Fact Sheet - Regulatory Impact Analysis of EPA’s Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone

SUMMARY

On August 2, 2007, the U.S. Environmental Protection Agency (EPA) issued a Regulatory Impact Analysis (RIA) for the revisions to the National Ambient Air Quality Standards for ozone that EPA proposed June 20, 2007. This RIA estimates potential benefits and costs of reaching a standard, in the year 2020, in the range EPA proposed (0.070 to 0.075 parts per million, or ppm); and at two other levels on which the Agency is taking comment (0.065 ppm and 0.079 ppm).

Annual net benefits for implementation of the proposed standards (i.e., 0.070 ppm to 0.075 ppm) in 2020 range between -$20 billion and +$23 billion. Because of the high degree of uncertainty in these calculations, EPA cannot estimate whether costs will outweigh benefits, or vice versa. As the Agency improves its databases of control technologies and refines its understanding of the magnitude of the relationships between air pollution and premature mortality, EPA’s confidence in estimates of costs and benefits likely will improve.

EPA did not use this analysis in selecting the proposed ozone standards. The Clean Air Act bars EPA from considering costs in setting or revising any national air quality standard. EPA analyzes the benefits and costs of any major rule under requirements of Executive Order 12866 and according to guidelines from the White House Office of Management and Budget.

The estimates in the RIA are not intended to be precise predictions of control measures, costs, or benefits of implementing revised standards. Rather, they are intended to inform the public about the relative magnitude of the potential benefits and costs of reducing pollution to meet alternative ozone standards. The RIA also illustrates emissions control strategies states might consider adopting to meet the revised standards in an efficient and cost-effective manner.

BENEFITS AND COSTS OF MEETING THE PROPOSED OZONE STANDARDS

To estimate the benefits of meeting a standard, EPA uses peer-reviewed studies of air quality and health and welfare effects, sophisticated air quality models and peer-reviewed studies of the dollar values of public health improvements.

The RIA estimates the benefits and costs of meeting the alternative standards incremental to achieving the current standard; it does not estimate the benefits and costs of meeting the existing standard.

The underlying assumption in the RIA is that the proposed alternative standards in this rule are achievable through known and unknown, future air control technologies. Air quality in 50 areas of the country currently does not meet the 1997 ozone standard (0.084 ppm).

EPA anticipates the proposed standards would lead to reductions in emissions of nitrogen oxides, or NOx, which is a key component in both ozone and particle pollution formation. As a result, the benefits estimates in the RIA include the value of reductions in adverse health effects that may result from both reduced ozone and particle pollution levels. Benefits from reduced particle pollution make up between 13 percent and 99 percent of the estimated benefits of meeting the alternative standards.

EPA also uses sophisticated, peer-reviewed models of air quality and air quality controls to illustrate potential control strategies to attain the current ozone standard and their engineering costs necessary to comply with more stringent standards.

For some urban areas, the analysis assumes that future innovation and technological advances will enable states to achieve the proposed standards by 2020. In those areas, the additional costs estimated for unknown controls are significant.

The RIA includes a range of estimates

Benefits Estimates

The RIA provides a range of benefits for meeting each of the proposed standards. The range allows readers to understand the influence on the total benefits estimate of using alternative approaches to describe the potential relationship between ozone exposure and premature death and the relationship between particle pollution exposure and premature death.

Based on the largest multi-city study used in EPA’s analysis of ozone and risk, setting a standard at 0.070 ppm would reduce ozone- related premature deaths by 280 deaths per year in 2020; however using three studies that synthesize data from a large number of individual studies, leads to an estimated reduction in ozone related premature mortality of 1,100 to 1,400 per year. Setting a standard at 0.075 ppm would reduce ozone- related premature deaths by 200 deaths per year in 2020; using the three studies that synthesize data from a large number of individual studies leads to an estimated reduction in ozone related premature mortality of 900 to 1,100 per year.

Alternatively, if there is no causal relationship between ozone and mortality, no premature deaths would be avoided by reducing ozone exposure.

