in
the
C&
D
industry;
the
number
of
potentially
affected
small
businesses
is
developed
in
Chapter
Six.

Table
2­
13
Number
of
Firms
and
Establishments
Above
and
Below
SBA
Thresholds
for
Small
Business
Definition:
Based
on
Data
from
SBA
NAICS
SBA
Revenue
Threshold
(
million
$
)
Total
Estimated
Number
of
Businesses
Estimated
Number
of
Small
Businesses
Small
Businesses
as
a
Percent
of
Total
233210:
Single­
family
Housing
Construction
$
27.5
138,732
138,583
99.9%

233220:
Multifamily
Housing
Construction
$
27.5
7,534
7,491
99.4%

233310:
Manufacturing
and
Industrial
Building
Construction
$
27.5
7,257
7,050
97.1%

233320:
Commercial
and
Institutional
Building
Construction
$
27.5
37,220
36,681
98.6%

TOTAL
 
190,743
189,805
99.5%

a
For
those
industries
with
a
$
27.5
million
SBA
cutoff,
the
table
shows
the
number
of
firms
and
establishments
with
revenues
below
$
25.0
million
(
the
next
closest
SBA
data
break
point)
.
For
industries
with
a
$
11.5
million
SBA
cutoff,
figures
shown
are
for
firms
and
establishments
with
revenues
below
$
7.5
million.
Source:
SBA
1998;
also
see
Chapter
Six,
Tables
6­
2
and
6­
3
2­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.4
Entities
Not
Covered
by
the
Proposed
Rule
Not
all
establishments
and
firms
that
fall
within
the
industry
definitions
outlined
in
the
previous
sections
will
be
affected
by
the
proposed
rule.
The
proposed
rule
will
apply
only
to
those
NPDES­

permitted
establishments
engaged
in
activities
that
disturb
land.
EPA
believes
that
some
entities
will
be
excluded
from
regulatory
coverage
because
they
are
primarily
engaged
in
remodeling
activities
that
will
not
result
in
land
disturbance.
Others
will
be
excluded
because
they
are
generally
not
the
primary
NPDES
permit
holder.
As
discussed
in
Section
VI.
A
in
the
preamble
of
the
proposed
rule,
Special
trade
contractors
are
typically
not
identified
as
NPDES
permit
holders
and
thus
will
not
likely
be
covered
by
the
proposed
rule.
In
this
section
EPA
estimates
the
number
of
establishments
that
fall
into
these
categories.
The
resulting
estimates
are
brought
together
in
Section
2.3.5
to
derive
the
number
of
establishments
covered
under
each
option
of
the
proposed
rule.

2.3.4.1
Establishments
Engaged
in
Remodeling
Two
sources
provide
information
on
the
potential
number
of
C&
D
establishments
that
are
actually
remodelers.
In
an
article
published
in
Housing
Economics,
NAHB
economists
estimated
that
in
1997
approximately
45,952
establishments
in
the
residential
building
industry
were
involved
in
remodeling
activities
only
(
Ahluwalia
and
Chapman,
2000)
.
This
count
is
based
on
analysis
of
Census
microdata
on
establishments,
receipts,
and
source
of
receipts.
Establishments
were
classified
as
remodelers
in
this
study
if
they
earned
100
percent
of
revenues
from
remodeling
activities.

The
Joint
Center
for
Housing
Studies
at
Harvard
University
recently
published
a
report
focused
solely
on
the
remodeling
industry
(
Joint
Center,
2001)
.
This
report
classified
establishments
that
derive
at
least
half
of
their
revenues
from
remodeling
activities
as
remodelers.
When
defined
in
this
manner,

the
study
found
that
62,400
establishments
classified
as
general
contractors/
builders
in
1997
were
actually
remodelers.

Both
of
these
estimates
are
based
on
establishments
classified
by
Census
as
general
contractors/
builders.
The
Joint
Center
study
goes
further
to
identify
establishments
classified
in
various
special
trades
(
e.
g.
,
Carpentry,
Plumbing)
that
are
primarily
engaged
in
remodeling,
but
these
estimates
2­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
do
not
include
those
considered
part
of
the
C&
D
industries
(
i.
e.
,
NAICS
23593
Excavation
contractors
and
23594
Wrecking
and
demolition
contractors)
.
16
NAHB
does
not
address
the
issue
of
special
trades
contractors
in
their
report.
Neither
report
estimates
the
number
of
establishments
in
NAICS
234
(
Heavy
construction)
that
may
be
engaged
primarily
in
remodeling
activities;
however,
EPA
does
not
expect
that
establishments
in
the
heavy
construction
sector
would
be
engaged
in
remodeling
activities.

Following
review
of
these
studies,
EPA
used
the
estimate
from
the
Joint
Center
study
as
the
best
estimate
of
the
number
of
remodelers
included
in
statistics
of
the
C&
D
industries.
This
study
defines
remodelers
as
establishments
that
earn
at
least
50
percent
of
revenues
from
remodeling
activity
(
and
thus
earn
less
than
50
percent
from
building
activity)
.
EPA
concludes
that
these
establishments,
when
engaged
in
building
activity,
are
unlikely
to
disturb
more
than
one
acre
of
land
and
would
therefore
not
be
covered
by
the
proposed
rule.

2.3.4.2
Establishments
That
Are
Not
NPDES
Permttees
EPA
has
included
in
the
universe
of
potentially
affected
establishments
all
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
because
such
establishments
engage
in
land
disturbing
activities.
In
reality,
however,
establishments
in
these
industries
generally
act
as
subcontractors
on
C&
D
projects
and
are
hired
by
developers
or
general
contractors
to
perform
specific
tasks.
EPA
does
not
believe
that
such
establishments
generally
appear
as
NPDES
permittees
or
copermittees.
Therefore,
while
these
establishments
are
included
among
the
universe
of
potentially
affected
establishments
(
and
appear
below
in
Table
2­
14)
,
EPA
has
not
included
them
in
the
subsequent
economic
impact
analysis
chapters
(
i.
e.
,
Chapters
Four,
Five,
and
Six)
.

16
The
Joint
Center
study
does
provide
an
estimate
for
the
number
of
remodelers
classified
in
 
miscellaneous
special
trades
 
(
(
NAICS
2359)
,
which
includes
NAICS
23593
and
23594,
but
several
other
industries
as
well.
The
number
of
remodelers
classified
primarily
in
NAICS
23593
and
23594
may
not
be
large,
however,
since
the
total
number
in
NAICS
2359
is
only
6,600.

2­
27
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.3.5
Number
of
Potentially
Affected
Entities
EPA
took
several
steps
to
adjust
the
number
of
affected
entities
to
account
for
regulatory
coverage
and
data
availability.
Previous
sections
estimated
that
the
total
number
of
establishments
in
the
C&
D
industry
is
261,617
(
see
Table
2­
4)
.
Subtracting
the
62,400
remodeling
establishments
estimated
in
Section
2.3.4
from
this
figure
yields
a
potentially
affected
universe
of
199,214
establishments.
EPA
subtracted
the
62,400
residential
remodeling
establishments
from
the
single­
family
and
multifamily
building
construction
industries
(
NAICS
23321
and
NAICS
23322)
,
based
on
their
respective
shares
of
residential
building
establishments.

In
preparing
its
economic
impact
analysis,
EPA
concluded
that
data
limitations
on
land
developers
(
NAICS
2331)
would
preclude
retaining
this
as
a
separate
industry
for
purposes
of
regulatory
analysis.
17
Rather
than
excluding
establishments
in
this
industry
category
(
which
would
potentially
underestimate
the
number
of
affected
entities
and
associated
impacts)
EPA
distributed
them
among
the
four
building
construction
industries
(
single­
family,
multifamily,
commercial,
and
industrial
construction)
,
based
on
each
industry
 
s
share
of
total
establishments.
18
Table
2­
14
reflects
this
allocation,
which
was
done
after
removing
those
establishments
engaged
primarily
in
remodeling.

EPA
has
further
adjusted
the
population
of
affected
establishments
to
account
for
differences
in
regulatory
coverage.
As
described
in
Chapter
Three,
the
proposed
rule
considers
three
erosion
and
sediment
control
(
ESC)
options.
Option
1
would
apply
to
sites
that
disturb
one
acre
or
more
of
land,

while
Option
2
would
apply
to
sites
that
disturb
five
acres
or
more
of
land.
Option
3
is
a
no
regulation
option,
meaning
that
no
sites
or
establishments
would
be
affected.

EPA
used
data
from
the
Census
Bureau
and
other
sources
to
define
an
average
housing
density
for
the
nation
as
a
whole
(
average
number
of
housing
units
per
acre)
,
then
used
this
analysis
to
identify
classes
of
establishments
that
would
be
excluded
based
on
their
likelihood
of
disturbing
less
than
one
acre
(
Option
1)
or
five
acres
(
Option
2)
on
a
project
basis.
EPA
believes
these
estimates
to
be
17
Specifically,
EPA
could
not
obtain
equivalent
financial
data
with
which
to
build
financial
models
of
the
land
development
industry.

18
EPA
provides
further
justification
for
and
details
about
this
step
in
the
analysis
in
Chapter
Four.

2­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
conservative
in
terms
of
identifying
establishments
unaffected
by
the
proposed
rule.
First,
while
the
regulatory
threshold
applies
to
each
site
,
EPA
excluded
establishments
if
the
estimated
number
of
acres
disturbed
in
a
year
is
below
the
regulatory
threshold.
In
addition,
the
analysis
was
not
adjusted
for
the
percent
of
sites
normally
left
undisturbed.
19
Based
on
this
analysis,
EPA
assumed
that
establishments
in
the
single­
family
building
construction
industry
(
NAICS
2331)
that
complete
between
1
and
4
housing
units
each
year
would
be
excluded
under
Option
1.
Under
Option
2,
EPA
also
assumed
that
establishments
in
the
single­
family
building
construction
industry
(
NAICS
2331)
that
complete
between
5
and
9
housing
units,
as
well
as
establishments
in
the
multifamily
building
construction
industry
(
NAICS
2332)
that
complete
between
2
and
9
housing
units
each
year,
would
be
excluded.
Chapter
Four
contains
further
detail
on
the
data
sources
and
method
used
to
make
this
adjustment.

Table
2­
14
shows
the
distribution
of
establishments
potentially
affected
under
Option
1
and
2,

following
the
redistribution
of
land
developers
(
NAICS
2331)
and
adjustment
for
small
builders
exempt
from
the
site
size
limitations
of
each
option.
Due
to
limited
data,
the
number
of
establishments
in
NAICS
234
(
Heavy
construction)
and
NAICS
235
(
Special
trades)
affected
under
each
option
could
not
be
refined
further,
so
no
adjustments
are
made
to
these
establishment
counts.
Moreover,
as
discussed
in
Section
XII
of
the
preamble
of
the
proposed
rule,
special
trade
contractors
are
not
included
in
Chapter
5,

Economic
Impact
Analysis
Results
of
this
report.
Special
trade
contractors
are
typically
subcontractors
and
are
not
NPDES
permittees.
Therefore,
these
contractors
would
not
be
directly
affected
by
the
proposed
rule.

19
For
example,
an
establishment
that
completes
15
houses
per
year
is
estimated
to
account
for
5.6
acres
of
converted
land,
based
on
the
average
housing
density
of
2.67
new
single­
family
housing
units
per
acre.
EPA
would
include
this
establishment
among
those
covered
under
Option
2,
even
though
the
actual
area
disturbed
may
well
fall
below
5
acres
once
open
space,
buffers,
and
other
 
undisturbed
 
areas
are
factored
in.
.
Furthermore,
as
noted,
EPA
assumes
that
all
of
the
housing
units
are
covered
by
a
single
NPDES
permit
while
in
reality
the
establishment
might
operate
on
more
than
one
site,
none
of
which
exceeds
the
5­
acre
threshold.

2­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
14.
Number
of
Affected
Establishments
in
the
Construction
and
Development
Industry
NAICS
Industry
Option
1
Option
2
Number
Percent
of
Total
Number
Percent
of
Total
23321
Single­
family
residential
building
construction
34,070
22.9%
21,362
15.9%

23322
Multi­
family
residential
building
construction
4,603
3.1%
2,699
2.0%

23331
Manufacturing
and
industrial
building
construction
7,742
5.2%
7,742
5.8%

23332
Commercial
and
institutional
building
construction
39,810
26.8%
39,810
29.7%

234
Heavy
construction
42,557
28.6%
42,557
31.8%

235
a
Special
trade
contracting
19,771
13.3%
19,771
14.8%

Potentially
affected
establishments
148,553
100.0%
133,941
100.0%

a
Includes
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
and
EPA
estimates.

2.4
MARKET
SUPPLY
AND
DEMAND
The
sections
below
discuss
the
supply
and
demand
factors
that
affect
the
residential,

nonresidential,
and
heavy
construction
industries.
This
discussion
provides
insight
into
the
dynamics
of
the
construction
market
and
provides
a
basis
for
many
of
the
key
assumptions
used
in
the
economic
impact
models.

2­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.1
Characteristics
of
Construction
Supply
This
section
discusses
the
factors
that
influence
supply
in
the
C&
D
industry.
Topics
include
number
and
value
of
residential,
nonresidential,
and
heavy
construction
projects;
barriers
to
entry
in
the
industry;
and
supply
trends
(
the
latter
primarily
for
the
residential
construction
market)
.

2.4.1.1
Residential
Building
Number
of
Projects
The
Census
Bureau
operates
three
data
collection
programs
that
track
and
report
output
measures
relevant
for
the
C&
D
industry:

 
The
Building
Permits
Program
collects
monthly
information
on
building
permits
issued
for
new
private
residential
construction.

 
The
Survey
of
Construction
collects
information
on
residential
units
started,
sold,
and
completed
each
month.
Several
data
series
are
produced
from
this
program.
These
include:

 
Housing
Starts
(
Series
C20)
 
Provides
monthly
data
on
the
number
of
housing
starts,
including
number
of
housing
units
authorized,
started,
and
authorized
but
not
yet
started.

 
New
One­
Family
Houses
Sold
(
Series
C25)
 
Provides
monthly
data
on
units
sold
and
for
sale,
average
and
median
sales
prices,
and
price
distribution
of
units
sold.
This
series
also
produces
the
Price
Index
of
New
One­
Family
Houses
Sold.

 
Characteristics
of
New
Housing
(
Series
C25A)
 
Compiles
and
publishes
data
annually
on
housing
prices
and
physical
characteristics
such
as
size
of
unit,
number
of
bathrooms,
type
of
heating
system,
and
type
of
exterior
wall.

 
Housing
Completions
(
Series
C22)
 
This
series,
,
published
monthly,
provides
data
on
the
number
of
housing
units
completed
in
a
month
and
on
those
under
construction.

2­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
New
Residential
Construction
in
Selected
Metropolitan
Areas
(
Series
C21)
 
Provides
quarterly
data
by
metropolitan
area
on
units
authorized,
started,
and
completed.
20
 
The
Value
Put
in
Place
program
publishes
estimates
of
the
value
of
construction
work
performed
each
month.

Combined,
these
data
programs
produce
vast
amounts
of
information
on
construction
industry
output.
This
profile
focuses
on
building
permits,
since
the
activities
most
likely
to
be
influenced
by
the
proposed
effluent
guidelines
regulations
are
those
that
take
place
early
in
the
development
process.
The
following
discussion
and
supporting
tables
provide
further
details
about
the
building
permits
data
collection
program.

The
Building
Permits
Program
collects
data
on
private
residential
construction
authorized
by
building
permits
based
upon
reports
submitted
by
local
building
permit
officials.
21
The
data
include
the
number
of
permits
authorized
by
type
22
and
the
value
of
permits.
These
reports
are
provided
in
response
to
a
mail
survey
using
Form
C­
404
 
Report
of
Building
or
Zoning
Permits
Issued
and
Local
Public
Construction.
 
The
mail
survey
covers
a
sample
of
8,500
permit­
issuing
places
from
a
universe
of
19,000
in
the
U.
S.
23
Approximately
96
percent
of
all
privately
owned
housing
units
are
built
in
areas
that
require
building
permits.

20
Census
has
discontinued
publication
of
this
series.
The
last
year
for
which
data
were
published
was
1998.

21
Census
discontinued
collection
of
data
on
nonresidential
construction
authorized
by
building
permits
in
1995
due
to
budget
cuts.
EPA
has
used
historical
data
from
this
series
to
create
projections
of
nonresidential
building
activity
beyond
1995.
See
Section
2.6.1.2.

22
Private
residential
construction
is
classified
as:
single­
family
homes,
2­
family
buildings,
3­
4
family
buildings,
or
5
or
more
family
buildings.
Data
collection
for
other
types
of
construction
(
including
nonresidential
housekeeping,
nonresidential
buildings,
and
demolition
and
razing)
was
discontinued
in
1995.

23
All
permit­
issuing
places
in
the
most
active
MSAs
and
all
CMSAs
are
selected
with
certainty
for
the
sample.
The
remaining
places
are
stratified
by
State
into
two
strata
based
on
the
number
of
housing
units
authorized
in
1989,
1990,
1991,
and
1992.
In
each
State,
all
places
that
authorized
housing
units
during
the
period
greater
than
or
equal
to
a
predetermined
number
of
units
were
selected
with
certainty.
The
other
places
were
selected
at
the
rate
of
1
in
10.

2­
32
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
2­
3
shows
monthly
data
from
January
1994
through
July
2000
on
the
number
of
housing
units
authorized
by
building
permit.
The
data
in
this
chart
represent
seasonally
adjusted
annual
averages.

Seasonal
adjustment
eliminates
the
effect
of
changes
that
normally
occur
at
about
the
same
time
and
with
about
the
same
magnitude
every
year.
24
As
seen,
the
seasonally
adjusted
annual
rate
of
building
permits
issued
shows
a
steady
rise
over
the
recent
period.
From
an
average
of
between
1.3
and
1.5
million
units
per
year
over
the
1994
to
1997
period,
the
rate
then
rose
through
the
1998
to
2000
period.
The
rate
appears
to
have
reached
a
peak
in
January
2000
when
it
hit
1.7
million
units,
and
has
since
fallen
steadily
back
to
approximately
1.5
million
units
per
year.

24
This
includes
the
influence
of
factors
such
as
normal
or
average
changes
in
weather
conditions,
differences
in
the
lengths
of
the
months,
and
differences
in
the
composition
(
trading­
day
variation)
of
the
months.
The
seasonally
adjusted
annual
rate
is
the
seasonally
adjusted
monthly
rate
multiplied
by
12.
The
seasonally
adjusted
annual
rate
for
a
particular
month,
for
example
July,
can
be
interpreted
to
mean
that
if
the
only
changes
which
occur
in
building
permits
from
July
through
June
of
the
following
year
were
the
normal
seasonal
changes
described
by
the
seasonal
indexes,
then
the
total
building
permits
in
that
12­
month
interval
would
equal
the
seasonally
adjusted
annual
rate
for
July.
The
seasonally
adjusted
annual
rate
has
the
advantage
of
facilitating
comparisons
with
previous
annual
building
permit
figures
as
well
as
with
the
seasonally
adjusted
annual
rates
for
prior
months.
The
seasonally
adjusted
annual
rate
is
neither
a
forecast
nor
a
projection;
rather
it
is
a
description
of
the
rate
at
which
building
permits
are
issued
in
the
particular
month
for
which
it
is
calculated.

2­
33
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
total
number
of
new
housing
units
authorized
in
1997
was
1,441,136.
Of
these,
1,062,396
or
73.7
percent
were
for
single
housing
units.
25
Table
2­
15
shows
the
number
of
new
privately
owned
housing
units
authorized
by
building
permit,
allocated
to
Census
region
and
subregion.

1994
1995
1996
1997
1998
1999
2000
1,100
1,200
1,300
1,400
1,500
1,600
1,700
1,800
(
'
000)

Figure
2­
3.
New
Privately
Owned
Housing
Units
Authorized,
Seasonally
Adjusted
Annual
Rate,
U.
S.

Source:
U.
S.
Census
Bureau
(
2000e)
,
Series
C­
40,
Building
Permits.

25
A
 
housing
unit
 
consists
of
a
room
or
group
of
rooms
intended
for
occupancy
as
separate
living
quarters
by
a
family,
by
a
group
of
unrelated
persons
living
together,
or
by
a
person
living
alone.
Separate
living
quarters
are
those
in
which
the
occupants
live
and
eat
separately
from
other
persons
in
the
building
and
have
direct
access
from
the
outside
of
the
building
or
through
a
common
hall.
In
accordance
with
this
definition,
each
apartment
unit
in
an
apartment
building
is
counted
as
one
housing
unit.

2­
34
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
15
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permits
in
Permit­
Issuing
Places
in
1997,
by
Region
Region
Sub­
Region
Total
1
Unit
2
Units
3
and
4
Units
5
Units
or
More
Number
of
Structures
with
5
Units
or
More
Northeast
New
England
41,110
35,838
904
687
3,681
236
Middle
Atlantic
100,776
75,312
4,278
2,347
18,839
963
Total
Region
141,886
111,150
5,182
3,034
22,520
1,199
Midwest
East
North
Central
209,213
154,513
8,168
8,401
38,131
3,118
West
North
Central
90,628
65,510
4,472
2,910
17,736
1,105
Total
Region
299,841
220,023
12,640
11,311
55,867
4,223
West
Mountain
179,632
134,403
2,548
3,675
39,006
3,098
Pacific
183,913
132,670
4,590
5,180
41,473
2,902
Total
Region
363,545
267,073
7,138
8,855
80,479
6,000
South
South
Atlantic
392,540
291,564
5,070
5,605
90,301
5,839
East
South
Central
79,979
61,863
2,264
1,933
13,919
1,106
West
South
Central
163,345
110,723
2,556
2,850
47,216
2,760
Total
Region
635,864
464,150
9,890
10,388
151,436
9,705
TOTALS
1,441,136
1,062,396
34,850
33,588
310,302
21,127
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
35
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Value
of
Projects
The
same
Census
program
that
compiles
and
reports
data
on
the
number
of
housing
units
authorized
by
building
permit
also
compiles
data
on
the
value
of
permits
issued.
The
value
reported
in
the
permits
data
refers
to
the
value
of
structures
and
site
improvements
covered
by
the
building
permit,

but
excludes
land
costs.

The
total
value
of
residential
building
permits
issued
in
the
U.
S.
in
1997
was
$
141.0
billion.
Of
this,
$
121.2
billion,
or
86.0
percent,
was
accounted
for
by
single­
family
housing
units.

Table
2­
16
shows
the
value
of
new
privately
owned
housing
units
authorized
by
building
permits
in
1997,
by
Census
region
and
subregion.
The
South
region
accounted
for
$
55.9
billion
(
39.6
percent
of
the
total)
,
followed
by
the
West
with
$
40.7
billion
(
28.8
percent)
,
the
Midwest
with
$
30.3
billion
(
21.4
percent)
,
and
the
Northeast
with
$
14.1
billion
(
10.0
percent)
.

2­
36
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
16
New
Privately
Owned
Housing
Units
Authorized­
Valuation
for
Regions
(
Millions
of
1997
Dollars)

Region
Sub­
Region
Total
1
Unit
2
Units
3
and
4
Units
5
Units
or
More
Northeast
New
England
$
4,737.7
$
4,423.8
$
59.3
$
49.0
$
205.5
Middle
Atlantic
$
9,399.5
$
8,142.4
$
232.4
$
134.3
$
890.4
Total
Region
$
14,137.2
$
12,566.2
$
291.7
$
183.3
$
1,095.9
Midwest
East
North
Central
$
21,688.0
$
18,858.2
$
584.1
$
516.4
$
1,729.4
West
North
Central
$
8,573.9
$
7,292.4
$
294.3
$
184.1
$
803.3
Total
Region
$
30,261.9
$
26,150.5
$
878.3
$
700.4
$
2,532.6
West
Mountain
$
17,426.3
$
15,038.7
$
225.4
$
245.8
$
1,916.4
Pacific
$
23,299.2
$
19,693.7
$
389.6
$
410.3
$
2,805.6
Total
Region
$
40,725.5
$
34,732.4
$
615.0
$
656.1
$
4,722.0
South
South
Atlantic
$
35,206.7
$
29,973.8
$
301.1
$
341.9
$
4,590.0
East
South
Central
$
6,840.6
$
6,042.5
$
106.1
$
66.3
$
625.7
West
South
Central
$
13,832.4
$
11,729.1
$
111.8
$
109.6
$
1,881.9
Total
Region
$
55,879.7
$
47,745.4
$
518.9
$
517.8
$
7,097.6
TOTAL
$
141,004.4
$
121,194.5
$
2,304.0
$
2,057.7
$
15,448.2
Figures
rounded
from
thousands
reported
by
Census.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2.4.1.2
Nonresidential
Building
Census
discontinued
the
collection
of
data
on
nonresidential
construction
authorized
by
building
permits
in
1995
due
to
budgetary
restraints.
To
fill
this
data
gap,
EPA
has
used
historical
(
pre­
1995)
data
on
nonresidential
starts
to
establish
a
relationship
between
residential
and
nonresidential
starts
from
which
current
nonresidential
activity
can
be
estimated.

2­
37
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Number
and
Value
of
Projects
EPA
analyzed
data
from
1980
through
1994
on
the
number
of
nonresidential
building
permits,

number
of
residential
building
permits,
the
value
of
nonresidential
buildings
put
in
place,
and
a
time
trend
to
estimate
a
statistical
relationship
that
could
be
used
to
predict
the
number
of
nonresidential
permits
issued
in
1997.
26
Table
2­
17
shows,
for
each
region
and
subregion,
the
results
from
EPA
 
s
analysis.
EPA
used
a
linear
regression
of
nonresidential
building
permits
on
the
remaining
three
variables
to
estimate
the
number
of
permits.

The
value
of
nonresidential
building
projects
is
reported
by
Census
in
the
Value
Put
in
Place
data
series.
Table
2­
17
also
shows
the
value
of
nonresidential
projects
constructed
in
1997
by
region
and
subregion.

26
EPA
assumes
that
there
is
a
one­
to­
one
correspondence
between
permits
and
projects
for
nonresidential
construction
activity.
Therefore,
the
predicted
number
of
nonresidential
permits
issued
in
1997
is
assumed
to
also
be
the
predicted
number
of
nonresidential
projects
for
that
year.

2­
38
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
17
Estimated
Number
of
Nonresidential
Building
Permits
for
1997,
by
Region
Region
Sub­
Region
Nonresidential
Permits
(
estimated)
Value
Put
in
Place
(
millions
of
dollars)

Northeast
New
England
26,936
$
1,034
Middle
Atlantic
51,530
$
2,482
Total
Region
78,466
$
3,516
Midwest
East
North
Central
62,193
$
8,606
West
North
Central
30,374
$
1,745
Total
Region
92,568
$
10,351
West
Mountain
27,696
$
2,187
Pacific
51,408
$
6,736
Total
Region
79,105
$
8,922
South
South
Atlantic
124,452
$
6,098
East
South
Central
20,340
$
3,228
West
South
Central
31,093
$
4,624
Total
Region
175,886
$
13,950
TOTALS
United
States
426,024
$
36,739
Figures
may
not
add
to
totals
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
.

As
shown
in
Table
2­
17,
the
number
of
nonresidential
building
projects
authorized
by
permits
in
1997
is
estimated
at
426,024.
The
South
had
the
highest
number
of
nonresidential
permits
in
1997,
with
175,886,
or
41.3
percent
of
the
total.
The
Northeast
had
the
fewest
nonresidential
permits
issued,
with
only
78,466,
or
18.4
percent
of
the
total.

The
total
value
of
nonresidential
building
projects
constructed
in
1997
was
$
36.7
billion.
As
with
nonresidential
permits,
the
South
had
the
highest
value
put
in
place,
with
$
13.9
billion
(
38.0
percent
of
total
value
put
in
place)
while
the
Northeast
had
the
lowest
value
of
projects
put
in
place
with
$
3.5
billion
(
9.6
percent
of
total)
.

2­
39
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.1.3
Heavy
Construction
Heavy
construction
encompasses
both
building
and
nonbuilding
construction
activities,
although
95
percent
of
the
work
performed
by
establishments
in
NAICS
234
(
Heavy
construction)
is
classified
as
nonbuilding
construction.
The
largest
component
of
heavy
construction
work
is
highway
and
street
construction.
These
activities
account
for
one­
third
of
the
value
of
construction
work
completed
by
the
heavy
construction
industries.
When
highway
and
street
construction
is
combined
with
bridge
and
tunnel
construction,
the
total
value
of
work
climbs
to
$
53.3
billion,
or
41.7
percent
of
the
industry
total.
Heavy
construction
activities
excluding
roads,
bridges,
and
tunnels
(
e.
g.
,
airport
runways,
sewers
and
water
mains,
transmission
lines)
account
for
the
remaining
58.3
percent
of
construction
value,
but
there
is
little
data
providing
further
detail
on
such
activities.
As
a
result,
this
section
focuses
principally
on
road,

highway,
bridge,
and
tunnel
construction.

The
Federal
Highway
Administration
(
FHWA)
publishes
the
most
detailed
report
on
highway,

bridge,
and
transit
systems
in
the
United
States.
The
1999
Report
to
Congress,
Status
of
the
Nation
 
s
Highways,
Bridges
and
Transit:
Conditions
and
Performance
(
C&
P
Report)
includes
not
only
information
on
the
condition
of
these
systems,
but
details
on
capital
expenditures
and
improvements
as
well.
The
sections
below
summarize
some
of
this
data.

Number
of
Projects
Table
2­
18
summarizes
information
from
the
C&
P
Report
on
the
number
of
miles
of
highway,

urban,
and
rural
roads
in
the
U.
S.
,
as
well
as
the
number
of
lane­
miles
represented
Highway
lane­

mileage
has
increased
by
an
average
of
only
0.3
percent
annually
over
the
period
1987­
1997.
Although
the
report
and
Table
2­
18
show
the
annual
capital
and
maintenance
expenditures
on
this
roadway
system,

nowhere
in
the
report
(
nor
in
any
other
data
reviewed
for
this
analysis)
does
FHWA
present
the
number
of
projects
funded
or
number
of
miles
of
new
road
completed.
As
a
result,
EPA
lacks
current
estimates
of
the
number
of
highway,
road,
bridge
or
transit
construction
projects
that
potentially
would
disturb
land.

2­
40
­
­

­
­

­
­

­
­

­
­

­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
number
of
rural
highway
road­
miles
(
as
distinguished
from
lane­
miles
)
declined
by
an
average
of
0.2
percent
annually
between
1987
and
1997.
During
the
same
period,
urban
highway
road­

miles
grew
by
an
average
of
1.7
percent
annually.
The
decline
of
rural
road
mileage
and
comparative
growth
in
urban
road
mileage
may
be
due,
at
least
in
part,
by
the
expansion
of
existing
urban
roadways
indicated
by
the
figures
above
for
lane­
mileage
growth
trends.
Some
areas
that
were
previously
classified
as
rural
may
also
have
been
reclassified
as
urban
during
that
10­
year
period
based
on
population
growth.
27
Table
2­
18.
Highway
Statistics
Statistic
1997
Data
1987­
1997
Average
Annual
Growth
(
percent)
a
Total
Rural
Highway
Miles
Total
Urban
Highway
Miles
Total
Highway
Miles
3.11
million
0.84
million
3.95
million
­
0.2
1.7
Total
Rural
Highway
Lane­
Miles
Total
Urban
Highway
Lane­
Miles
Total
Highway
Lane­
Miles
6.37
million
1.89
million
8.26
million
2.1
0.3
Total
Highway
Expenditures
(
All
Govts.
)

Total
Highway
Capital
Outlay
(
All
Govts.
)

Total
Highway
Capital
Outlay
Per
Lane­
Mile
Total
Highway
Capital
Outlay
Per
Road­
Mile
b
$
101.3
billion
$
48.7
billion
$
5,914
$
12,329­
$
12,360
­
­
Not
provided
a
Not
provided
for
all
statistic
categories.
b
Range
calculated
by
EPA
as
described
in
text.
Source:
FHWA
1999,
various
tables.

27
The
C&
P
Report
defines
 
rural
 
areas
as
areas
with
a
population
under
5,000.
.
 
Urban
 
areas
are
those
with
a
population
greater
than
or
equal
to
5,000.

2­
41
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Value
of
Projects
The
C&
P
Report
presents
highway
and
road
expenditures
by
all
levels
of
government
ownership.

Expenditures
are
further
classified
as
capital
and
non­
capital.
Non­
capital
expenditures
include
maintenance
and
service
outlays.
28
Maintenance
activities
are
not
expected
to
disturb
significant
amounts
of
land.
Capital
outlays
refer
to
activities
such
as
land
acquisition
and
other
right­
of­
way
costs;

preliminary
and
construction
engineering;
new
construction,
reconstruction,
resurfacing,
rehabilitation,
and
restoration
of
roadways,
bridges,
and
other
structures;
and
installation
of
guardrails,
fencing,
signs,
and
signals.
Capital
outlays
are
further
classified
according
to
whether
they
support
system
preservation,

system
expansion,
or
system
enhancement.
Definitions
for
these
are
as
follows:

 
System
Preservation
 
capital
improvements
on
existing
roads
and
bridges;
includes
reconstruction,
resurfacing,
pavement
restoration/
rehabilitation,
widening
of
narrow
lanes
and
shoulders,
bridge
replacement
and
bridge
rehabilitation;
does
not
include
routine
maintenance
costs
(
these
costs
are
captured
by
 
non­
capital
expenditures
 
)
.

 
System
Expansion
 
construction
of
new
roads
and
bridges,
as
well
as
costs
associated
with
adding
lanes
to
existing
roads;
includes
all
of
 
New
Construction,
 
 
New
Bridge,
 
 
Major
Widening,
 
and
most
costs
associated
with
 
Reconstruction
­
Added
Capacity.
 
 
System
Enhancement
 
includes
safety
enhancements,
installation
of
intelligent
transportation
systems,
and
environmental
enhancements.

Based
on
a
review
of
these
definitions,
EPA
concludes
that
the
activities
classified
as
capital
outlays
are
most
likely
to
result
in
land
disturbances.
In
1997,
capital
outlays
totaled
$
48.7
billion.
Table
2­
20
provides
a
more
detailed
breakdown
of
these
expenditures.

Another
1999
FHWA
report,
Our
Nation
 
s
Highways
,
shows
that
6.9
percent
of
total
state
disbursements
29
for
highways
in
1998
went
to
new
road
and
bridge
construction.
Another
36.3
percent
went
to
other
capital
improvements
on
existing
highways.
Between
1995
and
1997,
expenditures
(
from
all
jurisdictions)
for
system
expansion
grew
at
a
faster
rate
than
expenditures
for
either
system
28
Maintenance
outlays
cover
spot
patching,
crack
sealing
(
roads
and
bridge
decks)
,
and
maintenance/
repair
of
route
markers,
signs,
guardrails,
fencing,
signals,
and
lighting.

29
Total
state
disbursements
were
$
80.5
billion
in
1998.
This
figure
includes
Federal
Aid
for
highways.

2­
42
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
preservation
or
system
enhancements.
The
C&
P
report
shows
that
in
1997,
47.6
percent
of
capital
outlays
went
toward
system
preservation;
8.0
percent
went
toward
system
enhancement;
15.6
percent
went
toward
new
roads
and
bridges;
and
another
28.8
percent
went
toward
other
system
expansion.

The
FHWA
data
does
not
report
the
mileage
of
new
roads
constructed
versus
the
mileage
lost
(
removed
or
taken
out
of
commission
due
to
condition)
.
Some
data
is
available
for
capital
outlays
by
improvement
type
(
such
as
new
road
construction,
resurfacing,
etc.
)
.
This
information
is
presented
in
Table
2­
19.
30
30
The
data
in
Table
2­
19
is
based
on
a
sample
of
direct
State
expenditures
on
particular
improvements.
FHWA
then
used
this
state
data
to
estimate
a
national
average
for
roads
under
jurisdiction
of
all
governmental
units
(
local,
state,
federal)
and
for
all
roadway
systems.
The
 
Total,
State
Arterials
&
Connectors
 
is
based
on
the
direct
State
expenditures
data;
 
Total,
Arterials
and
Collectors,
All
Jurisdictions
 
is
estimated
based
on
the
State
data.
.
FHWA
reports
that
there
is
very
little
information
on
expenditures
for
local
functional
class
roads.
FHWA
assumed
that
the
expenditure
patterns
for
local
functional
class
roads
more
or
less
followed
the
expenditure
patterns
for
arterials
and
collectors
and
used
this
assumption
to
estimate
the
total
capital
outlay
by
all
government
units
for
all
road
systems
(
arterials,
collectors,
and
local
functional
class
roads)
.
These
expenditures
are
accounts
of
governmental
unit
spending
,
not
of
construction
contractor
spending,
though
it
may
be
assumed
that
since
the
majority
of
roads
are
owned
by
some
government
unit
(
local,
state,
federal)
,
any
costs
incurred
by
the
construction
contractor
would
ultimately
be
paid
for
with
government
funds.

2­
43
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
19.
Highway
Capital
Outlay
by
Improvement
Type,
1997
(
Billions
of
Dollars)

Expenditure
Item
System
Preservation
System
Expansion
System
Enhancemen
t
Total
New
Roads
&
Bridges
Existing
Roads
Direct
State
Expenditures
on
Arterials
and
Collectors
Right­
of­
Way
Engineering
New
Construction
Relocation
Reconstruction­
Added
Capacity
Reconstruction­
No
Added
Capacity
Major
Widening
Minor
Widening
Restoration
&
Rehabilitation
Resurfacing
New
Bridge
Bridge
Replacement
Major
Bridge
Rehabilitation
Minor
Bridge
Work
Safety
Traffic
Management/
Engineering
Environmental
and
Other
Total,
State
Arterials
&
Collectors
2.6
1.1
1.0
0.8
2.5
3.4
1.7
1.5
0.7
15.2
0.9
0.8
3.1
0.6
5.4
1.5
1.3
1.7
2.6
1.8
8.9
0.4
1.2
0.4
0.5
2.5
2.4
5.1
3.1
1.7
3.7
1.0
1.8
0.8
2.5
3.4
0.6
1.7
1.5
0.7
1.2
0.4
0.5
32.1
Total
Expenditures
on
Arterials
and
Collectors,
All
Jurisdictions
(
estimated)
a
Highways
and
Other
Bridge
Total,
Arterials
and
Collectors
13.7
4.9
18.5
5.3
0.8
6.0
11.2
11.2
3.1
3.1
33.2
5.6
38.
.
9
Total
Capital
Outlay
on
All
Systems
(
estimated)
b
Highways
and
Other
Bridges
Total
Capital
Outlay,
All
Systems
17.1
6.1
23.2
6.6
1.0
7.6
14.0
14.0
3.9
3.9
41.7
7.0
48.7
Percent
of
Total
Expenditures
47.6%
15.6%
28.8%
8.0%
100.0%

a
Improvement
type
distribution
was
estimated
based
on
State
Arterial
and
Collector
data.
b
Includes
expenditures
for
arterials
and
collectors
as
well
as
for
local
functional
class
roads.
Sources:
Highway
Statistics
1997,
Table
SF12­
A
and
unpublished
FHWA
data;
all
FHWA
1999
Exhibit
6­
13
2­
44
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.1.4
Characterization
of
Supply
This
section
discusses
the
characteristics
of
supply
in
the
C&
D
industry
such
as
market
structure,

barriers
to
entry,
and
supply
trends.

Market
Structure
Section
2.3
summarized
information
about
the
size
distribution
of
developers
and
builders,
based
on
employee
and
revenue
size
criteria.
As
shown
there,
the
industry
consists
predominantly
of
small
firms
and
sole
proprietorships
who
generally
operate
on
a
localized
basis
within
a
specific
geographic
market.
Anecdotal
information
indicates
that
a
large
number
of
small
firms
focus
on
niche
markets
that
are
not
as
easily
accessible
to
the
large­
scale
builders
(
Housing
Zone,
2001)
.

While
the
majority
of
firms
are
small,
a
small
number
of
large
operators
do
control
a
sizeable
share
of
the
market.
In
its
special
report
on
homebuilding,
for
example,
Census
reports
that
just
over
100
builders,
representing
only
0.3
percent
of
all
establishments,
accounted
for
90,772
new
single­
family
homes,
or
18.4
percent
of
the
total.
This
represented
an
average
of
865
homes
per
builder
(
see
Table
2­

20)
.
31
Assuming
an
average
sales
price
of
$
200,000,
builders
in
this
size
class
would
have
average
revenues
of
$
173
million,
substantially
above
the
overall
industry
average
of
$
1.0
million.
At
the
top
of
the
industry
are
builders
like
Pulte
Corporation
(
$
3.8
billion
in
housing
revenues)
,
Kaufman
and
Broad
(
$
3.7
billion)
,
and
Centex
Corporation
(
$
3.3
billion)
who
operate
nationwide
and
wield
considerable
market
power.
32
Discussions
with
representatives
of
the
homebuilding
industry
suggest
there
are
at
least
two
common
business
models
in
the
industry.
Most
projects
are
managed
by
either
a
single
land
developer
who
sells
improved
lots
to
individual
builders,
or
feature
a
developer­
builder
who
both
develops
the
land
and
builds
on
it
(
some
developers
may
sell
some
lots
and
retain
others
to
build
on
themselves)
.
Figure
2­

4
illustrates
these
two
alternatives.

31
These
data
are
based
on
a
subset
of
builders
that
are
100
percent
specialized
in
new
single­
family
home
construction.

32
http:
/
/
www.
housingzone.
com/
topics/
pb/
build/
giants2000/
2000400.
asp
accessed
3/
9/
01.

2­
45
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
20
Selected
Statistics
for
Establishments
by
Single­
Family
Housing
Starts
Size
Class:
1997
[
Detail
may
not
add
to
total
because
of
rounding
]

Source:
U.
S.
Bureau
of
the
Census,
Construction
Sector
Special
Study
Table
3a.
(
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www/
starts.
pdf)
Number
of
Housing
Starts
Establishments
Starts
Starts
per
Establishment
No.
%
of
Total
No.
%
of
Total
0
3,736
11.0%
0
0.0%
0.0
1­
4
14,781
43.6%
33,363
6.8%
2.3
5­
9
6,557
19.3%
42,175
8.6%
6.4
10­
24
5,411
16.0%
79,226
16.1%
14.6
25­
99
2,608
7.7%
109,258
22.2%
41.9
100­
499
720
2.1%
138,000
28.0%
191.7
500+
105
0.3%
90,772
18.4%
864.5
Total
33,918
100.0%
492,792
100.0%
14.5
Barriers
to
Entry
In
the
economics
literature,
barriers
to
entry
are
considered
to
exist
when
it
is
difficult
for
a
new
firm
to
enter
an
existing
market.
According
to
academics
who
have
studied
the
homebuilding
industry,

there
are
two
types
of
barriers
to
entry
for
new
homebuilding
firms
 
entry
costs
and
input
cost
differentials
(
Landis,
1986)
.

 
Entry
cost
differentials
are
the
additional
costs
a
new
homebuilder
must
incur
to
participate
in
a
given
market.
These
costs
may
be
manifested
in
the
form
of
local
development
fees,
abnormally
high
land
costs,
or
abnormally
high
wages.
In
the
short
run,
entry
cost
barriers
raise
the
cost
of
building
and
keep
builders
who
are
unable
or
unwilling
to
pay
the
extra
costs
out
of
the
market.
In
the
long
run,
builders
produce
at
less
than
their
optimal
scale
(
i.
e.
,
to
the
left
of
the
lowest
point
on
their
marginal
cost
curve)
to
avoid
holding
unsold
inventory
in
a
downturn.
Thus,
entry
barriers
flatten
the
industry
average
cost
curve
by
increasing
builders
 
exposure
to
 
cyclical
risk.
 
In
addition,
these
barriers
tend
to
reduce
the
advantage
of
high
volume
builders
over
the
long
term
(
Landis,
1986)
.

2­
46
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
Input
cost
differentials
are
exhibited
when
new
homebuilders
must
pay
higher
prices
for
inputs
than
existing
firms,
or
when
they
are
prevented
from
accessing
necessary
inputs.
Usually,
input
price
differentials
are
a
temporary
phenomenon
but
some
forms
of
regulation
can
create
permanent
price
differentials.

The
existence
of
entry
costs
also
increases
the
importance
of
up­
front
financing
for
home
building
projects.
The
builder
must
invest
more
funds
earlier
in
the
project
to
overcome
the
entry
barrier.

Firms
with
established
credit
may
be
able
to
borrow
some
of
this
up­
front
financing,
while
less
well­

established
firms
must
use
their
own
capital.
In
either
case,
the
opportunity
costs
of
the
investment
are
larger
so
regulatory
delays
and
environmental
compliance
requirements
become
more
burdensome
(
Landis,
1986)
.
Much
of
the
cost
of
building
regulation
is
the
interest
that
accrues
on
invested
funds
while
permits
and
variances
are
negotiated.
Luger
and
Temkin
(
2000)
estimate
that
the
costs
of
delay
for
a
25­
unit
subdivision
rise
from
$
3,692
per
month
in
the
approvals
stage
to
$
13,400
per
month
in
the
construction
phase.

Similar
issues
confront
non­
residential
and
heavy
construction
contractors.
Non­
residential
projects
are
generally
larger
than
residential
projects,
so
builder
financing
and
carrying
costs
are
proportionately
larger.
Since
fewer
firms
can
take
on
large
projects,
the
opportunity
for
incumbent
firms
to
maintain
barriers
to
entry
is
also
greater.
Most
heavy
construction
is
carried
out
under
government
or
utility
contracts
where
competitive
bidding
is
required.
This
may
tend
to
level
the
playing
field
for
entering
firms
who
can
overcome
the
basic
qualification
requirements.

2.
4
.
1
.
5
Supply
Trends
This
section
provides
a
brief
overview
of
trends
in
homebuilding
practices
that
could
potentially
influence
baseline
ESC
practices
or
the
adoption
of
ESC
options
proposed
by
EPA
under
the
effluent
guidelines.

The
National
Governors
Association
(
NGA)
recently
published
a
report
examining
a
concept
they
have
termed
New
Community
Design
(
NCD)
.
According
to
the
report,
NCD
encompasses
many
of
the
concepts
popular
in
residential
design
today:
New
Urbanism,
Traditional
Neighborhood
Development,
compact
development,
livable
communities,
master­
planned
communities,
and
neo­

2­
47
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
traditional
design.
NCD
has
been
described
as
 
neighborhoods
of
housing,
parks,
and
schools
within
walking
distance
of
shops,
civic
services,
jobs,
and
transit
 
a
modern
version
of
the
traditional
town
 
(
Peter
Calthorpe,
as
quoted
in
Hirschhorn
and
Souza,
2001,
p.
9)
.
This
and
other
types
of
design
such
as
low
impact
development
(
LID)
have
garnered
new­
found
attention
in
recent
years,
and
continue
to
be
key
topics
for
development
professionals.
Both
NCD
and
LID
are
discussed
in
more
detail
below.

New
Community
Design
NCD
is
a
development
design
philosophy
aiming
to
create
a
walkable,
multi­
purpose
community
structure
that
decreases
dependency
on
automobiles,
takes
advantage
of
public
transportation,

incorporates
parks
and
other
green
spaces,
and
uses
existing
infrastructure.
A
community
based
on
NCD
incorporates
residential,
commercial,
and
institutional
facilities.
Residential
communities
are
a
blend
of
single
and
multi­
family
housing,
and
often
blend
commercial
and
retail
facilities
with
housing
units
as
well.
According
to
the
NGA
report,
approximately
one­
third
of
potential
homebuyers
would
prefer
an
NCD
community
versus
a
traditional,
sprawl­
based
development
 
provided
that
the
option
existed.

Currently
less
than
one
percent
of
total
housing
construction
is
based
on
NCD
principles.
This
means
that
the
option
to
live
in
a
NCD
community
versus
a
traditional
sprawl
community
does
not
exist
for
many
potential
homebuyers.
NGA
identifies
the
following
factors
as
limiting
the
adoption
of
NCD
and
similar
concepts:

 
Local
zoning
codes
make
it
difficult
for
mixed­
use
communities
to
get
approved.

 
Lenders
favor
single­
use
residential
projects,
strip
malls,
and
suburban
office
parks.
This
favoritism
 
causes
conventional
real
estate
analyses
to
discount
the
long­
term
returns
of
NCDs,
making
them
difficult
to
finance
 
(
(
Hirschhorn
and
Souza,
p.
13)
.

 
Conventional
developers
and
builders
have
expertise
in
single­
use
projects
and,
as
a
result,
continue
doing
what
they
are
already
familiar
with.
In
many
cases
these
individuals
are
not
able,
or
prepared,
to
deal
with
the
increase
in
up­
front
costs
arising
from
the
increased
intensity
at
the
planning
and
design
stage
of
a
NCD
project.

A
survey
by
the
Canada
Mortgage
and
Housing
Corporation
compared
the
costs
and
benefits
of
a
conventional
development
(
4,505
dwellings)
with
an
NCD
alternative
(
6,875
dwellings)
.
The
incremental
savings
resulting
from
the
NCD
alternative,
on
a
per
housing
unit
basis,
were
as
follows:

roads,
$
3,054;
storm
water
management,
$
1,499;
transit,
$
1,330;
water,
$
1,099;
policing,
$
1,016;
and
2­
48
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
sanitary
services,
$
975.
The
total
infrastructure
savings
for
the
NCD
alternative
are
$
61.5
million
(
Hirschhorn
and
Souza,
p.
36)
.
The
NGA
report
offers
one
solution
to
the
lagging
supply
of
NCD
construction:
implement
parallel
building
codes.
Such
parallel
building
codes
may
serve
to
 
level
the
playing
field
 
with
conventional
subdivision
development
while
still
allowing
conventional
development
to
take
place.

Low­
Impact
Development
LID
is
a
development
design
strategy
that
aims
to
protect
the
natural
pre­
development
hydrological
function
of
a
site.
True
LID
shares
many
features
with
NCD,
such
as
smaller
lot
sizes
and
the
addition
of
greenspace
to
the
site
plan.
However,
whereas
NCD
focuses
on
mixed­
use
development,

LID
at
this
time
focuses
primarily
on
residential
development,
although
LID
concepts
may
be
easily
applied
to
other
types
of
development
(
e.
g.
,
commercial,
mixed­
use)
.

The
primary
goals
of
LID
are
to:
(
1)
minimize
development
impacts
by
reducing
impervious
surfaces,
maintaining
natural
site
drainage,
reducing
curb
and
gutter
construction,
and
reducing
clearing
and
grading;
(
2)
create
dispersed
runoff
controls
on
individual
lots
utilizing
swales,
flatter
slopes,
rain
gardens,
etc.
;
(
3)
maintain
pre­
development
hydrology;
and
(
4)
encourage
pollution
prevention
and
runoff
management
by
individual
property
owners
(
Coffman
et
al.
,
1998)
.

Conventional
site
design
relies
on
storm
water
controls
that
collect
and
convey
runoff
away
from
the
property
as
quickly
as
possible.
This
type
of
design
relies
on
pipes,
paved
surfaces,
drainage
ditches,

and
gutters
as
well
as
traditional
best
management
practices
(
BMPs)
such
as
ponds
and
sediment
basins.

Such
conventional
design
actually
amplifies
hydrologic
changes
(
increased
volume,
runoff
frequency,

and
discharge
rate)
as
 
natural
storage
is
lost,
the
amount
of
impervious
surfaces
in
increased,
the
time
of
concentration
is
decreased,
runoff
travel
times
are
decreased
and
the
degree
of
hydraulic
connection
is
increased
 
(
(
Prince
George
 
s
County,
1999)
.
In
addition,
while
many
conventional
storm
water
control
techniques
are
designed
to
 
maintain
the
peak
runoff
discharge
rate
at
predevelopment
levels
for
a
particular
design
storm
event,
 
only
the
runoff
rate
is
controlled,
leaving
the
runoff
volume,
frequency,

and
duration
to
increase
unchecked
(
Coffman
et
al.
,
1998)
.

2­
49
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
with
any
relatively
new
technology
or
approach,
33
there
are
many
concerns
surrounding
the
effectiveness,
costs,
and
benefits
of
LID
as
compared
with
conventional
site
design.
Developers
and
builders
want
to
know
how
using
LID
techniques
will
affect
financing
and
their
bottom
line,
while
consumers
want
to
know
how
it
will
affect
their
ability
to
purchase
a
new
house,
as
well
as
their
resale
value.

Many
in
the
construction
industry
have
found
that
they
face
lower
development
costs
with
LID
than
with
conventional
 
curb
and
gutter
 
design.
.
A
presentation
at
a
1999
Storm
Water
Workshop
for
the
Florida
Keys
Carrying
Capacity
Study
(
FKCC;
sponsored
by
the
U.
S.
Army
Corps
of
Engineers,

Jacksonville
Division)
demonstrates
how
LID
can
lower
overall
development
costs.
Table
2­
21
reproduces
the
construction
cost
table
presented
for
a
residential
development
in
Maryland.

Table
2­
21.
Construction
Cost
Comparison
for
Low
Impact
Development
Cost
Element
Conventional
Development
Low
Impact
Development
Grading/
Roads
$
569,698
$
426,575
Storm
Drains
$
225,721
$
132,558
SWM
Pond/
Fees
$
260,858
$
10,530
Bioretention/
Micro
$
252,124
Total
$
1,086,277
$
821,787
Unit
Cost
$
14,679
$
10,146
Lot
Yield
74
81
Source:
Coffman,
1999
As
shown
above,
construction
costs
associated
with
development
were
estimated
to
be
nearly
$
250,000
lower
for
a
LID
development
plan
than
for
a
conventional
plan.
In
addition,
the
LID
design
actually
increased
lot
yield
from
74
lots
to
81
lots.
This
is
only
one
example
of
reduced
construction
costs
and/
or
increased
lot
yield
achievable
though
LID
design.

33
The
term
 
relatively
new
 
is
used
quite
loosely
here.
.
LID
technologies
have
been
in
use
for
some
time,
although
such
designs
are
just
now
beginning
to
gain
mainstream
acceptance.

2­
50
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
major
additional
cost
developers
incur
when
choosing
LID
(
as
well
as
NCD)
,
is
the
increased
time
and
effort
often
needed
at
the
design
stage
of
a
project.
The
additional
planning
time
is
used
to
assess
site
hydrology,
design
runoff
controls
for
each
lot,
and
other
considerations.

Conservation­
oriented
design
 
creates
significant
upfront
costs
and
raises
questions
of
financial
viability
 
(
Mammoser,
2000,
p.
45)
.
These
costs
can
increase
more
if
structures
are
built
using
environmentally­

friendly
materials,
which
have
generally
higher
 
first
cost
 
compared
to
more
traditional
materials.
.
As
noted
by
Mammoser,
(
2000)
,
potential
lenders
may
be
wary
of
financing
a
LID
project.
As
more
LID
projects
prove
successful
and
profitable,
however,
lenders
may
become
more
accepting
of
such
 
alternative
 
forms
of
development
and
perceive
them
as
no
more
risky
 
and
perhaps
less
risky
 
than
conventional
developments.

2.4.2
Characteristics
of
Construction
Demand
This
section
describes
the
factors
and
characteristics
of
demand
in
the
C&
D
industry.
The
major
demand
factors
addressed
are:
housing
demand
and
demand
elasticity,
the
impact
of
regulation
on
demand
for
housing,
and
demand
for
nonresidential
and
heavy
construction.

2.4.2.1
Demand
Factors
Affecting
Construction
and
Development
Activities
According
to
a
recent
study
(
Luger
and
Temkin,
2000)
,
market
demand
is
one
of
the
three
major
factors
taken
into
consideration
by
a
builder/
developer
when
deciding
whether
or
not
to
propose
a
development.
Market
demand
includes
the
types
and
quantities
of
housing
units
the
public
wants,
and
is
affected
by
general
macroeconomic
conditions,
demographics,
and
consumer
tastes.
Other
factors
that
may
affect
demand
for
C&
D
activities
include
inflation
(
Henderschott,
1980)
,
transaction
costs
(
i.
e.
,

costs
associated
with
purchasing
a
new
home/
facility)
(
Haurin
and
Chung,
1998)
,
expected
length
of
tenure
(
Haurin
and
Lee,
1989)
,
mortgage
loan
to
house
value
(
Haurin
and
Lee,
1989)
,
and
borrowing
constraints
(
Linneman
et
al.
,
1997;
Zorn,
1993)
.
Changing
demographics
tend
to
have
a
fairly
large
effect
on
the
type
of
residential
housing
demanded
(
i.
e.
,
single­
family
versus
multifamily)
(
Hirsch,
1994;

Eppli
and
Childs,
1995)
.

2­
51
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.2
Housing
Demand
and
Elasticity
As
discussed
above,
housing
demand
is
largely
determined
by
macroeconomic
factors,

demographics,
and
consumer
tastes.
Changes
in
the
age
of
family
formation,
the
size
of
families,
and
their
perceived
needs
for
space
will
affect
the
market
 
s
demand
for
houses
of
various
sizes
and
styles.

Geographic
shifts
in
economic
activity
and
changes
in
worker
mobility
affect
where
people
wish
to
live.

As
these
market
factors
evolve,
an
increasing
number
of
buyers
find
that
existing
housing
does
not
meet
their
desires.
In
other
words
it
becomes
an
imperfect
substitute
for
new
housing
(
Landis,
1986)
.
As
an
illustration,
the
average
size
of
new
homes
has
been
increasing
in
the
U.
S.
,
even
as
family
sizes
have
diminished
or
remained
unchanged.
In
1995,
the
average
size
of
a
new
home
was
2,095
square
feet.
By
1999
the
average
had
risen
more
than
6
percent,
to
2,225
square
feet
(
Census,
2000c)
.
Existing
housing
does,
however,
act
as
a
check
on
the
prices
of
new
housing
(
Landis,
1986)
since
it
serves
as
the
default
alternative.

Demand
for
new
construction
may
be
viewed
as
the
outcome
of
a
four­
way
household
decision
process
in
which
households
decide
whether
to
buy
an
existing
home,
buy
a
newly
constructed
home,

improve
their
current
home,
or
do
nothing.
In
light
of
demographically­
driven
demand
and
the
existence
of
near
substitutes,
it
is
not
surprising
that
empirical
studies
find
a
somewhat
inelastic
demand
for
new
housing
(
DiPasquale,
1999)
.
Price
is
not
the
strong
determining
factor
in
housing
markets
that
it
is
in
more
commodity­
like
markets.
Luger
and
Temkin
(
2000)
report
that
this
inelasticity
is
more
pronounced
in
the
higher­
end
housing
markets.

Demographic
trends
are
local
as
well
as
national
phenomena.
Different
parts
of
the
country
grow
at
different
rates
and
as
the
size
and
make
up
of
the
local
population
changes
so
do
housing
tastes
and
preferences.
Location
is
a
key
aspect
of
housing
demand,
perhaps
more
significant
than
price.
As
a
result,
demand
for
homes
in
favorable
locations
is
far
stronger
than
demand
for
homes
in
less
desirable
locations.
Strong
demand
in
certain
regions
or
neighborhoods
will
be
reflected
in
a
less
elastic
demand
curve.

2­
52
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.3
Impact
of
Regulation
on
Housing
Demand
Increased
regulations
may
exert
upward
pressure
on
housing
prices
which
may,
in
turn,
price
some
potential
homebuyers
out
of
the
market
due
to
income
constraints.
Luger
and
Temkin
(
2000)
give
the
following
example:
if
regulations
on
the
construction
industry
increase
the
price
of
a
house
by
$
10,000,
a
household
would
need
$
2,500
more
in
annual
income
to
still
qualify
for
the
house.
The
authors
define
 
excessive
 
regulation
as
those
regulations
that
are
 
beyond
what
is
essential
 
to
accomplish
set
environmental
or
developmental
goals,
or
those
delays
that
are
longer
than
what
should
be
necessary
to
accomplish
a
fair
review
of
plans
(
Luger
and
Temkin,
2000)
.
Table
2­
22
illustrates
this
effect.

Table
2­
22.
Impact
of
Regulatory­
Driven
Delays
on
Housing
Affordability
Parameters
No
Delay/
No
Excessive
Regulation
With
Delays
and
Excessive
Regulation
House
Price
PITI
Payment
a
(
per
month)

Income
Needed
to
Qualify
for
Mortgage
$
175,000
$
1,377
$
55,000
$
185,000
b
$
1,437
c
$
57,500
a
Principal,
Interest,
Tax,
Insurance
Payment.
Assumes
an
80
percent,
30­
year
conventional
mortgage
at
8
percent
interest,
using
tax
and
insurance
data
from
New
Jersey.
b
Assumes
$
10,000
in
regulatory
costs
added
to
the
home
price.
c
Calculated
using
typical
mortgage
spending
limit
equal
to
30
percent
of
gross
income.
Source:
Luger
and
Temkin
2000,
pages
10­
11.

Housing
demand,
especially
in
the
higher­
end
market,
tends
to
be
fairly
inelastic.
This
inelasticity
results
in
the
appearance
of
a
multiplier
effect
with
regard
to
regulatory
costs
and
sales
price.

In
other
words,
a
one
dollar
increase
in
costs
to
the
builder
will
translate
into
a
more
than
one
dollar
cost
to
the
consumer
(
if
costs
are
passed
forward
as
they
tend
to
be
with
inelastic
markets)
.
Estimates
for
the
magnitude
of
this
multiplier
range
from
two
to
six,
with
the
average
being
approximately
four
(
Luger
and
Temkin,
2000)
.
The
potential
impact
of
this
proposed
rule
on
housing
prices
is
discussed
and
analyzed
in
Chapters
Four
and
Five.

2­
53
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.4
Trends
in
New
Homes
Sold
Table
2­
23
shows
the
number
of
new
one­
family
houses
sold
and
for
sale
from
1981
through
1999,
including
the
median
number
of
months
from
start
to
sale,
average
sales
prices,
and
median
sales
price.

Table
2­
23
New
One­
Family
Houses
Sold
and
For
Sale
Year
Total
(
Thousands)
Median
Months
Start
to
Sale
Average
Sales
Price
Median
Sales
Price
1981
436
5.1
$
83,000
$
68,900
1982
412
3.9
$
83,900
$
69,300
1983
623
2.9
$
89,800
$
75,300
1984
639
3.4
$
97,600
$
79,900
1985
688
3.9
$
100,800
$
84,300
1986
750
3.6
$
111,900
$
92,000
1987
671
3.9
$
127,200
$
104,500
1988
676
4.0
$
138,300
$
112,500
1989
650
4.3
$
148,800
$
120,000
1990
534
4.5
$
149,800
$
122,900
1991
509
4.4
$
147,200
$
120,000
1992
610
3.5
$
144,100
$
121,500
1993
666
3.6
$
147,700
$
126,500
1994
670
3.8
$
154,500
$
130,000
1995
667
4.3
$
158,700
$
133,900
1996
757
4.2
$
166,400
$
140,000
1997
804
3.7
$
176,200
$
146,000
1998
886
3.5
$
181,900
$
152,500
1999
907
3.3
$
195,800
$
160,000
Source:
Bureau
of
the
Census
(
2000c)
.

2­
54
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.4.2.5
Nonresidential
Demand
Characteristics
Demand
characteristics
affecting
the
nonresidential
and
heavy
construction
sectors
are
similar
to
those
affecting
the
residential
sector.
General
economic
conditions,
interest
rates,
and
past
industry
activity
all
have
an
effect
on
current
demand.
According
to
a
recent
press
release
by
CMD
(
2001b)
,
the
demand
and
supply
cycles
in
construction
are
highly
localized,
and
at
any
given
time
different
cities
across
the
nation
are
at
different
points
in
their
own
cycles.
For
example,
as
of
October,
2001,
office
markets
in
Washington
D.
C.
,
San
Diego,
Los
Angeles,
and
several
areas
in
New
York
were
experiencing
increasing
office
vacancies,
but
new
construction
was
still
occurring.
In
markets
such
as
Dallas,

Jacksonville,
Tampa,
and
Salt
Lake
City,
however,
there
has
been
low
or
even
negative
demand
growth.

While
buildings
in
progress
are
still
being
completed,
new
construction
starts
have
slowed
dramatically.

The
industrial
market
was
still
fairly
stable
in
October
and
had
not
yet
begun
showing
signs
of
substantial
decline
(
CMD,
2001b)
.

As
with
residential
construction,
general
population
growth
should
ensure
that
demand
for
all
building
types
will
continue
to
rise
in
the
future
(
CMD,
2001b)
.
The
rate
at
which
demand
increases,

however,
is
certainly
variable
and
may
not
be
the
same
for
all
markets
in
all
portions
of
the
United
States.

For
the
commercial
building
market
in
particular,
past
building
activity
has
affected
demand
through
recent
years.
The
Economic
Recovery
Tax
Act
of
1981
fueled
a
commercial
building
boom
that
ultimately
generated
severe
excess
capacity
in
the
market
(
CMD,
2001a)
.
This
caused
a
decrease
in
demand
for
new
commercial
construction
throughout
the
late
1980s
and
into
the
1990s
as
the
market
worked
to
absorb
some
of
the
excess
commercial
space.
The
growth
in
the
technology
sector
in
the
late
1990s
spurred
another
boom
in
the
office
market.
According
to
CMD
(
2001a)
,
approximately
20
million
square
feet
of
office
space
was
built
between
1998
and
2000
as
a
result
of
increased
demand
from
this
one
sector.
Vacancy
rates
increased
once
again
as
the
year
2000
brought
the
decline
of
the
technology
sector
and
associated
economic
downturn.

For
the
commercial
and
industrial
sectors,
increasing
vacancy
rates
tend
to
be
followed
by
a
decrease
in
new
construction
activity
as
the
market
tries
to
absorb
the
over­
supply
of
space.
The
demand
for
new
construction
in
these
sectors
is
heavily
influenced
by
the
performance
of
other
sectors,
as
evidenced
by
the
technology
sector
example
above.
A
 
boom
 
in
one
industry
necessitates
the
2­
55
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
acquisition
of
new
space
for
expansion;
if
the
market
does
not
have
a
ready
supply
of
the
type
of
space
needed,
then
new
construction
increases.
At
the
same
time,
a
 
bust
 
in
a
given
industry
will
free
up
space
in
the
market,
and
until
the
space
is
absorbed,
new
construction
will
slow.
As
with
residential
construction,
lower
interest
rates
may
increase
construction
activity,
while
higher
rates
will
tend
to
slow
activity.

2.4.2.6
Heavy
Construction
Demand
Characteristics
The
heavy
construction
industry
(
NAICS
234)
is
defined
by
the
U.
S.
Census
Bureau
to
include
those
establishments
that
are
 
engaged
in
the
construction
of
heavy
engineering
and
industrial
projects
(
except
buildings)
such
as
highways,
power
plants,
and
pipelines
 
(
(
U.
S.
Census
Bureau,
2000f)
.
Heavy
construction
projects
are
characterized
by
their
linear
nature,
as
many
projects
are
spread
along
a
horizontal,
rather
than
vertical,
plane
(
Ringwald,
1993)
.
Since
the
definition
of
heavy
construction
projects
excludes
buildings,
these
projects
are
much
more
weather­
sensitive
than
building
construction
and
there
are
fewer
days
suited
for
heavy
construction
projects
nationwide,
especially
in
the
northern
states
(
Ringwald,
1993)
.
The
general
trend
in
heavy
construction
through
the
1990s
was
toward
the
rehabilitation
of
existing
infrastructure
(
Ringwald,
1993)
.

In
addition,
the
majority
of
heavy
construction
projects
(
and
the
majority
of
the
value
of
construction
work)
is
performed
for
public,
rather
than
private,
owners
(
Ringwald,
1993;
U.
S.
Census
Bureau,
2000f,
p.
5)
.
As
Table
2­
24
shows,
more
than
50
percent
of
the
value
of
construction
work
in
NAICS
234
occurs
under
government­
owned
projects,
compared
with
less
than
25
percent
of
the
value
in
NAICS
233
(
Building,
developing,
and
general
contracting)
and
NAICS
235
(
Special
trades)
.
This
division
of
project
ownership
sets
the
heavy
construction
sector
apart
from
the
other
major
construction
sectors.

For
heavy
construction
firms,
work
done
for
a
public
entity
generally
entails
different
contractual
requirements
than
work
done
for
private
entities.
When
the
project
owner
is
a
public
entity
such
as
a
city,
state,
or
federal
government,
at
least
50
percent
of
the
contract­
related
jobs
are
generally
performed
by
the
prime
contractor,
or
conversely,
less
than
half
of
the
work
under
a
given
contract
will
be
2­
56
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
subcontracted
to
other
firms
(
Ringwald,
1993)
.
This
practice
provides
a
public
owner
with
more
easily
enforceable
specifications,
since
the
majority
of
the
work
is
done
by
the
primary
contractor
(
Ringwald,

1993)
.
On
the
other
hand,
80
to
100
percent
of
the
work
on
a
privately­
owned
project
may
be
subcontracted
to
firms
other
than
the
prime
contractor
(
Ringwald,
1993)
.

The
negotiated
contracts
often
used
in
private­
sector
construction
are
not
as
common
in
the
public
arena.
This
is
because
a
private
owner
generally
has
to
prove
the
cost­
effectiveness
of
the
contract
only
to
the
owner
 
s
satisfaction,
whereas
a
public
owner
may
be
called
on
to
demonstrate
the
cost­

effectiveness
of
such
contracts
to
large
numbers
of
taxpayers
(
Ringwald,
1993)
.
For
this
reason,
most
heavy
construction
contracts
let
by
public
entities
are
competitively
bid.
Often,
local
law
or
agency
regulations
require
the
use
of
competitive
bidding
for
public
projects.
There
is
a
sense
that
such
a
system
provides
fairness
in
the
awarding
of
contracts,
as
well
as
providing
value
to
the
taxpayers
(
ASCE,
2000)
.

2­
57
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
24.
Value
of
Construction
Work
by
Project
Ownership
(
1997,
$
thousands)

1997
NAICS
code
Description
Owned
by
Federal
Government
Owned
by
State/
Local
Govts.
Total
Govt.
Owned
Govt.
Owned
as
Percent
of
Total
Privately
Owned
Privately
Owned
as
Percent
of
Total
Total
Private
and
Government
233
Building,
developing,
and
general
contracting
$
14,362,134
$
43,472,528
$
57,834,664
15.2%
$
323,806,944
84.8%
$
381,641,608
234
Heavy
Construction
$
8,845,515
$
60,368,420
$
69,213,936
54.1%
$
58,627,664
45.9%
$
127,841,600
235
Special
Trade
Contractors
a
$
559,910
$
2,179,346
$
2,739,258
17.2%
$
13,171,513
82.8%
$
15,910,771
TOTAL
$
23,767,559
$
106,020,294
$
129,787,858
24.7%
$
395,606,121
75.3%
$
525,393,979
a
Covers
establishments
in
NAICSs
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000f)
,
1997
Census
of
Construction
.
Figures
may
not
add
to
totals
due
to
rounding.

2­
58
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.5
ECONOMIC
AND
FINANCIAL
CHARACTERISTICS
2.5.1
Value
of
Work
Done
For
the
C&
D
industries,
the
Bureau
of
Census
defines
the
value
of
construction
work
as
the
combined
value
of
completed
work
on
new
construction,
additions,
alterations,
reconstruction,
and
maintenance
and
repair.
In
addition,
the
Census
defines
the
value
of
business
done
as
the
sum
of
the
value
of
construction
work
plus
other
business
receipts,
which
include:
receipts
from
retail
and
wholesale
trade,
rental
of
equipment,
manufacturing,
transportation,
legal
service,
insurance,
finance,
rental
of
property
and
other
real
estate
operations,
and
other
non­
construction
activities.
While
the
value
of
construction
work
is
a
good
indicator
of
economic
performance
specifically
related
to
C&
D
activity,
the
value
of
business
done
measure
provides
a
better
overall
indicator
of
the
economic
performance
of
establishments
in
the
C&
D
industries.

In
addition
to
value
of
construction
work,
value
of
other
receipts,
and
value
of
work
done,
the
1997
Census
of
Construction
Industries
includes
three
other
measures:
value
of
construction
work
subcontracted
in
from
others,
net
value
of
construction
work,
and
value
added.
The
value
of
construction
work
subcontracted
in
from
others
includes
the
value
of
construction
work
done
by
reporting
establishments
as
subcontractors.
The
net
value
of
construction
work
is
calculated
by
subtracting
the
costs
of
construction
work
subcontracted
out
to
others
from
the
value
of
construction
work
done.
The
value
added
component
is
equal
to
the
value
of
business
done
minus
the
costs
of
construction
work
subcontracted
to
others
and
the
costs
for
materials,
components,
supplies,
and
fuels
(
see
Section
2.5.2
for
discussion
of
these
costs)
.

Table
2­
25
below
shows,
for
each
of
the
C&
D
industries,
the
dollar
value
of
business
done
(
or
total
revenues)
,
value
of
construction
work,
value
of
other
business
receipts,
value
of
construction
work
subcontracted
in
from
others,
net
value
of
construction
work,
and
value
added.
Overall,
the
total
value
of
business
done
(
or
revenues)
in
the
C&
D
industries
was
$
534.2
billion
in
1997.
This
represented
a
nominal
increase
of
57.8
percent
over
the
$
338.5
billion
in
business
done
in
1992.
NAICS
233
(
Building
and
Developing,
including
NAICS
2331)
accounted
for
$
386.9
billion
or
72.4
percent
of
the
total
in
1997.
The
value
of
business
done
by
heavy
construction
contractors
(
NAICS
234)
was
$
130.8
billion
2­
59
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
24.4
percent
of
the
total)
,
while
special
trade
contractors
(
NAICS
23593
and
23594)
earned
$
16.5
billion
(
3.1
percent
of
the
total)
.

The
total
value
of
construction
work
done
in
the
C&
D
industries
was
$
525.4
billion
and
represented
98.3
percent
of
total
business
done
in
1997.
This
represented
a
nominal
increase
of
58.9
percent
over
the
$
330.6
billion
in
construction
work
done
in
1992.
Again,
NAICS
233
(
Building,

developing,
and
general
contracting,
including
NAICS
2331)
accounted
for
the
largest
share,
completing
$
381.6
billion
(
or
74.7
percent)
of
the
total
value
of
construction
work
done
in
the
C&
D
industries
in
1997.
Construction
work
by
heavy
construction
contractors
(
NAICS
234)
was
valued
at
$
127.8
billion
(
24.3
percent
of
the
total)
.
Work
done
by
excavation
and
wrecking/
demolition
contractors
(
NAICS
23593
and
23594)
was
worth
$
15.9
billion
and
represented
3.0
percent
of
the
total
value
of
construction
work
done
in
1997.

In
addition
to
the
$
525.4
billion
in
construction
work
done,
the
C&
D
industries
also
subcontracted
in
$
43.0
billion
in
construction
work
from
others.
This
represented
a
nominal
increase
of
91.2
percent
over
the
$
28.2
billion
in
work
subcontracted
in
during
1992.
Although
NAICS
233
accounted
for
the
highest
share
of
construction
work
value,
NAICS
234
(
Heavy
construction)
earned
the
greatest
share
of
work
subcontracted
in,
totaling
$
28.4
billion
or
52.6
percent
of
the
total
construction
work
subcontracted
in
by
the
C&
D
industries
in
1997.

As
explained
above,
the
net
value
of
construction
work
is
calculated
by
subtracting
the
value
of
work
subcontracted
out
to
others
from
the
value
of
construction
work
done.
For
the
C&
D
industries,
this
measure
totaled
$
318.6
billion
in
1997,
a
nominal
increase
of
close
to
60
percent
over
the
1992
figure
of
$
199.3
billion.
Costs
for
materials,
components,
supplies,
and
fuels
can
be
further
subtracted
to
obtain
the
value
added
measure,
which
amounted
to
$
199.9
billion
in
1997,
a
nominal
increase
of
70.3
percent
over
1992.
Of
the
1997
total,
NAICS
233
(
including
NAICS
2331)
accounted
for
$
120.3
billion,
or
60.2
percent.
Establishments
in
NAICS
234
(
Heavy
construction)
accounted
for
$
68.8
billion,
or
34.4
percent
of
the
value
added
while
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
accounted
for
$
10.8
billion,
representing
5.4
percent
of
the
total.

2­
60
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
26
shows
the
value
of
construction
work
done
by
major
type
of
construction
(
building
construction,
nonbuilding
construction,
and
construction
not
specified
by
kind)
for
each
of
the
large
NAICS
categories
(
Building,
developing,
and
general
contracting;
Heavy
construction,
and
Special
trades)
.
The
largest
type
of
activity
for
both
building
contractors
and
special
trades
was
single­
family
house
construction.
Highways
and
street­
related
construction
were
the
largest
category
of
activity
for
heavy
construction
contractors,
followed
by
sewer
and
water
main
construction.
Table
2A­
3
in
Appendix
2A
contains
a
more
detailed
table,
showing
value
of
construction
work
done
by
specific
type
of
construction.

2­
61
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
25
Value
and
Net
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

NAICS
Description
Dollar
Value
of
Business
Done
a
(
$
1,000)
Value
of
const
work
b
(
$
1,000)
Value
of
other
business
receipts
c
(
$
1000)
Construction
work
subcontracted
in
d
(
$
1,000)
Net
value
of
construction
work
e
(
$
1000)
Value
added
f
(
$
1,000)

233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdivision
$
372,516,170
$
368,006,098
$
15,451,969
$
4,510,092
$
188,579,070
$
111,168,087
2331
Land
subdivision
and
land
development
$
14,409,755
$
13,635,521
$
774,235
$
272,860
$
10,247,820
$
9,154,633
234
Heavy
construction
$
130,794,520
$
127,841,600
$
2,952,920
$
28,386,274
$
105,639,352
$
68,775,976
235
g
Special
trade
contractors
$
16,497,584
$
15,910,770
$
586,814
$
9,845,092
$
14,130,038
$
10,818,550
TOTAL
$
534,218,029
$
525,393,989
$
19,765,938
$
43,014,318
$
318,596,280
$
199,917,246
a
Dollar
value
of
business
done
comprises
the
total
value
of
construction
work
and
other
business
receipts
from
1997.
b
Value
of
construction
work
includes
all
value
of
construction
work
done
during
1997
for
construction
work
performed
by
general
contractors
and
special
trade
contractors.
Included
is
new
construction,
additions
and
alterations
or
reconstruction,
and
maintenance
and
repair
construction
work.
Also
included
is
the
value
of
any
construction
work
done
by
reporting
establishments
for
themselves.
c
Other
business
receipts
include
receipts
from
retail
and
wholesale
trade,
rental
of
equipment,
manufacturing,
transportation,
legal
service,
insurance,
finance,
rental
of
property
and
other
real
estate
operations,
and
other
non­
construction
activities.
d
Value
of
construction
work
subcontracted
in
from
others
includes
the
value
of
construction
work
during
1997
for
work
done
by
reporting
establishments
as
subcontractors
e
Net
value
of
construction
work
is
derived
for
each
establishment
by
subtracting
the
costs
for
construction
work
subcontracted
to
others
from
the
value
of
construction
work
done.
f
Value
added,
derived
for
each
establishment,
is
equal
to
dollar
value
of
business
done
less
the
costs
of
construction
work
subcontracted
to
others
and
costs
for
materials,
components,
supplies,
and
fuels.
g
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
62
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
26
Value
of
Construction
Work
by
Type
of
Construction
(
Thousands
of
1997
Dollars)

Type
of
Construction
Building,
developing,
and
general
contracting
Heavy
construction
Special
trade
contractors
a
Total
Value
Pct.
Value
Pct.
Value
Pct.
Value
Pct.

Building
construction,
total
$
371,426,049
97.32%
$
5,218,782
4.08%
$
12,550,515
78.88%
$
389,195,346
74.08%

Nonbuilding
construction,
total
$
5,970,952
1.56%
$
121,763,483
95.25%
$
3,036,318
19.08%
$
130,770,753
24.89%

Construction
work,
n.
s.
k.
$
4,244,630
1.11%
$
859,210
0.67%
$
323,939
2.04%
$
5,427,779
1.03%

Total
value
of
construction
work
$
381,641,600
100.00%
$
127,841,600
100.00%
$
15,910,770
100.00%
$
525,393,970
100.00%

NA
=
Data
Not
Available
a
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
63
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.5.2
Selected
Costs
The
Census
of
Construction
reports
on
the
categories
of
costs
incurred
by
the
C&
D
industries,

including
costs
of
materials,
components,
and
supplies;
costs
of
construction
work
subcontracted
out
to
others;
costs
of
power,
fuels,
and
lubricants;
costs
of
machinery,
equipment,
and
buildings;
and
other
selected
purchased
services.
Costs
of
materials,
components,
and
supplies
reflect
the
costs
of
purchasing
all
materials,
components,
and
supplies,
except
fuels,
but
do
not
include
industrial
and
specialized
machinery
and
equipment
costs
such
as
printing
presses
and
computer
systems
nor
costs
of
materials
furnished
to
contractors
by
the
owners
of
projects.
Costs
of
construction
work
subcontracted
out
to
others
do
not
include
the
costs
of
purchasing
materials,
components,
and
supplies
provided
to
a
subcontractor
for
use
nor
costs
for
machinery
or
equipment
rental.
Included
in
the
costs
of
power,
fuels,

and
lubricants
are
the
costs
of
fuels,
lubricants,
and
electric
energy
purchased
from
other
companies
or
received
from
other
establishments
of
the
company,
plus
costs
for
natural
and
manufactured
gas,
fuel
oil,

coal,
and
coke
products.
The
selected
materials
costs
described
above
are
presented
in
Table
2­
27.

2.5.2.1
All
Costs
As
shown
in
Table
2­
27,
all
C&
D
establishments
incurred
costs
of
$
334.3
billion
in
1997
for
materials,
components,
work
subcontracted
out,
power,
fuels,
and
lubricants.
This
represented
a
nominal
increase
of
59.6
percent
over
the
$
209.5
billion
in
costs
incurred
in
1992.
Establishments
in
NAICS
233
(
Building
and
developing,
including
NAICS
2331)
accounted
for
$
266.6
billion,
or
79.7
percent
of
the
total.
Establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
incurred
costs
of
$
5.7
billion,
or
1.7
percent
of
the
total.

