September 26, 2012

Reconsideration of Final National Emission Standards for Hazardous Air Pollutants for Reciprocating Internal Combustion Engines

Summary

Score: 24 / 60

Additional details
Agency
Environmental Protection Agency
Regulatory Identification Number
2060-AQ58
Rule Publication Date
06/07/2012
Comment Closing Date
08/09/2012
Dollar Year
2010, millions
Time Horizon (Years)
10

RULE SUMMARY

EPA is proposing amendments to national emission standards for hazardous air pollutants for stationary reciprocating internal combustion engines under section 112 of the Clean Air Act. Proposed amendments include alternative testing options for certain large spark ignition stationary reciprocating internal combustion engines, management practices for a subset of existing spark ignition stationary reciprocating internal combustion engines in sparsely populated areas, and alternative monitoring and compliance options for the same engines in populated areas. EPA also proposes to include a limited temporary allowance for existing stationary emergency area source engines to be used for peak shaving and non-emergency demand response. EPA also proposes to increase hours that stationary emergency engines may be used for emergency demand response. Proposed amendments also correct minor mistakes in the preexisting regulations.

COMMENTARY

This proposed rule simply offers an alternative, lower cost way of measuring compliance. It does not offer any innovative ways of overcoming the assumed externality associated with stationary combustible engines. It also represents an attempt to improve a previous regulation by responding to petitions by affected parties.

MONETIZED COSTS & BENEFITS (AS REPORTED BY AGENCY)

Dollar Year
2010, millions
 
Time Horizon (Years)
10
 
Discount Rates
3%
7%
Expected Costs (Annualized)
Not Reported by Agency
$373 (compression ignition) $115 (spark ignition)
Expected Benefits (Annualized)
$770 to $1,900 (compression ignition) $62 to $150 (spark ignition)
$690 to $1,700 (compression ignition) $55 to $140 (spark ignition)
Expected Costs (Total)
Not Reported by Agency
Not Reported by Agency
Expected Benefits (Total)
Not Reported by Agency
Not Reported by Agency
Net Benefits (Annualized)
Not Reported by Agency
Not Reported by Agency
Net Benefits (Total)
$0
$0

