Executive Summary

Overview

EPA has performed an illustrative analysis of the potential costs and
human health benefits of nationally attaining alternative ozone
standards. Per Executive Order 12866 and the guidelines of OMB Circular
A-4, this Regulatory Impact Analysis (RIA) presents analyses of the
range of standards proposed by the Administrator in the Notice of
Proposed Rulemaking (0.070 – 0.075 ppm), as well as one more stringent
option (0.065 ppm).  The less stringent option is the baseline, or the
current primary standard for ozone (0.08 ppm, effectively 0.084 ppm due
to current rounding conventions).  The benefit and cost estimates below
are calculated incremental to a 2020 baseline that incorporates air
quality improvements achieved through the projected implementation of
existing regulations and full attainment of the existing ozone and
particulate matter (PM) National Ambient Air Quality Standards  (NAAQS).
 The baseline includes the Clean Air Interstate Rule and mobile source
programs, which will help many areas move toward attainment of the
current standard.  

We present two sets of results.  The first reflects full attainment of
the alternative ozone standards in all locations of the U.S. except two
areas of California in 2020.  These two areas of California are not
planning to meet the current standard by 2020, so the estimated costs
and benefits for these areas are based on reaching an estimated
attainment point in 2020 (their “glidepath” targets).  The second
set of results, for California only, estimate the costs and benefits
from California fully attaining the alternative standards in a year
beyond 2020 (glidepath estimates, plus the increment needed to reach
full attainment beyond 2020, added together for a California total). 
Further explanation about these unique circumstances is provided in
Chapter 4.  

In addition, EPA designed a two-stage approach to estimating costs and
benefits because we recognized from the outset that known and reasonably
anticipated emissions controls would likely be insufficient to bring
many areas into attainment with either the current, or alternative, more
stringent ozone standards.  The individual chapters of the RIA present
more detail regarding estimated costs and benefits based on both partial
attainment (manageable with current technologies) and full attainment
(manageable in some locations only with hypothetical technologies).  The
post-2020 estimates for California are entirely based on hypothetical
technologies.  

In setting primary ambient air quality standards, EPA’s responsibility
under the law is to establish standards that protect public health. The
Clean Air Act (“Act”) requires EPA, for each criteria pollutant, to
set a standard that protects public health with “an adequate margin of
safety.” As interpreted by the Agency and the courts, the Act requires
EPA to base this decision on health considerations only; economic
factors cannot be considered. 

The prohibition against the consideration of cost in the setting of the
primary air quality standards, however, does not mean that costs,
benefits or other economic considerations are unimportant or should be
ignored. The Agency believes that consideration of costs and benefits is
an essential decision making tool for the efficient implementation of
these standards. The impacts of cost, benefits, and efficiency are
considered by the States when they make decisions regarding what
timelines, strategies, and policies make the most sense.

This RIA is focused on development and analyses of illustrative control
strategies to meet these alternative standards in 2020.  This analysis
does not prejudge the attainment dates that will ultimately be assigned
to individual areas under the Clean Air Act, which contains a variety of
potential dates and flexibility.  For purposes of this analysis, though,
we assume attainment by 2020 for all areas except for two areas in
California 

Because States are ultimately responsible for implementing strategies to
meet revised standards, this RIA provides insights and analysis of a
limited number of illustrative control strategies that states might
adopt to meet any revised standard.  These illustrative strategies are
subject to a number of important assumptions, uncertainties and
limitations, which we document in the relevant portions of the analysis.


ES.1	Approach to the Analysis

This RIA consists of multiple analyses including an assessment of the
nature and sources of ambient ozone; estimates of current and future
emissions of relevant precursors that contribute to the problem; air
quality analyses of baseline and alternative strategies; development of
illustrative control strategies to attain the standard alternatives in
future years; estimates of the incremental costs and benefits of
attaining the alternative standards, together with an examination of key
uncertainties and limitations; and a series of conclusions and insights
gained from the analysis.   

