Ozone NAAQS Proposal –

Regulatory Impact Analysis

U.S. Environmental Protection Agency

October 27, 2014

1
Key Messages

• The RIA analyzes costs/benefits of reaching alternative primary 

standards of 70, 65 and 60 ppb in 2025 for most of U.S., and 

post-2025 for California, which has later attainment dates

• The 2025 Baseline incorporates CAIR, MATS, Tier III, and BART, 

as well as adjustment for Clean Power Plan and some 

additional mobile source regs in California (2025-2030)

• For alternative standards in the proposed range (65-70 ppb), 

the estimated costs for most of U.S. range from $3.9-$15 

billion, while the health benefits range from $6.4-$38 billion 

(2011$, 7% discount rate)

• Cost estimates reflect updated emissions inventory, baseline with 

additional Federal measures, improved control measure information, 

and different future analysis year

• Health benefits reflect both ozone benefits and PM co-benefits, 

including mortality

• Net benefits are positive throughout proposed range (65-70 

ppb); only negative for low end of the 60 ppb alternative

2
Outline

•Background on Analysis for Primary Standard

•Air Quality Modeling and Analysis

•Control Strategy and Cost Analyses

• Known Control Cost Estimates

• Extrapolated Costs

•Benefits Analyses

•Environmental Justice Analysis

•Additional Qualitative Discussions

3
Project Base Year 

(Emissions & Air Quality)

Establish 2025 Baseline 

Air Quality

Estimate Air Quality for 

Attainment of 

Alternative NAAQS levels

Costs Associated with Known 

Controls Analysis for Partial 

Attainment

Extrapolated Costs 

For Full Attainment

Estimate Total Costs

Benefits Analysis for Partial 

Attainment

Benefits Analysis for 

Full Attainment

Estimate Total Benefits

Analytical Flowchart

4

Main Analysis for Primary 

Standard
Background on Analysis for Primary 

Standard

• Analyze Alternative Standards of 70, 65, and 60 ppb

• Future Analysis Year – 2025 (except California)

• Base Year Emissions - 2011

• Monitor data for 2009 through 2013 projected to 2025 base case 

using air quality modeling

• 2025 baseline reflects CAIR, MATS, Tier III, BART, getting to 75 ppb, 

and additional adjustments for mobile source rules in California 

(2025 to 2030) and for 111d 

• Results Presentation 

• In this RIA, we present primary costs and benefits for the majority of 

U.S. in 2025 and supplemental results for California for post-2025 

• For California for post-2025 -- costs will be incurred through 2038 and 

benefits estimated in 2038

• Because of data limitations and compounding analytical uncertainty 

in the post-2025 analysis, these estimates are not included in the 

primary cost and benefit estimates

5
6

2025 Projected Exceedance Areas 

(excluding California)
7

Post-2025 Analysis Areas in California
Air Quality Modeling and Analysis

• Similar to PM2.5 NAAQS, based on a series of emissions sensitivity 

model runs we developed “response factors” to assess changes in 

how O3 DVs respond to NOx and VOC reductions

• Two types of sensitivity model runs

• Maximum known NOx controls in areas projected to violate 75 

and/or 70 ppb -- California, Texas, Northeast

• Regional emissions cuts in NOx or VOC emissions in every sector

• We used the results to determine the emissions reductions 

needed to meet each alternative standard level analyzed

• We created ozone surfaces to estimate benefits for each 

alternative standard level analyzed

• Analysis of Ozone Monitors

• 1,219 ozone monitoring sites included in the analysis

• 1,150 sites will have quantified costs and benefits of meeting 

alternative ozone standards

• 69 sites will be excluded from control strategy analysis and 

cost/benefit estimates because of insufficient data, wintertime 

ozone, or background/transport influences

8
Known Control Cost Estimates

•Improved data in known control technology/cost tool

• Applied maximum end-of-pipe controls to industrial 

and area sources

• Beyond Tier 3, applied available controls for nonroad 

mobile sources

• Beyond the Clean Power Plan, applied additional SCRs 

to uncontrolled coal-fired EGUs

• Preliminary results for 70 ppb indicate that the 

percent of emissions reductions from known controls 

is ~70% and for 65 pbb is ~55% 

9
Control Strategy Results – Summary of NOx 

Emissions Remaining After Known Controls

10

1.7 

-

1.7 

-

1.5 

-

1.3 

-

1.3 

2.0 

-

1.0 

-

1.0 

-

0.8 

-

0.8 

2.9 

-

1.6 

-

1.6 

-

1.6 

-

1.6 

5.2 

-

1.3 

-

1.3 

-

1.3 

-

1.3 

1.5 

-

1.7 

-

1.4 

-

1.2 

-

1.2 

 -

 2.0

 4.0

 6.0

 8.0

 10.0

 12.0

 14.0

Tons per year

Annual NOx Emissions for US, except CA

2025 (millions of tons)

