Regulatory Impact Analysis of the Proposed Revisions to the National Ambient Air Quality ...

575 Pages·2015·11.49 MB·English

Regulatory Impact Analysis of the Proposed
Revisions to the National Ambient Air
Quality Standards for Ground-Level Ozone
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EPA-452/P-14-006
November 2014

Regulatory Impact Analysis of the Proposed Revisions
to the National Ambient Air Quality Standards for Ground-Level Ozone

U.S. Environmental Protection Agency
Office of Air and Radiation
Office of Air Quality Planning and Standards
Research Triangle Park, NC 27711
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CONTACT INFORMATION
This document has been prepared by staff from the Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency. Questions related to this document should be
addressed to Robin Langdon, U.S. Environmental Protection Agency, Office of Air Quality
Planning and Standards, C439-02, Research Triangle Park, North Carolina 27711 (email:
[email protected]).

ACKNOWLEDGEMENTS
In addition to EPA staff from the Office of Air Quality Planning and Standards, personnel from
the Office of Atmospheric Programs, the Office of Transportation and Air Quality, the Office of
Policy Analysis and Review, and the Office of Policy’s National Center for Environmental
Economics contributed data and analysis to this document.

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TABLE OF CONTENTS
LIST OF TABLES ....................................................................................................................... xiii 
LIST OF FIGURES ................................................................................................................... xxiv 
EXECUTIVE SUMMARY .......................................................................................................ES-1 
Overview .............................................................................................................................ES-1 
ES.1  Overview of Analytical Approach ....................................................................ES-3 
ES.1.1  Establishing the Baseline ..............................................................................ES-5 
ES.1.2  Control Strategies and Emissions Reductions ..............................................ES-6 
ES.1.2.1  Emissions Reductions from Known Controls in 2025 ........................ES-7 
ES.1.2.2  Emissions Reductions beyond Known Controls in 2025 ....................ES-9 
ES.1.2.3  Emissions Reductions beyond Known Controls for Post-2025 ..........ES-9 
ES.1.3  Human Health Benefits ..............................................................................ES-10 
ES.1.4  Welfare Co-Benefits of the Primary Standard ............................................ES-12 
ES.2  Results of Benefit-Cost Analysis ....................................................................ES-13 
ES.3  References .......................................................................................................ES-18 
CHAPTER 1: INTRODUCTION AND BACKGROUND ........................................................ 1-1 
Overview ............................................................................................................................... 1-1 
1.1  Background ................................................................................................................ 1-1 
1.1.1  NAAQS .......................................................................................................... 1-1 
1.1.2  Ozone NAAQS ............................................................................................... 1-2 
1.2  Role of this RIA in the Process of Setting the NAAQS ............................................ 1-2 
1.2.1  Legislative Roles ............................................................................................ 1-2 
1.2.2  Role of Statutory and Executive Orders ......................................................... 1-3 
1.2.3  The Need for National Ambient Air Quality Standards ................................. 1-4 
1.2.4  Illustrative Nature of the Analysis .................................................................. 1-4 
1.3  Overview and Design of the RIA ............................................................................... 1-5 
1.3.1  Existing and Revised Ozone National Ambient Air Quality Standards ......... 1-5 
1.3.2  Establishing Attainment with the Current Ozone National Ambient Air
Quality Standard ........................................................................................................ 1-6 
1.3.3  Establishing the Baseline for Evaluation of Alternative Standards ............... 1-8 
1.4  Health and Welfare Benefits Analysis Approach ...................................................... 1-9 
1.4.1  Health Benefits ............................................................................................... 1-9 
1.4.2  Welfare Co-Benefits ..................................................................................... 1-10 
1.5  Cost Analysis Approach .......................................................................................... 1-10 
1.6  Organization of this Regulatory Impact Analysis .................................................... 1-10 
1.7   References ................................................................................................................ 1-11 
CHAPTER 2: DEFINING THE OZONE AIR QUALITY PROBLEM .................................... 2-1 
Overview ............................................................................................................................... 2-1 