The air quality modeling results for the regulatory baseline (explained
in Chapter 3) provide the starting point for developing illustrative
control strategies to attain the alternative standards that are the
focus of this RIA.    The baseline shows that by 2020, while ozone air
quality would be significantly better than today under current
requirements, several eastern and western states would need to develop
and adopt additional controls to attain the alternative standards.   

In selecting controls, we focused more on ozone cost-effectiveness
(measured as $/ ppb) than on the NOx or VOC cost-effectiveness (measured
as $/ton).  Most of the overall reductions in NOx achieved our
illustrative control strategy were from non-EGU point sources.  The NOx
based illustrative control strategies we analyzed are also expected to
reduce ambient PM 2.5 levels in many locations.  The total benefits
estimates described here include the co-benefits of reductions in fine
particulate levels (PM) associated with year-round application of NOx
control strategies beyond those in the regulatory baseline.  

Estimated reductions in premature mortality from reductions in ambient
ozone and PM dominate the benefits estimates.  For this reason, our
assessment provides a range of estimates for both PM and ozone premature
mortality.  Although we note that there are uncertainties that are not
fully captured by this range of estimates, and that additional research
is needed to more fully establish underlying mechanisms by which such
effects occur, such ranges are illustrative of the extent of uncertainly
associated with some different modeling assumptions.  

	Fig ES.1  Projected Ozone Air Quality in 2020 After Application of
Known Controls

 

1 Modeled emissions reflect the expected reductions from federal
programs including the Clean Air Interstate Rule, the Clean Air Mercury
Rule, the Clean Air Visibility Rule, the Clean Air Nonroad Diesel Rule,
the Light-Duty Vehicle Tier 2 Rule, the Heavy Duty Diesel Rule, proposed
rules for Locomotive and Marine Vessels and for Small Spark-Ignition
Engines, and state and local level mobile and stationary source controls
identified for additional reductions in emissions for the purpose of
attaining the current PM 2.5 and Ozone  standards.  

2 Controls applied are illustrative.  States may choose to apply
different control strategies for implementation. 

3 The current standard of 0.08 ppm is effectively expressed as 0.084 ppm
when rounding conventions are applied.  

4 Modeled design values in ppm are only interpreted up to 3 decimal
places.

5 Map shows results from a total of 491 counties with projected design
values. Consistent with current modeling guidance, EPA did not project
2020 concentrations for counties where 2001 base year concentrations
were less than recommended criterion.  Such projections may not
represent expected future levels.  

ES-2.	Results of Benefit-Cost Analysis

There are two sets of results presented below.  The first set of
national results assumes attainment of revised standards by 2020 in all
areas, except for two areas in Southern California.   It is expected
that benefits and costs will begin occurring earlier, as states begin
implementing control measures to show progress towards attainment. Some
areas with high ozone levels, such as the two areas in Southern
California, are not planning to attain even the current standard until
after 2020.  In these locations, our national 2020 estimate includes the
cost and benefits of reaching an estimated progress point in  2020
(known as a “glidepath” target).  The 2020 results will thus not
represent a true “full attainment” scenario for the entire nation. 
In order to gain an understanding of the possible additional costs and
benefits of fully attaining in California in a year beyond 2020, we
provide an additional set of results for California only.  Tables ES-1
to ES-3 present national benefits and costs in 2020, including the
“glidepath” targets for California; companion Table ES-4 provides
the national estimated reductions in premature mortality and morbidity
in 2020, including the “glidepath” targets for California. 