2.5.2.2
Machinery
and
Equipment
Costs
Machinery
and
equipment
costs
include
the
costs
to
rent
or
lease
construction
machinery
and
equipment;
transportation
equipment;
production
equipment;
office
equipment,
furniture
and
fixtures;

and
scaffolding;
and
the
costs
of
renting
or
leasing
office
space
and
buildings,
which
define
the
costs
of
2­
64
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
buildings.
The
Census
Bureau
also
reports
costs
of
selected
purchased
services,
including
communication
services
purchased
from
other
companies
or
from
other
establishments
of
the
company,

and
the
costs
of
all
repairs
made
to
structures
and
equipment
by
outside
companies
or
from
other
establishments
of
the
same
company.
These
machinery,
equipment
costs,
and
selected
services
costs
are
presented
in
Table
2­
28.

According
to
Table
2­
28,
establishments
in
the
C&
D
industries
spent
$
7.3
billion
on
machinery,

equipment,
and
buildings
in
1997.
This
represented
a
nominal
increase
of
43.1
percent
from
1992,
when
these
expenditures
totaled
$
5.1
billion.
Establishments
in
NAICS
234
(
Heavy
construction)
accounted
for
$
4.3
billion,
or
roughly
60
percent
of
the
total.
The
C&
D
industries
also
spent
$
7.7
billion
on
communication
services,
repairs
to
buildings
and
other
structures,
and
repairs
to
machinery
and
equipment.
NAICS
234
(
Heavy
construction)
accounted
for
$
4.2
billion
of
this
total.

2­
65
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
27
Selected
Costs
in
the
Construction
Industry
(
Thousands
of
1997
Dollars)

NAICS
Industry
Materials,
Components,
and
Supplies
a
Construction
Work
Subcontracted
out
to
Others
b
Selected
Costs
of
Power,
Fuels,
and
Lubricants
c
Total
Selected
Costs
Electricity
Natural
and
Manu
­
factured
Gas
Gasoline
and
Diesel
Fuel
Other,
Including
Lubricating
Oils
and
Greases
Total
Power,
Fuels,
and
Lubricants
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
subdivision
and
development
$
79,936,341
$
179,427,020
$
599,022
$
134,485
$
1,179,930
$
73,637
$
1,984,736
$
261,348,110
2331
Land
subdivision
and
development
$
1,778,171
$
3,387,700
$
31,244
$
9,068
$
46,600
S
$
89,251
$
5,255,122
234
Heavy
construction
$
36,655,772
$
22,202,246
$
340,172
$
160,257
$
2,409,752
$
250,340
$
3,160,521
$
62,018,540
235
d
Special
trade
contractors
$
3,254,362
$
1,780,731
$
38,952
$
12,973
$
540,227
$
51,789
$
643,942
$
5,679,034
TOTAL
$
121,624,646
$
206,797,697
$
1,009,390
$
316,783
$
4,176,509
$
375,766
$
5,878,450
$
334,300,806
a
Costs
to
reporting
establishments
during
1997
for
the
purchase
of
all
materials,
components,
and
supplies,
except
fuels.
Does
not
include
industrial
and
other
specialized
machinery
and
equipment
such
as
printing
presses
and
computer
systems,
and
materials
furnished
to
contractors
by
the
owners
of
projects.
b
Costs
during
1997
for
construction
work
subcontracted
out
to
other
contractors,
not
including
costs
of
purchasing
materials,
components,
and
supplies
provided
to
a
subcontractor
for
use
and
costs
for
machinery
and
equipment
rental.
c
Costs
include
fuels,
lubricants,
and
electric
energy
purchased
during
the
year
from
other
companies
or
received
from
other
establishments
of
the
company
and
costs
for
natural
and
manufactured
gas,
fuel
oil,
coal,
and
coke
products.
d
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
S
Withheld
because
estimate
did
not
meet
publication
standards
on
the
basis
of
either
response
rate,
associated
relative
standard
error,
or
a
consistency
review.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
66
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
28
Additional
Selected
Costs
in
the
Construction
Industry
(
Thousands
of
1997
Dollars)

NAICS
Description
Machinery,
Equipment,
and
Buildings
Selected
Purchased
Services
For
Machinery
and
Equipment
a
For
Buildings
b
Total
Communication
Services
c
Repairs
to
Buildings
and
Other
Structures
d
Repairs
to
Machinery
and
Equipment
e
Total
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
$
1,403,930
$
901,176
$
2,260,517
$
1,260,796
$
203,102
$
1,060,589
$
2,521,488
2331
Land
subdivision
and
development
S
$
36,251
$
80,840
$
54,022
$
10,048
$
39,290
$
103,359
234
Heavy
construction
$
3,853,016
$
444,702
$
4,297,718
$
647,860
$
188,895
$
3,349,522
$
4,186,276
235
e
Special
trade
contractors
$
615,405
$
91,657
$
707,063
$
133,414
$
28,471
$
729,510
$
891,395
TOTAL
$
5,872,351
$
1,473,786
$
7,346,138
$
2,096,092
$
430,516
$
5,178,911
$
7,705,518
a
Includes
all
costs
during
1997
for
renting
or
leasing
construction
machinery
and
equipment,
transportation
equipment,
production
equipment,
office
equipment,
furniture
and
fixtures,
scaffolding,
etc.
b
Includes
all
costs
of
renting
or
leasing
office
space
and
buildings.
c
Includes
all
costs
during
1997
for
communication
services
purchased
from
other
companies
or
from
other
establishments
of
the
company.
d
Includes
the
cost
of
all
repairs
made
to
structures
and
equipment
by
outside
companies
or
from
other
establishments
of
the
same
company.
Only
costs
required
to
maintain
property
and
equipment
are
reflected
here.
e
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
NAICS
23594
(
Wrecking
and
demolition
contractors)
only.
S
Withheld
because
estimate
did
not
meet
publication
standards
on
the
basis
of
either
response
rate,
associated
relative
standard
error,
or
a
consistency
review.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
67
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.5.3
Capital
Expenditures
and
Depreciation
In
addition
to
the
materials
costs
discussed
above,
the
Census
of
Construction
reports
on
the
capital
expenditures
incurred
by
construction
establishments.
Among
these
capital
expenditures
are
the
costs
incurred
to
cover
the
acquisition,
construction,
and
the
major
alteration
of
the
establishment
 
s
own
new
and
used
buildings
and
other
structures,
and
the
acquisition
of
machinery
and
equipment.
Table
2­

29
presents
data
for
total
capital
expenditures
and
depreciation
for
buildings,
structures,
machinery,
and
equipment,
both
new
and
used.
34
Table
2­
29
presents
total
capital
expenditures
for
NAICS
233
(
Building
and
developing)
,
234
(
Heavy
construction)
,
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
.

Total
capital
expenditures
(
other
than
land)
were
$
9.5
billion
in
1997,
which
represented
a
51.6
percent
increase
over
the
$
4.9
billion
spent
in
1992.
Beginning
of
year
gross
book
value
of
depreciable
assets
totaled
$
70.6
billion
in
1997.
Of
this,
NAICS
233
(
Building
and
developing,
including
NAICS
2331)

accounted
for
$
20.3
billion
(
28.8
percent)
.
Establishments
in
NAICS
234
(
Heavy
construction)

accounted
for
60.0
percent
of
the
total
with
$
42.4
billion
and
establishments
in
NAICS
235
(
Special
trade
contractors)
accounted
for
11.2
percent
of
total
value
with
$
7.9
billion.
Depreciation
charges
during
the
year
totaled
$
7.8
billion,
with
NAICS
234
(
Heavy
construction)
accounting
for
$
4.6
billion,
or
59.3
percent
of
total
depreciation
charges.
NAICS
233
(
Building,
developing,
and
general
contracting,

including
NAICS
2331)
accounted
for
$
2.2
billion
(
27.9
percent)
and
NAICS
235
(
Special
trades
contractors)
accounted
for
$
1.0
billion
(
12.8
percent)
of
total
depreciation
charges.

34
The
1992
Census
of
Construction
presented
considerably
more
detailed
data
on
capital
expenditures,
first
dividing
capital
costs
into
those
for
(
a)
buildings
and
structures,
and
(
b)
machinery
and
equipment
and
then
further
subdividing
these
costs
by
 
new
 
and
 
used
 
categories.
.
The
1997
Census
of
Construction
reports
only
the
industry
 
s
total
capital
expenditure
figures.

2­
68
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
29
Capital
Expenditures
in
the
Construction
Industry:
Total
(
Thousands
of
1997
Dollars)
a,

NAICS
Description
Beginning­
of­
year
gross
book
value
of
depreciable
assets
Capital
expenditures,
other
than
land
Retirements
and
disposition
of
depreciable
assets
End­
of­
year
gross
book
value
of
depreciable
assets
Depreciation
charges
during
year
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
$
18,737,612
$
2,761,153
$
940,445
$
20,558,320
$
2,021,179
2331
Land
subdivision
and
development
$
1,571,722
$
276,804
$
102,440
$
1,746,086
$
152,751
234
Heavy
construction
$
42,372,868
$
5,313,180
$
1,839,777
$
45,846,272
$
4,627,363
235
b
Special
trade
contractors
$
7,890,728
$
1,104,527
$
291,243
$
8,704,113
$
1,001,533
TOTAL
$
70,572,930
$
9,455,664
$
3,173,905
$
76,854,791
$
7,802,826
a
Capital
expenditures
refers
to
all
costs
actually
incurred
during
1997
which
were
or
would
be
chargeable
to
the
fixed
assets
accounts
of
the
reporting
establishments
and
which
were
the
type
for
which
depreciation
accounts
are
ordinarily
maintained.
These
expenditures
cover
the
acquisition,
the
construction,
and
the
major
alteration
of
the
reporting
establishment'
s
own
buildings
and
other
structures,
and
the
acquisition
of
machinery
and
equipment.
b
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2.5.4
Value
of
Inventories
The
Census
of
Construction
Industries
presents
data
on
establishments
 
end­
­
of­
year
inventories
of
materials
and
supplies.
A
total
of
47,841
establishments
in
the
C&
D
industries
reported
holding
inventories
of
materials
and
supplies
at
the
end
of
1997.
These
inventories
were
valued
at
$
7.0
billion
at
the
end
of
the
year.
An
additional
109,094
establishments
reported
no
inventories,
while
104,680
establishments
did
not
report
their
inventories.
Table
2­
30
presents
the
inventory
data
for
C&
D
establishments.

2­
69
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
30
Total
Value
of
Inventories
for
Construction
Industry
Establishments,
1997
(
$
1,000)

NAICS
Description
Establishments
with
Inventories
a
Establishments
without
Inventories
Establishments
not
Reporting
Number
Value
of
Construction
Work
b
End
of
year
Materials
&
Supply
Inventory
Beginning
of
year
Materials
&
Supply
Inventory
Number
Value
of
Construction
Work
b
Number
Value
of
Construction
Work
b
233,
except
2331
Building,
developing,
and
general
contracting,
except
land
development
and
subdevelopment
33,100
$
89,182,562
$
5,648,406
$
5,015,102
81,735
$
196,519,085
76,268
$
82,304,448
2331
Land
subdivision
and
development
2,248
$
2,137,038
$
269,847
$
214,701
1,486
$
2,993,955
4,452
$
8,504,528
234
Heavy
construction
9,634
$
50,131,852
$
1,017,171
$
910,164
17,864
$
54,143,044
15,058
$
23,566,700
235
c
Special
trade
contractors
2,859
$
8,865,177
$
35,467
$
61,040
8,009
$
7,389,990
8,902
$
4,655,603
TOTALS
47,841
$
150,316,629
$
6,970,891
$
6,201,007
109,094
$
261,046,074
104,680
$
119,031,279
a
Inventory
includes
all
of
the
materials
and
supplies
that
are
owned
regardless
of
where
they
are
held,
excluding
materials
that
are
owned
by
others,
but
held
by
the
reporting
establishment.
b
Value
of
construction
work
includes
all
value
of
construction
work
done
during
1997
for
construction
work
performed
by
general
contractors
and
special
trades
contractors.
Included
is
new
construction,
additions
and
alterations
or
reconstruction,
and
maintenance
and
repair
construction
work.
Also
included
is
the
value
of
any
construction
work
done
by
reporting
establishments
for
themselves.
c
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
Source:
U.
S.
Census
Bureau
(
2000a)
.

2­
70
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Among
establishments
in
the
C&
D
industries
that
reported
inventories,
NAICS
233
(
Building,

developing,
and
general
contracting,
including
NAICS
2331)
accounted
for
$
5.9
billion
or
84.9
percent
of
the
total.
A
further
$
1.0
billion
was
reported
by
NAICS
234
(
Heavy
construction)
,
representing
14.6
percent,
while
NAICS
235
(
Special
trades
contractors)
held
$
35.5
million
in
materials
and
supplies
(
1.0
percent)
.

2.6
KEY
BUSINESS
INDICATORS
AND
RATIOS
Table
2­
31
below
presents
key
financial
characteristics
for
the
construction
industry
as
a
whole
(
i.
e.
,
not
just
C&
D
industries)
.
The
items
presented
in
the
table
are
taken
from
Dun
and
Bradstreet
 
s
(
D&
B)
Industry
Norms
&
Key
Business
Ratios
Desk­
Top
Edition
1999­
2000
.
D&
B
bases
this
report
on
more
than
one
million
financial
statements
of
U.
S.
corporations,
partnerships
and
proprietorships,
in
all
size
ranges,
including
more
than
800
business
sectors
defined
by
SIC
codes.
Though
the
Census
Bureau
is
now
using
NAICS
codes
for
most
reporting
of
industry
data,
Dun
&
Bradstreet
continues
to
use
SIC
codes.
Therefore,
Table
2­
31
differs
from
the
rest
of
this
profile
in
presenting
data
based
on
the
SIC
code
system.

In
addition
to
various
financial
terms,
Table
2­
31
also
presents
a
series
of
financial
ratios
for
solvency,
efficiency,
and
profitability.
The
table
also
notes
the
sample
size
of
the
financial
statements
used
to
estimate
the
values
in
each
SIC
code.
The
sample
size
for
SIC
15
(
General
building
contractors)

is
roughly
three
times
the
sample
size
for
this
SIC
in
1998
(
6,746
establishments
versus
2,138)
.
The
sample
size
for
SIC
16
(
Heavy
construction)
also
increased
from
1998,
from
2,135
to
2,847.
The
sample
sizes
for
SICs
1794
(
Excavation
work)
and
1795
(
Wrecking
and
demolition
work)
are,
as
expected,
much
smaller
than
the
sample
sizes
for
the
previous
two
SICs,
at
755
and
87
establishments,
respectively.

Solvency,
or
liquidity,
ratios
are
used
to
evaluate
a
company
 
s
ability
to
meet
short
and
long­
term
obligations
and
include
the
Quick
Ratio,
Current
Ratio,
Current
Liability
to
Net
Worth,
Current
Liability
to
Inventory,
Total
Liability
to
Net
Worth
,
and
Fixed
Assets
to
Net
Worth.
The
Quick
Ratio
is
defined
as
the
sum
of
cash
and
accounts
receivable
divided
by
total
current
liabilities
and
reveals
the
amount
of
liquid
assets
available
to
cover
each
dollar
of
current
debt.
The
larger
this
ratio,
the
greater
the
liquidity.

2­
71
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
Current
Ratio
is
calculated
by
dividing
current
assets
by
current
liabilities;
this
ratio
measures
the
margin
of
safety
available
to
cover
any
possible
shrinkage
in
the
value
of
current
assets.
The
quotient
of
current
liabilities
divided
by
net
worth
is
the
Current
Liability
to
Net
Worth
ratio
and
relates
the
funds
that
are
temporarily
risked
by
creditors
with
the
funds
permanently
invested
by
owners.
Another
ratio,

Current
Liability
to
Inventory,
is
obtained
by
dividing
current
liabilities
by
inventory,
and
is
an
indicator
of
the
extent
to
which
a
business
relies
on
funds
from
disposal
of
unsold
inventories
to
meet
its
debts.

Total
Liability
to
Net
Worth,
calculated
by
dividing
total
liabilities
by
net
worth,
can
be
used
to
determine
the
effect
of
long­
term
(
funded)
debt
on
a
business
when
compared
with
the
Current
Liabilities
to
Net
Worth
ratio.
The
final
solvency
ratio,
Fixed
Assets
to
Net
Worth,
is
calculated
when
fixed
assets
are
divided
by
Net
Worth
and
identifies
the
proportion
of
net
worth
that
consists
of
fixed
assets.
Chapter
Four
presents
the
financial
characteristics
of
model
firms
in
the
C&
D
industry
and
an
analysis
of
the
effects
of
the
proposed
rule
on
the
financial
health
of
the
model
firms.

2­
72
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
(
1999
)
a
SIC
15
1521
1522
1531
1541
1542
16
1611
1622
1623
1629
1794
1795
Item
Building
Constn.
General
Contrs.
and
Operative
Builders
General
Contrs.
­
­
Single­
Family
Houses
General
Contrs.
­
­
Residential
Buildings,
Other
Than
Single­
Family
Operative
Builders
General
Contrs.
­
­
Industrial
Buildings
and
Warehouses
General
Contrs.
­
Non­
residential
Buildings,
Other
Than
Industrial
Buildings
and
Warehouses
Heavy
Constn.
Other
Than
Building
Constn.
Contrs.
Highway
and
Street
Constn.
,
Except
Elevated
Highways
Bridge,
Tunnel,
and
Elevated
Highway
Constn.
Water,
Sewer,
Pipeline,
and
Communi
­
cations
and
Power
Line
Constn.
Heavy
Constn.
,
NEC
Excavation
Work
Wrecking
and
Demolition
Work
Sample
Size
b
6,746
1,780
283
112
870
3,701
2,847
959
159
1,086
643
755
87
Cash
245,212
102,836
250,363
425,696
309,137
323,254
277,028
333,899
385,604
238,632
247,547
132,318
137,765
Accounts
Receivable
374,595
112,769
364,659
318,378
579,430
532,241
459,331
536,775
461,613
444,349
384,015
247,424
371,096
Notes
Receivable
11,090
7,012
17,689
25,041
14,567
10,525
10,724
12,680
3,708
9,874
11,108
6,455
6,206
Inventory
71,469
84,138
57,148
1,087,493
24,278
30,070
37,533
46,492
31,516
27,978
44,431
17,212
31,028
Other
Current
Assets
247,675
108,094
303,429
790,579
313,992
315,737
257,368
278,954
317,010
245,215
228,504
96,818
162,587
Total
Current
Assets
950,041
414,849
993,288
2,647,187
1,241,404
1,211,827
1,041,984
1,208,800
1,199,451
966,048
915,605
500,227
708,682
Fixed
Assets
209,477
129,129
261,248
565,210
280,004
215,002
639,846
794,596
532,060
580,945
566,501
531,423
480,315
Other
Non­
current
72,701
40,317
106,132
364,883
97,111
76,678
105,450
109,891
122,355
98,744
104,731
44,106
52,128
Total
Assets
1,232,219
584,295
1,360,668
3,577,280
1,618,519
1,503,507
1,787,280
2,113,287
1,853,866
1,645,737
1,586,837
1,075,756
1,241,125
Accounts
Payable
312,984
92,903
327,921
293,337
424,052
457,066
266,305
336,013
292,911
230,403
231,678
112,954
142,729
Bank
Loans
8,626
7,596
10,885
60,814
3,237
7,518
8,936
10,566
3,708
6,538
9,521
7,530
7,447
Notes
Payable
54,218
49,665
83,001
525,860
38,844
36,084
64,342
73,965
40,785
57,601
66,647
59,167
71,985
Other
Current
Liabilities
272,319
170,614
459,906
1,019,525
310,756
275,142
298,476
321,220
339,257
291,295
271,350
204,394
245,743
Total
Current
Liabilities
648,147
320,778
881,713
1,899,536
776,889
775,810
638,059
741,764
676,661
585,882
579,196
384,045
467,904
Other
Long
Term
Debt
99,810
79,464
134,706
422,119
119,770
81,189
266,305
336,013
226,172
236,987
242,785
244,197
249,466
2­
73
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
(
1999
)
a
SIC
15
1521
1522
1531
1541
1542
16
1611
1622
1623
1629
1794
1795
Item
Building
Constn.
General
Contrs.
and
Operative
Builders
General
Contrs.
­
­
Single­
Family
Houses
General
Contrs.
­
­
Residential
Buildings,
Other
Than
Single­
Family
Operative
Builders
General
Contrs.
­
­
Industrial
Buildings
and
Warehouses
General
Contrs.
­
Non­
residential
Buildings,
Other
Than
Industrial
Buildings
and
Warehouses
Heavy
Constn.
Other
Than
Building
Constn.
Contrs.
Highway
and
Street
Constn.
,
Except
Elevated
Highways
Bridge,
Tunnel,
and
Elevated
Highway
Constn.
Water,
Sewer,
Pipeline,
and
Communi
­
cations
and
Power
Line
Constn.
Heavy
Constn.
,
NEC
Excavation
Work
Wrecking
and
Demolition
Work
Deferred
Credits
2,464
1,169
5,443
28,618
1,619
3,007
7,149
10,566
11,123
4,937
3,174
3,227
4,965
Net
Worth
481,798
182,884
338,806
1,227,007
720,241
643,501
875,767
1,024,944
939,910
817,931
761,682
444,287
518,790
Total
Liability
&
Net
Worth
1,232,219
584,295
1,360,668
3,577,280
1,618,519
1,503,507
1,787,280
2,113,287
1,853,866
1,645,737
1,586,837
1,075,756
1,241,125
Net
Sales
4,191,221
1,941,179
4,490,653
5,176,961
5,359,334
5,238,700
3,910,897
4,727,711
4,128,878
3,562,201
3,397,938
2,130,210
2,709,880
Gross
Profit
779,567
475,589
853,224
1,180,347
986,117
832,953
985,546
1,054,280
792,745
961,794
965,014
705,100
875,291
Net
Profit
After
Tax
138,310
77,647
157,173
62,124
182,217
157,161
175,990
203,292
156,897
167,423
152,907
104,380
124,654
Working
Capital
301,894
94,071
111,575
747,651
464,515
436,017
403,925
467,036
522,790
380,166
336,409
116,182
240,778
RATIOS
(
median)
SOLVENCY
RATIOS
Quick
Ratio
(
times)
1.1
0.8
1.0
0.2
1.2
1.2
1.2
1.2
1.3
1.2
1.1
1.1
1.2
Current
Ratio
(
times)
1.5
1.4
1.5
1.4
1.6
1.5
1.6
1.6
1.8
1.7
1.6
1.4
1.6
Current
Liability
to
Net
Worth
(
%
)
122.3
115.5
102.7
143.2
107.7
128.1
65.7
67.1
62.9
64.2
66.6
65.5
75.1
Current
Liability
to
Inventory
(
%
)
740.3
153.5
837.6
96.9
999.9
999.9
999.9
999.9
999.9
999.9
841.5
999.9
668.1
Total
Liability
to
Net
Worth
(
%
)
145.9
157.4
128.0
179.6
130.0
145.6
100.1
103.1
93.5
96.3
100.6
119.3
116.9
2­
74
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
31
Key
Business
Statistics
and
Ratios
of
the
Construction
Industry
(
1999
)
a
SIC
15
1521
1522
1531
1541
1542
16
1611
1622
1623
1629
1794
1795
Item
Building
Constn.
General
Contrs.
and
Operative
Builders
General
Contrs.
­
­
Single­
Family
Houses
General
Contrs.
­
­
Residential
Buildings,
Other
Than
Single­
Family
Operative
Builders
General
Contrs.
­
­
Industrial
Buildings
and
Warehouses
General
Contrs.
­
Non­
residential
Buildings,
Other
Than
Industrial
Buildings
and
Warehouses
Heavy
Constn.
Other
Than
Building
Constn.
Contrs.
Highway
and
Street
Constn.
,
Except
Elevated
Highways
Bridge,
Tunnel,
and
Elevated
Highway
Constn.
Water,
Sewer,
Pipeline,
and
Communi
­
cations
and
Power
Line
Constn.
Heavy
Constn.
,
NEC
Excavation
Work
Wrecking
and
Demolition
Work
Fixed
Assets
to
Net
Worth
(
%
)
25.9
37.0
23.1
17.1
27.6
23.0
68.5
75.4
51.7
66.1
68.6
105.0
77.8
EFFICIENCY
RATIOS
Collection
Period
(
days)
42.0
21.5
39.1
4.8
47.1
48.2
49.6
46.4
46.7
54.6
49.3
51.5
56.2
Sales
to
Inventory
(
times)
65.3
13.8
34.8
2.6
203.7
149.9
86.2
98.2
78.8
96.8
53.5
99.4
46.5
Assets
to
Sales
(
%
)
29.4
30.1
30.3
69.1
30.2
28.7
45.7
44.7
44.9
46.2
46.7
50.5
45.8
Sales
to
Net
Working
Capital
(
times)
12.5
12.1
10.5
6.6
11.8
12.9
9.0
9.5
7.7
8.5
8.9
9.7
8.3
Accounts
Payable
to
Sales
(
%
)
7.2
4.3
6.5
3.9
7.6
8.6
5.7
5.9
5.6
5.8
5.4
5.0
4.6
PROFITABILITY
RATIOS
Return
on
Sales
(
%
)
2.0
2.5
2.6
2.9
2.0
1.8
3.2
3.0
3.1
3.5
3.2
3.5
3.4
Return
on
Assets
(
%
)
6.5
8.0
6.7
4.4
6.5
6.0
6.6
6.5
6.4
6.9
6.6
6.7
9.0
Return
on
Net
Worth
(
%
)
18.3
27.5
22.7
16.8
15.1
16.4
15.5
14.8
12.9
16.4
15.0
17.7
24.2
a
The
dollar
figures
are
the
result
of
translating
the
common­
size
percentages
into
dollar
figures.
Common­
size
percentages
are
calculated
for
each
item
as
a
percentage
of
its
respective
aggregate
total.
The
dollar
figures
are
then
computed
by
multiplying
the
common­
size
percentages
for
each
statement
item
by
their
respective
total
amounts.
This
detailed
data
is
not
available
for
NAICS
655
b
Number
of
establishments
upon
which
calculations
are
based.
Source:
Dun
and
Bradstreet
Industry
Norms
&
Key
Business
Ratios
1999­
2000.

2­
75
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Efficiency
ratios
are
indicators
of
how
effectively
a
company
uses
and
controls
its
assets.
The
five
efficiency
ratios
presented
by
D&
B
are
Collection
Period,
Sales
to
Inventory,
Asset
to
Sales,
Sales
to
Net
Working
Capital,
and
Accounts
Payable
to
Sales.
The
Collection
Period,
measured
in
number
of
days,
is
calculated
by
multiplying
365
by
the
quotient
of
accounts
receivable
divided
by
sales.
This
measure
helps
determine
the
quality
of
the
receivables
of
a
company
when
compared
with
selling
terms
and
industry
norms.
Dividing
annual
net
sales
by
inventory
results
in
the
Sales
to
Inventory
ratio,
an
indicator
of
the
rapidity
with
which
merchandise
moves
and
the
effect
of
the
flow
of
funds
into
the
business.
Total
assets
are
divided
by
net
sales
to
obtain
the
Asset
to
Sales
ratio.
This
ratio
relates
sales
volume
to
the
total
investment
used
to
generate
those
sales.
Another
sales­
related
ratio,
Sales
to
Net
Working
Capital,
is
obtained
by
dividing
sales
by
net
working
capital.
This
is
an
indicator
of
whether
a
company
is
overtrading
or,
conversely,
carrying
more
liquid
assets
than
needed
for
its
volume.
Finally,

dividing
accounts
payable
by
annual
net
sales
yields
the
Accounts
Payable
to
Sales
ratio,
which
measures
how
the
company
is
paying
its
suppliers
in
relation
to
the
volume
being
transacted.

D&
B
also
reports
three
measures
of
profitability:
Return
on
Sales
(
also
known
as
Profit
Margin)
,

Return
on
Assets,
and
Return
on
Net
Worth
(
also
known
as
Return
on
Equity)
.
These
profitability
ratios
show
how
successfully
a
business
is
at
earning
a
return
for
its
owners.
The
Return
on
Sales
ratio
is
computed
by
dividing
net
profits
after
taxes
by
annual
net
sales;
this
measure
reveals
the
profits
earned
per
dollar
of
sales,
and
ultimately
is
an
indicator
of
the
operation
 
s
efficiency.
The
Return
on
Assets
ratio,
derived
by
dividing
net
profit
after
taxes
by
total
assets,
is
a
key
indicator
of
a
firm
 
s
profitability
as
it
matches
operating
profits
with
the
assets
available
to
earn
a
return.
The
final
financial
ratio
is
Return
on
Net
Worth,
or
the
value
of
net
profit
after
taxes
divided
by
net
worth.
This
ratio
can
be
used
to
analyze
the
ability
of
the
firm
to
achieve
an
adequate
return
on
the
capital
invested
by
the
owners.

Further
information
about
all
ratios
presented
in
D&
B
can
be
found
in
Appendix
2C.

2­
76
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.7
INDUSTRY
GROWTH
Table
2­
32
presents
annual
totals
for
private
housing
units
authorized
by
building
permits
for
1981
through
1999,
by
type
of
structure.
These
data
show
fluctuation
in
the
number
of
units
authorized
each
year,
increasing
from
985,500
units
in
1981
to
a
peak
of
1.8
million
units
in
1986.
The
period
of
1987
through
1991
was
marked
by
a
steady
decrease,
with
a
low
of
948,800
units
in
1991.
The
number
of
units
authorized
then
began
a
steady
increase
to
1.7
million
units
in
1999,
representing
an
annual
growth
rate
of
9.4
percent
from
1991
to
1999.
Table
2­
33
shows
national
growth
in
terms
of
value
of
housing
units
authorized
by
building
permits,
by
type
of
structure.
Valuation
of
units
authorized
has
grown
from
$
78.8
billion
in
1991
to
$
181.2
billion
in
1999
(
nominal)
,
with
an
annual
growth
rate
of
16.3
percent.

Total
value
of
new
privately
owned
housing
units
rose
steadily
from
1991
to
1994.
From
1994
to
1995,
total
value
of
new
privately
owned
housing
units
declined
slightly,
from
$
123.3
billion
to
$
120.8
billion.
This
decrease
was
realized
only
in
the
1­
unit
sector,
which
showed
a
decline
from
$
109.3
billion
in
1994
down
to
$
104.8
billion
in
1995;
the
remaining
sectors
actually
realized
continued
increases
in
value.

2­
77
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
32
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permit
­
Annual
(
Number
of
Housing
Units)
,
1981­
1999
Year
Total
Units
Number
of
Units
by
Type
of
Structure
1
Unit
2
units
3
and
4
units
5
units
or
more
1981
985,500
564,300
44,600
57,200
319,400
1982
1,000,500
546,400
38,400
49,900
365,800
1983
1,605,200
901,500
57,500
76,100
570,100
1984
1,681,800
922,400
61,900
80,700
616,800
1985
1,733,300
956,600
54,000
66,100
656,600
1986
1,769,400
1,077,600
50,400
58,000
583,500
1987
1,534,800
1,024,400
40,800
48,500
421,100
1988
1,455,600
993,800
35,000
40,700
386,100
1989
1,338,400
931,700
31,700
35,300
339,800
1990
1,110,800
793,900
26,700
27,600
262,600
1991
948,800
753,500
22,000
21,100
152,100
1992
1,094,900
910,700
23,300
22,500
138,400
1993
1,199,100
986,500
26,700
25,600
160,200
1994
1,371,600
1,068,500
31,400
30,800
241,000
1995
1,332,500
997,300
32,200
31,500
271,500
1996
1,425,600
1,069,500
33,600
32,200
290,300
1997
1,441,100
1,062,400
34,900
33,600
310,300
1998
1,612,300
1,187,600
33,200
36,000
355,500
1999
1,663,500
1,246,700
32,500
33,300
351,100
Source:
Bureau
of
the
Census
(
2000e)
.

2­
78
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2­
33
Value
of
New
Privately
Owned
Housing
Units
Authorized
by
Building
Permit,
Annual
(
Millions
of
Dollars)

Year
Total
Value
Valuation
by
Type
of
Structure
1
unit
2
units
3
and
4
units
5
units
or
more
1991
$
78,772.2
$
69,772.7
$
1,169.6
$
1,061.6
$
6,818.3
1992
$
95,539.0
$
87,071.5
$
1,272.2
$
1,126.2
$
6,069.2
1993
$
106,801.0
$
97,118.6
$
1,478.6
$
1,281.7
$
6,922.0
1994
$
123,278.3
$
109,294.0
$
1,813.3
$
1,595.7
$
10,575.3
1995
$
120,810.7
$
104,738.7
$
1,910.4
$
1,713.3
$
12,448.4
1996
$
134,175.8
$
116,535.0
$
2,069.1
$
1,861.4
$
13,710.2
1997
$
141,004.4
$
121,194.5
$
2,304.0
$
2,057.7
$
15,448.2
1998
$
165,265.7
$
142,240.8
$
2,254.2
$
2,282.0
$
18,488.8
1999
$
181,245.7
$
157,123.5
$
2,319.9
$
2,317.5
$
19,485.2
Source:
Bureau
of
the
Census
(
2000e)
.

2.8
INTERNATIONAL
COMPETITIVENESS
Construction
activities
are
highly
localized,
with
most
activities
being
performed
either
within
the
state
the
establishment
is
located
in
or
within
neighboring
states.
Some
of
the
largest
builders
may
perform
work
nationwide.
The
Census
Bureau
reports
only
construction
activities
within
the
United
States;
no
data
is
reported
on
construction
work
by
U.
S.
establishments
that
takes
place
outside
the
U.
S.

(
Census,
2000a)
.
EPA
concludes
that
only
a
very
small
percentage
of
construction
work
done
by
U.
S.

construction
firms
is
conducted
outside
of
the
U.
S.

2­
79
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
2.9
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33.

Luger
M.
I.
,
K.
Temkin.
2000.
Red
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Housing
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New
Brunswick,
New
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CUPR
Press.

Mammoser
A.
P.
2000.
Let
It
Flow.
Urban
Land(
June)
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42­
5.

Prince
George'
s
County
(
Maryland)
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1999.
Low
Impact
Design
Strategies:
An
Integrated
Design
Approach.
Prepared
by
Prince
George'
s
County,
Maryland
Department
of
Environmental
Resources
Programs
and
Planning
Division.
Also
published
ast
EPA­
841­
B­
00­
003,
January
2000
and
available
on
EPA
website
at:
http:
/
/
www.
epa.
gov/
owow/
nps/
urban.
html.

Rappaport
B.
A.
,
T.
A.
Cole.
(
U.
S.
Census
Bureau,
Manufacturing
and
Construction
Division)
.
2000.
Construction
Sector
Special
Study:
Housing
Starts
Statistics­
­
A
Profile
of
the
Homebuilding
Industry.

Ringwald,
Richard
C.
1993.
Means
Heavy
Construction
Handbook.
Kingston,
MA:
R.
S.
Means
Company,
Inc.

U.
S.
Census
Bureau.
2000a.
1997
Economic
Census:
Construction,
United
States.
Various
Reports.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
ec97/
us/
US000_
23.
HTM.

U.
S.
Census
Bureau.
2000b.
Current
Construction
Reports,
Series
C30­
­
Value
Put
in
Place.
Available
at:
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www.
c30index.
html.

U.
S.
Census
Bureau.
2000c.
Current
Construction
Reports,
Series
C25­
­
Characteristics
of
New
Housing.
Available
at:
http:
/
/
www.
census.
gov/
const.
html.

U.
S.
Census
Bureau.
2000d.
Current
Construction
Reports,
Series
C20­
­
Housing
Starts.
Available
at:
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www/
c20index.
html.

2­
81
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
U.
S.
Census
Bureau.
2000e.
Current
Construction
Reports,
Series
C40­
­
Building
Permits.
Available
at:
http:
/
/
www.
census.
gov/
ftp/
pub/
const/
www/
c40index.
html.

U.
S.
Census
Bureau.
2000f.
1997
Economic
Census,
Construction:
Industry
Summary.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
www/
econ97.
html
U.
S.
Census
Bureau.
1998a.
County
Business
Patterns,
1997.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
cbp/
view/
cbpview.
html.

U.
S.
EPA.
2002a.
Development
Document
for
the
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
007.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
2002b.
Environmental
Assessment
of
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
009.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
2001a.
Our
Built
and
Natural
Environments:
A
Technical
Review
of
the
Interactions
Between
Land
Use,
Transportation,
and
Environmental
Quality.
Washington,
D.
C.
:
U.
S.
Environmental
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EPA
231­
R­
01­
002.
Available
at:
http:
/
/
www.
smartgrowth.
org.

U.
S.
EPA.
2001b.
Revised
C&
D
Site
Size
and
Permit
Distribution.
Memo
from
Jesse
Pritts,
U.
S.
EPA,
to
John
Swanson
and
Jim
Collins,
Tetra
Tech.
Received
by
ERG
on
November
6,
2001.

U.
S.
EPA.
1999.
Economic
Analysis
of
the
Final
Phase
II
Storm
Water
Rule.
U.
S.
Environmental
Protection
Agency,
Office
of
Wastewater
Management.

U.
S.
Small
Business
Administration.
1998.
Statistics
of
U.
S.
Businesses:
Firm
Size
Data
[
HTML
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]
.
Available
at:
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

Zorn
P.
M.
1993.
The
Impact
of
Mortgage
Qualification
Criteria
on
Households'
Housing
Decisions:
An
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Using
Microeconomic
Data.
Journal
of
Housing
Economics
3(
1)
:
51­
75.

2­
82
APPENDIX
2A
Additional
Detailed
5­
Digit
NAICS
Tables
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2A­
1
Detailed
Number
of
Establishments
in
the
C&
D
Industry
with
Payroll,
by
Legal
Form
of
Organization
NAICS
Code
Description
Corporations
Proprietorships
Partnerships
Other
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
23311
Land
subdivision
and
land
development
6,268
76.6%
327
4.0%
1,323
16.2%
268
3.3%
8,186
100.0%

23321
Single­
family
housing
construction
84,437
60.8%
41,735
30.1%
7,567
5.5%
5,110
3.7%
138,850
100.0%

23322
Multifamily
housing
construction
5,265
69.8%
1,430
19.0%
494
6.5%
355
4.7%
7,544
100.0%

23331
Manufacturing
and
industrial
building
construction
5,863
80.5%
1,052
14.5%
239
3.3%
126
1.7%
7,280
100.0%

23332
Commercial
and
institutional
building
construction
28,910
77.2%
6,018
16.1%
1,527
4.1%
975
2.6%
37,430
100.0%

23411
Highway
and
street
construction
8,390
74.4%
1,933
17.2%
606
5.4%
341
3.0%
11,270
100.0%

23412
Bridge
and
tunnel
construction
1,032
87.7%
60
5.1%
66
5.6%
19
1.6%
1,177
100.0%

23491
Water,
sewer,
and
pipeline
construction
6,267
77.9%
1,214
15.1%
342
4.3%
218
2.7%
8,042
100.0%

2A­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2A­
1
Detailed
Number
of
Establishments
in
the
C&
D
Industry
with
Payroll,
by
Legal
Form
of
Organization
NAICS
Code
Description
Corporations
Proprietorships
Partnerships
Other
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
23492
Power
and
communication
transmission
line
construction
2,395
72.6%
625
18.9%
158
4.8%
122
3.7%
3,300
100.0%

23493
Industrial
nonbuilding
structure
construction
419
78.9%
77s
14.5%
19
3.6%
16
3.0%
531
100.0%

23499
All
other
heavy
construction
12,177
66.8%
4,493
24.6%
923
5.1%
643
3.5%
18,236
100.0%

23593
Excavation
contractors
11,001
60.3%
5,529
30.3%
951
5.2%
747
4.1%
18,229
100.0%

23594
Wrecking
and
demolition
contractors
1,176
76.3%
241
15.6%
97
6.3%
29
1.9%
1,542
100.0%

s:
Sampling
error
exceeds
40
percent.
Source:
Bureau
of
the
Census
(
1997)

2A­
2
­
­

­
­

­
­

­
­

­
­

­
­

­
­

­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2A­
2
Detailed
Number
of
Small
Establishments
with
Payroll
in
the
C&
D
Industry,
By
Employment
Size
Class
NAICS
Code
Description
Total
Establishments
with
less
than
5
employees
Establishments
with
less
than
10
employees
Establishments
with
less
than
20
employees
Number
Percent
of
Total
Number
Percent
of
Total
Number
Percent
of
Total
23311
Land
subdivision
and
development
8,186
S
1,011
12.4%
1,465
17.9%

23321
Single­
family
housing
construction
138,850
S
21,377
15.4%
28,611
20.6%

23322
Multifamily
housing
construction
7,544
S
1,456
19.3%
2,238
29.7%

23331
Manufacturing
and
industrial
building
construction
7,280
3,136
43.1%
4,802
66.0%
6,063
83.3%

23332
Commercial
and
institutional
building
construction
37,430
S
7,644
20.4%
13,505
36.1%

23411
Highway
and
street
construction
11,270
S
1,987
17.6%
3,863
34.3%

23412
Bridge
and
tunnel
construction
1,177
S
212
18.0%
439
37.3%

23491
Water,
sewer,
and
pipeline
construction
8,042
2,892
36.0%
4,332
53.9%
5,976
74.3%

23492
Power
and
communication
transmission
line
construction
3,300
1,432
43.4%
2,167
65.7%
2,564
77.7%

23493
Industrial
nonbuilding
structure
construction
531
S
30
5.6%
95
17.9%
23499
All
other
heavy
construction
18,236
10,100
55.4%
13,542
74.3%
15,868
87.0%
23593
Excavation
contractors
18,229
S
3,642
20.0%
5,522
30.3%

23594
Wrecking
and
demolition
contractors
1,542
700
45.4%
1,048
68.0%
1,311
85.0%
Source:
Bureau
of
Census
(
1997)

2A­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2A­
3
Value
of
Construction
Work
by
Type
of
Construction
(
Thousands
of
1997
Dollars)

Type
of
Construction
Building,
developing,
and
general
contracting
Heavy
construction
Special
trade
contractors
a
Total
Value
Pct.
Value
Pct.
Value
Pct.
Value
Pct.
Building
construction,
total
$
371,426,049
97.32%
$
5,218,782
4.08%
$
12,550,515
78.88%
$
389,195,346
74.08%
Single­
family
houses
$
150,532,478
39.44%
$
840,247
0.66%
$
4,863,142
30.57%
$
156,235,867
29.74%
Detached
$
133,869,882
35.08%
$
689,265
0.54%
$
4,147,573
26.07%
$
138,706,720
26.40%
Attached,
including
townhouses
and
townhouse­
type
condominiums
$
16,662,596
4.37%
$
150,982
0.12%
$
715,569
4.50%
$
17,529,147
3.34%
Apartment
buildings,
apartment
type
condominiums
and
cooperatives
$
19,617,644
5.14%
$
77,084
0.06%
$
611,174
3.84%
$
20,305,902
3.86%
All
other
residential
buildings
$
954,291
0.25%
$
9,661
0.01%
NA
0.00%
$
963,952
0.18%
Manufacturing
and
light
industrial
buildings
$
26,211,179
6.87%
$
1,314,909
1.03%
$
1,215,516
7.64%
$
28,741,604
5.47%
Manufacturing
and
light
industrial
warehouses
$
10,666,086
2.79%
$
98,046
0.08%
$
429,738
2.70%
$
11,193,870
2.13%
Hotels
and
motels
$
9,370,227
2.46%
$
85,071
0.07%
$
176,654
1.11%
$
9,631,952
1.83%
Office
buildings
$
40,371,389
10.58%
$
730,524
0.57%
$
1,207,915
7.59%
$
42,309,828
8.05%
All
other
commercial
buildings,
nec
$
36,519,818
9.57%
$
952,333
0.74%
$
2,283,510
14.35%
$
39,755,661
7.57%
Commercial
warehouses
$
8,262,304
2.16%
$
106,978
0.08%
$
433,003
2.72%
$
8,802,285
1.68%
Religious
buildings
$
4,936,913
1.29%
$
21,500
0.02%
$
131,868
0.83%
$
5,090,281
0.97%
Educational
buildings
$
25,194,532
6.60%
$
261,157
0.20%
$
445,626
2.80%
$
25,901,315
4.93%
Health
care
and
institutional
buildings
$
18,798,347
4.93%
$
81,173
0.06%
$
276,604
1.74%
$
19,156,124
3.65%
Public
Safety
buildings
$
5,584,102
1.46%
$
129,939
0.10%
NA
0.00%
$
5,714,041
1.09%
Farm
buildings,
nonresidential
$
2,107,126
0.55%
$
52,862
0.04%
NA
0.00%
$
2,159,988
0.41%
Amusement,
social,
and
recreational
buildings
$
7,265,413
1.90%
$
42,312
0.03%
NA
0.00%
$
7,307,725
1.39%
Other
building
construction
$
5,034,201
1.32%
$
414,988
0.32%
$
475,764
2.99%
$
5,924,953
1.13%
Nonbuilding
construction,
total
$
5,970,952
1.56%
$
121,763,483
95.25%
$
3,036,318
19.08%
$
130,770,753
24.89%
Highways,
streets,
and
related
work
$
1,639,808
0.43%
$
42,628,013
33.34%
$
675,214
4.24%
$
44,943,035
8.55%
Airport
runways
and
related
work
$
16,088
0.00%
$
1,696,575
1.33%
NA
0.00%
$
1,712,663
0.33%
Private
driveways
and
parking
areas
$
107,129
0.03%
$
3,722,761
2.91%
$
437,042
2.75%
$
4,266,932
0.81%

2A­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2A­
3
Value
of
Construction
Work
by
Type
of
Construction
(
Thousands
of
1997
Dollars)

Type
of
Construction
Building,
developing,
and
general
contracting
Heavy
construction
Special
trade
contractors
a
Total
Value
Pct.
Value
Pct.
Value
Pct.
Value
Pct.
Bridges,
tunnels,
and
elevated
highways
$
587,747
0.15%
$
10,697,254
8.37%
56,554
0.36%
11,341,555
2.16%
Bridges
and
elevated
highways
$
477,670
0.13%
$
8,799,646
6.88%
NA
0.00%
$
9,277,316
1.77%
Tunnels
$
110,076
0.03%
$
1,897,608
1.48%
NA
0.00%
$
2,007,684
0.38%
Sewers,
water
mains,
and
related
facilities
$
211,602
0.06%
$
19,475,202
15.23%
$
988,387
6.21%
$
20,675,191
3.94%
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
123,480
0.03%
$
11,642,425
9.11%
$
642,755
4.04%
$
12,408,660
2.36%
Water
mains
and
related
facilities
$
88,122
0.02%
$
7,832,777
6.13%
$
325,439
2.05%
$
8,246,338
1.57%
Pipeline
construction
other
than
sewer
or
water
lines
$
31,188
0.01%
$
5,437,692
4.25%
NA
0.00%
$
5,468,880
1.04%
Power
and
communication
transmission
lines,
cables,
towers,
and
related
facilities
$
160,372
0.04%
$
8,79,079
6.48%
NA
0.00%
$
8,439,451
1.61%
Power
plants
$
24,237
0.01%
$
2,621,409
2.05%
NA
0.00%
$
2,645,646
0.50%
Power
and
cogeneration
plants,
except
hydroelectric
$
11,702
0.00%
$
1,916,102
1.50%
NA
0.00%
$
1,927,804
0.37%
Power
plants,
hydroelectric
$
12,535
0.00%
$
705,307
0.55%
NA
0.00%
$
717,842
0.14%
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc
$
37,950
0.01%
$
6,505,276
5.09%
NA
0.00%
$
6,543,226
1.25%
Sewage
treatment
and
water
treatment
plants
$
1,790,144
0.47%
$
5,401,944
4.23%
NA
0.00%
$
7,192,088
1.37%
Sewage
treatment
plants
$
787,323
0.21%
$
3,110,034
2.43%
NA
0.00%
$
3,897,357
0.74%
Water
treatment
plants
$
1,002,821
0.26%
$
2,291,910
1.79%
NA
0.00%
$
3,294,731
0.63%
Mass
transit
construction
$
69,134
0.02%
$
2,127,939
1.66%
NA
0.00%
$
2,197,073
0.42%
Urban
mass
transit
construction
$
28,929
0.01%
$
745,507
0.58%
NA
0.00%
$
774,436
0.15%
Railroad
construction
$
40,205
0.01%
$
1,382,432
1.08%
NA
0.00%
$
1,422,637
0.27%
Conservation
and
development
construction
$
63,574
0.02%
$
2,954,381
2.31%
NA
0.00%
$
3,017,955
0.57%
Dam
and
reservoir
construction
$
18,688
0.00%
$
876,118
0.69%
NA
0.00%
$
894,806
0.17%
Dry/
solid
waste
disposal
$
13,970
0.00%
$
1,101,556
0.86%
NA
0.00%
$
1,115,526
0.21%
Harbor
and
port
facilities
$
66,927
0.02%
$
681,255
0.53%
NA
0.00%
$
748,182
0.14%

2A­
5
­
­

­
­
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2A­
3
Value
of
Construction
Work
by
Type
of
Construction
(
Thousands
of
1997
Dollars)

Type
of
Construction
Building,
developing,
and
general
contracting
Heavy
construction
Special
trade
contractors
a
Total
Value
Pct.
Value
Pct.
Value
Pct.
Value
Pct.
Marine
construction
S
 
$
2,240,422
 
NA
0.00%
$
2,240,422
0.43%
Outdoor
swimming
pools
$
17,356
0.00%
$
11,307
0.01%
NA
0.00%
$
28,663
0.01%
Water
storage
facilities
$
6,667
0.00%
$
289,122
0.23%
NA
0.00%
$
295,789
0.06%
Tank
storage
facilities
other
than
water
$
7,298
0.00%
$
129,440
0.10%
$
84,043
0.53%
$
220,781
0.04%
Fencing
$
4,485
0.00%
S
NA
0.00%
$
4,485
0.00%
Recreational
facilities
$
213,600
0.06%
$
2,084,069
1.63%
NA
0.00%
$
2,297,669
0.44%
Billboards
D
D
 
NA
0.00%
D
0.00%
Heavy
military
construction
D
D
 
NA
0.00%
D
0.00%
Ships
$
738
0.00%
S
 
NA
0.00%
$
738
0.00%
Oilfields
D
 
D
 
NA
0.00%
D
0.00%
Other
nonbuilding
construction,
nec
$
805,656
0.21%
$
2,639,358
2.06%
$
795,078
5.00%
$
4,240,092
0.81%
Construction
work,
n.
s.
k.
$
4,244,630
1.11%
$
859,210
0.67%
$
323,939
2.04%
$
5,427,779
1.03%
Total
value
of
construction
work
$
381,641,600
100.00%
$
127,841,600
100.00%
$
15,910,770
100.00%
$
525,393,970
100.00%
NA
=
Data
Not
Available
a
Covers
establishments
in
NAICS
23593
(
Excavation
contractors)
and
23594
(
Wrecking
and
demolition
contractors)
only.
D
=
Withheld
to
avoid
disclosure.
S
=
Data
withheld
because
it
did
not
meed
publication
standards.
Source:
Bureau
of
the
Census
(
1997)
.

2A­
6
APPENDIX
2B
Specialization
Within
the
C&
D
Industry,
Categorized
by
Value
of
Construction
Work
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
1
Specialization
within
NAICS
23311
(
Land
subdivision
and
land
development)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
and
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
7,903,746
$
5,705,996
$
633,804
$
701,844
$
519,252
$
162,598
$
180,251
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
1,690,850
$
1,561,253
S
S
$
15,817
$
33,114
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
All
other
commercial
buildings,
n.
e.
c.
$
1,009,513
$
935,619
D
D
$
11,283
S
$
37,543
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
1
Specialization
within
NAICS
23311
(
Land
subdivision
and
land
development)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
2
Specialization
within
NAICS
23321
(
Single­
family
housing
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
127,870,584
$
90,434,819
$
14,615,758
$
7,040,769
$
6,600,743
$
6,603,687
$
2,574,808
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
12,534,326
$
6,623,485
$
1,292,951
$
877,906
$
1,074,921
$
1,693,806
$
971,257
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
2
Specialization
within
NAICS
23321
(
Single­
family
housing
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
4
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
3
Specialization
within
NAICS
23322
(
Multifamily
housing
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
12,806,889
$
5,719,872
$
1,913,033
$
1,301,955
$
1,381,979
$
1,267,724
$
1,222,326
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
302,387
$
156,078
S
$
71,059
$
60,965
$
11,358
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
3
Specialization
within
NAICS
23322
(
Multifamily
housing
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
4
Specialization
within
NAICS
23331
(
Manufacturing
and
industrial
building
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
17,409,811
$
5,934,603
$
1,398,775
$
2,472,131
$
1,713,645
$
3,795,456
$
2,095,200
Warehouses
$
5,725,339
$
1,495,030
$
601,604
$
662,223
$
663,498
$
770,299
$
1,532,686
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
4
Specialization
within
NAICS
23331
(
Manufacturing
and
industrial
building
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
5
Specialization
within
NAICS
23332
(
Commercial
and
institutional
building
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
5,336,593
$
2,593,469
$
240,813
$
403,713
$
931,858
$
505,167
$
661,573
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
26,385,309
$
6,293,039
$
5,074,920
$
2,976,921
$
3,531,528
$
5,531,461
$
2,977,440
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
All
other
commercial
buildings,
n.
e.
c.
$
27,163,363
$
11,059,298
$
3,048,609
$
3,714,883
$
3,343,257
$
3,127,898
$
2,869,418
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
4,530,491
$
1,198,731
$
470,726
$
402,550
$
609,786
$
1,421,744
$
426,956
Religious
buildings
$
1,152,216
$
230,911
$
36,077
$
196,952
$
173,876
$
319,808
$
194,592
Educational
buildings
$
15,079,182
$
2,176,769
$
2,024,132
$
1,921,258
$
3,214,962
$
2,560,961
$
3,181,102
Hospitals
and
institutional
buildings
$
7,772,628
$
1,768,726
$
844,655
$
592,229
$
1,359,586
$
1,911,122
$
1,296,310
Public
safety
buildings
$
884,390
$
254,765
$
120,669
$
77,181
$
70,047
$
298,196
$
63,532
Farm
buildings,
nonresidential
$
1,637,968
$
1,077,154
$
141,707
$
66,058
$
96,840
$
163,533
$
92,675
Amusement,
social,
and
recreational
buildings,
indoors
$
2,424,893
$
689,938
$
599,733
$
411,573
S
$
363,722
$
200,426
Other
nonresidential
buildings
$
2,557,999
$
1,446,128
$
310,839
$
337,232
$
100,882
$
276,818
$
86,100
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
5
Specialization
within
NAICS
23332
(
Commercial
and
institutional
building
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
6
Specialization
within
NAICS
23411
(
Highway
and
street
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
43,439,086
$
15,061,825
$
5,949,644
$
5,659,718
$
6,827,389
$
5,700,890
$
4,239,620
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
476,352
$
206,565
 
 
$
164,989
$
87,063
$
17,736
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
6
Specialization
within
NAICS
23411
(
Highway
and
street
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
7
Specialization
within
NAICS
23412
(
Bridge
and
tunnel
construction)
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges,
tunnels
and
elevated
highways
$
8,249,795
$
3,472,091
$
547,816
$
952,468
$
1,095,565
$
1,623,637
$
558,218
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
7
Specialization
within
NAICS
23412
(
Bridge
and
tunnel
construction)
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
8
Specialization
within
NAICS
23491
(
Water,
sewer,
and
pipeline
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
8
Specialization
within
NAICS
23491
(
Water,
sewer,
and
pipeline
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
5,862,775
$
1,760,074
$
459,745
$
455,130
$
1,101,984
$
1,470,400
$
615,442
Water
mains
and
related
facilities
$
3,011,687
$
873,574
$
165,404
$
214,313
$
427,597
$
1,074,354
$
256,446
Pipeline
construction
other
than
sewer
or
water
lines
$
4,250,644
$
2,881,228
$
257,301
$
332,370
$
197,666
$
244,868
$
337,212
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
9
Specialization
within
NAICS
23492
(
Power
and
communication
transmission
line
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
9
Specialization
within
NAICS
23492
(
Power
and
communication
transmission
line
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
7,598,682
$
5,714,825
$
596,189
$
315,103
$
426,416
$
271,981
$
274,169
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
10
Specialization
within
NAICS
23493
(
Industrial
non­
building
structure
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
10
Specialization
within
NAICS
23493
(
Industrial
non­
building
structure
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
6,499,398
$
3,103,223
$
802,685
$
683,762
$
75,497
$
1,520,280
$
313,951
Power
plants,
all
$
1,616,857
$
1,095,143
$
53,785
$
216,704
$
176,694
$
49,333
$
25,197
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
11
Specialization
within
NAICS
23499
(
All
other
heavy
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Industrial
buildings
$
316,194
S
$
42,314
$
61,092
$
6,240
$
113,838
$
15,227
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
428,206
$
99,675
D
S
D
D
$
50,790
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
499,123
$
193,346
$
40,682
$
75,732
$
84,589
$
82,867
$
21,908
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
1,606,298
$
1,185,338
$
48,268
$
98,438
$
60,307
$
112,769
$
101,178
Bridges,
tunnels,
and
elevated
highways
$
272,411
$
64,282
$
39,300
$
36,403
$
54,103
$
39,085
$
39,239
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
11
Specialization
within
NAICS
23499
(
All
other
heavy
construction)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Marine
construction
$
1,728,083
$
1,433,105
$
108,622
$
81,257
$
38,123
$
47,960
S
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
2,215,356
$
1,159,140
$
229,741
$
249,653
$
134,677
$
353,501
$
88,644
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
468,520
$
368,874
S
$
24,608
$
8,159
$
11,886
S
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
water
mains
and
related
facilities
$
1,420,057
$
485,718
$
131,224
$
121,354
$
220,041
$
291,336
$
170,385
Pipeline
construction
other
than
sewer
or
water
lines
$
351,404
$
112,249
$
78,524
$
32,448
D
D
$
78,678
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Mass
transit
construction,
total
$
1,675,367
$
1,043,053
$
112,182
D
$
107,298
D
D
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
and
water
treatment
plants
$
2,699,575
$
818,096
$
327,674
$
255,130
$
413,160
$
539,916
$
345,601
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Dry/
solid
waste
disposal
$
746,785
$
352,148
$
90,543
$
53,407
$
74,059
S
$
70,040
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
12
Specialization
within
NAICS
23593
(
Excavation
contractors)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
and
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
4,056,605
$
1,537,017
$
594,683
$
459,760
$
734,403
$
493,142
$
237,601
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
296,995
$
104,666
$
27,862
S
D
$
137,324
D
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
379,068
$
76,339
$
42,754
$
31,338
$
128,109
$
70,563
$
29,965
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
All
other
commercial
buildings,
n.
e.
c.
$
1,103,861
$
433,494
$
84,081
$
119,400
$
142,382
$
136,372
$
188,133
Manufacturing
and
light
industrial
buildings
$
482,405
$
168,083
$
66,232
$
28,855
$
79,252
$
94,099
$
45,883
Manufacturing
and
light
industrial
warehouses
$
50,302
$
14,307
$
1,709
D
$
18,071
$
9,185
D
Commercial
warehouses
$
103,275
$
20,441
$
5,074
$
19,998
$
35,699
S
$
13,556
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
158,777
$
10,557
$
42,653
$
50,732
$
11,804
$
30,845
$
12,185
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
207,614
$
109,377
S
$
21,017
$
17,709
$
24,895
$
29,177
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
341,556
$
154,315
$
26,982
$
49,792
$
26,455
$
67,760
$
16,253
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
12
Specialization
within
NAICS
23593
(
Excavation
contractors)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
13
Specialization
within
NAICS
23594
(
Wrecking
and
demolition
contractors)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Single­
family
houses,
detached
and
Single­
family
houses,
attached,
including
townhouses
and
townhouse­
type
condominiums
$
131,122
$
73,376
S
$
17,406
$
5,488
$
18,869
$
7,553
Apartment
buildings
with
two
or
more
units,
including
rentals,
apartment­
type
condominiums,
and
cooperatives
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hotels,
motels,
and
tourist
cabins
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
residential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Office
buildings
$
134,487
$
66,668
$
10,005
$
27,727
$
13,096
$
13,996
S
Other
commercial
buildings
such
as
stores,
restaurants,
and
automobile
service
stations
$
0
$
0
$
0
$
0
$
0
$
0
$
0
All
other
commercial
buildings,
n.
e.
c.
$
266,265
$
184,232
$
13,410
$
19,643
D
$
42,138
D
Manufacturing
and
light
industrial
buildings
$
201,368
$
76,279
$
25,174
D
$
35,900
D
D
Warehouses
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Religious
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Educational
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Hospitals
and
institutional
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Farm
buildings,
nonresidential
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Amusement,
social,
and
recreational
buildings,
indoors
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonresidential
buildings
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Highways,
streets,
and
related
work
such
as
installation
of
guard
rails,
highway
signs,
lighting,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Outdoor
swimming
pools
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Airport
runways
and
related
work
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Private
driveways
and
parking
areas
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Fencing
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Recreational
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Tunnels
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Bridges
and
elevated
highways
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2B­
13
Specialization
within
NAICS
23594
(
Wrecking
and
demolition
contractors)
,
Categorized
by
Value
of
Construction
Work
(
Thousands
of
1997
Dollars)

Type
of
Construction
Estabs.
specializing
51
%
or
more
Estabs.
with
100
%
specialization
Estabs.
with
90
to
99
%
specialization
Estabs.
with
80
to
89
%
specialization
Estabs.
with
70
to
79
%
specialization
Estabs.
with
60
to
69
%
specialization
Estabs.
with
51
to
59
%
specialization
Dam
and
reservoir
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Marine
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Harbor
and
port
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Conservation
and
development
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
and
communication
transmission
lines,
towers,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewers,
sewer
lines,
septic
systems,
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
mains
and
related
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Pipeline
construction
other
than
sewer
or
water
lines
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Urban
mass
transit
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Railroad
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Blast
furnaces,
petroleum
refineries,
chemical
complexes,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants,
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Power
plants
and
cogeneration
plants,
except
nuclear
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Sewage
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
treatment
plants
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Water
storage
facilities
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Heavy
military
construction,
missile
sites,
etc.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Ships
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Oilfields
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Other
nonbuilding
construction
$
0
$
0
$
0
$
0
$
0
$
0
$
0
Construction
work,
n.
s.
k.
$
0
$
0
$
0
$
0
$
0
$
0
$
0
2B­
26
APPENDIX
2C
Definitions
of
Key
Business
Ratios
From
Dun
&
Bradstreet
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
SOLVENCY
RATIOS
Quick
Ratio
Cash
+
Accounts
Receivable
Current
Liabilities
The
Quick
Ratio
is
computed
by
divided
cash
plus
accounts
receivable
by
total
current
liabilities.
Current
liabilities
are
all
the
liabilities
that
fall
due
within
one
year.
This
ratio
reveals
the
protection
afforded
short­
term
creditors
in
cash
or
near­
cash
assets.
It
shows
the
number
of
dollars
of
liquid
assets
available
to
cover
each
dollar
of
current
debt.
Any
time
this
ratio
is
as
much
as
1
to
1
(
1.0)
the
business
is
said
to
be
in
a
liquid
condition.
The
larger
the
ratio
the
greater
the
liquidity.

Current
Ratio
Current
Assets
Current
Liabilities
Total
current
assets
are
divided
by
total
current
liabilities.
Current
assets
include
cash,
accounts
and
notes
receivable
(
less
reserves
for
bad
debts)
,
advances
on
inventories,
merchandise
inventories
and
marketable
securities.
This
ratio
measures
the
degree
to
which
current
assets
cover
current
liabilities.
The
higher
the
ratio
the
more
assurance
exists
that
the
retirement
of
current
liabilities
can
be
made.
The
current
ratio
measures
the
margin
of
safety
available
to
cover
any
possible
shrinkage
in
the
value
of
current
assets.
Normally
a
ratio
of
2
to
1
(
2.0)
or
better
is
considered
good.

Current
Liabilities
to
Net
Worth
Current
Liabilities
Net
Worth
Current
Liabilities
to
Net
Worth
is
derived
by
dividing
current
liabilities
by
net
worth.
This
contrasts
the
funds
that
creditors
temporarily
are
risking
with
the
funds
permanently
invested
by
the
owners.
The
smaller
the
net
worth
and
the
larger
the
liabilities,
the
less
security
for
the
creditors.
Care
should
be
exercised
when
selling
any
firm
with
current
liabilities
exceeding
two­
thirds
(
66.6
percent)
of
net
worth.

2C­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Current
Liabilities
to
Inventory
Current
Liabilities
Inventory
Dividing
current
liabilities
by
inventory
yields
another
indication
of
the
extent
to
which
the
business
relies
on
funds
from
disposal
of
unsold
inventories
to
meet
its
debts.
This
ratio
combines
with
Net
Sales
to
Inventory
to
indicate
how
management
controls
inventory.
It
is
possible
to
have
decreasing
liquidity
while
maintaining
consistent
sales­
to­
inventory
ratios.
Large
increases
in
sales
with
corresponding
increases
in
inventory
levels
can
cause
an
inappropriate
rise
in
current
liabilities
if
growth
isn
 
t
made
wisely.

Total
Liabilities
to
Net
Worth
Total
Liabilities
Net
Worth
Obtained
by
dividing
total
current
plus
long­
term
and
deferred
liabilities
by
net
worth.
The
effect
of
long­
term
(
funded)
debt
on
a
business
can
be
determined
by
comparing
this
ratio
with
Current
Liabilities
to
Net
Worth.
The
difference
will
pinpoint
the
relative
size
of
long­
term
debt,
which,
if
sizable,
can
burden
a
firm
with
substantial
interest
charges.
In
general,
total
liabilities
shouldn
 
t
exceed
net
worth
(
100
percent)
since
in
such
cases
creditors
have
more
at
stake
than
owners.

Fixed
Assets
to
Net
Worth
Fixed
Assets
Net
Worth
Fixed
assets
are
divided
by
net
worth.
The
proportion
of
net
worth
that
consists
of
fixed
assets
will
very
greatly
from
industry
to
industry
but
generally
a
smaller
proportion
is
desirable.
A
high
ratio
is
unfavorable
because
heavy
investment
in
fixed
assets
indicates
that
either
the
concern
has
a
low
net
working
capital
and
is
overtrading
or
has
utilized
large
funded
debt
to
supplement
working
capital.
Also,
the
larger
the
fixed
assets,
the
bigger
then
annual
depreciation
charge
that
must
be
deducted
from
the
income
statement.
Normally,
fixed
assets
over
75
percent
of
net
worth
indicate
possible
over­
investment
and
should
be
examined
with
care.

2C­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EFFICIENCY
RATIOS
Collection
Period
Accounts
Receivable
Sales
x
365
Accounts
receivable
are
divided
by
sales
and
then
multiplied
by
365
days
to
obtain
this
figure.
The
quality
of
the
receivables
of
a
company
can
be
determined
by
this
relationship
when
compared
with
selling
terms
and
industry
norms.
IN
some
industries
where
credit
sales
are
not
the
normal
way
of
doing
business,
the
percentage
of
cash
sales
should
be
taken
into
consideration.
Generally,
where
most
sales
are
for
credit,
any
collection
period
more
than
one­
third
over
normal
selling
terms
(
40.0
for
30­
day
terms)
is
indicative
of
some
slow­
turning
receivables.
When
comparing
the
collection
period
of
one
concern
with
that
of
another,
allowances
should
be
made
for
possible
variations
in
selling
terms.

Sales
to
Inventory
Annual
Net
Sales
Inventory
Obtained
by
dividing
annual
net
sales
by
inventory.
Inventory
control
is
a
primate
management
objective
since
poor
controls
allow
inventory
to
become
costly
to
store,
obsolete
or
insufficient
to
meet
demands.
The
sales­
to­
inventory
relationship
is
a
guide
to
the
rapidity
at
which
merchandise
is
being
moved
and
the
effect
on
the
flow
of
funds
into
the
business.
This
ratio
varies
widely
between
lines
of
business
and
a
company
 
s
figure
is
only
meaningful
when
compared
with
industry
norms.
Individual
figures
that
are
outside
either
the
upper
or
lower
quartiles
for
a
given
industry
should
be
examined
with
care.
Although
low
figures
are
usually
the
biggest
problem,
as
they
indicate
excessively
high
inventories,
extremely
high
turnovers
might
reflect
insufficient
merchandise
to
meet
customer
demand
and
result
in
lost
sales.

Asset
to
Sales
Total
Assets
Net
Sales
Assets
to
sales
is
calculated
by
dividing
total
assets
by
annual
net
sales.
This
ratio
ties
in
sales
and
the
total
investment
that
is
used
to
generate
those
sales.
While
figures
vary
greatly
from
industry
to
industry,
by
comparing
a
company
 
s
ratio
with
industry
norms
it
can
be
determined
2C­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
whether
a
firm
is
overtrading
(
handling
an
excessive
volume
of
sales
in
relation
to
investment)
or
undertrading
(
not
generating
sufficient
sales
to
warrant
the
assets
invested)
.
Abnormally
low
percentages
(
above
the
upper
quartile)
can
indicate
overtrading
which
may
lead
to
financial
difficulties
if
not
corrected.
Extremely
high
percentages
(
below
the
lower
quartile)
can
be
the
result
of
overly
conservative
or
poor
sales
management,
indicating
a
more
aggressive
sales
policy
may
need
to
be
followed.

Sales
to
Net
Working
Capital
Sales
Net
Working
Capital
Net
Sales
are
divided
by
net
working
capital
(
net
working
capital
is
current
assets
minus
current
liabilities)
.
This
relationship
indicates
whether
a
company
is
overtrading
or
conversely
carrying
more
liquid
assets
than
needed
for
its
volume.
Each
industry
can
vary
substantially
and
it
is
necessary
to
compare
a
company
with
its
peers
to
see
if
it
is
either
overtrading
on
its
available
funds
or
being
overly
conservative.
Companies
with
substantial
sales
gains
often
reach
a
level
where
their
working
capital
becomes
strained.
Even
if
they
maintain
an
adequate
total
investment
for
the
volume
being
generated
(
Assets
to
Sales)
,
that
investment
may
be
so
centered
in
fixed
assets
or
other
noncurrent
items
that
it
will
be
difficult
to
continue
meeting
all
current
obligations
without
additional
investment
or
reducing
sales.

Accounts
Payable
to
Sales
Accounts
Payable
Annual
Net
Sales
Computed
by
dividing
accounts
payable
by
annual
net
sales.
This
ratio
measures
how
the
company
is
paying
its
suppliers
in
relation
to
the
volume
being
transacted.
An
increasing
percentage,
or
one
larger
than
the
industry
norm,
indicates
the
firm
may
be
using
suppliers
to
help
finance
operations.
This
ratio
is
especially
important
to
short­
term
creditors
since
a
high
percentage
could
indicate
potential
problems
in
paying
vendors.

2C­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
PROFITABILITY
RATIOS
Return
on
Sales
(
Profit
Margin)

Net
Profit
After
Taxes
Annual
Net
Sales
Obtained
by
dividing
net
profit
after
taxes
by
annual
net
sales.
This
reveals
the
profits
earned
per
dollar
of
sales
and
therefore
measures
the
efficiency
of
the
operation.
Return
must
be
adequate
for
the
firm
to
be
able
to
achieve
satisfactory
profits
for
its
owners.
This
ratio
is
an
indicator
of
the
firm
 
s
ability
to
withstand
adverse
conditions
such
as
falling
prices,
rising
costs
and
declining
sales.

Return
on
Assets
Net
Profit
After
Taxes
Total
Assets
Net
profit
after
taxes
divided
by
total
assets.
This
ratio
is
the
key
indicator
of
profitability
for
a
firm.
It
matches
operating
profits
with
the
assets
available
to
earn
a
return.
Companies
efficiently
using
their
assets
will
have
a
relatively
high
return
while
less
well­
run
businesses
will
be
relatively
low.

Return
on
Net
Worth
(
Return
on
Equity)

Net
Profit
After
Taxes
Net
Worth
Obtained
by
dividing
net
profit
after
tax
by
net
worth.
This
ratio
is
used
to
analyze
the
ability
of
the
firm
 
s
management
to
realize
an
adequate
return
on
the
capital
invested
by
the
owners
of
the
firm.
Tendency
is
to
look
increasingly
to
this
ratio
as
a
final
criterion
of
profitability.
Generally,
a
relationship
of
at
least
10
percent
is
regarded
as
a
desirable
objective
for
providing
dividends
plus
funds
for
future
growth.

2C­
5
APPENDIX
2D
Summary
Statistics
for
the
C&
D
Industry,
By
NAICS
Code
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
2D­
1.
Summary
Statistics
for
the
C&
D
Industry
NAICS
Description
Number
of
Establishments
Number
of
Employees
Annual
Payroll
(
$
1000)
Number
of
Construction
Workers
Annual
Payroll
­
Construction
Workers
(
$
1000)
Value
of
Construction
Work
(
$
1000)
Value
of
Construction
Work
Subcontracted
In
(
$
1000)
Net
Value
of
Construction
Work
Value
Added
(
$
1000)

23
Construction
656,448
5,664,853
174,184,608
4,332,737
119,676,792
845,543,552
237,691,136
612,209,024
383,845,728
233
Building,
developing,
and
general
contracting
199,289
1,342,953
42,546,112
885,939
23,135,832
381,641,600
15,724,829
198,826,896
120,322,720
2331
Land
subdivision
and
land
development
8,186
41,827
1,509,773
10,977
254,247
13,635,521
272,860
10,247,820
9,154,633
233110
Land
subdivision
and
land
development
8,186
41,827
1,509,773
10,977
254,247
13,635,521
272,860
10,247,820
9,154,633
2332
Residential
housing
construction
146,394
629,886
16,731,210
407,801
8,762,123
161,286,076
5,260,611
100,124,176
56,374,697
233210
Single­
family
housing
construction
138,850
570,990
14,964,583
367,719
7,739,858
146,798,768
4,985,452
92,802,168
52,585,924
233220
Multifamily
housing
construction
7,544
58,896
1,766,627
40,082
1,022,265
14,487,308
275,159
7,322,008
3,788,773
2333
Nonresidential
building
construction
44,709
671,238
24,305,128
467,161
14,119,463
206,720,022
10,191,358
88,454,894
54,793,388
233310
Manufacturing
and
industrial
building
construction
7,280
143,066
5,128,967
107,180
3,322,347
33,514,342
2479077
17202078
10429844
233320
Commercial
and
institutional
building
construction
37,430
528,173
19,176,160
359,981
10,797,116
173,205,680
7712281
71252816
44363544
234
Heavy
construction
42,557
880,400
30,291,850
710,898
22,218,582
127,841,600
28,386,274
105,639,352
68,775,976
2D­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
NAICS
Description
Number
of
Establishments
Number
of
Employees
Annual
Payroll
(
$
1000)
Number
of
Construction
Workers
Annual
Payroll
­
Construction
Workers
(
$
1000)
Value
of
Construction
Work
(
$
1000)
Value
of
Construction
Work
Subcontracted
In
(
$
1000)
Net
Value
of
Construction
Work
Value
Added
(
$
1000)

2341
Highway,
street,
bridge
&
tunnel
construction
12,447
325,742
11,374,785
265,267
8,473,898
58,011,325
13,657,005
46,274,086
27,477,466
234110
Highway
and
street
construction
11,270
277,979
9,527,626
227,066
7,095,139
48,472,284
12,246,944
39,102,084
22,983,910
234120
Bridge
and
tunnel
construction
1,177
47,764
1,847,160
38,201
1,378,759
9,539,041
1,410,061
7,172,002
4,493,556
2349
Other
heavy
construction
30,107
554,655
18,917,062
445,630
13,744,685
69,830,272
14,729,269
59,365,265
41,298,511
234910
Water,
sewer,
and
pipeline
construction
8,042
162,566
5,522,281
134,023
4,087,007
22,204,058
5,233,440
19,126,738
12,280,098
234920
Power
and
communication
transmission
line
construction
3,300
74,050
2,387,432
60,880
1,748,715
7,849,436
1,312,622
6,741,945
5,201,423
234930
Industrial
nonbuilding
structure
construction
531
98,555
3,722,363
79,473
2,734,020
9,255,216
966,283
8,129,656
6288698
234990
All
other
heavy
construction
18,236
219,486
7,284,989
171,254
5,174,943
30,521,562
7,216,924
25,366,926
17,528,292
235
Special
trade
contractors
414,602
3,441,500
101,346,648
2,735,901
2,940,440
336,060,352
193,580,032
307,742,752
194,747,056
235930
Excavation
contractors
18,229
116,237
3,353,874
92,830
2,525,857
13,746,608
8,745,278
12,216,146
9,086,184
235940
Wrecking
and
demolition
contractors
1,542
18,820
592,176
14,486
414,583
2,164,162
1,099,814
1,913,892
1,732,366
2D­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
a
An
establishment
is
a
single
physical
location
at
which
business
is
conducted.
It
is
not
necessarily
identical
with
a
company
or
enterprise,
which
may
consist
of
one
establishment
or
more.
b
Value
of
construction
work
includes
all
value
of
construction
work
done
during
1992
for
construction
work
performed
by
general
contractors
and
special
trades
contractors.
Included
is
new
construction,
additions
and
alterations
or
reconstruction,
and
maintenance
and
repair
construction
work.
Also
included
is
the
value
of
any
construction
work
done
by
the
reporting
establishments
for
themselves.
This
value
is
not
available
for
SIC
655,
instead
estimates
of
annual
revenue
from
the
Census
of
Financial,
Insurance,
and
Real
Estate
Industries
is
used.
The
measure
includes
'
reported
revenues,
which
include
revenues
from
all
business
activities,
including
amounts
received
for
work
subcontracted
out
to
others.
c
Employment
comprises
all
full­
time
and
part­
time
employees
on
the
payrolls
of
construction
establishments,
who
worked
or
received
pay
for
any
part
of
the
pay
period
including
the
12
th
of
March,
May,
August,
and
November.
Included
are
all
persons
on
paid
sick
leave,
paid
holidays,
and
paid
vacations
during
these
pay
periods.
Officers
of
corporations
are
included,
but
proprietors
and
partners
of
unincorporated
firms
are
not.
All
employees
is
the
sum
of
all
employees
during
the
pay
periods
including
the
12
th
of
March,
May,
August,
and
November,
divided
by
4.
d
Payroll
includes
the
gross
earnings
paid
in
the
calendar
year
1992
to
all
employees
on
the
payroll
of
construction
establishments.
It
includes
all
forms
of
compensation
such
as
salaries,
wages,
commissions,
bonuses,
vacation
allowances,
sick
leave
pay,
prior
to
such
deductions
as
employees'
Social
Security
contribution,
withholding
taxes,
group
insurance,
union
dues,
and
savings
bonds.
e
Construction
workers
include
all
workers
up
through
the
working
supervisor
level
directly
engaged
in
construction
operations,
such
as
painters,
carpenters,
plumbers,
and
electricians.
Included
are
journeymen,
mechanics,
apprentices,
laborers,
truck
drivers
and
helpers,
equipment
operators,
and
on­
site
recordkeepers
and
security
guards.
f
Construction
worker
payroll
includes
gross
earnings
paid
in
the
calendar
year
1992
to
all
construction
workers
only.
g
Net
value
of
construction
work
is
derived
for
each
establishment
by
subtracting
the
costs
for
construction
work
subcontracted
to
others
from
the
value
of
construction
work
done.
h
Value
added,
derived
for
each
establishment,
is
equal
to
dollar
value
of
business
done
less
the
costs
of
construction
work
subcontracted
to
others
and
costs
for
materials,
components,
supplies,
and
fuels.
i
Value
of
construction
work
subcontracted
in
from
others
includes
the
value
of
construction
work
during
1992
for
work
done
by
reporting
establishments
as
subcontractors.
j
Covers
establishments
in
SICs
1794
(
Excavation
Work)
and
1795
(
Wrecking
and
Demolition
Work)
only.
k
Covers
establishments
in
SICs
6552
(
Land
Subdividers
and
Developers,
Except
Cemeteries)
and
6553
(
Cemetery
Subdividers
and
Developers)
only.
S
Withheld
because
estimate
did
not
meet
publication
standards
on
the
basis
of
either
the
response
rate,
associated
relative
standard
error,
or
a
consistency
review.
NA
These
values
are
not
included
in
the
Census
of
Financial,
Insurance,
and
Real
Estate
Industries
and
therefore
are
unavailable
for
SIC
655.

2D­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
THREE
DESCRIPTION
OF
PROPOSED
RULE
AND
REGULATORY
OPTIONS
Chapter
One
provides
a
summary
of
the
Phase
I
and
Phase
II
National
Pollutant
Discharge
Elimination
System
(
NPDES)
Storm
Water
Regulations
and
the
Construction
General
Permit
(
CGP)
for
the
construction
industry.
This
chapter
describes
the
effluent
limitation
guidelines
and
standards
program
(
Section
3.1)
,
the
technology
alternatives
for
the
proposed
effluent
limitation
guidelines
(
Section
3.2)
,
and
the
regulatory
options
that
EPA
is
proposing
for
the
C&
D
industry
(
Section
3.3)
.

3.1
EFFLUENT
LIMITATION
GUIDELINES
AND
STANDARDS
The
Federal
Water
Pollution
Control
Act,
passed
in
1972
(
CWA,
33
U.
S.
C.
§
1251
et
seq.
)
,

establishes
a
comprehensive
program
to
 
restore
and
maintain
the
chemical,
physical,
and
biological
integrity
of
the
Nation'
s
waters
 
(
(
§
101(
a)
)
,
often
referred
to
as
 
fishable,
swimmable
 
status.
.
The
statute
was
amended
in
1987
to
include
requirements
for
a
comprehensive
program
to
address
storm
water
discharges.
Moreover,
EPA
is
authorized
under
section
301,
304,
306,
and
307
of
the
CWA
to
establish
effluent
limitation
guidelines
and
pretreatment
standards
for
industrial
dischargers.
EPA
is
authorized
to
publish
the
following
standards:

#
Best
Practicable
Control
Technology
Currently
Available
(
BPT)
.
Under
section
304(
b)
(
1)
,
these
rules
apply
to
direct
dischargers.
BPT
limitations
are
generally
based
on
the
average
of
the
best
existing
performances
by
plants
of
various
sizes,
ages,
and
unit
processes
within
a
point
source
category
or
subcategory.

#
Best
Available
Technology
Economically
Achievable
(
BAT)
.
Under
section
304(
b)
(
2)
,
these
rules
apply
to
direct
discharges
of
toxic
and
nonconventional
1
pollutants.