2.1  Emissions and Atmospheric Chemistry ..................................................................... 2-1 
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2.2  Spatial and Temporal Variations in Ambient Ozone Concentrations ........................ 2-3 
2.3  Ozone Monitoring ...................................................................................................... 2-5 
2.3.1  Ozone Monitoring Network............................................................................ 2-5 
2.3.2  Recent Ozone Monitoring Data and Trends ................................................... 2-7 
2.4  Background Ozone................................................................................................... 2-10 
2.4.1  Seasonal Mean Background Ozone in the U.S. ............................................ 2-12 
2.4.2  Seasonal Mean Background Ozone in the U.S. as a Proportion of Total
Ozone ...................................................................................................................... 2-15 
2.4.3  Daily Distributions of Background Ozone within the Seasonal Mean ......... 2-16 
2.5  References ................................................................................................................ 2-19 
CHAPTER 3: AIR QUALITY MODELING AND ANALYSIS ............................................... 3-1 
Overview ............................................................................................................................... 3-1 
3.1  Modeling Ozone Levels in the Future ....................................................................... 3-2 
3.1.1  Selection of Future Analytic Year .................................................................. 3-2 
3.1.2  Air Quality Modeling Platform ...................................................................... 3-3 
3.1.3  Emissions Inventories ..................................................................................... 3-7 
3.1.4  Emissions Sensitivity Simulations ............................................................... 3-11 
3.2  Methods for Calculating Current and Future Year Ozone Design Values .............. 3-16 
3.2.1  Current Year Ozone Design Value Calculations .......................................... 3-16 
3.2.2  Future Year Ozone Design Value Projections .............................................. 3-17 
3.3  Determining Tons of Emissions Reductions to Meet Various NAAQS Levels ...... 3-18 
3.3.1  Determining Ozone Response from Each Emissions Sensitivity ................. 3-18 
3.3.2  Combining Response from Multiple Sensitivity Runs To Construct
Baseline And Alternative Standard Scenarios ......................................................... 3-22 
3.3.3  Creation of the Baseline Scenario ................................................................ 3-24 
3.3.4  Creation of the 70, 65, and 60 ppb Alternative Standard Level Scenarios ... 3-25 
3.3.5  Monitoring Sites Excluded from Quantitative Analysis............................... 3-26 
3.4  Creating Spatial Surfaces ......................................................................................... 3-28 
3.4.1  BenMap Surfaces .......................................................................................... 3-28 
3.4.2  W126 surfaces .............................................................................................. 3-35 
3.5  References ................................................................................................................ 3-40 
APPENDIX 3: ADDITIONAL AIR QUALITY ANALYSIS AND RESULTS .................... 3A-1 
3A.1  2011 Model Evaluation for Ozone .................................................................. 3A-1 
3A.2  California Sub-Regions and Areas of Influence ............................................ 3A-17 
3A.3  VOC Impact Areas ........................................................................................ 3A-22 
3A.4  Numeric Examples of Calculation Methodology for Changes in Design
Values ....................................................................................................................... 3A-23
3A.5  Emissions Reductions Applied to Create Baseline and Alternative Standard
Level Scenarios ............................................................................................................ 3A-25 
3A.6  Design Values for All Monitors included in the Quantitative Analysis ........ 3A-27 
3A.7  Monitors Excluded from the Quantitative Analysis ...................................... 3A-51 
3A.7.1  Sites without Projections Due to Insufficient Days ................................... 3A-51 
3A.7.2  Winter Ozone ............................................................................................. 3A-53 
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3A.7.3  Monitoring Sites in Rural/Remote Areas of the West and Southwest ...... 3A-54 
3A.8 Calculation Methodology for W126 Metric ........................................................... 3A-63 
3A.9 References ............................................................................................................... 3A-64 
CHAPTER 4: CONTROL STRATEGIES AND EMISSIONS REDUCTIONS ....................... 4-1 
Overview ............................................................................................................................... 4-1 
4.1  Control Strategy Analysis Steps ................................................................................ 4-3 
4.2  Baseline Control Strategy .......................................................................................... 4-5 
4.3  Alternative Standard Analyses ................................................................................. 4-12 