Tables ES-5 to ES-7 present the costs and benefits of full attainment
for California (“glidepath” in 2020 plus the additional increment
achieved between 2020 and a future year added together into one
California total); Table ES-8 is the companion table showing estimated
reductions in premature mortality and morbidity for California.  Because
various mobile source rules, such as the onroad and nonroad diesel rule,
among others, would be expected to be implemented between 2020 and a
future year, the tons of emission reduction expected to occur as a
result of those rules has been taken out of the calculated costs and
benefits for the estimates of additional tons of emission reduction
needed in California between 2020 and a future year.  EPA did the
analysis this way because to force full attainment in an earlier year
than would be required under the Clean Air Act would likely lead to an
overstatement of costs because those areas might benefit from these
existing federal or state programs that would be implemented between
2020 and the attainment year; because additional new technologies may
become available between 2020 and the attainment year; and because the
cost of existing technologies might fall over time.  As such, we use the
best available data to estimate costs and benefits of full attainment
for California in a future year, while recognizing that the estimates of
costs and benefits for California in a year between 2020 and a future
year are likely to be relatively more uncertain than the national
attainment estimates for 2020.  It is not appropriate to add together
the 2020 national attainment, California glidepath estimate and the
estimate of California full attainment as an estimate of national full
attainment in 2020.  The extra increment of attainment that is estimated
for California will not occur in 2020, so it is not accurate to add it
to our nationwide estimate of the “glidepath” benefits and costs to
arrive at a “full attainment” estimate for 2020.  It is also not
accurate to add the two estimates together to arrive at an estimate of
future, post-2020 full attainment benefits and costs, because our
nationwide full attainment estimates do not allow other areas of the
nation to take credit for the reductions in NOx from the mobile source
rules that will occur after 2020.

In these tables, the individual row estimates reflect the different
studies available to describe the ozone premature mortality
relationship.  Ranges within the total benefits column reflect
variability in the studies upon which the estimates associated with
premature mortality were derived.  PM co-benefits account for between 13
and 99 percent of co-benefits, depending on the standard analyzed and on
the choice of ozone and PM mortality functions used.

Ranges in the total costs column reflect different assumptions about the
extrapolation of costs.  The low end of the range of net benefits is
constructed by subtracting the highest cost from the lowest benefit,
while the high end of the range is constructed by subtracting the lowest
cost from the highest benefit.  The presentation of the net benefit
estimates represents the widest possible range from this analysis.  

Table ES-1  National Annual Costs and Benefits:  0.079 ppm Standard in
2020

(including California glidepath )

Premature Mortality Function or Assumption	Reference	Mean Total
Benefits, in Billions of 1999$



Total Benefits*	Total Costs**	Net Benefits

NMMAPS	Bell et al. 2004	$1.2 to $11	$3 to $3.3	-$2.1 to $8.5

Meta-analysis	Bell et al. 2005	$1.6 to $12	$3 to $3.3	-$1.7 to $8.9

	Ito et al. 2005	$1.7 to $12	$3 to $3.3	-$1.7 to $8.9

	Levy et al. 2005	$1.6 to $12	$3 to $3.3	-$1.7 to $8.9

Assumption that association is not causal***	$1.1 to $11	$3 to $3.3
-$2.2 to $8.4





Table ES-2  National Annual Costs and Benefits:  0.075 ppm Standard in
2020

(including California glidepath )

Premature Mortality Function or Assumption	Reference	Mean Total
Benefits, in Billions of 1999$



Total Benefits*	Total Costs**	Net Benefits

NMMAPS	Bell et al. 2004	$3 to $16	$5.5 to $8.8	-$5.8 to $10.5

Meta-analysis	Bell et al. 2005	$7.3 to $20	$5.5 to $8.8	-$1.5 to $15

	Ito et al. 2005	$7.8 to $21	$5.5 to $8.8	-$1. to $15

	Levy et al. 2005	$8.7 to $22	$5.5 to $8.8	-$0.1 to $16

Assumption that association is not causal***	$1.5 to $15	$5.5 to $8.8
-$7.3 to $9



Table ES-3  National Annual Costs and Benefits:  0.070 ppm Standard in
2020

(including California glidepath)

Premature Mortality Function or Assumption	Reference	Mean Total
Benefits, in Billions of 1999$