Nonpoint

Onroad

Nonroad

EGU

non-EGU Pt

2011 Base 

Case 

Emissions

2025 70 ppb 

Analysis

Levels

2025 

Baseline 

Analysis 

Levels

2025 65 ppb 

Analysis

Levels

2025 60 ppb 

Analysis

Levels

13

7.4

6.9

6.3 6.2
Control Strategy Results – Summary of Emissions 

Reductions for U.S., except California, 2025

Emissions Reductions for 70, 65, and 60 ppb

(Annual Tons NOx/Yr in 2025)

(Results Incremental to Baseline)

AQ Level Total Currently Known Unknown % from Unknown

75 45,000 45,000 -- --

70 650,000 490,000 150,000 23%

65 1,900,000 1,100,000 750,000 40%

60 3,400,000 1,200,000 2,200,000 65%

11

Known Controls Applied

EGUs SCRs beyond CPP

Nonpoint NSCR for Rich Burn IC Gas-fired Engines 

Low Emission Combustion Techniques for Lean Burn IC Gas-fired Engines

Nonroad Diesel engine rebuilds and retrofits 

Non-EGU Point SCR and SCR + LNB for ICI Boilers 

Low Emission Combustion Techniques for IC Engines
Control Strategy Results – Summary of NOx 

Emissions Remaining After Known Controls

12

0.07 

-

0.06 

0.01 0.03 

0.17 0.11 

0.41 

0.14 

0.06 

0.05 

 -

 0.10

 0.20

 0.30

 0.40

 0.50

 0.60

 0.70

 0.80

Tons per year

Annual NOx Emissions for California

post-2025 (millions of tons)

Nonpoint

Onroad

Nonroad

EGU

non-EGU Pt

2011 Base Case 

Emissions

2025 Baseline 

Analysis Levels

0.73

0.40
Control Strategy Results – Summary of 

Emissions Reductions for California, post-2025

13

Emissions Reductions for 70, 65, and 60 ppb

(Results Incremental to Baseline)

AQ Level Emission Reductions (Annual Tons NOx/Yr in Post-2025)

Total Currently Known Unknown Percent from 

Unknown

75 190,000 31,000 160,000 84%

70 53,000 0 53,000 100%

65 100,000 0 100,000 100%

60 140,000 0 140,000 100%
Extrapolated Costs

• EPA has estimated costs of emissions reductions for 

unknown controls using an average-cost methodology

• Used $15,000/ton as the primary cost estimate and alternative 

average-cost thresholds for sensitivity analysis

• For areas needing emissions reductions to meet alternative 

standards, 96% of known NOx emissions reductions cost less 

than $15,000/ton (with an average cost of $3,400/ton)

• This approach is consistent with advice from the Council 

on Clean Air Compliance Analysis, which in 2007 

recommended that when assigning costs to unidentified 

measures, a simple transparent method is best

• Council agreed there is limited value in assigning costs to 

unidentified measures and if costs are assigned, a fixed-cost 

methodology is preferred

14
Extrapolated Costs

• Current estimates of the known marginal abatement cost 

curve are incomplete, leaving abatement opportunities 

“unobserved” in analysis

• Examples include fuel switching, energy or process efficiency 

improvements, technical change, learning by doing, and 

innovative institutional arrangements (e.g., pollution offset 

markets)

15
Total Annual Costs for U.S., except California, 2025

(billions of 2011$, 7% Discount Rate)

16

* Engineering costs reflect 7% discount rate. We do not have a comprehensive data set to be able to 

calculate engineering costs at a 3% discount rate.

Results Incremental to Baseline*

Alternative 

Standards (ppb)

Total Costs* Known Control 

Costs

Extrapolated 

Costs

Percent 

Extrapolated

Costs

70 $3.9 $1.6 $2.3 59%

65 $15 $4.2 $11 73%

60 $39 $4.4 $34 87%
Total Annual Costs for California, post-2025

(billions of 2011$, 7% Discount Rate)

17

* Engineering costs reflect 7% discount rate. We do not have a comprehensive data set to be able to 

calculate engineering costs at a 3% discount rate.