4.3.1  Identifying Known Controls Needed to Meet the Alternative Standards ..... 4-14 
4.3.2  Known Control Measures Analyzed ............................................................. 4-19 
4.3.3  Emissions Reductions beyond Known Controls Needed to Meet the
Alternative Standards ............................................................................................... 4-21 
4.3.4  Summary of Emissions Reductions Needed to Meet the Alternative
Standards .................................................................................................................. 4-22 
4.4  Limitations and Uncertainties .................................................................................. 4-23 
4.5  References ................................................................................................................ 4-25 
APPENDIX 4: CONTROL STRATEGIES AND EMISSIONS REDUCTIONS ................... 4A-1 
Overview ............................................................................................................................ 4A-1 
4A.1  Types of Control Measures .............................................................................. 4A-1 
4A.2  Application of Control Measures in Geographic Areas .................................. 4A-1 
4A.3  NOx Control Measures for NonEGU Point Sources ........................................ 4A-4 
4A.4  VOC Control Measures for Non-EGU Point Sources ................................... 4A-12 
4A.5  NOx Control Measures for Nonpoint (Area) and Nonroad Sources .............. 4A-12
4A.6  VOC Control Measures for Nonpoint (Area) Sources ................................ 4A-123
CHAPTER 5: HUMAN HEALTH BENEFITS ANALYSIS APPROACH AND RESULTS .. 5-1 
5.1  Synopsis ..................................................................................................................... 5-1 
5.2  Overview .................................................................................................................... 5-4 
5.3  Updated Methodology Presented in this RIA ............................................................ 5-8 
5.4  Human Health Benefits Analysis Methods .............................................................. 5-10 
5.4.1  Health Impact Assessment............................................................................ 5-12 
5.4.2  Economic Valuation of Health Impacts ........................................................ 5-14 
5.4.3  Estimating Benefits for the 2025 and Post-2025 Scenarios ......................... 5-16 
5.4.4  Benefit-per-ton Estimates for PM2.5 ............................................................. 5-17 
5.5  Characterizing Uncertainty ...................................................................................... 5-19 
5.5.1  Monte Carlo Assessment .............................................................................. 5-21 
5.5.2  Sensitivity Analysis Addressing Both Incidence and Dollar Benefit
Valuation .................................................................................................................. 5-22 
5.5.3  Supplemental Analyses................................................................................. 5-24 
5.5.4  Qualitative Assessment of Uncertainty and Other Analysis Limitations ..... 5-25 
5.6  Benefits Analysis Data Inputs .................................................................................. 5-26 
5.6.1  Demographic Data ........................................................................................ 5-26 
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5.6.2  Baseline Incidence and Prevalence Estimates .............................................. 5-27 
5.6.3  Effect Coefficients ........................................................................................ 5-30 
5.6.3.1  Ozone Premature Mortality Effect Coefficients .................................... 5-38 
5.6.3.2  Hospital Admissions and Emergency Department Visits ...................... 5-48 
5.6.3.3  Acute Health Events and School/Work Loss Days ............................... 5-50 
5.6.3.4  Unquantified Human Health Effects ..................................................... 5-52 
5.6.4  Economic Valuation Estimates ..................................................................... 5-55 
5.6.4.1  Mortality Valuation ............................................................................... 5-56 
5.6.4.2  Hospital Admissions and Emergency Department Valuation ............... 5-67 
5.6.4.3  Nonfatal Myocardial Infarctions Valuation ........................................... 5-68 
5.6.4.4  Valuation of Acute Health Events ......................................................... 5-70 
5.6.4.5  Growth in WTP Reflecting National Income Growth over Time ......... 5-71 
5.7  Benefits Results ....................................................................................................... 5-75 
5.7.1  Benefits of the Proposed and Alternative Annual Primary Ozone
Standards for the 2025 Scenario .............................................................................. 5-76 
5.7.2  Benefits of the Proposed and Alternative Annual Primary Ozone
Standards for the post-2025 Scenario ...................................................................... 5-82 
5.7.3  Uncertainty in Benefits Results (including Discussion of Sensitivity
Analyses and Supplemental Analyses) .................................................................... 5-87 
5.7.3.1  Sensitivity Analyses ..................................................................................... 5-89 