Total Benefits*	Total Costs**	Net Benefits

NMMAPS	Bell et al. 2004	$4.3 to $26	$10 to $22	-$17 to $16

Meta-analysis	Bell et al. 2005	$9.7 to $31	$10 to $22	-$12 to $21

	Ito et al. 2005	$10 to $32	$10 to $22	-$11 to $22

	Levy et al. 2005	$11 to $33	$10 to $22	-$10 to $23

Assumption that association is not causal***	$2.5 to $24	$10 to $22	-$20
to $14



Table ES-4  National Annual Costs and Benefits :  0.065 ppm Standard in
2020

(including California glidepath)

Premature Mortality Function or Assumption	Reference	Mean Total
Benefits, in Billions of 1999$



Total Benefits*	Total Costs**	Net Benefits

NMMAPS	Bell et al. 2004	$7.7  to $45	$17 to $46	-$38 to $28

Meta-analysis	Bell et al. 2005	$18 to $55	$17 to $46	-$28 to $38

	Ito et al. 2005	$19 to $56	$17 to $46	-$27 to $39

	Levy et al. 2005	$20 to $57	$17 to $46	-$27 to $40

Assumption that association is not causal***	$4.3 to $42	$17 to $46	-$42
to $25

*Includes ozone benefits, and PM 2.5 co-benefits. Range was developed by
adding the estimate from the ozone premature mortality function to both
the lower and upper ends of the range of the PM2.5 premature mortality
functions characterized in the expert elicitation

**Range reflects lower and upper bound cost estimates

***Total includes ozone morbidity benefits only

Table ES-5: Summary of Total Number of Annual Ozone and PM2.5-Related
Premature Mortalities and Premature Morbidity Avoided: 2020 National
Benefits

Combined Estimate of Mortality

Standard Alternative and 

Model or Assumption	Combined Range of Ozone Benefits and

 PM2.5 Co-Benefits



0.079 ppm	0.075 ppm	0.070 ppm	0.065 ppm

NMMAPS 	Bell (2004)	200 to 1,900	430 to 2,600	670 to 4,300	1,200 to
7,400

Meta-Analysis	Bell (2005)	260 to 2,000	1,100 to 3,300	1,500 to 5,100
2,800 to 9,000

	Ito (2005)	270 to 2,000	1,200 to 3,300	1,600 to 5,200	3,000 to 9,200

	Levy (2005)	260 to 2,000	1,300 to 3,500	1,800 to 5,400	3,000 to 9,200

No Causality	180 to 1,900	230 to 2,400	390 to 4,000	660 to 6,900



	Combined Estimate of Morbidity



	Acute Myocardial Infarction	1,100	1,400	2,300	4,000

Hospital and ER Visits	1,300	5,600	7,600	13,000

Chronic Bronchitis	370	470	780	1,300

Acute Bronchitis	950	1,200	2,000	3,500

Asthma Exacerbation	7,300	9,400	16,000	27,000

Lower Respiratory Symptoms	8,100	10,000	17,000	29,000

Upper Respiratory Symptoms	5,900	7,500	13,000	22,000

School Loss Days	50,000	610,000	780,000	1,300,000

Work Loss Days	51,000	65,000	110,000	190,000

Minor Restricted Activity Days	430,000	2,000,000	2,700,000	4,700,000



	

Table ES-6   California:  Annual Costs and Benefits of Attaining 0.079
ppm Standard (beyond 2020)*

Premature Mortality Function 

or Assumption	Reference	Mean Total Benefits, in Billions of 1999$



Total Benefits**	Total Costs***	Net Benefits

NMMAPS	Bell et al. 2004	$0.1 to $0.6	$0.3 to $1.7	-$1.6 to $0.2

Meta-analysis	Bell et al. 2005	$0.2 to $0.7	$0.3 to $1.7	-$1.5 to $0.4

	Ito et al. 2005	$0.3 to $0.7	$0.3 to $1.7	-$1.4 to $0.4

	Levy et al. 2005	$0.2 to $0.7	$0.3 to $1.7	-$1.5 to $0.4

Assumption that association is not causal****	$0.05 to $0.5	$0.3 to $1.7
-$1.6 to $0.2



Table ES-7   California:  Annual Costs and Benefits of Attaining 0.070
ppm Standard (beyond 2020)*