1
Toxic
pollutants
are
listed
in
Table
1
of
U.
S.
C
1317
Section
307(
a)
(
1)
and
currently
include
64
pollutants
and
their
organic
and
inorganic
compounds.
This
list
includes
arsenic,
DDT,
lead,
and
mercury.
Nonconventional
pollutants
are
any
pollutants
that
are
not
statutorily
listed
(
not
covered
by
the
list
of
toxic
or
conventional
pollutants)
or
which
are
poorly
understood
by
the
scientific
community.

3­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
#
Best
Conventional
Pollutant
Control
Technology
(
BCT)
.
Under
section
304(
b)
(
4)
,
these
rules
apply
to
direct
discharges
of
conventional
pollutants.
2
BCT
limitations
are
generally
established
using
a
two­
part
cost­
reasonableness
test.
BCT
replaces
BAT
for
control
of
conventional
pollutants.

#
Pretreatment
Standards
for
Existing
Sources
(
PSES)
.
Under
section
307.
Analogous
to
BAT
controls,
these
rules
apply
to
existing
indirect
dischargers
(
i.
e.
,
dischargers
to
publicly
owned
treatment
works
(
POTWs)
.

#
New
Source
Performance
Standards
(
NSPS)
.
Under
section
306(
b)
,
these
rules
apply
to
discharges
of
toxic
and
nonconventional
pollutants
and
apply
to
new
direct
dischargers.

#
Pretreatment
Standards
for
New
Sources
(
PSNS)
.
Under
section
307.
Analogous
to
NSPS
controls,
these
rules
apply
to
new
source
indirect
dischargers
(
i.
e.
,
dischargers
to
publicly
owned
treatment
works
(
POTWs)
.

Under
the
proposed
effluent
limitation
guidelines
(
ELG)
,
EPA
is
proposing
BAT,
BPT,
BCT
and
NSPS
guidelines
and
standards
for
erosion
and
sediment
control
(
ESC)
during
the
active
construction
phase.

3.2
REQUIREMENTS
UNDER
THE
EXISTING
CONSTRUCTION
GENERAL
PERMIT
The
CGP,
published
in
1992
and
revised
in
1998,
directs
NPDES
permittees
to
prepare
a
storm
water
pollution
prevention
plan
(
SWPPP)
for
certain
construction
activities.
The
CGP
also
calls
for
installation
of
temporary
sediment
basins
for
construction
sites
with
disturbed
area
of
10
acres
or
more.

The
permit
lists
a
variety
of
options
and
goals
for
other
ESCs,
but
none
are
required.
A
description
of
ESCs,
if
any,
is
to
be
contained
in
the
SWPPP.
Options
and
goals
for
post­
construction
storm
water
best
management
practices
(
BMPs)
are
also
contained
in
the
CGP,
but
none
are
required.
As
with
ESCs,

selected
BMPs,
if
any,
are
to
be
described
in
the
SWPPP.

The
C&
D
industry
ELG
would
build
upon
and
complement
the
CGP
by
adding
inspection
and
certification
(
I&
C)
requirements
for
active
construction
ESCs.
As
described
below,
under
one
option
2
Conventional
pollutants
include
biochemical
oxygen
demand
(
BOD)
,
total
suspended
solids
(
TSS)
,
fecal
coliform,
pH,
and
oil
and
grease.

3­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
would
add
the
I&
C
requirements
for
sites
of
one
acre
or
more
in
size,
while
under
another
option
the
I&
C
requirements
would
apply
to
sites
of
5
acres
and
above.
This
second
option
would
also
codify
in
the
Code
of
Federal
Regulations
(
CFR)
the
requirements
found
in
the
CGP.
These
options
are
described
more
fully
below.

3.3
SUMMARY
OF
REGULATORY
OPTIONS/
TECHNOLOGY
ALTERNATIVES
EPA
is
co­
proposing
two
regulatory
alternatives,
along
with
a
 
no
regulation
 
option,
,
for
a
total
of
three
regulatory
options.
EPA
has
defined
the
baseline
for
the
proposed
rule
as
full
compliance
with
the
current
Phase
I
NPDES
storm
water
regulations
and
the
future
Phase
II
regulations.
If
any
additional
costs
are
incurred
by
dischargers
under
the
existing
storm
water
regulations
the
costs
will
be
added
to
the
baseline
assumption.
Table
3­
1
summarizes
the
regulatory
options.
Throughout
the
analysis
presented
in
this
report,
EPA
treats
the
baseline
as
 
Option
3.
 
Table
3­
1.
Summary
of
Regulatory
Options
Being
Co­
Proposed
by
EPA
Option
Description
Regulatory
Mechanism
Applicability
Option
1
Inspection
and
Certification
of
Construction
Site
Erosion
and
Sediment
Controls
Amendment
to
NPDES
storm
water
permitting
regulations
Sites
of
1
acre
or
more
Option
2
 
Codification
 
of
the
Construction
General
Permit
(
CGP)
plus
Inspection
and
Certification
Requirements
Effluent
limitation
guidelines
Sites
of
5
acres
or
more
Option
3
No
Regulation
(
Baseline)
N/
A
All
sites
3­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
3.3.1
Option
1
Option
1
would
amend
40
CFR
Part
122,
the
section
of
the
CFR
covering
NPDES
permitting,

adding
a
new
paragraph
(
t)
section
to
§
122.44
entitled
Inspection
and
Certification
for
Construction
Site
Storm
Water
Discharges
.
These
requirement
in
this
section
would
include:

(
1)
Site
log
book.
The
permittee
for
a
point
source
discharge
under
§
122.26(
(
b)
(
14)
(
x)
or
§
122.26(
(
b)
(
15)
shall
maintain
a
record
of
site
activities
in
a
site
log
book.
The
site
log
book
shall
be
maintained
as
follows:

(
i)
A
copy
of
the
site
log
book
shall
be
maintained
on
site
and
be
made
available
to
the
permitting
authority
upon
request;

(
ii)
In
the
site
log
book,
the
permittee
shall
certify,
prior
to
the
commencement
of
construction
activities,
that
any
plans
required
by
the
permit
meet
all
Federal,
State,
Tribal
and
local
erosion
and
sediment
control
requirements
and
are
available
to
the
permitting
authority;

(
iii)
The
permittee
shall
have
a
qualified
professional
(
knowledgeable
in
the
principles
and
practices
of
erosion
and
sediment
controls,
such
as
a
licensed
professional
engineer,
or
other
knowledgeable
person)
conduct
an
assessment
of
the
site
prior
to
groundbreaking
and
certify
in
the
log
book
that
the
appropriate
best
management
practices
(
BMPs)
described
in
plans
required
by
the
permit
have
been
adequately
designed,
sized
and
installed
to
ensure
overall
preparedness
of
the
site
for
initiation
of
groundbreaking
activities.
The
permittee
shall
record
the
date
of
initial
groundbreaking
in
the
site
log
book.
The
permittee
shall
also
certify
that
any
inspection,
stabilization
and
BMP
maintenance
requirements
of
the
permit
have
been
satisfied
within
48
hours
of
actually
meeting
such
requirements;
and
(
iv)
The
permittee
shall
post
at
the
site,
in
a
publicly­
accessible
location,
a
summary
of
the
site
inspection
activities
on
a
monthly
basis;

(
2)
Site
Inspections.
The
permittee
or
designated
agent
of
the
permittee
(
such
as
a
consultant,
subcontractor,
or
third­
party
inspection
firm)
shall
conduct
regular
inspections
of
the
site
and
record
the
results
of
such
inspection
in
the
site
log
book
in
accordance
with
paragraph
(
t)
(
1)
of
this
section.

(
i)
After
initial
groundbreaking,
permittees
shall
conduct
site
inspections
at
least
every
14
calendar
days
and
within
24
hours
of
the
end
of
a
storm
event
of
0.5
inches
or
greater.
These
inspections
shall
be
conducted
by
a
qualified
professional.
During
each
inspection,
the
permittee
or
designated
agent
shall
record
the
following
information:

3­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
A)
Indicate
on
a
site
map
the
extent
of
all
disturbed
site
areas
and
drainage
pathways.
Indicate
site
areas
that
are
expected
to
undergo
initial
disturbance
or
significant
site
work
within
the
next
14
days;

(
B)
Indicate
on
a
site
map
all
areas
of
the
site
that
have
undergone
temporary
or
permanent
stabilization;

(
C)
Indicate
all
disturbed
site
areas
that
have
not
undergone
active
site
work
during
the
previous
14
days;

(
D)
Inspect
all
sediment
control
practices
and
note
the
approximate
degree
of
sediment
accumulation
as
a
percentage
of
the
sediment
storage
volume
(
for
example
10
percent,
20
percent,
50
percent,
etc.
)
.
Note
all
sediment
control
practices
in
the
site
log
book
that
have
sediment
accumulation
of
50
percent
or
more;
and
(
E)
Inspect
all
erosion
and
sediment
control
BMPs
and
note
compliance
with
any
maintenance
requirements
such
as
verifying
the
integrity
of
barrier
or
diversion
systems
(
e.
g.
,
earthen
berms
or
silt
fencing)
and
containment
systems
(
e.
g.
,
sediment
basins
and
sediment
traps)
.
Identify
any
evidence
of
rill
or
gully
erosion
occurring
on
slopes
and
any
loss
of
stabilizing
vegetation
or
seeding/
mulching.
Document
in
the
site
log
book
any
excessive
deposition
of
sediment
or
ponding
water
along
barrier
or
diversion
systems.
Note
the
depth
of
sediment
within
containment
structures,
any
erosion
near
outlet
and
overflow
structures,
and
verify
the
ability
of
rock
filters
around
perforated
riser
pipes
to
pass
water.

(
ii)
Prior
to
filing
of
the
Notice
of
Termination
or
the
end
of
permit
term,
a
final
site
erosion
and
sediment
control
inspection
shall
be
conducted
by
the
permittee
or
designated
agent.
The
inspector
shall
certify
that
the
site
has
undergone
final
stabilization
as
required
by
the
permit
and
that
all
temporary
erosion
and
sediment
controls
(
such
as
silt
fencing)
not
needed
for
long­
term
erosion
control
have
been
removed.

Option
1
would
also
amend
§
122.44(
i)
(
4)
to
exclude
construction
activities
from
requirements
for
monitoring
of
storm
water
discharges.

Option
1
would
apply
to
sites
of
one
acre
or
more
in
size.

3.3.2
Option
2
Option
2
would
add
a
new
section
to
the
effluent
limitation
guidelines
section
of
the
CFR,
i.
e.
,

Part
450
 
Construction
and
Development
Point
Source
Category.
This
section
would
essentially
codify
3­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
in
the
CFR
the
provisions
of
the
CGP
(
see
Section
3.2)
,
and
in
addition
would
add
the
provisions
for
I&
C
introduced
under
Option
1
(
Section
3.3.1)
.
Option
2
would
amend
40
CFR
122(
i)
(
3)
to
specify
that
discharges
from
construction
activity
are
instead
governed
by
Part
450.

40
CFR
Part
450,
Subpart
A
describes
applicability
and
provides
definitions.
Subpart
B
would
establish
the
ESC
requirements
based
on
application
of
BPT,
BAT,
BCT,
and
NSPS.

Part
450
would
apply
to
construction
and
development
activities
subject
to
an
NPDES
permit
under
the
definition
of
 
construction
activity
 
at
40
CFR
122.26(
(
b)
(
14)
(
x)
.
Section
450.11
establishes
some
general
definitions
for
the
following
terms:
BMPs,
commencement
of
construction,
final
stabilization,
groundbeaking,
new
source,
operator,
perimeter
controls,
qualified
professional,
runoff
coefficient,
and
stabilization.

Section
450.21
would
establish
effluent
limitations
reflecting
best
practicable
technology
currently
available
(
BPT)
,
as
follows:
3
Except
as
provided
in
40
CFR
125.30
through
125.32,
any
existing
point
source
subject
to
this
subpart
must
achieve
the
following
effluent
limitations
representing
the
application
of
the
best
practicable
control
technology
currently
available
(
BPT)
.
Permittees
with
operational
control
over
construction
plans
and
specification,
including
the
ability
to
make
modifications
to
those
plans
and
specifications
(
e.
g.
,
developer
or
owner)
,
must
ensure
the
project
specifications
that
they
develop
meet
the
minimum
requirements
of
a
SWPPP
required
by
§
450.21(
(
d)
.

(
a)
General
Erosion
and
Sediment
Controls.
Each
SWPPP
shall
include
a
description
of
appropriate
controls
designed
to
retain
sediment
on
site
to
the
extent
practicable.
These
general
erosion
and
sediment
controls
shall
be
included
in
the
SWPPP
developed
pursuant
to
paragraph
(
d)
of
this
section.
The
SWPPP
must
include
a
description
of
interim
and
permanent
stabilization
practices
for
the
site,
including
a
schedule
of
when
the
practices
will
be
implemented.
Stabilization
practices
may
include:

(
1)
Establishment
of
temporary
or
permanent
vegetation;

3
Parts
450.22,
450.23,
and
450.24
would
establish
identical
requirements
for
BAT,
BCT,
and
NSPS,
respectively.

3­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
2)
Mulching,
geotextiles,
or
sod
stabilization;

(
3)
Vegetative
buffer
strips;

(
4)
Protection
of
trees
and
preservation
of
mature
vegetation.
(
b)
Sediment
Controls.
The
SWPPP
must
include
a
description
of
structural
practices
to
divert
flows
from
exposed
soils,
store
flows,
or
otherwise
limit
runoff
and
the
discharge
of
pollutants
from
exposed
areas
of
the
site
to
the
degree
attainable.

(
1)
For
common
drainage
locations
that
serve
an
area
with
10
or
more
acres
disturbed
at
one
time,
a
temporary
(
or
permanent)
sediment
basin
that
provides
storage
for
a
calculated
volume
of
runoff
from
a
2
year,
24­
hour
storm
from
each
disturbed
acre
drained,
or
equivalent
control
measures,
shall
be
provided
where
attainable
until
final
stabilization
of
the
site.
Where
no
such
calculation
has
been
performed,
a
temporary
(
or
permanent)
sediment
basin
providing
3,600
cubic
feet
of
storage
per
acre
drained,
or
equivalent
control
measures,
shall
be
provided
where
attainable
until
final
stabilization
of
the
site.
When
computing
the
number
of
acres
draining
into
a
common
location
it
is
not
necessary
to
include
flows
from
off­
site
areas
and
flows
from
on­
site
areas
that
are
either
undisturbed
or
have
undergone
final
stabilization
where
such
flows
are
diverted
around
both
the
disturbed
area
and
the
sediment
basin.

(
2)
In
determining
whether
a
sediment
basin
is
attainable,
the
operator
may
consider
factors
such
as
site
soils,
slope,
available
area
on
site,
etc.
In
any
event,
the
operator
must
consider
public
safety,
especially
as
it
relates
to
children,
as
a
design
factor
for
the
sediment
basin,
and
alternative
sediment
controls
shall
be
used
where
site
limitations
would
preclude
a
safe
basin
design.

(
3)
For
portions
of
the
site
that
drain
to
a
common
location
and
have
a
total
contributing
drainage
area
of
less
than
10
disturbed
acres,
the
operator
should
use
smaller
sediment
basins
and/
or
sediment
traps.

(
4)
Where
neither
a
sediment
basin
nor
equivalent
controls
are
attainable
due
to
site
limitations,
silt
fences,
vegetative
buffer
strips
or
equivalent
sediment
controls
are
required
for
all
down
slope
boundaries
of
the
construction
area
and
for
those
side
slope
boundaries
deemed
appropriate
as
dictated
by
individual
site
conditions.

(
c)
Pollution
Prevention
Measures.
The
SWPPP
shall
include
the
following
pollution
prevention
measures:

(
1)
Litter,
construction
chemicals,
and
construction
debris
exposed
to
storm
water
shall
be
prevented
from
becoming
a
pollutant
source
in
storm
water
discharges
(
e.
g.
,
screening
outfalls,
picked
up
daily)
;
and
(
2)
A
description
of
construction
and
waste
materials
expected
to
be
stored
on­
site
with
updates
as
appropriate,
and
a
description
of
controls
to
reduce
pollutants
3­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
from
these
materials
including
storage
practices
to
minimize
exposure
of
the
materials
to
storm
water,
and
spill
prevention
and
response.

(
d)
Storm
Water
Pollution
Prevention
Plan.
Operators
subject
to
this
Part
shall
compile
Storm
Water
Pollution
Prevention
Plans
(
SWPPPs)
prior
to
groundbreaking
at
any
construction
site.
In
areas
where
EPA
is
not
the
permit
authority,
operators
may
be
required
to
prepare
documents
that
may
serve
as
the
functional
equivalent
of
a
SWPPP.
Such
alternate
documents
will
satisfy
the
requirements
for
a
SWPPP
so
long
as
they
contain
the
necessary
elements
of
a
SWPPP.
A
SWPPP
shall
incorporate
the
following
information:

(
1)
A
narrative
description
of
the
construction
activity,
including
a
description
of
the
intended
sequence
of
major
activities
that
disturb
soils
on
the
site
(
major
activities
include
grubbing,
excavating,
grading,
and
utilities
and
infrastructure
installation,
or
any
other
activity
that
disturbs
soils
for
major
portions
of
the
site)
;

(
2)
A
general
location
map
(
e.
g.
,
portion
of
a
city
or
county
map)
and
a
site
map.
The
site
map
shall
include
descriptions
of
the
following:

(
i)
Drainage
patterns
and
approximate
slopes
anticipated
after
major
grading
activities;

(
ii)
The
total
area
of
the
site
and
areas
of
disturbance;

(
iii)
Areas
that
will
not
be
disturbed;

(
iv)
Locations
of
major
structural
and
nonstructural
controls
identified
in
the
SWPPP;

(
v)
Locations
where
stabilization
practices
are
expected
to
occur;

(
vi)
Locations
of
off­
site
material,
waste,
borrow
or
equipment
storage
areas;

(
vii)
Surface
waters
(
including
wetlands)
;
and
(
viii)
Locations
where
storm
water
discharges
to
a
surface
water;

(
3)
A
description
of
available
data
on
soils
present
at
the
site;

(
4)
A
description
of
BMPs
to
be
used
to
control
pollutants
in
storm
water
discharges
during
construction
as
described
elsewhere
in
this
section;

(
5)
A
description
of
the
general
timing
(
or
sequence)
in
relation
to
the
construction
schedule
when
each
BMP
is
to
be
implemented;

3­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
6)
An
estimate
of
the
pre­
development
and
post­
construction
runoff
coefficients
of
the
site;

(
7)
The
name(
s)
of
the
receiving
water(
s)
;

(
8)
Delineation
of
SWPPP
implementation
responsibilities
for
each
site
owner
or
operator;

(
9)
Any
existing
data
that
describe
the
storm
water
runoff
characteristics
at
the
site.

(
e)
Updating
the
SWPPP.
The
operator
shall
amend
the
SWPPP
and
corresponding
erosion
and
sediment
control
BMPs
whenever:

(
1)
There
is
a
change
in
design,
construction,
or
maintenance
that
has
a
significant
effect
on
the
discharge
of
pollutants
to
waters
of
the
United
States
which
has
not
been
addressed
in
the
SWPPP;
or
(
2)
Inspections
or
investigations
by
site
operators,
local,
State,
Tribal
or
Federal
officials
indicate
that
the
SWPPP
is
proving
ineffective
in
eliminating
or
significantly
minimizing
pollutant
discharges.

(
f)
Site
Log
Book/
Certification.
The
operator
shall
maintain
a
record
of
site
activities
in
a
site
log
book,
as
part
of
the
SWPPP.
The
site
log
book
shall
be
maintained
as
follows:

(
1)
A
copy
of
the
site
log
book
shall
be
maintained
on
site
and
be
made
available
to
the
permitting
authority
upon
request;

(
2)
In
the
site
log
book,
the
operator
shall
certify,
prior
to
the
commencement
of
construction
activities,
that
the
SWPPP
prepared
in
accordance
with
paragraph
(
d)
of
this
section
meets
all
Federal,
State
and
local
erosion
and
sediment
control
requirements
and
is
available
to
the
permitting
authority;

(
3)
The
operator
shall
have
a
qualified
professional
conduct
an
assessment
of
the
site
prior
to
groundbreaking
and
certify
in
the
log
book
that
the
appropriate
BMPs
and
erosion
and
sediment
controls
described
in
the
SWPPP
and
required
by
paragraphs
(
a)
,
(
b)
,
(
c)
and
(
d)
of
this
section
have
been
adequately
designed,
sized
and
installed
to
ensure
overall
preparedness
of
the
site
for
initiation
of
groundbreaking
activities.
The
operator
shall
record
the
date
of
initial
groundbreaking
in
the
site
log
book.
The
operator
shall
also
certify
that
the
requirements
of
paragraphs
(
g)
,
(
h)
and
(
i)
of
this
section
have
been
satisfied
within
48
hours
of
actually
meeting
such
requirements;

(
4)
The
operator
shall
post
at
the
site,
in
a
publicly­
accessible
location,
a
summary
of
the
site
inspection
activities
on
a
monthly
basis.

(
g)
Site
Inspections.
The
operator
or
designated
agent
of
the
operator
(
such
as
a
consultant,
subcontractor,
or
third­
party
inspection
firm)
shall
conduct
regular
inspections
of
the
site
3­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
and
record
the
results
of
such
inspection
in
the
site
log
book
in
accordance
with
paragraph
(
f)
of
this
section.

(
1)
After
initial
groundbreaking,
operators
shall
conduct
site
inspections
at
least
every
14
calendar
days
and
within
24
hours
of
the
end
of
a
storm
event
of
0.5
inches
or
greater.
These
inspections
shall
be
conducted
by
a
qualified
professional.
During
each
inspection,
the
operator
or
designated
agent
shall
record
the
following
information:

(
i)
On
a
site
map,
indicate
the
extent
of
all
disturbed
site
areas
and
drainage
pathways.
Indicate
site
areas
that
are
expected
to
undergo
initial
disturbance
or
significant
site
work
within
the
next
14­
day
period;
(
ii)
Indicate
on
a
site
map
all
areas
of
the
site
that
have
undergone
temporary
or
permanent
stabilization;

(
iii)
Indicate
all
disturbed
site
areas
that
have
not
undergone
active
site
work
during
the
previous
14­
day
period;

(
iv)
Inspect
all
sediment
control
practices
and
note
the
approximate
degree
of
sediment
accumulation
as
a
percentage
of
the
sediment
storage
volume
(
for
example
10
percent,
20
percent,
50
percent,
etc.
)
.
Record
all
sediment
control
practices
in
the
site
log
book
that
have
sediment
accumulation
of
50
percent
or
more;
and
(
v)
Inspect
all
erosion
and
sediment
control
BMPs
and
record
all
maintenance
requirements
such
as
verifying
the
integrity
of
barrier
or
diversion
systems
(
earthen
berms
or
silt
fencing)
and
containment
systems
(
sediment
basins
and
sediment
traps)
.
Identify
any
evidence
of
rill
or
gully
erosion
occurring
on
slopes
and
any
loss
of
stabilizing
vegetation
or
seeding/
mulching.
Document
in
the
site
log
book
any
excessive
deposition
of
sediment
or
ponding
water
along
barrier
or
diversion
systems.
Record
the
depth
of
sediment
within
containment
structures,
any
erosion
near
outlet
and
overflow
structures,
and
verify
the
ability
of
rock
filters
around
perforated
riser
pipes
to
pass
water.

(
2)
Prior
to
filing
of
the
Notice
of
Termination
or
the
end
of
permit
term,
a
final
site
erosion
and
sediment
control
inspection
shall
be
conducted
by
the
operator
or
designated
agent.
The
inspector
shall
certify
that
the
site
has
undergone
final
stabilization
using
either
vegetative
or
structural
stabilization
methods
and
that
all
temporary
erosion
and
sediment
controls
(
such
as
silt
fencing)
not
needed
for
long­
term
erosion
control
have
been
removed.

(
h)
Stabilization.
The
operator
shall
initiate
stabilization
measures
as
soon
as
practicable
in
portions
of
the
site
where
construction
activities
have
temporarily
or
permanently
ceased,
but
in
no
case
more
than
14
days
after
the
construction
activity
in
that
portion
of
the
site
has
temporarily
or
permanently
ceased.
This
requirement
does
not
apply
in
the
following
instances:

3­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
1)
Where
the
initiation
of
stabilization
measures
by
the
14th
day
after
construction
activity
temporarily
or
permanently
ceased
is
precluded
by
snow
cover
or
frozen
ground
conditions,
stabilization
measures
shall
be
initiated
as
soon
as
practicable;

(
2)
Where
construction
activity
on
a
portion
of
the
site
is
temporarily
ceased,
and
earth­
disturbing
activities
will
be
resumed
within
21
days,
temporary
stabilization
measures
need
not
be
initiated
on
that
portion
of
the
site.

(
3)
In
arid
areas
(
areas
with
an
average
annual
rainfall
of
0
to
10
inches)
,
semi­
arid
areas
(
areas
with
an
average
annual
rainfall
of
10
to
20
inches)
,
and
areas
experiencing
droughts
where
the
initiation
of
stabilization
measures
by
the
14th
day
after
construction
activity
has
temporarily
or
permanently
ceased
is
precluded
by
seasonably
arid
conditions,
the
operator
shall
initiate
stabilization
measures
as
soon
as
practicable.

(
i)
Maintenance.
Sediment
shall
be
removed
from
sediment
traps
or
sediment
ponds
when
design
capacity
has
been
reduced
by
50
percent.

Option
2
would
apply
to
sites
of
five
acres
or
more.

3.3.3
Option
3
Option
3
is
the
 
no
regulation
 
option.
.
Storm
water
runoff
from
construction
and
development
activities
would
continue
to
be
managed
in
accordance
with
the
requirements
of
the
CGP.
There
would
be
no
incremental
compliance
requirements
and
consequently
no
incremental
compliance
costs
or
benefits.

3­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
FOUR
ECONOMIC
IMPACT
ANALYSIS
METHODOLOGY
4.1
OVERVIEW
OF
ECONOMIC
IMPACT
ANALYSIS
METHODOLOGY
This
chapter
presents
EPA
 
s
methodology
for
analyzing
the
economic
impacts
of
the
proposed
erosion
and
sediment
control
(
ESC)
regulations
for
the
construction
and
development
(
C&
D)
industry.

EPA
has
employed
a
number
of
different
methods
for
assessing
the
economic
impacts
of
the
proposed
rule.

These
include
models
that
analyze
impacts
at
the
level
of
the
individual
construction
project,
the
individual
firm,
national
construction
markets,
and
the
national
economy
as
a
whole.
The
analysis
considers
impacts
on
the
firms
in
the
C&
D
industry
who
would
be
complying
with
the
regulations,
on
those
who
purchase
the
output
of
the
C&
D
industry,
and
on
those
who
would
be
responsible
for
implementing
the
proposed
rule.

The
analysis
is
based
upon
engineering
cost
estimates
developed
by
EPA.
The
engineering
costs
reflect
the
costs
to
comply
with
requirements
related
to
erosion
and
sediment
controls
(
ESCs)
employed
over
a
relatively
short
period
(
generally
less
than
one
year)
during
which
land
is
being
converted
from
an
undeveloped
to
a
developed
state.
The
engineering
costs
also
include
the
costs
associated
with
meeting
any
paperwork
requirements
triggered
by
the
proposed
rule,
including
any
requirements
related
to
the
permitting
of
construction
and
development
projects,
and
incremental
inspection
and
certification
requirements
for
ESCs.

The
outline
of
the
chapter
is
as
follows:

 
Section
4.2
presents
EPA
 
s
analysis
of
the
impacts
of
the
proposed
rule
on
model
C&
D
projects.
Here
EPA
develops
pro
forma
financial
analyses
for
representative
projects
and
analyzes
the
impact
of
the
incremental
regulatory
costs
on
project
viability.
The
section
includes
a
description
of
the
model
projects,
model
project
analysis
methodology,
data
sources,
and
assumptions
used
in
the
model
project
analysis.
The
model
project
analysis
results
are
presented
in
Chapter
Five,
Section
5.2.

 
Section
4.3
presents
EPA
 
s
analysis
of
the
impacts
of
the
proposed
rule
on
model
C&
D
firms.
This
section
uses
data
on
the
financial
condition
of
representative
firms
to
examine
the
impact
of
the
incremental
compliance
requirements
on
the
model
firm
 
s
financial
4­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
condition.
This
section
also
describes
how
the
model
firm
analysis
is
used
to
evaluate
economic
achievability
and
barrier
to
entry
considerations
for
the
proposed
rule,
and
to
conduct
the
firm
closure
analysis
and
small
entity
impact
analysis.
This
section
includes
a
description
of
the
model
firms,
model
firm
analysis
methodology,
data
sources,
and
assumptions
used
in
the
model
firm
analysis.
The
model
firm
analysis
results,
including
those
from
the
economic
achievability,
barrier
to
entry,
closure,
and
employment
loss
analyses,
are
presented
in
Chapter
Five,
Sections
5.4
through
5.6.

 
Section
4.4
presents
EPA
 
s
methodology
for
estimating
the
national
compliance
costs
of
the
proposed
rule.
These
costs
are
estimated
starting
with
the
per­
acre
compliance
costs
estimated
by
EPA.
The
per­
acre
costs
are
applied
to
national
estimates
of
the
amount
of
land
converted
to
developed
status
annually.
National
compliance
cost
estimates
are
presented
in
Chapter
Five,
Section
5.3.

 
Section
4.5
describes
EPA
 
s
partial
equilibrium
market
model
analysis.
This
section
considers
the
impact
of
the
incremental
compliance
requirements
on
consumers
of
the
construction
industry
 
s
output,
in
particular
the
impacts
on
home
buyers
and
on
housing
affordability.
The
section
includes
a
description
of
the
market
model
methodology,
data
sources,
and
assumptions
used
in
the
market
models.
The
market
modeling
results
are
presented
in
Chapter
Five,
Section
5.6.

 
Section
4.6
expands
the
analysis
to
consider
the
net
impacts
of
the
proposed
rule
on
the
national
economy.
While
the
compliance
costs
would
reduce
output
in
the
construction
industry
there
may
be
an
offsetting
increase
in
spending
related
to
ESCs
and
inspection
and
certification.
EPA
uses
input­
output
analysis
to
trace
the
implications
of
these
spending
shifts
on
the
national
economy.
The
result
is
an
overall
estimate
of
the
impact
on
macroeconomic
variables
such
as
output
and
national
employment.
The
results
of
the
national
economic
impact
analysis
are
presented
in
Chapter
Five,
Section
5.7.

 
Section
4.7
considers
the
impacts
on
governmental
units
associated
with
establishing
or
modifying
permitting
programs
to
reflect
the
requirements
in
the
proposed
rule
as
well
as
new
or
increased
costs
related
to
permit
processing.
The
results
of
the
government
cost
impact
analyses
are
presented
in
Chapter
Five,
Section
5.8.

4.
1
.
1
Compliance
and
Baseline
Assumptions
In
this
analysis
EPA
assumes
that
the
proposed
rule
would
impact
markets
that
have
already
fully
implemented
existing
regulations
related
to
storm
water
controls
for
C&
D
activities.
EPA
assumes
that
all
states,
tribal
lands,
and
territories
comply
with
the
existing
regulations
or
have
equivalent
programs.
These
programs
are
assumed
to
include
all
of
the
requirements
affecting
C&
D
activities
that
were
part
of
the
national
storm
water
Phase
I
and
Phase
II
NPDES
storm
water
regulations.
Since
the
Phase
II
regulations
are
not
scheduled
to
be
fully
implemented
until
2003,
however,
EPA
acknowledges
that
4­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
current
market
conditions
may
not
fully
reflect
the
baseline
that
would
apply
at
the
time
the
proposed
rule
comes
into
force.
Specifically,
EPA
notes
that
the
baseline
market
conditions
assumed
in
this
analysis
(
including
baseline
financial
conditions
for
affected
firms)
may
not
fully
reflect
the
implementation
of
Phase
II
NPDES
storm
water
requirements.
For
this
reason,
EPA
has
conducted
a
supplemental
analysis
that
reflects
less
than
100
percent
implementation
of
the
Phase
II
NPDES
storm
water
rule
in
the
baseline.

The
supplemental
baseline
analysis
is
presented
in
Appendix
5C
of
this
report.

4.1.2
Cost
Pass
Through
Assumptions
EPA
has
incorporated
into
each
of
the
impact
analyses
described
below
specific
assumptions
about
the
incidence
of
the
compliance
costs.
This
section
describes
generally
EPA
 
s
conclusions
about
cost
incidence
for
the
proposed
regulation
and
then
outlines
the
specific
assumptions
made
for
each
impact
analysis.

In
general,
EPA
believes
that
developers
and
builders
faced
with
an
increase
in
costs
due
to
new
ESC
requirements
would
have
an
incentive
to
pass
on
all
or
some
of
the
increased
cost
to
the
project
owner.
(
This
is
referred
to
as
cost
pass
through,
or
CPT)
.
The
extent
to
which
the
costs
can
be
passed
through
in
practice
would
depend
on
market
conditions.
The
demand
elasticity
of
the
project
owner
(
i.
e.
,

the
sensitivity
of
the
purchase
decision
to
incremental
changes
in
price)
would
be
influenced
by
two
main
factors:

 
The
magnitude
of
the
cost
increase
relative
to
the
overall
cost
of
the
project.
For
example,
on
a
large
office
project
or
even
a
high
end
single­
family
home,
the
buyer
may
put
up
little
resistance
if
the
cost
increase
is
small
relative
to
the
overall
cost
of
the
project.

 
The
availability
and
price
of
substitutes.
If
the
cost
increase
affects
all
suppliers
and
all
substitutes
equally,
then
the
project
owner
is
less
likely
to
resist
an
incremental
price
increase.

Since
the
proposed
rule
would
be
national
in
scope
and
the
compliance
costs
would
be
similar
within
a
given
geographic
region
(
assuming
similar
sites)
,
the
compliance
costs
should
affect
the
buyer
 
s
alternate
suppliers
roughly
equally.
This
suggests
that
if
the
costs
are
small
relative
to
the
total
cost
of
4­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
the
project,
demand
should
be
relatively
inelastic
and
the
builder
would
be
able
to
pass
all
or
most
of
the
cost
increase
on
to
the
buyer.

Another
factor
facilitating
cost
pass
through
for
builders
is
that
project
owners
often
plan
for
unexpected
cost
changes
by
building
contingencies
into
their
budgets.
A
common
mechanism
in
new
residential
construction,
for
example,
is
for
the
home
buyer
to
absorb
an
unexpected
cost
increase
at
one
stage
of
construction
by
reducing
costs
on
a
later
stage.
This
might
be
done,
for
example,
by
selecting
less
expensive
flooring
material,
deferring
finishing
of
a
basement,
or
opting
to
build
a
garage
at
a
later
date.

This
line
of
reasoning,
which
suggests
demand
is
generally
inelastic,
presumes
that
the
 
good
 
the
buyer
is
purchasing
is
 
new
construction.
 
In
most
markets,
however,
the
owner
can
also
elect
to
buy
from
an
inventory
of
existing
homes,
office
or
retail
space,
or
industrial
facilities
available
for
sale,
or
to
rent
from
a
corresponding
inventory
of
rental
properties.
To
the
extent
that
existing
construction
and
rental
property
serves
as
a
perfect
or
even
partial
substitute
for
new
construction,
the
buyer
 
s
demand
elasticity
would
also
be
influenced
by
conditions
in
the
existing
construction
and
rental
markets.

Existing
homes
and
existing
office,
retail
or
industrial
space
would
not
be
affected
by
the
proposed
regulation.
Cost
increases
that
differentially
affect
new
construction
may
cause
some
buyers
to
choose
existing
construction
over
new,
i.
e.
,
they
could
elect
to
buy
or
rent
rather
than
build.
The
strength
of
demand
for
new
relative
to
existing
construction
depends
on
the
relative
availability,
suitability,
and
price
of
each
type
of
construction.
Buyers
choosing
new
over
existing
construction
often
do
so
for
reasons
related
to
location,
the
ability
to
match
their
specific
needs,
expected
length
of
tenure,
and
greater
certainty
about
a
structure
 
s
condition
and
future
maintenance
requirements.
Demand
for
new
construction
is
also
highly
influenced
by
the
availability,
quality,
and
age
of
existing
construction.
In
geographic
areas
or
market
segments
where
the
existing
inventory
is
weak
or
unsuitable,
demand
for
new
construction
would
be
stronger.

Evidence
from
the
literature
suggests
that
in
residential
construction,
regulatory­
related
costs
are
usually
passed
on
to
consumers
(
e.
g.
,
Luger
and
Temkin
2000)
,
and
this
general
observation
was
echoed
during
EPA
 
s
focus
group
sessions
with
members
of
NAHB.
Industry
literature
points
out
that
in
the
recent
past,
a
variety
of
market
forces
have
shifted
the
new
construction
market
towards
larger,
more
4­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
expensive
homes
(
NAHB
2001a)
.
Other
things
equal,
demand
in
the
higher
end
of
the
housing
market
tends
to
be
more
inelastic.
Efforts
to
model
the
housing
sector
have
shown
that
new
construction
is
more
affected
by
changes
in
household
formation
and
income
than
marginal
changes
in
price
(
Hirsch
1994)
.

Given
this
evidence,
EPA
believes
overall
that
demand
in
the
single­
family
housing
sector
is
relatively
inelastic.

In
the
other
sectors
modeled
(
multifamily
housing,
commercial,
industrial)
,
EPA
believes
demand
to
be
relatively
inelastic
as
well.
In
the
non­
residential
sectors,
interest
rates,
regional
economic
performance
and
outlook,
and
changing
technological
needs
are
important
drivers
of
building
demand.

As
shown
in
the
subsequent
chapter,
the
change
in
costs
relative
to
total
project
costs
in
these
markets
are
relatively
small
and
unlikely
to
influence
the
purchase
decision,
given
the
greater
significance
of
these
other
factors.

EPA
notes
that
under
certain
conditions
developers
might
also
attempt
to
pass
regulatory
costs
back
to
land
owners.
In
a
depressed
market,
builders
may
argue
successfully
that
a
regulatory
cost
increase
would
make
a
particular
project
unprofitable
unless
the
land
costs
can
be
reduced.
For
example,

if
the
land
owner
is
convinced
that
a
residential
subdivision
project
would
not
go
ahead
because
home
buyers
would
not
absorb
an
unexpected
increase
in
sales
price,
they
may
be
willing
to
accept
a
lower
price
per
acre
for
raw
land.
The
ability
of
developers
to
pass
such
costs
back
would
likely
depend
on
the
land
owner
 
s
experience
in
land
development
projects,
their
knowledge
of
the
local
real
estate
market,

and
in
particular
their
understanding
of
the
regulation
and
its
likely
cost.
While
some
evidence
of
cost
pass­
back
to
land
owners
exists
for
fixed
and
readily
identifiable
regulatory
costs,
such
as
development
impact
fees
(
Luger
and
Temkin
2000)
,
it
is
unclear
whether
a
builder
 
s
claim
that
costs
would
be
higher
due
to
the
types
of
requirements
imposed
by
the
proposed
rule
would
induce
land
owners
to
make
concessions.

In
the
sections
below,
EPA
has
made
differing
assumptions
concerning
whether
compliance
costs
are
passed
through
to
buyers,
and
to
what
extent.
In
the
model
project
analyses
in
Section
4.2,
for
example,
EPA
analyzes
results
under
the
extreme
conditions
of
zero
and
100
percent
CPT.
This
enables
EPA
to
examine
the
impacts
under
worst­
case
assumptions
with
respect
to
builders
(
zero
CPT)
,
as
well
as
to
owners
(
100
percent
CPT)
.

4­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
In
other
parts
of
the
impact
analysis
EPA
introduces
more
realistic
assumptions
about
actual
market
conditions.
For
example,
it
is
generally
thought
that
the
long
run
supply
of
new
construction
is
almost
perfectly
elastic,
as
resources
can
shift
easily
into
the
industry.
When
empirical
elasticity
estimates
are
used
to
estimate
actual
cost
pass
through,
the
combination
of
inelastic
demand
and
highly
elastic
supply
results
in
relatively
high
cost
pass
through
rates,
on
the
order
of
85
percent.
In
the
model
firm
and
closure
analysis
(
Section
4.3)
,
EPA
analyzes
the
impacts
under
conditions
of
zero
CPT
(
worst­

case)
as
well
as
under
the
most
realistic
estimates
of
actual
CPT.
In
the
market
models
(
Sections
4.5
and
4.6)
EPA
uses
only
the
estimates
of
actual
CPT.

4.1.3
Operation
and
Maintenance
Costs
In
order
to
remain
effective
all
of
the
ESCs
should
be
maintained.
The
engineering
costs
for
ESCs
include
costs
for
operating
and
maintaining
the
controls.
The
controls
used
during
the
active
phase
of
construction
are
assumed
to
be
in
place
for
one
year
and
therefore
should
be
maintained
throughout
the
period.

4.1.4
Impacts
Associated
With
NSPS
Under
Option
2,
EPA
is
proposing
to
define
a
 
new
source
 
under
Part
450
as:
:
 
any
source
of
storm
water
discharge
associated
with
construction
activity
that
results
in
the
disturbance
of
at
least
five
acres
total
land
area
that
itself
will
produce
an
industrial
source
from
which
there
may
be
a
discharge
of
pollutants
regulated
by
some
other
new
source
performance
standard
elsewhere
under
subchapter
N.
 
1
This
definition
would
mean
that
the
land­
disturbing
activity
associated
with
constructing
a
particular
facility
would
not
itself
constitute
a
"
new
source"
unless
the
results
of
that
construction
would
yield
a
"
new
source"
regulated
by
other
new
source
performance
standards.
For
example,
construction
activity
that
is
intended
to
build
a
new
pharmaceutical
plant
covered
by
40
CFR
439.15
would
be
subject
to
new
source
performance
standards
under
§
450.24.
.
At
the
same
time,
EPA
is
seeking
comment
on
whether
1
All
new
source
performance
standards
promulgated
by
EPA
for
categories
of
point
sources
are
codified
in
subchapter
N.

4­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
no
sources
regulated
under
Option
2
should
be
deemed
 
new
sources
 
on
the
grounds
that
construction
activity
itself
is
outside
the
scope
of
those
activities
intended
to
be
covered
by
Section
306
of
the
Clean
Water
Act
(
CWA)
.
2
Under
the
proposed
definition,
EPA
believes
that
the
NSPS
standards
could
trigger
a
National
Environmental
Policy
Act
(
NEPA)
review
process
for
those
C&
D
activities
permitted
by
EPA.
To
assess
the
potential
impact
of
such
a
result,
EPA
examined
NPDES
construction
permitting
data
for
19
states
fully
or
partially
administered
by
EPA.
In
2000,
the
number
of
permits
administered
by
EPA
was
8,563.

EPA
believes,
however,
that
by
the
time
the
proposed
C&
D
rule
is
finalized
the
states
of
Florida,
Maine,

and
Texas
(
currently
fully
administered
by
EPA)
will
have
assumed
permitting
authority
for
construction
activities.
In
2000,
the
number
of
permits
administered
by
EPA
excluding
these
three
states
was
1,454.

The
NPDES
permitting
data
does
not
include
sufficient
detail
to
indicate
the
number
of
sources
that
could
be
new
sources
covered
by
CWA
Section
306.
EPA
notes,
however,
that
in
a
1999
study
of
14
jurisdictions,
slightly
under
one
percent
of
construction
permits
were
for
industrial
facilities
(
EPA,
1999;

see
Table
4­
15)
.
Based
on
this,
EPA
believes
that
the
number
of
construction
permits
for
new
sources
(
regulated
under
Subchapter
N)
that
would
be
administered
by
EPA
is
likely
to
be
small.
At
this
time,

therefore,
EPA
has
not
estimated
any
potential
costs
for
NEPA
review
as
part
of
this
economic
analysis.

4.2
IMPACTS
ON
MODEL
PROJECTS
EPA
has
analyzed
the
impacts
of
the
proposed
rule
by
developing
financial
models
of
representative
C&
D
projects.
These
models
evaluate
whether
the
additional
costs
of
complying
with
the
proposed
regulation
would
make
the
model
project
unprofitable
and
vulnerable
to
abandonment
or
closure.
In
the
absence
of
an
industry
survey,
the
economic
models
are
based
on
EPA
 
s
best
available
data
and
assumptions
concerning
construction
project
characteristics,
and
are
designed
to
depict
as
accurately
as
possible
the
change
in
cash
flow
resulting
from
compliance
with
the
proposed
rule
for
typical
projects,
representative
of
the
type
required
to
comply
with
the
proposed
rule.
The
models
developed
reflect
the
range
of
C&
D
projects
typically
undertaken
by
industry
participants.

2
"
The
term
'
new
source'
means
any
source,
the
construction
of
which
is
commenced
.
.
.
"
33
U.
S.
C.
sec.
1316(
a)
(
2)
(
emphasis
added)
.

4­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.2.1
Description
of
Model
Project
Approach
EPA
selected
the
model
project
types
by
analyzing
data
on
the
output
of
the
C&
D
industry.
The
industry
output
reflects
both
the
diversity
of
the
industry
itself
and
the
diversity
of
the
U.
S.
economy
overall.
To
illustrate
this
diversity,
EPA
notes
that
the
Census
of
Construction
assigns
construction
projects
to
one
of
17
building
and
32
nonbuilding
construction
categories
(
see
Appendix
2A,
Table
2A­
3)
.

In
terms
of
economic
value,
building
construction
projects
accounted
for
$
371.4
billion
(
97.3
percent
of
total
construction
revenues)
in
1997,
while
nonbuilding
construction
projects
accounted
for
only
$
5.9
billion
(
1.5
percent)
.
3
The
largest
single
category
of
construction
activity,
accounting
for
$
150.5
billion
(
39.4
percent
of
the
total)
,
was
single­
family
home
construction.
This
was
followed
by
office
buildings
at
$
40.3
billion
(
10.6
percent
of
the
total)
,
all
other
commercial
buildings
at
$
36.5
billion
(
9.6
percent
of
the
total)
,

manufacturing
and
light
industrial
buildings
at
$
26.2
billion
(
6.8
percent
of
the
total)
,
educational
buildings
at
$
25.1
billion
(
6.6
percent
of
the
total)
,
and
multifamily
housing
at
$
19.6
billion
(
5.1
percent
of
the
total)
.
Based
on
this
review,
EPA
developed
models
for
four
types
of
development
projects
that
reflect
the
range
of
projects
undertaken
by
the
industry
and
that
would
fall
within
the
ambit
of
the
proposed
rule.

These
included:

 
A
residential
development
of
single­
family
homes
 
A
residential
development
of
multifamily
housing
units
 
A
commercial
development
(
enclosed
shopping
center)

 
An
industrial
development
(
industrial
park)

Furthermore,
for
each
class
of
project
,
EPA
has
developed
models
that
correspond
to
a
range
of
project
sizes.
In
each
case,
there
are
versions
of
the
model
for
projects
of
1,
3,
7.5,
25,
70,
and
200
acres.

The
combination
of
four
project
types
and
six
project
size
classes
results
in
a
total
of
24
model
projects.

EPA
 
s
models
for
these
projects
assess
their
vulnerability
to
shutdown
or
closure
by
predicting
the
cash
flow
changes
that
would
result
from
the
incremental
costs
that
project
developers
would
incur
in
3
Another
$
4.2
billion
(
1.1
percent
of
the
total)
was
not
specified
by
kind.

4­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
complying
with
the
proposed
rule.
The
models
establish
the
baseline
financial
conditions
for
each
representative
project
and
assess
the
significance
of
the
change
in
cash
flow
that
results
from
the
incremental
compliance
costs.
The
model
project
characteristics
are
based
on
best
available
data
and
reasonable
assumptions
about
development
activities
and
project
financing.

4.2.2
Treatment
of
Nonbuilding
Construction
Projects
As
noted
above,
an
estimated
$
5.9
billion
in
nonbuilding
construction
is
put
in
place
each
year.

This
total
includes
highways,
roads
and
streets
(
$
1.6
billion)
;
sewage
and
water
treatment
facilities
(
$
1.7
billion)
;
bridges,
tunnels,
and
elevated
highways
(
$
587
million)
;
sewers
and
water
mains
(
$
211
million)
;

power
and
communication
lines
and
towers
(
$
160
million)
;
and
private
driveways
and
parking
areas
(
$
100
million)
.
While
considerable
in
absolute
value,
such
nonbuilding
construction
activity
represents
less
than
two
percent
of
the
total
value
of
construction
completed.
Estimates
of
the
land
area
disturbed
as
a
result
of
nonbuilding
construction
activity
are
not
available.

EPA
has
not
developed
engineering
costs
applicable
to
nonbuilding
construction
projects,
due
to
the
diversity
of
the
activities
covered
under
this
category
and
the
relatively
small
share
of
overall
construction
activity
it
accounts
for.
4
By
way
of
analysis,
EPA
has
developed
a
reduced
form
model
project
for
highway
construction
and
analyzed
the
likely
magnitude
of
the
costs
and
impacts
using
the
highway
model.
This
analysis
is
presented
in
Section
4.2.7.

4.2.3
Description
of
Model
Projects
To
develop
the
model
projects,
EPA
focused
first
on
the
single­
family
residential
model
project.

As
noted
above,
single­
family
residential
construction
represents
the
highest
value
category
of
construction,
and
information
about
the
construction
and
development
process
for
single­
family
homes
is
4
The
national
costs
of
the
proposed
rule,
however,
do
account
for
the
costs
borne
for
these
types
of
projects.
See
Section
4.4.

4­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
readily
available.
5
EPA
was
able
to
develop
a
relatively
detailed
model
for
the
single­
family
development
and
then
adjusted
the
model
parameters
as
necessary
to
reflect
differences
in
the
other
project
categories.
In
general,
EPA
believes
that
projects
in
the
other
categories
follow
a
roughly
similar
development
path,
and
has
thus
used
a
similar
general
structure
for
all
of
the
models.

Since
many
of
the
data
elements
and
modeling
assumptions
are
based
on
the
single­
family
residential
model,
this
model
is
discussed
in
detail
below.
Many
of
the
assumptions
and
data
elements
defined
for
this
model
were
applied
directly
or
modified
only
slightly
for
use
in
the
other
models.
The
discussion
of
the
other
three
project
types
focuses
primarily
on
those
assumptions
or
methods
that
differ
from
those
employed
in
the
single­
family
residential
model.

4.2.3.1
Residential
Single­
family
Development
The
model
single­
family
residential
project
or
site
is
an
undeveloped
parcel
zoned
for
single­

family
residential
housing.
The
number
of
housing
units
built
would
depend
on
the
size
of
the
model
project.
6
The
location
of
the
site
is
unspecified,
and
for
this
reason
EPA
has
used
national­
level
data
wherever
possible.
In
this
case,
the
site
is
assumed
to
be
controlled
by
a
developer­
builder
(
sometimes
referred
to
in
the
industry
as
merchant
builders
or
operative
builders)
.
The
developer­
builder
is
responsible
for
all
aspects
of
the
project,
from
land
acquisition
through
permitting,
subdivision
of
the
parcel,
installation
of
any
ESCs,
and
construction
and
marketing
of
all
completed
housing
units.
EPA
recognizes
that
there
are
many
variations
on
how
a
particular
site
may
be
developed,
but
believes
this
model
project
to
be
representative
of
a
large
number
of
projects
actually
undertaken
each
year
in
the
U.
S.
7
5
For
example,
EPA
was
able
to
obtain
input
to
the
single­
family
residential
model
from
representatives
of
the
National
Association
of
Home
Builders
(
NAHB)
,
a
prominent
C&
D
industry
association.
Input
from
NAHB
assisted
EPA
in
identifying
cost
elements
associated
with
each
stage
of
project
development.

6
Model
projects
were
developed
for
sites
of
1,
3,
7.5,
25,
70,
and
200
acres.

7
Other
common
scenarios
involve
the
developer
selling
all
or
some
of
the
finished
lots
to
builders.
The
developer
may
or
may
not
retain
lots
in
the
development
to
complete
and
sell.
See
Figure
2­
4,
for
example.

4­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
starting
point
for
the
project
is
the
acquisition
of
the
parcel,
which
is
assumed
to
be
purchased
or
optioned
from
another
land
owner.
8
The
development
and
construction
process,
as
modeled,
is
assumed
to
proceed
through
three
phases,
characterized
as
follows:

 
Land
acquisition
 
The
developer­
builder
puts
together
the
necessary
financing
to
purchase
the
parcel.
When
lenders
are
involved,
they
may
require
certain
documentation,
such
as
financial
statements,
tax
returns,
appraisals,
proof
of
the
developer
 
s
ability
to
obtain
necessary
zoning,
evaluations
of
project
location,
assessments
of
the
capacity
of
existing
infrastructure,
letters
of
intent
from
city/
town
to
install
infrastructure,
environmental
approvals,
etc.
To
satisfy
these
factors,
the
developer
may
incur
costs
associated
with
compiling
this
data.

 
Land
development
 
The
developer­
builder
obtains
all
necessary
site
approvals
and
prepares
the
site
for
the
construction
phase
of
the
project.
Costs
incurred
during
this
stage
are
divided
among
soft
costs
for
architectural
and
engineering
services,
legal
work,
permits,
fees,
and
testing,
and
hard
costs
,
such
as
land
clearing,
installing
utilities
and
roads,
and
preparing
foundations
or
pads.
The
result
of
this
phase
is
a
legally
subdivided
parcel
with
finished
lots
ready
for
construction.

 
Construction
 
The
developer­
builder
undertakes
the
actual
construction
of
the
housing
units.
A
substantial
portion
of
this
work
may
be
subcontracted
out
to
specialty
subcontractors
(
foundation,
framing,
roofing,
plumbing,
electrical,
painting,
etc.
)
.
Marketing
of
the
development
generally
begins
prior
to
the
start
of
this
phase,
hence
the
developer­
builder
may
also
incur
some
marketing
costs
at
this
time.
Housing
units
may
come
under
sales
agreement
at
any
time
prior
to,
during,
or
after
completion
of
construction.

While
the
length
of
each
phase
and
the
overall
length
of
the
project
may
vary
considerably,
EPA
assumes,
for
modeling
purposes,
that
the
time
elapsed
from
acquisition
of
the
parcel
through
development
and
construction
totals
36
months.
Focus
groups
with
NAHB
in
Dallas
provided
estimates
that
ranged
from
13
to
63
months.
While
acknowledging
there
will
be
wide
variation
in
the
duration
of
each
phase,

EPA
further
assumes
that
each
phase
 
land
acquisition,
development,
and
construction
 
takes
12
months.

EPA
presently
lacks
detailed
data
on
the
exact
timing
of
ESC
installation
during
project
development.
EPA
assumes
that
ESCs
installed
to
control
runoff
during
the
active
phase
of
construction
8
Options
involve
payments
from
the
developer
to
a
land
owner
to
secure
the
rights
to
develop
the
land
for
a
specified
period
of
time,
usually
while
a
more
complete
assessment
of
project
viability
is
undertaken.

4­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
are
put
in
place
early
in
the
development
phase
and
are
maintained
throughout
the
construction
phase.

Thus,
the
capital
costs
for
such
ESCs
would
generally
be
incurred
early
in
the
project,
and
the
structures
would
be
maintained
in
place
for
the
duration
of
the
project.
The
costs
for
removing
the
ESCs
would
be
incurred
at
project
completion.
9
These
general
assumptions
aside,
in
this
analysis
EPA
has
used
the
simplifying
assumption
that
the
costs
for
all
ESCs
are
incurred
at
the
beginning
of
the
project.
EPA
acknowledges
that
capital
costs
would
actually
be
incurred
some
time
after
the
start
of
the
project,
and
that
as
a
result,
the
costs
would
be
discounted
back
to
their
present
value.
In
making
this
assumption,

EPA
is
thus
overstating
the
magnitude
of
the
true
costs
incurred,
since
costs
incurred
in
the
future
would
have
a
lower
present
value.

EPA
understands
that
land
development
projects
involve
significant
cash
outflows
early
on
to
finance
land
acquisition,
development,
and
construction,
with
revenues
generally
received
only
after
completed
houses
are
sold
to
buyers.
For
this
reason,
EPA
assumes
that
the
integrated
developer­
builder
assumed
here
would
be
motivated
to
have
several
projects
underway
at
one
time.
Cash
inflows
from
the
sale
of
completed
units
in
one
development
can
offset
cash
outflows
associated
with
the
earlier
stages
of
development
on
another
project.
For
simplicity,
EPA
assumes
that
the
developer­
builder
involved
in
the
model
project
has
three
projects
underway
so
that
in
any
given
year
the
developer­
builder
incurs
all
of
the
costs
 
and
earns
all
of
the
revenues
 
associated
with
completing
the
land
acquisition,
development,

and
construction
phases
of
a
project,
even
though
these
may
occur
on
different
projects.

Additional
assumptions
and
sources
for
data
used
in
the
model
project
analysis
are
presented
below.
The
model
project
is
developed
using
assumptions
about
the
types
and
magnitude
of
costs
incurred
during
various
phases
of
the
project,
the
sources
for
these
funds
(
i.
e.
,
the
amounts
borrowed
versus
the
amounts
provided
from
the
developer­
builder
 
s
equity)
,
and
the
expected
profit
margins
earned
by
the
developer­
builder
from
each
phase
of
the
project.
EPA
is
seeking
comments
on
these
assumptions
as
well
as
any
additional
data
that
may
enable
the
Agency
to
more
accurately
model
such
impacts
at
the
project
level.

9
In
practice,
some
ESCs
installed
to
control
runoff
during
the
construction
phase
that
are
then
converted
to
permanent
BMPs
to
control
post­
construction
flows.
These
structures
would
not
need
to
be
removed.

4­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Assumptions
regarding
the
various
cost
elements
incurred
during
each
phase
of
the
residential
single­
family
development
are
described
in
detail
in
Section
4.2.5.

4.2.3.2
Residential
Multifamily
Development
The
model
multifamily
residential
development
is
an
apartment
building
or
complex.
The
project
is
assumed
to
be
developed
in
a
similar
fashion
to
the
single­
family
model
development
described
above:
a
single
developer­
builder
is
responsible
for
all
site
acquisition,
site
preparation,
construction,
and
marketing
of
the
project;
the
project
timeline
is
similar,
i.
e.
,
three
years
from
start
to
finish;
and
the
project
proceeds
through
the
same
project
phases.
Similarly,
the
developer­
builder
is
assumed
to
have
several
projects
underway
to
help
balance
cash
flows.
This
assumption
makes
it
possible
to
examine
the
impacts
of
a
three
year
project
on
a
single
year
 
s
cashflow
for
the
affected
business.
Data
sources
and
inputs
specific
to
the
model
multifamily
development
are
discussed
in
Section
4.2.5.

4.2.3.3
Commercial
Development
The
commercial
development
is
assumed
to
be
an
enclosed
retail
shopping
or
office
area.

Depending
on
the
size
of
the
model
project,
it
could
range
from
a
small
stand­
alone
retail
outlet
to
a
large,
enclosed
mall
or
office
complex.
As
with
the
residential
projects,
a
single
developer­
builder
is
assumed
to
be
responsible
for
all
site
acquisition,
site
preparation,
construction,
and
marketing
of
the
project.
The
project
timeline
is
assumed
to
be
the
same
as
for
the
residential
projects,
i.
e.
,
three
years
from
start
to
finish,
and
to
proceed
through
the
same
project
phases.
Similarly,
the
developer­
builder
is
assumed
to
have
several
projects
underway
to
help
balance
cash
flows.
This
assumption
makes
it
possible
to
examine
the
impacts
of
a
three
year
project
on
a
single
year
 
s
cashflow
for
the
affected
business.
Again,
the
particular
data
sources
used
and
inputs
to
this
model
project
are
discussed
further
in
Section
4.2.5.

4­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.2.3.4
Industrial
Development
The
industrial
development
is
assumed
to
be
an
industrial
park
or
a
stand­
alone
manufacturing
facility.
As
with
the
residential
and
commercial
projects,
a
single
developer­
builder
is
assumed
to
be
responsible
for
all
site
acquisition,
site
preparation,
construction,
and
marketing
of
the
project.
The
project
timeline
is
assumed
to
be
the
same
as
for
the
residential
and
commercial
projects,
i.
e.
,
three
years
from
start
to
finish,
and
to
proceed
through
the
same
project
phases.
Similarly,
the
developer­
builder
is
assumed
to
have
several
projects
underway
to
help
balance
cash
flows.
This
assumption
makes
it
possible
to
examine
the
impacts
of
a
three
year
project
on
a
single
year
 
s
cashflow
for
the
affected
business.
A
detailed
discussion
of
data
sources
and
inputs,
which
are
similar
to
those
used
for
the
model
commercial
development,
follows
in
Section
4.2.5.

4.2.4
Cost
Pass
Through
Assumptions
For
modeling
purposes,
EPA
has
analyzed
the
impacts
of
the
regulatory
options
on
each
model
development
project
under
two
extreme
alternatives:
100
percent
cost
pass
through
(
CPT)
and
zero
percent
CPT.
As
explained
in
Section
4.2,
this
allows
EPA
to
show
the
impacts
under
worst­
case
conditions
for
builders
(
zero
percent
CPT)
and
worst­
case
conditions
for
owners
(
100
percent
CPT)
.

Under
the
100
percent
CPT
scenario,
a
fixed
percentage
is
assumed
for
the
developer­
builder
 
s
profit
margin
and
the
model
calculates
the
final
sales
price
that
each
buyer
would
be
asked
to
pay
after
the
compliance
costs
have
been
passed
through.
Under
the
zero
CPT
scenario,
a
fixed
percentage
is
assumed
for
the
developer­
builder
 
s
profit
under
baseline
conditions
and
the
change
in
profit
is
calculated
under
each
regulatory
option,
with
the
sale
price
of
each
housing
unit
remaining
the
same.
Section
4.2.5
contains
further
details
on
the
assumed
profit
levels
and
other
inputs.

4.2.5
Inputs
to
the
Model
Project
Analysis
As
noted
above,
the
representative
projects
take
place
in
three
phases:
land
acquisition,
site
development,
and
construction.
The
process
of
obtaining
options
on
land
to
be
developed
(
a
common
but
not
universal
step
that
occurs
in
the
very
early
stages
of
development)
,
has
been
combined
with
the
4­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
land
acquisition
 
activities
for
simplicity.
.
Assumptions
regarding
the
various
costs
that
are
incurred
during
each
phase
of
the
project
are
summarized
in
Table
4­
1
below.

Table
4­
1.
Costs
Incurred
at
Various
Stages
of
a
Residential
Construction
Project
Project
Phase
Cost
Elements
Land
Acquisition
 
Raw
land
(
purchase
or
option)
 
Interest
on
land
acquisition
loan
 
Opportunity
cost
of
capital
Development
 
Engineering
 
Due
diligence
 
Land
development
 
Storm
water
controls
 
Contingency
 
Impact
fees
 
Interest
on
development
loan
 
Opportunity
cost
of
capital
 
Overhead
Building
Construction
 
Lot
cost
(
if
sold
to
a
builder;
includes
land
acquisition
and
development
costs
plus
profit
to
the
developer)
 
Construction
cost
 
Builder
overhead
 
Interest
on
construction
loan
 
Opportunity
cost
of
capital
 
Real
estate
and
marketing
fees
Overall,
EPA
has
used
more
than
two
dozen
different
modeling
parameters,
although
not
all
project
types
encompass
all
of
these
parameters.
Since
the
project
location
is
not
specified,
national
estimates
are
used
where
possible.
Participants
in
the
NAHB
focus
group
meetings
in
Chicago
assisted
EPA
with
identifying
ranges
for
a
number
of
cost
elements
for
the
hypothetical
residential
construction
project,
developing
estimates
for
raw
land
costs,
engineering
costs,
and
construction
costs,
among
others.

Some
of
the
estimates
proposed
during
the
NAHB
Chicago
meetings
are
used
in
the
model
project,

especially
where
actual
national­
level
data
has
not
yet
been
identified,
and
may
reflect
market
conditions
in
that
part
of
the
country.
Table
4­
2
presents
the
assumptions
used
in
the
single­
family
residential
model,
along
with
the
data
source(
s)
used.
Appendix
4A
contains
a
similar
table
outlining
the
data
parameters
and
sources
for
all
four
model
project
types.
A
more
detailed
discussion
of
selected
parameters
and
data
sources
used
for
the
project
models
is
contained
in
Appendix
4B.

4­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
2.
Model
Parameters
and
Data
Sources
Model
Parameter
Source
1,
3,
7.5,
25,
70,
and
200
size
of
parcel,
in
acres
EPA
assumption
$
40,000
cost
of
raw
land,
per
acre
Estimate
from
NAHB
Chicago
focus
groups,
based
on
experience
of
the
Chicago­
area
participants.
See
Appendix
4B
for
further
discussion.

0.33
size
of
lot,
in
acres
Census
Report
C25
(
Characteristics
of
New
Housing,
1999)
reports
a
mean
lot
size
for
new
single­
family
homes
sold
of
12,910
square
feet,
which
represents
a
density
of
close
to
3
lots
per
acre
(
evenly
distributed
with
1/
3
acre
lots)
.
(
The
median
lot
size
is
8,750
square
feet,
which
implies
a
density
of
almost
5
lots
per
acre.
)

2.67
approximate
density
(
number
of
lots
per
acre)
Calculated
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygons,
 
to
account
for
impervious
surface
area.
Total
number
of
lots
(
density
x
site
size)
is
rounded
to
nearest
whole
number.

$
2,500
due
diligence
costs,
per
acre
Based
on
$
100,000
in
total
due
diligence
costs
for
a
hypothetical
40­
acre
development
discussed
by
the
NAHB
Chicago
focus
group
participants.
Participants
considered
the
costs
associated
with
all
necessary
environmental
and
engineering
assessments,
usually
done
prior
to
land
acquisition.
During
these
assessments
the
developer
works
to
identify
any
potential
future
problems
or
liabilities.
See
Appendix
4B
for
further
discussion.

$
25,000
land
development
costs,
per
lot
Estimate
from
NAHB
Chicago
focus
groups.
This
figure
includes
any
construction
activities
related
to
land
development
(
e.
g.
,
infrastructure
costs)
.

6%
engineering
costs,
as
percent
of
land
development
costs
Estimate
from
NAHB
Chicago
focus
groups.

10%
overhead
costs,
as
percent
of
development
costs
Estimate
from
NAHB
Chicago
focus
groups.

10%
contingency,
as
percent
of
land
development
costs
(
before
impact
fees)
Estimate
from
NAHB
Chicago
focus
groups.

$
15,000
impact
fees,
per
lot
Estimate
from
NAHB
Chicago
focus
groups.
See
Appendix
4B
for
further
discussion.

7%
real
estate
and
marketing
fees,
as
percent
of
house
sales
price
Estimate
from
NAHB
Chicago
focus
groups.

2,310
average
square
footage
of
new
house
From
Census
Report
C25,
the
average
size
of
new
single­
family
homes
sold
in
1999
and
conventionally
financed
was
2,310
square
feet
$
53.80
cost
of
house
construction,
per
square
foot
From
NAHB
 
s
website,
construction
costs
for
a
generic
single­
family
house
are
$
124,276.
$
124,276
÷
2,310
sq.
.
ft.
=
$
53.80
per
sq.
ft.
(
NAHB
2001b)
.
See
Appendix
4B
for
further
discussion.

65%
percent
of
total
land
cost
that
a
developer
can
finance
for
land
acquisition
Loan­
to­
value
ratio
as
written
in
the
Real
Estate
Lending
Rules.
See
Appendix
4B
for
further
discussion.

4­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
2.
Model
Parameters
and
Data
Sources
Model
Parameter
Source
75%
percent
of
total
development
costs
that
a
developer
can
finance
for
this
stage
Loan­
to­
value
ratio
as
written
in
the
Real
Estate
Lending
Rules.
See
Appendix
4B
for
further
discussion.

80%
percent
of
total
building
construction
cost
that
a
builder
can
finance
Loan­
to­
value
ratio
as
written
in
the
Real
Estate
Lending
Rules.
See
Appendix
4B
for
further
discussion.

7.5%
loan
interest
rate
for
builder/
developer
EPA
estimate.

3
term
of
land
acquisition
loan,
years
EPA
assumption.
Assumes
that
the
land
acquisition
loan
is
paid
off
over
the
life
of
the
project,
which
in
this
case
is
3
years.

1
term
of
development
loan,
years
EPA
assumption.
Assumes
that
the
land
development
loan
term
is
equal
to
the
length
of
the
development
phase
of
the
project,
which
in
this
case
is
1
year.

1
term
of
construction
loan,
years
EPA
assumption.
Assumes
that
the
construction
loan
term
is
equal
to
the
length
of
the
construction
phase
of
the
project,
which
in
this
case
is
1
year.

10%
assumed
baseline
profit
on
land
development
NAHB
Chicago
focus
group
estimated
12­
14
percent;
10
percent
is
an
EPA
assumption.
See
Appendix
4B
for
further
discussion.

10%
assumed
baseline
pre­
tax
profit
on
construction
NAHB
Chicago
focus
groups
estimated
8
to
12
percent
pre­
tax
at
time
of
sale.
R.
S.
Means
also
uses
10
percent
as
a
profit
assumption
in
their
Cost
Data
series.

4.2.6
Model
Project
Analysis
Approach
The
model
project
defines
the
baseline
financial
performance
of
the
residential
subdivision
project
prior
to
the
promulgation
of
the
proposed
rule.
The
baseline
case
is
assumed
to
incorporate
the
costs
of
full
compliance
with
the
existing
Phase
I
and
future
Phase
II
NPDES
storm
water
regulations.

The
model
is
set
up
to
then
assess
the
incremental
impact
of
additional
requirements
imposed
under
the
proposed
effluent
guidelines.

4.2.6.1
Baseline
Model
Project
Performance
Table
4­
3
presents
the
model
project
analysis
under
baseline
conditions,
that
is
prior
to
adding
in
compliance
costs
associated
with
the
proposed
regulatory
requirements.
The
model
estimates
the
final
4­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
sales
price
per
housing
unit
using
the
assumptions
discussed
above.
The
model
incorporates
built­
in
targets
for
profit
margins
on
both
the
development
and
construction
portions
of
the
project,
as
well
as
other
assumptions
that
affect
the
target
sales
price
for
each
unit.
As
seen,
using
the
assumptions
discussed
here,
the
calculated
sales
price
for
each
unit
is
$
283,093.
EPA
notes
that
this
is
higher
than
the
national
mean
sales
price
for
conventionally­
financed
new
single­
family
housing
units,
which
was
$
234,900
in
2000
(
FHFB
2001)
.
EPA
attributes
the
difference
to
assumptions
in
the
model
that
may
reflect
higher­
priced
housing
markets.
Despite
this
likely
bias,
EPA
believes
that
the
model
is
sufficiently
well­
calibrated
to
allow
comparison
of
the
impacts
of
alternative
storm
water
control
costs
on
the
model
project
financials.

It
is
important
to
note
that
while
the
model
recognizes
that
projects
are
developed
over
time,
the
model
does
not
fully
account
for
the
time
value
of
money.
Assumptions
have
been
made
regarding
the
duration
of
each
stage
of
development
in
order
to
determine
the
period
for
any
loans
taken
on
by
the
developer,
i.
e.
,
three
years
for
land
acquisition
loan,
one
year
for
development
loan,
one
year
for
construction
loan.
These
assumptions
influence
the
debt
carrying
costs
incurred
by
the
developer.
What
the
model
does
not
account
for,
however,
is
the
fact
that
some
costs
are
incurred
in
years
two
and
three
(
e.
g.
,
construction
costs
are
incurred
three
years
out)
and
therefore
should
be
discounted
back
to
the
base
year,
which
is
the
year
the
project
starts.
The
discount
factors
for
costs
incurred
two
and
three
years
in
the
future
are
0.873
and
0.816,
respectively,
assuming
a
seven
percent
discount
rate.
This
means
that
any
adjustments
made
to
reflect
the
time
value
of
money
would
reduce
the
overall
project
costs,
but
to
a
fairly
limited
degree.
10
4.2.6.2
Results
of
Model
Project
Analysis
The
model
incorporates
the
costs
of
incremental
regulatory
costs
via
the
shaded
line
item
shown
in
Table
4­
3.
These
engineering
cost
estimates
are
specific
to
both
the
type
of
project
and
project
size.

As
these
costs
are
added
to
the
other
costs
incurred
during
development,
the
financing
requirements
in
the
development
stage
also
increase.
Table
4­
4
shows
the
baseline
project
data
and
illustrates
how
the
10
These
comments
apply
to
the
baseline
costs
incurred
for
project
development,
but
do
not
apply
to
the
incremental
regulatory
costs.
EPA
has
discounted
all
regulatory
costs
that
wold
be
incurred
in
the
future
back
to
the
baseline
year,
in
accordance
with
EPA
and
OMB
guidance
for
conducting
regulatory
impact
analysis.

4­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
project
financials
change
in
response
to
the
regulatory
costs
associated
with
Option
1
under
the
proposed
regulation.

As
seen,
the
incremental
controls
for
the
option
shown
in
the
example,
$
483,
would
raise
the
calculated
sales
price
on
each
housing
unit
from
$
283,093
to
$
283,137,
a
difference
of
$
44.
This
represents
0.02
percent
of
the
baseline
sales
price.
When
the
$
44
per
lot
cost
passed
on
to
the
buyer
is
compared
with
the
contractor
 
s
per­
lot
cost
of
controls
(
i.
e.
,
$
483
÷
20
lots
=
=
$
24.15)
,
the
calculated
cost
 
multiplier
 
for
this
model
project
is
in
the
range
of
1.814.
.
The
cost
multiplier
is
determined
by
taking
the
calculated
increase
in
house
sales
price
(
over
baseline)
and
dividing
it
by
the
actual
per­
lot
cost
of
storm
water
controls
incurred
by
the
builder.
In
this
example,
all
costs
are
passed
on
to
the
buyer
(
100
percent
CPT)
.
In
Chapter
Five,
EPA
presents
the
results
for
all
combinations
or
regulatory
options
under
both
the
100
percent
and
zero
CPT
assumption.
Under
the
zero
CPT
assumption,
the
builder
would
absorb
the
$
24.15
in
compliance
costs
on
each
lot.
The
impact
would
be
reflected
in
a
decrease
in
the
builder
profit,
and
the
sales
price
of
the
housing
unit
would
remain
the
same.

4­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
3.
Baseline
Economic
Model
of
Hypothetical
7.5
Acre
Residential
Development
Project
Cost
Element
Value
Land
Acquisition
(
7.5
acre
parcel)
Raw
land
Interest
on
land
acquisition
Opportunity
cost
of
capital
Land
acquisition
costs
$
300,000
$
29,955
$
16,129
$
346,084
Land
development
(
7.5
acre
parcel)

Engineering
Due
diligence
Land
development
ESC
engineering
costs
Contingency
Impact
fees
Interest
on
development
loan
Opportunity
cost
of
capital
Overhead
[
a
]

Land
development
costs
$
30,000
$
18,750
$
500,000
$
0
$
50,000
$
300,000
$
50,555
$
16,852
$
78,079
$
1,044,235
Land
acquisition
+
land
development
costs
Profit
on
land
acquisition
and
development
Total
 
Land
acquisition
and
development
$
1,390,319
$
154,480
$
1,544,799
Construction
Costs
(
per
lot)

Finished
lot
cost
Construction
cost
Interest
on
construction
loan
Opportunity
cost
of
capital
Builder
overhead
[
a
]

Total
costs
to
builder
Marketing
fees
Profit
on
construction
costs
House
sales
price
(
calculated)
$
77,240
$
124,276
$
12,091
$
3,023
$
18,338
$
234,968
$
19,817
$
28,309
$
283,093
Incremental
Regulatory
Impacts
Change
in
sales
price
per
lot
Costs
as
percent
of
sales
price
Multiplier
$
0
0.00%

0.00
[
a
]
Overhead
in
both
the
development
and
construction
stages
is
calculated
as
total
overhead
(
(
based
on
10
percent
of
development
or
construction
costs)
less
the
opportunity
cost
of
capital.
This
was
done
to
avoid
double­
counting
the
opportunity
cost
of
capital.
Source:
EPA
estimates.
See
also
Table
4­
2
for
model
parameters
and
data
sources.

4­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
4.
Illustration
of
Impact
of
Incremental
Storm
Water
Control
Requirements
on
Model
Project
Under
Proposed
Rule
Option
1
 
100
Percent
Cost
Pass
Through
Scenario
Project
Cost
Element
Baseline
Option
1
Land
Acquisition
(
7.5
acre
parcel)

Raw
land
Interest
on
land
acquisition
Opportunity
cost
of
capital
Land
acquisition
costs
$
300,000
$
29,955
$
16,129
$
346,084
$
300,000
$
29,955
$
16,129
$
346,084
Land
Development
(
7.5
acre
parcel)

Engineering
Due
diligence
Land
development
ESC
engineering
costs
Contingency
Impact
fees
Interest
on
development
loan
Opportunity
cost
of
capital
Overhead
[
a
]

Land
development
costs
$
30,000
$
18,750
$
500,000
$
0
$
50,000
$
300,000
$
50,555
$
16,852
$
78,079
$
1,044,235
$
30,000
$
18,750
$
500,000
$
483
$
50,000
$
300,000
$
50,582
$
16,861
$
78,121
$
1,044,796
Land
acquisition
+
land
development
costs
Profit
on
land
acquisition
and
development
Total
 
Land
acquisition
and
development
$
1,390,319
$
154,480
$
1,544,799
$
1,390,880
$
154,542
$
1,545,422
Construction
Costs
(
per
lot)
Finished
lot
cost
Construction
cost
Interest
on
construction
loan
Opportunity
cost
of
capital
Builder
overhead
[
a
]

Total
costs
to
builder
Marketing
fees
Profit
House
sales
price
(
calculated)
$
77,240
$
124,276
$
12,091
$
3,023
$
18,338
$
234,968
$
19,817
$
28,309
$
283,093
$
77,271
$
124,276
$
12,093
$
3,023
$
18,341
$
235,004
$
19,820
$
28,314
$
283,137
Incremental
Regulatory
Impacts
Change
in
sales
price
per
lot
Costs
per
lot
as
%
of
baseline
sales
price
Multiplier
[
b
]
$
0
0.00%

0.000
$
44
0.02%

1.814
[
a
]
Overhead
in
both
the
development
and
construction
stages
is
total
overhead
(
(
based
on
10
percent
of
development
or
construction
costs)
minus
the
opportunity
cost
of
capital.
This
was
done
to
avoid
double­
counting
of
the
opportunity
cost.
[
b
]
[
Incremental
regulatory
costs
per
lot
x
number
of
lots
]
÷
[
engineering
costs
]
Source:
EPA
estimates.
See
also
Table
4­
2
for
model
parameters
and
data
sources.

4­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.2.7
Model
Nonbuilding
Project
Analysis
As
noted
in
Section
4.2.2,
nonbuilding
construction
such
as
roads,
highways,
bridges,
etc.
s
a
sizeable
activity
but
overall
represents
less
than
two
percent
of
the
total
value
of
construction
completed
each
year.
To
assess
the
potential
impacts
of
the
proposed
rule
on
such
activities
EPA
has
developed
a
model
highway
construction
project
and
used
this
model
to
assess
the
proposed
rule
 
s
costs
and
impacts.

EPA
believes
the
model
captures
and
reflects
the
likely
magnitude
and
significance
of
the
impacts
of
the
proposed
rule
on
the
nonbuilding
construction
sector
overall.

From
the
highway
engineering
literature,
EPA
assumed
that
the
typical
four­
lane
interstate
roadway
is
configured
as
follows:
two
travel
lanes
of
24
feet
each,
one
20­
foot
median
between
the
travel
lanes,
and
10
foot
buffer
on
each
side
of
the
highway
(
Wright,
1996)
.
EPA
assumed
that
the
combined
width
of
the
road
surface,
median,
and
buffers,
88
feet,
represents
the
typical
disturbed
area
for
new
highway
construction.
One
mile
of
new
highway
would
therefore
represent
10.67
acres
in
disturbed
area.
11
To
develop
representative
baseline
costs
for
the
model
highway
project,
EPA
examined
data
from
the
Federal
Highway
Administration
 
s
(
FHWA
 
s)
Highway
Statistics
publication.
Table
FA­
10
(
 
Obligation
of
Federal­
Aid
Highway
Funds
for
Highway
Improvements
 
)
of
the
Highway
Statistics
series
shows
the
number
of
miles,
federal
funds
obligated,
and
total
cost
for
approved
projects
in
a
number
of
highway
improvement
categories
and
roadway
functional
classifications.
Improvement
categories
include
new
construction,
relocation,
widening,
and
bridge
work,
among
others.
Roadway
functional
classifications
include
arterials,
collectors,
and
local
roads,
both
rural
and
urban.
Arterials
are
further
divided
into
interstate,
other
freeways
and
expressways,
other
principal
arterials,
and
minor
arterials.

EPA
aggregated
the
mileage
and
cost
for
the
following
improvement
categories:
new
construction,
relocation,
reconstruction
with
added
capacity,
and
major
widening.
EPA
further
used
only
data
for
urban
interstates
and
other
freeways
and
expressways,
since
other
functional
classifications
may
11
The
disturbed
area
is
88
feet
or
0.0167
miles
wide
(
88
÷
5,280
feet)
)
.
One
mile
of
roadway
therefore
disturbs
0.0167
square
miles,
or
10.67
acres
(
0.0167
x
640
acres/
square
mile)
.

4­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
include
projects
that
do
not
closely
match
the
model
project
characteristics.
Since
highway
and
road
funding
can
fluctuate
from
year
to
year,
EPA
estimated
the
average
miles
and
average
cost
over
the
period
1995­
2000.
Table
4­
5
shows
these
data,
with
all
dollar
values
expressed
in
1997
dollars.
12
Once
all
dollar
amounts
were
expressed
in
constant
year
dollars,
EPA
summed
the
number
of
miles,
federal
funds,
and
total
costs
across
the
two
functional
classifications
and
four
improvement
types
to
generate
an
overall
estimate
of
total
cost
and
miles
affected.
The
total
cost
was
then
divided
by
the
miles
affected
to
generate
a
weighted
average
cost
per
mile
over
all
relevant
improvement
types
and
functional
classifications.
Table
4­
5
shows
the
weighted
average
cost
is
$
5.4
million
per
mile.