Results Incremental to Baseline*

Alternative 

Standards 

(ppb)

Total Costs* Known Control 

Costs

Extrapolated 

Costs

Percent 

Extrapolated

Costs

70 $0.80 0 $0.80 100%

65 $1.6 0 $1.6 100%

60 $2.2 0 $2.2 100%
Benefits Analyses

•Ozone-related Health Benefits - BenMAP

• Will include mortality and morbidity endpoints 

determined to be “causal” and “likely causal”

•PM2.5-related Health Co-Benefits – Benefits/Ton

• Similar to approach used in 111d and the 2010 ozone 

reconsideration

• National scale analysis of PM2.5-related health cobenefits associated with ozone precursor emission 

reductions 

•Welfare Effects

• For alternative primary standards, modeling 

agricultural and ecosystem benefits using 

FASOMGHG, including estimates of additional carbon 

sequestration – same as methods used in WREA 

• Estimates will be presented separately

18
Health Benefits Results in 2025

19

Core versus Sensitivity Analysis (mortality focus)*

Pollutant and Endpoint

Core Analysis Sensitivity Analysis

Incidence

Valuation 

($) Incidence 

Valuation 

($)

Ozone

Short-term mortality

Smith et al., (2009)

Zanobetti and Schwartz (2008)

X X

Long-term mortality

Jerrett et al., (2009) X X

PM2.5

Long-term mortality 

X X

* Mortality comprises over 98% of total dollar benefits for both ozone and PM2.5 and consequently we focus on that endpoint here (a range of 

morbidity endpoints are modeled for both pollutants as part of the core analysis).
Core Health Benefits Results in 2025 

(nationwide benefits of attainment everywhere except California)

20

Health Endpoint 70ppb 65ppb 60ppb

Short-term exposure-related premature deaths avoided 

(all ages) (Ozone: 2 studies) 200 to 340 630 to 1,000 1,100 to 1,900

Long-term exposure-related premature deaths avoided

(age 30+) (PM: 2 studies)

O3: 680

PM2.5: 510 to 1,100

O3: 2,100

PM2.5: 1,400 to 3,300

O3: 3,900

PM2.5: 2,600 to 6,000

Other health effects avoided

Non-fatal heart attacks (age 18-99) (5 studies) PM 64 to 600 180 to 1,700 330 to 3,100

Respiratory hospital admissions (age 0-99) O3+PM 510 1,600 2,900

Cardiovascular hospital admissions (age 18-99) PM 180 530 950

Asthma emergency department visits (age 0-18) O3+PM 1,400 4,300 8,000

Acute bronchitis (age 8-12) PM 790 2,300 4,100

Asthma exacerbation (age 6-18) O3+PM 320,000 970,000 1,800,000

Lost work days (age 18-65) PM 65,000 180,000 340,000

Minor restricted activity days (age 18-65) O3+PM 1,300,000 3,900,000 7,300,000

Upper & lower respiratory symptoms (children) PM 25,000 70,000 130,000

School loss days O3 330,000 1,000,000 1,900,000

Total Monetized Health Benefits*

(3% discount rate, billions of 2011$) $6.9 to $14 $20 to $41 $37 to $75

Total Monetized Health Benefits*

(7% discount rate, billions of 2011$) $6.4 to $13 $19 to $38 $34 to $70

Note, incidence estimates in blue reflect impacts from ozone (either alone, or in combination with PM as noted)

*Range reflects: LOW (sum of lower core estimates of short-term ozone and long-term PM mortality) to HIGH (sum of upper core estimates for same 

endpoints). NOTE – core estimates excludes long-term ozone mortality. 
Core Health Benefits Results post-2025

(nationwide benefits of attainment in California)

21

Health Endpoint 70ppb 65ppb 60ppb

Short-term exposure-related premature deaths avoided 

(all ages) (Ozone: 2 studies) 65 to 110 140 to 230 210 to 350

Long-term exposure-related premature deaths avoided

(age 30+) (PM: 2 studies)

O3: 260

PM2.5: 45 to 100

O3: 560

PM2.5: 89 to 200

O3: 840

PM2.5: 120 to 280

Other health effects avoided

Non-fatal heart attacks (age 18-99) (5 studies) PM 6 to 54 11 to 110 16 to 140

Respiratory hospital admissions (age 0-99) O3+PM 130 280 430

Cardiovascular hospital admissions (age 18-99) PM 16 32 45

Asthma emergency department visits (age 0-18) O3+PM 340 730 1,100

Acute bronchitis (age 8-12) PM 67 130 180

Asthma exacerbation (age 6-18) O3+PM 99,000 210,000 320,000

Lost work days (age 18-65) PM 5,500 11,000 15,000

Minor restricted activity days (age 18-65) O3+PM 320,000 690,000 1,000,000

Upper & lower respiratory symptoms (children) PM 2,100 4,100 5,600

School loss days O3 110,000 230,000 350,000

Total Monetized Health Benefits *

(3% discount rate, billions of 2011$) $1.1 to $2 $2.3 to $4.2 $3.4 to $6.2

Total Monetized Health Benefits *

(7% discount rate, billions of 2011$) $1.1 to $2 $2.2 to $4.1 $3.2 to $5.9

Note, incidence estimates in blue reflect impacts from ozone (either alone, or in combination with PM as noted)