Premature Mortality Function 

or Assumption	Reference	Mean Total Benefits, in Billions of 1999$



Total Benefits**	Total Costs***	Net Benefits

NMMAPS	Bell et al. 2004	$0.7 to $3.5	$2 to $13	-$12 to $1.5

Meta-analysis	Bell et al. 2005	$1.9 to $4.7	$2 to $13	-$11 to $2.7

	Ito et al. 2005	$2.1 to $4.8	$2 to $13	-$11 to $2.9

	Levy et al. 2005	$2.1 to $4.8	$2 to $13	-$11 to $2.9

Assumption that association is not causal****	$0.4 to $3.1	$2 to $13
-$13 to $1.2



Table ES-8   California:  Annual Costs and Benefits of  Attaining 0.075
ppm Standard (beyond 2020)*

Premature Mortality Function 

or Assumption	Reference	Mean Total Benefits, in Billions of 1999$



Total Benefits**	Total Costs***	Net Benefits

NMMAPS	Bell et al. 2004	$0.4 to $1.9	$1.1 to $6.2	-$5.8 to $0.8

Meta-analysis	Bell et al. 2005	$1.1 to $2.6	$1.1 to $6.2	-$5.1 to $1.5

	Ito et al. 2005	$1.2 to $2.7	$1.1 to $6.2	-$5.1 to $1.6 

	Levy et al. 2005	$1.2 to $2.7	$1.1 to $6.2	-$5 to $1.6

Assumption that association is not causal****	$0.2 to $1.7	$1.1 to $6.2
-$6 to $0.6





Table ES-9   California:  Annual Costs and Benefits of Attaining 0.065
ppm Standard (beyond 2020)*

Premature Mortality Function 

or Assumption	Reference	Mean Total Benefits, in Billions of 1999$



Total Benefits**	Total Costs***	Net Benefits

NMMAPS	Bell et al. 2004	$1.1 to $5.2	$2.9 to $21	-$19 to $2.3

Meta-analysis	Bell et al. 2005	$3.1 to $7.2	$2.9 to $21	-$17 to $4.3 

	Ito et al. 2005	$3.4 to $7.4	$2.9 to $21	-$17 to $4.5

	Levy et al. 2005	$3.3 to $7.4	$2.9 to $21	-$17 to $4.5

Assumption that association is not causal****	$0.5 to $4.6	$2.9 to $21
-$20 to $1.7

* Tables present the total of CA glidepath in 2020, plus the additional
increment needed to reach full attainment in a year beyond 2020

** Includes ozone benefits and PM 2.5 co-benefits.  Range was developed
by adding the estimate from the ozone premature mortality function to
both the lower and upper ends of the range of the PM2.5 premature
mortality functions characterized in the expert elicitation

***Range reflects lower and upper bound cost estimates

****Total includes ozone morbidity benefits only



Table ES-10: Summary of Total Number of Annual Ozone and PM2.5-Related
Premature Mortalities and Premature Morbidity Avoided: California Post
2020 Attainment

Combined Estimate of Mortality

Standard Alternative and 

Model or Assumption	Combined Range of Ozone Benefits and

 PM2.5 Co-Benefits



0.079 ppm	0.075 ppm 	0.070 ppm	0.065 ppm

NMMAPS 	Bell (2004)	17 to 93	61 to 310	110 to 570	180 to 840

Meta-Analysis	Bell (2005)	42 to 120	170 to 410	300 to 760	490 to 1,200

	Ito (2005)	45 to 120	180 to 430	320 to 780	530 to 1,200

	Levy (2005)	46 to 120	180 to 430	320 to 780	520 to 1,200

No Causality	8.2 to 84	26 to 270	49 to 500	72 to 740



	Combined Estimate of Morbidity



	Acute Myocardial Infarction	49	160	290	430

Hospital and ER Visits	200	790	1,400	2,200

Chronic Bronchitis	17	53	99	150

Acute Bronchitis	43	140	260	380

Asthma Exacerbation	330	1,100	2,000	2,900

Lower Respiratory Symptoms	360	1,200	2,200	3,200

Upper Respiratory Symptoms	270	850	1,600	2,300

School Loss Days	30,000	120,000	210,000	340,000

Work Loss Days	2,300	7,400	14,000	20,000

Minor Restricted Activity Days	87,000	340,000	600,000	960,000



	