Some
caveats
should
be
noted
about
the
data
from
the
 
Highway
Statistics
 
series,
,
and
as
used
in
EPA
 
s
impact
model.
First,
the
dollar
amounts
used
represent
obligated
funds,
rather
than
actual
finished
project
cost.
Therefore,
the
final
project
cost
(
as
well
as
the
actual
payment
to
private
sector
contractors
carrying
out
the
work)
may
be
different
than
the
costs
reported
here
(
Benedict
2002)
.
13
Second,
the
costs
reported
in
Table
FA­
10
of
 
Highway
Statistics
 
are
for
multi­
­
year
projects
(
Benedict
2002)
.
This
does
not
present
a
serious
problem
for
the
analysis
because
the
costs
provide
consistent
estimates
of
project­

level
costs
and
affected
miles
with
which
to
calculate
a
project­
level
cost
per
mile.
The
fact
that
project
completion
may
span
multiple
years
is
not
particularly
relevant
for
this
analysis.
These
caveats
aside,

this
is
the
most
complete
and
well­
documented
set
of
data
available
on
the
cost
for
highway
construction
projects
nationwide.
14
The
results
of
this
analysis
are
presented
in
Sections
5.2
and
5.4.

12
Values
were
converted
to
1997
equivalents
using
data
from
Table
PT­
1
of
the
Highway
Statistics
publication,
 
Price
Trends
for
Federal­
Aid
Highway
Construction
 
(
(
FHWA,
2001a)
.

13
Actual
costs
may
be
higher
due
to
unforeseen
construction
problems.
However,
to
the
extent
this
occurs,
it
will
lessen
the
impacts
of
the
proposed
rule
as
modeled.
Higher
costs
per
mile
will
decrease
the
average
number
of
miles
constructed
per
year.
Fewer
miles
constructed
results
in
fewer
acres
disturbed,
and
therefore
lower
compliance
costs.

14
EPA
previously
has
used
an
estimate
of
$
24.61
million
per
mile
as
an
estimate
for
highway
project
cost
(
weighted
rural
and
urban
average;
FHWA
2001b)
.
This
figure,
from
the
FHWA
Office
of
Program
Administration,
may
reflect
many
improvement
types
and
other
costs
that
EPA
determined
should
not
be
included
in
this
analysis.
It
also
contains
significant
costs
for
land
acquisition,
engineering,
design,
and
other
work
that
would
not
be
paid
to
the
contractor
for
actual
construction.

4­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
5.
Obligation
of
Federal­
Aid
Highway
Funds
for
Selected
Highway
Improvements
and
Functional
Classifications
­
1995
to
2000.
(
Thousands
of
1997
dollars)

Type
of
Improvement
Urban
Total
Interstate
Other
Freeways
and
Expressways
New
Construction
Number
Of
Miles
Federal
Funds
Total
Cost
Cost
per
Mile
175
$
1,231,171
$
1,393,799
$
7,984
277
$
1,226,600
$
1,584,583
$
5,714
452
2,457,771
2,978,382
$
6,591
Relocation
Number
Of
Miles
Federal
Funds
Total
Cost
Cost
per
Mile
17
$
243,936
$
272,084
$
16,062
46
$
213,422
$
270,509
$
5,924
63
457,358
542,593
$
8,668
Reconstruction­
Added
Capacity
Number
Of
Miles
Federal
Funds
Total
Cost
Cost
per
Mile
536
$
2,206,338
$
2,680,896
$
5,001
331
$
1,330,439
$
1,674,158
$
5,062
867
3,536,778
4,355,055
$
5,024
Major
Widening
Number
Of
Miles
Federal
Funds
Total
Cost
Cost
per
Mile
307
$
1,086,999
$
1,273,760
$
4,152
192
$
800,507
$
1,041,609
$
5,429
499
1,887,507
2,315,369
$
4,643
Total
Number
Of
Miles
Federal
Funds
Total
Cost
Cost
per
Mile
1,034
$
4,768,445
$
5,620,539
$
5,434
846
$
3,570,968
$
4,570,860
$
5,406
1,880
8,339,413
10,191,398
$
5,421
Source:
Based
on
FHWA
1996­
2001,
Highway
Statistics
1995­
2000
,
Table
FA­
10.

4­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.3
IMPACTS
ON
MODEL
ESTABLISHMENTS
In
this
section
EPA
presents
the
methodology
used
to
analyze
the
establishment­
level
impacts
of
the
proposed
rule.
Section
4.3.1
outlines
the
impact
analysis
for
a
model
establishment
undertaking
a
model
project.
Section
4.3.2
generalizes
and
extends
this
model
establishment
analysis
to
estimate
the
industry­
wide
closure
impacts
and
employment
losses
due
to
the
proposed
regulatory
options.
Finally,

Section
4.3.3
analyzes
whether
the
proposed
rule
could
present
a
barrier
preventing
new
firms
from
entering
a
market,
thereby
protecting
existing
firms
from
competition.

4.3.1
Model
Establishment
Analysis
This
section
presents
the
inputs
to
the
model
establishment
analysis,
discusses
the
development
of
balance
sheet
and
income
statement
information,
and
develops
the
methodology
for
assessing
potential
regulatory
impacts
in
terms
of
changes
in
model
establishment
financial
ratios.

4.3.1.1
Inputs
to
the
Model
Establishment
Analysis
EPA
began
by
identifying
data
to
characterize
the
typical
financial
conditions
of
model
businesses
in
the
construction
and
development
industry.
This
data
is
used
to
develop
a
financial
model
of
the
firm,
and
to
analyze
the
impacts
of
the
regulatory
options
on
firm
financial
conditions.
The
sections
below
present
the
methodology
used
to
analyze
financial
impacts
on
a
model
firm,
and
then
extend
the
methodology
to
project
facility
closures
and
employment
losses.

The
Bureau
of
the
Census
recently
published
a
profile
of
the
residential
homebuilding
industry
that
allows
analysts
and
others
to
examine
data
in
ways
that
were
not
previously
available
(
Rappaport
and
Cole
2000)
.
In
particular,
the
study
presents
data
by
size
of
builder,
where
the
builder
 
s
size
is
defined
in
terms
of
the
number
of
housing
units
completed
(
previously
such
breakdowns
were
available
only
on
the
basis
of
employment
size
or
revenue
size)
.
EPA
used
this
profile
to
develop
financial
snapshots
of
typical
residential
home
builders.

4­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
From
the
profile,
EPA
determined
the
average
value
of
construction
work
(
revenues)
completed
by
builders
of
various
sizes
based
on
the
number
of
housing
units
started
in
1997.
EPA
combined
the
average
construction
revenue
data
for
such
builders
with
more
detailed
financial
data
on
the
homebuilding
industry
from
Dun
and
Bradstreet
(
2000)
(
D&
B)
.
The
D&
B
data
was
then
scaled
to
the
size
of
the
builder
in
the
Census
profile,
using
the
ratio
of
revenues
to
total
assets.

4.3.1.2
Balance
Sheet
and
Income
Statement
for
Model
Establishment
Table
4­
6
presents
the
balance
sheet
and
income
statement
for
a
model
firm
in
the
single­
family
residential
construction
sector.
EPA
constructed
the
model
firm
financial
statement
using
D&
B
 
s
1999
­

2000
Industry
Norms
and
Key
Business
Ratios,
and
the
Census
special
report
on
the
homebuilding
industry.
The
basic
approach
was
to
calculate
the
ratio
of
key
components
of
the
balance
sheet
and
income
statement
to
net
sales,
and
then
scale
the
value
of
these
components
to
the
size
of
the
model
firm.

The
model
firm
financials
shown
in
Table
4­
6
are
based
on
a
firm
with
$
1.99
million
in
revenues,
which
is
the
average
for
homebuilders
in
the
10
to
24
home
per
year
size
class
(
one
of
the
size
classes
defined
in
the
Census
report)
.

For
the
single­
family
and
multifamily
residential
construction
sectors,
EPA
constructed
a
series
of
model
facilities,
one
for
each
housing
unit
starts
class.
A
financial
statement
for
each
model
firm
was
generated
from
these
revenue
estimates
using
the
method
discussed
above
and
illustrated
in
Table
4­
6.

The
Census
special
study
covers
the
single­
family
and
multifamily
construction
sectors,
but
does
not
cover
the
commercial
and
industrial
building
construction
sectors.
To
construct
model
facilities
for
these
sectors,
EPA
used
1997
Census
of
Construction
data
which
is
available
by
employment
size
class.
First,

EPA
determined
the
employment
class
in
each
sector
corresponding
to
the
median
sized
firm
in
terms
of
revenues.
This
employment
class
became
the
basis
for
a
single
model
facility
for
each
sector.
For
both
the
commercial
and
industrial
sectors,
median
revenues
were
in
the
50
to
99
employee
class.
Within
that
employment
class,
EPA
then
calculated
revenues,
employment,
and
costs
per
establishment
in
order
to
further
characterize
the
model
facility.

4­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
For
the
four
construction
sectors
analyzed,
EPA
used
D&
B
 
s
 
typical
 
establishment
balance
sheet
data
from
the
following
four­
digit
SIC
industries:
15
 
Single­
family
residential
construction:
SIC
1531
 
Multifamily
residential
construction:
SIC
1522
 
Manufacturing
and
industrial
building
construction:
SIC
1541
 
Commercial
and
institutional
building
construction:
SIC
1542
 
Highway
and
street
construction:
SIC
1611
For
the
model
establishment
presented
in
Table
4­
6,
revenues
were
determined
from
Census
data.
All
other
components
are
determined
by
the
percentages
taken
from
the
D&
B
 
typical
 
balance
sheet
for
SIC
1531.
The
ratio
of
revenues
(
net
sales)
to
total
assets
is
used
to
determine
total
assets
(
and
therefore
total
liabilities)
;
the
dollar
value
of
the
remaining
components
are
derived
using
the
percentages
in
the
right
hand
column.

15
Although
most
of
the
data
used
in
this
economic
analysis
is
reported
on
an
NAICS
basis,
the
most
recent
D&
B
report
still
uses
the
SIC
system
for
reporting
purposes.
EPA
believes
the
SIC­
based
data
from
D&
B
can
be
applied
to
the
corresponding
NAICS
industries,
since
there
is
a
high
degree
of
overlap
in
the
industry
definitions.

4­
27
1
2
3
4
5
6
7
8
9
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
6.
Model
Single­
Family
Residential
Construction
Firm
Financial
Data
Sources:
D&
B
2000;
Census
2000c;
CCH
1999.
Line
Item
Dollars
Percent
Assets
Cash
$
163,390
11.9%

Accounts
Receivable
$
122,199
8.9%

Notes
Receivable
$
9,611
0.7%

Inventory
$
417,399
30.4%

Other
Current
$
303,438
22.1%

Total
Current
Assets
$
1,016,037
74.0%

Fixed
Assets
$
216,938
15.8%
Other
Non­
current
$
140,049
10.2%

Total
Assets
$
1,373,023
100.0%

Liabilities
10
Accounts
Payable
$
112,588
8.2%

11
Bank
Loans
$
23,341
1.7%

12
Notes
Payable
$
201,834
14.7%

13
Other
Current
$
391,312
28.5%

14
Total
Current
Liabilities
$
729,075
53.1%

15
Other
Long
Term
$
162,017
11.8%

16
Deferred
Credits
$
10,984
0.8%

17
Net
Worth
$
470,947
34.3%
18
Total
Liabilities
&
Net
Worth
$
1,373,023
100.0%

Operating
Income
19
Net
Sales
$
1,987,009
100.0%

20
Gross
Profit
$
453,038
22.8%

21
Net
Profit
After
Tax
$
23,844
1.2%

22
Working
Capital
$
286,962
4.3.1.3
Methodology
for
Analysis
of
Regulatory
Impacts
on
Model
Establishment
For
each
model
firm,
EPA
examined
the
economic
impacts
of
each
regulatory
option
on
four
different
financial
ratios:
(
1)
Gross
Profit,
(
2)
Current,
(
3)
Debt
to
Equity,
and
(
4)
Return
on
Net
Worth.

Industry
publications
cite
these
financial
ratios
as
particularly
relevant
to
the
construction
industry
4­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
Kone,
2000;
Benshoof,
2001)
.
Two
of
the
ratios
examined
are
based
on
operating
income
(
gross
profit,

and
return
on
net
worth)
,
and
two
are
based
on
the
balance
sheet
statement
(
current,
and
debt
to
equity)
.

Based
on
literature
reviews,
industry
focus
group
input,
and
econometric
evidence,
EPA
believes
the
level
of
CPT
to
customers
to
be
high
in
the
construction
industry.
Complete,
or
100
percent
CPT
implies
zero
direct
impacts
on
the
construction
industry.
Complete
CPT
in
the
residential
sector,
for
example,
essentially
results
in
all
compliance
costs
being
capitalized
into
the
cost
of
the
house,
which
is
then
assumed
to
be
paid
for
over
30
years
as
part
of
the
homebuyer
 
s
mortgage.
In
this
analysis,
EPA
has
taken
a
conservative
approach
that
results
in
a
 
worst­
case
 
scenario,
,
and
is
based
on
the
opposite
extreme
 
zero
CPT.
.
That
is,
EPA
assumed
all
compliance
costs
are
borne
by
the
developer­
builder.

EPA
also
examined
more
realistic
scenarios
incorporating
the
effects
of
partial
CPT
on
the
builder.
EPA
used
a
market
model
approach
to
estimate
CPT
(
i.
e.
,
the
ratio
of
the
increase
in
market
price
to
incremental
compliance
costs)
for
each
of
the
four
construction
sectors
analyzed.
EPA
 
s
estimates
of
CPT
range
from
a
low
of
85
percent
for
the
manufacturing
and
industrial
building
sector
to
a
high
of
92
percent
for
the
multifamily
residential
housing
sector.
Assuming
positive
CPT,
builders
incur
compliance
costs
multiplied
by
one
minus
the
CPT
percentage;
the
remaining
costs
are
passed
through
to
customers
in
the
form
of
higher
prices.
16
Thus,
for
each
compliance
cost
estimate,
EPA
examines
impacts
two
ways:
first
assuming
zero
CPT,
second,
assuming
positive
CPT.

EPA
assumes
that
compliance
costs
affect
each
model
firm
 
s
balance
sheet
in
the
following
manner.
Construction
costs
are
typically
financed
with
a
short
term
construction
loan.
The
value
of
the
loan
tends
to
run
about
80
percent
of
the
value
of
the
project,
with
the
developer
providing
the
remainder
of
the
capital.
The
simplified
balance
sheet
presented
in
Table
4­
7
illustrates
how
a
construction
loan
equal
to
$
Q
affects
the
construction
firm
 
s
balance
sheet
if
the
lending
institution
requires
the
builder
to
finance
20
percent
of
the
cost
of
the
loan.

16
Assume,
for
example,
that
the
market
analysis
shows
that
housing
prices
increase
by
$
0.80
of
every
dollar
in
increased
construction
costs
per
unit
built,
then
CPT
is
80
percent.
If
the
proposed
regulation
adds
$
200
in
construction
costs
per
house,
the
builder
incurs
impacts
from
$
40
in
increased
costs
not
offset
by
increased
revenues
[
(
1
­
0.8)
*
$
200
]
,
while
the
house
buyer
pays
an
additional
$
160
(
0.8*
$
200)
for
the
house.

4­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
loan
reduces
current
assets
by
the
amount
of
capital
the
builder
is
required
to
pay
but
increases
noncurrent
assets
by
the
total
value
of
the
project;
long
term
debt
is
increased
by
the
amount
of
the
loan
(
0.80Q)
.
The
baseline
balance
sheet
financial
ratios
for
the
model
firm
will
be
calculated
on
the
basis
of
the
center
column,
while
the
post­
regulatory
financial
ratios
will
be
calculated
on
the
basis
of
the
right
hand
column.
The
value
of
Q
was
set
equal
to
the
incremental
capital
compliance
costs
of
the
proposed
rule.
EPA
used
the
same
framework
for
all
four
sectors
analyzed.

Table
4­
7.
Impact
of
Compliance
Costs
on
Developer­
Builder
 
s
Balance
Sheet
Line
item
Baseline
Post
Loan
Current
Assets
$
A
$
A
­
.
20Q
Noncurrent
assets
$
B
$
B
+
Q
Total
Assets
$
A
+
$
B
$
A
+
$
B
+
.
80Q
Current
Liabilities
$
D
$
D
Long
Term
Debt
$
E
$
E
+
.
80Q
Net
Worth
$
F
$
F
Debt
plus
Equity
$
D
+
$
E
+
$
F
$
D
+
$
E
+
$
F
+
.
80Q
Note:
Q
equals
incremental
compliance
costs.

4.3.1.4
Analysis
of
Financial
Ratios
for
Model
Establishment
Few
financial
ratios
have
clearly
defined
critical
values
that
indicate
whether
a
firm
is
performing
well
or
poorly.
Furthermore,
analysts
often
find
that
a
firm
can
perform
well
in
one
financial
category
(
debt
management,
for
example)
,
yet
poorly
in
another
(
perhaps
rate
of
return)
.
Lacking
such
hard
and
fast
rules
for
interpreting
financial
ratios,
analysts
tend
to
emphasize
trends
over
time,
comparisons
among
competitors,
or
comparisons
between
industries,
rather
than
a
single
critical
value
for
any
particular
ratio.
The
sections
below
briefly
describe
the
four
ratios
examined
for
this
analysis.

4­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Gross
Profit
Ratio
The
gross
profit
ratio
measures
the
ratio
of
pretax
operating
profit
to
revenues:

gross
profit
ratio
 
gross
profit
 
(
net
sales
&
operating
costs)
net
sales
net
sales
Gross
profits
are
line
item
20
on
the
model
firm
balance
sheet
and
income
statement
(
Table
4­
6)

while
net
sales
are
line
item
19.
This
ratio
measures
the
decline
in
pretax
operating
income
relative
to
the
firm
 
s
volume
of
business.
Under
the
worst­
case
scenario
(
zero
CPT)
,
the
post
compliance
gross
profit
ratio
for
the
model
firm
would
be:

gross
profit
ratio
 
(
net
sales
&
operating
costs
&
pre
&
tax
compliance
costs)
net
sales
An
increase
in
compliance
costs
decreases
the
value
of
the
gross
profit
ratio;
the
firm
is
relatively
worse
off.

Return
on
Net
Worth
Return
on
net
worth
measures
the
rate
of
return
from
the
firm
relative
to
the
owner
 
s
investment:

return
on
net
worth
 
net
profit
after
tax
net
worth
Net
profit
after
tax
is
line
item
21
on
the
model
firm
balance
sheet
and
income
statement
(
Table
4­
6)
while
net
worth
is
line
item
17.
Should
the
rate
of
return
on
this
line
of
business
fall
too
much,
then
investors
have
better
opportunities
for
their
capital;
they
would
start
investing
their
capital
in
other
industries
instead
of
construction,
and
the
construction
industry
would
contract.
Compliance
costs
reduce
net
profit,
and
therefore
reduce
return
on
net
worth:

4­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
return
on
net
worth
 
(
net
profit
after
tax
&
post
&
tax
compliance
costs)
net
worth
EPA
multiplied
compliance
costs
by
one
minus
the
effective
tax
rate
to
estimate
post­
tax
compliance
costs.
To
determine
the
effective
tax
rate,
EPA
assumed
taxable
income
was
equal
to
gross
profit
(
line
item
20
on
Table
4­
6)
;
EPA
used
Federal
corporate
tax
rates
plus
the
average
state
corporate
tax
rate
(
6.6
percent)
for
the
specified
level
of
taxable
income.
Note
that
return
on
net
worth
is
a
much
more
sensitive
ratio
than
the
other
ratios
considered
above
because
it
is
calculated
on
a
post­
tax
basis.

As
can
be
observed
in
line
item
21,
post­
tax
profits
are
a
much
smaller
percent
of
net
sales
than
gross
profit.

Current
Ratio
The
current
ratio
is
defined
as:

current
ratio
 
current
assets
current
liabilities
Current
assets
are
line
item
6
on
the
model
firm
balance
sheet
and
income
statement
(
Table
4­
6)

while
current
liabilities
are
line
item
14.
The
current
ratio
is
a
liquidity
ratio
that
measures
the
availability
of
cash
and
near
cash
assets
to
meet
short­
term
obligations.
Clearly
if
current
liabilities
exceed
current
assets
(
i.
e.
,
the
current
ratio
is
less
than
one)
,
the
firm
cannot
meet
all
its
short­
term
financial
obligations.
Although
the
current
ratio
has
a
well
defined
critical
threshold,
detrimental
financial
impacts
can
occur
before
the
ratio
falls
below
one.
Again,
using
EPA
 
s
conservative
worst­
case
assumption
to
estimate
the
impact
of
the
proposed
rule
on
the
model
firms
 
s
finances,
the
post­
regulatory
current
ratio
is:

current
ratio
 
(
current
assets
&
.
20
×
pre
&
tax
compliance
costs)
current
liabilities
An
increase
in
compliance
costs
decreases
the
value
of
the
current
ratio;
the
firm
is
relatively
worse
off.

4­
32
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Debt
Management
The
debt
to
equity
ratio
is
a
ratio
that
measures
how
much
a
firm
 
s
financing
has
been
borrowed
from
creditors:

total
debt
debt
to
equity
ratio
 
owner
equity
Total
debt
is
the
sum
of
line
items
14
(
current
liabilities)
,
15
(
other
long
term
liabilities)
,
and
16
(
deferred
credits)
on
the
model
firm
balance
sheet
and
income
statement
(
Table
4­
6)
,
while
owner
equity
is
line
item
17
(
net
worth)
.
The
debt
to
equity
ratio
presents
amount
of
capital
borrowed
relative
to
that
supplied
by
the
owners.
If,
for
example,
the
debt
to
equity
ratio
is
1.9,
then
$
1.90
has
been
borrowed
for
every
$
1
of
capital
provided
by
the
owners.
If
the
debt
to
equity
ratio
becomes
too
high,
creditors
would
be
reluctant
to
lend
further
capital
unless
the
owners
provide
more
equity.
Incremental
compliance
costs
mean
that
the
builder
would
increase
long
term
debt
by
the
amount
of
the
loan
(
0.80
×
capital
cost)
)
.
Thus
the
post
compliance
debt
to
equity
ratio
is
calculated
as:

debt
to
equity
ratio
 
(
total
debt
%
0.
80
×
pre
&
tax
compliance
costs)
net
worth
An
increase
in
compliance
costs
increases
the
value
of
the
debt
to
equity
ratio
and
the
firm
is
relatively
worse
off.

4.3.1.5
Compliance
Cost
Inputs
into
Financial
Ratio
Analysis
EPA
estimated
engineering
compliance
costs
based
on
project
size,
climatic,
geographical,
and
other
characteristics.
To
project
economic
impacts
using
these
costs,
EPA
determined
the
costs
incurred
by
each
model
establishment,
then
converted
these
compliance
costs
to
costs
per
establishment
based
on
the
following
formula:

costs
per
establishment
 
(
costs
per
acre)
×
(
acres
per
start)
×
(
starts
per
establishment)

4­
33
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
estimated
average
compliance
costs
per
acre
based
on
project
size.
These
are
a
weighted
average
of
engineering
costs
by
environmental
region
(
see
section
4.4.3
for
details
of
the
weighted
average
of
compliance
costs
per
acre
calculation,
and
section
4.6.2.
for
discussion
of
regional
characteristics
and
compliance
costs)
.

For
the
single­
family
residential,
commercial,
and
manufacturing
construction
sectors,
the
estimated
number
of
units
started
per
establishment
is
essentially
identical
to
the
number
of
buildings
started.
For
the
multifamily
residential
construction
sector,
however,
Census
reports
the
number
of
units
started,
but
each
building
contains
a
number
of
units.
EPA
therefore
estimated
the
average
number
of
units
per
building
to
convert
units
started
to
buildings
started.

Using
data
from
1999
and
2000,
EPA
examined
the
number
of
units
built
in
various
building
classes
(
e.
g.
,
35,500
units
in
buildings
containing
2
to
4
units,
48,000
units
in
buildings
containing
5
to
9
units)
to
construct
a
weighted
average
(
U.
S.
Census
Bureau
2000b)
.
Assuming
the
midpoint
of
each
building
class
interval
represents
the
average
number
of
units
per
building
in
each
class
(
e.
g.
,
apartment
buildings
in
the
2
to
4
units
per
building
class
contain
an
average
of
3
apartments
per
building)
,
EPA
divided
total
units
per
class
by
the
midpoint
of
the
class
to
estimate
the
number
of
multi­
unit
buildings
in
each
class.
EPA
then
calculated
a
weighted
average
of
units
per
building
using
the
class
midpoints
weighted
by
the
estimated
number
of
buildings
constructed
in
each
class.
Using
this
approach,
EPA
estimated
an
overall
average
of
10.8
units
per
multi­
family
residential
building
nationwide.

EPA
used
a
variety
of
sources
to
estimate
average
acres
per
start.
For
single­
family
residential
construction,
EPA
based
its
estimate
of
acres
per
start
on
the
median
lot
size
from
the
Census
report
Characteristics
of
New
Housing
(
U.
S.
Census
Bureau,
2000a)
.
For
multifamily
residential,
commercial,

and
industrial
sectors,
EPA
combined
data
on
the
typical
 
building
 
footprint
from
R.
.
S.
Means
(
2000)

with
the
ratio
of
building
footprint
to
site
size
from
the
Center
for
Watershed
Protection
(
CWP,
2001)
to
estimate
average
acres
per
start.

For
the
model
highway
and
street
construction
contractor,
EPA
used
data
from
Dun
&

Bradstreet,
the
1997
Census
of
Construction
,
and
the
1995­
2000
editions
of
the
Federal
Highway
Administration
 
s
(
FHWA
 
s)
Highway
Statistics
publication.
EPA
used
1997
Census
data
to
construct
a
model
highway
and
street
construction
establishment
based
on
median
revenues
for
establishments
in
4­
34
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
NAICS
234110.
Using
the
same
methodology
EPA
developed
distributions
of
financial
ratios
for
Dun
&

Bradstreet
data
for
SIC
1611
(
highway
and
street
construction)
.
To
estimate
the
number
of
acres
disturbed,
and
hence,
total
establishment
compliance
costs,
ERG
estimated
miles
of
highway
constructed
per
year
by
dividing
model
establishment
revenues
by
the
estimated
cost
per
mile
constructed,
$
5.4
million,
which
was
derived
in
Table
4­
5.
17
4.3.2
Extension
of
Model
Facility
Analysis
to
Project
Industry
Closures
EPA
extended
the
model
facility
framework
described
here
to
project
closures
and
employment
losses
resulting
from
the
proposed
regulation.
The
primary
analysis,
based
upon
analysis
of
financial
ratios,
is
presented
in
Section
4.3.2.1.
EPA
also
conducted
a
sensitivity
analysis,
comparing
the
results
of
the
primary
analysis
to
an
estimate
of
closures
and
employment
losses
using
an
alternative
approach
based
on
cashflow
changes.
This
alternative
approach
is
outlined
in
Section
4.3.2.2.
The
results
of
the
primary
analysis
are
in
Section
5.5,
while
the
sensitivity
analysis
is
presented
in
Appendix
5B.
Before
explaining
these
methodologies,
however,
EPA
first
presents
information
on
how
the
number
of
affected
establishments
and
employees
was
determined
for
use
in
this
analysis.

4.3.2.1
Estimation
of
Affected
Establishments
and
Employment
The
proposed
rule
contains
three
regulatory
options,
each
of
which
would
apply
to
sites
of
varying
sizes.
Option
1
applies
to
sites
of
one
acre
or
larger,
Option
2
applies
to
sites
of
five
acres
or
larger,
and
Option
3
(
no
regulation
option)
applies
to
all
sites.
To
accurately
reflect
the
number
of
entities
affected
under
each
option,
EPA
has
adjusted
the
closure
and
employment
loss
methodology
to
account
for
the
number
of
establishments
affected
under
each
option.
This
section
describes
the
process
used
to
make
these
adjustments.

EPA
again
used
data
from
the
Census
special
study
of
the
home
building
industry
(
Rappaport
and
Cole,
2000)
to
obtain
the
number
of
establishments
by
housing
unit
starts
class.
EPA
concluded
that
17
As
described
in
Section
4.2.7,
EPA
estimated
that
one
mile
of
highway
will
disturb
10.67
acres
of
land.

4­
35
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
this
data
provided
the
best
source
for
estimating
the
number
of
establishments
and
employees
potentially
affected
under
each
option.
Using
the
estimated
density
of
2.67
single­
family
housing
units
per
acre
(
see
Table
4­
2)
,
establishments
starting
between
one
and
four
single­
family
housing
units
per
year
were
excluded
under
Option
1
because
they
are
unlikely
to
disturb
more
than
one
acre
on
a
given
project.
18
Establishments
in
both
the
1­
4
and
5­
9
housing
unit
starts
per
year
categories
were
similarly
excluded
under
Option
2,
since
the
maximum
number
of
housing
units,
nine,
equates
to
only
3.3
acres.
19
This
makes
it
unlikely
many
builders
in
these
size
classes
disturb
more
than
five
acres
on
an
individual
project
basis.
The
Census
report
estimates
that
50,661
single­
family
builders
start
between
one
and
four
housing
units
per
year,
while
another
12,708
builders
start
between
five
and
nine
units
per
year.
EPA
further
concluded
that
1,904
multifamily
builders
starting
between
two
and
nine
multifamily
units
per
year
are
unlikely
to
disturb
more
than
five
acres
on
a
given
project,
and
excluded
these
from
the
universe
of
establishments
potentially
affected
under
Option
2.
Affected
employment
is
determined
in
the
same
manner
as
affected
establishments.
The
Census
study
reports
the
number
of
employees
in
each
housing
unit
start
category,
and
this
number
is
subtracted
as
above
under
each
option.

The
adjustments
above
were
made
for
the
residential
construction
industries
only.
There
are
two
reasons
for
this:
(
1)
the
Census
special
study
only
covers
single­
family
and
multifamily
residential
construction
establishments;
and
(
2)
EPA
believes
that
commercial
and
industrial
building
establishments
are
overall
more
likely
to
disturb
five
acres
or
more
during
the
course
of
each
project.
Therefore,
no
adjustments
are
made
to
the
nonresidential
building
establishment
and
employment
counts.

Table
4­
8
shows
the
establishment
count
adjustment
for
each
option,
while
Table
4­
9
shows
the
adjustment
to
employment.

18
Using
the
density
of
2.67
units
per
acre,
four
housing
units
per
year
equates
to
a
maximum
of
1.5
acres.
This
makes
it
unlikely
a
large
percentage
of
establishments
in
the
1­
4
housing
units
per
year
category
disturb
more
than
one
acre
at
a
time
on
a
regular
basis.

19
Again,
this
would
be
the
maximum
land
area
disturbed
in
a
year.
The
maximum
disturbed
on
an
individual
project
could
be
even
less.

4­
36
­
­

­
­
­
­

­
­
­
­

­
­

­
­
­
­

­
­
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
8.
Number
of
Establishments
in
the
Construction
and
Development
Industry
Adjusted
for
Regulatory
Option
Coverage
Industry
Baseline
[
a
]
Option
1
Option
2
Adjustment
for
1
acre
exclusion
Adjusted
Number
Adjustment
for
5
acre
exclusion
Adjusted
Number
Single­
family
84,731
(
50,661)
34,070
(
12,708)
21,362
Multifamily
4,603
4,603
(
1,904)
2,699
Commercial
39,810
39,810
39,810
Industrial
7,742
7,742
7,742
Potentially
affected
establishments
136,886
86,225
71,613
[
a
]
Previously
adjusted
for
remodeling
establishments
and
land
development
establishments.
.
See
Section
2.3.5
for
discussion
of
this
adjustment.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
Rappaport
and
Cole
(
2000)
and
EPA
estimates.

Table
4­
9.
Employment
in
the
Construction
and
Development
Industry
Adjusted
for
Regulatory
Option
Coverage
Industry
Baseline
[
a
]
Option
1
Option
2
Adjustment
for
1
acre
exclusion
Adjusted
Number
Adjustment
for
5
acre
exclusion
Adjusted
Number
Single­
family
340,874
(
128,940)
211,933
(
41,940)
169,993
Multifamily
35,160
35,160
(
6,064)
29,096
Commercial
549,567
549,567
549,567
Industrial
148,861
148,861
148,861
Potentially
affected
employees
1,074,462
945,521
897,517
[
a
]
Previously
adjusted
for
remodeling
establishments
and
land
development
establishments.
.
See
Section
2.3.5
for
discussion
of
this
adjustment.
Figures
may
not
add
to
totals
due
to
rounding.
Source:
Rappaport
and
Cole
(
2000)
and
EPA
estimates.

4­
37
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.3.2.2
Closure
and
Employment
Impacts
Based
on
Financial
Ratio
Analysis
To
assess
the
impacts
on
firm
closures,
EPA
first
selected
a
criterion
for
determining
when
a
facility
is
considered
 
impacted
 
by
the
proposed
rule.
.
As
discussed
above,
financial
ratios
rarely
have
well­
defined
thresholds
that
correlate
with
financial
health
or
distress.
On
previous
effluent
guidelines
(
e.
g.
,
MP&
M)
,
EPA
has
defined
the
critical
value
for
financial
stress
as
that
value
of
a
financial
ratio
that
defines
the
poorest
performing
25
percent
of
firms
(
i.
e.
,
the
lowest
quartile)
.
EPA
then
assumes
that
a
facility
is
financially
stressed
if
its
pre­
regulatory
financial
ratio
lies
above
the
lowest
quartile
for
that
ratio,
but
its
post­
regulatory
ratio
falls
in
that
lowest
quartile
range.
20
To
estimate
the
number
of
establishments
in
each
industry
that
would
be
financially
distressed
by
the
proposed
regulation,
EPA
first
approximated
a
cumulative
distribution
function
for
each
financial
ratio
based
on
D&
B
data.
Figure
4­
1
illustrates
the
current
ratio
cumulative
distribution
function
for
SIC
1531,
used
to
analyze
single­
family
residential
construction.
The
baseline
curve
represents
the
pre­

regulatory
cumulative
distribution
function.
This
curve
indicates
that
25
percent
of
establishments
have
a
current
ratio
below
1.1
(
1.1
thus
becoming
the
critical
value
for
determining
financial
distress)
,
25
percent
of
establishments
have
a
current
ratio
greater
than
1.1
but
less
1.4
(
the
median)
,
25
percent
have
a
current
ratio
greater
than
1.4
but
less
than
2.9,
and
25
percent
have
a
current
ratio
greater
than
2.9.
21
20
For
example,
according
to
D&
B,
25
percent
of
establishments
in
SIC
1531
have
a
current
ratio
less
than
1.1,
and
75
percent
have
a
current
ratio
greater
than
1.1.
If
an
establishment
 
s
pre­
regulatory
current
ratio
is
greater
than
1.1,
but
its
post­
regulatory
current
ratio
is
less
than
1.1,
EPA
would
classify
the
firm
as
financially
distressed.

21
The
minimum
and
maximum
values
for
the
current
ratio
are
not
provided
by
D&
B.
For
completeness
EPA
selected
 
reasonable
 
values
to
represent
the
end
points
of
the
curve.
.
This
has
no
effect
on
the
analysis
because
the
lowest
and
highest
ranges
are
not
used
in
the
analysis.

4­
38
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
then
calculates
the
post­
regulatory
current
ratio
for
the
quartile
values.
This
shifts
the
cumulative
distribution
function
for
the
current
ratio
to
the
left.
Using
the
post­
regulatory
curve
in
this
example,
approximately
40
percent
of
establishments
now
have
current
ratios
less
than
or
equal
to
the
critical
value
of
1.1.
Thus,
about
15
percent
of
establishments
in
this
sector
incur
incremental
financial
Figure
4­
1
Pre
­
and
Post­
regulatory
Cumulative
Distribution
Function
for
Current
Ratio
SIC
1531:
Ope
rative
Builde
rs
0.00
0.10
0.20
0.30
0.40
0.50
0.60
0.70
0.80
0.90
1.00
0.00
1.00
2.00
3.00
4.00
5.00
6.00
7.00
8.00
9.00
Current
Ratio
Probability
Baseline
Postregulatory
Critical
Value
distress
due
to
compliance
costs
(
i.
e.
,
40
percent
below
1.1
on
the
post
regulatory
curve
minus
25
percent
below
1.1
in
the
baseline)
.

4­
39
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
A
firm
that
exhibits
or
experiences
financial
distress
under
a
single
measure
of
financial
performance
would
not
necessarily
always
shut
down.
Therefore,
EPA
constructed
similar
cumulative
distribution
functions
for
the
debt
to
equity,
and
return
on
net
worth
ratios,
then
estimated
the
probability
of
incremental
financial
distress
under
each
measure.
22
To
assess
the
economic
achievability
of
the
proposed
rule,
EPA
assumes
that
the
probability
of
establishment
closure
due
to
incremental
compliance
costs
is
equal
to
the
average
probability
of
incremental
financial
distress
under
each
of
the
three
financial
ratios:
current,
debt
to
equity,
and
return
on
net
worth.
Multiplying
this
probability
by
the
number
of
establishments
in
the
sector,
EPA
obtains
an
estimate
of
the
number
of
establishments
projected
to
close
due
to
the
proposed
regulation.
Intuitively,
EPA
is
making
an
implicit
assumption
that
establishments
incurring
financial
distress
under
one
ratio
are
also
incurring
distress
under
the
other
two
ratios.
If
an
establishment
is
distressed
under
multiple
measures
of
financial
health,
it
is
highly
likely
the
establishment
will
close.
23
Employment
losses
are
estimated
by
multiplying
the
number
of
establishments
projected
to
close
by
the
average
number
of
employees
per
establishment.

Finally,
to
project
sector­
wide
impacts,
EPA
aggregated
closure
and
employment
impacts
over
all
combinations
of
model
establishments
and
project
sizes
examined.
Thus,
closures
for
a
single
sector
are
calculated
as
a
weighted
average
where
the
weights
are
determined
by:
(
1)
the
relative
frequency
of
establishments
represented
by
each
model
in
the
sector,
and
(
2)
the
relative
frequency
of
a
particular
project
size
among
all
projects
performed
by
the
sector.
EPA
also
adjusted
the
universe
of
affected
establishments
to
reflect
the
regulatory
coverage
of
each
option.
Thus,
for
Option
1
(
which
applies
to
sites
of
one
acre
or
greater)
EPA
excluded
establishments
in
the
1­
4
housing
starts
category
on
the
assumption
that
few
of
these
small
builders
are
likely
to
disturb
more
than
one
acre
per
project.
Similarly,

where
Option
2
would
apply
to
sites
of
five
acres
or
more,
EPA
excluded
establishments
in
both
the
1­
4
22
D&
B
does
not
provide
quartile
values
for
the
gross
profit
ratio.

23
A
strict
interpretation
of
this
implicit
assumption
would
result
in
EPA
always
selecting
the
smallest
probability
of
incremental
financial
distress
from
among
the
three
measure.
However,
EPA
determined
this
was
not
analytically
desirable
because
the
results
would
always
be
determined
by
the
least
sensitive
measure
of
distress.
Therefore,
EPA
selected
an
average
of
the
three
probabilities
to
measure
closure
rates.
Note
that
in
reality,
establishments
may
incur
distress
under
one
ratio,
but
not
under
another,
thus
being
less
likely
to
close.
It
is
possible
that
the
set
of
establishments
incurring
distress
under
the
current
ratio,
for
example,
is
completely
separate
from
the
set
of
establishments
incurring
distress
under
the
debt
to
equity
ratio.
However,
EPA
has
no
information
on
which
to
base
an
estimate
of
such
joint
probabilities.
Assuming
the
sets
of
establishments
incurring
distress
are
identical
results
in
a
more
conservative
estimate
of
closures.

4­
40
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
and
5­
9
housing
starts
class.
Assuming
the
national
average
of
density
of
2.67
houses
per
acre
(
see
Table
4­
2)
a
five
acre
site
would
support
an
average
of
13.3
housing
units.

4.3.2.3
Closure
and
Employment
Impacts
Based
on
Cashflow
Analysis
As
a
check
on
the
financial
ratio­
based
approach
to
projecting
establishment
closure
impacts,

EPA
developed
a
cashflow
model
and
constructed
a
statistical
distribution
of
establishments
around
each
representative
model.
This
allowed
EPA
to
estimate
the
probability
that
establishments
would
have
insufficient
cashflow
to
afford
the
estimated
compliance
costs.

Modern
financial
theory
states
that
an
investment
should
not
be
undertaken
if
cashflow
is
expected
to
be
negative
after
the
investment
is
undertaken
(
Brealy
and
Myers,
1996;
Brigham
and
Gapenski,
1997)
.
In
the
context
of
this
proposed
rule,
if
compliance
costs
exceed
cashflow,
then
post­

regulatory
cashflow
would
be
negative.
Under
these
circumstances
EPA
projects
that
the
establishment
would
close;
EPA
has
used
this
standard
for
projecting
establishment
closures
for
a
number
of
past
effluent
guidelines
(
e.
g.
,
Transportation
Equipment
Cleaning,
Industrial
Laundries,
Iron
and
Steel)
.

Basing
the
cashflow
analysis
on
the
model
facilities
only
means
that
all
establishments
represented
by
a
particular
model
would
be
projected
to
remain
open
if
the
model
establishment
earns
cashflow
exceeding
compliance
costs,
and
all
would
close
if
the
model
establishment
 
s
cashflow
is
less
than
estimated
compliance
costs.
In
reality,
the
model
establishment
represents
a
family
of
establishments,
some
with
greater
cashflow
than
the
model,
some
with
less
cashflow
than
the
model.

Thus,
there
is
some
probability
that
establishments
would
close
due
to
compliance
costs
even
if
the
model
establishment
 
s
cashflow
exceeds
compliance
costs.
By
developing
a
probability
distribution
for
each
model
establishment
 
s
cashflow
with
known
mean
and
variance,
EPA
can
estimate
this
probability.

Multiplying
the
probability
that
compliance
costs
exceed
cashflow
(
i.
e.
,
that
post­
regulatory
cashflow
is
negative)
by
the
number
of
establishments
represented
by
the
model,
EPA
obtains
the
projected
number
of
closures
for
that
option.
To
develop
the
cashflow
distribution,
EPA
first
estimated
the
mean
and
variance
of
cashflow
associated
with
each
model
establishment.
EPA
based
its
estimate
of
mean
cashflow
on
the
1997
Census
of
Construction.
EPA
calculated
average
revenues,
payroll,
material
costs,

and
work
subcontracted
out
to
others
within
each
model
class
(
starts
class
for
single
and
multifamily
residential,
employment
class
for
commercial
and
manufacturing
sectors)
by
dividing
each
Census
value
4­
41
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
by
the
number
of
establishments
in
the
class.
EPA
then
estimated
taxable
income
per
model
establishment
as:
revenues
minus
payroll,
material
costs,
and
work
subcontracted
out
to
others.

Adjusting
taxable
income
for
taxes
and
interest
payments
results
in
estimated
model
establishment
cashflow.
EPA
applied
Federal
corporate
tax
rates,
plus
the
average
state
corporate
tax
rate
to
establishment
income.
EPA
assumed
interest
payments
comprise
25
percent
of
taxable
income.

EPA
based
its
estimate
of
the
variance
of
each
model
establishment
 
s
cashflow
distribution
on
the
U.
S.
Small
Business
Administration
 
s
 
births
and
deaths
 
database,
,
a
special
tabulation
prepared
for
SBA
by
Census
(
SBA
1999)
.
EPA
calculated
the
ratio
of
establishment
closures
to
total
establishments
for
the
1989
to
1998
time
period
at
the
four­
digit
SIC
level
from
this
database.
24
Assuming
these
establishments
were
closing
because
their
cashflow
was
less
than
zero,
EPA
used
the
model
mean
and
the
assumption
of
a
normal
distribution
to
estimate
the
variance
for
the
distribution
that
would
result
in
a
probability
of
zero
cashflow
(
or
less)
equal
to
the
closure
rate
estimated
from
the
births
and
deaths
database.

With
estimated
mean,
variance,
and
assumed
distribution
of
cashflow
for
each
model
establishment,
it
is
a
straightforward
exercise
to
estimate
the
probability
of
closure
due
to
the
proposed
rule.
Figure
4­
2
illustrates
how
this
analysis
was
conducted.
The
 
estimated
normal
 
curve
represents
the
distribution
of
a
model
establishment
with
mean
cashflow
of
$
1
million,
and
a
variance
set
so
that
the
probability
of
cashflow
less
than
zero
is
about
17
percent
(
as
determined
from
SBA
 
s
 
births
and
deaths
 
database)
)
.
The
critical
value
is
equal
to
estimated
compliance
costs
 
in
this
example
set
equal
to
$
400,000.
25
Figure
4­
2
shows
that
based
on
this
distribution,
about
27
percent
of
establishments
earn
cashflow
less
than
estimated
compliance
costs.
However,
17
percent
of
establishments
had
negative
cashflow
prior
to
incurring
the
compliance
costs
(
i.
e.
,
the
 
baseline
closures
 
)
.
Therefore,
about
10
percent
of
establishments
in
this
example
would
be
projected
to
close
due
to
the
regulation
(
e.
g.
,
27
24
Note
that
the
level
of
detail
in
the
database
was
sufficient
to
allow
EPA
to
estimate
separately
the
closure
rates
for
small
and
large
business
establishments.

25
This
large
estimated
compliance
cost
was
selected
only
for
the
purposes
of
making
the
figure
clear
and
does
not
reflect
actual
anticipated
compliance
costs.

4­
42
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
4­
2
Baseline
Distribution
Function
with
Bounds
for
Facility
Cashflow
0.00
0.25
0.50
0.75
1.00
$
0
$
1,000
$
2,000
$
3,000
$
4,000
Cashflow
(
x
$
1,000)
Probability
Estimated
Normal
Lower
Bound
Upper
Bound
Critical
Value
percent
with
cashflow
less
than
compliance
costs
minus
the
17
percent
with
cashflow
less
than
zero)
.
If
150
establishments
are
in
this
model
class,
and
the
average
employment
per
establishment
is
20
workers
in
this
class,
than
EPA
would
project
15
establishments
would
close
and
300
employees
would
lose
their
jobs
due
to
the
regulation.

Because
of
the
uncertainties
inherent
in
estimating
cashflow
and
variance
for
this
analysis,
EPA
estimated
a
range
of
closure
and
employment
impacts.
EPA
created
upper
and
lower
bounds
to
its
4­
43
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
estimated
cashflow
distribution
by
multiplying
the
distribution
 
s
variance
by
plus/
minus
25
percent.
This
creates
the
bands
observed
around
the
estimated
normal
distribution
in
Figure
4­
2.
Therefore,
although
the
methodology
follows
the
logic
outlined
above,
EPA
reports
an
upper
and
lower
bound
for
projected
closures
based
on
bands
around
the
actual
estimated
variance
of
cashflow.
The
results
of
this
analysis
are
presented
in
Appendix
5A.

4.3.3
Analysis
of
Barriers
to
Entry
Barriers
to
entry
are
typically
assumed
to
occur
if
the
cost
of
complying
with
a
regulation
substantially
increases
the
firm
start­
up
costs.
For
example,
if
a
rulemaking
required
that
all
facilities
invest
substantially
in
a
wastewater
treatment
system,
then
an
entrepreneur
might
be
discouraged
from
starting
an
enterprise.
The
increased
capital
cost
serves
as
a
barrier
to
new
entry
to
the
industry.

The
situation
in
the
construction
industry
is
somewhat
different
than
that
outlined
above.
In
terms
of
the
capital
expense
needed
to
start
a
firm,
the
proposed
rule
has
little
direct
impact.
The
proposed
rule
does
not
require
a
firm
to
purchase
and
install
any
capital
equipment,
and
thus
the
level
of
capital
expenditures
required
to
start
up
a
firm
are
not
directly
affected
by
the
proposed
rule.

Landis
(
1986;
see
section
2.4.1.4.2
for
details)
identifies
two
significant
classes
of
barrier
to
entry
specific
to
the
construction
industry
that
are
not
related
to
capital
equipment:
(
1)
entry
costs
to
participate
in
a
given
market
(
e.
g.
,
local
development
fees
or
abnormally
high
land
costs)
,
and
(
2)
input
cost
differentials
(
e.
g.
,
the
new
entrant
must
pay
a
higher
price
for
inputs
than
existing
firms)
.
These
barriers
to
entry,
however,
also
appear
unaffected
by
the
proposed
rule.
To
the
extent
that
either
of
these
barriers
already
exist
in
any
given
market,
they
would
not
be
differentially
impacted
by
the
proposed
rule.

As
the
model
establishment
analysis
shows,
the
proposed
rule
might
increase
borrowing
to
finance
building
projects.
This
could
affect
a
potential
industry
entrant
indirectly
in
that
it
may
need
marginally
more
start­
up
capital
in
order
to
obtain
the
somewhat
larger
short­
term
construction
loan
to
undertake
a
project.
Once
again,
however,
the
new
entrant
would
still
face
essentially
the
same
requirements
that
existing
firms
face
to
secure
a
loan.
Thus,
new
entrants
should
not
be
differentially
4­
44
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
affected
by
the
proposed
rule
in
such
a
way
that
they
would
be
unable
to
compete
effectively
with
existing
firms.

To
examine
the
potential
for
barriers
to
entry,
EPA
calculated
the
ratio
of
estimated
compliance
costs
to
each
model
establishment
 
s
current
assets
and
total
assets.
If
these
ratios
are
small,
then
EPA
concludes
that
the
proposed
rule
would
have
little
effect
on
the
ability
of
a
new
entrant
to
find
financing
for
a
project.
Note
that
in
this
analysis
EPA
compares
total
compliance
costs
to
assets.
This
step
probably
overestimates
impacts.
It
is
more
likely
that
a
new
entrant
would
need
to
provide
only
20
percent
of
the
incremental
compliance
costs
and
would
obtain
the
remaining
80
percent
from
conventional
construction
loan
financing
sources
(
see
Section
4.3.1.3)
 
as
would
an
existing
firm.
.

4.4
NATIONAL
COMPLIANCE
COSTS
As
noted
above,
EPA
developed
engineering
costs
for
four
categories
of
land
use
(
single­
family
residential,
multifamily
residential,
commercial,
and
industrial)
and
six
project
size
categories
(
1,
3,
7.5,

25,
70,
and
200
acres)
.
Estimates
of
the
national
costs
of
the
effluent
guidelines
regulations
are
obtained
by
multiplying
the
per­
acre
costs
developed
for
each
land
use
and
size
class
combination
by
the
number
of
acres
of
each
type
estimated
to
be
developed
each
year;
taking
into
account
the
applicability
of
each
option
in
terms
of
site
size.

Estimates
of
the
number
of
acres
developed
nationally
per
year
are
available
from
the
U.
S.

Department
of
Agriculture
 
s
(
USDA
 
s)
National
Resources
Inventory
(
NRI)
.
This
source
does
not,

however,
identify
the
type
of
development
or
subsequent
nature
of
the
land
use,
nor
the
distribution
of
acreage
by
site
size.
The
following
sections
describe
the
NRI
estimates
and
EPA
 
s
approach
to
distributing
the
developed
acreage
by
type
of
development
and
site
size.

4.4.1
National
Estimates
of
Disturbed
Acreage
The
NRI,
a
program
of
the
USDA
 
s
Natural
Resources
Conservation
Service,
is
designed
to
track
changes
in
land
cover
and
land
use
over
time.
The
inventory,
conducted
every
five
years,
covers
all
non­

4­
45
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Federal
land
in
the
United
States
(
75
percent
of
the
U.
S.
total)
.
The
program
captures
land
use
data
from
some
800,000
statistically
selected
locations.
From
1992
to
1997,
an
average
of
2.24
million
acres
per
year
was
converted
from
nondeveloped
to
developed
status
(
USDA,
2000)
.
Table
4­
10
shows
the
allocation
of
this
converted
land
area
by
type
of
land
or
land
cover.
As
seen,
land
previously
classified
as
forest
land
accounted
for
41.9
percent
of
the
total,
while
land
previously
classified
as
cropland
accounted
for
25.6
percent
and
land
previously
classified
as
pastureland
accounted
for
17.4
percent.
No
further
breakdown
by
type
of
converted
land
use
is
available.

EPA
assumes
that
some
of
the
2.24
million
acres
converted
from
an
undeveloped
to
developed
state
each
year
would
be
exempt
from
the
requirements
of
the
proposed
rule
due
to
small­
site
or
low­
soil­

loss­
potential
waivers.
Based
on
the
engineering
analysis
of
sites
likely
to
be
eligible
for
such
waivers,

EPA
has
reduced
the
acreage
subject
to
active
construction
controls
to
2.18
million
acres
(
U.
S.
EPA,

2002)
.

In
the
following
section
EPA
develops
estimates
of
the
distribution
of
this
acreage
by
type
of
development
and
by
project
size.
EPA
also
estimates
the
amount
of
acreage
potentially
excluded
from
coverage
under
the
site
size
exclusions
specified
for
Option
1
and
Option
2
(
i.
e.
,
below
one
and
below
5
acres,
respectively)
.
With
the
resulting
estimates
of
acreage
distributed
by
project
type
and
size
class,

EPA
can
then
apply
the
appropriate
per­
acre
engineering
costs
to
obtain
estimates
of
national
costs.

4.4.2
Distribution
of
Acreage
by
Project
Type
To
allocate
the
NRI
acreage,
EPA
has
estimated
the
distribution
of
acres
developed
by
type
of
development
in
the
following
way.
In
the
first
step,
EPA
multiplied
the
number
of
building
permits
issued
annually
by
estimates
of
the
average
site
size.
Thus
for
single­
family
residential
construction,

EPA
multiplied
the
number
of
new
single­
family
homes
authorized
by
building
permit
by
the
average
lot
size
for
new
single­
family
construction.
Estimates
for
other
types
of
construction
are
based
on
extrapolations
from
the
Census
permit
data
and
EPA
estimates
of
average
project
size.
In
the
second
step,
EPA
adjusts
the
estimates
of
acres
converted
to
reconcile
any
differences
between
the
total
number
of
acres
accounted
for
using
this
approach
and
the
total
acres
developed
estimated
by
the
NRI.
Finally,

4­
46
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
allocates
the
total
by
type
of
construction,
site
size,
and
region
and
adjusts
each
regional
value
to
an
integer
to
ensure
that
only
whole
sites
are
considered.

Table
4­
10.
Acres
Converted
from
Undeveloped
to
Developed
State
a
(
1992­
1997)

Type
of
land
Acres
Converted
to
Development
1992­
1997
(
000)
annual
average
Percent
contribution
by
type
of
land
Cropland
574.8
25.6%

Conservation
Reserve
Program
land
1.5
0.1%

Pastureland
391.2
17.4%

Rangeland
245.9
11.0%

Forest
land
939
41.9%

Other
rural
land
89.1
4.0%

Water
areas
and
federal
land
1.8
0.1%

Total
2,243.4
100.0%

a
NRI
defines
developed
land
as
a
combination
of
the
following
land
cover/
use
categories
large
urban
and
built­
up
areas
,
small
built­
up
areas
,
and
rural
transportation
land
.
These
are
defined
as
follows:
 
Large
urban
and
built­
up
areas
.
A
land
cover/
use
category
composed
of
developed
tracts
of
at
least
10
acres
 
meeting
the
definition
of
urban
and
built­
up
areas.
b
 
Small
built­
up
areas.
A
land
cover/
use
category
consisting
of
developed
land
units
of
0.25
to
10
acres,
which
meet
the
definition
of
urban
and
built­
up
areas.
b
 
Rural
transportation
land.
A
land
cover/
use
category
which
consists
of
all
highways,
roads,
railroads
and
associated
right­
of­
ways
outside
urban
and
built­
up
areas;
also
includes
private
roads
to
farmsteads
or
ranch
headquarters,
logging
roads,
and
other
private
roads
(
field
lanes
are
not
included)
.
b
Urban
and
built
up
areas
are
in
turn
defined
as:
 
Urban
and
built­
up
areas.
A
land
cover/
use
category
consisting
of
residential,
industrial,
commercial,
and
institutional
land;
construction
sites;
public
administrative
sites;
railroad
yards;
cemeteries;
airports;
golf
courses;
sanitary
landfills;
sewage
treatment
plants;
water
control
structures
and
spillways;
other
land
used
for
such
purposes;
small
parks
(
less
than
10
acres)
within
urban
and
built­
up
areas;
and
highways,
railroads
,
and
other
transportation
facilities
if
they
are
surrounded
by
urban
areas.
Also
included
are
tracts
of
less
than
10
acres
that
do
not
meet
the
above
definition
but
are
completely
surrounded
by
Urban
and
built­
up
land.
Two
size
categories
are
recognized
in
the
NRI:
areas
of
0.25
acre
to
10
acres,
and
areas
of
at
least
10
acres.

Source:
USDA,
2000.

Single­
family
residential
Census
data
indicate
that
in
recent
years
the
number
of
new
single­
family
housing
units
authorized
has
averaged
just
over
1.0
million
units
per
year
(
see
Table
4­
11)
.
As
seen
in
Table
4­
12,
the
average
lot
size
for
new
single­
family
housing
units
is
13,553
square
feet,
or
0.31
acres
(
1
acre
=
43,560
4­
47
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
square
feet)
.
Using
the
average
lot
size,
however,
would
underestimate
the
total
acreage
converted
for
single­
family
residential
projects
because
this
acreage
does
not
include
common
areas
of
developments
that
are
not
counted
as
part
of
the
owner
 
s
lot
 
streets,
sidewalks,
parking
areas,
storm
water
management
structures,
and
open
spaces.

To
account
for
this,
EPA
examined
data
obtained
from
a
survey
of
municipalities
conducted
in
support
of
the
Phase
II
NPDES
storm
water
rule
(
EPA,
1999)
.
This
survey
identified
14
communities
that
consistently
collected
project
type
and
size
data
as
part
of
their
construction
permitting
programs.
26
EPA
 
s
review
of
permitting
data
from
these
communities
covered
855
single­
family
developments
encompassing
18,134
housing
units.
The
combined
area
of
these
developments
was
11,460
acres.
This
means
that
each
housing
unit
accounted
for
0.63
acres
(
11,460
acres
÷
18,134
units
=
=
0.63
acres
per
unit)
.
This
estimate,
essentially
double
the
average
lot
size,
appears
to
more
than
account
for
the
common
areas
and
undeveloped
areas
in
a
typical
single­
family
residential
development.
For
this
reason,

EPA
averaged
the
Census
estimate
of
the
national
average
lot
size
(
0.31
acres)
and
the
Phase
II
NPDES
storm
water
estimate
of
0.63
acres
per
unit
to
arrive
at
an
estimate
of
0.47
acres
per
unit.
This
number
was
multiplied
by
the
average
number
of
single­
family
housing
units
authorized
by
building
permit,
1.04
million,
to
arrive
at
an
estimate
of
490,231
acres
(
see
Table
4­
15)
.

Table
4­
11.
New
Single­
Family
and
Multifamily
Housing
Units
Authorized,
1995­
1997
Year
All
Housing
Units
Single­
Family
Housing
Units
Multifamily
Housing
Units
1995
1,332,549
997,268
335,281
1996
1,425,616
1,069,472
356,144
1997
1,441,136
1,062,396
378,740
1995­
1997
avg
1,399,767
1,043,045
356,722
Source:
Census
2000b.
Series
C40
New
Privately
Owned
Housing
Units
Authorized.

26
The
communities
were:
Austin,
TX;
Baltimore
County,
MD;
Cary,
NC;
Ft.
Collins,
CO;
Lacey,
WA;
Loudoun
County,
VA;
New
Britain,
CT;
Olympia,
WA;
Prince
George
 
s
County,
MD;
Raleigh,
NC;
South
Bend,
IN;
Tallahassee,
FL;
Tuscon,
AZ;
and
Waukesha,
WI.

4­
48
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
12.
Average
and
Median
Lot
Size
for
New
Single­
Family
Housing
Units
Sold,
1995­
1997
Year
Average
Lot
Size
(
Square
Feet)
Median
Lot
Size
(
Square
Feet)

1995
13,290
9,000
1996
13,705
9,100
1997
13,665
9,375
1995­
1997
avg
13,553
9,158
Source:
Census
2000a.
Series
C25
Characteristics
of
New
Housing:

Multifamily
Residential
For
residential
construction
other
than
single­
family
housing,
EPA
divided
the
average
number
of
units
authorized
over
1995­
1997
(
356,722,
from
Table
4­
11)
by
the
average
number
of
units
per
new
multifamily
building.
The
average
number
of
units
per
building
was
obtained
by
examining
the
distribution
of
units
by
unit
size
class
in
Census
data
(
U.
S.
Census
Bureau,
2000b)
.
This
report
shows
the
number
of
units
by
building
size
class
(
2
to
4
units,
5
to
9
units,
10
to
19
units,
20
or
more
units)
.
27
EPA
estimated
the
number
of
buildings
in
each
size
class
(
using
data
for
1999
and
2000)
by
dividing
the
number
of
units
in
each
class
by
the
average
number
of
units.
The
total
number
of
units
were
then
divided
into
the
estimated
number
of
buildings
to
arrive
at
the
average
number
of
units
across
all
building
size
classes.
When
this
was
done,
the
average
number
of
units
was
estimated
to
be
10.8.

EPA
next
examined
data
on
the
average
site
size
for
multifamily
residential
developments.
The
Center
for
Watershed
Protection
reports
estimates
from
one
survey
in
which
the
footprint
for
multifamily
buildings
occupied
an
average
of
15.6
percent
of
the
total
site
(
CWP,
2001)
.
EPA
assumed
that
the
average­
sized
multifamily
building
(
10.8
units)
would
have
two
floors
and
that
each
unit
occupies
the
national
average
of
1,095
square
feet
(
NAHB,
2002)
.
The
total
square
footage
accounted
for
by
living
space
is
thus
11,826
square
feet.
Multiplying
by
a
factor
of
1.2
to
account
for
common
areas
and
other
non­
living
space
(
utility
rooms,
hallways,
stairways)
,
and
dividing
by
2
to
reflect
the
assumption
of
a
2­

27
The
average
number
of
units
was
derived
using
data
for
1999
and
2000,
since
data
for
prior
years
was
not
available
at
this
level
of
building
size
detail.

4­
49
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
story
structure,
EPA
obtained
a
typical
building
footprint
of
7,096
square
feet
(
11,826
x
1.2
÷
2
=
=
7,096)
.

Combining
this
with
the
CWP
estimate
of
the
building
footprint
share
of
total
site
size
(
15.6
percent)
,
the
average
site
size
was
estimated
to
be
42,485
square
feet
(
7,096
÷
0.156
=
=
45,487)
,
or
just
over
one
acre
(
1.04
acres)
.

EPA
compared
the
average
site
size
obtained
using
this
approach
with
data
from
the
14
community
study
referenced
above.
That
study
 
s
review
of
permitting
data
identified
286
multifamily
developments
covering
a
total
of
3,476
acres.
The
average
site
size,
12.1
acres,
is
considerably
higher
than
that
obtained
above.
EPA
has
no
indication
that
the
permits
reviewed
in
these
communities
are
for
projects
of
a
larger
than
average
size.
For
purposes
of
this
analysis,
EPA
has
taken
the
midpoint
of
the
estimates,
6.5
acres,
as
the
average
size
of
multifamily
projects.
This
number
was
multiplied
by
the
average
number
of
multifamily
housing
developments
authorized
by
building
permit,
35,672,
to
arrive
at
an
estimate
of
231,868
acres
(
see
Table
4­
15)
.

Nonresidential
construction
EPA
lacked
current
data
on
the
number
of
nonresidential
construction
and
development
projects
authorized
annually
because
the
Census
Bureau
ceased
collecting
data
on
the
number
of
permits
issued
for
such
projects
in
1995.
EPA
therefore
used
regression
analysis
to
forecast
the
number
of
nonresidential
building
permits
issued
in
1997,
based
on
the
historical
relationship
between
residential
and
nonresidential
construction
activity
(
see
Section
4.5.3)
.
Using
this
approach,
EPA
estimates
that
a
total
of
426,024
nonresidential
permits
were
issued
in
1997.
These
represent
a
variety
of
project
types,

including
commercial
and
industrial,
institutional,
recreational,
as
well
as
nonresidential,
nonbuilding
projects
such
as
parks
and
road
and
highway
projects.

EPA
first
combined
a
number
of
nonresidential
project
types
into
a
larger
 
commercial
 
category,
which
included
hotels
and
motels,
retail
and
office
projects,
and
religious,
public
works,
and
educational
projects.
28
EPA
 
s
reasoning
for
including
the
latter
categories
under
the
commercial
category
28
The
commercial
category
included:
hotels/
motels,
amusement,
religious,
parking
garages,
service
stations,
hospitals,
offices,
public
works,
educational,
stores,
other
nonresidential
buildings.

4­
50
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
is
based
on
engineering
judgment
that
storm
water
management
practices
would
be
similar
across
each
project
type.
The
total
estimated
number
of
commercial
permits
in
1997
was
254,566
(
59.7
percent
of
the
nonresidential
total)
.
EPA
retained
the
industrial
category,
which
totaled
12,140
permits
(
2.8
percent)
,
separately.
Storm
water
management
practices
for
such
sites
generally
differ
from
those
for
commercial
or
residential
sites.
The
residual,
159,318
permits
(
37.4
percent)
,
are
nonbuilding,

nonresidential
projects
that
include
parks,
bridges,
roads,
and
highways.
EPA
accounts
for
these
projects
in
the
steps
described
further
below.

For
the
commercial
and
industrial
categories,
EPA
reviewed
the
project
size
data
collected
from
the
14­
community
study
referenced
earlier
(
EPA,
1999)
.
This
study
identified
817
commercial
sites
occupying
5,514
acres
and
115
industrial
sites
occupying
689
acres.
The
average
site
size
is
6.75
and
5.99
acres,
respectively.

EPA
also
reviewed
estimates
from
CWP
(
2001)
on
the
average
percent
of
commercial
and
industrial
sites
taken
up
by
the
building
footprint.
These
percentages,
19.1
and
19.6
respectively,
were
multiplied
across
the
model
project
site
sizes
of
1,
3,
7.5,
25,
70,
and
200
acres
to
estimate
the
size
of
building
on
each
site,
assuming
single­
story
buildings
in
each
case.
These
estimates
are
shown
in
Table
4­
13.

Table
4­
13.
Average
Building
Square
Footage
Project
Size
(
Acres)
Commercial
Industrial
1
8,320
8,555
3
24,960
25,666
7.5
62,400
64,164
25
207,999
213,880
70
582,397
598,863
200
1,663,992
1,711,037
Estimates
were
obtained
by
multiplying
the
site
size
in
square
feet
by
the
percentage
of
the
site
estimated
to
be
occupied
by
the
building
footprint,
based
on
data
from
CWP
(
2001)
.
Source:
EPA
estimates.

4­
51
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
seen
in
the
table,
the
average
building
size
corresponding
to
the
6­
to
7­
acre
sites
estimated
from
the
14­
community
study
are
in
the
60,000
square
feet
range.
EPA
next
examined
R.
S.
Means
(
2000)
,
which
provides
cost
data
for
 
typical
 
commercial
and
industrial
buildings.
.
As
part
of
the
cost
data,
Means
identifies
the
typical
range
of
building
sizes
based
on
a
database
of
actual
projects.
Table
4­

13
shows
the
typical
size
and
size
range
for
a
variety
of
building
types
that
would
fall
into
either
the
commercial
or
industrial
categories.
While
some
of
the
building
types
correspond
with
the
estimated
average
of
60,000
square
feet,
these
appear
high
for
other
categories,
such
as
low­
rise
office
and
supermarkets,
warehouses,
and
elementary
schools.
EPA
believes
generally
that
there
are
more
small
projects
than
large
ones.
As
a
result,
EPA
inferred
that
this
approach
would
suggest
an
average
building
size
of
25,000
square
feet,
which
implies
an
average
site
size
of
3
acres,
based
on
Table
4­
14.

Table
4­
14.
Typical
Building
Sizes
and
Size
Ranges
by
Type
of
Building
Building
Category/
Type
Typical
Size
(
Gross
Square
Feet)
Typical
Range
(
Gross
Square
Feet)

Low
High
Commercial
­
Supermarkets
20,000
12,000
30,000
Commercial
­
Department
Store
90,000
44,000
122,000
Commercial
­
Low­
Rise
Office
8,600
4,700
19,000
Commercial
­
Mid­
Rise
Office
52,000
31,300
83,100
Commercial
­
Elementary
a
41,000
24,500
55,000
Industrial
­
Warehouse
25,000
8,000
72,000
a
For
purposes
of
this
analysis
EPA
combines
a
number
of
building
types,
including
educational,
under
the
commercial
category.
Source:
R.
S.
Means
(
2000)
.

To
reconcile
the
estimates
obtained
from
the
two
approaches,
EPA
has
taken
the
midpoint
of
the
estimates.
For
commercial
development,
EPA
assumes
an
average
site
size
of
4.87
acres
(
the
average
of
6.75
and
3.0
acres)
and
for
industrial
development
EPA
assumes
an
average
site
size
of
4.50
acres
(
the
average
of
5.99
and
3.0
acres)
.

The
resulting
average
project
sizes
were
then
multiplied
by
the
estimated
number
of
commercial
and
industrial
permits
to
obtain
an
estimate
of
the
total
acreage
developed
for
these
project
categories.

4­
52
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
15
shows
the
results
of
this
 
bottom­
up
 
approach
to
estimating
the
number
of
acres
of
land
developed.
The
overall
estimate
of
the
amount
of
land
developed
is
2.01
million
acres
per
year.

Residential
single­
family
development
accounts
for
24.4
percent
of
the
total,
multifamily
development
for
11.5
percent
of
the
total,
commercial
for
61.4
percent,
and
industrial
for
2.7
percent.

Table
4­
15.
National
Estimates
of
Land
Area
Developed
Per
Year,
Based
on
Building
Permit
Data
Type
of
Construction
Permits
Average
Site
Size
a
Acres
Disturbed
Number
Pct.
of
Total
Number
Pct.
of
total
Residential
Single­
family
1,043,045
77.5%
0.47
490,231
24.4%

Multifamily
35,672
2.7%
6.5
231,868
11.5%

Nonresidential
Commercial
b
254,566
18.9%
4.9
1,234,645
61.4%

Industrial
12,140
0.9%
4.5
54,630
2.7%

Total
1,345,423
100.0%
2,011,374
100.0%

a
For
single­
family
residential,
this
is
the
average
of
the
average
lot
size
for
new
construction
in
1999
(
Census
1999)
and
the
average
obtained
in
EPA
(
1999)
.
For
all
other
categories,
the
site
sizes
are
EPA
assumptions
based
on
representative
project
profiles
contained
in
R.
S.
Means
(
2000)
and
the
14­
community
survey
conducted
in
support
of
the
Phase
II
NPDES
storm
water
rule
(
EPA
1999)
.
See
also
Tables
4­
7
and
4­
8.
b
A
number
of
project
types
were
grouped
together
to
form
the
 
commercial
 
category,
,
including:
hotels/
motels,
amusement,
religious,
parking
garages,
service
stations,
hospitals,
offices,
public
works,
educational,
stores,
other
nonresidential
buildings.

The
estimate
of
total
acreage
developed,
2.01
million
acres,
can
be
compared
with
the
estimate
provided
by
the
NRI.
From
Table
4­
10,
NRI
estimates
that
a
total
of
2.24
million
acres
are
converted
from
undeveloped
to
developed
status
each
year.
As
noted
above,
some
acreage
would
not
be
covered
by
the
proposed
rule
or
site
size
limitations
due
to
waivers.
The
estimated
acreage
subject
to
the
proposed
rule
2.18
million
acres.
29
EPA
considers
the
estimate
of
2.01
million
acres
(
Table
4­
15)
to
be
close
to
the
estimates
obtained
from
NRI.
Areas
not
accounted
for
in
EPA
 
s
estimates
include
those
converted
as
a
result
of
29
This
is
technically
the
acreage
covered
under
Option
1,
which
affects
sites
of
one
acre
or
more
in
size.
Estimates
of
the
acreage
covered
under
Option
2,
which
affects
sites
of
five
acres
or
more,
are
made
in
Section
4.4.4.

4­
53
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
road,
highway,
bridge,
park,
monument,
and
other
nonbuilding
construction
projects.
30
EPA
has
not
developed
engineering
costs
applicable
to
these
types
of
projects,
but
assumes
that
the
builders
and
developers
of
these
areas
would
face
compliance
costs,
i.
e.
,
the
acres
should
not
be
excluded
from
the
analysis.
For
the
purpose
of
developing
national
compliance
costs,
therefore,
EPA
has
allocated
the
entire
NRI
acreage,
adjusted
for
waivers,
according
to
the
distribution
shown
in
the
final
column
of
Table
4­
16.
31
Table
4­
16.
National
Estimates
of
Land
Area
Disturbed
Based
on
National
Resources
Inventory
Totals
Type
of
Construction
Acres
Based
on
Permits
Data
Adjusted
NRI
Acreage
b
Number
a
Pct.
of
Total
Residential
Single­
family
490,231
24.4%
533,878
Multifamily
231,868
11.5%
252,182
Nonresidential
Commercial
c
1,234,645
61.4%
1,332,476
Industrial
54,630
2.7%
57,523
Total
2,011,374
100.0%
2,176,058
a
From
Table
4­
15.
b
This
column
distributes
the
total
acreage
estimated
in
NRI
to
be
converted
on
an
annual
basis
(
adjusted
for
waivers)
according
to
the
distribution
by
type
of
development
estimated
through
analysis
of
permits
data.
See
also
Tables
4­
11
through
4­
14.
c
A
number
of
project
types
were
grouped
together
to
form
the
 
commercial
 
category,
,
including:
hotels/
motels,
amusement,
religious,
parking
garages,
service
stations,
hospitals,
offices,
public
works,
educational,
stores,
other
nonresidential
buildings.

4.4.3
Distribution
of
Acreage
by
Project
Size
The
next
step
in
the
national
compliance
cost
analysis
is
to
allocate
the
number
of
acres
in
each
of
the
four
land
use
categories
according
to
project
size.
The
project
size
distribution
is
based
on
the
survey
of
municipalities
conducted
in
support
of
the
Phase
II
NPDES
storm
water
rule
(
EPA,
1999)
.

This
survey
identified
14
communities
that
consistently
collect
project
type
and
size
data
as
part
of
their
30
As
noted
above,
EPA
estimates
there
are
approximately
159,000
such
projects
permitted
each
year.

31
This
distribution
implies
that
the
acres
not
accounted
for
from
the
NRI
(
see
Table
4­
10)
will
be
costed
at
the
weighted
average
cost
across
the
single­
family
residential,
multifamily
residential,
commercial,
and
industrial
categories.

4­
54
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
construction
permitting
programs.
Table
4­
17
shows
the
distribution
by
project
size
for
each
land
use
category.

Following
allocation
to
project
size
class,
EPA
also
allocated
the
acreage
to
one
of
19
eco
­

regions,
based
on
geographical
information
system
(
GIS)
modeling.
Non­
linearity
of
installation
costs
made
it
inaccurate
to
consider
partial
sites.
So,
these
totals
were
adjusted
to
ensure
that
only
whole
sites
would
be
considered
for
each
category
of
type,
site
size,
and
region.
Further
detail
on
this
step
in
the
analysis
can
be
found
in
the
Development
Document
(
U.
S.
EPA,
2002)
.

The
final
step
in
the
national
compliance
cost
analysis
is
to
multiply
the
number
of
acres
in
each
eco­
region,
size
class,
and
land
use
category
by
the
applicable
cost
per
acre.
These
costs
are
shown
in
Chapter
Five.

4.4.4
Estimates
of
Acreage
Covered
by
Option
2
Table
4­
16
above
shows
the
distribution
of
acreage
affected
under
Option
1
of
the
proposed
rule,

which
would
apply
to
sites
of
one
acre
or
larger.
The
additional
acreage
excluded
under
the
site
size
limitations
of
Option
2
(
five
acres)
was
obtained
by
estimating
the
acreage
in
sites
above
one
acre
and
below
five
acres
in
size.
The
3­
acre
size
class
represents
projects
greater
than
1
acre
and
less
than
5
acres.
This
category
was
subtracted
from
the
matrix
of
acreage
by
region,
type,
and
size
class
as
allocated
by
the
GIS.
As
shown
in
Table
4­
17,
the
14­
community
study
(
EPA,
1999)
found
that
6.0
percent
of
acreage
developed
for
single­
family
housing
was
assigned
to
sites
in
the
3­
acre
size
class.

EPA
estimated
that,
after
rounding,
roughly
6.1
percent
of
acreage
converted
to
single­
family
housing
units
would
be
excluded
under
Option
2.
EPA
made
similar
estimates
of
the
acreage
converted
to
multi­

family,
commercial,
and
industrial
uses
that
would
be
excluded
under
Option
2.
Table
4­
18
shows
the
distribution
of
acreage
affected
under
Option
2
of
the
proposed
rule.

4­
55
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
17.
Distribution
of
Permits
by
Site
Size
Site
Size
(
Acres)
No.
of
Permits
Acres
by
Size
Pct.
Acres
by
Size
Single­
Family
Residential
1
266
266
2.3%

3
228
684
6.0%

7.5
138
1,035
9.0%

25
175
4,375
38.2%

70
30
2,100
18.3%

200
15
3,000
26.2%

Total
852
11,460
100.0%

Multifamily
Residential
1
43
43
1.2%

3
100
300
8.6%

7.5
61
458
13.2%

25
71
1,775
51.1%

70
10
700
20.1%

200
1
200
5.8%

Total
286
3,476
100.0%

Commercial
1
266
266
4.8%

3
356
1,068
19.4%

7.5
86
645
11.7%

25
91
2,275
41.3%

70
16
1,260
22.9%

200
0
0
0.0%

Total
815
5,514
100.0%

Industrial
1
39
39
5.7%

3
55
165
23.9%

7.5
10
75
10.9%

25
8
200
29.0%

70
3
210
30.5%

200
0
0
0.0%

Total
115
689
100.0%

4­
56
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4­
17.
Distribution
of
Permits
by
Site
Size
Site
Size
(
Acres)
No.
of
Permits
Acres
by
Size
Pct.
Acres
by
Size
Total
1
614
614
2.9%

3
739
2,217
10.5%

7.5
295
2,213
10.5%

25
345
8,625
40.8%

70
59
4,270
20.2%

200
16
3,200
15.1%

Total
2,068
21,139
100.0%

Based
on
permitting
data
from
the
following
municipalities
or
counties:
Austin,
TX;
Baltimore
County,
MD;
Cary,
NC;
Ft.
Collins,
CO;
Lacey,
WA;
Loudoun
County,
VA;
New
Britain,
CT;
Olympia,
WA;
Prince
George
 
s
County,
MD;
Raleigh,
NC;
South
Bend,
IN;
Tallahassee,
FL;
Tuscon,
AZ;
and
Waukesha,
WI
(
EPA,
1999)
.
Source:
EPA
estimates.

Table
4­
18.
Estimates
of
Acreage
Affected
Under
Proposed
Rule
Option
2
Type
of
Construction
Acreage
Affected
Under
Option
1
a
Percent
Excluded
Under
Option
2
b
Acreage
Affected
Under
Option
2
Residential
Single­
family
533,878
6.1%
501,100
Multifamily
252,182
8.8%
229,958
Nonresidential
Commercial
c
1,332,476
20.4%
1,061,108
Industrial
57,523
25.7%
42,733
Total
2,176,058
1,834,898
a
From
Table
4­
15.
b
Based
on
analysis
of
site
size
distributions
found
in
EPA
(
1999)
.
c
A
number
of
project
types
were
grouped
together
to
form
the
 
commercial
 
category,
,
including:
hotels/
motels,
amusement,
religious,
parking
garages,
service
stations,
hospitals,
offices,
public
works,
educational,
stores,
other
nonresidential
buildings.
Source:
EPA
estimates.

4­
57
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.4.5
Operation
and
Maintenance
Costs
For
any
incremental
ESC
requirements
triggered
under
Option
2,
EPA
estimated
the
percentage
of
capital
costs
of
each
technology
that
would
be
required
annually
to
operate
and
maintain
the
facilities.

Those
facilities
with
a
limited
useful
life
were
assigned
percentages
sufficient
to
replace
them
at
the
appropriate
time.
These
were
converted
to
costs
per
acre
for
each
option.
The
O&
M
costs
are
assumed
to
be
incurred
for
a
one­
year
period
during
the
active
phase
of
construction.

4.5
IMPACTS
ON
THE
NATIONAL
HOUSING
MARKET
4.5.1
Description
of
National
Housing
Market
Model
EPA
takes
three
complementary
approaches
to
estimating
the
market
impacts
of
the
proposed
rule.
Two
treat
the
nation
as
a
single
market;
the
third
treats
each
city
as
a
distinct
housing
market.
The
first
approach
assumes
all
of
the
costs
of
compliance
with
the
regulation
are
passed
through
to
the
home
buyer.
If
the
home
is
more
costly,
fewer
households
would
be
able
to
qualify
for
a
mortgage
to
purchase
it.
This
change
in
market
size
is
an
indicator
of
the
impact
of
the
proposed
regulation.
In
the
second
approach,
the
costs
of
compliance
shift
the
national
housing
supply
curve
in
a
linear
partial
equilibrium
model.
A
portion
of
the
increased
costs
raises
the
price
of
new
housing
while
the
balance
is
absorbed
by
the
builder.
Higher
prices
and
lower
quantities
change
the
welfare
of
participants
in
the
housing
market.

The
third
approach
estimates
a
linear
partial
equilibrium
model,
like
the
national
model,
for
215
metropolitan
statistical
areas
(
MSAs)
based
on
local
measures
of
residential
construction
activity.
This
approach
measures
changes
in
affordability
in
terms
of
the
Housing
Opportunity
Index
(
HOI)
,
a
well
publicized
measure
of
housing
availability.
The
following
sections
explain
each
model
in
detail.