5.7.3.2  Supplemental Analyses................................................................................. 5-91 
5.8  Discussion ................................................................................................................ 5-92 
5.9  References ................................................................................................................ 5-95 
APPENDIX 5A: COMPREHENSIVE CHARACTERIZATION OF UNCERTAINTY IN
OZONE BENEFITS ANALYSIS ..................................................................................... 5A-1 
Overview ............................................................................................................................ 5A-1 
5A.1  Description of Classifications Applied in the Uncertainty Characterization ... 5A-1 
5A.1.1  Direction of Bias .......................................................................................... 5A-2 
5A.1.2  Magnitude of Impact ................................................................................... 5A-2 
5A.1.3  Confidence in Analytic Approach ............................................................... 5A-3 
5A.1.4  Uncertainty Quantification .......................................................................... 5A-4 
5A.2  Organization of the Qualitative Uncertainty Table ......................................... 5A-5 
5A.3  References ...................................................................................................... 5A-16 
Appendix 5B: ADDITIONAL SENSITIVITY ANALYSES RELATED TO THE OZONE
HEALTH BENEFITS ANALYSIS ....................................................................................5B-1 
Overview .............................................................................................................................5B-1 
5B.1  Threshold Sensitivity Analysis for Premature Mortality Incidence and
Benefits from Long-term Exposure to Ozone .................................................................5B-2 
5B.2  Alternative Concentration-Response Functions for PM2.5–Related Mortality .5B-4 
5B.3  Income Elasticity of Willingness-to-Pay ..........................................................5B-7 
5B.4  References .........................................................................................................5B-9 
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APPENDIX 5C: SUPPLEMENTAL ANALYSES RELATED TO THE OZONE HEALTH
BENEFITS ANALYSIS .....................................................................................................5C-1 
Overview .............................................................................................................................5C-1 
5C.1  Age Group-Differentiated Aspects of Short-Term Ozone Exposure-Related
Mortality ..........................................................................................................................5C-1 
5C.2  Evaluation of Mortality Impacts Relative to the Baseline Pollutant
Concentrations (used in generating those mortality estimates) for both Short-Term
Ozone Exposure-Related Mortality and Long-Term PM Exposure-Related
2.5
Mortality ..........................................................................................................................5C-6 
5C.3  Core Incidence and Dollar Benefits Estimates Reflecting Application of
Known Controls for the 2025 Scenario .........................................................................5C-14 
5C.4  References .......................................................................................................5C-19 
APPENDIX 5D: DISCUSSION OF EFFECT ESTIMATES REFLECTED IN THE
DEVELOPMENT OF DOLLAR-PER-TON VALUES USED IN MODELING PM
2.5
COBENEFITS ................................................................................................................... 5D-1 
Overview ............................................................................................................................ 5D-1 
5D.1  PM2.5 Premature Mortality Effect Coefficients ................................................ 5D-5 
5D.2  Hospital Admissions and Emergency Department Visits .............................. 5D-14 
5D.3  Acute Health Events and School/Work Loss Days ....................................... 5D-16 
5D.4  Nonfatal Acute Myocardial Infarctions (AMI) (Heart Attacks) .................... 5D-19 
5D.5  References ...................................................................................................... 5D-21

APPENDIX 5E: INPUTS TO PM2.5 COBENEFITS MODELING........................................... 5E-1 
Overview ............................................................................................................................. 5E-1 
CHAPTER 6: IMPACTS ON PUBLIC WELFARE OF ATTAINMENT STRATEGIES TO
MEET PRIMARY AND SECONDARY OZONE NAAQS ................................................ 6-1 
Overview ............................................................................................................................... 6-1 
6.1  Welfare Benefits of Strategies to Attain Primary and Secondary Ozone Standards . 6-2 
6.2  Welfare Benefits of Reducing Ozone ........................................................................ 6-3 
6.3  Additional Welfare Benefits of Strategies to Meet the Ozone NAAQS .................... 6-6 
6.4  Analysis of Commercial Agricultural and Forestry Related Benefits Using the
Forest and Agricultural Sector Optimization Model – Greenhouse Gas Version
(FASOMGHG) .................................................................................................................. 6-8 
6.4.1  Summary of the Analytical Approach ............................................................ 6-8 