***Range was developed by adding the estimate from the ozone premature
mortality function to both the lower and upper ends of the range of the
PM2.5 premature mortality functions characterized in the expert
elicitation

ES-3. 	Caveats and Conclusions 

Of critical importance to understanding these estimates of future costs
and benefits is that they not intended to be forecasts of the actual
costs and benefits of implementing revised standards. There are many
challenges in estimating the costs and benefits of attaining a tighter
ozone standard, which are fully discussed in Chapter 8.  Analytically,
the characterization of ozone mortality benefits and the estimation of
the costs and benefits of the nation fully attaining a tighter standard
are being subject to further review by science advisory boards. 

There are significant uncertainties in both cost and benefit estimates.
Below we summarize some of the more significant sources of uncertainty. 

Benefits estimates are influenced by our ability to correctly model
relationships between ozone and PM and their associated health effects
(e.g., premature mortality). 

Benefits estimates are also heavily dependent upon the choice of
statistical estimates for values associated with each of the health
benefits. 

EPA has requested advice from the National Academy of Sciences on how
best to quantify uncertainty in the relationship between ozone exposure
and premature mortality in the context of quantifying benefits
associated with alternative ozone control strategies. 

PM co-benefits are derived primarily from reductions in nitrates
(associated with NOx controls).  As such, these estimates are strongly
influenced by the assumption that all PM components are equally toxic. 
Co-benefit estimates are also influenced by the extent to which a
particular area chooses to use NOx controls rather than VOC controls. 

There are several nonquantified benefits (e.g. effects of reduced ozone
on forest health and agricultural crop production) and disbenefits (e.g.
decreases in tropospheric ozone lead to reduced screening of UV-B rays
and reduced nitrogen fertilization of forests and cropland) discussed in
this analysis in chapter 6.   

Changes in air quality as a result of controls are not expected to be
uniform over the country.  In our hypothetical control scenario some
increases in ozone levels occur in areas already in attainment, though
not enough to push the areas into nonattainment

As explained in chapter 5, there are several uncertainties in our cost
estimates.  For example, the states are likely to use different
approaches for reducing NOx and VOCs in their state implementation plans
to reach a tighter standard.  In addition, since we are unable to use
known controls to get all areas into attainment, we needed to use simple
$/ton costs to estimate the overall national cost of meeting the tighter
alternatives.  

As discussed in chapter 5, recent advice from EPA’s Science Advisory
Board has questioned the appropriateness of an approach similar to that
used here for estimating extrapolated costs.  EPA will consider this
advice and other guidance as it develops the methodology for analyzing
the final rule.

Both extrapolated costs and benefits have additional uncertainty
relative to modeled costs and benefits.   The extrapolated costs and
benefits will only be realized to the extent that unknown extrapolated
controls are economically feasible and are implemented.  

Technological advances over time will tend to increase the economic
feasibility of reducing emissions, and will tend to reduce the costs of
reducing emissions.  

These sources of uncertainty are discussed in more detail in subsequent
chapters of the RIA. In addition to considering any advice which comes
from advisory bodies prior to the publication of the final ozone NAAQS,
EPA will undertake an updated approach with improvements to emissions
inventories, models and control strategies for the RIA which will
accompany that rulemaking. 

 The California full attainment costs calculated using the offset in NOx
emissions from mobile programs would understate the costs of fully
attaining in 2020, however, California will not be required to attain in
2020.

 This approach would be an overestimate of national full attainment
costs in a future year after 2020 because it would not take into account
that other states (not just California) could replace more expensive NOx
reductions from other sources with the post-2020  reductions obtained
from implementation of mobile source rules that are included in the
regulatory baseline.  

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ES- PAGE   9 