4.5.1.1
Complete
Cost
Pass
Through
and
Housing
Affordability
Landis
 
(
(
1986)
and
Luger
and
Temkin
 
s
(
2000)
surveys
suggest
that
all
of
the
additional
costs
of
compliance
with
new
storm
water
regulations
would
be
passed
through
to
new
home
buyers
in
the
form
of
higher
prices
for
a
unit
of
a
given
quality.
The
quantity
of
new
housing
built
would
not
change
4­
58
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
because
demand
is
driven
by
demographics
more
than
marginal
price
considerations,
i.
e.
,
demand
is
inelastic,
and
competition
in
supply
is
limited
because
of
oligopolistic
markets
in
many
areas
and
infinitely
elastic
supply
in
others.
An
increase
in
the
price
of
a
home
increases
the
income
necessary
to
qualify
for
a
home
mortgage
to
purchase
the
home,
and
so
reduces
the
number
of
households
able
to
afford
it.
One
measure
of
the
impact
of
the
regulation
is
the
change
in
the
number
of
households
that
can
afford
the
new
home.

EPA
developed
its
market
model
parameters
from
the
previously
described
model
projects,

Census
data,
and
the
housing
economics
literature.
Simple
assumptions
about
expected
proportionate
profit
margins,
borrowing,
and
contingencies
discussed
in
Section
4.2
indicate
that
added
incremental
compliance
costs
are
multiplied
by
a
factor
of
1.5
to
1.8
in
the
final
consumer
price.
Luger
and
Temkin
(
2000)
report
a
compliance
cost
multiplier
of
2
to
6
times
actual
compliance
costs.
The
higher
multiplier
may
reflect
a
tight
housing
market
in
high
growth
regions.
The
median
house
price,
from
the
industry
profile,
is
taken
as
the
baseline
price.
The
median
price,
P0
,
with
the
additional
compliance
costs,
C,

multiplied
by
a
factor
for
added
time
and
borrowing,
m,
equals
the
new
price,
PN
,
which
is
the
starting
point
for
calculating
the
effect
of
the
proposed
regulation
on
affordability,
welfare
measures,
and
other
market
model
results:

P
N
 
P
0
%
mC
(
1)

where:

P
N
 
New
Price
with
ESC
Compliance
Costs
P
0
 
Median
New
Home
Price
m
 
Cost
Multiplier
C
 
ESC
Compliance
Costs
The
monthly
payment
for
principal,
interest,
taxes,
and
insurance
(
PITI)
for
the
new
home
is
based
on
the
new
price:

4­
59
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
FP
N
(
r
PI
 
12
)

(
2)

12
)
&
360
1
&
(
1
%
r
P
N
T
 
t
(
3)
1,
000
P
N
I
 
s
(
4)
1,
000
PITI
 
PI
%
T
%
I
(
5)

where:

PI
 
Monthly
Principal
and
Interest
F
 
Proportion
of
New
Home
Cost
that
is
financed
r
 
Annual
Mortgage
Interest
Rate
T
 
Monthly
Tax
Payment
t
 
Monthly
Tax
Rate
per
Thousand
Dollars
Value
I
 
Monthly
Insurance
Premium
s
 
Monthly
Insurance
Rate
per
Thousand
Dollars
Value
PITI
 
Principal
,
Interest
,
Taxes
,
and
Insurance
Fannie
Mae
guidelines
limit
borrowers
 
PITI
payments
to
no
more
than
28
percent
of
their
gross
income.
.

The
value
for
F,
0.774,
and
r,
0.0752,
the
mortgage
terms,
are
national
averages
for
the
typical
30­
year
fixed
rate,
private
mortgage
in
the
base
period
(
FHFB,
2001)
.
Values
for
t,
$
1/
$
1,000
value,
and
s,

$
0.25/
$
1,000
value,
are
from
a
recent
study
of
housing
affordability
(
Savage,
1999)
.
The
gross
income
necessary
to
qualify
for
the
mortgage
at
the
new
price,
under
this
criterion,
Y,
is
given
by:

4­
60
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Y
 
12
PITI
(
6)
0.
28
Table
4­
19
illustrates
the
calculations
using
Option
2
costs.
In
Chapter
Five,
EPA
uses
this
approach
to
estimate
the
number
of
households
priced
out
of
the
new
housing
market
as
a
result
of
each
regulatory
option
or
combination
of
options.

Table
4­
19.
Change
in
Housing
Affordability
 
Sample
Calculation
Source:
EPA
estimates.
Data
element
Baseline
Option
2
Average
per
lot
cost
difference
from
baseline
Difference
in
cost
per
lot
times
multiplier
$
0
$
0
$
111
$
201
Home
price
$
288,397
$
288,598
Principal
and
interest
Real
estate
taxes
Homeowner'
s
insurance
Total
principal,
interest,
taxes,
and
insurance
$
1,564
$
288
$
72
$
1,924
$
1,565
$
289
$
72
$
1,926
Income
necessary
to
qualify
for
mortgage
Change
in
income
necessary
Number
of
households
shifted
(
thousands)

Percent
change
in
number
of
qualified
households
$
82,472
$
0
0
0.0%
$
82,529
$
58
­
29
­
0.15%

The
change
in
the
number
of
households
who
qualify
for
a
mortgage
to
finance
the
baseline
home
price
but
cannot
afford
the
home
with
the
added
compliance
costs
is
imputed
from
Census
Bureau
statistics
of
household
income.
The
Census
Bureau,
Current
Population
Survey,
reports
the
money
income
of
households
in
21
income
classes
from
zero
to
over
$
100,000
(
U.
S.
Census
Bureau
2000d)
.

Table
4­
20
shows
the
Census
distribution.
Each
income
class,
except
the
top
one,
spans
$
5,000
in
annual
income.
If
households
are
evenly
distributed
within
each
class,
then
a
change
of
$
1,000
from
the
baseline
income
necessary
to
qualify
to
the
new
income
necessary
excludes
one
fifth
of
the
members
of
the
income
class
from
qualifying
for
the
new
mortgage
level.
Since
the
incremental
costs
of
compliance
4­
61
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
are
relatively
small,
the
new
price
usually
falls
within
the
same
income
class
as
the
baseline
price
and
the
number
of
households
per
$
1,000
change
in
price
is
adequate
to
find
the
change
in
number
of
qualifying
households.
If
the
qualifying
income
for
the
baseline
price
is
in
a
different
income
class
than
the
qualifying
income
for
the
new
price,
the
number
of
households
per
$
1,000
change
in
price
in
each
class
is
calculated
and
the
number
of
households
disqualified
calculated
in
parts.

Table
4­
20.
Household
Information
for
Imputing
Changes
in
Ownership
Possibilities
a
Calculated
from
proportion
of
owner­
occupied
to
total
housing
units
multiplied
by
number
of
households
in
income
class.
Source:
Household
Income:
U.
S.
Census
Bureau,
Current
Population
Reports,
P60­
209,
Money
Income
in
the
United
States:
1999,
U.
S.
GPO:
Washington,
2000;
Housing:
U.
S.
Census
Bureau,
American
Housing
Survey
for
the
United
States:
1999,
Table
2­
12
Income
Characteristics
of
Occupied
Units,
http:
/
/
www.
census.
gov/
hhes/
www/
housing/
ahs/
ahs99/
tab212.
html
Current
Population
Survey
American
Housing
Survey
Annual
Household
Income
(
$
1,000)
Households
(
1,000)
Households
That
Own
Home
a
(
1,000)
Percent
Owned
for
Income
Class
Total
Housing
Units
(
1,000)
Owner­
Occupied
Units
(
1,000)

<
5
5­
9
10­
14
15­
19
20­
24
25­
29
30­
34
35­
39
40­
44
45­
49
50­
54
55­
59
60­
64
65­
69
70­
74
75­
79
80­
84
85­
89
90­
94
95­
99
100>
Total
3,010
6,646
7,661
7,482
7,238
6,890
6,381
6,016
5,565
4,958
4,789
4,064
4,112
3,380
2,927
2,903
2,526
2,023
1,736
1,568
12,832
104,707
1,456
3,051
3,906
3,935
3,946
4,000
3,891
3,794
3,875
3,452
3,674
3,118
3,360
2,762
2,392
2,372
2,227
1,784
1,531
1,383
11,674
70,071
48.4%
45.9%
51.0%
52.6%
54.5%
58.1%
61.0%
63.1%
69.6%
69.6%
76.7%
76.7%
81.7%
81.7%
81.7%
81.7%
88.2%
88.2%
88.2%
88.2%
91.0%
66.9%
5,839
6,728
7,780
7,037
7,369
6,867
7,469
5,951
9,778
 
8,184
 
11,985
 
 
 
6,548
 
 
 
11,267
102,802
2,824
3,089
3,967
3,701
4,017
3,987
4,555
3,753
6,808
 
6,278
 
9,793
 
 
 
5,774
 
 
 
10,250
68,796
The
proportion
of
households
in
the
marginal
income
class
that
already
own
their
home
indicates
the
size
of
the
market
possibly
affected.
According
to
the
Census
Bureau
 
s
American
Housing
Survey,
in
4­
62
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
1999,
48.4
percent
of
households
with
less
than
$
5,000
income
owned
their
own
home
while
91
percent
of
those
with
income
over
$
100,000
annually
own
their
home.
Overall,
66.9
percent
of
households
own
their
home.
32
The
rate
of
home
ownership
for
the
larger
income
classes
from
the
housing
survey
was
applied
to
all
of
the
income
classes
of
the
population
survey
within
the
same
range
(
indicated
by
the
ditto
marks
in
Table
4­
20)
.
The
total
number
of
households
with
income
greater
than
that
required
to
qualify
for
the
baseline
home
is
the
total
number
of
households
that
could
afford
the
baseline
home.
Since
this
is
the
group
that
may
be
in
the
market
for
a
new
home,
substantial
changes
in
the
proportion
of
this
group
that
can
afford
it
may
represent
large
changes
in
the
size
of
the
market
for
new
homes
attributable
to
the
construction
and
development
regulation.

4.5.1.2
National
Partial
Equilibrium
Modeling
Another
approach
to
evaluating
the
impact
of
the
proposed
regulation
on
housing
markets
is
based
on
a
household
production
function
partial
equilibrium
model.
Empirical
studies
find
a
highly
elastic
supply
and
a
somewhat
inelastic
demand
for
new
housing
(
DiPasquale,
1999)
.
These
estimated
elasticities
and
the
assumption
that
compliance
costs
of
new
environmental
regulations
result
in
only
marginal
changes
in
prices
and
quantities
allow
the
market
to
be
modeled
with
a
simple
linear
partial
equilibrium
market
model
similar
to
the
ones
used
in
other
recent
EPA
regulations
(
U.
S.
EPA,
2001b)
.

The
modeling
situation
is
similar
to
that
used
by
Montgomery
(
1996)
to
forecast
wood
product
demand.
The
linear
partial
equilibrium
model
can
be
viewed
as
a
reduced
form
of
a
more
complex
structural
model.
We
can
assume,
for
example,
that
all
of
the
instrumental
variables
are
the
same
in
both
the
baseline
and
alternatives,
i.
e.
,
the
regulation
does
not
change
U.
S.
population
growth,
carpenters
 
wages,
wood
product
prices,
and
so
forth.
Montgomery
 
s
(
1996)
modeling
equation
(
equation
12
in
the
paper)
is
simply
a
linear
supply
curve
and
equations
6,
8,
and
10
reduce
to
a
linear
demand
curve.
The
simpler
model
will
provide
the
same
results
as
the
more
complex
structural
model
given
small
marginal
changes
in
costs
and
unchanging
long
run
assumptions.

32
The
American
Housing
Survey
uses
fewer
income
groups
than
the
Current
Population
Survey.

4­
63
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
National
statistics
of
residential
housing
starts
from
the
Census
of
Construction
establish
the
baseline
quantity
for
the
model.
The
baseline
price
is
the
median
new
home
price
derived
from
the
project
cost
model.
This
combination
is
the
baseline
market
equilibrium
where
supply
equals
demand.

To
indicate
highly
elastic
supply,
EPA
assumes
a
price
elasticity
of
supply
of
4.0.
DiPasquale
(
1999)

cites
studies
with
estimates
for
new
housing
supply
elasticity
from
0.5
to
infinity
but
the
majority
of
the
long
run
estimates
are
in
the
3
to
13
range.
Housing
demand
elasticity
is
equally
controversial.
EPA
assumes
a
price
elasticity
of
demand
of
­
0.7
to
indicate
a
somewhat
inelastic
demand
function.

Sensitivity
tests
of
these
assumptions
are
shown
in
Appendix
5B.

Given
a
baseline
equilibrium
point
(
P0
,
Q0
curve.
)
and
these
elasticities,
EPA
identified
a
linear
supply
Q
 
"
%
$
P
(
7)

Where:

Q
 
Number
of
residential
building
permits
issued
P
 
Price
of
new
home
"
 
Intercept
calibrated
from
baseline
equilibrium
 
Q
0
&
$
P
0
$
 
Coefficient
on
price
 
E
s
×
Q
0
P
0
E
s
 
Supply
elasticity
of
new
homes
>
0
A
linear
demand
curve
was
derived
similarly.

4­
64
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Q
 
F
%
(
P
(
8)

Where:

F
 
Intercept
calibrated
from
baseline
equilibrium
 
Q
0
&
(
P
0
(
 
Coefficient
on
price
 
E
d
×
Q
0
P
0
E
d
 
Demand
elasticity
of
new
homes
<
0
EPA
assumes
the
baseline
condition
is
in
equilibrium
so
these
two
equations
are
equal.
The
increased
costs
of
compliance
raise
builders
 
costs
and
shift
the
supply
curve
upward
to
the
left.
.
The
change
in
prices
and
quantities
depends
on
the
relative
slopes
of
the
supply
and
demand
curves.
EPA
chose
to
model
the
increased
costs
as
a
slope­
preserving
change
in
the
supply
curve
intercept,
"
,
rather
than
an
elasticity­
preserving
change
in
slope.
The
new
intercept
is
calculated
as:

"
 
Shocked
intercept
s
(
9)
 
Q
0
&
$
(
P
0
%
ESC)

where
ESC
is
the
per
unit
costs
of
compliance
with
the
proposed
regulation.
The
new
price
is
given
by:

"
S
&
F
P
N
 
(
&
$
(
10)

Equilibrium
prices
and
quantities
are
then
recalculated
using
the
new
price
and
shocked
intercept.

Unlike
the
complete
cost
pass
through
method
described
above,
some
of
the
costs
of
compliance
in
the
partial
equilibrium
model
may
be
absorbed
by
the
builder.
The
proportions
flowing
to
consumers
4­
65
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
and
builders
depends
on
the
relative
elasticities
of
supply
and
demand.
The
literature
suggests
cost
pass
through
rates
are
very
high
in
this
industry
(
DiPasquale,
1999)
.
With
the
supply
and
demand
elasticities
selected
as
representative
of
the
literature,
Es
=
4
and
Ed
=
­
0.7,
the
cost
pass
through
is
85
percent.
Thus,

the
industry
absorbs
15
percent
of
the
costs
of
compliance
and
passes
the
remainder
on
to
home
buyers
as
a
price
increase.

The
partial
equilibrium
model
has
a
number
of
implications
for
the
welfare
of
society.
When
the
supply
curve
shifts
following
introduction
of
incremental
compliance
costs,
consumers
lose
some
of
their
benefits
from
the
product
in
absorbing
those
compliance
costs.
This
results
in
a
loss
of
consumer
surplus.
How
the
consumer
surplus
is
lost
is
irrelevant
from
a
welfare
economics
perspective.

Consumers
may
choose
cheaper
options
in
the
construction
of
their
new
homes
such
as
lower
quality
carpets
or
cabinets.
They
may
accept
less
expensive,
smaller
homes.
Or,
they
may
just
pay
the
higher
price
and
forego
other
spending.
In
any
case,
the
home
would
provide
less
utility
than
it
might
have
without
the
ESC
costs.
Different
choices
would
affect
which
industries
feel
the
impact
in
the
regional
economy.
Changes
in
housing
options
would
impact
builders
and
suppliers.
Decreased
overall
spending
would
impact
a
wide
range
of
consumer
goods
industries.
For
simplicity,
EPA
assumed
that
consumers
would
reduce
other
spending
in
response
to
the
price
change.
The
reduction
in
home
sales
volume
and
consumer
spending
in
other
sectors
reduces
employment
in
construction
and
all
other
parts
of
the
economy.
Indirect
effects
of
the
regulation
on
the
whole
economy
are
estimated
using
Regional
Input­

Output
Modeling
System
(
RIMS)
multipliers
published
by
the
U.
S.
Department
of
Commerce.
The
multiplier
analysis
indicates
the
ultimate
changes
in
gross
domestic
output
and
employment
attributable
to
the
new
regulation.

4.5.1.3
Regional
Partial
Equilibrium
Modeling
and
the
Housing
Opportunity
Index
Each
of
the
approaches
described
above
treats
housing
as
a
national
market
with
the
same
demand
elasticities
applying
across
the
country.
In
reality,
however,
market
conditions
can
vary
widely
from
region
to
region,
state
to
state,
and
city
to
city.
Markets
vary
both
in
the
level
of
activity
and
the
structure
of
the
industry.
Costs
of
compliance
would
undoubtedly
be
easier
to
pass
through
to
consumers
in
a
hot
housing
market
than
in
a
depressed
market.
EPA
 
s
third
modeling
approach
captures
such
4­
66
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
regional
variation
by
setting
up
a
partial
equilibrium
model
for
each
Metropolitan
Statistical
Area
(
MSA)

and
using
statistics
of
the
level
of
activity
in
the
MSA
to
select
the
parameters
of
the
model.

The
Census
Bureau
collects
information
about
housing
starts
as
well
as
the
size
of
the
existing
housing
stock
at
the
MSA
level.
EPA
infers
that
where
housing
built
during
the
1990s
represents
a
large
proportion
of
the
total
current
housing
stock,
the
new
housing
market
is
active
and
demand
would
be
expected
to
be
less
elastic
than
in
areas
with
slower
growth.
As
discussed
above,
the
long
run
supply
of
new
housing
is
assumed
to
be
quite
elastic
overall.
These
facts
provide
the
basis
for
selecting
elasticities
to
represent
housing
markets
at
the
MSA
level.

EPA
developed
separate
partial
equilibrium
models
for
each
MSA.
Like
the
national
models
described
above,
EPA
used
building
permit
and
median
new
home
price
data
to
establish
the
baseline
equilibrium
point
for
each
MSA.
Demand
elasticities
were
estimated
based
on
the
ratio
of
new
housing
units
authorized
to
housing
stock
over
the
period
1990
to
1996
(
Census,
1998)
.
EPA
mapped
regions
where
this
ratio
is
lowest
to
the
most
elastic
estimates
of
demand
found
in
the
literature
and
those
where
the
ratio
is
highest
to
the
least
elastic
demand
elasticity
estimates.
EPA
believes
this
approach
captures
the
relative
differences
in
demand
elasticity
between
active
and
depressed
housing
markets
around
the
country.

Each
MSA
model
is
shocked
with
the
estimated
compliance
costs
for
the
median
new
home
in
the
region.
The
model
then
estimates
changes
in
prices,
quantities,
and
welfare
measures
for
each
MSA.

As
there
are
more
than
200
MSAs,
it
is
not
practical
to
report
all
of
the
individual
results.
Instead,
all
of
the
MSAs
in
a
Census
division
are
averaged
together
to
give
a
sense
of
the
effect
of
compliance
costs
on
each
region
of
the
nation.

Affordability
is
a
significant
concern
for
some
stakeholders.
The
National
Association
of
Home
Builders
(
NAHB)
publishes
the
Housing
Opportunity
Index
(
HOI)
for
180
MSAs.
HOI
measures
the
proportion
of
the
housing
stock
a
family
with
the
median
income
can
afford.
NAHB
compares
the
median
family
income
to
the
actual
distribution
of
home
prices
in
the
MSA.
EPA
does
not
have
access
to
such
detailed
price
information.
Instead,
EPA
assumes
home
prices
are
normally
distributed
about
the
median
with
standard
deviation
of
1.
Thus,
our
rough
HOI
(
RHOI)
is
the
cumulative
probability
of
homes
with
prices
less
than
the
maximum
PITI
that
the
median
income
can
afford.

4­
67
Economic
Analysis
of
Construction
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Development
Proposed
Effluent
Guidelines
May
2002
Algebraically:

30
(
Median
Income
×
0.
28)
e
rt
dt
RHOI
 
Z
(
1,
1)
(
m
0
)
(
11)
Median
Sales
Price
The
numerator
represents
the
present
value
of
the
maximum
PITI
payment
that
the
median
income
can
afford
at
the
prevailing
mortgage
rate,
r,
over
a
typical
30­
year
fixed
rate
loan.
The
denominator
is
simply
the
median
sales
price.
When
this
ratio
is
equal
to
one,
the
median
income
family
can
afford
the
median
sales
price
home
or,
equivalently,
half
the
families
can
afford
the
median
sales
price
home.
The
normal
cumulative
density
function
with
mean
of
one
and
variance
of
one,
is
represented
by
Z(
1,1)
(
@
)
.

Thus,
if
the
median
income
family
can
afford
more
than
the
median
sales
price
home,
the
ratio
will
be
greater
than
one,
and
the
Z(
1,1)
(
@
)
function
will
indicate
the
proportion
of
homes
the
family
can
afford.

For
MSAs
with
HOIs
reported
by
NAHB,
EPA
adjusts
the
variance
of
the
normal
curve
so
that
RHOI
yields
the
NAHB
baseline
HOI
index
(
NAHBHOI)
.
The
variance
scaling
factor
is:

Z
&
1
(
0,
1)
(
RHOI
)
V
 
*
Z
&
1
*
(
12)

(
0,
1)
(
NAHBHOI
)

where
Z(
0,1)
­
1
is
the
inverse
of
the
standard
normal
cumulative
distribution.
Changing
the
variance
of
Z(
1,1)

from
one
to
V
causes
RHOI
to
equal
NAHBHOI
at
the
observed
median
family
income.
In
those
MSAs
where
NAHB
does
not
calculate
HOI,
unadjusted
RHOI
is
reported.
33
To
assess
the
impact
of
the
regulation,
the
adjusted
HOI
is
calculated
with
the
new
sales
price
from
the
market
model.
The
percent
change
in
adjusted
HOI
is
an
indicator
of
the
added
stress
of
compliance
costs
on
the
housing
market.

Like
the
full
pass
through
model
discussed
above,
the
MSA
HOI
model
shows
how
changes
in
costs
affect
home
buyers.
This
approach
has
the
advantage
of
recognizing
local
market
differences
and
33
In
13
MSAs,
the
distribution
of
home
prices
is
so
different
from
normal
that
RHOI
cannot
approximate
NAHBHOI
with
the
variance
adjustment.
These
MSAs
were
deleted
from
the
results.

4­
68
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
applying
them
within
the
model.
Average
HOI
among
MSAs
in
Census
divisions
before
and
after
compliance
costs
are
reported
in
Chapter
Five.

4.5.2
Inputs
to
the
National
Housing
Market
Model
The
analysis
uses
the
average
price
of
the
model
home
worked
out
in
Section
4.2,
$
284,632,
as
a
starting
point.
Buyers
in
2000
financed
an
average
of
77.4
percent
of
the
home
purchase
price
at
an
interest
rate
of
7.52
percent
(
FHFB,
2001)
.
EPA
assumes
a
30­
year
conventional
fixed
rate
mortgage
for
ease
of
calculation.
EPA
also
assumes
a
monthly
real
estate
tax
rate
of
$
1
per
$
1,000
of
home
value
and
insurance
payment
of
$
0.25
per
$
1,000
of
home
value
(
Savage
1999)
.
These
assumptions
are
applied
to
the
revised
home
price
to
derive
an
estimate
of
the
monthly
principal,
interest,
taxes,
and
insurance
(
PITI)

payment
generally
required
to
purchase
a
new
home.

In
Chapter
Five
EPA
uses
this
approach
to
estimate
the
number
of
households
priced
out
of
the
new
housing
market
as
a
result
of
each
regulatory
option.

4.5.3
Multifamily
and
Non­
Residential
Construction
Market
Models
EPA
developed
three
market
models
of
the
multifamily
and
non­
residential
construction
industry.

All
three
are
similar
to
the
residential
regional
partial
equilibrium
model.
They
treat
each
state
as
a
separate
market
with
adjusted
demand
elasticities.
Each
model
produces
estimates
of
changes
in
prices,

quantities,
and
welfare
measures.

The
commercial
market
is
highly
disaggregated
into
regional
markets.
Office
rents
for
similar
buildings
(
Class
A
space)
range
from
$
17/
square
foot/
year
in
Wichita
to
more
than
$
60/
square
foot/
year
in
San
Francisco
(
Grubb
&
Ellis
2001)
.
This
disparity
shows
that
arbitrage
among
markets
is
not
possible
and
space
in
each
area
should
be
considered
a
different
commodity.
Many
real
estate
companies
maintain
data
on
conditions
in
regional
markets.
Typically,
activity
in
the
market
is
measured
in
terms
of
the
vacancy
rate
and
asking
rents.
EPA
developed
a
market
model
for
office
space
similar
to
the
regional
partial
equilibrium
models
developed
for
residential
construction
to
indicate
the
effects
on
commercial
construction.

4­
69
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
Census
Bureau
discontinued
collection
of
non­
residential
building
permit
information
in
1994.
To
estimate
non­
residential
building
permits
issued
in
later
years,
EPA
regressed
non­
residential
building
permits
on
residential
building
permits,
the
value
of
non­
residential
buildings
put
in
place
(
VPIP)
,

and
a
time
trend.
Since
the
relationship
among
these
variables
differs
from
state­
to­
state,
regressions
were
estimated
at
the
state
level.
Three
different
regressions
were
estimated.
Several
states
showed
a
distinct
shift
in
building
permits
data
when
the
Census
sample
changed
from
17,000
permit­
granting
jurisdictions
to
19,000
jurisdictions
in
1983.
In
states
where
this
difference
was
apparent,
only
observations
after
1983
were
used
in
the
final
projection.
In
addition
some
states
had
strong
trends
which
were
correlated
with
residential
building
permits.
Since
this
multicollinearity
reduced
the
influence
of
residential
building
permit
data
in
later
projection
years,
a
regression
was
also
estimated
without
the
trend
variable.
The
three
regressions
are:

 
1980­
1994
data;

 
1983­
1994
data;
and
 
1980­
1994
data
estimated
without
the
trend
variable.

Each
regression
was
also
estimated
using
only
data
through
1993
to
test
their
ability
to
forecast
the
next
year
outside
of
the
sample,
i.
e.
,
1994.
The
regression
which
gave
the
best
out
of
sample
projection
to
1994
and/
or
had
the
highest
correlation
coefficient
for
the
state
was
selected
to
be
used
for
that
state
 
s
projection.
Thus,
each
state
projection
uses
the
model
that
best
predicts
its
pattern
of
non­
residential
development.
EPA
allocates
the
number
of
non­
residential
building
permits
estimated
for
each
state
to
commercial,
industrial,
and
other
projects
based
on
the
number
of
permits
issued
for
each
type
of
project
in
the
1994
building
permit
data.
The
commercial
category
is
a
catch­
all
which
includes
public
buildings,

hotels,
amusements,
and
educational
buildings,
in
addition
to
office
and
retail
buildings.
EPA
implicitly
assumes
that
these
projects
would
employ
best
management
practices
that
are
similar
to
those
required
for
office
or
retail
space.
A
separate
category
for
industrial
projects
and
a
third
category
for
non­
building
permits
are
also
allocated
from
the
1994
data.

In
the
partial
equilibrium
model,
the
quantity
of
construction
in
each
category
is
measured
by
the
number
of
building
permits
issued.
Rental
rates,
in
dollars
per
square
foot
per
year,
are
closely
watched
indicators
of
demand
for
commercial
space
and
serve
as
our
price.
Rents
and
activity
reports
for
35
retail
space
markets
around
the
country
from
a
recent
real
estate
marketing
firm
report
(
Grubb
and
Ellis,
2001)

4­
70
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
provide
the
baseline
information
for
the
market
model.
Like
the
ratio
of
new
building
permits
to
housing
stock
in
the
residential
model,
EPA
used
the
activity
reports
to
create
a
scale
of
demand
intensity
which
was
then
used
to
map
to
each
market
an
appropriate
demand
elasticity
from
a
range
of
possible
market
elasticities.

Demand
for
office
and
retail
space
is
relatively
insensitive
to
small
changes
in
price.
Since
non­

residential
construction
activity
tends
to
be
driven
by
interest
rates,
job
growth,
and
locational
factors
rather
than
building
costs,
cost
pass
through
is
very
high.
Huffman
(
1988)
,
for
example,
found
that
impact
fees
were
largely
passed
on
to
end
users
in
the
long
run.
EPA
therefore
applies
a
range
of
elasticities
from
­
0.01
to
­
0.80
to
represent
relatively
inelastic
demand
for
commercial
space.
In
regions
with
many
vacancies,
lessees
can
be
more
sensitive
to
price
so
a
more
elastic
demand
curve
is
used.
In
regions
with
tight
markets,
lessees
have
fewer
options
and
generally
have
little
choice
but
to
pay
the
asking
price,
so
demand
is
less
elastic.
Builders
can
pass
on
a
higher
proportion
of
their
costs
in
tight
markets
than
in
soft
markets.
Even
in
the
softest
market,
however,
83
percent
of
costs
are
passed
through
to
consumers
with
these
assumptions.

The
number
of
non­
residential
building
permits
was
projected
at
the
state
level
while
the
Grubb
and
Ellis
commercial
data
is
from
35
selected
cities.
Since
there
is
insufficient
building
permit
data
to
model
each
city,
EPA
models
each
state
as
a
separate
market
with
the
average
rent
and
activity
rate
for
the
cities
within
the
state
representing
the
state
market.
The
assumption
is
reasonable
where
state
office
and
retail
markets
are
concentrated
in
one
city,
or
one
city
is
representative
of
general
statewide
market
conditions.
The
assumption
is
less
defensible
in
large
states
with
many
population
centers,
since
market
conditions
may
vary
from
city
to
city
within
such
states.
Almost
half
of
the
states
were
not
represented
by
cities
in
the
Grubb
and
Ellis
data.
For
these
states,
the
average
rent
and
activity
values
for
cities
within
the
Census
division
containing
the
state
were
used
to
indicate
state
market
conditions.

The
industrial
space
market
model
is
similar
to
the
commercial
model.
It
uses
the
vacancy
rate
for
industrial
space
as
an
indicator
of
market
activity
and
the
rental
rate
for
warehouse
space
as
the
price.

Industrial
space
users
are
considerably
more
mobile
and
price
sensitive
than
commercial
or
residential
space
consumers
so
demand
for
industrial
space
is
more
elastic.
The
range
used
in
this
analysis
is
­
0.2
to
­
1.5.

4­
71
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
multifamily
housing
market
model
uses
the
same
format
as
the
non­
residential
models.
The
activity
measure
is
the
proportion
of
the
housing
stock
built
in
the
1990
to
1996
time
period.
Separate
price
series
or
rental
rates
for
multifamily
housing
are
not
reported
so
the
single­
family
housing
prices
were
taken
as
a
near
substitute.
EPA
assumed
that
elasticities
of
demand
are
also
similar
to
those
for
single­
family
housing.

The
multifamily
and
non­
residential
models
apply
equations
7
through
10
above
to
estimate
supply
and
demand
curves.
Compliance
costs
are
converted
to
the
same
units
as
the
rental
rates,
given
the
model
project.
The
increase
in
cost
shifts
the
supply
curve
to
the
left
and
upward.
Market
results
may
be
reported
in
terms
of
changes
in
rents
and
building
permits,
as
well
as
changes
in
consumer
and
producer
surplus,
and
can
be
converted
to
changes
in
indirect
employment
using
the
RIMS
II
multiplier.

4.6
NET
ECONOMIC
IMPACTS
Environmental
regulations,
while
imposing
costs
on
the
regulated
industry,
may
also
provide
a
stimulus
to
firms
that
make
or
install
environmental
controls,
or
provide
other
services
related
to
reglatory
compliance.
The
output
and
jobs
created
by
new
spending
in
the
environmental
industry
offsets,
to
some
extent,
the
loss
of
output
in
the
affected
industry.
In
the
case
of
C&
D,
the
same
firms
that
now
do
much
of
the
site
preparation
work
would
also
be
charged
with
implementing
ESCs,
and
likely,
conducting
ESC
certification
and
inspection.
Contractors
would
be
hired
to
build
sedimentation
ponds,
improve
grades,
and
construct
any
incremental
ESCs
triggered
by
the
proposed
regulation.
Thus,

while
the
regulation
is
costly
in
one
sense,
much
of
that
cost
flows
directly
back
into
the
industry,

stimulating
more
activity,
output,
and
employment.

4.6.1
Welfare
Effects
In
terms
of
the
welfare
effects
discussed
in
Section
4.5.1,
both
the
consumer
and
producer
surpluses
are
converted
to
costs
of
production.
Consumer
surplus
represents
income
that
would
have
been
used
by
consumers
to
purchase
other
products
or
for
enjoyment.
Producer
surplus
would
have
flowed
to
the
owners
of
the
firm
and
probably
to
consumption
or
investment
in
other
industries.
Both
4­
72
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
quantities
thus
flow
out
of
the
construction
sector.
Only
to
the
extent
that
the
compliance
costs
that
would
be
absorbed
are
greater
than
the
sum
of
production
loss
plus
the
consumer
surplus
lost
would
the
regulation
result
in
a
net
increase
in
activity
in
the
construction
sector.

Both
the
loss
and
the
gain
in
employment
are
estimated
by
applying
RIMS
II
multipliers
to
the
changes
in
output
derived
from
the
market
models.
Construction
activity
generates
approximately
37.8
jobs
per
million
dollars
of
output
while
general
consumer
spending
generates
only
27.3
jobs
per
million
dollars
of
spending.
Shifting
spending
from
consumers
to
construction
would
increase
overall
employment.
As
some
readers
may
be
interested
in
both
the
losses
and
gains
in
construction
employment,
both
aspects
are
shown
in
Chapter
Five,
as
well
as
the
loss
in
employment
from
lost
consumer
spending.

4.6.2
Regional
Impacts
For
this
analysis,
EPA
examines
the
potential
impacts
to
specific
regions
by
assessing
whether
the
proposed
C&
D
regulations
could
have
community
or
regional
level
impacts.
Such
impacts
could
alter
the
competitive
position
of
the
C&
D
industry
across
the
nation
or
lead
to
growth
or
reductions
in
C&
D
activity
(
in­
or
out­
migration)
in
different
regions
and
communities.
Traditionally,
the
distribution
of
C&
D
establishments
has
echoed
the
general
regional
distribution
of
U.
S.
population,
with
some
parts
of
the
industry
responding
to
short
or
long
term
shifts
in
population
distribution.

EPA
does
not
expect
that
the
proposed
C&
D
regulations
would
have
a
significant
impact
on
where
construction
and
development
takes
place,
or
the
regional
distribution
of
construction
and
development
activity.
On
the
one
hand,
regulatory
costs
would
be
lower
in
regions
with
lower
rainfall
and
reduced
soil
erodibility.
This
would
tend
to
favor
projects
being
developed
in
such
regions.
At
the
same
time,
however,
a
project
located
in
a
low
rainfall
region
would
rarely
be
a
perfect
substitute
for
the
same
project
in
a
high
rainfall
region.
So
many
factors
go
into
a
locational
decision
that
few
homeowners,
companies,
or
industrial
firms
are
likely
to
make
their
decision
on
where
to
build
based
solely
upon
the
relative
costs
of
storm
water
controls.
Thus,
EPA
does
not
expect
the
proposed
C&
D
regulations
to
significantly
influence
the
prevailing
pattern
of
construction
and
development
activity.

4­
73
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
 
s
market
model
accounts
for
regional
market
influences
by
creating
state
and
MSA
level
partial
equilibrium
models
for
each
sector.
These
models
are
used
to
quantify
the
regional
impacts
in
terms
of
output
and
employment.
Like
the
national
employment
effects,
state
employment
changes
are
calculated
using
RIMS
II
multipliers.
Regional
multipliers
were
not
available
for
this
analysis
so
the
national
multipliers
were
used.
The
results,
therefore,
overstate
the
employment
impacts
within
the
region
but
indicate
the
effect
of
changes
within
the
region
on
the
nation
as
a
whole.
Tables
summarizing
state
impacts
are
included
in
Chapter
Five.

4.6.3
International
Trade
As
part
of
its
economic
analysis,
EPA
has
evaluated
the
potential
for
changes
in
U.
S.
trade
(
imports,
exports)
of
construction
and
development
related
goods
and
services.
A
significant
component
of
the
U.
S.
construction
and
development
industry
operates
internationally,
and
in
addition
numerous
foreign
firms
operate
in
the
U.
S.
EPA
judged,
however,
that
the
potential
for
U.
S.
construction
and
development
firms
to
be
differentially
affected
by
the
proposed
rule
is
negligible.
The
proposed
rule
would
be
implemented
at
the
project
level,
not
the
firm
level,
and
would
affect
only
projects
within
the
U.
S.
All
firms
undertaking
such
projects,
domestic
or
foreign,
would
be
subject
to
the
proposed
rules.

U.
S.
firms
doing
business
outside
the
U.
S.
would
not
be
differentially
impacted
compared
to
foreign
firms,
nor
would
foreign
firms
doing
business
in
the
U.
S.

The
proposed
rule
may
stimulate
or
depress
demand
for
some
construction­
related
goods.
To
the
extent
that
the
proposed
rule
acts
to
depress
the
overall
construction
market,
demand
for
conventional
construction­
related
products
may
decline.
This
decline
may
be
offset
by
purchase
of
goods
and
services
related
to
storm
water
management.
Overall,
EPA
does
not
anticipate
that
any
shifts
in
demand
for
such
goods
and
services
resulting
from
the
proposed
regulation
would
have
significant
implications
for
U.
S.

and
foreign
trade.

4­
74
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.7
GOVERNMENT
IMPACTS
4.7.1
Administrative
Costs
EPA
has
analyzed
the
administrative
costs
to
governments
associated
with
the
proposed
rule.

EPA
assumes
that
the
majority
of
construction­
related
regulatory
costs
would
be
associated
with
processing
general
permits.
As
noted
previously,
EPA
assumes
that
the
majority
of
NPDES
Phase
I
and
Phase
II
NPDES
storm
water
permit
programs
are
fully
implemented,
and
that
any
new
regulatory
requirements
would
be
superimposed
upon
these
programs.

Under
Option
1,
EPA
assumes
that
no
incremental
costs
would
be
imposed
on
governmental
units.
Under
Option
2,
EPA
estimates
that
each
state
would
incur
costs
to
revise
existing
regulations
to
reflect
the
shift
of
regulatory
coverage
from
Part
122
to
Part
450.
Based
on
the
assumption
that
all
states
would
change
their
storm
water
programs
to
include
certification
of
sedimentation
basins
and
other
aspects
of
the
proposed
rule,
EPA
estimated
the
costs
of
establishing
such
a
program.
The
costs
are
based
on
assumptions
about
the
number
of
labor
hours
states
would
allocate
to
amending
such
programs,

and
the
applicable
labor
rate.
Further
details
on
these
assumptions
and
costs
can
be
found
in
the
Development
Document
(
EPA,
2002)
.

4.7.2
Compliance
Costs
EPA
estimates
that
government
entities
(
federal,
state,
and
local)
commission
as
much
as
one
quarter
of
the
total
value
of
construction
work
completed
in
the
U.
S.
each
year.
As
final
owner
of
a
substantial
amount
of
the
industry
output,
governments
would
bear
some
of
the
compliance
costs
associated
with
the
proposed
rule,
assuming
these
costs
are
passed
on
from
developers
and
builders.
In
Chapter
Five,
Section
5.8,
EPA
allocates
the
government
share
of
compliance
costs
based
on
the
government
share
of
industry
output.
Further
details
about
government
costs
can
also
be
found
in
Chapter
Ten.

4­
75
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
4.8
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4­
78
APPENDIX
4A
Data
and
Modeling
Assumptions
for
Model
Project
Analysis
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4A­
1.
Model
Parameters
and
Data
Sources
Parameters
Single­
family
Residential
Multifamily
Residential
Small
Commercial
(
Shopping
Center)
Industrial
Building
Value
Data
Source
Value
Data
Source
Value
Data
Source
Value
Data
Source
Size
of
parcel
1,
3,
7.5,
25,
70,
and
200
acres
EPA
assumption
1,
3,
7.5,
25,
70,
and
200
acres
EPA
assumption
1,
3,
7.5,
25,
70,
and
200
acres
EPA
assumption
1,
3,
7.5,
25,
70,
and
200
acres
EPA
assumption
Cost
of
raw
land
$
40,000
per
acre
NAHB
Chicago
focus
groups,
based
on
experience
of
the
Chicago­
area
participants.
See
Appendix
B
for
further
discussion.
$
40,000
per
acre
NAHB
Chicago
focus
groups,
based
on
experience
of
the
Chicago­
area
participants.
See
Appendix
A
for
further
discussion.
$
297,545
per
acre
Urban
Land
Institute
(
ULI)
Market
Profiles
2000:
North
America.
Median
land
cost
for
nonregional
shopping
centers
(
cost
ranges
for
individual
MSAs
were
averaged
before
taking
the
median)
$
137,500
per
acre
Urban
Land
Institute
(
ULI)
Market
Profiles
2000:
North
America.
Median
land
cost
for
industrial
parks
(
cost
ranges
for
individual
MSAs
were
averaged
before
taking
the
median)
.

Average
Lot
Size
0.33
acres
Census
Report
C25
(
Characteristics
of
New
Housing,
1999)
reports
an
average
lot
size
for
new
single­
family
homes
sold
of
12,910
square
feet,
which
represents
a
density
of
close
to
3
lots
per
acre.
(
The
median
lot
size
is
8,750
square
feet,
which
implies
a
density
of
almost
5
lots
per
acre)
.
N/
A
N/
A
N/
A
Approximate
Density
(
number
of
lots
per
acre)
2.67
Calculated
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygons,
 
to
account
for
impervious
surfaces
not
associated
with
individual
lots.
Total
number
of
lots
is
rounded
to
nearest
whole
number.
N/
A
N/
A
N/
A
4A­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4A­
1.
Model
Parameters
and
Data
Sources
Parameters
Single­
family
Residential
Multifamily
Residential
Small
Commercial
(
Shopping
Center)
Industrial
Building
Value
Data
Source
Value
Data
Source
Value
Data
Source
Value
Data
Source
Due
diligence
$
2,500
per
acre
Based
on
$
100,000
for
a
hypothetical
40­
acre
development
discussed
by
the
NAHB
Chicago
focus
group
participants.
See
Appendix
B
for
further
discussion.
$
2,500
per
acre
See
Single­
family
Residential
Data
Source
for
details.
$
2,500
per
acre
See
Single­
family
Residential
Data
Source
for
details.
$
2,500
per
acre
See
Single­
family
Residential
Data
Source
for
details.

Land
development
costs
$
25,000
per
lot
Estimate
from
NAHB
Chicago
focus
groups.
This
figure
includes
any
construction
activities
related
to
land
development
(
e.
g.
infrastructure
costs)
.
$
75,000
per
acre
Scaled
estimate
based
on
$
25,000
per
lot
from
NAHB
Chicago
focus
groups.
This
figure
includes
any
construction
activities
related
to
land
development
(
e.
g.
infrastructure
costs)
.
$
75,000
per
acre
Scaled
estimate
based
on
$
25,000
per
lot
from
NAHB
Chicago
focus
groups.
This
figure
includes
any
construction
activities
related
to
land
development
(
e.
g.
infrastructure
costs)
.
$
75,000
per
acre
See
Small
Commercial
Data
Source
for
details.

Engineering
costs,
as
percent
of
land
development
costs
6%
Estimate
from
NAHB
Chicago
focus
groups.
6%
Estimate
from
NAHB
Chicago
focus
groups.
6%
Estimate
from
NAHB
Chicago
focus
groups.
6%
Estimate
from
NAHB
Chicago
focus
groups.

Overhead
costs,
as
percent
of
development
costs
10%
Estimate
from
NAHB
Chicago
focus
groups.
10%
Estimate
from
NAHB
Chicago
focus
groups.
10%
Estimate
from
NAHB
Chicago
focus
groups.
10%
Estimate
from
NAHB
Chicago
focus
groups.

Contingency,
as
percent
of
land
development
costs
prior
to
impact
fees
10%
Estimate
from
NAHB
Chicago
focus
groups.
10%
Estimate
from
NAHB
Chicago
focus
groups.
10%
Estimate
from
NAHB
Chicago
focus
groups.
10%
Estimate
from
NAHB
Chicago
focus
groups.

Impact
fees
$
15,000
per
lot
Estimate
from
NAHB
Chicago
focus
groups.
See
Appendix
B
for
further
discussion.
$
45,000
per
acre
Scaled
estimate
based
on
$
15,000
per
residential
lot
from
NAHB
Chicago
focus
groups.
See
Appendix
A
for
further
discussion.
$
45,000
per
acre
See
Multifamily
Data
Source
for
details.
$
45,000
per
acre
See
Multifamily
Data
Source
for
details.

4A­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4A­
1.
Model
Parameters
and
Data
Sources
Parameters
Single­
family
Residential
Multifamily
Residential
Small
Commercial
(
Shopping
Center)
Industrial
Building
Value
Data
Source
Value
Data
Source
Value
Data
Source
Value
Data
Source
Real
estate
and
marketing
fees,
as
percent
of
sales
price
of
building
7%
Estimate
from
NAHB
Chicago
focus
groups.
7%
Estimate
from
NAHB
Chicago
focus
groups.
7%
Estimate
from
NAHB
Chicago
focus
groups.
7%
Estimate
from
NAHB
Chicago
focus
groups.

Average
size
of
building
2,310
square
feet
From
Census
Report
C25,
the
average
size
of
new
single­
family
homes
sold
in
1999
and
conventionally
financed
was
2,310
square
feet.
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Cost
of
building
construction
$
53.80
per
sq.
ft.
From
NAHB
 
s
website,
construction
costs
for
a
generic
single­
family
house
are
$
124,276.
$
124,276
÷
2,310
=
=
$
53.80.
See
Appendix
B
for
further
discussion.
$
54.05
per
sq.
ft.
R.
S.
Means
Building
Construction
Cost
Data
median
construction
cost
per
square
foot
for
a
 
typical
 
low­
­
rise
(
1­
3
stories)
apartment
building.
$
53.85
per
sq.
ft.
R.
S.
Means
Building
Construction
Cost
Data
median
construction
cost
per
square
foot
for
a
 
typical
 
supermarket
$
$
36.15
R.
S.
Means
Building
Construction
Cost
Data
median
construction
cost
per
square
foot
for
a
 
typical
 
industrial
warehouse.

Total
Paved
Surface
Area
(
Parking,
Driveways,
and
Roads)
N/
A
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Paving
Cost
(
Parking,
Driveways,
and
Roads)
N/
A
$
1.44
per
sq.
ft.
R.
S.
Means
Heavy
Construction
Cost
Data
$
1.44
per
sq.
ft.
R.
S.
Means
Heavy
Construction
Cost
Data
$
1.44
per
sq.
ft.
R.
S.
Means
Heavy
Construction
Cost
Data
Total
Sidewalk
Area
N/
A
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
Varies
Scaled
to
site
size
based
on
impervious
surface
ratios
from
 
Chesapeake
Bay
Watershed
Impervious
Cover
Results
by
Land
Use
Polygon.
 
4A­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4A­
1.
Model
Parameters
and
Data
Sources
Parameters
Single­
family
Residential
Multifamily
Residential
Small
Commercial
(
Shopping
Center)
Industrial
Building
Value
Data
Source
Value
Data
Source
Value
Data
Source
Value
Data
Source
Sidewalk
Construction
Cost
N/
A
$
4.66
per
sq.
ft.
R.
S.
Means
Heavy
Construction
Cost
Data
$
4.66
per
sq.
ft.
R.
S.
Means
Heavy
Construction
Cost
Data
$
4.66
per
sq.
ft.
R.
S.
Means
Heavy
Construction
Cost
Data
Percent
of
total
land
cost
that
a
developer
can
finance
for
land
acquisition
65%
Loan­
to­
value
ratio
as
written
in
the
Real
Estate
Lending
Rules.
See
Appendix
B
for
further
discussion.
65%
See
Single­
family
Residential
Data
Source
for
details.
65%
See
Single­
family
Residential
Data
Source
for
details.
65%
See
Single­
family
Residential
Data
Source
for
details.

Percent
of
total
land
cost
that
a
developer
can
finance
for
land
development
70%
Loan­
to­
value
ratio
as
written
in
the
Real
Estate
Lending
Rules.
See
Appendix
B
for
further
discussion.
70%
See
Single­
family
Residential
Data
Source
for
details.
70%
See
Single­
family
Residential
Data
Source
for
details.
70%
See
Single­
family
Residential
Data
Source
for
details.

Percent
of
total
building
construction
cost
that
a
builder
can
finance
80%
Loan­
to­
value
ratio
as
written
in
the
Real
Estate
Lending
Rules.
See
Appendix
B
for
further
discussion.
80%
See
Single­
family
Residential
Data
Source
for
details.
80%
See
Single­
family
Residential
Data
Source
for
details.
80%
See
Single­
family
Residential
Data
Source
for
details.

Loan
interest
rate
for
builder/
developer
7.5%
EPA
estimate.
7.5%
EPA
estimate.
7.5%
EPA
estimate.
7.5%
EPA
estimate.

Term
of
land
acquisition
loan,
years
3
EPA
assumption.
Assumes
that
the
land
acquisition
loan
is
paid
off
over
the
life
of
the
project,
which
in
this
case
is
3
years.
3
See
Single­
family
Residential
Data
Source
for
details.
3
See
Single­
family
Residential
Data
Source
for
details.
3
See
Single­
family
Residential
Data
Source
for
details.

Term
of
land
development
loan,
years
1
EPA
assumption.
Assumes
that
the
land
development
loan
term
is
equal
to
the
length
of
the
development
phase
of
the
project,
which
in
this
case
is
1
year.
1
See
Single­
family
Residential
Data
Source
for
details.
1
See
Single­
family
Residential
Data
Source
for
details.
1
See
Single­
family
Residential
Data
Source
for
details.

4A­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4A­
1.
Model
Parameters
and
Data
Sources
Parameters
Single­
family
Residential
Multifamily
Residential
Small
Commercial
(
Shopping
Center)
Industrial
Building
Value
Data
Source
Value
Data
Source
Value
Data
Source
Value
Data
Source
Term
of
building
construction
loan,
years
1
EPA
assumption.
Assumes
that
the
construction
loan
term
is
equal
to
the
length
of
the
construction
phase
of
the
project,
which
in
this
case
is
1
year.
1
See
Single­
family
Residential
Data
Source
for
details.
1
See
Single­
family
Residential
Data
Source
for
details.
1
See
Single­
family
Residential
Data
Source
for
details.

Assumed
pre­
tax
profit
on
land
development
10%
NAHB
Chicago
focus
group
estimated
12­
14
percent;
10
percent
is
an
EPA
assumption.
See
Appendix
B
for
further
discussion.
10%
See
Single­
family
Residential
Data
Source
for
details.
10%
See
Single­
family
Residential
Data
Source
for
details.
10%
See
Single­
family
Residential
Data
Source
for
details.

Assumed
pre­
tax
profit
on
construction
10%
NAHB
Chicago
focus
groups
estimated
8
to
12
percent
pre­
tax
at
time
of
sale.
R.
S.
Means
uses
10
percent
as
a
profit
assumption
in
their
Cost
Data
book
series.
10%
See
Single­
family
Residential
Data
Source
for
details.
10%
See
Single­
family
Residential
Data
Source
for
details.
10%
See
Single­
family
Residential
Data
Source
for
details.

4A­
5
APPENDIX
4B
Detailed
Description
of
Model
Parameters
and
Assumptions
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Cost
of
Raw
Land
Land
prices
tend
to
vary
by
region
of
the
country,
and
even
within
particular
regions,
depending
on
the
exact
location
of
the
parcel
(
e.
g.
,
urban
proximity)
.
For
this
generic
single­
family
project
cost
model,
a
value
of
$
40,000
per
acre
is
used
based
on
the
estimate
provided
by
participants
in
the
Chicago
NAHB
focus
group
morning
session.
The
participants
in
the
NAHB
Dallas
focus
group
meetings
confirmed
that
even
within
one
state
lot
prices
can
range
dramatically.
Prices
per
lot
were
reported
to
range
from
near
$
10,000
in
El
Paso,
TX,
to
nearly
$
1
million
in
Austin
(
for
lake­
front
property)
.
(
Note,

these
costs
cited
were
per
lot,
not
per
acre)
.
The
single­
family
development
land
cost
estimate
was
also
used
in
the
multifamily
residential
project
model
due
to
lack
of
other
data.

Land
prices
for
the
commercial
and
industrial
models
were
taken
from
the
Urban
Land
Institute
 
s
(
ULI)
Market
Profiles
2000:
North
America,
which
lists
average
land
costs
for
shopping
centers
and
industrial
parks
for
selected
Metropolitan
Statistical
Areas
(
MSAs)
depending
on
data
availability.
The
median
land
cost
for
each
project
type
was
calculated
from
a
list
of
MSA
average
land
costs
and
used
in
the
models
as
a
national
estimate
proxy.

Due
Diligence
As
described
previously,
due
diligence
refers
to
the
work
done
by
the
developer
prior
to
taking
ownership
of
a
parcel.
During
this
time
the
developer
conducts
a
variety
of
environmental
and
engineering
assessments
to
identify
any
potential
obstacles
to
the
successful
completion
of
the
proposed
development.
At
this
time
the
only
estimates
for
due
diligence
costs
are
based
on
a
$
100,000
estimate
provided
by
the
Chicago
NAHB
focus
group
participants
for
a
40­
acre
project.
This
figure
was
converted
to
$
2,500
per
acre
on
the
assumption
that
these
costs
would
fluctuate
depending
on
the
size
of
the
project.

Impact
Fees
The
NAHB
 
s
Chicago
focus
group
estimated
the
impact
fees
on
new
residential
construction
to
average
$
15,000
per
lot.
This
figure
was
converted
to
$
45,000
per
acre
for
use
in
the
multifamily,

commercial,
and
industrial
project
models.

4B­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
This
is
one
of
many
estimates
that
may
be
found
in
the
literature.
In
their
book
Red
Tape
and
Housing
Costs
,
Michael
Luger
and
Kenneth
Temkin
interviewed
numerous
builders
and
developers
in
New
Jersey
and
North
Carolina,
and
received
several
estimates
for
impact
fees
in
North
Carolina.

Estimates
ranged
from
approximately
$
2,800
to
$
6,547
per
unit
in
Cary,
NC,
and
from
$
1,300
to
$
2,765
in
Durham,
NC.
Even
the
highest
estimate
in
these
ranges
is
significantly
lower
than
the
estimate
from
the
focus
group
meeting.
These
fees
represent
approximately
1
to
2
percent
of
the
final
sale
price
of
a
house
in
the
area.

In
a
cost
breakdown
of
a
single­
family
home
provided
by
NAHB
on
their
website,
34
impact
fees
were
estimated
at
$
1,182
per
unit
(
approximately
1
percent
of
total
construction
cost)
.
A
study
by
the
Sierra
Club
(
Sierra
Club
2000)
estimates
that
impact
fees
range
from
under
$
1,000
per
unit
to
approximately
$
6,140
per
single­
family
unit.
These
figures
are
based
on
local
observations.
Finally,

Ross
and
Thorpe
(
1992)
report
that
a
survey
conducted
in
1990
in
Orange
County,
California
(
one
of
the
most
expensive
housing
markets
in
the
country)
,
found
at
least
three
cities
in
that
county
with
impact
fees
exceeding
$
20,000
per
unit.
This
estimate
is
closest
to
the
assumption
currently
in
the
models.

At
this
time,
EPA
is
unaware
of
any
single
national
estimate
for
the
average
impact
fee
imposed
on
developers
and
builders
and
has
chosen
to
use
the
NAHB
estimate
for
this
analysis.

Building
Construction
Costs
The
approach
used
in
the
model
project
for
estimating
average
building
construction
costs
for
the
single­
family
project
is
to
take
total
construction
costs
for
a
new
single­
family
house,
provided
by
NAHB
on
their
website
(
$
124,276)
(
NAHB
2001b)
,
and
divide
that
figure
by
the
average
square
footage
of
a
new,
conventionally
financed,
house
as
reported
by
Census
(
2,310
square
feet;
Characteristics
of
New
Housing)
.
This
calculation
yields
an
average
construction
cost
of
$
53.80
per
square
foot.
NAHB
focus
group
participants
estimated
that
building
construction
costs
ranged
from
$
50
to
$
75
per
square
foot,
at
least
in
the
Chicago
area.
The
national
estimate
is
within
the
range
provided
by
NAHB
members
at
the
focus
group
meeting.

34
http:
/
/
www.
nahb.
com/
housing_
issues/
balance_
2.
htm
4B­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Building
construction
costs
for
the
remaining
projects
 
multifamily,
,
commercial,
and
industrial
 
were
taken
from
R.
.
S.
Means
Building
Construction
Cost
Data
.
The
costs
used
were
median
costs
for
the
 
typical
 
sized
building
for
each
project
type,
,
based
on
the
projects
detailed
in
the
R.
S.
Means
project
database.
While
the
building
costs
may
fluctuate
some
with
overall
building
size,
the
median
cost
was
used
as
a
proxy
for
national­
level
building
costs
and
was
used
regardless
of
site
or
building
size.

Building
size
for
these
three
project
types
was
assumed
to
fluctuate
with
site
size.
Size
estimates
for
each
site
size
were
determined
using
the
building
to
site
area
ratio
from
the
Center
for
Watershed
Protection.

Multiplying
this
ratio
by
each
site
size
(
1,
3,
7.5,
etc.
acres)
gave
EPA
an
estimate
of
building
footprint.

Since
multifamily
building
construction
costs
were
based
on
low­
rise
apartment
buildings
1
to
3
stories
in
height,
an
average
of
2
stories
per
apartment
building
was
used
to
calculate
total
building
square
footage
from
the
footprint.
Commercial
and
industrial
buildings
were
assumed
to
be
1
story;
therefore
the
building
footprint
equaled
total
building
area.

Impervious
Surface
Estimates
Estimates
for
impervious
surface
area
and
construction
costs
were
calculated
for
the
multifamily,

commercial,
and
industrial
model
projects.
The
impervious
surface
area
for
roads,
driveways,
parking,

and
sidewalks
was
calculated
by
multiplying
the
impervious
surface
area
to
site
size
ratio
(
CWP
2001)
by
the
site
size.
R.
S.
Means
cost
estimates
for
paving
and
sidewalk
construction
were
used
to
estimate
impervious
surface
construction
costs.
The
paving
cost
estimate
(
$
1.44
per
square
foot)
was
multiplied
by
the
combined
surface
area
for
roads,
driveways,
and
parking
while
the
sidewalk
cost
estimate
(
$
4.66
per
square
foot)
could
be
directly
multiplied
to
the
sidewalk
surface
area
estimate.

Financing
Requirements
A
December
28,
1999,
memo
from
ERG
to
EPA
(
 
Real
Estate
Development
Financing
 
)
cites
the
typical
land
acquisition
loan
duration
is
2
years,
whereas
the
models
currently
use
a
duration
of
3
years.
It
is
not
clear
if
the
2
year
loan
term
includes
the
same
activities
as
assumed
for
the
model
projects.
Similarly,
the
duration
for
the
land
development
loan
is
cited
as
approximately
2
years
(
comparable
to
that
for
the
land
acquisition
loan)
.
The
average
duration
of
the
construction
loan
is
not
cited
in
the
memo,
although
it
may
be
assumed
that
the
duration
of
the
loan
would
vary
with
project
size.

4B­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Loan­
to­
value
ratios
under
the
Real
Estate
Lending
Rules
declined
from
approximately
80
percent
for
all
phases
of
project
development
to
the
following
breakdown
after
the
Savings
and
Loan
Crisis:

 
65
percent
for
land
acquisition
 
75
percent
for
land
development
 
80
percent
for
construction
The
memo
also
states
that
the
typical
land
acquisition
loan
rate
is
1­
4
points
above
the
prime
rate.

No
further
detail
for
the
remaining
project
stages
is
given,
but
they
are
assumed
to
be
within
the
same
range.
The
models
currently
use
a
loan
rate
of
7.5
percent.

Profit
Assumptions
Profit
on
both
land
development
and
building
construction
are
assumed
to
be
10
percent,
based
on
conversations
with
NAHB
and
reality­
checked
against
the
assumptions
used
in
the
R.
S.
Means
Cost
Data
series.
Note
that
there
would
not
be
a
separate
profit
for
the
land
development
phase
of
the
project
because
the
developer­
builder
would
retain
ownership
of
the
project
through
building
construction
(
land
development
profit
is
only
realized
when
a
developer
sells
finished
lots
to
individual
builders)
.
The
profit
rate
with
100
percent
CPT
is
based
on
the
assumption
that
any
additional
costs
incurred
by
the
developer­

builder
(
i.
e.
,
additional
storm
water
control
costs)
would
be
passed
through
to
the
consumer,
and
that
none
of
the
additional
costs
would
be
borne
by
the
developer­
builder
as
decreased
profit.
The
profit
rate
with
zero
CPT
depends
on
the
level
of
costs.

Overhead
Assumptions
EPA
assumes
that
developers
apply
an
overhead
charge
to
all
costs
incurred
during
the
land
development
phase,
and
that
a
further
overhead
charge
is
levied
by
the
builder
on
all
costs
incurred
during
the
building
phase,
including
the
cost
of
lot
acquisition.
These
overhead
charges
represent,
in
part,

payment
to
the
owner
for
capital
tied
up
to
secure
development
and
construction
loans
as
well
as
compensation
for
managing
and
overseeing
the
work
of
subcontractors
and
other
professionals
(
engineers,

architects,
designers)
.

4B­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
estimated
overhead
rate
of
10
percent
at
the
development
stage
and
10
percent
at
the
building
phase
was
based
on
input
from
NAHB.
EPA
has
separately
calculated
the
 
opportunity
cost
of
capital
 
based
on
actual
financing
needs,
loan
conditions,
and
loan
terms.
In
the
model
projects,
therefore,
the
actual
percentage
applied
as
an
overhead
factor
has
been
adjusted
downwards.

4B­
5
APPENDIX
4C
Characteristics
of
Model
Establishments
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4C­
1.
Model
Establishment
Characteristics
Based
on
Census
Data
[
1
]

Class
Number
of
Establishments
Average
Starts
Average
Revenue
Average
Employment
Cashflow
1­
4
17,107
2.
3
$
492.
2
2.
5
$
46.3
Single
5­
9
7,589
6.
4
$
1,088.
6
3.
3
$
104.9
Family
10­
24
6,262
14.
6
$
1,987.
0
4.
3
$
177.3
25­
99
3,018
41.
9
$
4,923.
5
8.
6
$
4,229.0
100­
499
833
191.
7
$
24,030.
7
32.
1
$
2,187.6
500+
122
864.
5
$
109,032.
6
160.
0
$
9,192.5
2­
9
486
4.
3
$
644.
8
3.
2
$
29.4
Multifamily
10­
24
398
16.
5
$
1,381.
6
5.
1
$
99.6
25­
99
383
55.
1
$
3,499.
7
8.
0
$
320.1
100­
499
593
191.
7
$
7,410.
0
13.
5
$
566.6
500+
39
959.
0
$
43,844.
4
64.
7
$
938.8
Commercial
50­
99
41,356
13.2
$
23,799
67.
5
$
927.5
Industrial
50­
99
8,042
9.5
$
18,470
67.
7
$
627.3
[
1
]
Dollar
values
in
thousands
4C­
1
­
­
­
­
­
­
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4C­
2
Model
Establishment
Characteristics
Based
on
Dun
And
Bradstreet
Data
Single
Family
(
SIC
1531)
Multifamily
(
SIC
1522)
Commercial
(
SIC
1542)
Industrial
(
SIC
1541)
Line
Item
S
caled
Value
[
1
]
Percent
S
caled
Value
[
1
]
Percent
S
caled
Value
[
1
]
Percent
S
caled
Value
[
1
]
Percent
Cash
$
82,22
9
11.9
%
$
55,75
2
18.4
%
$
61,70
5
21.5
%
$
57,68
2
19.1%

A
cco
unts
Receiv
a
ble
$
61,49
9
8.9
%
$
81,20
4
26.8
%
$
101,59
8
35.4
%
$
108,11
6
35.8%

Notes
Receiv
a
ble
$
4,83
7
0
.7
%
$
3,93
9
1
.3
%
$
2,00
9
0
.7
%
$
2,71
8
0.9%

Inventory
$
210,06
4
30.4
%
$
12,72
6
4.2
%
$
5,74
0
2.0
%
$
4,53
0
1.5%

Other
Current
$
152,71
1
22.1
%
$
67,56
9
22.3
%
$
60,27
0
21.0
%
$
58,58
8
19.4%

Total
Current
Assets
$
511,34
0
7
4
.
0
%
$
221,19
0
7
3
.
0
%
$
231,32
2
8
0
.
6
%
$
231,63
4
7
6
.
7%

Fix
ed
A
ssets
$
109,17
8
15.8
%
$
58,17
6
19.2
%
$
41,04
1
14.3
%
$
52,24
6
17.3%

Other
Non­
current
$
70,48
2
10.2
%
$
23,63
4
7.8
%
$
14,63
7
5.1
%
$
18,12
0
6.0%

Total
Asset
s
$
691,00
0
1
0
0
.0
%
$
303,00
0
1
0
0
.0
%
$
287,00
0
1
0
0
.0
%
$
3
0
2
,0
0
0
100.0%

A
cco
unts
Paya
ble
$
56,66
2
8.2
%
$
73,02
3
24.1
%
$
87,24
8
30.4
%
$
79,12
4
26.2%

Bank
Loans
$
11,74
7
1.7
%
$
2,42
4
0.8
%
$
1,43
5
0.5
%
$
6
0
4
0.2%

Notes
Paya
ble
$
101,57
7
14.7
%
$
18,48
3
6.1
%
$
6,88
8
2.4
%
$
7,24
8
2.4%

Other
Current
$
196,93
5
28.5
%
$
102,41
4
33.8
%
$
52,52
1
18.3
%
$
57,98
4
19.2%

Total
Current
Liabilities
$
366,92
1
5
3
.
1
%
$
196,34
4
6
4
.
8
%
$
148,09
2
5
1
.
6
%
$
144,96
0
4
8
.
0%

Other
Long
Term
$
81,53
8
11.8
%
$
29,99
7
9.9
%
$
15,49
8
5.4
%
$
22,34
8
7.4%

Deferred
Credit
s
$
5,52
8
0
.8
%
$
1,21
2
0
.4
%
$
57
4
0
.2
%
$
30
2
0.1%

Net
W
orth
$
237,01
3
34.3
%
$
75,44
7
24.9
%
$
122,83
6
42.8
%
$
134,39
0
44.5%

Total
Liabilities
&
Net
W
orth
$
691,00
0
1
0
0
.0
%
$
303,00
0
1
0
0
.0
%
$
287,00
0
1
0
0
.0
%
$
3
0
2
,0
0
0
100.0%

Ne
t
Sales
$
1,000,000
100.0%
$
1,000,000
100.0%
$
1,000,000
100.0%
$
1,000,000
100.0%

Gross
Profit
$
228,00
0
22.8
%
$
190,00
0
19.0
%
$
159,00
0
15.9
%
$
184,00
0
18.4%

Net
Profit
A
fter
Tax
$
12,00
0
1.2
%
$
35,00
0
3.5
%
$
30,00
0
3.0
%
$
34,00
0
3.4%

W
orking
Capital
$
144,419
$
24,846
$
83,230
$
86,674
Gross
P
rofit
Ratio
0.22
8
0.19
0
0.15
9
0.184
Ret
urn
on
Net
W
orth
Ratio
0.05
1
0.46
4
0.24
4
0.253
Current
Ratio
1.39
4
1.12
7
1.56
2
1.598
Debt
t
o
E
quit
y
Ratio
1.91
5
3.01
6
1.33
6
1.247
[
1
]
Values
scaled
according
to
$
$
1,
000,000
net
sales
for
comparative
purposes
4C­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
4C­
3
Financial
Ratio
Data
by
Quartile
Uppe
r
Low
e
r
S
e
ctor
Ra
ti
o
Q
u
a
r
t
i
l
e
Me
dia
n
Q
u
a
r
t
i
l
e
Current
2
.
9
0
0
1
.
4
0
0
1
.
1
0
0
S
i
n
g
l
e
Family
De
bt
t
o
E
quit
y
0
.
7
2
4
1
.
7
9
6
4
.
9
2
8
Ret
urn
on
Ne
t
W
o
rth
0
.
3
3
5
0
.
1
6
8
0
.
0
6
6
Current
2
.
5
0
0
1
.
5
0
0
1
.
1
0
0
Mul
tifamily
De
bt
t
o
E
quit
y
0
.
5
9
5
1
.
2
8
0
3
.
1
7
9
Ret
urn
on
Ne
t
W
o
rth
0
.
5
8
9
0
.
2
2
7
0
.
0
6
1
Current
2
.
2
0
0
1
.
5
0
0
1
.
2
0
0
Commer
ci
a
l
De
bt
t
o
E
quit
y
0
.
6
6
0
1
.
4
5
6
2
.
8
2
3
Ret
urn
on
Ne
t
W
o
rth
0
.
3
6
9
0
.
1
6
4
0
.
0
5
5
Current
2
.
5
0
0
1
.
6
0
0
1
.
2
0
0
Industrial
De
bt
t
o
E
quit
y
0
.
5
2
7
1
.
3
0
0
2
.
7
2
3
Ret
urn
on
Ne
t
W
o
rth
0
.
3
8
6
0
.
1
5
1
0
.
0
5
5
4C­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
FIVE
ECONOMIC
IMPACT
ANALYSIS
RESULTS
5.1
OVERVIEW
OF
ECONOMIC
IMPACT
ANALYSIS
METHODOLOGY
This
chapter
presents
the
projected
economic
impacts
of
the
regulatory
options
discussed
in
Chapter
Three
on
the
construction
and
development
(
C&
D)
industry.
In
this
chapter,
EPA
evaluates
the
impacts
of
these
costs
using
the
methodology,
models,
data,
and
approaches
described
in
Chapter
Four.

The
economic
impact
methodology
uses
several
methods
to
assess
economic
impacts
on
the
industry.
These
include
models
that
analyze
impacts
at
the
level
of
the
individual
construction
project,

individual
firm,
national
construction
market,
and
the
economy
as
a
whole.
The
analysis
considers
impacts
on
C&
D
firms
that
would
be
complying
with
the
regulations.
It
also
considers
the
impacts
on
those
who
purchase
the
output
of
the
C&
D
industry,
including
prospective
new
home
buyers;
owners
of
new
multifamily,
commercial,
and
industrial
properties;
and
public
entities
responsible
for
building
roads,
schools,
and
other
public
facilities.

The
chapter
is
organized
as
follows:

 
Section
5.2
presents
EPA
 
s
analysis
of
the
economic
impacts
of
the
proposed
rule
on
model
C&
D
projects.
These
results
are
based
on
the
financial
analyses
developed
for
representative
projects
in
Chapter
Four.

 
Section
5.3
presents
EPA
 
s
estimates
of
the
national
costs
of
the
proposed
rule.
EPA
determined
those
costs
by
multiplying
the
per­
acre
compliance
costs
by
estimates
of
the
number
of
acres
subject
to
the
proposed
effluent
guidelines
annually.

 
Section
5.4
presents
the
results
of
EPA
 
s
analysis
of
the
impacts
of
the
proposed
rule
on
model
C&
D
establishments.
This
section
examines
the
impact
of
the
incremental
compliance
requirements
on
the
financial
condition
of
representative
establishments,
using
data
on
their
present
financial
condition
as
a
starting
point.

 
Section
5.5
presents
EPA
 
s
analysis
of
closures
and
employment
losses.
These
impacts
are
based
on
the
model
establishment
described
in
Section
5.4.

5­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
 
Section
5.6
presents
EPA
 
s
analysis
of
the
proposed
rule
 
s
impacts
on
barriers
to
entry
 
that
is,
how
the
incremental
costs
of
the
proposed
rule
could
affect
the
ability
of
new
businesses
to
enter
the
market.

 
Section
5.7
presents
EPA
 
s
market
model
analysis.
This
section
considers
the
impact
of
the
incremental
compliance
requirements
on
national
construction
markets
and
the
economy
as
a
whole.

 
Section
5.8
presents
EPA
 
s
analysis
of
potential
impacts
on
government
units.
This
section
considers
the
various
costs
to
government
associated
with
the
proposed
rule.

 
Section
5.9
presents
EPA
 
s
analysis
of
additional
impacts
of
the
proposed
rule.
This
section
discusses
regional
impacts,
social
costs,
and
unfunded
mandates.

5.
2
ANALYSIS
OF
IMPACTS
ON
MODEL
PROJECTS
Chapter
Four
defines
a
series
of
model
projects.
In
this
section,
EPA
uses
those
models
to
analyze
the
impact
of
the
proposed
rule
on
two
alternative
targets:
the
developer­
builder
(
assuming
that
they
absorb
the
incremental
costs)
and
the
consumer
(
assuming
that
the
same
costs
are
passed
on
to
the
buyer)
.
EPA
has
developed
model
projects
for
each
of
the
following:

 
A
residential
development
of
single­
family
homes
 
A
residential
development
of
multifamily
housing
units
 
A
commercial
development
(
enclosed
shopping
center)

 
An
industrial
development
(
industrial
park)

For
each
type
of
model
project,
EPA
has
analyzed
costs
and
impacts
for
a
range
of
project
sizes:

1,
3,
7.5,
25,
70,
and
200
acres.
The
model
projects
incorporate
all
of
the
baseline
costs
associated
with
developing
a
site
and
completing
construction
of
all
housing
units
or
buildings
on
the
site.
Accordingly,
it
is
assumed
that
the
baseline
costs
include
the
costs
of
complying
with
existing
Phase
I
and
Phase
II
NPDES
storm
water
regulations
as
they
would
apply
to
the
site.
The
model
then
allows
EPA
to
assess
the
incremental
impact
of
additional
requirements
imposed
under
the
proposed
rule.
Chapter
Four
5­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
provides
a
detailed
description
of
the
model
project
characteristics,
assumptions,
and
data
sources,

including
an
itemized
listing
of
project
cost
elements.

5.2.1
Cost
Pass
Through
Considerations
The
model
projects
are
calibrated
to
allow
analysis
under
varying
assumptions
about
the
degree
of
cost
pass
through
(
CPT)
from
the
builder­
developer
to
the
buyer.
1
Costs
for
the
models
have
been
estimated
under
two
extreme
assumptions,
100
percent
CPT
and
zero
CPT.
Under
100
percent
CPT,
all
incremental
regulatory
costs
resulting
from
the
proposed
rule
are
passed
through
to
end
consumers.

Under
this
approach,
the
costs
are
also
assumed
to
be
marked
up
to
the
same
degree
as
any
other
project
costs.
2
Consumers
feel
the
impact
of
the
regulations
in
the
form
of
a
higher
price
for
each
new
building
or
housing
unit.
With
zero
CPT,
the
incremental
regulatory
costs
are
assumed
to
accrue
entirely
to
the
builder­
developer,
and
appear
as
a
reduction
in
profits.
EPA
determines
this
reduction
by
fixing
the
final
sales
price
of
the
housing
units
and
calculating
the
builder
 
s
profit
once
the
regulatory
costs
are
absorbed.

Existing
literature
and
industry
information
suggests
that,
in
the
important
single­
family
home
market,
at
least,
pass
through
of
regulatory
costs
in
the
new
housing
market
is
close
to
100
percent
(
e.
g.
,

Luger
and
Temkin,
2000)
,
but
the
actual
incidence
of
regulatory
costs
would
depend
closely
on
local
market
conditions.
To
illustrate
the
range
of
possible
impacts,
EPA
has
calculated
its
models
under
the
extreme
conditions
of
100
percent
and
zero
percent
CPT.
Accordingly,
for
each
sector
modeled
there
are
two
sets
of
results
reported
below.

5.2.2
Model
Project
Baseline
Performance
Under
the
baseline
assumptions
and
conditions,
the
sales
price
for
each
housing
unit
(
or
model
commercial
or
industrial
building)
is
calculated,
and
the
baseline
builder­
developer
profit
level
is
1
Cost
pass­
back
to
the
landowner
is
possible,
but
it
occurs
infrequently.
See
Section
4.1.2.
Since
EPA
lacks
data
on
the
actual
incidence
and
extent
of
cost
pass­
back,
it
is
not
analyzed
in
detail.

2
The
cost
markup
assumptions
are
built
into
the
model
and
are
explained
in
Chapter
Four.

5­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
determined
based
on
the
sales
price.
Builder­
developer
pre­
tax
profit
is
assumed
to
be
approximately
10
percent
of
the
building
sales
price.
Table
5­
1
shows
the
baseline
sales
price
and
profit
for
each
model
project
type
and
each
project
size.
Data
and
assumptions
underlying
these
estimates
are
derived
in
Chapter
Four.
The
model
results
presented
later
in
this
section
show
changes
from
these
baseline
values
under
each
regulatory
option.

Table
5­
1.
Baseline
Sales
Price
and
Profit
Conditions
for
the
Model
Projects
Project
Type
and
Size
(
acres)
Calculated
Building
Sales
Price
Builder­
Developer
Pre­
tax
Profit
Single­
Family
Residential
1
acre
$
279,903
$
27,990
3
acres
$
283,093
$
24,251
7.5
acres
$
283,093
$
28,309
25
acres
$
282,951
$
28,295
70
acres
$
283,042
$
28,304
200
acres
$
283,058
$
28,306
Multifamily
Residential
1
acre
$
1,375,074
$
137,507
3
acres
$
4,125,374
$
412,537
7.5
acres
$
10,313,438
$
1,031,344
25
acres
$
34,378,235
$
3,437,823
70
acres
$
96,259,030
$
9,625,903
200
acres
$
275,025,887
$
27,502,589
Commercial
1
acre
$
1,498,800
$
149,880
3
acres
$
4,496,399
$
449,640
7.5
acres
$
11,240,999
$
1,124,100
25
acres
$
37,469,920
$
3,746,992
70
acres
$
104,915,760
$
10,491,576
200
acres
$
299,759,358
$
29,975,936
Industrial
1
acre
$
950,949
$
95,095
3
acres
$
2,852,899
$
285,290
7.5
acres
$
7,132,197
$
713,220
25
acres
$
23,773,989
$
2,377,399
70
acres
$
66,567,119
$
6,656,712
200
acres
$
190,191,761
$
19,019,176
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5.2.3
Results
of
Model
Project
Analyses
Table
5­
2a
contains
the
results
under
the
100
percent
CPT
assumption,
while
Table
5­
2b
contains
identical
results
under
the
assumption
of
zero
CPT.
In
Table
5­
2a
(
100
percent
CPT)
,
the
impacts
of
the
regulatory
options
are
shown
as
the
percentage
increase
in
the
sales
price
of
each
model
project
unit.
In
Table
5­
2b
(
zero
CPT)
,
the
impacts
of
the
regulatory
options
are
shown
as
the
percentage
decrease
in
builder
profits.

100
Percent
Cost
Pass­
Through
Under
the
100
percent
CPT
assumption,
the
impacts
range
from
a
minimum
of
0.00
percent
(
i.
e.
,

there
is
no
incremental
impact
on
sales
price)
for
all
project
types
to
a
range
of
maximum
impact
values
(
where
the
percent
listed
indicates
an
increase
in
sales
price
of
that
amount)
:
0.09
percent
for
single­
family
residential,
0.05
percent
for
multifamily
residential,
0.05
percent
for
commercial,
and
0.07
percent
for
industrial.
All
of
the
maximum
impacts
occur
under
Option
2.

Zero
Cost
Pass­
Through
Under
the
zero
CPT
assumption,
the
impacts
range
from
a
minimum
of
0.00
percent
for
all
project
types
under
various
option
combinations
(
indicating
no
impact
to
builder
profit)
to
a
range
of
maximum
impact
values,
all
under
one
percent.
Maximum
impacts
all
occur
with
Option
2
as
shown
below:

 
Single­
family
residential:
­
0.80
percent
 
Multifamily
residential:
­
0.45
percent
 
Commercial:
­
0.41
percent
 
Industrial:
­
0.64
percent
5­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
2a.
Impact
of
Regulatory
Options
on
Model
Project
Financials
 
100
Percent
Cost
Pass
Through,
All
Project
Sizes
Option
Percent
Change
in
Project
Price
to
Buyer
Single­
Family
Multifamily
Commercial
Industrial
Min
Max
Min
Max
Min
Max
Min
Max
1
0.00%
0.04%
0.00%
0.02%
0.00%
0.02%
0.00%
0.03%

2
0.00%
0.09%
0.00%
0.05%
0.00%
0.05%
0.00%
0.07%

3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5­
2b.
Impact
of
Regulatory
Options
on
Model
Project
Financials
 
Zero
Percent
Cost
Pass
Through,
All
Project
Sizes
Option
Percent
Change
in
Builder­
Developer
Profit
Single­
Family
Multifamily
Commercial
Industrial
Min
Max
Min
Max
Min
Max
Min
Max
1
0.00%
­
0.37%
0.00%
­
0.19%
0.00%
­
0.17%
0.00%
­
0.27%

2
0.00%
­
0.80%
0.00%
­
0.45%
0.00%
­
0.41%
0.00%
­
0.64%

3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.2.4
Nonbuilding
Project
Analysis
Results
This
section
presents
the
results
of
the
model
nonbuilding
project
analysis
described
in
Section
4.2.7.
As
indicated
in
that
section,
EPA
has
not
developed
actual
engineering
costs
for
projects
such
as
roads
and
highways.
As
a
result,
EPA
has
simulated
the
impact
of
the
proposed
rule
on
such
projects
using
worst­
case
(
i.
e.
,
highest)
estimates
of
the
per­
acre
engineering
costs
estimated
for
building
projects.

Due
to
the
lack
of
engineering
costs
for
this
project
type,
EPA
used
a
 
worst­
case
 
assumption
of
$
378
per
acre
in
compliance
costs.
This
figure
is
based
on
the
highest
per­
acre
compliance
cost
5­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
estimated
for
a
7.5­
acre
building
project.
EPA
elected
to
use
the
compliance
costs
for
a
7.5­
acre
project
because
the
model
one­
mile
new
highway
construction
project
encompasses
10.67
acres.
EPA
estimates
that
the
baseline
costs
of
construction
for
one
mile
of
typical
road
or
highway
is
$
5.4
million
(
see
Section
4.2.7)
.
Using
$
378
per
acre,
the
worst­
case
estimate
of
compliance
costs
associated
with
one
mile
of
new
road
or
highway
construction
(
10.67
acres)
is
$
4,033.
This
equates
to
less
than
0.1
percent
of
baseline
costs,
indicating
even
under
worst­
case
assumptions
regarding
compliance
costs,
the
proposed
rule
is
unlikely
to
have
a
significant
impact
on
representative
nonbuilding
construction
projects.