6.4.2  Summary of FASOMGHG Results .............................................................. 6-10 
6.5  References ................................................................................................................ 6-16 
APPENDIX 6A: Methods and Data Used to Develop estimates of Ozone Effects on Crop
and Forest Productivity ...................................................................................................... 6A-1 
6A.1  Methodology .................................................................................................... 6A-1 
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6A.1.1  Calculation of Relative Yield Loss .............................................................. 6A-4 
6A.1.1.1  Relative Yield Loss for Crops ........................................................... 6A-5 
6A.1.1.2  Relative Yield Loss for Trees ............................................................ 6A-7 
6A.1.1.3  Calculation of Relative Yield Gain .................................................... 6A-7 
6A.1.2  Conducting Model Scenarios in FASOMGHG ........................................... 6A-8 
6A.1.3  Data Inputs ................................................................................................... 6A-9 
6A.1.3.1  Ambient Ozone Concentration Data ................................................ 6A-10 
6A.1.3.2  Changes in Crop and Forest Yields with Respect to 75 ppb
Scenario. ........................................................................................................ 6A-16 
6A.2  Model Results ................................................................................................ 6A-25 
6A.2.1  Agricultural Sector .................................................................................... 6A-25 
6A.2.1.1  Production and Prices ...................................................................... 6A-25 
6A.2.1.2  Crop Acreage ................................................................................... 6A-28 
6A.2.2  Forestry Sector ........................................................................................... 6A-30 
6A.2.2.1  Production and Prices ...................................................................... 6A-30 
6A.2.2.2  Forest Acres Harvested .................................................................... 6A-33 
6A.2.2.3  Forest Inventory ............................................................................... 6A-34 
6A.2.3  Cross-Sectoral Policy Impacts ................................................................... 6A-35 
6A.2.3.1  Land Use .......................................................................................... 6A-36 
6A.2.3.2  Welfare ............................................................................................ 6A-37 
6A.2.3.3  Greenhouse Mitigation Potential ..................................................... 6A-40 
6A.3  Summary ........................................................................................................ 6A-43 
6A.4  References ...................................................................................................... 6A-45 
CHAPTER 7: ENGINEERING COST ANALYSIS and Economic Impacts ............................ 7-1 
Overview ............................................................................................................................... 7-1 
7.1  Estimating Engineering Compliance Costs ............................................................... 7-2 
7.1.1  Methods and Data ........................................................................................... 7-2 
7.1.2   Compliance Cost Estimates for Known Controls ........................................... 7-4 
7.2   The Challenge of Estimating Costs for Unknown Controls .................................... 7-10 
7.2.1  Incomplete Characterization of NOx Marginal Abatement Cost Curves ..... 7-11 
7.2.2   Comparison of Baseline Emissions and Controls across Ozone NAAQS
RIAs from 1997 to 2014 .......................................................................................... 7-13 
7.2.3  Impact of Technological Innovation and Diffusion ..................................... 7-18 
7.2.4  Learning by Doing ........................................................................................ 7-20 
7.2.5  Using Regional NOx Offset Prices to Estimate Costs of Unknown
Emissions Controls .................................................................................................. 7-22 
7.2.6  Conclusion .................................................................................................... 7-25 
7.3  Compliance Cost Estimates for Unknown Emissions Controls ............................... 7-26 
7.3.1  Methods ........................................................................................................ 7-26 
7.3.2   Unknown Compliance Cost Estimates ......................................................... 7-30 
7.4   Total Compliance Cost Estimates ............................................................................ 7-31 
7.5  Updated Methodology Presented in this RIA .......................................................... 7-33 
7.6  Economic Impacts .................................................................................................... 7-36 
7.6.1  Introduction .................................................................................................. 7-36 
7.6.2  Summary of Market Impacts ........................................................................ 7-37 
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