The estimated NOx reduction and subsequent change in particle pollution from setting an ozone standard at 0.070 ppm could result in a reduction of between 390 to 4,000 particle pollution-related premature deaths in 2020. Setting an ozone standard at 0.075 ppm could result in a reduction of between 230 to 2,400 particle pollution-related premature deaths in 2020.

Taking into account the alternative assumptions about ozone-related mortality, the value of mortality benefits and other health improvements of reducing ozone to 0.070 ppm would range from an estimated $2.5 billion to $33 billion per year in 2020. For a standard of 0.075 ppm, the value of benefits would range from $1.5 billion to $22 billion per year in 2020.

Studies also link ozone with other health effects. EPA estimates that a standard in the proposed range (0.075 ppm to 0.070 ppm) would prevent the following in 2020:
- 470 to 780 cases of chronic bronchitis,
- 1,400 to 2,300 nonfatal heart attacks,
- 5,600 to 7,600 hospital and emergency room visits,
- 1,200 to 2,000 cases of acute bronchitis,
- 17,500 to 30,000 cases of upper and lower respiratory symptoms,
- 9,400 to 16,000 cases of aggravated asthma,
- 675,000 to 890,000 days when people miss work or school, and
- 2 million to 2.7 million days when people must restrict their activities because of symptoms.

Note: These benefits estimates reflect both the ozone and particle pollution reductions that would result from a revised ozone standard.

Cost Estimates

The RIA also provides a range of costs for meeting each of the proposed standards.

The RIA assumes that the proposed standards can be achieved throughout the U.S. using a mixture of known air pollution control technologies and unknown, future technologies. EPA has used several statistical methods to provide a range of likely compliance costs for these unknown technologies.

The annual control technology costs of implementing known controls as part of a strategy to attain either a standard of 0.075 ppm and 0.070 ppm in 2020 would be approximately $3.9 billion. This includes estimated costs of $0.2 billion for the utility sector, $0.73 billion for the transportation sector, $2.64 billion for the industrial sector, and $0.32 billion for other sectors combined. These costs of known controls are only a part of the total costs for fully attaining either standard nationwide. Costs of known controls are the same for both alternative standards because those known controls are not sufficient to attain either 0.075 ppm or 0.070 ppm.

The RIA applied slightly different control strategies by geographic region. Controls were applied to 29 eastern U.S. states anticipated to influence air quality in those counties predicted to violate a 0.070 ppm standard. These controls were applied to utilities, transportation, industrial and other sectors. In the western U.S., controls were applied to an entire six-state area comprising Arizona, California, Colorado, New Mexico, Nevada, and Utah. These controls were applied to industrial, transportation, and other sectors, with no utility controls applied in the western U.S.

The costs of known controls in the eastern U.S. are estimated to be $3.4 billion, or 86 percent of the total estimated costs of known controls in 2020. The known control costs in the western U.S. are estimated to be $0.5 billion or 14 percent of the total estimated costs of known controls in 2020.

For areas that cannot meet the standards using known controls, particularly in California, the estimate of additional control technology costs for unknown controls range from $5.9 billion to $18 billion annually for a 0.070 ppm standard and $1.6 billion to $4.9 billion for a 0.075 standard in 2020.

Because two areas in California are assumed to achieve these standards after 2020, the RIA also estimates additional benefits and costs for California, which are incremental to the 2020 benefits and costs estimates.

ADDITIONAL INFORMATION

In conducting its analysis, EPA recognized that parts of California will take longer to meet a revised ozone standard than the rest of the continental United States. The Clean Air Act gives areas such as those in certain parts of California additional time to meet the existing ozone standards, because of the relatively higher levels of ozone in that state. As a result, EPA’s national cost-benefits estimates reflect only partial attainment in California. A more detailed discussion about costs and benefits for California can be found in the analysis, at www.epa.gov/groundlevelozone.

EPA also analyzed two other alternative levels that were outside of the proposed range but within the range EPA requested comment on in the proposal. Details on those levels (0.065 ppm and 0.079 ppm) are available in the RIA at www.epa.gov/groundlevelozone.

Fact Sheet - Regulatory Impact Analysis of EPA’s Proposed Revisions to the National Ambient Air Quality Standards for Ground-Level Ozone

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