5.3
ANALYSIS
OF
NATIONAL
COMPLIANCE
COSTS
EPA
has
calculated
the
national
compliance
costs
associated
with
the
proposed
rule
by
multiplying
the
compliance
costs
per
acre
(
by
project
type
and
size)
by
estimates
of
the
number
of
acres
developed
per
year.
EPA
used
data
from
the
USDA
National
Resources
Inventory
(
NRI)
to
estimate
the
number
of
acres
developed
per
year.
According
to
this
source,
approximately
2.2
million
acres
of
undeveloped
land
are
converted
to
a
developed
state
every
year.
EPA
has
adjusted
this
total
to
account
for
waivers
and
differences
in
regulatory
coverage
between
Option
1
and
Option
2.
3
As
described
in
Chapter
Four,
both
the
14­
Community
Study
(
conducted
in
support
of
the
Phase
II
NPDES
storm
water
rule
development)
and
building
permits
data
from
Census
were
used
to
allocate
the
developed
acreage
by
project
type
and
size.

Table
5­
3
contains
EPA
 
s
estimates
of
the
national
costs
of
the
regulatory
options.
The
national
costs
of
the
proposed
rule
range
from
$
0.00
for
each
project
type
(
Option
3)
to
a
maximum
of
$
121.5
million
for
single­
family
residential
construction,
$
59.4
million
for
multifamily
residential
construction,

$
277.3
million
for
commercial
construction,
and
$
11.0
million
for
industrial
construction
(
all
Option
2)
.

The
combined
national
compliance
costs
across
all
sectors
are
shown
in
the
final
rows
of
Table
5­
3a.
The
national
compliance
costs
under
Option
1
are
$
118.1
million
while
the
national
compliance
costs
under
Option
2
are
$
469.2
million.

3
Option
1
applies
to
sites
of
one
acre
or
more
in
size
while
Option
2
applies
to
sites
of
five
acres
or
more
in
size.

5­
7
­
­

­
­

­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
3a.
Estimated
National
Cost
of
Storm
Water
Control
Options
(
All
Dollar
Amounts
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Compliance
Costs
per
Acre(
$
)
Estimated
National
Costs
(
$
Millions)

Single­
Family
Residential
Option
1
$
57.0
$
24.1
Option
2
$
305.0
$
121.5
Option
3
$
0.0
$
0.0
Multifamily
Residential
Option
1
$
59.0
$
11.9
Option
2
$
319.0
$
59.4
Option
3
$
0.0
$
0.0
Commercial
Option
1
$
74.0
$
78.4
Option
2
$
312.0
$
277.3
Option
3
$
0.0
$
0.0
Industrial
Option
1
$
81.0
$
3.7
Option
2
$
303.0
$
11.0
Option
3
$
0.0
$
0.0
Total
Option
1
$
118.1
Option
2
$
469.2
Option
3
$
0.0
NOTE:
Compliance
costs
per
acre
are
weighted
national
averages
for
each
option
over
all
site
size
classes.
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
3b.
Calculation
of
Total
Cost
per
Unit
(
All
Dollar
Amounts
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Single
Multi­
Family
Commercial
Industrial
Total
Option
1
Total
Costs
$
24,099,340
$
11,892,936
$
78,415,033
$
3,733,824
$
118,141,133
Total
Acres
533,878
252,182
1,332,476
57,523
2,176,058
Cost
per
Acre
$
45.14
$
47.16
$
58.85
$
64.91
Units
per
Acre
2.67
13,591
8,320
8,555
Cost
per
Unit
$
16.91/
house
$
0.003/
sq
ft
$
0.007/
sq
ft
$
0.008/
sq
ft
Option
2
Total
Costs
$
121,470,785
$
59,391,699
$
277,280,636
$
11,016,368
$
469,159,488
Total
Acres
501,100
229,958
1,061,108
42,733
1,834,898
Cost
per
Acre
$
242.41
$
258.27
$
261.31
$
257.80
Units
per
Acre
2.67
13,591
8,320
8,555
Cost
per
Unit
$
90.79/
house
$
0.019/
sq
ft
$
0.031/
sq
ft
$
0.030/
sq
ft
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5­
3b
shows
the
calculation
of
cost
per
unit
for
Options
1
and
2.
Units
are
 
dollars
per
house
 
for
single­
­
family
residential
construction
and
 
dollars
per
square
foot
 
for
all
other
categories.
.

Total
costs
are
the
estimated
national
costs
as
shown
in
Table
5­
3a.
Option
2
applies
only
to
sites
disturbing
5
acres
or
more,
so
this
option
encompasses
less
acreage
than
Option
1.
In
addition,
several
states
have
enacted
regulations
equivalent
to
the
proposed
standards
and
so
would
not
incur
incremental
costs
from
the
proposed
rule.
These
equivalent
states
are
included
in
the
storm
water
control
costs
per
acre
in
Table
5­
3a
but
removed
in
the
estimated
national
costs
in
the
same
table.
Table
5­
3b
recalculates
the
cost
per
acre
with
the
costs
attributable
to
states
with
equivalent
programs
removed.
With
this
adjustment,
the
cost
per
unit
is
calculated
by
dividing
by
the
number
of
houses
per
acre,
or
number
of
rentable
square
feet
per
acre,
which
is
derived
from
Census
and
R.
S.
Means
data.

The
cost
to
build
a
new
single­
family
home
increases
by
$
17
under
Option
1
and
$
91
under
Option
2.
Costs
per
square
foot
increase
by
less
than
1
cent
for
Option
1
and
2
to
3
cents
for
Option
2.

The
impacts
of
these
cost
increases
on
the
markets
for
new
construction
are
explored
in
Section
5.7.

5­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5.4
ANALYSIS
OF
IMPACTS
ON
MODEL
ESTABLISHMENTS
As
described
in
Chapter
Four,
EPA
developed
a
set
of
representative
model
projects
as
one
basis
for
analyzing
the
impacts
of
the
proposed
rule
on
the
construction
industry.
EPA
has
examined
the
impacts
of
the
compliance
costs
associated
with
these
model
projects
on
a
series
of
model
establishments
that
characterize
the
financial
conditions
of
 
typical
 
businesses
in
each
of
the
four
major
industry
sectors
(
single­
family
residential,
multifamily
residential,
commercial,
and
industrial;
see
Section
4.3)
.

The
model
firm
analysis
simulates
the
impact
of
the
incremental
compliance
costs
on
the
balance
sheet
and
cash
flow
of
the
model
establishments,
and
expresses
the
impacts
in
terms
of
changes
in
meaningful
business
financial
ratios.
The
ratios
used
in
the
analysis
include:

 
Gross
profit
ratio
 
Return
on
net
worth
 
Current
ratio
 
Debt
to
equity
ratio
These
ratios
are
reviewed
in
Chapter
Four,
which
also
presents
a
discussion
of
their
significance
as
indicators
of
financial
performance.

5.
4
.
1
Building
Construction
This
section
presents
the
results
of
simulations
of
firm
performance
under
the
regulatory
options
being
considered
by
EPA.
As
indicated
in
Chapter
Four,
the
simulations
have
been
run
under
two
CPT
scenarios:
(
1)
zero
CPT
from
the
developer­
builder
to
the
consumer
and
(
2)
an
estimated
actual
CPT,

where
a
 
realistic
 
share
of
the
compliance
costs
are
passed
though
to
consumers
in
the
form
of
higher
prices.
EPA
has
estimated
a
separate
CPT
factor
for
each
market
sector
individually.
The
zero
CPT
results
presented
in
this
section
represents
the
 
worst
case
 
scenario;
;
impacts
under
the
more
realistic
CPT
assumption
are
much
smaller
than
those
shown
below.

5­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
4
shows
sample
results
for
a
firm
in
the
single­
family
residential
construction
industry
(
SIC
1531)
completing
between
10
and
24
housing
starts
per
year,
based
on
costs
for
7.5­
acre
projects.

Impacts
are
most
severe
on
the
return
on
net
worth
ratio,
a
recurring
outcome
throughout
EPA
 
s
model
firm
analysis.
Return
on
net
worth
is
the
most
sensitive
ratio
because
it
is
based
on
net
profit
after
taxes,

which
makes
up
1.2
percent
of
revenues
for
the
 
typical
 
establishment
in
SIC
1531
according
to
D&
&
B
data.
Impacts
are
much
less
severe
under
the
other
financial
ratio
measures.

Table
5­
5a
provides
a
summary
of
the
results
for
each
sector
by
regulatory
option,
over
all
project
sizes
and
under
the
zero
CPT
scenario.
The
results
are
broadly
similar
to
the
detailed
example
presented
in
Table
5­
4
for
the
single­
family
residential
sector.
Table
5­
5b
provides
the
same
summary
of
financial
ratios
under
the
estimated
actual
cost
pass
through
scenario.
In
both
scenarios
the
most
severe
impacts
are
observed
when
measured
by
impact
on
return
on
net
worth,
followed
by
the
gross
profit,
debt
to
equity,
and
current
ratios.
The
largest
impact
over
both
scenarios
is
a
5.85
percent
decline
in
the
return
on
net
worth
ratio
for
the
single­
family
residential
sector
under
Option
2
with
zero
CPT.
With
the
exception
of
return
on
net
worth,
the
remainder
of
the
results
under
zero
CPT
are
at
or
below
1.0
percent
for
all
project
types.
The
results
under
the
estimated
actual
CPT
scenario
indicate
impacts
of
less
than
1.0
percent
for
all
financial
ratios
and
all
four
project
types,
with
most
of
the
impacts
being
less
than
0.10
percent
(
with
the
exception
of
return
on
net
worth)
.

5­
11
­
­

­
­

­
­

­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
4
Impact
of
Regulatory
Options
on
Financial
Performance
for
Model
Firm
Single­
family
Residential
Construction,
10­
24
Housing
Units
Starts
Class
Impact
Regulatory
Option
Option
1
Option
2
Option
3
Cost
Impact
Incremental
Costs
per
Acre
Per
Year
$
64
$
371
$
0
Incremental
Costs
per
Establishment
Per
Year
$
354
$
2,034
$
0
Impact
on
Financial
Performance
Gross
Profit
Ratio
Percent
change
from
baseline
0.2278%

­
0.0780%
0.2270%

­
0.4490%
0.2280%

Return
on
Net
Worth
Percent
change
from
baseline
0.0502%

­
0.8810%
0.0481%

­
5.0680%
0.0506%

Current
Ratio
Percent
change
from
baseline
1.3935%

­
0.0070%
1.3930%

­
0.0400%
1.3936%

Debt
to
Equity
Ratio
Percent
change
from
baseline
1.9161%

0.0310%
1.9189%

0.1800%
1.9155%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
5a.
Impact
of
Regulatory
Options
on
Model
Firm
Financial
Performance
Zero
Cost
Pass
Through
Construction
Industry
and
Regulatory
Option
Percent
Change
in
Financial
Ratios,
From
Baseline
a
Gross
Profit
Return
on
Net
Worth
Current
Ratio
Debt
to
Equity
Min.
Max.
Min.
Max.
Min.
Max.
Min.
Max.

Single­
family
residential
Option
1
0.000%
­
0.230%
0.000%
­
2.540%
0.000%
­
0.020%
0.000%
0.900%

Option
2
0.000%
­
0.520%
0.000%
­
5.850%
0.000%
­
0.050%
0.000%
0.210%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Multifamily
residential
Option
1
0.000%
­
0.310%
0.000%
­
0.990%
0.000%
­
0.050%
0.000%
0.200%

Option
2
0.000%
­
0.950%
0.000%
­
3.070%
0.000%
­
0.160%
0.000%
0.640%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Commercial
Option
1
0.000%
­
0.170%
0.000%
­
0.530%
0.000%
­
0.020%
0.000%
0.130%

Option
2
0.000%
­
0.400%
0.000%
­
1.250%
0.000%
­
0.050%
0.000%
0.310%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Industrial
Option
1
0.000%
­
0.140%
0.000%
­
0.430%
0.000%
­
0.020%
0.000%
0.120%

Option
2
0.000%
­
0.320%
0.000%
­
1.020%
0.000%
­
0.050%
0.000%
0.280%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

a
Ranges
(
minimum
and
maximum)
reflect
results
across
model
firms
of
varying
sizes.
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
5b.
Impact
of
Regulatory
Options
on
Model
Firm
Financial
Performance
Estimated
Actual
Cost
Pass
Through
Construction
Industry
and
Regulatory
Option
Percent
Change
in
Financial
Ratios,
From
Baseline
a
Gross
Profit
Return
on
Net
Worth
Current
Ratio
Debt
to
Equity
Min.
Max.
Min.
Max.
Min.
Max.
Min.
Max.

Single­
family
residential
Option
1
0.000%
­
0.034%
0.000%
­
0.379%
0.000%
­
0.003%
0.000%
0.013%

Option
2
0.000%
­
0.077%
0.000%
­
0.872%
0.000%
­
0.007%
0.000%
0.031%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Multifamily
residential
Option
1
0.000%
­
0.026%
0.000%
­
0.083%
0.000%
­
0.004%
0.000%
0.017%

Option
2
0.000%
­
0.080%
0.000%
­
0.259%
0.000%
­
0.014%
0.000%
0.054%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Commercial
Option
1
0.000%
­
0.017%
0.000%
­
0.054%
0.000%
­
0.002%
0.000%
0.013%

Option
2
0.000%
­
0.040%
0.000%
­
0.126%
0.000%
­
0.006%
0.000%
0.031%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

Industrial
Option
1
0.000%
­
0.021%
0.000%
­
0.066%
0.000%
­
0.003%
0.000%
0.018%

Option
2
0.000%
­
0.048%
0.000%
­
0.155%
0.000%
­
0.008%
0.000%
0.042%

Option
3
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%
0.000%

a
EPA
applied
the
following
estimated
cost
pass
through
factors:
Single­
family
residential,
85.10%
;
Multifamily
residential,
91.55%
;
Commercial,
89.87%
;
Industrial,
84.75%
.
b
Ranges
(
minimum
and
maximum)
reflect
results
across
model
firms
of
varying
sizes.
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.4.2
Nonbuilding
Construction
EPA
has
analyzed
the
potential
impacts
of
the
proposed
rule
on
nonbuilding
construction
establishments
based
on
Census
data
and
the
cost
data
presented
in
Section
5.2.4.
As
previously
discussed,
this
analysis
focuses
on
highway
and
street
construction
contractors
(
NAICS
23411)
due
to
the
lack
of
financial
data
for
other
segments
of
the
heavy
construction
industry
group
(
NAICS
234)
.

5­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
model
establishment
analysis
for
heavy
construction,
although
somewhat
simplified,
follows
the
basic
methodology
outlined
in
Section
4.3
for
establishments
in
the
commercial
and
industrial
construction
industries.
EPA
has
determined
that
the
median
highway
construction
establishment
(
NAICS
23411)
,
based
on
revenues,
is
in
the
50
to
99
employee
size
classification
category
as
defined
by
Census
(
U.
S.
Census
2000)
.
Within
this
employment
size
class,
EPA
calculated
average
establishment
revenues,
employment,
and
costs
as
discussed
in
Section
4.3.1.2.

For
the
model
establishment,
EPA
examined
the
economic
impacts
of
the
worst­
case
compliance
cost
impacts
on
the
same
four
financial
ratios
analyzed
above
for
the
residential,
commercial,
and
industrial
construction
industries.
Due
to
the
lack
of
actual
engineering
cost
estimates
for
highway
construction,
the
compliance
costs
used
in
this
analysis
do
not
correspond
to
a
particular
regulatory
option
or
combination
of
options.
Compliance
costs
for
7.5­
acre
projects
were
chosen
for
this
analysis
because
they
are
closest
in
size
to
the
model
highway
construction
project
assumed
to
be
undertaken
by
the
model
establishment,
which
encompasses
10.67
acres.

Table
5­
6
shows
the
results
of
this
analysis
for
the
model
highway
construction
firm
(
50­
99
employment
size
class)
.
Overall,
the
impacts
are
not
large,
with
only
one
estimate
above
one­
quarter
of
one
percent.
As
with
the
model
establishments
in
the
building
construction
industries,
the
impacts
are
largest
for
the
return
on
net
worth
ratio.

5­
15
­
­
­
­
­
­
­
­

­
­
­
­
­
­
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
6.
Impact
of
Proposed
Rule
on
Model
Firm
Financials
­
Highway
Construction
Cost
Pass
Through
Assumption
Gross
Profit
Return
on
Net
Worth
Current
Debt
to
Equity
Ratio
Percent
Change
from
Baseline
Ratio
Percent
Change
from
Baseline
Ratio
Percent
Change
from
Baseline
Ratio
Percent
Change
from
Baseline
Zero
Cost
Pass
Through
Baseline
0.223000
0.198344
1.629629
1.061856
Worst­
Case
0.222256
­
0.33%
0.196307
­
1.03%
1.628681
­
0.06%
1.064601
0.26%

90
Percent
Cost
Pass
Through
Baseline
0.223000
0.198344
1.629629
1.061856
Worst­
Case
0.222926
­
0.03%
0.198141
­
0.10%
1.629534
­
0.01%
1.062131
0.03%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Under
a
zero
cost
pass
through
(
CPT)
assumption,
the
largest
impact
is
on
return
on
net
worth,

which
declines
by
just
over
1.0
percent.
Impacts
under
an
estimated
CPT
value
of
90
percent
are
all
at
or
below
0.10
percent.

5.5
ANALYSIS
OF
IMPACTS
ON
CLOSURES
AND
EMPLOYMENT
LOSSES
As
discussed
in
Chapter
Four,
EPA
used
two
approaches
to
estimate
potential
facility
closures
and
employment
losses
resulting
from
the
proposed
rule.
The
primary
approach
was
to
analyze
changes
in
key
financial
ratios
that
occur
as
firms
 
costs
increase
in
response
to
the
proposed
rule.
.
To
estimate
closures,
EPA
examined
a
weighted
average
of
changes
in
the
current
ratio,
debt
to
equity
ratio,
and
return
on
net
worth
ratios.
EPA
then
constructed
a
cumulative
distribution
function
for
each
ratio
to
estimate
the
percent
of
establishments
that
would
likely
fall
below
 
critical
 
values
after
incurring
compliance
costs.
That
percent
falling
below
this
critical
value,
multiplied
by
the
number
of
facilities
represented
by
the
model
under
evaluation,
resulted
in
a
projected
number
of
closures.
Employment
losses
were
calculated
by
multiplying
the
number
of
establishments
projected
to
close
by
employment
estimates
for
the
model
facility
representing
those
closures.

5­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
 
s
alternative
approach,
which
analyzed
estimated
model
facility
cash
flow,
was
used
as
a
check
on
the
financial
ratio
analysis
described
above.
Results
from
this
analysis
are
contained
in
Appendix
5­
A.

5.5.1
Facility
Closures
Table
5­
7a
shows
closure
analysis
results
using
the
financial
ratio
method
under
a
zero
CPT
assumption
 
the
worst
case
scenario.
.
Results
under
a
calculated
CPT
assumption
are
presented
in
Table
5­
7b.
The
largest
number
of
establishment
closures
is
projected
to
occur
in
the
commercial
sector
(
43
projected
closures)
,
followed
by
the
single­
family
residential
sector
(
13
closures)
.
Facility
closures
as
a
percent
of
total
facilities
are
less
than
one
percent
under
all
proposed
options
and
for
all
industry
sectors.
As
seen
in
Table
5­
7b,
closure
impacts
are
even
smaller
when
CPT
is
accounted
for.

Table
5­
7a.
Estimated
Facility
Closures
Zero
Cost
Pass
Through
Option
Single­
Family
Multifamily
Commercial
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
4
0.005%
1
0.022%
11
0.028%

2
13
0.015%
3
0.065%
43
0.108%

3
0
0.000%
0
0.000%
0
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
2
0.026%
0
0.000%
18
0.012%

2
7
0.090%
26
0.230%
92
0.063%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
7b.
Estimated
Facility
Closures
Estimated
Cost
Pass
Through
Option
Single­
Family
Multifamily
Commercial
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
1
0.001%
0
0.000%
1
0.003%

2
2
0.002%
0
0.000%
4
0.010%

3
0
0.000%
0
0.000%
0
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
0
0.000%
0
0.000%
2
0.001%

2
1
0.013%
3
0.027%
10
0.007%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.5.2
Employment
Losses
Table
5­
8a
presents
employment
loss
analysis
results
for
the
financial
ratio
method
under
a
zero
CPT
assumption
to
show
the
worst
case
scenario.
Results
under
a
calculated
CPT
assumption
are
presented
in
Table
5­
8b.

Employment
impacts
as
a
percent
of
each
sector
 
s
total
employment
are
roughly
the
same
as
closure
impacts.
This
is
to
be
expected,
because
EPA
estimated
employment
impacts
by
multiplying
projected
closures
by
the
number
of
employees
per
establishment.
Note
that
in
the
multifamily
sector,

the
percentage
of
employment
losses
is
slightly
larger
than
the
percentage
of
closures.
This
is
because
the
model
establishments
most
affected
by
the
proposed
rule
account
for
a
disproportionately
high
percentage
of
sector
employment.

5­
18
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
8a.
Estimated
Employment
Losses
Zero
Cost
Pass
Through
Option
Single­
Family
Multifamily
Commercial
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
34
0.016%
12
0.034%
162
0.029%

2
145
0.067%
61
0.173%
603
0.110%

3
0
0.000%
0
0.000%
0
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
43
0.029%
0
0.000%
251
0.021%

2
133
0.089%
647
0.233%
1,589
0.130%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5­
8b.
Estimated
Employment
Losses
Estimated
Cost
Pass
Through
Option
Single­
Family
Multifamily
Commercial
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
5
0.001%
1
0.003%
16
0.003%

2
22
0.006%
5
0.014%
61
0.011%

3
0
0.000%
0
0.000%
0
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
7
0.005%
0
0.000%
29
2
20
0.013%
65
0.023%
173
3
0
0.000%
0
0.000%
0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
19
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5.6
ANALYSIS
OF
BARRIER
TO
ENTRY
This
section
presents
the
results
of
EPA
 
s
barrier
to
entry
analysis.
As
discussed
in
Section
4.3.3,
EPA
examined
the
ratio
of
compliance
costs
to
current
and
total
assets
to
determine
if
new
market
entrants
would
find
it
more
difficult
to
obtain
construction
loans
to
start
a
project
than
would
existing
firms.
As
discussed
in
more
detail
in
that
section,
this
methodology
is
conservative
by
design
because
it
does
not
account
for
the
fact
that
a
firm
would
typically
be
expected
to
finance
20
percent
of
the
incremental
compliance
costs
to
obtain
the
loan
 
not
the
full
amount
as
assumed
here.
.

5.6.1
Building
Construction
As
shown
in
Table
5­
9a,
compliance
costs
represent
a
maximum
of
0.82
percent
of
a
model
establishment
 
s
current
assets
(
0.60
percent
of
total
assets)
across
all
options
and
project
types.
These
maximum
projected
impacts
occur
in
the
multifamily
sector.
For
the
industrial
and
commercial
sectors,

compliance
costs
are
less
than
0.30
percent
of
current
assets,
while
in
the
single­
family
sector,
costs
are
less
than
0.25
percent
of
current
assets.
Table
5­
9b
shows
the
barrier
to
entry
analysis
results
under
an
estimated
CPT
scenario.
As
shown,
the
impacts
are
smaller
than
under
the
zero
CPT
scenario,
with
the
maximum
impact
on
both
current
assets
and
total
assets
at
less
than
0.10
percent.

5­
20
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
9a.
Barrier
to
Entry
Analysis
 
Zero
Cost
Pass
Through
Option
Compliance
Costs
Divided
by:

Current
Assets
Total
Assets
Min
Max
Min
Max
Single­
Family
Residential
1
0.000%
0.100%
0.000%
0.070%

2
0.000%
0.230%
0.000%
0.170%

3
0.000%
0.000%
0.000%
0.000%

Multifamily
Residential
1
0.000%
0.260%
0.000%
0.190%

2
0.000%
0.820%
0.000%
0.600%

3
0.000%
0.000%
0.000%
0.000%

Commercial
1
0.000%
0.120%
0.000%
0.090%

2
0.000%
0.270%
0.000%
0.220%

3
0.000%
0.000%
0.000%
0.000%

Industrial
1
0.000%
0.110%
0.000%
0.080%

2
0.000%
0.250%
0.000%
0.190%

3
0.000%
0.000%
0.000%
0.000%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
9b.
Barrier
to
Entry
Analysis
 
Cost
Pass
Through
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.
Option
Compliance
Costs
Divided
by:

Current
Assets
Total
Assets
Min
Max
Min
Max
Single­
Family
Residential
1
0.000%
0.015%
0.000%
0.011%

2
0.000%
0.034%
0.000%
0.025%

3
0.000%
0.000%
0.000%
0.000%

Multifamily
Residential
1
0.000%
0.022%
0.000%
0.016%

2
0.000%
0.069%
0.000%
0.050%

3
0.000%
0.000%
0.000%
0.000%

Commercial
1
0.000%
0.012%
0.000%
0.009%

2
0.000%
0.028%
0.000%
0.022%

3
0.000%
0.000%
0.000%
0.000%

Industrial
1
0.000%
0.016%
0.000%
0.013%

2
0.000%
0.038%
0.000%
0.029%

3
0.000%
0.000%
0.000%
0.000%

5.6.2
Nonbuilding
Construction
The
barrier
to
entry
analysis
also
produced
results
in
line
with
the
results
previously
reported
for
the
other
four
industries.
Table
5­
10
shows
the
results
of
this
analysis.
Under
a
zero
CPT
assumption,

compliance
costs
are
less
than
one
percent
of
both
current
and
total
assets
using
the
best
estimate
compliance
cost.
Using
the
worst­
case
estimate,
compliance
costs
are
slightly
above
2.5
percent
of
current
assets
and
nearly
1.5
percent
of
total
assets.
With
cost
pass
through,
these
impacts
are
significantly
lower.

5­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
10.
Barrier
to
Entry
Analysis
­
Highway
Construction
Compliance
Cost
Assumption
Compliance
Costs
Divided
By:

Current
Assets
Total
Assets
Zero
Cost
Pass
Through
Baseline
0.00%
0.00%

Worst­
Case
0.29%
0.17%

With
90
Percent
Cost
Pass
Through
Baseline
0.00%
0.00%

Worst­
Case
0.03%
0.02%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7
ANALYSIS
OF
IMPACTS
ON
NATIONAL
CONSTRUCTION
MARKETS
EPA
used
three
approaches
to
estimate
the
potential
impacts
of
the
regulatory
options
on
the
national
single­
family
housing
construction
market.
This
section
presents
the
results
of
these
analyses.

In
the
first
approach,
EPA
analyzed
the
impacts
of
the
proposed
rule
on
consumers
under
the
assumption
that
developers
and
builders
pass
on
100
percent
of
the
costs
to
the
new
single­
family
home
buyer.
To
assess
these
impacts,
EPA
developed
a
model
that
estimates
the
change
in
income
needed
to
qualify
for
financing
to
purchase
the
(
higher
priced)
housing
unit,
and
then
estimates
the
change
in
the
number
of
households
that
would
meet
the
higher
income
criteria.
In
theory,
this
provides
an
estimate
of
the
change
in
new
housing
demand
that
could
arise
as
a
result
of
the
proposed
regulations.

EPA
 
s
second
approach
applies
a
partial
equilibrium
model
to
220
metropolitan
housing
markets
to
estimate
how
compliance
costs
change
the
proportion
of
homes
in
the
market
that
the
median
income
household
can
afford,
termed
the
Housing
Opportunity
Index
(
HOI)
.
HOI
is
published
quarterly
by
the
NAHB.
This
index
offers
a
similar
estimate
of
the
change
in
housing
demand
that
may
arise
from
the
effluent
guideline
in
terms
of
a
familiar,
widely
publicized,
indicator.

5­
23
­
­
­
­
­
­
­
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
third
approach
is
a
single
national
partial
equilibrium
model.
Changes
in
prices
and
quantities
from
this
model
are
used
to
derive
the
impacts
on
employment
and
social
welfare.

EPA
 
s
methodology
for
these
models
is
discussed
more
fully
in
Section
4.5.

5.7.1
Residential
Construction
Markets
5.7.1.1
Housing
Affordability
Table
5­
11
shows
that
the
incremental
costs
of
the
proposed
rule
add
a
maximum
of
$
58
to
the
$
82,472
in
income
that
is
required
to
purchase
the
baseline
model
home.
After
this
income
change,

between
5,200
and
29,000
households
(
0.03
percent
to
0.15
percent
of
total
qualifying
households)

would
fail
to
qualify
for
a
mortgage.

Table
5­
11.
Impact
of
Erosion
and
Sediment
Control
Costs
on
Housing
Affordability
(
All
Dollar
Amounts
are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
ESC
Costs
(
$
/
Unit)
Total
Change
in
Costs
(
$
/
Unit)
Income
Needed
To
Qualify
(
$
)
Change
in
Income
Needed
(
$
)
Number
of
Households
Shifted
(
Thousands)
Percent
of
Households
Shifted
That
Could
Afford
Baseline
(
Percent)

1
$
20
$
36
$
82,482
$
10
­
5.2
­
0.03%

2
$
111
$
201
$
82,529
$
58
­
29.1
­
0.15%

3
$
0
$
0
$
82,472
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7.1.2
Housing
Opportunity
Index
The
HOI
is
an
alternative
measure
of
housing
affordability.
EPA
estimated
the
change
in
HOI
from
its
baseline
value
for
220
regional
housing
markets.
Table
5­
12
summarizes
these
results
in
terms
5­
24
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
of
the
average
change
calculated
across
each
Census
Bureau
division.
Since
the
HOI
encompasses
both
existing
and
new
housing,
the
results
show
the
net
effect
for
the
entire
housing
market.
The
value
of
the
HOI
varies
considerably
by
region.
In
the
Pacific
region,
high
real
estate
prices
result
in
only
one
third
of
households
having
sufficient
income
to
purchase
the
median­
priced
home.
In
the
central
regions,

however,
three­
quarters
of
households
can
afford
the
median­
priced
home.

The
proposed
regulation
has
little
effect
on
regional
HOI.
Table
5­
13
shows
the
percentage
change
in
HOI
by
Census
division.
Option
1
changes
HOI
by
less
than
two­
hundredths
of
one
percent
in
all
regions.
Option
2
changes
HOI
by
less
than
0.2
percent.
The
largest
changes
occur
in
the
South
Atlantic
region.
These
changes
are
much
smaller
in
scale
than
annual
changes
that
result
from
normal
shifts
in
real
estate
market
conditions
and
demography
of
the
market
areas.

Table
5­
12.
Single­
Family
Residential
Average
HOI
by
Census
Division
Option
Census
Division
1
New
England
2
Middle
Atlantic
3
East
North
Central
4
West
North
Central
5
South
Atlantic
6
East
South
Central
7
West
South
Central
8
Mountain
9
Pacific
1
54.24
62.36
72.66
78.81
70.30
69.69
64.73
44.57
32.62
2
54.23
62.31
72.59
78.74
70.24
69.65
64.69
44.55
32.61
3
54.24
62.37
72.67
78.82
70.31
69.70
64.73
44.58
32.63
HOI
indicates
the
percent
of
households
in
each
region
that
can
afford
the
median­
priced
house.
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5­
13.
Single­
Family
Residential
Percentage
Change
in
HOI
by
Census
Division
Option
Census
Division
1
New
England
2
Middle
Atlantic
3
East
North
Central
4
West
North
Central
5
South
Atlantic
6
East
South
Central
7
West
South
Central
8
Mountain
9
Pacific
1
0.00%
­
0.02%
­
0.02%
­
0.02%
­
0.02%
­
0.01%
­
0.01%
­
0.01%
­
0.01%

2
­
0.02%
­
0.10%
­
0.10%
­
0.10%
­
0.11%
­
0.08%
­
0.07%
­
0.07%
­
0.04%

3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

HOI
indicates
the
percent
of
households
in
each
region
that
can
afford
the
median­
priced
house.
Source
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5.7.1.3
Single­
Family
Housing
Prices
and
Quantities
Table
5­
14
shows
the
results
of
EPA
 
s
analysis
using
the
market
model
approach.
The
table
shows
the
estimated
changes
in
median
single­
family
home
prices
from
all
combinations
of
the
proposed
options.
The
changes
in
costs
range
from
$
0
to
$
111.
The
market
model
recognizes
that
market
conditions
control
how
much
of
these
costs
can
be
passed
through
to
consumers.
Thus,
the
price
increase
is
somewhat
smaller
than
the
related
cost
increase,
reflecting
the
fact
some
costs
would
be
borne
by
the
builder­
developer.
The
largest
increase
in
price
reduces
the
quantity
that
can
be
sold
by
about
two­
hundredths
of
one
percent.
The
total
loss
in
output
to
the
construction
industry
ranges
from
$
0
to
$
72
million.

Table
5­
14.
Single­
Family
Residential
 
Changes
in
Price
and
Quantity
From
the
Baseline
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Change
in
Cost
(
$
/
Unit)
New
Price
(
$
/
Unit)
Price
Change
(
$
/
Unit)
Quantity
Change
(
Units)
Quantity
Change
(
Percent)
Loss
of
Output
(
$
Million)

1
$
20
$
288,414
$
17
(
44)
­
0.00%
­
$
12.8
2
$
111
$
288,492
$
95
(
248)
­
0.02%
­
$
71.6
3
$
0
$
288,397
$
0
0
­
0.00%
0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7.1.4
Multifamily
Housing
Prices
and
Quantities
Table
5­
15
shows
the
estimated
changes
in
median
price
of
a
unit
in
a
multifamily
building
from
the
proposed
options.
The
changes
in
costs
range
from
$
0
to
$
40
per
unit.
Multifamily
housing
disturbs
a
smaller
area
per
unit,
so
any
ESC­
related
costs
are
spread
over
more
units.
The
market
model
suggests
a
higher
share
of
compliance
costs
in
multifamily
housing
would
be
passed
through
to
consumers,

compared
to
single­
family
homes,
so
price
changes
are
closer
to
the
actual
change
in
builder
costs.
The
price
changes
passed
through
to
consumers
range
from
$
0
to
$
40
per
unit.

5­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
15.
Multifamily
Residential
 
Changes
in
Price
and
Quantity
From
the
Baseline
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Change
in
Cost
(
$
/
Unit)
New
Price
(
$
1,000/
Unit)
Price
Change
(
$
/
Unit)
Quantity
Change
(
Units)
Quantity
Change
(
Percent)
Loss
of
Output
(
$
Million)

1
$
7
$
132.53
$
7
­
7
0.00%
­
$
0.9
2
$
40
$
132.57
$
40
­
41
0.01%
­
$
5.2
3
$
0
$
132.53
$
0
0
0.00%
­
$
0.0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7.2
Non­
Residential
Construction
Markets
5.7.2.1
Commercial
Space
Rental
prices
for
commercial
space
are
typically
quoted
in
dollars
per
square
foot
per
year.
Table
5­
16
shows
the
estimated
changes
in
median
rental
rate
of
a
square
foot
of
commercial
space
from
the
proposed
options.
The
changes
in
costs
range
from
$
0
to
$
0.02
per
square
foot.
Tenants
of
commercial
space
are
considerably
more
price
sensitive
than
residential
buyers,
so
less
of
the
change
in
costs
can
be
passed
through
to
tenants.
The
change
in
average
price
per
square
foot
reflects
this
absorption
of
compliance
costs
by
builders
and
building
owners.

Price
changes
range
from
$
0
to
$
0.02
per
square
foot.
Quantity
reductions
are
estimated
to
reach
seven­
hundredths
of
one
percent
for
the
most
costly
option.
The
total
loss
in
output
to
the
construction
industry
ranges
from
$
0
to
$
67.1
million.

5­
27
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
16.
Commercial
 
Changes
in
Price
and
Quantity
From
the
Baseline
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Change
in
Cost
(
$
/
Sq.
Ft.
)
New
Price
(
$
/
Sq.
Ft.
)
Price
Change
(
$
/
Sq.
Ft.
)
Quantity
Change
(
Units)
Quantity
Change
(
Percent)
Loss
of
Output
(
$
Million)

1
$
0.01
$
14.67
$
0.00
­
36
­
0.01%
­
$
14.7
2
$
0.02
$
14.69
$
0.02
­
163
­
0.07%
­
$
67.1
3
$
0.00
$
14.66
$
0.00
0
­
0.00%
$
0.0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7.2.2
Industrial
Space
Only
12,100
industrial
projects
are
estimated
to
start
in
the
base
year.
Rental
prices
for
industrial
space
are
typically
quoted
in
dollars
per
square
foot
per
year.
Table
5­
17
shows
the
estimated
changes
in
median
rental
rate
of
a
square
foot
of
industrial/
warehouse
space
from
the
proposed
options.
The
changes
in
costs
range
from
$
0
to
$
0.02
per
square
foot.
Buyers
of
industrial
space
are
considerably
more
price
sensitive
than
homeowners,
so
less
of
the
change
in
costs
can
be
passed
through
to
the
end­

users.
The
change
in
average
price
per
square
foot
reflects
this
absorption
of
compliance
costs
by
builders
and
developers.

Price
changes
range
from
$
0
to
$
0.02
per
square
foot.
Quantity
reductions
are
estimated
to
reach
0.3
percent
for
the
most
costly
option,
albeit
on
a
small
number
of
projects
in
the
baseline.
The
total
loss
in
output
to
the
construction
industry
ranges
from
$
0
to
$
17.8
million.

Table
5­
17.
Industrial
 
Changes
in
Price
and
Quantity
From
the
Baseline
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Change
in
Cost
(
$
/
Sq.
Ft.
)
New
Price
(
$
/
Sq.
Ft.
)
Price
Change
(
$
/
Sq.
Ft.
)
Quantity
Change
(
Units)
Quantity
Change
(
Percent)
Loss
of
Output
(
$
Million)

1
$
0.01
$
5.17
$
0.00
­
11
­
0.08%
­
$
4.4
2
$
0.02
$
5.18
$
0.02
­
46
­
0.32%
­
$
17.8
3
$
0.00
$
5.16
$
0.00
0
0.00%
$
0.0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5.7.3
Output
and
Employment
As
discussed
in
Section
4.5,
additional
compliance
costs
reduce
the
output
of
the
construction
industry
as
the
increased
price
reduces
sales.
The
estimate
of
this
effect
is
shown
in
the
 
Loss
of
Output
 
column
of
Table
5­
18.
Most
of
the
losses
are
in
the
large
single­
family
residential
and
catch­
all
commercial
construction
sectors.
These
losses
are
offset,
however,
by
increases
in
output
and
employment
in
those
industries
associated
with
compliance,
i.
e.
,
design,
installation,
and
inspection
of
ESCs.
The
estimate
of
the
amount
of
new
work
generated
in
these
activities
is
shown
in
the
 
Stimulus
from
Added
Work
 
column.
.
The
next
two
columns
show
the
changes
in
jobs
related
to
the
loss
in
construction
spending
and
(
offsetting)
increase
in
regulatory
compliance
spending.
Under
both
options,

the
stimulus
adds
more
jobs
than
the
loss
of
output
takes
away,
with
the
result
that
net
employment
change
from
construction
impacts
is
a
positive
number.
In
the
single­
family
sector,
for
example,
under
Option
1
there
is
a
loss
$
12.8
million
of
output
but
an
offsetting
stimulus
of
$
21.5
million.
The
loss
represents
475
jobs,
but
the
stimulus
generates
797
jobs;
the
net
result
is
that
322
more
jobs
are
generated.
Note
that
these
job
estimates
apply
to
the
entire
economy,
not
just
the
construction
sectors.

They
represent
all
of
the
impacts
that
result
as
changes
in
the
construction
industry
ripple
through
other
sectors.

The
stimulus
to
the
construction
industry
comes
at
the
expense
of
consumer
spending,
as
home
buyers
and
other
consumers
devote
more
of
their
income
to
housing.
EPA
assumes
that
this
loss
of
consumer
surplus
takes
the
form
of
reduced
spending
for
other
products,
though
it
might
also
take
the
form
of
reduced
amenities
in
housing
construction.
Removing
this
spending
from
the
national
economy
reduces
the
employment
that
arises
in
response
to
consumer
spending.
The
 
Change
in
Employment
From
Consumer
Spending
 
column
shows
this
reduction
in
jobs,
,
which
offsets
the
stimulus
to
construction.
When
this
effect
is
factored
in,
the
net
change
in
total
employment
is
negative.

Total
employment
losses
range
from
0
to
1,400
jobs.
These
estimates
do
not
consider
how
long
individuals
may
be
out
of
work,
nor
do
they
consider
individuals
 
alternative
opportunities.
.
Because
of
this,
such
input­
output
analysis
results
are
usually
considered
an
over­
estimate
of
the
hardship
initiated
by
the
change
to
the
economy.

5­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
18.
Changes
in
Output
and
Total
Employment
From
the
Baseline
(
All
dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Loss
of
Output
(
$
Million)
Stimulus
From
Added
Work
(
$
Million)
Change
in
Employment
From
Lost
Output
(
Jobs)
Change
in
Employment
From
Stimulus
(
Jobs)
Net
Change
in
Employment
From
Construction
Impacts
(
Jobs)
Change
in
Employment
From
Consumer
Spending
(
Jobs)
Net
Change
in
Total
Employment
(
Jobs)

Single­
Family
Residential
1
(
$
12.8)
$
21.5
(
475)
797
322
(
498)
(
176)

2
(
$
71.6)
$
120.2
(
2,662)
4,467
1,805
(
2,792)
(
986)

3
$
0.0
$
0.0
0
0
0
0
0
Multifamily
Residential
1
(
$
0.9)
$
2.5
(
34)
91
57
(
67)
(
10)

2
(
$
5.2)
$
13.7
(
192)
509
317
(
374)
(
56)

3
$
0.0
$
0.0
0
0
0
0
Commercial
1
(
$
14.7)
$
42.6
(
546)
1,583
1,037
(
1,062)
(
25)

2
(
$
67.1)
$
194.7
(
2,494)
7,234
4,740
(
4,857)
(
116)

3
$
0.0
$
0.0
0
0
0
0
0
Industrial
1
(
$
4.4)
$
6.7
(
164)
248
84
(
152)
(
68)

2
(
$
17.8)
$
26.9
(
662)
1,001
338
(
616)
(
277)

3
$
0.0
$
0.0
0
0
0
0
0
Total
1
(
$
32.8)
$
73.2
(
1,219)
2,719
1,501
(
1,780)
(
279)

2
(
$
161.7)
$
355.5
(
6,010)
13,212
7,201
(
8,638)
(
1,436)

3
$
0.0
$
0.0
0
0
0
0
0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7.4
Changes
in
Welfare
Measures
As
discussed
in
Section
4.6,
the
proposed
regulation
shifts
the
supply
curves
for
new
construction
in
each
sector.
This
shift
alters
the
balance
between
consumers
and
producers.
Each
group
contributes
to
the
costs
of
complying
with
the
regulation.
As
Table
5­
19
indicates,
consumers
may
lose
5­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
from
$
0
to
$
316.6
million,
depending
on
the
option
selected.
Producers
lose
from
$
0
to
$
40.4
million.

Almost
all
of
this
loss
is
shifted
from
consumers
and
construction
firm
owners
to
construction
firms
to
pay
the
costs
of
complying
with
the
regulation.
As
shown
in
the
last
section,
the
net
effect
on
construction
may
be
a
stimulus.
However,
a
small
portion
is
utterly
lost
to
society.
This
portion,
termed
the
 
deadweight
loss,
 
ranges
from
$
$
0
to
$
200,000.

Table
5­
19.
Changes
in
Social
Welfare
Measures
 
All
Sectors
Combined
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)

Option
Total
Deadweight
Loss
(
$
Million)
Total
Consumer
Surplus
Loss
(
$
Million)
Total
Producer
Surplus
Loss
(
$
Million)

1
$
0.0
$
65.2
$
8.2
2
$
0.2
$
316.6
$
40.4
3
$
0.0
$
0.0
$
0.0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5.7.5
Regional
Effects
The
multifamily
housing
and
non­
residential
market
models
estimate
impacts
at
the
state
level
based
on
information
about
local
real
estate
markets.
The
single­
family
housing
market
model
estimates
market
effects
at
the
MSA
level,
which
can
then
be
aggregated
to
the
state
level.
Table
5­
20
shows
the
loss
in
output
to
the
construction
industry,
by
state,
from
compliance
with
the
more
expensive
Option
2.

Loss
of
output
largely
follows
the
expected
pattern
of
population
and
growth.
Several
states
show
zero
loss
for
some
categories
because
there
is
so
little
activity
in
that
state
that
the
effect
could
not
be
measured.
For
example,
multifamily
housing
in
Vermont.
California,
Pennsylvania,
and
several
other
states
(
indicated
with
an
e)
show
no
effect
as
current
State
regulations
were
deemed
equivalent
to
the
proposed
regulations
and
so
there
was
no
incremental
impact
on
firms
operating
in
those
states.

Although
the
totals
would
be
lower
for
Option
1,
the
pattern
of
losses
would
be
similar.

Table
5­
21
provides
a
similar
state­
by­
state
breakdown
of
the
net
change
in
employment
as
a
result
of
compliance
with
the
proposed
regulation.
In
several
states,
multifamily
housing,
commercial,

5­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
and
industrial
stimulus
effects
are
greater
than
the
losses,
and
the
regulation
causes
a
small
net
positive
change
in
employment
within
those
categories.

Table
5­
20.
Loss
of
Output
to
the
Construction
Industry
by
State
and
Use
Category
(
$
Millions)
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)
,
Option
2
State
Single­
Family
Multifamily
Commercial
Industrial
Total
Alabama
(
1.2)
0.0
(
0.9)
(
0.4)
(
2.5)

Alaska
(
0.2)
0.0
0.0
0.0
(
0.2)

Arizona
e
e
e
e
e
Arkansas
(
0.4)
0.0
(
0.7)
(
0.2)
(
1.3)

California
e
e
e
e
e
Colorado
(
3.6)
(
0.3)
(
1.2)
(
0.5)
(
5.6)

Connecticut
e
e
e
e
e
Delaware
(
0.3)
0.0
(
0.5)
0.0
(
0.8)

District
of
Columbia
(
4.8)
(
0.2)
0.0
0.0
(
5.1)

Florida
(
7.4)
(
1.0)
(
15.3)
(
0.9)
(
24.6)

Georgia
(
0.9)
(
0.5)
(
4.1)
(
1.6)
(
7.1)

Hawaii
(
0.4)
0.0
0.0
0.0
(
0.4)

Idaho
e
e
e
e
e
Illinois
e
e
e
e
e
Indiana
(
3.6)
(
0.1)
(
1.6)
(
1.5)
(
6.9)

Iowa
(
0.7)
0.0
(
0.7)
(
1.0)
(
2.5)

Kansas
(
0.5)
0.0
(
0.9)
(
0.5)
(
1.8)

Kentucky
(
1.1)
0.0
(
1.3)
(
0.8)
(
3.3)

Louisiana
(
1.8)
0.0
(
1.8)
(
0.2)
(
3.8)

Maine
0.0
0.0
(
2.4)
(
0.1)
(
2.5)

Maryland
(
2.1)
0.0
(
2.1)
(
0.3)
(
4.4)

Massachusetts
e
e
e
e
e
Michigan
(
5.9)
(
0.1)
(
2.9)
(
1.1)
(
10.0)

Minnesota
(
3.5)
(
0.1)
(
2.4)
(
1.0)
(
7.0)

Mississippi
(
0.7)
0.0
(
0.7)
(
0.2)
(
1.7)

Missouri
(
3.1)
(
0.1)
(
2.0)
(
0.6)
(
5.9)

Montana
0.0
0.0
(
0.3)
(
0.1)
(
0.3)

Nebraska
(
0.6)
(
0.1)
(
0.8)
(
0.2)
(
1.7)

Nevada
4.0
(
0.3)
(
2.8)
(
0.3)
0.7
New
Hampshire
e
e
e
e
e
New
Jersey
(
3.9)
(
0.1)
0.0
(
0.1)
(
4.1)

New
Mexico
e
e
e
e
e
New
York
(
13.4)
(
0.7)
(
6.9)
(
0.6)
(
21.5)

North
Carolina
(
3.2)
(
0.4)
(
3.3)
(
1.5)
(
8.4)

5­
32
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
20.
Loss
of
Output
to
the
Construction
Industry
by
State
and
Use
Category
(
$
Millions)
(
All
Dollar
Values
Are
in
Constant,
Pre­
tax,
1997
Dollars)
,
Option
2
State
Single­
Family
Multifamily
Commercial
Industrial
Total
North
Dakota
(
0.1)
0.0
(
0.3)
(
0.3)
(
0.6)

Ohio
(
6.8)
(
0.2)
(
1.1)
(
1.2)
(
9.3)

Oklahoma
e
e
e
e
e
Oregon
(
1.0)
(
0.1)
(
2.2)
(
0.8)
(
4.1)

Pennsylvania
e
e
e
e
e
Rhode
Island
(
0.7)
0.0
(
1.2)
0.0
(
1.9)

South
Carolina
e
e
e
e
e
South
Dakota
e
e
e
e
e
Tennessee
e
e
e
e
e
Texas
e
e
e
e
e
Utah
e
e
e
e
e
Vermont
(
0.1)
0.0
(
1.2)
(
0.1)
(
1.4)

Virginia
e
e
e
e
e
Washington
(
1.9)
(
0.3)
(
4.1)
(
0.5)
(
6.8)

West
Virginia
e
e
e
e
e
Wisconsin
(
1.8)
(
0.2)
(
1.2)
(
1.3)
(
4.4)

Wyoming
0.0
0.0
(
0.2)
0.0
(
0.3)

United
States
Total
(
71.6)
(
5.2)
(
67.1)
(
17.8)
(
161.7)

Note:
e
indicates
state
has
regulations
equivalent
to
the
proposed
options.
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5­
33
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
21.
Net
Change
in
Total
Employment
by
State
and
Use
Category
(
Jobs)
Under
Proposed
Rule
Option
2
State
Single­
Family
Multifamily
Commercial
Industrial
Total
Alabama
(
17)
0
(
3)
(
5)
(
26)

Alaska
(
3)
0
0
0
(
3)

Arizona
e
e
e
e
e
Arkansas
(
5)
0
(
8)
(
3)
(
17)

California
e
e
e
e
e
Colorado
(
50)
(
3)
(
4)
(
4)
(
62)

Connecticut
e
e
e
e
e
Delaware
(
4)
0
(
2)
0
(
7)

District
of
Columbia
(
66)
(
3)
0
0
(
69)

Florida
(
102)
(
16)
(
15)
(
15)
(
187)

Georgia
(
12)
(
9)
(
28)
(
28)
(
64)

Hawaii
(
5)
0
0
0
(
5)

Idaho
e
e
e
e
e
Illinois
e
e
e
e
e
Indiana
(
50)
(
1)
49
(
30)
(
32)

Iowa
(
10)
0
(
­
3)
(
23)
(
35)

Kansas
(
7)
0
(
3)
(
8)
(
18)

Kentucky
(
16)
(
1)
(
5)
(
13)
(
34)

Louisiana
(
24)
0
(
21)
(
3)
(
48)

Maine
0
0
(
37)
0
(
37)

Maryland
(
28)
0
(
7)
(
4)
(
41)

Massachusetts
e
e
e
e
e
Michigan
(
81)
0
57
(
9)
(
33)

Minnesota
(
49)
(
1)
(
8)
(
17)
(
74)

Mississippi
(
10)
0
(
3)
(
3)
(
16)

Missouri
(
43)
(
1)
(
7)
(
9)
(
61)

Montana
0
0
(
3)
(
1)
(
3)

Nebraska
(
8)
(
1)
(
3)
(
3)
(
15)

Nevada
55
(
7)
(
44)
(
4)
0
New
Hampshire
e
e
e
e
e
New
Jersey
(
54)
0
24
1
(
29)

New
Mexico
e
e
e
e
e
New
York
(
184)
5
56
(
2)
(
125)

North
Carolina
(
44)
(
7)
(
12)
(
29)
(
92)

North
Dakota
(
1)
0
(
1)
(
5)
(
7)

Ohio
(
93)
(
1)
34
(
21)
(
81)

Oklahoma
e
e
e
e
e
Oregon
(
14)
(
2)
(
28)
(
11)
(
55)

5­
34
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5­
21.
Net
Change
in
Total
Employment
by
State
and
Use
Category
(
Jobs)
Under
Proposed
Rule
Option
2
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.
State
Single­
Family
Multifamily
Commercial
Industrial
Total
Pennsylvania
e
e
e
e
e
Rhode
Island
(
9)
0
(
19)
0
(
28)

South
Carolina
e
e
e
e
e
South
Dakota
e
e
e
e
e
Tennessee
e
e
e
e
e
Texas
e
e
e
e
e
Utah
e
e
e
e
e
Vermont
(
2)
0
(
18)
0
(
21)

Virginia
e
e
e
e
e
Washington
(
26)
(
4)
(
64)
(
5)
(
99)

West
Virginia
e
e
e
e
e
Wisconsin
(
25)
(
3)
37
(
20)
(
10)

Wyoming
0
0
(
3)
(
1)
(
3)

United
States
Total
(
986)
(
56)
(
116)
(
277)
(
1,436)

5.8
IMPACTS
ON
GOVERNMENTAL
UNITS
As
Section
4.8
discusses,
EPA
estimates
that
the
proposed
rule
would
impose
some
costs
on
governmental
units
involved
in
 
codifying
 
the
construction
general
permit.
.
This
section
examines
the
costs
imposed
on
governmental
units
associated
with
the
proposed
Option
2.

5.8.1
Construction
Program
Administration
EPA
has
analyzed
the
costs
to
governments
under
the
assumption
that
the
majority
of
construction­
related
regulatory
costs
would
be
associated
with
processing
general
permits.
As
noted
previously,
EPA
assumes
that
the
majority
of
NPDES
Phase
I
and
Phase
II
NPDES
storm
water
permit
programs
are
fully
implemented,
and
that
any
new
regulatory
requirements
would
be
superimposed
upon
these
programs.

5­
35
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Based
on
the
assumption
that
all
states
would
change
their
storm
water
programs
to
include
certification
of
sedimentation
basins
and
other
aspects
of
the
proposed
rule,
EPA
estimated
the
annual
costs
of
establishing
such
a
program.
These
costs
are
presented
in
Table
5­
22.
EPA
estimates
that
states
would
experience
$
0.26
million
in
costs
staying
current
with
federal
guidance,
state
guidance,
and
evolving
industry
practice
(
U.
S.
EPA
2002)
.

Table
5­
22.
Costs
To
Establish
Construction
Programs
(
$
1997)

Element
Value
Units
Labor
hours
to
review
EPA
regulation
and
modify
state
practices
200
Hours/
Year
Labor
cost
$
26.02
$
/
Hour/
State
State
Cost
per
year
$
5,203
$
/
Year/
State
Number
of
States
50
States
Totals
$
260,150
$
/
Year
Source:
U.
S.
EPA.
2002.

In
evaluating
the
annual
costs,
EPA
assumed
that
the
current
trend
 
states
taking
the
lead
in
implementing
the
regulation
of
construction
activities
 
will
continue
in
the
future.
EPA
elected
not
to
evaluate
how
to
distribute
its
total
estimated
implementation
cost
between
state
and
municipal
agencies,

and
instead
has
attributed
all
costs
to
states.

5.8.2
Government
Construction
Costs
Government
entities
commission
nearly
a
quarter
of
the
value
of
construction
put
in
place
(
Census,
2000)
.
Government
projects
would
need
to
comply
with
the
proposed
regulation
so
their
costs
would
increase,
just
as
private
projects
 
would.
.
Roughly
one­
half
of
government
projects
are
maintenance
or
reconstruction
of
existing
structures
which
does
not
entail
new
ground
disturbance.
EPA
estimates
that
approximately
25
percent
of
total
impacts
would
fall
on
government
projects
resulting
in
a
$
29.2
million
additional
cost
to
government
entities
under
proposed
Option
1
or
a
$
115.9
million
5­
36
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
additional
cost
under
proposed
Option
2.
4
This
effect
is
discussed
in
detail
in
the
Unfunded
Mandates
Reform
Act
(
UMRA)
analysis
in
Chapter
Ten.

5.9
OTHER
IMPACTS
This
section
addresses
Executive
Order
(
EO)
12866,
which
directs
federal
agencies
to
assess
the
costs
and
benefits
of
each
significant
rule
they
propose
or
promulgate,
as
well
as
issues
of
environmental
justice
and
children
 
s
health.
Chapter
Ten
addresses
the
Unfunded
Mandates
Reform
Act
(
UMRA)
.

Section
5.9.1
describes
the
administrative
requirements
of
EO
12866.
Sections
5.9.2
and
5.9.3
describe
EPA
 
s
analysis
of
environmental
justice
and
children
 
s
health
issues
for
the
proposed
rule.
Another
piece
of
legislation
 
the
Unfunded
Mandates
Reform
Act,
or
UMRA
 
also
has
requirements
relevant
to
EPA
 
s
plans.
Chapter
Ten
addresses
UMRA.

Much
of
the
information
provided
in
this
section
is
summarized
from
other
documents
that
support
this
proposed
rulemaking,
as
well
as
other
sections
of
this
report.

5.9.1
Requirements
of
Executive
Order
12866
Under
EO
12866
(
58
FR
51735,
October
4,
1993)
,
the
Agency
is
to
determine
whether
a
regulatory
action
is
 
significant
 
and
therefore
subject
to
OMB
review
and
the
directives
of
the
EO.
.
The
Order
defines
a
 
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;

4
Additional
cost
to
government
entities
under
the
proposed
ESC
options
includes
costs
potentially
incurred
by
Federal,
State,
and
local
government
entities.

5­
37
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
(
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.

EPA
has
determined
that
the
proposed
C&
D
rulemaking
is
a
 
significant
regulatory
action
 
under
the
terms
of
EO
12866,
because
the
total
costs
of
the
proposed
rule
are
estimated
to
exceed
$
100
million
annually.
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.

In
addition
to
submission
of
the
action
to
OMB,
the
principal
directives
of
the
EO
are
that
the
Agency
perform
an
analysis
comparing
the
benefits
of
the
regulation
to
the
costs
that
the
regulation
imposes,
that
the
Agency
analyze
alternative
approaches
to
the
proposed
rule,
and
that
the
reason
for
the
proposed
rule
be
identified.
Wherever
possible,
the
costs
and
benefits
of
the
proposed
rule
are
to
be
expressed
in
monetary
terms.
To
address
these
directives,
the
following
section
describes
the
reasons
why
EPA
is
revising
the
existing
regulations,
and
Chapters
Eight
and
Nine
present
the
estimated
social
costs,

pollutant
reductions,
and
monetary
benefits
of
the
proposed
C&
D
regulations.
Section
5.8
addresses
the
impacts
of
the
proposed
regulations
on
governmental
units.
An
in­
depth
profile
of
the
potentially
affected
industry
sectors
is
presented
in
Chapter
Two
of
this
report.

Reason
for
the
Regulation
Executive
Order
12866
directs
the
Agency
to
identify
the
reason
for
the
regulations
being
proposed.
The
reasons
for
proposing
the
C&
D
regulations
are
stated
throughout
this
report
(
Chapters
One
and
Six)
and
are
presented
in
the
preamble
of
the
proposed
rulemaking.
These
reasons
are
summarized
briefly
below:

 
In
spite
of
existing
regulatory
controls,
there
is
continued
runoff
of
sediment
from
construction
sites
and
newly
developed
areas.
Sediment
entering
public
waterways
imposes
costs
on
water
users
in
the
form
of
additional
demand
for
pre­
treatment
of
water
withdrawn
and
diminished
value
for
in­
stream
uses.
Users
cannot
identify
and
seek
compensation
from
the
construction
sites
causing
the
problem.
So
there
is
a
market
failure
in
terms
of
the
environmental
externality
of
sediment
emissions.
The
proposed
5­
38
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
regulations
are
expected
to
address
the
impairment
of
many
U.
S.
waterways
and
the
associated
human
health
and
ecological
risks.

 
The
existing
regulation
appears
to
be
insufficient
to
protect
or
restore
water
quality.
There
exists
an
information
asymmetry
between
builders
and
enforcement
officials
in
which
builders
know
their
level
of
care
with
regard
to
erosion
and
sediment
controls
while
officials
may
or
may
not
know.
The
certification
and
inspection
provisions
of
the
proposed
rule
increase
the
level
of
information
available
to
officials.
The
revisions
would
make
the
regulations
apply
more
uniformly
throughout
the
country
and
 
raise
the
bar
 
for
storm
water
control,
in
general.

Both
UMRA
and
EO
12866
require
the
statutory
authority
for
the
rule
to
be
cited.
A
detailed
discussion
of
the
objectives
and
legal
basis
for
the
proposed
C&
D
regulations
is
presented
in
the
preamble.

A
discussion
of
the
UMRA
is
presented
in
Chapter
Ten
of
this
report.

5.9.2
Environmental
Justice
According
to
EO
12898,
Federal
Actions
To
Address
Environmental
Justice
in
Minority
Populations
and
Low­
Income
Populations
,
federal
agencies
are
to
address
potential
environmental
justice
issues
that
may
be
triggered
by
proposed
actions.
Based
on
guidance
in
EPA
 
s
Guidelines
for
Preparing
Economic
Analyses
,
the
potential
effects
of
the
proposed
regulation
on
minority
and
low­
income
populations
have
been
considered
(
U.
S.
EPA
2000)
.
EPA
has
determined
that
the
proposed
rule
would
not
have
a
disproportionately
large
effect
on
minority
or
low­
income
populations,
nor
would
it
have
disproportionately
high
human
health
or
environmental
effects.
Thus
no
further
analysis
on
environmental
justice
issues
has
been
conducted
for
this
proposal.

5.9.3
Children
 
s
Health
Pursuant
to
EO
13045,
Protection
of
Children
From
Environmental
Health
Risks
and
Safety
Risks
,
EPA
has
considered
whether
this
proposed
rule
would
have
any
significant
effects
on
children
 
s
health
or
safety
(
U.
S.
EPA
2000)
.
EPA
has
determined,
based
on
the
information
provided
throughout
5­
39
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
this
report,
that
the
proposed
rule
would
not
have
any
significant
effects
on
children
 
s
health
or
safety,

and
no
further
analysis
has
been
conducted
for
this
proposal.

5­
40
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5.10
REFERENCES
Tetra
Tech.
2002.
Personal
Communication
from
J.
Swanson,
Tetra
Tech,
Inc.
,
to
J.
Cantin,
ERG,
Inc.
January
29.

U.
S.
Census
Bureau
2000.1997
Economic
Census:
Construction:
Subject
Series.
January.

U.
S.
EPA
2002.
 
Development
Document
for
the
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
 
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.

U.
S.
EPA
2000.
 
Guidelines
for
Preparing
Economic
Analyses.
 
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency,
Report
EPA
240­
R­
00­
003,
September.

5­
41
APPENDIX
5A
Closure
and
Employment
Loss
Analysis
Results
Cash
Flow
Method
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5A­
1.
Estimated
Closures
as
Percent
of
Total
Establishments
Zero
Cost
Pass
Through
Cash
Flow
Method
Option
Single­
Family
Multifamily
Commercial
Industrial
1
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

2
0.0%
­
0.0%
0.0%
­
0.0%
0.1%
­
0.2%
0.1%
­
0.1%

3
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

Table
5A­
2.
Estimated
Closures
as
Percent
of
Total
Establishments
Cost
Pass
Through
Cash
Flow
Method
Option
Single­
Family
Multifamily
Commercial
Industrial
1
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

2
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

3
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

Single
family
cost
pass
through:
85.10%
Multifamily
cost
pass
through:
91.55%
Commercial
cost
pass
through:
89.87%
Industrial
cost
pass
through:
84.75%
Cost
Pass
Through
Values
Calculated
by
EPA.

5A­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5A­
3.
Estimated
Employment
Losses
as
Percent
of
Total
Employment
Zero
Cost
Pass
Through
Cash
Flow
Method
Option
Single­
Family
Multifamily
Commercial
Industrial
1
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

2
0.0%
­
0.0%
0.2%
­
0.2%
0.1%
­
0.2%
0.1%
­
0.1%

3
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

Table
5A­
4.
Estimated
Employment
Losses
as
Percent
of
Total
Employment
Cost
Pass
Through
Cash
Flow
Method
Option
Single­
Family
Multifamily
Commercial
Industrial
1
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

2
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

3
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%
0.0%
­
0.0%

Single
family
cost
pass
through:
85.10%
Multifamily
cost
pass
through:
91.55%
Commercial
cost
pass
through:
89.87%
Industrial
cost
pass
through:
84.75%
Cost
Pass
Through
Values
Calculated
by
EPA.

5A­
2
APPENDIX
5B
Sensitivity
Analysis
for
the
National
Partial
Equilibrium
Model
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5B.
1
Introduction
to
Sensitivity
Analysis
Elasticities
of
supply
and
demand
are
key
parameters
of
the
partial
equilibrium
market
models
which
generate
many
of
the
results
shown
in
Chapter
5.
Values
for
these
parameters
are
derived
from
a
consensus
of
elasticity
estimates
appearing
in
the
literature.
Often
differing
databases
and
estimation
methods
generate
different
estimates,
so
the
literature
contains
a
wide
range
of
elasticities.
Table
5B­
1
shows
the
impact
on
the
results
of
selecting
different
sets
of
elasticities.
The
first
line
in
each
use
category
section
is
the
cost
pass
through
(
CPT)
and
impact
reported
in
Table
5­
16a,
Changes
in
Output
and
Total
Employment
from
the
Baseline,
for
the
proposed
Option
2.
The
succeeding
lines
show
how
the
results
change
with
the
different
combinations
of
supply
and
demand
elasticities
shown
in
the
first
two
columns.
(
As
the
stimulus
is
virtually
the
same
in
all
cases,
the
 
Stimulus
from
Added
Work
 
and
 
Change
in
Employment
from
Stimulus
 
columns
in
Table
5­
­
16a
are
not
shown
here.
)
Except
for
single
family
housing,
all
of
the
categories
were
modeled
at
the
state
level
so
that
local
market
conditions
would
drive
the
model.
Thus,
a
range
of
demand
elasticities
is
chosen
as
a
parameter
of
the
model
but
the
actual
elasticity
used
in
each
state
model
is
calculated
based
on
an
indicator
of
state
market
activity.
The
sensitivity
analysis
for
these
categories
was
conducted
by
adjusting
the
range
of
possible
demand
elasticities.

As
discussed
in
Section
4.5,
housing
supply
is
highly
elastic
which
implies
high
CPT
rates.
The
sensitivity
analysis
shows
that
when
the
elasticity
of
supply
for
single
family
housing
is
reduced
from
4
to
0.5,
the
CPT
falls
from
85
percent
to
42
percent.
This
reduces
the
change
in
the
quantity
of
homes
sold
and
the
impact
on
consumers
so
much
that
the
net
effect
of
the
proposed
regulation
is
a
creation
of
1,800
jobs.
Similar
changes
occur
in
other
use
categories.
Reducing
the
elasticity
of
demand
also
reduces
the
impact
of
the
regulation.

5B.
2
Sensitivity
Analysis
Results
Overall,
the
sensitivity
analysis
shows
that
while
the
results
can
be
changed
by
manipulation
of
the
assumptions,
the
assumptions
used
yield
reasonable
estimates
near
the
middle
of
the
range
of
probable
outcomes.

5B­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5B­
1.
Sensitivity
Tests
with
Alternative
Elasticities
Supply
Elasticity
Demand
Elasticity
CPT
(
%
)
Loss
of
Output
(
$
Million)
Change
in
Employment
from
Lost
Output
Net
Change
in
Employment
from
Construction
Impacts
Change
in
Employment
from
Consumer
Spending
Net
Change
in
Total
Employment
Single
Family
Housing
4
0.7
85.11
­
71.6
­
2,662
1,805
­
2,792
­
986
10
0.7
93.46
­
78.7
­
2,923
1,544
­
3,066
­
1,522
1
0.7
58.82
­
49.5
­
1,840
2,628
­
1,930
698
0.5
0.7
41.67
­
35.1
­
1,303
3,165
­
1,367
1,798
4
1.0
80.00
­
96.2
­
3,575
892
­
2,624
­
1,732
4
0.5
88.89
­
53.4
­
1,986
2,482
­
2,916
­
434
Multifamily
Housing
4
­
0.8
­
­
0.2
91.54
­
5.2
­
192
317
­
374
­
56
10
­
0.8
­
­
0.2
96.42
­
5.5
­
203
333
­
394
­
61
1
­
0.8
­
­
0.2
73.35
­
4.0
­
150
257
­
299
­
42
4
­
1.0
­
­
0.2
90.40
­
5.9
­
218
284
­
369
­
84
4
­
0.5
­
­
0.2
93.34
­
4.0
­
150
369
­
381
­
12
4
­
0.8
­
­
0.1
93.08
­
4.2
­
158
360
­
380
­
20
Commercial
4
­
0.8
­
­
0.01
89.87
­
67.1
­
2,494
4,740
­
4,857
­
116
10
­
0.8
­
­
0.01
95.62
­
71.5
­
2,656
4,578
­
5,119
­
541
1
­
0.8
­
­
0.01
70.17
­
51.9
­
1,930
5,306
­
3,898
1,408
4
­
1.0
­
­
0.01
87.73
­
81.6
­
3,034
4,199
­
4,757
­
558
4
­
0.5
­
­
0.01
93.32
­
44.0
­
1,633
5,604
­
5,015
588
4
­
0.8
­
­
0.2
88.16
­
83.5
­
3,103
4,130
­
4,744
­
615
Industrial
4
­
1.5
­
­
0.2
84.75
­
17.8
­
662
338
­
616
­
277
10
­
1.5
­
­
0.2
93.21
­
20.0
­
742
258
­
682
­
424
1
­
1.5
­
­
0.2
59.11
­
11.7
­
436
567
­
418
149
4
­
2.0
­
­
0.2
81.43
­
21.8
­
810
190
­
588
­
399
4
­
1.0
­
­
0.2
88.43
­
13.4
­
498
504
­
646
­
142
4
­
1.5
­
­
0.01
86.91
­
15.8
­
585
416
­
630
­
214
5B­
2
APPENDIX
5C
Baseline
Analysis
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
APPENDIX
5C
BASELINE
ANALYSIS
5C.
1
INTRODUCTION
The
main
portion
of
this
economic
analysis
assumes
that,
in
the
baseline,
the
construction
and
development
(
C&
D)
industry
is
in
full
compliance
with
the
existing
Storm
Water
Phase
I
and
Phase
II
regulations
as
they
apply
to
construction
activities.
Since
the
final
deadline
for
implementation
of
Phase
II
is
not
until
March
10,
2003,
some
affected
entities
may
not
yet
have
adjusted
to
the
Phase
II
requirements.

Because
of
the
overlap
between
the
proposal
of
the
effluent
limitation
guideline
(
ELG)
and
the
implementation
of
the
Phase
II
regulations,
EPA
has
completed
this
alternate
baseline
analysis.
The
analysis
presents
the
following:

 
Combined
national
compliance
costs
and
social
costs
of
Phase
II
and
the
C&
D
Effluent
Limitation
Guideline
(
ELG)
 
This
analysis
simply
adds
together
the
compliance
and
government
costs
of
the
rules.

 
Impact
of
the
combined
Phase
II
and
ELG
costs
on
representative
model
projects
 
This
analysis
would
apply
to
projects
that
take
place
in
jurisdictions
not
yet
in
compliance
with
Phase
II.

 
Impact
of
the
combined
Phase
II
and
ELG
costs
on
representative
model
firms
 
This
analysis
would
apply
to
firms
for
whom
100
percent
of
operations
take
place
in
jurisdictions
not
yet
in
compliance
with
Phase
II.

 
Impact
of
the
combined
Phase
II
and
ELG
costs
on
facility
closures
and
employment
levels.
This
part
of
the
analysis
is
the
most
speculative
because
we
have
no
way
of
identifying
how
many
firms
and
what
share
of
their
operations
would
be
subject
to
both
rules.
To
derive
these
estimates
we
have
assumed
that
(
1)
firms
within
a
certain
size
class
are
most
likely
to
be
affected
(
because
Phase
II
applies
only
to
sites
of
1
to
5
acres
in
size)
,
and
(
2)
within
this
group
we
have
estimated
only
those
firms
located
in
non
Phase
II
compliant
states
would
be
affected.
This
second
assumption
ignores
the
fact
that
it
is
site
location,
not
firm
location,
that
would
determine
coverage
under
Phase
II,
and
that
many
construction
firms
operate
outside
their
home
state.

Note
that
EPA
has
not
assessed
the
potential
combined
benefits
of
the
Phase
II
and
effluent
guidelines
requirements.
The
Phase
II
rule
EA
indicated
benefits
from
the
construction
part
of
the
rule
of
$
540
to
$
686
million
per
year
(
U.
S.
EPA
1999,
Table
6­
20)
.

5C­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5C.
2
BASELINE
ANALYSIS
Throughout
the
economic
analysis
of
the
proposed
C&
D
effluent
guidelines,
EPA
has
assumed
the
industry
is
in
full
compliance
with
all
applicable
existing
laws
and
regulations
related
to
storm
water
management
(
see
U.
S.
EPA
2002,
Section
4.11)
.
This
includes
the
final
storm
water
Phase
II
regulations,

which
were
published
on
December
8,
1999
(
64
FR
235;
page
68794)
.
The
Phase
II
rules
apply
to
sites
between
one
and
five
acres
in
size.

While
many
permitting
authorities
have
already
begun
implementing
the
Phase
II
requirements,

the
deadline
for
obtaining
permit
coverage
is
not
until
March
10,
2003.
As
a
result,
it
is
likely
that
the
C&
D
industry
is
not
uniformly
compliant
with
these
requirements
at
this
time.
One
implication
is
that
the
economic
baseline
used
to
assess
the
impacts
of
the
proposed
effluent
guideline
may
not
reflect
industry
conditions
once
the
Phase
II
regulations
have
been
fully
implemented.
To
account
for
this,
EPA
has
conducted
a
supplemental
analysis
that
includes
the
combined
costs
and
impacts
of
meeting
the
Phase
II
requirements
and
the
proposed
effluent
guidelines.
This
section
describes
the
methodology
used
to
conduct
this
analysis
and
presents
the
results.

5C.
2.1
National
Compliance
Costs
The
economic
analysis
for
the
construction
component
of
the
final
Phase
II
storm
water
rule
was
based
on
engineering
costs
developed
for
three
site
size
classes:
1­
,
3­
,
and
5­
acres.
Within
each
site
size
class
EPA
developed
costs
for
erosion
and
sediment
control
(
ESC)
specific
to
sites
in
low,
medium,
and
high
rainfall
regions
and
with
low,
medium,
and
high
slope
conditions.
Since
EPA
did
not
have
a
distribution
of
sites
by
rainfall
region
or
slope
condition,
a
simple
average
of
the
costs
across
all
site
types
was
used
within
each
size
class.
Table
5C­
1
shows
the
costs
and
costs
per
acre
for
the
three
site
size
classes,
with
costs
updated
to
1997
dollars.

5C­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5C­
1.
Costs
of
Phase
II
Erosion
and
Sediment
Control,
by
Site
Size
(
$
1997)

Site
Size
(
Acres)
ESC
Costs
ESC
Costs
per
Acre
1
$
1,187
$
1,187
3
$
4,524
$
1,508
5
$
8,569
$
1,714
Source:
Economic
Analysis
of
the
Final
Storm
Water
Phase
II
Rules.
U.
S.
EPA
(
1999)
;
ENR
(
2001)
.

In
addition
to
the
ESC
costs,
EPA
estimated
the
industry
would
incur
$
937.46
in
administrative
costs
(
$
922.42
in
$
1997)
for
each
permitted
construction
project.
These
include
costs
associated
with
the
following
elements:
notification
of
intent,
municipal
notification,
storm
water
pollution
prevention
plan,

record
retention,
and
notification
of
termination.
Thus,
the
total
costs
to
industry
of
compliance
with
the
construction
portion
of
the
Phase
II
rules
include
the
costs
of
ESC
controls
and
the
administrative
costs.

The
Phase
II
compliance
costs
were
applied
to
EPA
 
s
estimate
of
the
number
of
projects
falling
within
the
one
to
five
acre
size
class.
Projects
in
areas
with
equivalent
programs
were
excluded,
including
14
states
covered
by
equivalent
existing
state
programs
and
two
states
and
parts
of
four
other
states
covered
by
requirements
equivalent
to
those
implemented
under
the
Coastal
Zone
Act
Reauthorization
Amendments
(
CZARA)
(
which
covers
nonpoint
sources
of
pollution,
including
construction
activities,
in
coastal
regions)
.
The
national
compliance
costs
of
the
Phase
II
rules
were
estimated
in
1998
dollars
to
be
$
545
­
$
679
million.
1
EPA
added
the
Phase
II
compliance
cost
estimates
to
the
compliance
costs
of
the
proposed
ELG
to
obtain
an
alternate
estimate
of
the
compliance
costs
(
and
social
costs)
of
the
proposed
rule
under
the
alternative
baseline.
Table
5C­
2
shows
the
national
costs
under
the
alternative
baseline
scenario,
obtained
by
adding
the
national
ESC
and
administrative
costs
from
the
Phase
II
analysis
to
the
national
compliance
costs
associated
with
the
proposed
effluent
guidelines.
The
combined
industry
compliance
costs
are
$
539.3
million
under
Option
1
and
$
890.3
million
under
Option
2.
Table
5C­
3
indicates
the
combined
social
costs
are
$
891.1
million
for
Option
2
(
1997
dollars)
.

1
Source:
Phase
II
final
EA,
Table
4­
18,
p.
4­
25.

5C­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5C­
2.
Estimated
National
Costs
of
Erosion
and
Sediment
Controls
Alternative
Baseline
Scenario
(
No
Phase
II
Compliance)
(
$
1997
millions,
pre­
tax)

Option
National
Costs
by
Type
of
Construction
(
$
millions)

Total
Single­
Family
Multifamily
Commercial
Industrial
1
$
64.6
$
39.3
$
413.4
$
22.0
$
539.3
2
$
161.9
$
86.8
$
612.3
$
29.3
$
890.3
3
$
0.0
$
0.0
$
0.0
$
0.0
$
0.0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5C­
3.
Social
Costs
and
Benefits
Erosion
and
Sediment
Controls
Alternative
Baseline
Scenario
(
No
Phase
II
Compliance)
(
$
1997
millions,
pre­
tax)

Option
Installation,
Design
and
Permitting
Operation
and
Maintenance
Government
Costs
Deadweight
Loss
Total
Social
Costs
Total
Benefits
a
1
$
539.3
$
0.0
$
0.0
$
0.1
$
539.4
$
9.7
2
$
842.4
$
48.0
$
0.3
$
0.4
$
891.1
$
20.6
3
$
0.0
$
0.0
$
0.0
$
0.0
$
0.0
$
0.0
a
Benefits
do
not
include
benefits
of
Phase
II
rule.
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5C.
2.2
Economic
Impacts
EPA
assessed
the
economic
impacts
under
the
alternative
baseline
using
a
similar
approach
to
that
described
in
Chapter
Four
of
the
draft
Economic
Analysis
(
EA)
.
The
impacts
on
key
financial
ratios
were
assessed
for
model
projects
and
model
firms.
The
model
firm
impact
analysis
was
then
extended
to
estimate
the
number
of
firm
closures
and
the
associated
employment
losses.

5C.
2.2.1
Analysis
of
Impacts
on
Model
Projects
EPA
assessed
the
impacts
of
the
combined
costs
of
the
Phase
II
and
proposed
effluent
guidelines
requirements
on
model
projects
using
the
same
approach
described
in
Section
4.2.
EPA
developed
a
series
of
model
C&
D
projects
and
flowed
the
incremental
costs
through
these
models
to
assess
the
impacts
on
project
viability.
The
model
project
scenarios
were
analyzed
under
the
alternative
assumptions
of
100
5C­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
percent
cost
pass
through
(
the
end
consumer
bears
all
of
the
cost)
and
zero
cost
pass
through
(
the
developer­
builder
bears
all
of
the
cost)
.
In
the
former
case
the
impacts
are
reflected
in
a
higher
price
for
the
finished
product
(
home,
apartment,
commercial
or
industrial
building)
while
in
the
latter
case
the
impacts
are
reflected
in
reduced
profits
to
the
builder­
developer.

Table
5C­
4a
shows
the
combined
impact
of
the
Phase
II
and
proposed
effluent
guidelines
costs
on
model
project
financials
under
the
100
percent
cost
pass
through
scenario.
Table
5C­
4b
shows
the
same
impacts
under
the
zero
percent
cost
pass
through
scenario.

Table
5C­
4a.
Impact
of
Combined
Phase
II
and
Proposed
Effluent
Guidelines
Costs
on
Model
Project
Financials
 
100
Percent
Cost
Pass­
Through
and
All
Project
Sizes
Option
Percent
Change
in
Project
Price
to
Buyer
Single­
Family
Multifamily
Commercial
Industrial
Min
Max
Min
Max
Min
Max
Min
Max
1
0.00%
0.47%
0.00%
0.26%
0.00%
0.24%
0.00%
0.37%

2
0.00%
0.44%
0.00%
0.24%
0.00%
0.22%
0.00%
0.34%

3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5C­
4b.
Impact
of
Combined
Phase
II
and
Proposed
Effluent
Guidelines
Costs
on
Model
Project
Financials
 
Zero
Cost
Pass­
Through
and
All
Project
Sizes
Option
Percent
Change
in
Builder­
Developer
Profit
Single­
Family
Multifamily
Commercial
Industrial
Min
Max
Min
Max
Min
Max
Min
Max
1
0.00%
­
4.60%
0.00%
­
2.35%
0.00%
­
2.13%
0.00%
­
3.36%

2
0.00%
­
4.23%
0.00%
­
2.15%
0.00%
­
1.96%
0.00%
­
3.09%

3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5C­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
For
Option
1,
under
the
alternate
baseline,
the
maximum
percent
change
in
project
cost
to
the
buyer
ranges
from
0.24
percent
(
commercial
project)
to
0.47
percent
(
single­
family
project)
.
This
is
higher
than
the
range
of
maximum
impact
given
in
Table
5­
2a
of
the
draft
EA,
Chapter
5
(
0.02
percent
for
a
commercial
project
to
0.04
percent
for
a
single­
family
project)
.