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?
The proposed rule and RIA are available through both the EPA and regulations.gov. Given the large number of rules on combustion engines, the RIA was difficult to find on regulations.gov. A keyword search was successful on the EPA site, though the RIN search was not.
3/5
2. How verifiable are the data used in the analysis?
Data extensive and developed by EPA over many years. Sources for all data, such as the estimated values of a statistical life, are provided but not necessarily linked AND all proprietary/confidential data is identified and evidence is given that those data are valid.
3/5
3. How verifiable are the models and assumptions used in the analysis?
Almost all aspects of models and assumptions are consistent with or based on cited literature or analyses. Cited works are recent, peer-reviewed scientific publications.
4/5
4. Was the analysis comprehensible to an informed layperson?
Probably clear for an expert but heavy and complex reading for an informed layperson without extensive experience in combustion engines and jargon.
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?
Amendments to previous rule reduce costs but still result in reduced emissions, thus affecting citizens' quality of life by reducing premature mortality as well as respiratory stress and damage, ecosystem effects, and visibility impairment.
5/5
Does the analysis identify how these outcomes are to be measured?
Reductions in capital and annual costs of amended rules are measured; benefits (reductions) are measured by HAP, CO, PM, Nox, and VOC in tons per year. No clear linkage to health outcomes though.
2/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
Theory is that replacing formaldehyde testing with THC testing results in substantial compliance cost savings annually while achieving same reduction in HAP emissions. Reducing exposure to the pollutants is associated with less premature death, less respiratory stress, and greater visibility.
3/5
Does the analysis present credible empirical support for the theory?
The proposed rule and RIA cite peer-reviewed studies, including Laden, F., J. Schwartz, F.E. Speizer, and D.W. Dockery. (2006) and Pope, C.A., III, R.T. Burnett, M.J. Thun, E.E. Calle, D. Krewski, K. Ito, and G.D. Thurston (2002). The RIA does not, however, look at the direct effect of the current emission levels on human welfare. Nor does the RIA look at the direct effect these emission reductions may have on human welfare. The RIA simply extrapolates previous studies of exposure.
4/5
Does the analysis adequately assess uncertainty about the outcomes?
RIA does provide a "sensitivity analysis using the previous methodology (i.e., a threshold model at 10 μg/m3 without the two technical updates) as a historical reference. Table 7-5 shows the sensitivity of an assumed threshold on the monetized results, with and without an assumed threshold at 10 μg/m3." EPA admits that examining effects of a change in environmental protection requirements is limited by data gaps, model capabilities, and uncertainties in underlying scientific and economic studies used to configure benefit and cost models. EPA believes benefit analysis provides a reasonable indication of expected health benefits of rulemaking under reasonable assumptions. EPA admits analysis does not include type of detailed uncertainty assessment found in 2006 PM2.5 National Ambient Air Quality Standard (NAAQS) RIA because it lacks necessary air quality input and monitoring data to run benefits model.
4/5
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?
2/5
Does the analysis identify a market failure or other systemic problem?
No direct discussion of a market failure or other systemic problem, but analysis indirectly assumes a systemic problem exists due to previous regulation that EPA now seeks to amend.
1/5
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 implicit theory is that certain types of existing stationary Reciprocating Internal Combustion Engines (RICE) release too many particulate and hazardous air pollutants. Whether this is the case is difficult to know given the uncertainty over whether ultra-low-sulfur diesel (15ppm) is used or not. RIA briefly models demand and supply for products affected by rule and predicts regulation will raise prices and lower consumption/production and then discusses implications for deadweight loss. Curiously, there is no mention of externalities in context of socially efficient level of production.
2/5
Does the analysis present credible empirical support for the theory?
Little evidence to support theory new regulation will achieve health benefits. The empirical support does reveal that reducing particulates and hazardous air pollutants results in a net gain to society. However, it does not reveal why this might be the case.
2/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
Little assessment of uncertainty surrounding existence or size of problem. The rule does mention the uncertainty surrounding the use of ultra-low-sulfur diesel and thus the size of the problem.
2/5
7. How well does the analysis assess the effectiveness of alternative approaches?
1/5
Does the analysis enumerate other alternatives to address the problem?
Although the rule does propose different standards for engines of various sizes, locations, and emergency and non-emergency status, the rule is a command and control rule at its heart. There are no alternatives presented.
0/5
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)?
Narrow since no discussion of non-command and control regulation, simply comparison to no change in regulation.
0/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
Alternative approaches not evaluated.
0/5
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?
EPA assumed a baseline in which original 2010 rule did not exist because full implementation of final rule will not take place until 2013. EPA believes this baseline is appropriate because full implementation of the final rule has not taken place as of yet (it will take place in 2013). No mention of possibility that firms may have responded to previous rule or altered behavior on their own.
3/5
8. How well does the analysis assess costs and benefits?
2/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
No alternatives provided, though it quantified costs of a single "alternative."
1/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
The proposed rule does present initial capital costs, continuing maintenance costs, and paperwork costs.
4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
Prices are predicted to rise.
3/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
RIA uses elasticies of demand and supply to determine how price and quantity will change but does not report the estimated number of sites that will simply stop operating with new rule.
3/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
By updating the rule with another way to measure emissions, the rule does give two estimated costs: the old measurement of formaldehyde versus the new of measuring CO, but that is the only 'range' of costs reported.
0/5
Does the analysis identify the alternative that maximizes net benefits?
Alternative not presented to amendment. The benefits are greater than the costs for the one regulatory option presented. There is no way to know whether the difference between the two are maximized.
1/5
Does the analysis identify the cost-effectiveness of each alternative considered?
None presented.
0/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
RIA reports fraction of stationary internal combustion engines by industry (the two largest being energy production and defense) and effects on consumers and producers by industry. The rule also notes costs by the size—measured by horsepower—of the engines.
4/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Benefits are avoided premature mortality and morbidity. The rule also has more stringent requirements for more densely populated areas. However, the rule does not present benefits by region.
3/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
Amendments were prompted by engine manufacturer Dresser-Waukesha and Engine Manufacturers Association which submitted petitions for reconsideration of earlier amendments. Analysis appears to simply support proposed amendments.
1/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
No evidence net benefits are maximized in any global context (without alternatives presented, there is no way to know). Benefits simply estimated to be greater than costs.
0/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
While EPA will track emissions, there is no discussion of linking them to future health benefits. Given compliance data that will be collected, the agency may be able to measure emissions, but measuring health benefits remains problematic.
1/5
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?
None discussed.
0/5
 
Total 24 / 60