*Range reflects: LOW (sum of lower core estimates of short-term ozone and long-term PM mortality) to HIGH (sum of upper core estimates for same 

endpoints). NOTE – core estimates excludes long-term ozone mortality. 
Total Monetized Costs and Benefits in 2025

(nationwide benefits of attainment everywhere except California --

billions of 2011$, 3% and 7% Discount Rates)

22

70 ppb 65 ppb 60 ppb

Total Costs (7%)* $3.9 $15 $39

Health Benefits (3%)** $6.9 to $14 $20 to $41 $37 to $75

Health Benefits (7%)** $6.4 to $13 $19 to $38 $34 to $70

Net Benefits (3%) $3.0 to $10.1 $5 to $26 ($2) to $36

Net Benefits (7%) $2.5 to $9.1 $4 to $23 ($5) to $31

* Engineering costs reflect a 7% discount rate. Our data set to be able to calculate engineering costs at a 3% 

discount rate is not comprehensive -- approximately 23% of the known control cost data are disaggregated at 

a level to allow costs to be discounted at 3%.

** Range reflects: LOW (sum of lower core estimates of short-term ozone and long-term PM mortality) to 

HIGH (sum of upper core estimates for same endpoints). NOTE – core estimates excludes long-term ozone 

mortality
Costs and Benefits from Known Controls 

in 2025 for U.S., except California 

(percent of total)

70 ppb 65 ppb 60 ppb

Percent of Emissions Reductions from 

Known Controls 77% 60% 35%

Percent of Costs from Known Controls 41% 27% 13%

Percent of Benefits from Application of Known Controls

Ozone-related Benefits 82% 59% 35%

PM-related Benefits 76% 59% 33%

Total Benefits 77% 59% 34%

23
Total Monetized Costs and Benefits for post2025 (nationwide benefits of attainment in California - billions of 

2011$, 3% and 7% Discount Rates)

24

70 ppb 65 ppb 60 ppb

Total Costs (7%)* $0.80 $1.6 $2.2

Health Benefits (3%)** $1.1 to $2 $2.3 to $4.2 $3.4 to $6.2

Health Benefits (7%)** $1.1 to $2 $2.2 to $4.1 $3.2 to $5.9

Net Benefits (3%) $0.3 to $1.2 $0.70 to $2.6 $1.2 to $4

Net Benefits (7%) $0.3 to $1.2 $0.60 to $2.5 $1 to $3.7

* Engineering costs reflect a 7% discount rate. Our data set to be able to calculate engineering costs at a 3% 

discount rate is not comprehensive -- approximately 23% of the known control cost data are disaggregated at 

a level to allow costs to be discounted at 3%.

** Range reflects: LOW (sum of lower core estimates of short-term ozone and long-term PM mortality) to 

HIGH (sum of upper core estimates for same endpoints). NOTE – core estimates excludes long-term ozone 

mortality
Environmental Justice Analysis

•Compare demographic data of populations 

within ‘estimated violating areas’ for alternative 

standards with national population

•Will assess CBSAs estimated to have DVs than 70 

ppb and 65 ppb based on current (2011-2013) air 

quality data only 

•Demographics from 2010 census

•Approach consistent with Agency EJ analytic 

framework and similar to that used for recent 

analysis conducted for other rules, including 

MACT and RTRs

25
Additional Qualitative Discussions

•Employment Analysis

•Not estimating total job impacts

•Will only include estimates of the number of jobs 

involved in construction and installation of a NOx

control device at an example EGU, industrial 

boiler, and cement kiln

•Economic Impacts Analysis

•No quantitative estimates

•Waiting for guidance from SAB panel

26
Notice of Proposed Rulemaking Schedule

27

Milestone Date

NPRM to OMB for Interagency Review October 3, 2014

Regulatory Impact Analysis to OMB October 24, 2014

OMB Clearance November 26, 2014

(the day before Thanksgiving)

Proposal Signature (court order) December 1, 2014

(the Monday after Thanksgiving)