Impacts
on
builder
profits
are
also
greater
under
the
alternate
baseline
assumption.
As
shown
in
Table
5C­
4b,
the
maximum
impacts
range
from
­
4.60
percent
for
a
single­
family
project
under
Option
1,

up
to
­
1.96
percent
for
a
commercial
project
under
Option
2.
This
is
2
to
3
percent
higher
than
the
impacts
shown
in
Chapter
5
of
this
EA,
Table
5­
2b,
where
the
maximum
impact
ranges
from
­
0.17
percent
for
a
commercial
project
up
to
­
0.80
percent
for
a
single­
family
project.

5C.
2.2.2
Analysis
of
Impacts
on
Model
Establishments
In
Section
4.3
EPA
developed
a
series
of
model
firms
based
on
composite
industry
financial
data
collected
by
Dun
&
Bradstreet
(
D&
B
2000)
.
For
single­
family
and
multifamily
housing
EPA
constructed
one
model
for
each
starts
size
class
while
for
commercial
and
industrial
construction
there
is
a
single
model
firm.
EPA
examined
the
impact
of
the
regulatory
costs
on
model
firm
financial
performance
by
analyzing
changes
in
key
financial
ratios
as
the
annual
regulatory
costs
are
absorbed
into
the
model
firm
 
s
financial
statement.
Complete
details
on
the
methodology
can
be
found
in
Chapter
Four,
Section
4.3
of
this
economic
analysis.

Under
this
baseline
scenario
some
firms
will
be
impacted
to
a
greater
extent
than
others
because
they
operate
on
sites
subject
to
the
Phase
II
storm
water
requirements
and
in
jurisdictions
that
have
not
yet
fully
implemented
the
Phase
II
requirements.
As
a
result,
the
baseline
financial
conditions
for
these
firms
used
in
the
economic
analysis
may
not
fully
reflect
adjustments
necessary
to
meet
the
Phase
II
requirements.
To
address
this,
EPA
has
analyzed
the
impacts
associated
with
meeting
the
combined
requirements
of
Phase
II
and
the
C&
D
effluent
guidelines.

As
noted
above,
the
Phase
II
rules
apply
to
construction
sites
greater
than
one
acre
and
less
than
five
acres
in
size.
EPA
currently
lacks
information
on
how
frequently
firms
operate
on
sites
that
fall
within
this
size
range.
As
a
result,
EPA
cannot
present
reliable
data
on
the
extent
to
which
firms
might
5C­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
be
subject
to
both
the
Phase
II
requirements
and
the
proposed
effluent
guidelines
requirements.
At
one
extreme
there
may
be
firms
that
operate
only
on
sites
greater
than
five
acres.
Such
firms
are
likely
be
already
compliant
with
the
existing
Phase
I
requirements
and
thus
would
face
only
the
incremental
requirements
associated
with
the
proposed
effluent
guidelines.
On
the
other
extreme
are
firms
that
may
operate
exclusively
on
sites
between
one
and
five
acres
in
size
and
in
jurisdictions
that
have
not
fully
implemented
the
Phase
II
requirements.
These
firms
would
incur
the
combined
costs
of
the
Phase
II
and
proposed
effluent
guidelines
Option
1
requirements
on
100
percent
of
their
projects.
In
between
there
will
be
firms
who
operate
only
part
of
the
time
on
sites
subject
to
the
combined
Phase
II
and
proposed
effluent
guidelines
requirements.

Insufficient
data
is
available
to
allow
EPA
to
develop
a
distribution
of
firms
by
the
extent
of
exposure
to
both
the
Phase
II
requirements
and
the
proposed
effluent
guidelines
requirements.
As
a
result,
EPA
has
modeled
this
baseline
scenario
only
for
firms
with
100
percent
exposure
to
both
sets
of
requirements.
This
represents
an
absolute
worst­
case
scenario
in
terms
of
potential
impacts.
EPA
expects
that
only
a
small
proportion
of
the
industry
would
actually
be
represented
by
this
model
firm
scenario.

Table
5C­
5
shows
the
impact
of
the
combined
Phase
II
and
proposed
effluent
guidelines
compliance
costs
on
model
firm
financial
ratios
under
the
zero
cost
pass
through
assumption
(
i.
e.
,
the
firm
absorbs
100
percent
of
the
compliance
costs)
.

Table
5C­
5.
Impact
of
Combined
Phase
II
and
Proposed
Effluent
Guidelines
Costs
on
Model
Firm
Financials
 
Zero
Cost
Pass
Through
Option
Percent
Change
in
Financial
Ratios
From
Baseline
Gross
Profit
Return
on
Net
Worth
Current
Ratio
Debt
to
Assets
Min
Max
Min
Max
Min
Max
Min
Max
Single­
family
Residential
1
0.00%
­
2.40%
0.00%
­
27.04%
0.00%
­
0.21%
0.00%
0.96%
2
0.00%
­
2.20%
0.00%
­
24.83%
0.00%
­
0.20%
0.00%
0.88%
3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Multifamily
Residential
1
0.00%
­
1.73%
0.00%
­
5.57%
0.00%
­
0.30%
0.00%
1.15%
2
0.00%
­
1.59%
0.00%
­
5.11%
0.00%
­
0.27%
0.00%
1.06%
3
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
0.00%
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5C­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
For
Option
1,
the
largest
impacts
generally
occur
in
the
multifamily
sector.
Percent
change
in
gross
profit
for
the
single­
family
sector
ranges
from
­
2.20
percent
to
­
2.40
percent.
Under
the
initial
baseline,
the
range
was
from
­
0.23
percent
to
­
0.52
percent.
For
the
multifamily
residential
sector,
the
change
in
gross
profit
ranges
from
­
1.59
percent
to
­
1.73
percent.
The
change
in
gross
profit
for
the
multifamily
sector
is
also
higher
under
the
alternate
baseline
than
under
the
initial
baseline
assumption.

Change
in
gross
profit
from
the
initial
baseline
was
from
­
0.31
percent
to
­
0.95
percent.

The
current
ratio
shows
the
least
change
from
baseline
of
all
four
financial
ratios
in
both
sectors.

The
maximum
percent
change
in
current
ratio
for
the
single­
family
sector
ranges
from
­
0.20
percent
to
­

0.21
percent.
Under
the
initial
baseline,
these
impacts
were
lower,
ranging
from
­
0.02
percent
to
­
0.05
percent.
For
the
multifamily
sector
the
change
ranges
from
­
0.27
percent
to
­
0.30
percent.
Again,
impacts
were
less
severe
under
the
initial
baseline
assumption,
where
change
in
current
ratio
for
the
multifamily
sector
ranged
from
­
0.05
percent
to
­
0.16
percent.

As
with
the
analysis
in
the
EA,
the
largest
impacts
over
all
model
firm
financials
under
the
alternate
baseline
is
on
the
return
on
net
worth.
Here,
the
percent
change
from
baseline
ranges
from
­
24.83
percent
to
­
27.04
percent
in
the
single­
family
sector
and
from
­
5.11
percent
to
­
5.57
percent
in
the
multifamily
sector
(
both
under
zero
cost
pass
through)
.
Under
the
initial
baseline,
change
in
return
on
net
worth
ranges
from
­
2.54
percent
to
­
5.85
percent
for
single­
family
and
from
­
0.99
percent
to
­
3.07
percent
for
multifamily.

Incremental
impacts
on
debt­
to­
assets
ratios
(
also
called
the
debt­
to­
equity
ratio)
for
the
single­

family
sector
range
from
0.88
percent
to
0.96
percent.
Under
the
initial
baseline,
change
in
the
debt­
to­

assets
ratio
in
this
sector
range
from
0.21
percent
to
0.90
percent.
For
the
multifamily
sector,
the
percent
change
in
debt­
to­
assets
ratio
over
baseline
ranges
from
1.06
percent
to
1.15
percent.
The
impacts
under
the
initial
baseline
for
this
sector
range
from
0.20
percent
to
0.64
percent.

5C­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5C.
2.2.3
Analysis
of
Impacts
on
Closures
and
Employment
Losses
EPA
examined
the
potential
impact
of
the
combined
Phase
II
and
proposed
effluent
guidelines
requirements
on
closures
and
employment
losses
using
the
general
approach
developed
in
Section
4.3.2.

The
approach
is
based
on
the
model
firm
analysis
presented
in
the
section
above.
EPA
estimated
the
change
in
the
number
of
firms
considered
financially
 
stressed
 
(
(
and
their
employment)
as
a
result
of
the
regulatory
action
by
examining
key
financial
ratios
with
and
without
the
compliance
cost
impacts.
The
financial
stress
indicators
were
used
to
identify
firms
that
could
potentially
shut
down
and
close
as
a
result
of
the
regulatory
action.

As
explained
above,
EPA
lacks
reliable
data
on
the
distribution
of
firms
by
extent
of
exposure
to
the
Phase
II
requirements.
Although
key
information
on
the
exposure
of
firms
to
the
combined
effect
of
Phase
II
and
the
proposed
effluent
guidelines
was
not
available,
EPA
developed
closure
estimates
for
the
single­
family
and
multifamily
homebuilding
sector
only
by
making
a
number
of
assumptions.
2
First,
EPA
assumed
that
the
firms
most
likely
to
operate
on
sites
subject
to
the
Phase
II
requirements
(
i.
e.
,
sites
between
one
and
five
acres
in
size)
are
those
in
the
5­
9
and
10­
24
starts
per
year
class.
3
At
the
national
average
lot
size
of
0.31
acres
this
translates
to
disturbance
of
between
1.55
and
7.44
acres.
EPA
further
assumed
that
all
of
the
activities
of
firms
in
these
size
classes
takes
place
on
sites
between
1
and
5
acres
in
size.
4
2
EPA
has
a
distribution
of
establishments
by
starts
size
class
for
the
single­
family
and
multifamily
sectors
only
and
therefore
could
not
conduct
the
same
analysis
for
the
commercial
and
industrial
sector.

3
These
establishments
represent
35
percent
of
all
establishments
and
account
for
21
percent
of
new
single­
family
homes.
See
Table
2­
20.
Builders
in
the
1­
4
starts
class
(
accounting
for
43
percent
of
establishments
and
7
percent
of
starts)
were
already
assumed
to
build
predominantly
on
sites
under
1
acre
in
size
and
thus
will
not
be
impacted
by
the
proposed
rule
requirements.
See
Sections
2.34
and
2.35.

4
The
next
largest
starts
class
is
between
25
and
99
units.
This
translates
to
between
7.5
and
33
acres
disturbed.
EPA
judged
that
at
this
size
class
and
above
it
was
unlikely
that
firms
would
operate
solely
or
predominantly
on
sites
between
1
and
5
acres
in
size.

5C­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
closure
analysis
is
thus
based
on
the
following:

 
The
combined
Phase
II
and
effluent
guidelines
costs
are
applied
to
establishments
in
the
5­
9
and
10­
24
starts
class
located
in
states
without
equivalent
Phase
II
programs
at
the
time
of
promulgation
of
the
Phase
II
rules.

 
The
analysis
assumes
all
activities
of
firms
in
these
starts
classes
in
affected
states
are
subject
to
the
combined
compliance
costs
of
Phase
II
and
the
effluent
guideline.

 
The
costs
per
acre
for
the
effluent
guidelines
only
are
applied
to
remaining
establishments
(
i.
e.
,
those
in
the
25+
starts
size
classes)
in
these
states
and
to
all
establishments
in
all
other
states.

 
Closures
and
employment
losses
are
calculated
under
the
zero
cost
pass
through
assumption.

Tables
5C­
6
and
5C­
7
present
the
results
of
the
closure
analysis.
Table
5C­
6
shows
the
estimated
closures
for
the
single­
family
and
multifamily
sectors
under
the
alternate
baseline.
Table
5C­
7
shows
the
estimated
employment
losses
for
the
single­
family
and
multifamily
sectors
under
the
alternate
baseline.

As
shown
in
the
tables
below,
EPA
has
estimated
that
approximately
16
single­
family
businesses
(
0.02
percent
of
all
potentially
affected
single­
family
businesses)
,
and
4
multifamily
businesses
(
0.09
percent
of
potentially
affected
multifamily
businesses)
,
will
be
subject
to
possible
closure
due
to
the
proposed
rule.
Under
the
initial
baseline,
EPA
estimated
that
13
single­
family
businesses
and
3
multifamily
businesses
would
be
subject
to
closure.

EPA
has
estimated
employment
losses
with
the
alternative
baseline
to
be
approximately
230
for
the
single­
family
and
multifamily
sectors
(
less
than
one­
half
of
one
percent
of
potentially
affected
employees
in
these
two
sectors)
.
Under
the
initial
baseline,
EPA
estimated
employment
losses
of
approximately
206
for
both
sectors.

5C­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5C­
6.
Estimated
Facility
Closures
Alternate
Baseline
Zero
Cost
Pass
Through
Option
Single­
Family
Multifamily
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
12
0.014%
2
0.043%
14
0.057%

2
16
0.019%
4
0.087%
20
0.106%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

Table
5C­
7.
Estimated
Employment
Losses
Alternate
Baseline
Financial
Ratio
Method
Zero
Cost
Pass
Through
Option
Single­
Family
Multifamily
TOTAL
Number
Pct.
of
Total
Number
Pct.
of
Total
Number
Pct.
of
Total
1
64
0.019%
18
0.051%
82
0.070%

2
162
0.048%
65
0.185%
227
0.233%

3
0
0.000%
0
0.000%
0
0.000%

Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5C.
2.2.4
Analysis
of
Impacts
on
the
National
Construction
Market
The
Phase
II
baseline
scenario
adds
the
same
costs
per
acre
to
each
type
of
construction.
The
impact
on
each
type
of
construction
is
a
weighted
average
of
the
number
of
acres
subject
to
the
Phase
II
regulation.
The
incremental
costs
to
bridge
the
gap
between
the
Phase
II
baseline
and
the
initial
baseline
are
also
the
same
across
policy
options.
Thus,
assessing
this
baseline
scenario
is
unlikely
to
change
the
rank
order
of
costs
among
policy
options
but
merely
demonstrate
larger
impacts
by
including
all
recent
EPA
C&
D
regulation
rather
than
showing
only
the
effects
of
the
proposed
effluent
guidelines.

5C­
11
­
­
­
­
­
­
­
­
­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5C­
8
repeats
the
affordability
assessment
from
the
initial
baseline
analysis.
It
shows
the
worst
case
scenario
in
which
the
Phase
II
alternative
baseline
applies
to
all
regulated
construction
sites.

The
impacts
are
considerably
larger
than
under
the
standard
baseline.
The
most
costly
option
decreases
the
number
of
families
that
could
have
afforded
the
model
home
by
0.21
percent.
This
is
slightly
more
than
the
0.15
percent
cut
estimated
under
the
standard
baseline.

Table
5C­
8.
Impact
of
Erosion
and
Sediment
Control
Costs
on
Housing
Affordability
Alternative
Baseline
Scenario
(
No
Phase
II
Compliance)
(
$
1997
millions,
pre­
tax)
.

Option
Storm
Water
Control
Costs
Per
Lot
Change
in
Costs
per
Unit
Income
Needed
to
Qualify
Change
in
Income
Needed
Number
of
Households
Shifted
(
thousands)
Percent
of
Households
Shifted
That
Could
Afford
Baseline
1
$
62
$
112
$
82,503
$
32
­
16
­
0.08%

2
$
153
$
277
$
82,551
$
79
­
40
­
0.21%

3
$
0
$
0
$
82,472
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

The
changes
in
output
and
employment
are
considerably
greater
under
the
alternative
baseline.

Table
5C­
9
shows
that
under
the
more
costly
Option
2,
construction­
related
impacts
decrease
employment
by
7,800
jobs.
The
stimulus
effect
of
the
regulation
increases
employment
by
a
more
than
offsetting
19,410
jobs.
The
change
in
consumer
spending,
however,
causes
a
job
loss
of
12,900
jobs
in
all
industries
nationwide.
This
is
half
again
as
large
as
the
job
losses
from
consumer
spending
estimated
under
the
original
baseline
for
Option
2
(
8,640
jobs)
.
Table
5C­
9
shows
a
net
employment
loss
of
1,300
under
Option
2.
This
is
about
the
same
as
the
net
employment
effect
under
the
initial
baseline
(
1,440
jobs)

Clearly,
the
estimated
impact
of
the
proposed
rule
depends
on
which
baseline
is
considered
more
appropriate.

5C­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
5C­
9
Changes
in
Output
and
Total
Employment
from
the
Alternate
Baseline
(
$
1997)

Option
Comb.
Loss
of
Output
(
$
Million)
Stimulus
from
Added
Work
(
$
Million)
Change
in
Employment
from
Lost
Output
(
Jobs)
Change
in
Employment
from
Stimulus
(
Jobs)
Net
Change
in
Employment
from
Construction
Impacts
(
Jobs)
Change
in
Employment
from
Consumer
Spending
(
Jobs)
Net
Change
in
Total
Employment
(
Jobs)
Single­
family
1
(
30)
67
(
1,101)
2,477
1,376
(
1,616)
(
241)

2
(
74)
165
(
2,732)
6,147
3,414
(
4,012)
(
598)

3
0
0
0
0
0
0
0
Multifamily
1
(
4)
10
(
136)
354
218
(
260)
(
41)

2
(
8)
21
(
293)
772
479
(
567)
(
88)

3
0
0
0
0
0
0
0
Commercial
1
(
50)
143
(
1,840)
5,319
3,478
(
3,569)
(
90)
2
(
102)
295
(
3,789)
10,965
7,176
(
7,361)
(
185)

3
0
0
0
0
0
0
0
Industrial
1
(
14)
21
(
520)
779
259
(
478)
(
219)

2
(
27)
(
41)
(
1,019)
1,527
508
(
940)
(
432)

3
0
0
0
0
0
0
0
Total
1
(
97)
240
(
3,597)
8,928
5,332
(
5,923)
(
591)

2
(
211)
522
(
7,833)
19,410
11,577
(
12,880)
(
1,303)

3
0
0
0
0
0
0
0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four.

5C­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
5C.
3
REFERENCES
Dun
&
Bradstreet.
2000.
1999­
2000
Industry
Norms
and
Key
Business
Ratios.

ENR.
2001.
ENR
Construction
Cost
Index.
Engineering
News
Record.
Available
at:
http:
/
/
www.
enr.
com/
cost/
costcci.
asp.
Accessed
on
December
17,
2001.

U.
S.
EPA.
1999.
Economic
Analysis
of
the
Final
Phase
II
Storm
Water
Rule.
U.
S.
Environmental
Protection
Agency.

5C­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
SIX
INITIAL
REGULATORY
FLEXIBILITY
ANALYSIS
6.1
INTRODUCTION
TO
THE
INITIAL
REGULATORY
FLEXIBILITY
ANALYSIS
This
section
considers
the
effects
that
the
proposed
C&
D
regulations
would
have
on
small
entities
in
accordance
with
the
Regulatory
Flexibility
Act
(
RFA,
5
U.
S.
C
et
seq.
,
Public
Law
96­
354)
as
amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act
of
1996
(
SBREFA)
.
The
purpose
of
the
RFA
is
to
establish
as
a
principle
of
regulation
that
agencies
should
tailor
regulatory
and
informational
requirements
to
the
size
of
entities,
consistent
with
the
objectives
of
a
particular
regulation
and
applicable
statutes.
The
RFA
generally
requires
an
agency
to
prepare
an
initial
regulatory
flexibility
analysis
(
IRFA)
of
any
rule
subject
to
notice­
and­
comment
rulemaking
requirements
under
the
Administrative
Procedure
Act
or
any
other
statute
unless
the
agency
certifies
that
the
rule
will
not
have
a
 
significant
impact
on
a
substantial
number
of
small
entities.
 
1
Small
entities
include
small
businesses,

small
organizations,
and
governmental
jurisdictions.

For
this
proposed
rulemaking,
EPA
conducted
outreach
to
small
businesses,
convened
a
Small
Business
Advocacy
Review
(
SBAR)
panel,
and
prepared
an
IRFA.
2
The
IRFA
is
detailed
in
this
section
and
represents
EPA
 
s
assessment
of
the
impacts
of
the
proposed
regulations
on
small
businesses
in
the
C&
D
industries.
The
analysis
is
presented
as
follows:

C
Section
6.2
outlines
EPA
 
s
initial
assessment
of
small
businesses
in
the
industries
affected
by
the
proposed
regulations.

C
Section
6.3
presents
EPA
 
s
analysis
(
i.
e.
,
IRFA)
and
summarizes
the
steps
taken
by
EPA
to
comply
with
the
RFA.

1
The
preparation
of
an
IRFA
for
a
proposed
rule
does
not
legally
foreclose
certifying
no
significant
impact
for
the
final
rule
(
USEPA,
1999)
.

2
This
analysis
or
a
summary
of
the
analysis
must
be
published
in
the
Federal
Register
at
the
time
of
publication
of
a
proposal.

6­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
C
Section
6.4
presents
the
data,
methodology,
and
results
of
EPA
 
s
analysis
of
impacts
to
small
businesses
for
this
rulemaking.

6.2
INITIAL
ASSESSMENT
EPA
has
determined
that
the
proposed
C&
D
regulations
are
subject
to
notice­
and­
comment
rulemaking
requirements.
EPA
has
developed
a
profile
of
the
C&
D
industry
that
includes
all
potentially
affected
operations
as
well
as
small
businesses.
This
information
is
provided
in
Chapter
Two
and
also
in
Chapters
Four
and
Five
of
this
EA.
Much
of
the
profile
information
covered
in
these
sections
applies
to
small
businesses.
Additional
information
on
small
businesses
in
the
C&
D
industry
is
provided
in
Sections
6.2
and
6.3
of
this
chapter.
EPA
 
s
assessment
concludes
that
the
proposed
rule
may
affect
small
entities
and
the
proposed
rule
would
have
an
adverse
economic
impact
on
small
entities.

Section
6.2.1
reviews
the
SBA
definitions
of
small
entities
in
the
C&
D
industry.
Section
6.2.2
then
uses
the
definitions
of
small
entities
laid
out
in
Section
6.2.1
to
estimate
the
number
of
operations
that
meet
this
small
business
definition.

6.2.1
Definition
of
Affected
Small
Entities
The
RFA
defines
a
 
small
entity
 
as
a
small
not­
­
for­
profit
organization,
small
governmental
jurisdiction,
or
small
business.
EPA
expects
that
the
principal
impact
of
the
C&
D
regulations
on
small
entities
will
fall
on
(
1)
small
businesses
that
undertake
C&
D
activities
and
(
2)
small
governmental
units
involved
in
permitting
C&
D
activities.
With
respect
to
the
first
of
these
categories,
the
majority
of
C&
D
activity
in
the
United
States
is
undertaken
by
private
businesses,
hence
the
small
entity
analysis
will
focus
on
small
businesses
engaged
in
C&
D
activities.
3
With
respect
to
the
second
category
of
impact,

permitting
activity
is
undertaken
exclusively
by
governmental
units
(
at
various
levels
of
government)
,

hence
this
part
of
the
analysis
will
focus
on
the
impacts
on
small
government
units.

3
While
some
governmental
and
nonprofit
entities
may
engage
directly
in
C&
D
activities
(
i.
e.
,
undertake
C&
D
work
of
their
own
accord)
,
complete
information
is
not
available
to
warrant
inclusion
of
governmental
or
nonprofit
entities
in
this
analysis.
For
this
reason,
this
analysis
focuses
only
on
small
businesses.

6­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
RFA
requires
(
with
some
exception)
that
EPA
define
 
small
 
businesses
according
to
the
size
standards
established
by
the
Small
Business
Administration
(
SBA)
.
SBA
establishes
criteria
for
identifying
small
businesses
based
on
either
the
number
of
employees
or
annual
revenues
(
13
CFR
121)
.
4
These
size
standards
vary
by
NAICS
(
North
American
Industrial
Classification
System)
code,
and
previously
by
Standard
Industrial
Classification
(
SIC)
codes.
Qualifying
revenue
levels
differ
among
NAICS
industries,
and
within
the
C&
D
industries
there
is
a
range
of
qualifying
revenue
levels,
from
$
5.0
million
for
NAICS
23311
(
Land
subdivision
and
development)
to
$
27.5
million
for
the
majority
of
industries
within
NAICS
233
and
234.
For
businesses
in
the
special
trades
industries,
the
small
business
size
threshold
is
$
11.5
million
in
revenues.
Table
6­
1
summarizes
the
SBA
revenue
thresholds
for
small
businesses
in
each
of
the
C&
D
industries.

4
Employees
counted
in
determining
size
includes
all
individuals
employed
on
a
full­
time,
part­
time,
temporary
or
other
basis.
Employment
is
measured
as
the
average
number
of
employees
for
each
pay
period
over
the
previous
12
months.
For
standards
based
on
revenues,
SBA
uses
the
average
revenues
over
the
last
three
completed
fiscal
years.

6­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
1.
SBA
Small
Business
Definitions
for
the
Construction
and
Development
Industry
NAICS
Code
Description
SBA
Revenue
Size
Cutoff
(
Millions)

233110
Land
subdivision
and
land
development
$
5.0
233210
Single­
family
housing
construction
$
27.5
233220
Multifamily
housing
construction
$
27.5
233310
Manufacturing
and
industrial
building
construction
$
27.5
233320
Commercial
and
institutional
building
construction
$
27.5
234110
Highway
and
street
construction
$
27.5
234120
Bridge
and
tunnel
construction
$
27.5
234910
Water,
sewer,
and
pipeline
construction
$
27.5
234920
Power
and
communication
transmission
line
construction
$
27.5
234930
Industrial
nonbuilding
structure
construction
$
27.5
234990
All
other
heavy
construction
$
27.5
235930
Excavation
contractors
$
11.5
235940
Wrecking
and
demolition
contractors
$
11.5
Source(
s)
:
13
CFR
121
(
Small
Business
Size
Regulations;
Size
Standards
and
the
North
American
Industry
Classification
System;
Correction)
;
Small
Business
Administration
1998:
Firm
Size
Data
(
see
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html)

6.2.2
Number
of
Small
Businesses
Affected
The
number
of
small
businesses
affected
by
the
proposed
rule
was
estimated
through
a
series
of
steps.
First,
EPA
estimated
the
number
of
establishments
in
the
affected
industries.
From
the
number
of
establishments,
EPA
then
estimated
the
number
of
businesses
(
or
firms)
affected.
Finally,
EPA
estimated
the
number
of
small
businesses
affected.

6­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.2.2.1
Number
of
Establishments
Affected
The
first
step
in
the
small
entity
analysis
is
to
determine
the
number
of
establishments
affected.

EPA
developed
estimates
of
the
number
of
potentially
affected
establishments
in
Chapter
Two
(
see
Table
2­
14.
)
The
estimate
of
148,553
potentially
affected
businesses
was
obtained
after
subtracting
62,400
establishments
judged
to
be
primarily
engaged
in
remodeling
activities,
and
50,661
homebuilding
establishments
that
construct
fewer
than
four
homes
per
year
and
who
were
judged
unlikely
to
disturb
more
than
one
acre
of
land
on
a
regular
basis.
Table
2­
14
also
reflects
the
fact
that
EPA
distributed
establishments
in
the
land
development
industry
(
NAICS
2331)
among
the
four
building
construction
industries
(
NAICS
23321,
23322,
23331,
and
23332)
due
to
data
limitations
for
the
land
development
industry.

For
the
small
entity
analysis,
EPA
was
unable
to
include
all
of
the
establishments
potentially
affected
as
shown
in
Table
2­
14.
In
particular,
EPA
has
not
included
special
trades
(
NAICS
235)
in
its
small
entity
analysis
because
the
financial
data
upon
which
the
small
entity
analysis
is
based
is
not
available
for
these
industries.
EPA
does
not
believe,
however,
that
a
substantial
number
of
entities
in
these
industries
are
NPDES
storm
water
permittees
or
co­
permittees
and
would
therefore
not
be
subject
to
the
proposed
rule
requirements.

The
final
distribution
of
potentially
affected
establishments
used
in
the
small
entity
analysis
is
shown
in
Table
6­
2.
The
total
number
of
establishments
potentially
affected
by
the
proposed
rule
is
128,782
under
Option
1.
This
is
the
figure
upon
which
the
small
business
analysis
is
based.

6­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
2.
Number
of
Affected
Establishments
in
the
Construction
and
Development
Industry
NAICS
Industry
Option
1
Option
2
Number
Percent
of
Total
Number
Percent
of
Total
23321
Single­
family
residential
building
construction
34,070
26.5%
21,362
18.7%

23322
Multi­
family
residential
building
construction
4,603
3.6%
2,699
2.4%

23331
Manufacturing
and
industrial
building
construction
7,742
6.0%
7,742
6.8%

23332
Commercial
and
institutional
building
construction
39,810
30.9%
39,810
34.9%

23411
Heavy
construction
42,557
33.0%
42,557
37.3%

Potentially
affected
establishments
128,782
67.0%
114,170
100.0%

Totals
may
not
add
due
to
rounding.
Source:
U.
S.
Census
Bureau
(
2000a)
and
EPA
estimates.
See
also
Chapter
Two,
Table
2­
14.

6.2.2.2
Number
of
Businesses
Affected
In
order
to
estimate
the
number
of
businesses
affected
by
the
proposed
rule,
EPA
first
examined
the
ratio
of
businesses
to
establishments
from
SBA
(
1998)
data.
5
Table
6­
3
shows
these
ratios.

5
For
clarification,
an
establishment
is
defined
as
 
a
relatively
permanent
office
or
other
place
of
business
where
the
usual
business
activities
related
to
construction
are
conducted
 
(
(
Census
2000)
.
A
business
(
or
firm)
refers
to
the
aggregation
of
all
establishments
owned
by
one
company;
therefore
one
business
may
consist
of
several
establishments.

6­
6
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
3.
Ratio
of
Businesses
to
Establishments
by
Employment
Size
Class
Employment
Class
23321
Single­
Family
Housing
Construction
23322
Multifamily
Housing
Construction
23331
Manufacturing
and
Industrial
Building
Construction
23332
Commercial
and
Institutional
Building
Construction
23411
Heavy
Construction
1
to
4
1.000
1.000
1.000
1.000
0.999
5
to
9
1.000
0.999
1.000
1.000
0.999
10
to
19
0.999
1.000
0.999
0.998
0.997
20
to
99
0.993
0.994
0.997
0.991
0.991
100
to
499
0.661
0.884
0.973
0.821
0.860
500+
0.203
0.540
0.558
0.327
0.215
Source:
SBA
(
1998)
.

As
seen,
the
ratio
of
businesses
to
establishments
is
almost
one­
to­
one
for
all
establishments
with
fewer
than
100
employees.
With
the
exception
of
NAICS
23331
(
manufacturing
and
industrial
construction)
,
the
ratio
of
businesses
to
establishments
is
significantly
lower
for
establishments
employing
100
or
more
workers.
Table
6­
4
applies
these
percentages
to
the
total
number
of
establishments
in
the
four
industries
to
estimate
the
number
of
businesses.
6
The
overall
ratio
of
businesses
to
establishments
for
each
industry
was
then
applied
to
the
number
of
potentially
affected
establishments
within
each
industry.
To
illustrate,
for
the
single­
family
residential
construction
industry,

the
estimate
of
potentially
affected
businesses
is
based
on
the
following
calculation:

(
adjusted
no.
of
affected
establishments)
*
(
total
businesses/
total
establishments)
=
affected
businesses
(
34,070)
*
(
138,732/
138,850)
=
34,041
potentially
affected
businesses
The
number
of
potentially
affected
businesses
was
calculated
in
the
same
manner
for
the
remaining
industries.

6
The
table
also
shows
average
revenues
per
establishment.
These
results
are
used
in
the
next
step
to
determine
the
number
of
small
businesses
affected.

6­
7
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
4.
Estimated
Number
of
Businesses
by
Employment
Class,
and
Revenues
per
Establishment
Employment
Class
Number
of
Establishments
Ratio
of
Businesses
to
Establishments
Estimated
Number
of
Businesses
Estimated
Number
of
Establishments
Owned
by
Multifacility
Businesses
Revenues
per
Establishment
(
x
$
1,000)

Single­
Family
Housing
Construction
(
NAICS
23321)

1
to
4
106,985
1.000
106,985
0
$
412
5
to
9
21,377
1.000
21,372
5
$
1,299
10
to
19
7,234
0.999
7,227
7
$
2,991
20
to
99
1
3,022
0.993
2,999
23
$
12,073
100
to
499
2
222
0.661
147
75
$
75,923
500+
3
10
0.203
2
8
$
174,764
Subtotal
138,850
0.999
138,732
118
$
1,760
Multifamily
Housing
Construction
(
NAICS
23322)

1
to
4
4,725
1.000
4,725
0
$
383
5
to
9
1,456
0.999
1,455
1
$
1,474
10
to
19
782
1.000
782
0
$
3,612
20
to
99
1
532
0.994
529
3
$
10,692
100
to
499
2
46
0.884
41
5
$
40,855
500+
3
3
0.540
2
1
$
122,949
Subtotal
7,544
0.999
7,534
10
$
1,070
Manufacturing
and
Industrial
Building
Construction
(
NAICS
23331)

1
to
4
3,136
1.000
3,136
0
$
459
5
to
9
1,666
1.000
1,666
0
$
1,529
10
to
19
1,261
0.999
1,260
1
$
2,926
20
to
99
1
991
0.997
988
3
$
10,891
100
to
499
2
195
0.973
190
5
$
46,414
500+
3
30
0.558
17
13
$
217,247
Subtotal
7,279
0.997
7,257
22
$
4,682
Commercial
and
Institutional
Building
Construction
(
NAICS
23332)

1
to
4
17,722
1.000
17,718
4
$
467
5
to
9
7,644
1.000
7,643
1
$
1,490
10
to
19
5,861
0.998
5,850
11
$
3,434
20
to
99
1
5,518
0.991
5,470
48
$
12,663
100
to
499
2
637
0.821
523
114
$
77,162
500+
3
48
0.327
16
32
$
342,102
Subtotal
37,430
0.994
37,220
210
$
437,317
Heavy
Construction
(
NAICS
23411)

1
to
4
4,154
0.9997
4,153
1
$
281
5
to
9
1,987
0.
.
9995
1,986
1
$
939
10
to
19
1,876
0.9966
1,870
6
$
1,998
20
to
99
1
2,683
0.9907
2,658
25
$
7,124
100
to
499
2
544
0.8601
468
76
$
35,823
500+
3
26
0.2153
6
20
$
118,810
Subtotal
11,270
0.9886
11,141
129
$
4,301
Source:
Census
(
2000)
;
SBA
(
1998)
.
1
Combined
data
from
Census
20
to
49
and
50
to
99
employment
classes.
2
Combined
data
from
Census
100
to
249
and
250
to
499
employment
classes.
3
Combined
data
from
all
Census
employment
classes
of
more
than
500
employees.

6­
8
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.2.2.3
Number
of
Small
Businesses
Affected
To
determine
the
number
of
potentially
affected
small
businesses,
the
number
of
potentially
affected
businesses
was
multiplied
by
the
ratio
of
small
businesses
to
total
businesses.
To
estimate
the
number
of
small
businesses,
EPA
examined
the
distribution
of
revenues
per
establishment
by
size
of
establishment
(
see
last
column
of
Table
6­
4)
.
This
review
concluded
that
average
revenues
for
establishments
below
100
employees
in
size
are
consistently
below
the
SBA
small
business
size
threshold
(
$
27.5
million
per
year)
while
average
revenues
for
establishments
above
100
employees
consistently
exceed
the
SBA
threshold.
7
EPA
thus
concluded
that
the
number
of
businesses
with
100
or
fewer
employees
would
be
a
good
proxy
for
the
number
of
businesses
that
fall
below
the
SBA
revenue
size
threshold.
Table
6­
5
shows
the
results
of
this
review.
EPA
estimates
there
are
95,753
potentially
affected
businesses
(
representing
98.6
percent
of
all
potentially
affected
businesses)
that
fall
below
the
SBA­
defined
revenue
threshold
and
that
therefore
may
be
considered
 
small
 
businesses.
.

7
EPA
notes
that
while
the
SBA
threshold
applies
to
businesses
not
establishments,
there
are
very
few
multi­
establishment
businesses
in
the
below
100­
employee
size
classes,
therefore
the
use
of
average
establishment
revenues
is
appropriate.

6­
9
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
5.
Estimated
Number
of
Small
Businesses
Potentially
Affected
by
the
Proposed
Rule.

NAICS
Potentially
Affected
Establishments
Potentially
Affected
Businesses
Potentially
Affected
Small
Businesses
Small
Businesses
as
a
Percent
of
Total
for
Individual
Industry
Number
Percent
of
total
233210:
Single­
family
housing
construction
34,070
34,041
34,004
35.5%
99.9%

233220:
Multifamily
housing
construction
4,603
4,597
4,571
4.8%
99.4%

233310:
Manufacturing
and
industrial
building
construction
7,742
7,719
7,498
7.8%
97.1%

233320:
Commercial
and
institutional
building
construction
39,810
39,587
39,013
40.7%
98.6%

23411
Heavy
construction
11,270
11,141
10,667
11.1%
95.7%

Total
97,495
97,085
95,753
100.0%
98.6%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6.3
EPA
COMPLIANCE
WITH
RFA
REQUIREMENTS
6.3.1
Outreach
and
Small
Business
Advocacy
Review
In
accordance
with
section
609(
b)
of
the
RFA,
as
amended
by
SBREFA,
EPA
convened
a
Small
Business
Advocacy
Review
(
SBAR)
Panel
for
the
proposed
rule.
The
Panel
was
convened
on
July
16,

2001.
Panel
participants
included
representatives
from
EPA,
the
Office
of
Information
and
Regulatory
Affairs
within
the
Office
of
Management
and
Budget
(
OMB)
,
and
the
Office
of
Advocacy
of
the
Small
Business
Administration
(
SBA)
.
 
Small
Entity
Representatives
 
(
(
SERs)
,
who
advised
the
Panel,

included
small
homebuilders
and
commercial
builders.
Throughout
the
development
of
these
regulations,
EPA
conducted
outreach
to
small
businesses
in
the
C&
D
industries.
EPA
held
several
informational
public
meetings
in
1999
and
again
in
2001
to
provide
the
public
and
those
in
potentially
affected
C&
D
industries
to
learn
more
about
the
proposed
rule
and
to
voice
their
questions
and
concerns.

6­
10
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
In
addition,
several
half­
day
focus
group
sessions
were
conducted
with
members
of
the
National
Association
of
Home
Builders
(
NAHB)
in
early
2001.

Consistent
with
the
RFA/
SBREFA,
the
Panel
evaluated
the
assembled
materials
and
small
entity
comments
on
issues
related
to
the
elements
of
the
IRFA.
The
Panel
 
s
activities
and
recommendations
are
summarized
in
the
Final
Report
of
the
Small
Business
Advocacy
Review
Panel
on
EPA
 
s
Planned
Proposed
Rule
on
National
Pollutant
Discharge
Elimination
System
(
NPDES)
and
Effluent
Limitations
Guideline
(
ELG)
Regulations
for
Construction
and
Development
Activities
(
USEPA,
2001)
,
or
 
Panel
Report.
 
This
document
is
included
in
the
public
record.

6.3.2
EPA
 
s
Initial
Regulatory
Flexibility
Analysis
As
required
by
Section
603
of
the
RFA,
as
amended
by
SBREFA,
EPA
has
conducted
an
initial
regulatory
flexibility
analysis.
The
IRFA
includes
a
discussion
of
the
problems
the
proposed
rule
will
solve,
as
well
as
the
objectives
and
legal
basis
for
the
proposal.
The
IRFA
also
includes
a
description
and
estimate
of
the
following:

C
Number
of
small
businesses
that
will
be
affected;

C
The
reporting,
recordkeeping,
and
other
compliance
requirements
of
the
proposed
rule;

C
Any
Federal
rules
that
may
duplicate,
overlap,
or
conflict
with
the
proposed
rule;

C
Any
significant
regulatory
alternatives
to
the
rule
that
would
accomplish
the
stated
objectives
of
the
applicable
statutes
and
minimize
impacts
to
small
businesses.

This
section
addresses
each
of
these
requirements
of
the
IRFA
that
EPA
has
prepared
to
support
the
proposed
C&
D
regulations.

Section
607
of
the
RFA
further
notes
that
the
Agency
is
to
 
provide
either
a
quantifiable
or
numerical
description
of
the
effects
of
a
proposed
rule
or
alternatives
to
the
proposed
rule,
or
more
general
descriptive
statements
if
quantification
is
not
practicable
or
reliable.
 
For
this
rulemaking,
EPA
has
prepared
an
economic
analysis
of
the
impacts
to
small
C&
D
businesses.
This
analysis
is
provided
in
6­
11
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Section
6.4.
Additional
information
and
the
detailed
results
of
this
analysis
are
presented
in
Section
6.4.2.

6.3.2.1
Reasons
EPA
is
Considering
the
Proposed
Rule
EPA
is
proposing
effluent
limitation
guidelines
(
ELG)
for
the
C&
D
industry
under
a
settlement
agreement
with
the
Natural
Resources
Defense
Council
(
NRDC)
.
The
ELG
is
an
effort
to
establish
performance
standards
for
construction
and
development
projects
during
active
and
post­
construction
phases.
This
rulemaking
is
being
proposed
under
Title
III
of
the
Clean
Water
Act
(
CWA)
,
and
was
outlined
in
the
Phase
II
NPDES
storm
water
Final
Rule
(
64
FR
68741)
as
the
next
step
in
the
development
of
the
framework
of
the
storm
water
program.
While
construction
activities
disturbing
five
acres
or
more
land
are
already
subject
to
NPDES
permits
and
the
requirements
set
forth
in
EPA
 
s
construction
general
permit
(
CGP)
,
these
permits
do
not
generally
contain
technology­
based
requirements
for
design,
inspection,
or
maintenance
of
erosion
and
sediment
control
(
ESC)
best
management
practices
(
BMPs)
.
The
current
regulations
require
permittees
to
develop
a
storm
water
pollution
prevention
plan
(
SWPPP)
and
in
that
plan
to
describe
any
ESCs
they
will
use.
The
existing
regulations
do
not
require
that
permittees
use
particular
ESCs;
actual
ESC
selection
and
design
is
the
responsibility
of
the
permittee
in
conformance
with
any
existing
state
and
local
requirements.
State
and
local
requirements
for
ESC
design,
inspection,
and
maintenance
criteria,
if
present,
vary
widely.
The
purpose
of
this
rule
is
 
to
establish
nation­
wide
criteria
to
support
builders
and
local
jurisdictions
in
appropriate
BMP
selection
 
(
64
FR
68741)
.

6.3.2.2
Objectives
and
Legal
Basis
for
the
Proposed
Rule
Construction
and
development
(
C&
D)
activity
affecting
water
quality
typically
involves
site
selection
and
planning,
and
land­
disturbing
tasks
during
construction
such
as
clearing,
excavating
and
grading.
Disturbed
soil,
if
not
managed
properly,
can
be
easily
washed
off­
site
during
storm
events.

Storm
water
discharges
generated
during
construction
activities
can
cause
an
array
of
physical,
chemical
and
biological
impacts.
Water
quality
impairment
may
result,
in
part,
because
a
number
of
pollutants
are
6­
12
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
preferentially
absorbed
onto
mineral
or
organic
particles
found
in
fine
sediment.
The
interconnected
process
of
erosion
(
detachment
of
the
soil
particles)
,
sediment
transport,
and
delivery
is
the
primary
pathway
for
introducing
pollutants
from
construction
sites
into
aquatic
systems.
A
primary
concern
at
most
construction
sites
is
the
erosion
and
transport
process
related
to
fine
sediment
because
rain
splash,

rills
(
small
channels
typically
less
than
one
foot
deep)
and
sheetwash
(
thin
sheets
of
water
flowing
across
a
surface)
encourage
the
detachment
and
transport
of
this
material
to
water
bodies.
Although
streams
and
rivers
naturally
carry
sediment
loads,
erosion
from
construction
sites
and
runoff
from
developed
areas
can
elevate
these
loads
to
levels
above
those
in
undisturbed
watersheds.

Existing
national
storm
water
regulations
require
construction
site
operators
to
outline
controls
to
manage
construction
site
runoff,
but
do
not
require
any
specific
level
of
control.
One
of
the
options
being
proposed
(
Option
2)
would
establish
effluent
limitation
guidelines
in
the
form
of
minimum
standards
for
design
and
implementation
of
erosion
and
sediment
controls
used
during
the
active
phase
of
construction.
This
approach
would
cover
sites
with
five
or
more
acres
of
disturbed
land,
and
would
establish
minimum
requirements
for
conducting
site
inspections
and
providing
certification
as
to
the
design
and
completion
of
various
aspects
of
those
controls.

EPA
acknowledges
that
many
State
and
local
governments
have
existing
standards
for
temporary
controls.
The
proposed
rule
is
intended
to
work
in
concert
with
existing
requirements
where
equivalent,

and
would
not
supercede
more
stringent
requirements.
In
addition,
EPA
is
proposing
two
alternatives
that
would
not
set
national
standards
for
control
of
storm
water
discharges
from
construction
sites
subject
to
permit
requirements
under
section
402
of
the
CWA.
Both
of
these
approaches
would
rely
instead
on
a
combination
of
existing
State
and
local
requirements
and
additional
requirements
based
on
the
best
professional
judgement
(
BPJ)
of
the
permitting
authority.
Under
one
of
these
alternatives
(
Option
1)
,
the
proposal
would
establish
minimum
requirements
for
conducting
site
inspections
and
providing
certification
as
to
design
and
completion
of
controls
required
by
the
permit
authority
in
its
NPDES
permit.
These
requirements
are
similar
to
the
inspection
and
certification
requirements
in
Option
2.

Existing
compliance
determination
practices
for
construction
site
storm
water
controls
rely
principally
on
site
inspections
by
local
governments,
however,
enforcement
efforts
are
reported
to
be
uneven
nationwide,
largely
due
to
limited
enforcement
resources
at
the
Federal,
State
and
local
levels.
The
6­
13
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
inspection
and
certification
requirements
in
today'
s
proposed
rule
could
strengthen
the
current
permit
program.

Under
another
alternative
(
Option
3)
,
no
new
requirements
would
be
established
under
this
option.
Both
the
control
requirements
and
the
certification
requirements
would
be
left
to
the
best
professional
judgement
of
the
permitting
authority
in
order
to
allow
them
to
be
better
tailored
to
local
conditions.
These
proposed
options
are
discussed
in
more
detail
in
sections
IX
and
X
of
today'
s
notice.

At
this
time,
EPA
is
co­
proposing
all
three
options
because
it
sees
advantages
to
each.

This
rulemaking
is
being
proposed
under
Title
III
of
the
Clean
Water
Act
(
CWA)
,
specifically
under
the
authorities
of
sections
301,
304,
306,
307,
308,
402
and
501
of
the
Clean
Water
Act.
Further
legal
basis
for
this
proposed
rule
may
be
found
in
33
U.
S.
C.
sections
1311,
1314,
1316,
1317,
1318,

1342
and
1361
and
under
authority
of
the
Pollution
Prevention
Act
of
1990,
42
U.
S.
C.
13101
et
seq.
,
Pub
L.
101­
508,
November
5,
1990.
Chapter
One
of
this
report
and
the
preamble
to
the
proposed
rule
contain
more
detailed
information
on
the
objectives
and
basis
for
this
proposed
rule.

6.3.2.3
Description
and
Estimate
of
Number
of
Small
Entities
Affected
As
presented
in
Table
6­
5,
EPA
estimates
that
there
are
about
97,085
potentially
affected
C&
D
businesses
nationwide
in
the
four
industries
discussed
in
this
chapter,
of
which
95,753
(
98.6
percent)
are
small
businesses.
8
Approximately
40
percent
of
the
small
businesses
are
in
the
commercial
and
institutional
building
construction
industry
and
35
percent
are
in
the
single­
family
residential
construction
industry.
Heavy
construction
accounts
for
11
percent
of
small
C&
D
businesses,

manufacturing
and
industrial
building
construction
accounts
for
8
percent,
and
multifamily
residential
construction
accounts
for
5
percent.

8
The
businesses
shown
in
Table
6­
5
excludes
those
representing
19,771
establishments
in
Special
Trades
Contracting
(
NAICS
235)
that
are
potentially
affected
by
the
proposed
rule
(
see
Table
2­
14)
,
but
were
not
analyzed
in
this
chapter
because
the
financial
data
upon
which
the
small
entity
analysis
is
based
is
not
available
for
these
industries.
EPA
does
not
believe,
however,
that
a
substantial
number
of
entities
in
these
industries
are
NPDES
storm
water
permittees
or
co­
permittees,
and
would
therefore
generally
not
be
subject
to
the
proposed
rule
requirements.

6­
14
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.3.2.4
Description
of
Proposed
Recordkeeping,
Reporting,
and
Other
Requirements
The
proposed
C&
D
regulations
contain
recordkeeping
and
reporting
requirements
for
entities
in
the
C&
D
industry.
In
Chapter
Five,
EPA
estimated
the
costs
associated
with
the
additional
requirements
imposed
on
C&
D
establishments
as
a
result
of
the
proposed
rule.
This
section
focuses
specifically
on
the
costs
and
burden
associated
with
recordkeeping,
reporting
and
related
requirements.

For
the
purpose
of
this
analysis,
 
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
existing
procedures
to
comply
with
any
previously
applicable
instructions
and
requirements;
train
personnel
to
be
able
to
respond
to
a
collection
of
information
request;
search
data
sources;
complete
and
review
the
collection
of
information;
and
transmit
or
otherwise
disclose
the
information.

EPA
estimated
that
states
would
incur
some
costs
related
to
implementation
of
the
proposed
rule.

Specifically,
general
permit
development
and
implementation
of
the
inspection
and
certification
provisions
are
estimated
to
require
approximately
200
labor
hours
per
state
during
the
first
three
years
of
program
implementation.
See
Chapter
Five,
Section
5.8
for
full
details.

EPA
analyzed
costs
to
government
units
under
the
assumption
that
the
majority
of
Phase
I
and
Phase
II
storm
water
NPDES
permit
programs
are
fully
implemented.
Any
new
regulatory
requirements
will
be
incremental
to
the
costs
of
these
programs.
The
analysis
in
Chapter
Five
concluded
that
once
Phase
I
and
Phase
II
are
fully
implemented
by
communities,
the
proposed
rule
will
not
add
any
additional
burden
to
government
units.

The
current
NPDES
storm
water
permitting
authority
defaults
to
the
state
level
except
where
places
are
large
enough
to
qualify
as
Phase
I
(
medium
and
large
MS4)
or
Phase
II
(
small
MS4)

communities.
Since
permitting
authority,
and
thus
permitting
costs,
will
affect
only
Phase
II
or
larger
6­
15
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
communities,
and
since
EPA
 
s
analysis
indicates
no
incremental
impacts
to
Phase
II
or
larger
communities,
EPA
does
not
expect
smaller
government
units
to
be
adversely
impacted
by
the
proposed
rule.
Therefore
no
additional
analysis
was
conducted
to
assess
the
impacts
of
the
proposed
rule
on
small
government
entities.

A
significant
new
requirement
for
construction
firms
contained
in
both
Option
1
and
Option
2
would
be
maintenance
of
a
site
log
book.
The
site
log
will
record
the
date
of
initial
groundbreaking
and
any
inspection
or
maintenance
activities
related
to
erosion
and
sediment
control.
The
availability
of
the
log
must
be
posted
on
the
site
and
the
log
must
be
made
available
to
government
inspectors
and
the
public.
This
is
a
record­
keeping
requirement
only
and
no
information
will
be
collected.
EPA
estimates
that
site
log
will
require
8.7
hours
per
year
for
each
construction
firm
respondent.
EPA
further
assumes
that
all
recordkeeping
tasks
will
be
performed
by
an
engineering
assistant.
The
fully
loaded
hourly
wage
for
the
engineering
assistant
labor
category
in
the
construction
industry,
based
on
data
from
the
U.
S.

Department
of
Labor,
Bureau
of
Labor
Statistics,
is
$
38.47
per
hour.
Thus,
the
8.7
hours
per
year
burden
implies
an
average
annual
cost
of
$
335
for
each
firm.
Since
there
are
an
estimated
95,753
small
firms
subject
to
Option
1,
the
annual
cost
of
the
site
log
requirement
is
$
32.07
million.
This
is
the
largest
portion
of
the
inspection
costs
discussed
in
Chapter
Five.
Since
Option
2
excludes
firms
disturbing
less
than
five
acres
each
year
from
the
site
log
requirement,
the
total
costs
of
this
requirement
to
small
business
will
be
reduced.

6.3.2.5
Identification
of
Relevant
Federal
Rules
That
May
Duplicate,
Overlap,
or
Conflict
with
the
Proposed
Regulations
EPA
has
analyzed
the
potential
impacts
of
the
proposed
rule
under
the
baseline
assumption
that
all
C&
D
activities
are
in
compliance
with
existing
federal
and
state
regulations
affecting
C&
D
operations,
including
Phase
I
and
future
Phase
II
NPDES
storm
water
regulations.
Neither
EPA
nor
the
Small
Business
Advocacy
Review
Panel
identified
any
federal
rules
that
duplicate
or
interfere
with
the
requirements
of
the
proposed
rule
(
USEPA,
2001)
.

6­
16
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.3.2.6
Significant
Regulatory
Alternatives
The
proposed
rule
retains
the
coverage
of
the
Phase
II
NPDES
storm
water
permitting
program,

which
excludes
construction
activities
that
disturb
less
than
one
acre
of
land.
EPA
believes
that
this
exclusion
alleviates
the
potential
compliance
burden
for
small­
scale
builders
who
operate
independently
and
who
work
on
very
few
(
and
relatively
small)
projects
in
a
given
year.
9
EPA
believes
that
larger
plans
of
development
and
individual
construction
projects
that
disturb
a
total
of
more
than
one
acre
are
more
likely
to
contribute
to
increased
storm
water
runoff
and
erosion
problems
than
activities
disturbing
less
than
one
acre.
In
addition,
activities
disturbing
less
than
one
acre
are
more
likely
to
be
dispersed,
thus
decreasing
the
concentration
of
adverse
effects.

Additionally,
under
Option
2
of
the
proposed
rule
construction
sites
disturbing
less
than
5
acres
would
be
excluded.
EPA
believes
that
a
substantial
share
of
activity
on
sites
between
one
and
five
acres
in
size
may
also
be
undertaken
by
small­
scale
builders.
This
broader
exclusion,
therefore,
would
potentially
reduce
compliance
burdens
for
more
small­
scale
builders
by
exempting
them
from
additional
requirements.

EPA
considered
additional
options
that
would,
for
example,
exempt
construction
activities
taking
place
on
sites
of
ten
acres
or
less.
EPA
was
unable,
however,
to
identify
data
to
suggest
that
exempting
sites
under
ten
acres
from
the
requirements
of
the
proposed
rule
would
produce
substantial
additional
relief
to
small
entities.
In
fact,
EPA
found
evidence
that
even
the
largest
home
builders
operate
on
sites
in
this
size
range
(
Otsuji,
2001)
.

Waivers
for
construction
activities
occurring
in
areas
with
low
erosion
potential
remain
in
place
from
the
Phase
II
NPDES
storm
water
Final
Rule.
Under
Phase
II
such
waivers
may
be
granted
where
little
or
no
rainfall
is
expected
during
the
period
of
construction.
Qualification
for
this
waiver
may
be
determined
using
the
tables
of
rainfall­
runoff
erosivity
(
R)
factors
published
for
each
region
of
the
U.
S.

by
the
Department
of
Agriculture
(
64
FR
68774)
.
In
addition,
EPA
has
taken
regional
climate
factors
into
account
throughout
the
development
of
this
proposed
regulation
and
has
built
a
sizeable
amount
of
9
Note
that
as
in
the
Phase
II
NPDES
storm
water
rule,
this
exclusion
does
not
apply
to
development
activities
disturbing
less
than
one
acre
that
are
part
of
a
larger
development
plan
(
64
FR
68772­
68773)
.

6­
17
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
flexibility
into
the
rule
to
allow
permittees
to
choose
appropriate
controls
based
on
their
particular
site
characteristics.

6.4
EPA
 
S
ANALYSIS
OF
SMALL
BUSINESS
IMPACTS
The
following
sections
describe
the
methodologies
and
results
for
the
economic
impact
analysis
of
the
proposed
rule
on
small
businesses
in
the
C&
D
industry.

6.4.1
Classification
of
Model
Facilities
for
Impact
Analysis
For
its
economic
impact
analysis,
EPA
used
model
facilities
based
on
Census
data,
however,

these
facilities
are
not
identical
to
the
1997
Census
of
Construction
data.
This
section
describes
how
EPA
applied
its
analysis
of
small
business­
owned
establishments
to
the
model
facilities
used
in
the
impact
analysis.

In
the
single­
family
and
multifamily
housing
construction
industries,
(
NAICS
233210
and
233220,
respectively)
,
EPA
used
multiple
model
facilities
based
on
the
number
of
housing
starts
performed
by
the
establishment
per
year
for
its
economic
impact
estimates.
EPA
compared
the
model
facility
data
by
starts
class
with
both
the
1997
Census
of
Construction
data
by
employment
class
and
the
SBA
size
standard
for
small
business
status.
Table
6­
6
presents
key
model
facility
data
by
starts
class.

6­
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Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
6.
Key
Model
Facility
Data
by
Housing
Starts
Classification
Category
Number
of
Units
Started
Average
Number
of
Employees
Average
Value
of
Construction
Work
(
$
1,000)

NAICS
233210
Single­
Family
Housing
Construction
1
to
4
2.5
$
492
5
to
9
3.3
$
1,089
10
to
24
4.3
$
1,987
25
to
99
8.6
$
4,923
100
to
499
32.1
$
24,031
500+
160.0
$
109,033
NAICS
233220
Multifamily
Housing
Construction
2
to
9
3.2
$
645
10
to
24
5.1
$
1,382
25
to
99
8.0
$
3,500
100
to
499
13.5
$
7,410
500+
64.7
$
43,844
Source:
EPA
estimates
based
on
Rappaport
and
Cole
(
2000)
.

Single­
family
housing
construction
establishments
with
100
to
499
starts
per
year
employ,
on
average,
32
workers
per
establishment
and
earn
$
24
million
in
revenues.
Establishments
with
fewer
starts
tend
to
employ
fewer
workers
and
have
lower
average
revenues.
Conversely,
establishments
with
more
than
500
starts
per
year
employ
on
average
160
workers
and
earn
revenues
in
excess
of
$
109
million
per
establishment.

Multifamily
housing
construction
establishments
with
100
to
499
starts
per
year
employ,
on
average,
13.5
workers
per
establishment
and
earn
$
7.4
million
in
revenues.
Establishments
with
more
than
500
starts
per
year
employ
on
average
65
workers
and
earn
revenues
of
$
44
million
per
establishment.
Although
average
employment
per
establishment
in
the
500+
start
class
does
not
exceed
100
workers,
employment
per
establishment
in
that
class
is
almost
five
times
larger
than
the
100
to
499
starts
class.

6­
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Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
The
natural
break
points
in
the
employment
and
revenue
per
establishment
data
by
housing
start
class
match
reasonably
well
with
those
from
the
1997
Census
of
Construction
data
described
in
Section
6.2.2.
Therefore,
for
the
purpose
of
this
analysis,
EPA
assumes
that
model
facilities
with
fewer
than
500
housing
starts
per
year
in
both
the
233210
and
233220
NAICS
codes
are
small
business­
owned
establishments,
and
model
facilities
in
the
500+
starts
class
represent
large
business­
owned
establishments.
Note
that
based
on
1997
Census
of
Construction
figures
by
employment
class,
EPA
estimated
99.8
percent
of
establishments
in
NAICS
233210
and
99.4
percent
of
establishments
in
NAICS
233220
overall
are
small
business­
owned.
Based
on
the
Census
Housing
Starts
Statistics
special
study,

EPA
estimated
that
99.7
percent
of
establishments
in
NAICS
233210
and
98.4
percent
of
establishments
in
NAICS
233220
overall
are
small
business­
owned.
10
To
estimate
the
number
of
small
business­
owned
facilities
affected
by
the
proposed
C&
D
effluent
guideline,
EPA
first
projected
impacts
for
each
model
facility
and
extrapolated
those
to
the
establishments
represented
by
the
model.
If
the
model
facility
has
fewer
than
500
starts
per
year,
then
all
impacts
to
establishments
represented
by
that
facility
are
incurred
by
small
businesses;
impacts
to
establishments
represented
by
the
model
facility
for
the
500+
starts
class
are
incurred
by
large
business­

owned
establishments.

In
the
manufacturing
and
industrial,
commercial
and
institutional,
and
heavy
construction
industries,
(
NAICS
codes
233310,
233320,
and
23411,
respectively)
,
a
single
model
facility
was
used
for
the
economic
impact
analysis.
Selection
of
the
model
facility
for
each
industry
was
based
on
median
revenue
by
employment
class.
Because
EPA
used
a
single
model
facility
in
each
of
these
industries,
it
is
not
appropriate
to
designate
the
model
facility
as
owned
by
a
small
or
large
business.
Therefore,
EPA
calculated
the
percent
of
establishments
that
are
small
business­
owned,
as
estimated
from
the
1997
Census
of
Construction
,
and
applied
that
percentage
to
all
impacts
to
estimate
small
business
impacts.

For
example,
approximately
97
percent
of
establishments
in
NAICS
233310
are
small
business­
owned.

10
Small
differences
arise
in
estimating
the
percentages
of
total
establishments
in
the
industry
that
are
small
business­
owned
because
of
differences
in
how
the
data
is
arranged.
SBA
sets
its
definition
of
 
small
 
by
firm
revenues.
However,
the
Census
data
available
to
EPA
is
arranged
by
employment
class,
not
revenues,
while
data
in
the
Census
special
study
used
to
develop
model
establishments
is
arranged
by
starts
class,
not
revenues
or
employment.
Thus
minor
discrepancies
in
percentages
that
are
insignificant
to
the
analysis
will
occur.

6­
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Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
If
100
establishments
in
that
NAICS
code
are
projected
to
incur
compliance
costs
exceeding
one
percent
of
revenues,
EPA
assumes
that
97
of
those
establishments
are
small
businesses.

6.4.2
Revenue
Test
Methodology
EPA
assessed
the
impacts
to
small
businesses
by
examining
the
ratio
of
estimated
compliance
costs
to
business
revenues.
Impacts
are
determined
by
the
number
and
percentage
of
businesses
incurring
costs
that
exceed
one
percent
and
three
percent
of
revenues.

EPA
 
s
primary
tool
for
projecting
revenue
test
impacts
is
the
model
facility.
For
each
model
facility,
it
is
straightforward
to
divide
estimated
business­
level
compliance
costs
by
model
facility
revenues.
However,
that
answers
only
part
of
the
question
concerning
the
impact
of
the
proposed
regulation
on
small
business
entities.
To
determine
the
number
and
percentage
of
businesses
exceeding
the
revenue
test
thresholds,
EPA
must
consider
not
only
the
model
facility,
but
the
businesses
represented
by
that
model
as
well.
The
model
facility
actually
represents
a
set
of
approximately
similar
businesses
(
e.
g.
,
similar
levels
of
employment
within
some
bounded
range)
with
revenues
that
form
a
statistical
distribution
around
the
model
facility
 
s
revenue
figure.
Some
businesses
in
this
statistical
distribution
will
have
revenues
below
those
of
the
model
business
while
others
will
have
revenues
above
those
of
the
model
business.
Therefore,
simply
examining
the
ratio
of
compliance
costs
to
revenues
for
the
model
business
is
insufficient.
If,
for
example,
the
model
facility
incurs
compliance
costs
that
are
less
than
one
percent
of
revenues,
a
conclusion
that
no
businesses
are
affected
by
the
regulation
is
unwarranted.
It
is
highly
likely
that
other
businesses
represented
by
the
model
have
lower
revenues
and
therefore
may
well
incur
costs
exceeding
one
percent
of
revenues.

To
address
this
issue,
EPA
developed
estimates
of
the
statistical
revenue
distribution
of
establishments
represented
by
each
model
facility.
11
EPA
then
used
those
distributions
to
estimate
the
number
and
percentage
of
small
business­
owned
establishments
in
each
industry
that
incur
compliance
costs
exceeding
one
and
three
percent
of
revenues.
EPA
used
model
facility
revenues
for
the
mean
of
11
As
described
in
Section
6.2.2
above,
EPA
determined
that
in
the
construction
industry,
the
small
business
is
essentially
identical
to
the
small
business­
owned
establishment.

6­
21
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
each
distribution,
but
had
no
direct
information
concerning
the
dispersion
of
establishment
income
around
each
model
facility.
EPA
therefore
developed
the
distributions
by
making
reasonable
assumptions
about
the
variance
and
shape
of
the
distribution.
In
order
to
deal
with
the
uncertainty
caused
by
the
lack
of
direct
evidence
about
the
shape
of
the
distribution,
EPA
used
two
different
assumptions
about
the
distribution
of
revenues
to
generate
a
range
of
impacts.

6.4.2.1
Development
of
Revenue
Distributions
The
two
curves
in
Figure
6­
1
represent
the
cumulative
distribution
functions
for
two
different
sets
of
assumptions
concerning
the
distribution
of
establishment
income
around
a
hypothetical
model
facility
mean
of
$
1.0
million
in
annual
revenues.
The
cumulative
distribution
function
is
used
to
determine
the
probability
y
that
a
random
variable
x
is
less
than
or
equal
to
some
specified
value.
It
is
appropriate
to
use
the
cumulative
distribution
function
for
this
application
because
EPA
is
concerned
with
the
probability
that
an
establishment
earns
less
than
some
specified
level
of
revenues.
For
example,

suppose
estimated
establishment
compliance
costs
for
this
model
facility
class
are
equal
to
$
15,000.
Any
establishment
in
this
model
facility
class
that
earns
revenues
less
than
$
1.5
million
will
incur
compliance
costs
that
exceed
one
percent
of
revenues.
Thus,
EPA
would
use
the
cumulative
distribution
function
to
estimate
the
probability
that
a
facility
earns
revenues
of
$
1.5
million
or
less.

6­
22
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Figure
6­
1
Baseline
Distribution
Functions
for
Facility
Revenues
0.00
0.25
0.50
0.75
1.00
$
0
$
1,000
$
2,000
$
3,000
$
4,000
Revenues
(
x
$
1,000)
Probability
Unit
Normal
Lognormal
Critical
Value
As
a
starting
point
for
its
analysis,
EPA
examined
the
implications
of
assuming
that
income
is
normally
distributed
and
has
a
standard
deviation
equal
to
the
mean.
That
is,
the
coefficient
of
variation
(
standard
deviation
divided
by
mean)
for
this
distribution
is
equal
to
one.
In
Figure
6­
1,
this
is
represented
by
the
curve
labeled
 
unit
normal.
 
An
implication
of
the
unit
normal
distribution
for
this
analysis
is
that
some
establishments
are
projected
to
earn
negative
revenues.
This
can
be
observed
by
examining
the
y
axis;
the
unit
normal
distribution
assumption
results
in
about
a
15
percent
probability
of
an
establishment
earning
negative
revenues.
While
negative
income
(
e.
g.
,
net
income,
cash
flow)
is
both
possible
and
plausible
for
a
business
establishment,
negative
revenue
is
not.
12
12
EPA
examined
an
alternative
assumption
that
income
is
normally
distributed,
but
with
standard
deviation
such
that
there
was
zero
probability
of
an
establishment
earning
negative
revenues.
This
adjustment
results
in
a
coefficient
of
variation
equal
to
about
0.29.
EPA
determined
that
this
was
probably
not
a
reasonable
distribution
for
use
in
this
analysis
because
the
probability
of
an
establishment
earning
low
revenues
is
quite
small.
For
example,
using
the
hypothetical
mean
revenues
of
$
1
million,
the
probability
of
an
establishment
earning
revenues
less
than
$
500,000
is
only
about
5
percent;
the
probability
of
an
establishment
earning
revenues
between
$
500,000
and
$
1.0
million
is
about
45
percent.

6­
23
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
EPA
then
examined
the
implications
of
using
a
lognormal
distribution.
EPA
estimated
the
mean
and
standard
deviation
for
the
lognormal
distribution
through
a
standard
transformation
of
the
mean
and
standard
deviation
of
the
unit
normal
distribution.
Using
this
transformation,
the
lognormal
distribution
can
be
interpreted
as
having
the
same
mean
and
standard
deviation
as
the
equivalent
unit
normal
distribution,
but
a
skewed
distribution
(
unlike
the
normal
distribution,
which
is
symmetric)
.
In
Figure
6­

1,
for
example,
the
probability
of
establishment
revenues
less
than
or
equal
to
$
1.0
million
is
50
percent
under
the
unit
normal
distribution
assumption,
as
is
the
probability
of
revenues
greater
than
$
1.0
million.

Under
the
lognormal
distribution
assumption,
about
66
percent
of
establishments
have
income
less
than
or
equal
to
$
1.0
million,
and
about
34
percent
have
income
greater
than
$
1.0
million.

The
distribution
of
establishment
revenues
may
be
skewed
because
it
is
probable
 
but
infrequent
 
that
some
establishments
in
any
model
class
will
perform
extremely
well
and
earn
very
high
revenues
relative
to
other
establishments;
there
is
no
inherent
limit
to
the
revenues
such
an
establishment
might
earn.
Conversely,
there
is
a
limit
to
the
minimum
revenues
even
the
poorest
performing
establishments
will
earn;
poor
performers
cannot
earn
less
than
zero
revenues.
Such
a
distribution
would
tend
to
be
skewed
as
is
the
lognormal
distribution
in
Figure
6­
1.

6.4.2.2
Application
of
Revenue
Distributions
to
Estimating
Small
Business
Impacts
Given
the
revenue
distributions
developed
in
the
preceding
section,
EPA
applied
the
distributions
to
the
problem
of
estimating
revenue
test
impacts
as
follows.
First,
EPA
used
revenues
for
each
model
facility
from
the
four
major
construction
industries
(
single­
family,
multifamily,

manufacturing
and
industrial,
commercial
and
institutional)
as
the
mean
of
the
distribution
for
each
model
class.
EPA
then
set
the
standard
deviation
for
each
model
class
 
distribution
equal
to
its
mean.
.

With
mean,
standard
deviation,
and
two
alternative
assumptions
concerning
the
shape
of
the
distribution
6­
24
Economic
Analysis
of
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and
Development
Proposed
Effluent
Guidelines
May
2002
(
normal
or
lognormal)
,
EPA
calculated
the
probability
that
revenues
are
less
than
or
equal
to
any
given
value
for
each
model
class.
13
After
estimating
the
compliance
costs
per
establishment
for
each
option,
EPA
calculated
the
level
of
revenues
at
which
the
estimated
compliance
costs
would
exactly
equal
one
percent
and
three
percent
of
revenues.
EPA
then
used
its
two
distributions
to
calculate
the
probability
that
establishments
have
revenues
less
than
or
equal
to
these
specified
levels.
These
probabilities
provide
the
range
for
the
percentage
of
establishments
projected
to
incur
compliance
costs
exceeding
the
one
percent
and
three
percent
thresholds.
Multiplying
these
probabilities
by
the
number
of
establishments
in
the
model
class
provides
the
range
for
the
number
of
establishments
projected
to
incur
compliance
costs
exceeding
the
one
percent
and
three
percent
thresholds.
Note
that
EPA
chose
to
truncate
the
unit
normal
distribution
at
zero
revenues;
EPA
calculated
the
probability
that
establishments
earn
revenues
equal
to
the
specified
one
or
three
percent
threshold
for
incurring
impacts.
This
is
because
analytically
the
region
of
the
distribution
showing
some
probability
of
negative
revenues
cannot
be
appropriately
evaluated.

This
process
is
illustrated
in
Figure
6­
1.
The
hypothetical
model
establishment
earns
$
1
million,

the
mean
for
each
distribution.
If
EPA
estimates
annual
compliance
costs
of
$
7,500
will
be
incurred
by
this
business,
then
any
business
in
this
model
class
earning
less
than
$
750,000
will
incur
compliance
costs
exceeding
one
percent
of
revenues,
and
any
business
earning
less
than
$
22,500
will
incur
compliance
costs
exceeding
three
percent
of
revenues.
The
 
critical
value
 
in
Figure
6­
­
1
represents
the
one
percent
threshold
(
i.
e.
,
revenues
of
$
750,000)
.
Based
on
the
normal
distribution,
EPA
would
project
that
22
percent
of
establishments
incur
costs
exceeding
the
one
percent
threshold
(
i.
e.
,
the
probability
of
revenues
less
than
$
750,000
is
equal
to
0.38,
while
the
probability
of
revenues
less
than
$
0
is
equal
to
0.16,
thus,
the
net
probability
equals
0.22)
.
Based
on
the
lognormal
distribution,
EPA
would
project
that
54
percent
of
establishments
incur
costs
exceeding
the
same
threshold.
These
provide
the
lower
and
upper
bounds
for
EPA
 
s
impacts
estimates.

13
For
calculation
purposes,
EPA
used
the
@
NORMAL
and
@
LOGNORMDIST
functions
in
the
Lotus
spreadsheet
program.

6­
25
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.4.3
Small
Business
Impact
Analysis
Results
Tables
6­
7a
and
6­
7b
present
the
range
of
establishments
projected
to
incur
compliance
costs
exceeding
one
percent
and
three
percent
of
revenues,
respectively,
for
each
proposed
ESC
option
under
a
zero
percent
cost
pass
through
assumption.
Tables
6­
7c
and
6­
7d
present
the
same
results
under
an
estimated
cost
pass
through
assumption.
In
each
table,
the
 
A
 
denotes
the
results
obtained
assuming
a
normal
distribution
and
the
 
B
 
indicates
the
results
obtained
using
the
lognormal
distribution,
,
as
discussed
in
Section
6.4.2.

The
number
of
small
business­
owned
establishments
incurring
compliance
costs
exceeding
the
revenue
threshold
is
less
than
one
percent
for
all
options
and
project
types
under
the
zero
CPT
assumption.
Impacts
under
the
estimated
CPT
assumption
are
even
smaller.
Under
the
zero
CPT
scenario,
the
number
of
small
businesses
with
costs
exceeding
one
percent
of
revenues
ranges
from
a
low
of
0
to
126
under
Option
1
and
from
a
low
of
104
to
a
high
of
627
under
Option
2
(
Table
6­
7a)
.
The
number
of
businesses
with
costs
exceeding
three
percent
of
revenues
ranges
from
a
low
of
0
to
a
high
of
42
under
Option
1
and
from
a
low
of
0
to
a
high
of
205
under
Option
2
(
Table
6­
7b)
.

Under
the
estimated
CPT
scenario,
the
number
of
small
businesses
with
costs
exceeding
one
percent
of
revenues
ranges
from
a
low
of
0
to
15
under
Option
1
and
from
a
low
of
0
to
a
high
of
70
under
Option
2
(
Table
6­
7c)
.
The
number
of
businesses
with
costs
exceeding
three
percent
of
revenues
ranges
from
a
low
of
0
to
a
high
of
5
under
Option
1
and
from
a
low
of
0
to
a
high
of
24
under
Option
2
(
Table
6­
7d)
.

6­
26
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7a.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
1
Percent
of
Revenues
Zero
Percent
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
47
0.000%
0.138%
0
5
0.000%
0.110%
0
62
0.000%
0.159%

2
40
140
0.118%
0.412%
8
18
0.175%
0.395%
18
234
0.046%
0.599%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
12
0.000%
0.160%
0
0
0.000%
0.000%
0
126
0.000%
0.000%

2
2
36
0.270%
0.480%
36
199
1.863%
0.337%
104
627
0.109%
0.109%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6­
27
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7b.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
3
Percent
of
Revenues
Zero
Percent
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
15
0.000%
0.044%
0
2
0.000%
0.044%
0
21
0.000%
0.054%

2
0
45
0.000%
0.133%
0
6
0.000%
0.132%
0
77
0.000%
0.197%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
4
0.000%
0.053%
0
0
0.000%
0.000%
0
42
0.000%
0.044%

2
0
12
0.000%
0.160%
0
65
0.000%
0.607%
0
205
0.000%
0.214%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6­
28
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7c.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
1
Percent
of
Revenues
Estimated
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
7
0.000%
0.021%
0
0
0.000%
0.000%
0
6
0.000%
0.015%

2
0
20
0.000%
0.059%
0
1
0.000%
0.022%
0
24
0.000%
0.061%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
2
0.000%
0.027%
0
0
0.000%
0.000%
0
15
0.000%
0.016%

2
0
6
0.000%
0.080%
0
19
0.000%
0.178%
0
70
0.000%
0.073%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
based
on
methodologies
presented
in
this
chapter
and
in
Chapter
Four.

6­
29
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
6­
7d.
Estimated
Number
of
Small
Business­
Owned
Establishments
With
Compliance
Costs
Exceeding
3
Percent
of
Revenues
Estimated
Cost
Pass
Through
Option
Single­
family
Multifamily
Commercial
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
2
0.000%
0.006%
0
0
0.000%
0.000%
0
2
0.000%
0.005%

2
0
7
0.000%
0.021%
0
0
0.000%
0.000%
0
8
0.000%
0.020%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Option
Industrial
Heavy
TOTAL
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Number
Pct.
of
Small
Businesses
Low
High
Low
High
Low
High
Low
High
Low
High
Low
High
1
0
1
0.000%
0.013%
0
0
0.000%
0.000%
0
5
0.000%
0.005%

2
0
2
0.000%
0.027%
0
7
0.000%
0.065%
0
24
0.000%
0.025%

3
0
0
0.000%
0.000%
0
0
0.000%
0.000%
0
0
0.000%
0.000%

Source:
EPA
estimates
.

6­
30
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
6.5
REFERENCES
Otsuji,
2001.
Personal
communication
between
Patrick
Otsuji,
California
State
Water
Resources
Control
Board,
Division
of
Water
Quality,
Storm
Water
Section,
and
Dina
Metivier
of
Eastern
Research
Group,
Lexington,
MA.
April
2001.

Rappaport
B.
A.
,
T.
A.
Cole.
(
U.
S.
Census
Bureau,
Manufacturing
and
Construction
Division)
.
2000.
Construction
Sector
Special
Study:
Housing
Starts
Statistics­
­
A
Profile
of
the
Homebuilding
Industry.

SBA.
1998.
Statistics
of
U.
S.
Businesses:
Firm
Size
Data.
U.
S.
Small
Business
Administration,
Office
of
Advocacy.
Available
at:
http:
/
/
www.
sba.
gov/
advo/
stats/
data.
html.

U.
S.
Census
Bureau.
2000.
1997
Economic
Census:
Construction,
United
States.
Various
Reports.
Available
at:
http:
/
/
www.
census.
gov/
epcd/
ec97/
us/
US000_
23.
HTM.

U.
S.
EPA.
2001.
 
Final
Report
of
the
Small
Business
Advocacy
Review
Panel
on
EPA
 
s
Planned
Proposed
Rule
on
National
Pollutant
Discharge
Elimination
System
(
NPDES)
and
Effluent
Limitations
Guideline
(
ELG)
Regulations
for
Construction
and
Development
Activities.
 
U.
S.
Environmental
Protection
Agency.

U.
S.
EPA.
1999.
Revised
Interim
Guidance
for
EPA
Rulewriters:
Regulatory
Flexibility
Act
as
Amended
by
the
Small
Business
Regulatory
Enforcement
Fairness
Act.
March
29.
http:
/
/
www.
epa/
gov/
sbrefa/
documents/
igui99.
pdf.

U.
S.
GPO
(
U.
S.
Government
Printing
Office)
.
2000.
Small
Business
Size
Regulations;
Size
Standards
and
the
North
American
Industry
Classification
System;
Correction.
13
CFR
Part
121.
Washington,
DC:
Small
Business
Administration.
Federal
Register.
65(
172)
:
53533­
53558.
September
5.
http:
/
/
www.
sba.
gov/
library/
lawroom.
html
6­
31
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
SEVEN
BENEFITS
METHODOLOGY
Previous
chapters
have
considered
the
costs
of
implementing
the
proposed
regulations
and
their
effect
on
the
industry,
markets,
and
economy.
Those
chapters
discussed
the
negative
impact
of
the
regulation
on
the
national
economy
but
the
purpose
of
the
regulation
is
to
benefit
the
nation
by
improving
water
quality
and
the
environment.
These
benefits
can
be
measured
in
economic
terms
and
balanced
against
the
costs
of
implementing
the
proposed
rule.
This
chapter
reviews
previous
benefits
assessments
for
similar
regulations
to
develop
a
methodology
for
measuring
the
benefits
of
the
proposed
construction
and
development
regulation.

7.1
PREVIOUS
APPROACHES
TO
BENEFITS
ASSESSMENT
Two
basic
approaches
are
used
to
measure
the
economic
benefits
of
a
policy
change.
In
the
 
top­

down
 
approach,
,
the
analyst
defines
the
total
benefits
of
an
improvement
(
or
avoidance
of
degradation)

brought
about
by
some
policy
action
or
combination
of
actions,
and
posits
a
means
of
scaling
the
benefit
to
the
size
and
scope
of
the
action.
The
overall
benefits
of
the
proposed
action
can
then
be
calculated.

The
alternative,
 
bottom­
up
 
approach
enumerates
the
pathways
through
which
society
derives
value
from
the
environmental
consequences
of
the
proposed
action
and
estimates
that
value.
Reducing
sediment
runoff,
for
example,
reduces
the
potential
need
to
dredge
navigation
channels.
A
bottom­
up
approach
makes
the
connections
from
changes
at
the
sediment
source
to
deposition
in
the
harbor
to
the
savings
to
society
from
reduced
dredging
costs.
The
following
sections
establish
a
framework
for
development
of
bottom­
up
methods
to
estimate
benefits
of
the
proposed
construction
and
development
rule.

