June 14, 2010

Reconsideration of the 2008 Ozone NAAQS

Proposed Rule
Summary

Score: 31 / 60

Additional details
Agency
Environmental Protection Agency
Regulatory Identification Number
2060-AP98
Agency Name
Environmental Protection Agency
Rule Publication Date
01/19/2010
Comment Closing Date
03/22/2010
Dollar Year
2006
Time Horizon (Years)
20

RULE SUMMARY

Based on its reconsideration of the primary and secondary national ambient air quality standards (NAAQS) for ozone (O3) set in March 2008, EPA proposes to set different primary and secondary standards then those set in 2008 to provide requisite protections of public health and welfare, repectively. With regard to the primary standard for O3, EPA proposes that the level of the 8-hour primary standard, which was set at 0.075 ppm in the 2008 final rule, should instead be set at a lower level within the range of 0.060 to 0.070 parts per million (ppm), to provide increased protection for children and other "at risk" populations against an array of O3-related adverse health effects that range from decreased lung function and increased respiratory symptoms to serious indicatiors of respiratory morbidity including emergency department visits and hospital admissions for respiratory causes, and possibly cardiovascular-related morbidity as well as total non-accidental and cardiopulmonary mortality. With regard to the secondary O3 standard, which was set identical to the revised primary standard in the 2008 final rule, should instead be a new cumulative, seasonal standard expressed as an annual index of the sum of weighted hourly concentrations, cumulated over 12 hours per day (8 am to 8 pm) during the consecutive 3-month period within the O3 season with the maximum index value, set at a level within the range of 7 to 15 ppm-hours, to provide increased protection against O3-related adverse impacts on vegetation and forested ecosystems.

MONETIZED COSTS & BENEFITS (AS REPORTED BY AGENCY)

Dollar Year
2006
 
Time Horizon (Years)
20
 
Discount Rates
3%
7%
Expected Costs (Annualized)
NA
$7.6-44 billion
Expected Benefits (Annualized)
$6.9-$61 billion
$6.4-53 billion
Expected Costs (Total)    
Expected Benefits (Total)    
Net Benefits (Annualized)
-$22 -- $29 billion
-$25 -- $20 billion
Net Benefits (Total)    

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
We had difficulty finding the RIA, which was not on Regulations.gov. We had to call EPA to find someone to direct us to a EPA web address, which contained a link to it.
1/5
2. How verifiable are the data used in the analysis?
Much of the new data for the reconsideration is based on assumptions and are difficult to verify. You have to go to the 2008 RIA to find data sources.
2/5
3. How verifiable are the models and assumptions used in the analysis?
Again concentrating on the new analysis as opposed to the analysis from the 2008 final rule, much of it is speculative and as mentioned in the RIA "Illustrative"
3/5
4. Was the analysis comprehensible to an informed layperson?
One must be familiar with previous EPA methodology and rulemakings to be able to understand what EPA is doing here. It was easy to read (language isn't too technical), but to follow all of the logic you'd have to jump back and forth between the rule, the RIA, and the old RIA and that's a burden on readers.
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
4/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The analysis clearly lists outcomes that affect quality of life including estimates of various mortality and morbidity.
5/5
Does the analysis identify how these outcomes are to be measured?
Morbidity and mortality reductions are modeled to follow from improvements in measurable air quality indicators. The actual mortality and morbidity reductions are not actually measured.
3/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
The regulations work through further regulation from the States spelled out in State Implementation Plans, which in turn work through predicted improvements in air quality followed by improved health. Most but not all (for example, the SIP process) can be tested in advance.
4/5
Does the analysis present credible empirical support for the theory?
The revisions to the 2008 standard(the 0.060 and 0.055 proposals and the new secondary NAAQS) as the RIA itself states are not as well supported by empirical evidence because of increased uncertainty and difficulty of quantifying the impacts.
3/5
Does the analysis adequately assess uncertainty about the outcomes?
The RIA does a good job emphazising the speculative nature of many of the estimates although the presentations of the hundred of alternative cost and benefit estimates as if they were all of equal weight is misleading.
3/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
4/5
Does the analysis identify a market failure or other systemic problem?
The 2008 RIA which the updated RIA for the 2010 revision does a nice job of explaining the theory of market failure and the problems that high transactions costs and the lack of well-defined property rights presents for the Ozone case.
4/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The problem is clearly based on mountains of systematic evidence.
4/5
Does the analysis present credible empirical support for the theory?
The analysis clearly presents quite a bit of quantitative data in support for the harmful health impacts of Ozone. But is not clear always why changes were made from the 2010 assumptions.
4/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The analysis does present many of the uncertaities with the estimates but does not present distributions or simulations only wide ranges.
3/5
7. How well does the analysis assess the effectiveness of alternative approaches?
4/5
Does the analysis enumerate other alternatives to address the problem?
The analysis presents a good number of altrnatives but leaves out one (0.079) from the 2008 final RIA.
4/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
They are already set on regulating Ozone in a certain way, they are just narrowing in on what the appropriate level would be.
3/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
They have a decent comparison of the different levels and what the impacts would be.
4/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
They refer to the baseline of the 2008 RIA, which is thorough but you'd have to go back and read that document to know what's going on.
4/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
There is a thorough discussion of engineering costs in the 2008 RIA. There is no quantification of the secondary standard.
3/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
No, for example, where technolgy is not considered likely to be developed by 2020 to meet compliance costs are not estimated.
3/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
Prices impacts are not considered.
0/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Other than assuming that new technologies to reduce compliance costs will be invented, no human behavioral changes are considered.
0/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
They mention uncertainty and present two different methods of cost calculations for comparison
4/5
Does the analysis identify the alternative that maximizes net benefits?
Costs and benefits for alternatives are listed but there is no discussion of which alternative might maximize net benefits.
2/5
Does the analysis identify the cost-effectiveness of each alternative considered?
See above. Cost-effectiveness coud be infered from the data pressented but there is no analysis od cost-effectiveness.
2/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
There is a good discussion of the distribution of costs geographiclly down to the county level.
3/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
There is some data presented on the age and location of the beneficiaries.
3/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
There is no evidence presented that they used the RIA in their decision making.
1/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
They don't attempt to maximize net benefits, but they clearly believe that the range of new levels that they proposed are more likely to increase net benefits.
3/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
EPA is suppose to review the standards every five years, but they don't clearly address how they will measure future progress although presumably they would update their current analysis.
2/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
Again EPA does not directly address how the intend to track or measure true performance such as the expected health benefits. However Ozone levels will be closely monitored.
2/5
 
Total 31 / 60