A
prominent
study
of
the
benefits
of
reducing
sediment
in
waterways
is
Ribaudo
 
s
Water
Quality
Benefits
from
the
Conservation
Reserve
Program
(
Ribaudo,
1989)
.
For
benefit
categories
where
there
is
sufficient
information,
Ribaudo
carefully
links
soil
loss
to
water
quality
measures
and
benefit
values.
For
other
categories,
where
he
has
estimates
of
total
damage
costs,
he
assumes
that
reductions
in
sediment
discharge
will
lead
linearly
to
similar
reductions
in
damage
costs.
Fox,
et
al.
(
1995)
suggest
that
the
relationship
between
sediment
loading
and
water
quality
is
not
linear
but
S­
shaped.
At
high
sediment
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
loadings,
incremental
reductions
in
sediment
discharge
may
have
essentially
no
effect
on
water
quality.

At
very
low
loadings,
incremental
reductions
may
actually
be
harmful
for
some
purposes.
Some
fish,
for
example,
prefer
some
sediment
in
the
water
column.
The
linearity
assumption
presumes
that
starting
sediment
loads
are
in
the
middle
section
of
the
S­
curve.
This
may
or
may
not
be
valid
for
a
particular
location
and
benefit
category
but
is
probably
a
reasonable
working
assumption.

In
maintaining
the
connection
from
physical
effects
of
the
policy
to
changes
in
welfare,
bottom­

up
approaches
offer
the
opportunity
to
assess
different
policy
options,
if
they
can
be
well­
described
and
have
discernible
effects.
The
connections,
however,
are
only
as
good
as
the
research
upon
which
they
are
based.
Poor
connections
may
be
bridged
with
reasonable
assumptions.
However,
weakness
at
any
level
compromises
the
credibility
of
the
results.

7.2
BENEFITS
CATEGORIES
CONSIDERED
The
Environmental
Assessment
for
the
proposed
rule
(
EPA
2002b)
accomplishes
the
first
two
or
three
steps
of
Ribaudo
 
s
process.
The
assessment
estimates
the
sediment
loads
avoided
by
implementation
of
the
proposed
regulation.
Sediment
load
can
be
linked
to
services
society
values
and
therefore
to
benefit
categories.

EPA
used
a
model
watershed
approach
to
estimate
the
impacts
of
development
on
water
quality.

Several
studies
in
Maryland
and
Pennsylvania
provided
the
basic
reference
information
for
what
occurs
in
a
watershed
as
the
landscape
is
developed.
Attention
focused
on
increased
sediment
loads
from
construction
sites.
These
case
studies
were
then
generalized
using
appropriate
adaptations
to
different
weather,
slope,
and
soil
conditions
in
different
regions
of
the
country.
Table
7­
1
summarizes
the
categories
of
information
developed
in
the
baseline
environmental
assessment
and
the
categories
of
benefits
which
they
were
used
to
estimate.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
7­
1.
Environmental
Measures
from
the
Baseline
Environmental
Assessment
Environmental
Effect
Units
Benefit
Category
Settleable
Solids
Total
tons
per
Year
Dredging
Turbidity
Producing
Solids
Total
tons
per
Year
Treatment/
Dredging
The
theoretically
correct
benefit
measure
is
the
change
in
producer
and
consumer
surplus
ensuing
from
a
change
in
environmental
quality.
As
most
environmental
changes
entail
non­
market
goods,
such
as
clean
air
and
water,
demand
functions
cannot
be
readily
estimated.
Economists
instead
use
the
fact
that
environmental
externalities
impose
costs
on
the
public
to
estimate
benefits.
Most
benefit
assessments
in
the
soil
conservation
context
use
the
costs
of
avoiding
the
consequences
of
the
environmental
harm
as
a
proxy
for
the
correct
benefit
measures.
It
can
be
shown
that
averting
costs
are
a
lower
bound
on
the
correct
welfare
measures
(
Laughland,
et
al.
,
1996)
.
Whether
averting
costs
are
a
near
or
distant
lower
bound
depends
on
how
closely
the
product
of
the
averting
process
substitutes
for
the
actual
environmental
good.
Most
of
the
studies
cited
below
rely
on
avoided
cost
measures
which
should
be
considered
a
lower
bound
benefit
estimate.

Although
benefits
are
measured
in
terms
of
avoided
costs,
whether
those
costs
are
actually
incurred
or
not
is
largely
irrelevant.
The
measures
indicate
society
 
s
willingness
to
pay
for
the
environmental
change
or
the
utility
lost
due
to
the
change.
If
a
reservoir
fills
with
sediment,
for
example,

the
community
has
lost
water
storage
capacity.
Whether
or
not
it
chooses
to
replace
the
lost
capacity
depends
on
budget
constraints
and
other
priorities.
Nevertheless,
the
community
has
lost
some
of
the
utility
of
the
resource.
If
it
is
not
replaced,
the
loss
of
utility
may
be
exacted
from
the
community
in
other
ways
such
as
increased
flood
damage
or
water
shortages.
Thus,
the
avoided
costs
should
be
viewed
as
the
opportunity
cost
of
failing
to
control
sedimentation
rather
than
as
a
budgetary
saving
for
the
responsible
agency.

The
following
sections
review
benefit
categories
suggested
for
this
analysis
and
used
in
other
assessments.
For
each
category
we
discuss
the
methods,
units,
and
results
of
prior
studies
and
EPA
assessments.
We
also
describe
the
methods
used
to
assess
the
benefits
of
the
proposed
ESC
controls
for
each
category.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
7.2.1
Decreased
Erosion
and
Sediment
Generation
Faster
run
off
from
construction
sites
and
impervious
surfaces
has
ill
effects
on
stream
sediment
and
structure
both
upstream
and
downstream
in
the
watershed.
Upstream,
faster
run
off
cuts
into
streambanks
and
adds
to
the
sediment
load.
Downstream,
additional
sediment
settles
out
when
flows
slow
or
reach
larger
water
bodies.
Some
of
the
sediment
is
suspended
degrading
water
quality.
The
benefits
of
reducing
suspended
sediment
are
discussed
in
Section
7.2.2.
In
this
section
we
discuss
the
benefits
of
reducing
larger
sediment
particles
which
contribute
to
sedimentation
of
water
bodies.

7.2.1.1
Water
Storage
Capacity
People
impound
water
for
many
reasons.
Reservoirs
supply
municipal
water
systems
and
mitigate
the
rising
waters
of
floods.
Flow
control
structures
on
large
rivers
enhance
navigation.
When
any
of
these
impoundments
fill
with
sediment,
they
are
less
capable
of
fulfilling
their
purpose.
Ribaudo
(
1989)
cited
an
estimate
by
Crowder
(
1987)
that
820,000
acre­
feet
of
water
storage
capacity
are
lost
to
anthropogenic
sources
annually.
Thus,
there
is
a
benefit
in
reducing
the
amount
of
sediment
that
flows
into
these
impoundments.
Ribaudo
estimated
the
benefits
as
the
costs
of
constructing
replacement
reservoirs
and
assumed
that
a
one
percent
reduction
in
sediment
discharge
would
result
in
one
percent
lower
replacement
costs.

An
alternative
approach
would
estimate
the
connection
from
stream
bank
and
overland
erosion
to
sediment
movement
to
reservoirs
to
the
need
to
maintain
water
storage
capacity.
The
Environmental
Assessment
estimates
the
total
tons
of
sediment
moved
from
stream
bank
and
overland
erosion.
This
total
volume
affects
both
water
storage
capacity
in
reservoirs
and
the
need
for
dredging
of
navigational
channels.
The
estimate
of
total
sediment
volume
can
be
allocated
to
these
two
categories
as
well
as
to
other
fates,
such
as
redeposition
along
watercourses.
For
example,
the
regional
capacity
of
reservoirs
compared
to
the
total
capacity
of
water
bodies
indicates
the
proportion
of
sediments
settling
in
lakes
that
would
be
subject
to
dredging.
Similarly,
the
number
or
area
of
navigational
channels
maintained
in
the
region
compared
to
natural
outlets
could
indicate
the
proportion
of
sediment
that
would
need
to
be
removed
from
channels.
Given
the
animus
against
new
water
projects
in
the
current
policy
climate,

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
construction
of
replacement
water
storage
capacity
is
unlikely
so
all
benefits
from
sediment
reduction
in
this
category
are
valued
at
the
average
cost
of
dredging.

Table
7­
2
illustrates
such
an
application
using
the
stream
bank
erosion
figures
from
the
Environmental
Assessment.
The
U.
S.
Army
Corps
of
Engineers
 
(
(
USACE)
National
Inventory
of
Dams
indicates
that
the
surface
area
of
reservoirs
behind
dams
represent
35.2
percent
of
the
water
area
of
the
nation
(
USACE
2001)
.
EPA
adopted
this
percentage
as
an
estimate
of
the
proportion
of
sediment
generated
from
construction
sites
that
would
reach
constructed
water
bodies.
The
tonnage
deposited
is
converted
to
cubic
yards
based
on
1.82
cubic
yards
per
ton
(
Sohngren
and
Rausch,
1998a)
.
Sohngren
and
Rausch
(
1998a)
estimate
the
variable
costs
of
dredging
as
$
2.10
per
cubic
yard
which
is
in
the
same
range
as
USACE
estimates.
As
discussed
in
Section
7.2,
the
avoided
costs
should
be
viewed
as
the
opportunity
cost
of
failing
to
control
sedimentation
rather
than
as
a
cost
saved
by
reducing
the
volume
to
be
dredged.
Whether
the
dam
owner
chooses
to
remove
the
sediment
or
not
is
irrelevant.
Sedimentation
reduces
the
social
utility
of
the
resource.
Multiplying
these
factors
together
yields
an
estimate
of
the
benefits
of
reduced
sedimentation.

Table
7­
2.
Sample
Calculation
of
Avoided
Loss
of
Water
Storage
Capacity
Row:
Formula
Effect
of
regulation
on
sediment
load
(
tons
per
year)
11,000,000
1
Allocation
to
Water
Storage
Facilities
Tons
Amount
of
sediment
reaching
reservoirs
35.2%
3,872,000
2:
1
×
0.352
Tonnage
expressed
in
cubic
yards
7,047,000
3:
2
×
1.82
Cost
of
restoration
dredging
per
cubic
yard
$
2.10
4
Total
cost
of
re­
dredging
avoided
annually
$
14,799,000
5:
3
×
4
Sources:
U.
S.
EPA,
2002a
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
7.2.1.2
Navigational
Dredging
River
channels
and
harbors
are
dredged
periodically
to
maintain
a
mandated
depth.
Much
of
the
sediment
removed
can
be
traced
to
human
activities.
According
to
the
USACE,
more
than
400
ports
and
25,000
miles
of
navigation
channels
(
USACE
2002a)
are
maintained
in
the
U.
S.
There
are
two
kinds
of
dredging
operations
performed,
construction,
or
new,
dredging
and
maintenance
dredging.
Construction
dredging
involves
the
removal
of
sediments
not
previously
disturbed
in
order
to
create
a
new
channel,
or
to
enlarge
an
existing
channel.
Maintenance
dredging
is
the
removal
of
extra
sediment
in
an
existing
waterway
(
USACE
2002a)
.

Both
the
USACE
and
members
of
industry
participate
in
dredging
activities
under
the
USACE
Dredging
Program.
Under
this
program,
industry
and
the
Corps
combined
spent
$
494
million
on
maintenance
dredging
work
and
$
127
million
on
new
dredging
work,
for
a
total
of
$
622
million
in
1997.

This
activity
removed
253
million
cubic
yards
of
material
for
maintenance
and
32
million
cubic
yards
for
new
work,
combining
for
a
total
of
285
million
cubic
yards
dredged
(
USACE
2002b)
.
Based
on
this
data,
the
average
cost
per
cubic
yard
is
$
1.95
for
maintenance
dredging,
$
3.97
for
new
work,
and
$
2.18
for
both
new
and
maintenance
dredging
work.

Relatively
little
of
the
sediment
dredged
from
navigation
channels
comes
from
urban
development.
The
totals
above
represent
material
deposited
by
all
forms
of
sedimentation.
EPA
has
estimated
that
the
proposed
rule
would
keep
0.6
to
2.6
million
cubic
yards
from
reaching
navigational
channels.
This
is
less
than
one
percent
of
the
annual
amount
dredged
under
the
USACE
Dredging
Program
and
an
even
smaller
proportion
of
the
total
amount
dredged
in
the
U.
S.
annually.

Dredging
costs
have
been
used
to
estimate
the
benefits
of
sediment
reduction
in
several
other
studies.
Ribaudo
(
1989)
assumed
directly
proportional
reductions
between
erosion
and
dredging
costs
and
used
an
estimate
from
Clark
et
al.
(
1985)
for
total
dredging
costs
attributable
to
eroding
soils.

Sohngren
and
Rausch
(
1998b)
looked
specifically
at
the
Maumee
River
watershed
in
Ohio.
The
marginal
cost
of
dredging
contaminated
sediment
there
were
quite
high
as
an
existing
confined
disposal
facility
for
contaminated
dredge
spoil
was
near
its
capacity.
This
necessitated
construction
of
a
new
facility.

Sohngren
and
Rausch
(
1998a)
make
the
connections
from
farm
field
to
harbor
and
estimate
that
12.7
percent
of
soil
eroded
off
fields
in
the
watershed
ends
up
in
the
navigation
channel.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
As
discussed
in
the
water
storage
capacity
section,
the
sediment
load
deposited
in
navigation
channels
can
be
estimated
and
average
costs
per
ton
dredged
applied
to
estimate
avoided
costs
from
policy
alternatives.
The
starting
value
is
the
change
in
sediment
delivered
to
waterways.
This
value
is
taken
from
the
Environmental
Assessment.
Table
7­
3
shows
an
allocation
of
this
sediment
to
navigation
channels
using
Sohngren
and
Rausch
 
s
(
1998a)
estimate
of
the
proportion
of
sediment
reaching
navigation
channels,
12.7
percent.
The
Sohngren
and
Rausch
estimate
is
probably
relatively
high,
as
the
Maumee
River
which
they
studied
flows
into
Toledo
harbor.
Many
rivers
do
not
flow
to
developed,

commercial
harbors.
Variable
cost
avoided
is
the
appropriate
metric
for
this
application
as
the
regulation
is
unlikely
to
prevent
dredging
operations
entirely
since
other
sources
of
sediment
will
continue
to
flow.

Sohngren
and
Rausch
(
1998a)
estimate
the
variable
costs
as
$
2.10
per
cubic
yard.
This
agrees
well
with
the
$
2.18
per
cubic
yard
estimated
from
USACE
data
above.

Table
7­
3.
Sample
Calculation
of
Avoided
Navigational
Dredging
Row:
Formula
Effect
of
regulation
on
total
erosion
(
tons
per
yr)
11,000,000
1
Allocation
to
Navigational
Channels
Assume
12.7
percent
reaches
maintained
channel
(
tons
per
yr)
1,397,000
2:
1
×
0.127
Amount
of
sediment
to
be
dredged
annually
in
cubic
yards
2,543,000
3:
2
×
1.82
Variable
cost
per
cubic
yard
$
2.10
4
Total
avoided
cost
of
navigational
dredging
$
5,339,000
5:
3
×
4
Sources:
Sohngren
and
Rausch,
1998a,
and
U.
S.
EPA,
2002a.

7.2.2
Reduced
In­
Stream
TSS
and
Sediment
Concentration
Sediment
and
other
components
of
storm
water
runoff
contribute
to
low
water
quality
in
receiving
waterways.
If
these
waterways
are
used
for
public
water
supplies
or
industrial
processes,
the
water
may
need
treatment
before
it
is
used.
Excessive
sediment
in
the
water
causes
turbidity
which
impedes
the
action
of
disinfectants
and
results
in
harmful
disinfectant
by­
products.
Conventional
filtration
and
flocculation
removes
the
turbidity
before
further
treatment
processes.
The
worse
the
intake
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
water
 
s
quality
the
more
intense
and
expensive
the
treatment
required.
Three
studies
in
the
late
1980'
s
and
one
in
1998
estimated
the
elasticity
of
water
treatment
costs
with
respect
to
the
turbidity
of
the
intake
water.
The
studies
used
a
hedonic
method.
Dearmont,
et
al.
(
1998)
,
for
example,
regressed
the
costs
of
chemicals
for
treatment
on
turbidity
of
intake
water
and
other
variables
for
a
sample
of
Texas
water
treatment
facilities.
They
found
that
a
one
percent
reduction
in
nephelometric
turbidity
units
(
NTUs)
in
the
intake
water
resulted
in
0.27
percent
reduction
in
treatment
chemical
costs.
Similar
elasticities
from
other
studies
ranged
from
0.07
percent
(
Holmes,
1988)
to
0.333
percent
(
Moore
and
McCarl,
1987)
.

Ribaudo
(
1989)
used
Holmes
 
(
(
1988)
results
to
link
total
suspended
solids
(
TSS)
to
turbidity
to
treatment
costs
per
gallon
for
watersheds
nationwide.
Different
studies
express
their
results
in
various
units
corresponding
to
different
points
in
the
water
use
process.
Sohngren
and
Rausch
(
1998b)
do
not
describe
their
methods
but
estimate
that
water
treatment
costs
are
$
0.05
for
each
ton
of
gross
soil
erosion.
Fox
and
Dickson
(
1990)
express
their
results
in
terms
of
sediment
in
waterways,
i.
e.
tons
of
suspended
sediment,
and
find
a
cost
of
$
13.44
(
Canadian)
per
ton.
The
two
plus
orders
of
magnitude
difference
between
these
estimates
makes
sense
if
only
1
out
of
250
tons
of
soil
eroded
became
suspended
sediment.
Fox
and
Dickson
(
1990)
adjust
their
cost
estimate
based
on
the
probability
of
the
suspended
sediment
from
their
three
sample
watersheds
reaching
water
treatment
plants
given
the
geography
of
the
region.

The
EPA
assessment
of
the
benefits
and
costs
of
President
Clinton
 
s
Clean
Water
Initiative
(
U.
S.

EPA,
1994)
estimated
that
improved
water
quality
would
reduce
nationwide
treatment
costs
by
1
to
5
percent;
storm
water
was
a
source
of
6.6
percent
of
the
impairment.
The
nationwide
avoided
costs
from
improved
storm
water
quality
were
estimated
as
$
3.2
to
$
17.0
million
per
year.

The
Environmental
Assessment
estimates
the
TSS
loadings
reductions
from
ESC
management.

EPA
estimates
water
treatment
benefits
from
reducing
TSS
loadings
by
taking
a
derivative
from
Holmes
 
(
1988)
equation
which
shows
the
change
in
NTU
from
changes
in
sediment
loads,
given
stream
flow,
and
water
storage
capacity.
Values
for
assumptions
about
stream
flow,
storage
capacity
and
costs
of
processing
intake
water
are
taken
from
Holmes
(
1988)
.
The
literature
contains
a
range
of
NTU­
to­
cost
elasticities
from
0.07
to
0.333.
Using
this
range
of
elasticities
generates
the
range
of
benefit
estimates
from
$
22.49
to
$
106.97
per
1,000
tons
of
sediment
introduced
into
waters.
Holmes
 
costs
were
reported
in
1984
values.
Updating
these
values
to
1997
price
levels
using
the
CPI
for
urban
consumers
(
CPI­
U
in
1984=
103.9,
CPI­
U
in
1997=
160.5)
yields
values
of
$
34.74
and
$
165.24
per
1,000
tons
in
1997
dollars.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
7­
4.
Sample
Calculation
of
Avoided
Water
Treatment
Costs
Row:
Formula
Change
in
annual
TSS
after
development
from
pre­
development
levels
2,000
1
Low
High
Calculated
range
of
treatment
costs
per
1,000
tons/
yr
$
34.74
$
165.24
2
Range
of
changes
in
costs
b/
$
69,480
$
330,480
3:
1
×
2
Sources:
Holmes,
1988,
and
U.
S.
EPA,
2002a.
(
1,000
tons/
yr)

7.2.3
Non­
Quantified
Benefits
Several
categories
of
benefits
discussed
in
other
studies
were
considered
for
this
benefit
assessment.
For
the
most
part,
the
benefits
expected
to
be
derived
from
these
categories
are
relatively
small
and
difficult
to
quantify.
Rather
than
expend
inordinate
resources
to
quantify
small
benefits,
EPA
focused
on
the
more
promising,
larger
categories.

7.2.3.1
Water
Contact
Recreation
One
of
the
salutary
effects
of
improved
water
quality
is
wider
opportunities
for
water
contact
recreation.
Ribaudo
and
Young
(
1989)
used
a
criteria­
based
approach
to
estimate
the
benefits
of
improved
water
quality
on
recreation.
They
established
levels
of
suspended
sediment,
nitrogen,
and
phosphorous
which
would
show
whether
or
not
the
water
body
was
safe
for
swimming.
They
then
estimated
the
changes
in
runoff
and
ensuing
change
in
water
quality
indicator
levels
to
assess
whether
the
program
being
considered
would
bring
the
water
body
within
the
criteria
for
swimmable
waters.

Ribaudo
and
Young
found
that
the
changes
in
erosion
they
assessed
were
too
small
to
result
in
any
water
quality
changes
that
would
upgrade
the
receiving
waters
 
status.
.
So
there
were
no
water­
based
recreation
benefits
attributable
to
the
program.

Feather
and
Hellerstein
(
1997)
took
a
different
approach.
They
used
information
from
the
National
Resource
Inventory
and
National
Survey
of
Recreation
and
the
Environment
to
estimate
a
direct
7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
relationship
between
soil
loss
and
consumer
welfare
from
water­
based
recreation.
They
were
able
to
estimate
improvements
in
recreation
consumer
surplus
from
erosion
reductions
from
alternative
agricultural
practices.

While
the
ESC
regulations
would
reduce
TSS
loadings,
they
are
not
expected
to
affect
many
of
the
other
water
quality
indicators
that
preclude
water
contact
recreation.
Like
the
Ribaudo
and
Young
study,
estimation
of
recreation
benefits
could
consume
a
great
deal
of
analytical
resources
and
not
generate
any
measurable
benefits.

7.2.3.2
Biodiversity
Effects
Excess
sediment
can
play
havoc
with
natural
stream
ecosystems.
Salmon
and
trout
lay
their
eggs
in
scrapes
on
sand
or
gravel
substrates.
Flowing
sediment
can
bury
the
eggs
and
prevent
their
hatching.

Similarly,
mussel
beds
can
be
buried
by
excessive
sediment
movement,
smothering
the
mussels.
Even
relatively
small
sediment
loads
may
become
harmful
during
storm
events
when
bed
loads
shift
rapidly.

More
than
half
of
the
freshwater
mussel
species
in
the
U.
S.
are
imperiled
or
already
extinct
(
Stein
and
Flack
1997)
.
It
is
difficult
to
quantify
either
the
value
society
places
on
preservation
of
endangered
species
or
the
contribution
the
proposed
regulation
may
make
to
species
preservation.

7.2.3.3
Other
Sources
of
Benefits
Roads
and
irrigation
ditches
provide
transportation
services
to
people.
When
sediment
and
vegetation
clog
ditches
these
services
are
impeded.
Ribaudo
(
1989)
and
Fox
and
Dickson
(
1990)
both
use
government
highway
ditch
maintenance
costs
as
the
starting
point
for
valuing
decreased
roadside
sedimentation.
Ribaudo
estimates
state
removal
costs
as
a
function
of
rural
road
mileage,
gross
erosion,

and
the
reported
costs
to
remove
one
cubic
yard
of
material.
This
process
yields
an
average
cost
of
$
79
per
thousand
tons
of
gross
erosion.
Fox
and
Dickson
divide
provincial
expenses
for
ditch
maintenance
by
the
cropland
area
to
arrive
at
a
cost
of
$
3.41
per
hectare.
Both
studies
then
estimate
the
benefits
of
different
practices
by
assuming
directly
proportional
reductions
in
costs
with
reductions
in
gross
erosion.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
While
maintenance
of
roadside
swales
is
among
the
BMPs
suggested
under
this
regulation,
major
reductions
in
offsite
road
maintenance
are
not
anticipated
in
the
Environmental
Assessment.

Ribaudo
(
1989)
also
estimates
the
benefits
for
irrigation
ditch
maintenance.
He
accepts
Clark,
et
al.
 
s
(
1985)
estimate
of
overall
damage
to
irrigation
systems
from
cropland
erosion
and
assumes
reductions
in
erosion
would
result
in
proportional
reductions
in
damage.
Sohngren
and
Rausch
(
1998b)

estimate
that
drainage
ditch
maintenance
costs
are
$
0.15
per
ton
of
gross
soil
erosion
without
explaining
their
methodology.
Agricultural
water
management
is
probably
not
relevant
to
this
proposed
regulation.

7.3
CONCLUSION
These
methods
form
a
coherent
assessment
of
the
benefits
of
the
proposed
regulations.
There
are
several
opportunities
for
reality
and
sensitivity
testing
of
benefit
values
to
ensure
that
they
are
within
the
realm
of
possibility.
Information
on
total
navigational
and
reservoir
dredging
costs
in
the
region
can
be
compared
to
the
final
results
to
determine
if
the
benefits
estimates
are
in
a
reasonable
range.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
7.4
REFERENCES
Clark,
E.
H.
II,
J.
A.
Haverkamp,
and
W.
A.
Chapman.
1985.
Eroding
Soils:
The
off­
farm
impacts.
Washington,
DC:
The
Conservation
Foundation.
Cited
in
Ribaudo,
1989.

Crowder,
B.
M.
1987.
Economic
Costs
of
Reservoir
Sedimentation:
A
regional
approach
to
estimating
erosion
damage.
Journal
of
Soil
and
Water
Conservation,
42(
3)
:
194­
197.
Cited
in
Ribaudo,
1989.

Dearmont,
David,
Bruce
McCarl,
and
Deborah
A.
Tolman.
1998.
Cost
of
Water
Treatment
Due
to
Diminished
Water
Quality:
A
case
study
in
Texas.
Water
Resources
Research,
34(
4)
:
849­
855.

Feather,
Peter
and
Daniel
Hellerstein.
1997.
Calibrating
Benefit
Function
Transfer
to
Assess
the
Conservation
Reserve
Program.
American
Journal
of
Agricultural
Economics,
79(
1)
:
151­
162.

Fox,
Glenn,
and
Ed
J.
Dickson.
1990.
The
Economics
of
Erosion
and
Sediment
Control
in
Southwestern
Ontario.
Canadian
Journal
of
Agricultural
Economics,
38:
23­
44.

Fox,
Glenn,
Gloria
Umali,
and
Trevor
Dickinson.
1995.
An
Economic
Analysis
of
Targeting
Soil
Conservation
Measures
with
Respect
to
Off­
site
Water
Quality.
Canadian
Journal
of
Agricultural
Economics,
43:
105­
118.

Holmes,
Thomas
P.
1988.
The
Offsite
Impact
of
Soil
Erosion
on
the
Water
Treatment
Industry.
Land
Economics
64(
4)
:
356­
366.

Laughland,
Andrew
S.
,
Wesley
N.
Musser,
James
S.
Shortle,
and
Lynn
M.
Musser.
1996.
Construct
Validity
of
Averting
Cost
Measures
of
Environmental
Benefits.
Land
Economics
72(
1)
:
100­
112.

Moore,
W.
B.
and
B.
A.
McCarl.
1987.
Off­
site
Costs
of
Soil
Erosion:
A
case
study
in
the
Wilamette
Valley.
Western
Journal
of
Agricultural
Economics,
12:
42­
49.
Cited
in
Dearmont,
et
al.
,
1998.

Ribaudo,
Marc
O.
1989.
Water
Quality
Benefits
from
the
Conservation
Reserve
Program.
U.
S.
Department
of
Agriculture,
Economic
Research
Service,
Agriculture
Economic
Report
No.
606.
February.

Ribaudo,
Marc
O.
,
and
C.
Edwin
Young.
1989.
Estimating
Water
Quality
Benefits
from
Soil
Erosion
Control.
Water
Resources
Bulletin,
25(
1)
:
71­
78.

Sohngren,
Brent
and
Jonathan
Rausch.
1998a.
Soil
Erosion
in
the
Maumee
River
Basin:
A
case
study
using
market
methods
to
value
environmental
externalities.
Ohio
State
University
Working
Paper.
Dated
June
5,
1998.

Sohngren,
Brent
and
Jonathan
Rausch,
1998b.
Benefits
of
Controlling
Soil
Erosion
in
the
Maumee
River
Basin.
Ohio
State
University,
Department
of
Agricultural,
Environmental,
and
Development
Economics,
Natural
Resource
and
Environmental
Economics
Research
News.
November,
1998.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Stein,
Bruce
A.
and
Stephanie
R.
Flack.
1997.
1997
Species
Report
Card:
The
State
of
U.
S.
Plants
and
Animals.
Arlington,
Va:
The
Nature
Conservancy.
Available
at:
http:
/
/
www.
natureserve.
org/
publications/
97reportcard/
title.
html
Accessed
on
February
20,
2002.

USACE
2002a.
U.
S.
Army
Corps
of
Engineers,
Philadelphia
District
­
Navigation.
Available
at:
http:
/
/
www.
nap.
usace.
army.
mil/
sb/
nav.
htm.
Accessed
on
February
12,
2002.

USACE
2002b.
Actual
Dredging
Cost
Data
for
1963­
2000:
Summary
of
Corps
and
Industry
Activities.
U.
S.
Army
Corps
of
Engineers
Navigation
Data
Center.
Available
at:
http:
/
/
www.
wrsc.
usace.
army.
mil/
ndc/
ddhisbth.
htm.
Accessed
on
February
14,
2002.

USACE
2001.
National
Inventory
of
Dams
Database.
U.
S.
Army
Corps
of
Engineers
Topographical
Engineering
Center.
Available
at:
http:
/
/
crunch.
tec.
army.
mil/
nid/
webpages/
niddownloaddamsdata.
html
Accessed
on
November
12,
2001.

U.
S.
EPA.
2002a.
Development
Document
for
the
Proposed
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
007.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
2002b.
Environmental
Assessment
of
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
821­
R­
02­
009.
Available
at:
http:
/
/
www.
epa.
gov/
waterscience/
guide/
construction/
.

U.
S.
EPA.
1999.
Economic
Analysis
of
the
Final
Phase
II
Storm
Water
Rule.
Washington,
D.
C.
:
U.
S.
Environmental
Protection
Agency.
EPA­
833­
R­
99­
002.
Available
from
National
Environmental
Publications
Information
at:
http:
/
/
www.
epa.
gov/
clariton/
.

U.
S.
EPA.
1995.
Economic
Benefits
of
Runoff
Controls.
EPA
841­
S­
95­
002.
Available
at:
http:
/
/
www.
epa.
gov/
nps/
runoff.
html.
Accessed
on
May
23,
2001.

U.
S.
EPA.
1994.
President
Clinton
 
s
Clean
Water
Initiative:
Analysis
of
Benefits
and
Costs.
Cited
in
U.
S.
EPA,
1999.

7­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
EIGHT
BENEFITS
ASSESSMENT
RESULTS
The
purpose
of
the
proposed
regulation
is
to
benefit
the
nation
by
improving
water
quality
and
the
environment.
These
benefits
can
be
measured
in
economic
terms
and
balanced
against
the
costs
of
implementing
the
proposed
rule.
The
preceding
chapter
described
the
methodology
EPA
developed
to
measure
the
benefits
of
the
ESC
regulation.
This
chapter
summarizes
the
results
of
that
analysis.
The
first
section
draws
on
the
Environmental
Assessment
to
show
the
changes
in
sediment
loads
and
other
factors
that
indicate
the
environmental
effects
of
the
regulation.
The
second
section
describes
the
results
of
applying
these
environmental
changes
to
the
benefit
estimation
model
described
in
Chapter
Seven.

8.1
ENVIRONMENTAL
ASSESSMENT
RESULTS
The
Environmental
Assessment
used
a
model
watershed
approach
to
estimate
several
indicators
of
water
quality
in
the
baseline
condition
and
under
the
alternative
options.
The
primary
environmental
indicator
selected
was
sediment
entering
waterways
which
was
divided
into
turbidity
producing
solids
and
settleable
solids,
i.
e.
particle
size
20
microns
or
less
and
greater
than
20
microns.
Sediment
is
a
good
indicator
of
the
regulation
 
s
effectiveness
as
metals
and
organic
compounds
enter
the
environment
attached
to
sediment
particles.
Table
8­
1
shows
the
estimated
difference
between
sediment
tonnage
released
under
the
baseline
and
that
released
with
each
regulatory
option.

8.2
BENEFITS
ASSESSMENT
RESULTS
As
discussed
in
Chapter
Seven,
the
sediment
loadings
drive
benefit
analyses
for
several
categories
of
benefits.
Table
8­
2
shows
the
low
and
high
values
for
the
range
of
annual
benefit
estimates.

The
point
estimate
represents
EPA
 
s
best
judgment
of
the
most
probable
benefit
value
after
weighing
the
accuracy
and
distribution
of
the
information
used
to
develop
the
benefit
range.
Most
of
the
benefits
arise
from
the
avoided
costs
of
lost
water
storage
capacity.

8­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
8­
1.
Total
Suspended
Sediment
(
TSS)
­
Differences
from
Baseline
Source:
U.
S.
EPA,
2002.
Decrease
from
Baseline
in:
Option
1
­
Inspection
and
Certification
Option
2
­
Codify
CGP,
Inspection
and
Certification
Turbidity
Producing
Load
(
Tons/
Year)
Settleable
Solids
Load
(
Tons/
Year)
Turbidity
Producing
Load
(
Tons/
Year)
Settleable
Solids
Load
(
Tons/
Year)

High
Estimate
1,582,541
7,912,707
2,225,328
11,126,639
Low
Estimate
527,514
2,637,569
2,225,328
11,126,639
Table
8­
2.
Benefits
Estimates
Benefit
Category
Type
of
Estimate
Option
1
Inspection
and
Certification
Option
2
Codify
CGP
+
Inspectn
&
Certn
Water
Treatment
Point
0.1
0.2
Low
0.0
0.1
High
0.3
0.4
Water
Storage
Point
7.1
15.0
Low
3.5
15.0
High
10.6
15.0
Navigational
Dredging
Point
2.6
5.4
Low
1.3
5.4
High
3.8
5.4
Total
Point
9.7
20.6
Low
4.8
20.5
High
14.4
20.8
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Seven.

8­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
8.3
REFERENCES
U.
S.
EPA.
2002.
Development
Document
for
the
Effluent
Guidelines
for
the
Construction
and
Development
Point
Source
Category.

8­
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
NINE
COSTS
AND
BENEFITS
OF
THE
PROPOSED
RULE
9.1
INTRODUCTION
This
chapter
addresses
the
net
social
costs
of
the
proposed
rule.
It
brings
together
the
results
described
in
Chapters
5
and
8
to
directly
compare
the
estimated
costs
and
benefits
of
the
proposed
regulation
in
accordance
with
Executive
Order
12866
and
other
administrative
regulations.
The
economic
analysis
describes
a
typical
year
 
s
impacts
subsequent
to
implementation
of
the
proposed
rule.
When
flows
of
costs
and
benefits
vary
through
time,
it
is
common
practice
to
calculate
the
net
present
value
of
each
series
of
flows
and
then
compare
the
annual
payments
that
would
be
necessary
to
amortize
that
value.
For
example,
when
new
regulation
requires
investment
in
capital
equipment
there
may
be
a
large
cost
to
retrofit
plants
and
smaller
maintenance
costs
in
later
years
while
benefits
do
not
begin
to
accrue
for
several
years.
To
compare
the
two,
their
net
present
values
are
placed
on
an
annual
basis,
i.
e.

annualized.
When
flows
are
constant,
and
the
same
discount
rate
is
used
to
calculate
the
net
present
value
as
well
as
the
amortization,
the
annualized
value
is
the
same
as
the
annual
value.
The
impacts
in
this
report
represent
typical
annual
values
for
costs
and
benefits
and
so
are
constant
throughout
the
evaluation
period.
Thus,
all
years
are
considered
the
same
and
annualization
is
unnecessary.
Section
9.2
describes
the
direct
social
costs
of
the
proposed
rule,
while
Section
9.3
describes
the
proposed
rule
 
s
indirect
effects.
Section
9.4
compares
these
costs
with
the
benefits
estimated
in
Chapter
8.

9.2
SOCIAL
COSTS
OF
THE
PROPOSED
RULE
9.2.1
Direct
Social
Costs
Direct
social
costs
are
the
real
resource
opportunity
costs
to
the
private
sector,
and
to
the
government,
of
implementing
the
regulation.
The
largest
component
of
social
cost
is
the
cost
to
firms
to
comply
with
the
CGP
provisions.
Installation
of
improved
ESC
management
is
a
direct
cost
to
9­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
construction
firms.
In
addition,
firms
would
also
bear
increased
design,
certification,
and
inspection
costs.

Operation
and
maintenance
(
O&
M)
of
improved
ESCs
also
adds
to
costs.
Governments
at
the
Federal,

State,
and
Municipal
level
would
have
roles
in
implementing
this
regulation.
These
public
resources
spent
by
government
entities
might
have
been
used
for
other
purposes
and
so
represent
a
direct
social
cost.

Each
of
these
direct
cost
categories
was
quantified
in
Chapter
5
and
is
briefly
discussed
below.

9.2.1.1
Compliance
Costs
Implementation
of
the
proposed
rule
requires
the
firm
to
devote
real
resources,
which
might
have
been
used
for
other
purposes,
to
compliance.
EPA
estimated
design,
installation,
certification,
and
inspection
costs
per
acre
for
the
baseline
and
each
regulatory
option
in
Chapter
5.
These
figures
are
adjusted
to
constant
1997
dollars
using
the
Engineering
News­
Record
Construction
Cost
Index
(
ENR
CCI)
to
represent
the
real
private
opportunity
cost.
These
costs
were
shown
in
Table
5­
4.

The
ESCs
in
the
proposed
rule
do
not
depart
significantly
from
current
practices.
The
basic
operations
of
construction
would
change
little
from
existing
practices.
Potential
changes
in
the
inputs
or
production
processes
are
minimal.
No
radically
new
technology
is
proposed
that
would
require
a
substantial
learning
period
to
operate
or
essentially
change
the
production
process.
Nor
would
the
proposed
regulation
generate
new
waste
products
which
might
raise
issues
for
disposal,
sale,
or
reuse.

9.2.1.2
Government
Regulatory
Costs
Codification
of
the
CGP
would
require
only
a
few
hours
of
activity
at
the
Federal,
State,
and
local
levels
of
government.
Administration
would,
in
most
instances,
be
conducted
at
the
State
or
local
levels,

though
some
oversight
would
remain
with
EPA.
These
activities
impose
opportunity
costs
as
they
draw
resources
from
other
government
functions.
EPA
estimates
that
each
state
would
require
approximately
200
labor
hours
to
codify
the
CGP.
To
a
large
extent
the
proposed
regulation
utilizes
administrative
and
enforcement
institutions
established
by
prior
zoning,
building
code,
and
storm
water
regulation.
EPA
9­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
estimates
that
this
one­
time
activity
would
cost
$
260,000
per
year
for
five
years
as
states
revise
their
permitting
language
and
programs.

In
addition,
government
entities
conduct
many
projects
that
would
be
subject
to
the
proposed
regulations.
Approximately
24.7
percent
of
the
value
of
construction
put
in
place
would
be
incurred
by
government
entities.
The
breakdown
is
10.1
percent
Federal,
8.5
percent
State,
and
6.1
percent
local.

Much
of
this
expenditure
is
for
maintenance
of
existing
structures
and
so
does
not
entail
new
ground
disturbance.

9.2.2
Social
Welfare
Losses
Social
welfare
losses
occur
when
compliance
costs
result
in
higher
prices
for
the
goods
in
question.
Individuals
gain
utility
from
products
when
the
market
price
is
lower
than
the
value
they
derive
from
the
product.
This
difference
between
value
and
price
is
termed
 
consumer
surplus.
 
Producers
also
gain
a
surplus,
or
profit,
when
they
can
sell
a
product
for
more
than
the
cost
of
production.
The
proposed
regulations
are
likely
to
affect
new
construction
prices
and
so
shift
the
market
supply
function.

Market
models
for
each
sector
estimate
the
transfer
of
surplus
from
consumers
to
producers
as
buyers
pay
more
to
builders
for
the
added
storm
water
facilities.
In
addition,
the
higher
price
would
discourage
some
buyers
so
the
number
of
homes
or
buildings
that
will
be
sold
would
fall
slightly.
Such
reductions
in
sales
result
in
losses
of
both
consumer
and
producer
surplus
without
any
offsetting
gain,
and
so
are
termed
 
deadweight
loss.
 
The
market
models
estimate
these
surplus
changes
based
on
linear
supply
and
demand
curves
with
elasticities
taken
from
the
literature.

Consumer
and
producer
surplus
losses
were
reported
in
Table
5­
19
as
the
gross
loss
attributable
to
the
proposed
rule
and
include
the
deadweight
loss.
Although
lost
as
profits,
much
of
the
producer
surplus
figure
is
spent
in
the
industry
to
comply
with
the
new
regulations.
Similarly,
most
of
the
consumer
surplus
loss
is
spent
in
the
construction
industry
absorbing
the
 
passed
on
 
costs
of
compliance
with
the
regulations.
The
loss
in
consumers
 
utility
becomes
spending
for
improved
storm
water
management.
.

Only
the
deadweight
loss,
estimated
at
$
10,000
for
Option
1
and
$
185,000
for
Option
2,
is
completely
lost
to
society.

9­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
9.2.3
Transitional
Effects
Traditional
environmental
regulations
may
have
resulted
in
some
plant
closings
and
unemployment.
The
local
impact
of
such
effects
is
generally
not
considered
a
social
impact
issue
since,
in
general,
the
effects
are
transitory.
The
employees
shift
to
other
jobs
and
the
capital
invested
in
the
plant
shifts
to
other
uses.
There
is
a
small
social
loss
in
job
search
costs
and
unemployment
time.
However,

when
workers
are
specialized
or
unable
to
adapt
to
new
labor
market
conditions,
they
may
be
permanently
unemployed
which
would
result
in
a
loss
of
social
welfare.

Construction
is
a
highly
flexible
industry.
It
is
normal
practice
for
employees
and
firms
to
move
from
job
to
job
applying
their
individual
skills
to
the
task
at
hand.
Job
search
costs
and
shifting
investments
are
standard
elements
of
the
industry.
EPA
does
not
foresee
any
major
disruptions
in
the
industry
as
a
result
of
the
proposed
rule.

9.3
INDIRECT
EFFECTS
Beyond
shifting
the
market
supply
for
the
regulated
commodity,
the
regulation
could
affect
the
structure
of
the
industry,
change
labor
or
capital
productivity
or
discourage
innovation.
These
effects
would
have
wider
impacts
on
society
as
they
ripple
through
related
markets
and
industries.
EPA
determined
that
the
proposed
rule
has
relatively
little
possibility
of
causing
indirect
social
welfare
effects.

No
substantial
changes
in
market
structure
are
anticipated
from
this
proposed
rule.
While
some
forms
of
regulation
may
result
in
advantages
to
large
firms
or
encourage
vertical
integration,
this
regulation
builds
on
existing
practices
of
design
and
certification
already
common
in
the
industry.

The
proposed
regulation
is
expected
to
have
little
effect
on
labor
or
capital
productivity.
It
may
require
firms
to
employ
more
workers
without
increasing
output,
e.
g.
,
to
maintain
silt
fencing,
but
this
opportunity
cost
is
captured
in
the
installation,
operating,
and
maintenance
cost.
No
substantial
changes
in
productivity
are
anticipated.
Nor
is
the
proposed
regulation
expected
to
have
substantial
affects
on
research,
innovation,
or
investment
toward
future
technological
development
of
the
industry.
EPA
9­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
expects
that
other
costs
to
society
not
specifically
addressed
by
the
analyses
presented
in
this
report
would
be
modest.

9.4
COMPARISON
OF
ESTIMATED
COSTS
AND
BENEFITS
Chapter
8
described
the
results
of
the
environmental
assessment
and
benefit
monetization.
All
of
the
benefits
estimated
represent
incremental
social
benefits
from
the
baseline
case.
Table
9­
1
compares
the
sum
of
social
costs
discussed
above
with
the
benefits
estimated
in
Table
8­
5.
Anticipated
social
costs
are
greater
than
the
monetized
benefits.

The
social
benefit
estimate
includes
only
those
benefits
that
could
be
monetized.
Section
7.2.6
discusses
several
other
classes
of
benefits
that
could
not
be
quantified
yet
provide
real
social
benefits.

These
included
increased
utility
from
water­
based
recreation
and
biodiversity
preservation.

Table
9­
1.
Social
Costs
and
Benefits
(
1997
$
Million
per
year)

Option
Installation,
Design
and
Permitting
Operation
and
Maintenance
Government
Costs
Deadweight
Loss
Total
Social
Costs
Total
Benefits
1
$
118.1
$
0.0
$
0.0
$
0.1
$
118.2
$
9.7
2
$
421.2
$
48.0
$
0.3
$
0.2
$
469.6
$
20.6
3
$
0.0
$
0.0
$
0.0
$
0.0
$
0.0
$
0.0
Source:
EPA
estimates
based
on
the
methodologies
presented
in
Chapter
Four
and
Chapter
Seven.

9­
5
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
CHAPTER
TEN
UNFUNDED
MANDATES
REFORM
ACT
10.1
INTRODUCTION
Title
II
of
the
Unfunded
Mandates
Reform
Act
of
1995
(
UMRA)
,
P.
L.
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
prepares
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.

Before
promulgating
an
EPA
rule
for
which
a
written
statement
is
needed,
section
205
of
the
UMRA
generally
directs
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
of
why
that
alternative
was
not
adopted.

Before
EPA
establishes
any
regulatory
requirements
that
may
significantly
or
uniquely
affect
small
governments,
including
tribal
governments,
it
is
to
develop,
under
section
203
of
the
UMRA,
a
small
government
agency
plan.
The
plan
is
to
provide
for
notifying
potentially
affected
small
governments,
thus
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.

10­
1
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
10.2
ANALYSIS
AND
RESULTS
EPA
has
determined
that
the
proposed
C&
D
regulations
may
contain
a
federal
mandate
that
may
result
in
expenditures
of
$
100
million
or
more
by
State,
local
or
Tribal
governments
in
the
aggregate,
or
to
the
private
sector
in
any
one
year.
Accordingly,
EPA
has
prepared
the
written
statement
in
accordance
with
section
202
of
the
UMRA.
This
and
previous
sections
of
the
EA
constitute
this
statement:
Chapter
Five
of
the
EA
identifies
costs
and
impacts
(
burdens)
on
construction
firms
that
would
be
subject
to
the
proposed
regulations,
as
well
as
other
market
affects.
Chapter
Eight
presents
estimated
monetary
benefits
that
may
accrue
under
the
proposed
regulations,
in
accordance
with
UMRA
when
costs
of
a
federal
mandate
exceed
$
100
million
in
any
one
year.

EPA
determined
that
the
smallest
unit
of
government
potentially
affected
by
the
proposed
rule
would
be
on
the
sub­
county
(
i.
e.
,
municipal
or
township)
government
level.
Census
data
was
used
to
determine
financial
and
other
information
(
e.
g.
,
population)
for
local
government
entities
(
Census
2000a,

Census
1999)
.
This
information
was
combined
with
data
from
several
other
sources
to
assess
the
impacts
of
the
proposed
rule
on
small
(
serving
populations
of
less
than
50,000)
government
entities.

The
estimated
total
cost
of
the
proposed
rule
under
ESC
option
1
is
approximately
$
118
million.
1
Based
on
the
value
of
construction
work
done,
approximately
24.7
percent
of
this
cost,
or
$
29
million,

would
be
borne
by
public
entities.
Under
ESC
option
2,
the
estimated
total
cost
of
the
proposed
rule
is
$
469
million,
with
public
entities
incurring
approximately
$
116
million
of
this
total.

Approximately
83
percent
of
the
total
U.
S.
population
in
1996
(
219
million
out
of
265
million)
lived
in
areas
governed
by
a
municipality
or
town/
township.
Of
those
served
by
these
sub­
county
governments,

approximately
43
percent
(
114
million)
lived
in
areas
served
by
municipal
or
town/
township
governments
with
populations
of
less
than
50,000.
The
remaining
portion
of
the
total
U.
S.
population
(
i.
e.
,
those
not
served
by
municipal
or
town/
township
governments)
may
be
served
only
by
a
county
government,
a
1
Total
compliance
cost
equals
the
installation,
design,
and
permitting
costs
plus
operation
and
maintenance
costs.

10­
2
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
special
district
government,
or
some
other
form
of
local
government
not
covered
by
the
Census
report
(
Census
1999)
.

The
value
of
construction
work
done
by
government
agencies
(
federal,
state,
and
local)
is
approximately
24.7
percent
of
the
total
value
of
construction
work
done,
with
the
remainder
performed
by
private
entities.
EPA
applied
the
24.7
percent
factor
to
the
total
national
compliance
costs
for
each
option
to
determine
the
portion
of
costs
accruing
to
government
entities.

EPA
then
used
data
on
the
funding
of
capital
outlay
for
highway
projects
to
determine
the
portion
of
compliance
costs
accruing
to
each
level
of
government
(
i.
e.
,
to
federal,
state,
and
local
entities)
.
Based
on
this
data,
approximately
41
percent
of
government
compliance
costs
would
be
borne
by
the
Federal
government,
34
percent
would
be
borne
by
state
governments,
and
the
remaining
25
percent
would
be
borne
by
local
governments.

EPA
compared
the
local
government
share
of
compliance
costs
against
several
financial
indicators
to
determine
the
extent
of
the
impacts
on
small
governmental
units.
The
indicators
used
were
total
revenues,
capital
outlay,
and
capital
outlay
for
construction
only.
In
all
cases,
compliance
costs
were
less
than
0.2
percent
of
the
financial
measure,
indicating
no
significant
impact
on
small
governmental
units.
The
calculations
are
shown
in
Table
10­
1
below.

10­
3
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
Table
10­
1.
Impacts
of
Proposed
Rule
Compliance
Costs
on
Government
Units
Government
Component
Option
1
Option
2
Costs
As
Percent
of
Total
Costs
Costs
As
Percent
of
Total
Costs
Total
Compliance
Costs
$
118,100,000
100.00%
$
469,200,000
100.00%

Private
Compliance
Costs
(
75.3%
)
[
a
]
$
88,929,300
75.30%
$
353,307,600
75.30%

Public
Compliance
Costs
(
24.7%
)
[
a
]
$
29,170,700
24.70%
$
115,892,400
24.70%

Federal
(
41.07%
)
[
b
]
$
11,980,406
10.14%
$
47,597,009
10.14%

State
(
34.29%
)
[
b
]
$
10,002,633
8.47%
$
39,739,504
8.47%

Local
(
24.64%
)
[
b
]
$
7,187,660
6.09%
$
28,555,887
6.09%

Small
Government
Entities
(
<
50,000)
[
c
]
$
3,098,600
2.62%
$
12,310,443
2.62%

Total
Revenues:
Small
Government
$
103,640,793,000
$
103,640,793,000
Compliance
Costs
as
%
of
Total
Revenues
0.00%
0.01%

Capital
Outlay:
Small
Government
$
11,262,360,000
$
11,262,360,000
Compliance
Costs
as
%
of
Total
Capital
Outlay
0.03%
0.11%

Construction
Outlay
Only:
Small
Government
$
6,901,826,000
$
6,901,826,000
Compliance
Costs
as
%
of
Construction
Outlay
0.04%
0.18%

[
a
]
Based
on
value
of
construction
work
done
by
government
entity.
.
1997
Census
of
Construction.
[
b
]
Based
on
the
percent
of
capital
outlay
for
highways
funded
by
governmental
unit.
.
1999
FHWA
Conditions
and
Performance
Report
to
Congress.
[
c
]
Based
on
the
percent
of
U.
.
S.
population
living
in
municipalities
or
towns/
townships
serving
<
50,000
(
43.11%
of
the
population
in
1996)
.
Note:
Approximately
83%
of
the
U.
S.
population
(
or
219,004,000)
lives
in
an
area
governed
by
a
municipality
or
a
town/
township.
The
remaining
population
may
be
served
only
by
a
county
government,
a
special
district
government,
or
other
governmental
organization
not
covered
here.
Of
the
219
million
served
by
these
subcounty
governments,
approximately
114,347,000
(
or
43
percent)
are
served
by
municipal
or
town/
township
governments
with
populations
of
<
50,000.
Sources:
1997
Census
of
Governments:
Compendium
of
Government
Finances;
1997
Census
of
Governments:
Government
Organization;
1999
Status
of
the
Nation'
s
Highways,
Bridges,
and
Transit:
Conditions
and
Performance,
Report
to
Congress;
1997
Census
of
Construction.

10­
4
Economic
Analysis
of
Construction
and
Development
Proposed
Effluent
Guidelines
May
2002
10.3
REFERENCES
Census
2000a.
1997
Census
of
Governments:
Compendium
of
Government
Finances.
Volume
4.
U.
S.
Census
Bureau.
December.

Census
2000b.
1997
Economic
Census:
Construction
­
Industry
Summary
Census
1999.
1997
Census
of
Governments:
Government
Organization.
Volume
1.
U.
S.
Census
Bureau.
August.

FHWA
2000.
Status
of
the
Nation
 
s
Highways,
Bridges,
and
Transit:
Conditions
and
Performance.
Report
to
Congress.
Federal
Highway
Administration.
May.

10­
5
Index
Page(
s)

accounts
payable
to
sales
ratio
.....................................................................
2­
74,
2­
75  
active
construction
....................................................
ES­
74,
3­
2,
1­
4,
4­
6,
4­
11,
4­
46,
4­
58,
6­
13  
affordability
....................................................
ES­
58,
ES­
87,
2­
1,
2­
52,
4­
2,
4­
58­
60,
4­
67,
5­
24  
assets
to
sales
ratio
..................................................................................
2­
74  
barrier
to
entry
..............................................
ES­
83,
ES­
84,
2­
31,
2­
44­
46,
4­
2,
4­
44,
4­
45,
5­
20­
23  
benefits
........................................
ES­
91­
95,
1­
6,
1­
8,
2­
9,
2­
17­
19,
2­
47,
2­
49,
3­
11,
4­
66,
5­
37,
5­
38,
5­
42,
7­
1­
6,
7­
8­
14,
8­
70,
8­
71,
8­
73,
9­
1,
9­
3,
9­
4,
10­
2  
Best
Available
Technology
Economically
Achievable
(BAT)
.....................................
ES­
74,
3­
1,
3­
2,
3­
6  
Best
Conventional
Pollutant
Control
Technology
(BCT)
.........................................
ES­
74,
3­
1,
3­
2,
3­
6  
best
management
practices
(BMPs)
......................
ES­
74,
1­
3,
2­
48,
3­
2,
3­
4,
3­
6,
3­
8,
3­
10,
4­
12,
4­
70,
6­
12,
7­
10  
Best
Practicable
Control
Technology
Currently
Available
(BPT)
..................................
ES­
74,
3­
1,
3­
2,
3­
6  
building
permit(
s)
................................
ES­
57,
ES­
70,
1­
6,
2­
31­
35,
2­
38,
2­
76,
2­
77,
2­
78,
2­
80,
4­
46,
4­
48,
4­
50,
4­
53,
4­
67,
4­
69­
72,
5­
7  
Census
Bureau
................
ES­
57,
ES­
60,
ES­
61,
ES­
63,
ES­
65,
ES­
67,
ES­
68,
ES­
73,
ES­
97,
1­
5­
7,
2­
3,
2­
4,
2­
5,
2­
7,  
2­
8,
2­
11­
14,
2­
16,
2­
18­
22,
2­
28,
2­
30,
2­
31,
2­
33,
2­
34,
2­
36,
2­
38,
2­
45,
2­
53,
2­
55,
2­
57,  
2­
61­
63,
2­
65,
2­
66,
2­
68­
70,
2­
78,
2­
78,
2­
80,
2­
81,
4­
25,
4­
34,
4­
49,
4­
50,
4­
61,
4­
62,
4­
66,  
4­
69,
4­
77,
4­
78,
5­
24,
5­
41,
6­
6,
10­
5  
C&
P
Report
.....................................................................................
2­
39­
41  
capital
costs
..........................................................................
2­
67,
4­
12,
4­
58,
4­
78  
cashflow
..........................................................................
4­
13,
4­
14,
4­
35,
4­
41­
44  
Clean
Water
Act
(CWA)
..........................................................
1­
2,
1­
5,
3­
1,
4­
7,
6­
12,
6­
14  
collection
period
................................................................................
2­
74,
2­
75  
commercial
construction
................
ES­
60,
ES­
69,
ES­
70,
ES­
75­
84,
ES­
86,
ES­
87,
ES­
90,
ES­
91,
ES­
93,
ES­
94,
1­
5,  
2­
7,
2­
19,
2­
22,
2­
24,
2­
25,
2­
28,
2­
30,
2­
47,
2­
48,
2­
54,
2­
79,
4­
5,
4­
8,
4­
13,
4­
14,  
4­
26,
4­
27,
4­
34,
4­
36,
4­
37,
4­
41,
4­
45,
4­
47,
4­
50­
57,
4­
69­
71,
4A­
1,
4A­
2,
4B­
1­
3,
5­
1­
10,
5­
13­
15,
5­
17­
22,
5­
27,
5­
29­
32,
5­
34,
6­
4,
6­
6,
6­
10,
6­
14,
6­
20,
7­
7  
Construction
General
Permit
(CGP)
..................
ES­
73,
ES­
74,
1­
2­
5,
2­
5,
3­
1­
3,
3­
5,
3­
11,
5­
35,
6­
12,
8­
71,
9­
1,
9­
2  
consumer
............................
ES­
58,
ES­
76,
2­
1,
2­
50­
52,
4­
59,
4­
66,
4­
72,
4­
73,
4B­
4,
5­
2,
5­
10,
5­
29­
31,
7­
3,  
7­
10,
9­
2  
consumer
surplus
..........................................................
4­
66,
4­
72,
5­
29,
5­
31,
7­
3,
7­
10,
9­
2  
cost
pass
through
(CPT)
.............
ES­
58,
ES­
76­
78,
ES­
80,
ES­
81­
84,
ES­
90,
ES­
91,
2­
1,
4­
3,
4­
4,
4­
5,
4­
6,
4­
14,
4­
19,
4­
21,
4­
29,
4­
31,
4­
58,
4­
65,
4­
71,
5­
3,
5­
5,
5­
6,
5­
10,
5­
11,
5­
13,
5­
14,
5­
16­
19,
5­
20,
5­
21­
23  
current
ratio
.........................................
ES­
79­
81,
2­
70,
2­
71,
2­
73,
4­
32,
4­
38­
40,
5­
10,
5­
12­
14,
5­
16  
deadweight
loss
.................................................................
ES­
87,
ES­
95,
5­
31,
9­
2,
9­
4  
debt
to
equity
.................................................
ES­
79,
ES­
81,
4­
28,
4­
29,
4­
33,
4­
40,
5­
10­
14,
5­
16  
demand
..........................
ES­
73,
ES­
86,
ES­
87,
2­
4,
2­
30,
2­
50­
52,
2­
54,
2­
55,
2­
79,
3­
2­
6,
4­
59,
4­
63­
67,
4­
69­  
72,
4­
74,
5­
23,
5­
38,
7­
3,
9­
2  
developer­
builder
..........................................................
2­
44,
4­
10­
14,
4­
29,
4B­
4,
5­
2,
5­
10  
Dun
&
Bradstreet
(D&
B)
..........................
ES­
78,
ES­
81,
2­
70,
2­
75,
4­
26­
28,
4­
34,
4­
35,
4­
38,
4­
40,
4­
76,
5­
11  
employment
...........................
ES­
56,
ES­
57,
ES­
63,
ES­
69,
ES­
75,
ES­
81,
ES­
82,
ES­
87­
89,
1­
1,
1­
6,
2­
8,
2­
9,  
2­
11,
2­
15­
17,
2­
21,
2­
22,
4­
2,
4­
25,
4­
26,
4­
35­
38,
4­
40,
4­
41,
4­
43,
4­
66,
4­
72­  
74,
4­
78,
5­
75,
5­
1,
5­
15,
5­
16,
5­
18,
5­
19,
5­
24,
5­
29­
32,
5­
34,
6­
3,
6­
7,
6­
8,
6­
18  
entry
costs
.....................................................................................
2­
46,
4­
44  
equipment
......................................
ES­
60,
2­
5,
2­
7,
2­
17,
2­
19,
2­
58,
2­
61,
2­
63­
68,
3­
8,
4­
41,
4­
44,
9­
1  
erosion
.......................
ES­
73,
ES­
74,
1­
3­
5,
2­
28,
3­
2­
6,
3­
9,
3­
10,
4­
1,
5­
24,
5­
39,
6­
12,
6­
13,
6­
16,
6­
17,
7­
4­
12  
erosion
and
sediment
..........................
ES­
73,
ES­
74,
1­
3,
1­
4,
2­
28,
3­
2­
6,
3­
9,
3­
10,
4­
1,
5­
24,
5­
39,
7­
4,
7­
12  
erosion
and
sediment
controls
(ESCs)
........................
ES­
73,
ES­
74,
1­
3,
1­
4,
3­
2,
3­
3­
6,
3­
9,
3­
10,
4­
1,
4­
2,
4­
6,
4­
10,
4­
11,
4­
12,
4­
72,
5­
29,
5­
39,
9­
1  
Executive
Order
12866
..........................................................
ES­
56,
1­
1,
1­
8,
5­
37,
5­
38,
9­
1  
Federal
government
........................................................................
2­
55,
2­
57,
10­
3  
Federal
Highway
Administration
(FHWA)
.................
2­
39,
2­
40,
2­
41,
2­
42,
2­
43,
2­
79,
4­
23,
4­
24,
4­
76,
10­
4,
10­
5  
Federal
Water
Pollution
Control
Act
..................................................................
1­
2,
3­
1  
fixed
assets
to
net
worth
ratio
.................................................................
2­
70,
2­
71,
2­
74  
geographic
distribution
........................................................................
2­
8,
2­
9,
2­
15  
11­
1  
Index
(
cont.
)

Page(
s)

gross
profit
ratio
.....................................
ES­
79,
ES­
81,
2­
73,
4­
28,
4­
29,
4­
31,
4­
32,
4­
40,
5­
10­
14,
5­
16  
heavy
construction
...........................
ES­
58­
61,
ES­
63,
ES­
65,
ES­
66,
ES­
68,
ES­
70,
ES­
79,
ES­
84,
1­
5,
2­
1­
3,  
2­
6­
12,
2­
14,
2­
16,
2­
19,
2­
21,
2­
22,
2­
24,
2­
25,
2­
27,
2­
29­
31,
2­
39,
2­
46,
2­
50,  
2­
54­
62,
2­
64­
70,
2­
80,
4­
77,
4A­
3,
4A­
4,
5­
14,
5­
15,
6­
4,
6­
6,
6­
8,
6­
10,
6­
14,
6­
20  
hedonic
values
......................................................................................
7­
8  
homebuilding
........................................
ES­
58,
ES­
67,
ES­
97,
2­
1,
2­
44­
46,
2­
80,
4­
25,
4­
26,
4­
77,
6­
5  
homebuyers
.........................................................................
ES­
58,
2­
1,
2­
47,
2­
52  
Housing
Opportunity
Index
(HOI)
.....................................
ES­
87,
4­
58,
4­
66,
4­
67,
4­
68,
5­
23,
5­
24,
5­
25  
industrial
construction
...............
ES­
60,
ES­
69,
ES­
70,
ES­
75,
ES­
76,
ES­
78,
ES­
79,
ES­
81­
84,
ES­
86,
ES­
87,
ES­
90­  
92,
ES­
94,
1­
2,
1­
5,
2­
2,
2­
5,
2­
7,
2­
8,
2­
19,
2­
22,
2­
24,
2­
25,
2­
28,
2­
30,
2­
54,  
2­
55,
2­
63,
2­
65,
2­
72,
2­
79,
3­
1,
4­
4­
8,
4­
14,
4­
26,
4­
27,
4­
29,
4­
34,
4­
36,
4­
37,  
4­
41,
4­
45,
4­
47,
4­
50­
57,
4­
70,
4­
71,
4­
73,
4A­
1,
4A­
3,
4B­
1­
3,
5­
1­
10,
5­
13­
15,  
5­
17­
22,
5­
28,
5­
30,
5­
32,
5­
34,
6­
3,
6­
4,
6­
6,
6­
10,
6­
14,
6­
20,
7­
7  
infrastructure
savings
................................................................................
2­
48  
Initial
Regulatory
Flexibility
Analysis
(IRFA)
..........................................
ES­
88,
ES­
89,
1­
8,
6­
1,
6­
11  
institutional
construction
.........................
ES­
60,
ES­
70,
1­
5,
2­
7,
2­
19,
2­
22,
2­
24,
2­
25,
2­
30,
2­
47,
4­
27,
4­
47,
4­
50,
6­
4,
6­
6,
6­
10,
6­
14,
6­
20  
inventory
.........................................
1­
6,
2­
45,
2­
68­
75,
4­
4,
4­
28,
4­
45,
4­
54,
4­
78,
5­
7,
7­
5,
7­
9,
7­
13  
Joint
Center
for
Housing
Studies
..............................
ES­
57,
ES­
66,
ES­
68,
ES­
97,
2­
8,
2­
12,
2­
26,
2­
27,
2­
80  
land
developer
.....................................................................................
2­
44  
land
development
..........................
ES­
58,
ES­
61,
ES­
63,
ES­
65,
ES­
68,
ES­
69,
2­
1­
3,
2­
8­
12,
2­
15,
2­
16,
2­
19,  
2­
22,
2­
25,
2­
28,
2­
61,
2­
66,
2­
68,
2­
69,
2­
80,
4­
5,
4­
12,
4­
15­
17,
4­
20,
4­
21,
4­
37,  
4­
77,
4A­
2,
4A­
4,
4A­
5,
4B­
4,
6­
4,
6­
5  
lane­
mile(
s)
....................................................................................
2­
39,
2­
40  
low
impact
development
(LID)
.............................................
2­
47,
2­
47,
2­
48,
2­
49,
2­
50,
2­
79,
2­
80  
machinery
.......................................................................................
2­
63­
68  
manufacturing
construction
..................
ES­
60,
ES­
70,
ES­
97,
1­
5,
2­
7,
2­
19,
2­
24,
2­
25,
2­
30,
2­
58,
2­
61,
2­
80,
4­
8,  
4­
14,
4­
27,
4­
29,
4­
34,
4­
41,
6­
4,
6­
6,
6­
10,
6­
14,
6­
20  
market
model
......................................
ES­
87,
4­
2,
4­
29,
4­
58,
4­
59,
4­
63,
4­
68­
71,
4­
73,
5­
2,
5­
26,
5­
31  
metropolitan
statistical
area
(MSA)
.........................................
2­
32,
4­
58,
4­
66,
4­
67,
4­
68,
4B­
1,
5­
31  
model
project(
s)
..........................
ES­
75,
ES­
76,
1­
7,
3­
90,
4­
1,
4­
5,
4­
7­
10,
4­
12­
15,
4­
17­
19,
4­
21,
4­
23,
4­
25,  
4­
51,
4­
72,
4A­
79,
5­
2­
6  
multifamily
construction
...................
ES­
60,
ES­
69,
ES­
70,
ES­
73,
ES­
75,
ES­
76,
ES­
78­
84,
ES­
86,
ES­
87,
ES­
90,  
ES­
91,
1­
5,
2­
7,
2­
19,
2­
22,
2­
24,
2­
25,
2­
28,
2­
29,
2­
50,
4­
5,
4­
8,
4­
13,
4­
26,  
4­
27,
4­
29,
4­
34,
4­
36,
4­
37,
4­
41,
4­
45,
4­
48­
50,
4­
53,
4­
54,
4­
56,
4­
57,
4­
69,  
4­
71,
4­
72,
4­
77,
4A­
1,
4A­
2,
4B­
1­
3,
5­
1,
5­
2,
5­
4­
8,
5­
10,
5­
13,
5­
14,
5­
17­
22,  
5­
26,
5­
27,
5­
30­
32,
5­
34,
6­
4,
6­
7,
6­
8,
6­
10,
6­
14,
6­
18,
6­
19  
municipal
...............................................................
ES­
92,
1­
2,
5­
36,
7­
4,
9­
1,
10­
2,
10­
4  
NAICS
23
.................................................................
ES­
59,
ES­
61,
ES­
63,
2­
5,
2­
6,
6­
3  
NAICS
233
.............................
ES­
59,
ES­
61,
ES­
63,
ES­
65,
ES­
68,
ES­
89,
2­
2,
2­
6,
2­
8­
12,
2­
15,
2­
25,
2­
55,  
2­
58,
2­
59,
2­
63,
2­
67,
2­
70,
6­
3  
NAICS
2331
.............................
ES­
61,
ES­
63,
2­
2,
2­
8,
2­
9,
2­
11­
13,
2­
15,
2­
28,
2­
29,
2­
58,
2­
59,
2­
63,
2­
67,  
2­
70,
6­
5  
NAICS
234
..............................
ES­
59,
ES­
63,
ES­
65,
ES­
66,
ES­
68,
2­
6,
2­
8­
10,
2­
12,
2­
16,
2­
25,
2­
27,
2­
29,  
2­
39,
2­
55,
2­
58,
2­
59,
2­
64,
2­
67,
2­
70,
5­
14  
NAICS
235
........................
ES­
59,
ES­
61,
ES­
69,
2­
3,
2­
6,
2­
8,
2­
9,
2­
11,
2­
13,
2­
29,
2­
55,
2­
67,
2­
70,
6­
5,
6­
14  
NAICS
23593
...........................
ES­
59,
ES­
61,
ES­
63,
ES­
65­
68,
2­
3,
2­
6,
2­
8­
12,
2­
14,
2­
16,
2­
19,
2­
26,
2­
27,  
2­
30,
2­
58,
2­
59,
2­
61­
63,
2­
65,
2­
66,
2­
68,
2­
69  
NAICS
23594
..............................................................................
2­
8,
2­
10,
2­
66  
National
Association
of
Home
Builders
(NAHB)
...........
ES­
57,
ES­
66,
ES­
71,
ES­
73,
ES­
97,
1­
7,
2­
8,
2­
26,
2­
27,
2­
79,
2­
80,
4­
4,
4­
5,
4­
10,
4­
11,
4­
15­
17,
4­
49,
4­
67,
4­
68,
4­
76,
4­
77,
4A­
1­
3,
4A­
5,
4B­
1­
5,
5­
23,
6­
11  
National
Governors
Association
(NGA)
..............................................................
2­
46,
2­
80  
11­
2  
Index
(
cont.
)

Page(
s)

National
Pollutant
Discharge
Elimination
System
(
NPDES)
........
ES­
56,
ES­
57,
ES­
59,
ES­
67,
ES­
73­
75,
1­
1­
4,
1­
6,
2­
5,
2­
6,
2­
26,
2­
27,
2­
29,
3­
1­
4,
3­
6,
4­
2,
4­
3,
4­
7,
4­
17,
4­
48,  
4­
53,
4­
54,
4­
75,
4­
78,
5­
2,
5­
7,
5­
35,
6­
5,
6­
11,
6­
17  
National
Resources
Inventory
(NRI)
.............................................
1­
6,
4­
45­
47,
4­
53,
4­
54,
4­
78,
5­
7  
New
Community
Design
(NCD)
.....................................................
2­
46,
2­
47,
2­
48,
2­
50,
2­
79  
New
Source
Performance
Standards
(NSPS)
..................................................
ES­
74,
3­
2,
4­
6,
4­
7  
nonemployer
establishments
.......................................................................
2­
11,
2­
12  
non­
residential
construction
..................................................................
4­
69,
4­
71,
5­
27  
North
American
Industrial
Classification
System
(NAICS)
.............................................
2­
2,
2­
5,
6­
3  
Notice
of
Intent
(NOI)
................................................................................
1­
6  
Notice
of
Termination
(NOT)
.......................................................................
3­
5,
3­
10  
operation
and
maintenance
(O&
M)
..........................................
ES­
94,
ES­
95,
4­
6,
4­
58,
9­
1,
9­
4,
10­
2  
payroll
..............................................................
ES­
61,
ES­
63,
ES­
68,
2­
2,
2­
9,
4­
41,
4­
42  
permittee(
s)
................................
ES­
59,
ES­
67,
1­
3,
2­
6,
2­
27,
2­
29,
3­
2,
3­
4,
3­
5,
3­
6,
6­
5,
6­
12,
6­
14,
6­
18  
Phase
I
.............................................
ES­
75,
1­
2,
2­
5,
3­
1,
3­
3,
4­
2,
4­
17,
4­
75,
5­
2,
5­
35,
6­
15,
6­
16  
Phase
II
....................................
ES­
57,
ES­
75,
1­
2,
1­
3,
1­
7,
2­
5,
2­
81,
3­
1,
3­
3,
4­
2,
4­
3,
4­
17,
4­
48,
4­
53,  
4­
54,
4­
75,
4­
78,
5­
2,
5­
7,
5­
35,
6­
12,
6­
15,
6­
17,
7­
13  
post­
construction
..............................................................
ES­
74,
1­
3,
3­
2,
3­
8,
4­
12,
6­
12  
potentially
affected
entities
..............................
ES­
57,
ES­
67,
ES­
68,
ES­
70,
ES­
89,
1­
1,
1­
4­
7,
2­
4,
2­
9,
2­
25,  
2­
27­
30,
4­
36­
38,
6­
2,
6­
5,
6­
9,
6­
10,
6­
14,
10­
1,
10­
2  
Pretreatment
Standards
for
Existing
Sources
(PSES)
.........................................................
3­
2  
Pretreatment
Standards
for
New
Sources
(PSNS)
...........................................................
3­
2  
principal,
interest,
taxes,
and
insurance
(PITI)
..................................
2­
52,
4­
59,
4­
60,
4­
61,
4­
67,
4­
68,
4­
69  
producer
surplus
............................................................................
4­
72,
5­
31,
9­
2  
profit
margin
...................................................................................
2­
75,
4­
14  
quick
ratio
....................................................................................
2­
70,
2­
73  
rainfall
...............................................................................
1­
3,
3­
11,
4­
73,
6­
17  
Regulatory
Flexibility
Act
(RFA)
.........................
ES­
56,
ES­
58,
ES­
88,
ES­
97,
1­
1,
1­
8,
2­
1,
6­
1,
6­
5,
6­
10,
6­
11  
remodelers
...................................................................
ES­
66,
ES­
67,
2­
12,
2­
26,
2­
27  
remodeling
..................................
ES­
57,
ES­
58,
ES­
66­
68,
ES­
97,
2­
2,
2­
8,
2­
12,
2­
26­
28,
2­
80,
4­
37,
6­
5  
residential
construction
...........................
2­
2,
2­
31,
2­
32,
2­
54,
2­
55,
2­
79,
4­
4,
4­
9,
4­
15,
4­
26­
28,
4­
34,
4­
36,  
4­
38,
4­
46,
4­
49,
4­
58,
4­
69,
4­
71,
4­
77,
4B­
2,
5­
7,
5­
9,
5­
10,
5­
12,
5­
24,
5­
27,
6­
7,
6­
14  
return
on
assets
.................................................................................
2­
74,
2­
75  
return
on
equity
....................................................................................
2­
75  
return
on
net
worth
...................................
ES­
79,
ES­
81,
2­
74,
2­
75,
4­
28,
4­
29,
4­
31,
4­
32,
4­
40,
5­
10­
16  
return
on
sales
.................................................................................
2­
74,
2­
75  
runoff
.........................................
ES­
56,
ES­
93,
1­
3,
1­
4,
1­
8,
2­
1,
2­
48,
2­
50,
3­
6­
9,
4­
12,
5­
38,
6­
13,
6­
17,
7­
1,
7­
7,
7­
9,
7­
13  
sales
to
inventory
ratio
...........................................................................
2­
74,
2­
75  
sales
to
net
working
capital
ratio
...................................................................
2­
74,
2­
75  
sediment
..............................
ES­
56,
ES­
73,
ES­
74,
ES­
91­
93,
1­
1,
1­
3­
5,
2­
28,
2­
48,
3­
2­
7,
3­
9­
11,
4­
1,
5­
24,  
5­
38,
5­
39,
6­
12,
6­
13,
6­
16,
7­
1­
10,
7­
12,
8­
70,
8­
71  
single­
family
construction
................
ES­
60,
ES­
68­
71,
ES­
73,
ES­
75,
ES­
76,
ES­
78­
84,
ES­
86,
ES­
87,
ES­
90,
ES­
91,  
1­
5,
2­
7,
2­
9,
2­
10,
2­
18­
20,
2­
22,
2­
24,
2­
25,
2­
28­
30,
2­
32,
2­
35,
2­
44,
2­
45,  
2­
50,
2­
60,
2­
72,
2­
79,
4­
3,
4­
5,
4­
8­
10,
4­
13,
4­
15,
4­
16,
4­
18,
4­
26­
28,
4­
34,  
4­
36­
38,
4­
45­
49,
4­
53­
57,
4­
72,
4­
77,
4A­
1­
5,
4B­
1­
14,
5­
17­
23,
5­
25,  
5­
26,
5­
29­
32,
5­
34,
6­
4,
6­
6,
6­
8,
6­
10,
6­
14,
6­
18,
6­
19  
small
business
........................
ES­
56,
ES­
58,
ES­
68,
ES­
70,
ES­
88­
91,
ES­
97,
1­
1,
1­
8,
2­
1,
2­
3,
2­
11,
2­
22,
2­
25,  
2­
81,
4­
42,
4­
78,
6­
1,
6­
2,
6­
3,
6­
4,
6­
5,
6­
7,
6­
9,
6­
10,
6­
11,
6­
16,
6­
18,
6­
20,
6­
21  
Small
Business
Administration
(SBA)
..................
ES­
68,
ES­
88,
ES­
97,
2­
3,
2­
4,
2­
10,
2­
21,
2­
22,
2­
24,
2­
25,
2­
81,
4­
42,
4­
78,
6­
2,
6­
3,
6­
4,
6­
6,
6­
10,
6­
18,
6­
20  
Small
Business
Advocacy
Review
(SBAR)
.............................................
ES­
88,
6­
1,
6­
10,
6­
11,
6­
16  
11­
3  
Index
(
cont.
)

Page(
s)

Small
Business
Regulatory
Enforcement
Fairness
Act
(SBREFA)
..................
ES­
56,
ES­
58,
ES­
88,
ES­
97,
1­
1,
1­
8,  
2­
1,
6­
1,
6­
10,
6­
11
6­
10,
6­
11,
6­
16,
6­
18,
6­
20,
6­
21  
small
entities
...................................................
ES­
68,
ES­
69,
ES­
88,
ES­
89,
2­
3,
2­
9,
2­
10,
2­
11,
2­
21,
2­
25,
4­
2,
6­
1,
6­
2,
6­
5,
6­
11,
6­
14,
6­
17  
specialization
ratio
..........................................................................
2­
9,
2­
18,
2­
20  
storm
water
..............................
ES­
56­
58,
ES­
67,
ES­
73­
75,
ES­
87,
ES­
93,
1­
1­
4,
1­
7,
1­
8,
2­
1,
2­
5,
2­
47­
49,  
2­
79,
2­
81,
3­
1­
5,
3­
7­
9,
3­
11,
4­
2,
4­
3,
4­
6,
4­
15,
4­
17­
19,
4­
21,
4­
48,
4­
51,
4­
53,  
4­
54,
4­
58,
4­
73­
75,
4­
76,
4­
77,
4­
78,
4B­
4,
5­
2,
5­
7­
9,
5­
35,
5­
39,
6­
5,
6­
12,
6­
13,
6­
15,
7­
7,
7­
8,
7­
13,
9­
2  
storm
water
pollution
prevention
plan
(SWPPP)
..........................
ES­
73,
ES­
74,
1­
3,
3­
2,
3­
6,
3­
7,
3­
8,
3­
9,
6­
12  
subdevelopment
.....................................................
ES­
61,
2­
3,
2­
9,
2­
11,
2­
12,
2­
66,
2­
68,
2­
69  
subdivision
...........................
ES­
58,
ES­
60,
ES­
63,
ES­
65,
ES­
68,
ES­
89,
1­
5,
2­
1,
2­
2,
2­
7,
2­
8,
2­
10,
2­
13­
16,  
2­
19,
2­
22,
2­
24,
2­
25,
2­
46,
2­
48,
2­
61,
2­
65,
2­
66,
2­
68,
2­
69,
4­
5,
4­
10,
4­
17,
6­
3,
6­
4  
supply
.............................
ES­
73,
ES­
86,
ES­
87,
2­
4,
2­
30,
2­
31,
2­
44,
2­
46,
2­
48,
2­
54,
2­
69,
2­
79,
4­
6,
4­
58,  
4­
59,
4­
63­
67,
4­
72,
5­
30,
7­
4,
9­
2,
9­
3  
surplus
..................................................................
4­
66,
4­
72,
5­
29,
5­
31,
7­
3,
7­
10,
9­
2  
Survey
of
Construction
...............................................................................
2­
31  
system
enhancement
...............................................................................
2­
41­
43  
system
expansion
.................................................................................
2­
41­
43  
system
preservation
...............................................................................
2­
41­
43  
Total
Maximum
Daily
Load
(TMDL)
....................................................................
1­
3  
total
suspended
solids
(TSS)
.................................................
ES­
91,
3­
2,
7­
7,
7­
8,
7­
9,
7­
10,
8­
71  
Unfunded
Mandates
Reform
Act
(UMRA)
...........................
ES­
56,
ES­
95,
1­
1,
1­
8,
5­
37,
5­
39,
9­
5,
10­
1,
10­
2  
value
of
business
done
......................................................................
2­
12,
2­
58,
2­
61  
value
of
construction
work
..........................
ES­
65,
lxii,
2­
18,
2­
20,
2­
32,
2­
39,
2­
55,
2­
57­
62,
2­
69,
4­
26,
4­
75,  
10­
2­
4  
value
put
in
place
............................................................
ES­
57,
1­
6,
2­
32,
2­
37,
2­
38,
2­
80  
watershed(
s)
.............................................
4­
16,
4­
34,
4­
49,
4­
76,
4A­
1,
6­
13,
7­
2,
7­
4,
7­
6,
7­
8,
8­
70  
welfare
..........................
ES­
94,
2­
18,
2­
19,
4­
58,
4­
59,
4­
66,
4­
67,
4­
69,
4­
72,
5­
24,
5­
30,
5­
31,
7­
2,
7­
3,
7­
10,  
9­
2,
9­
3  
willingness
to
pay
....................................................................................
7­
3  
11­
4  
