vvEPA
Office of Transportation EPA420-D-06-004
United States and Air Quality February 2006
Environmental Protection
Agency
Draft Regulatory Impact
Analysis: Control of
Hazardous Air Pollutants from
Mobile Sources
Executive Summary
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EPA420-D-06-004
February 2006
of Air
Assessment and Standards Division
Office of Transportation and Air Quality
U.S. Environmental Protection Agency
NOTICE
This Technical Report does not necessarily represent final EPA decisions or positions.
It is intended to present technical analysis of issues using data that are currently available.
The purpose in the release of such reports is to facilitate an exchange of
technical information and to inform the public of technical developments.
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Executive Summary
EPA is proposing new standards to reduce emissions of Mobile Source Air Toxics
(MSATs) including benzene and overall hydrocarbons from motor vehicles, motor vehicle fuels,
and portable gasoline containers (gas cans). This Regulatory Impact Analysis provides technical,
economic, and environmental analyses of the proposed new emission standards. The anticipated
emission reductions will significantly reduce exposure to harmful pollutants and also provide
assistance to states and regions facing ozone and particulate air quality problems that are causing
a range of adverse health effects, especially in terms of respiratory impairment and related
illnesses.
Chapter 1 reviews information related to the health effects of mobile source air toxics.
Chapter 2 provides emissions inventory estimates, including estimates of anticipated emissions
reductions. Chapter 3 presents air quality and resulting health and welfare effects associated
with air toxics, ozone, and particulate matter (PM). Chapter 4 contains an overview of the
affected refiners and manufacturers, including a description of the range of products involved
and their place in the market. Chapters 5 through 7 summarize the available information
supporting the specific standards we are proposing, providing a technical justification for the
feasibility of the standards for vehicles, fuels, and gas cans, respectively. Chapters 8 throughlO
present cost estimates of complying with the proposed standards or vehicles, fuels, and gas cans,
respectively. Chapter 11 compares the costs and the emission reductions to generate an estimate
of the cost per ton of pollutant removed. Chapters 12 and 13 describe the estimated societal
costs and benefits of the proposed rulemaking. Chapter 14 presents our Regulatory Flexibility
Analysis, as called for in the Regulatory Flexibility Act.
The following paragraphs briefly describe the standards that we are proposing and the
estimated impacts.
Emissions Standards
Vehicles
We are proposing new standards for both exhaust and evaporative emissions from
passenger vehicles. The new exhaust emissions standards would significantly reduce non-
methane hydrocarbon (NMHC) emissions from passenger vehicles at cold temperatures. These
hydrocarbons include many mobile source air toxics (including benzene), as well as VOC.
The current NMHC standards are typically tested at 75° F, and recent research and
analysis indicates that these standards are not resulting in robust control of NMHC at lower
temperatures. (There is an existing cold temperature standard, but it applies only to CO.) We
believe that cold temperature NMHC control can be substantially improved using the same
technological approaches that are generally already being used in the Tier 2 vehicle fleet to meet
the stringent standards at 75° F. These cold-temperature NMHC controls would also result in
lower direct PM emissions at cold temperatures.
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Accordingly, we are proposing that light-duty vehicles, light-duty trucks, and medium-
duty passenger vehicles would be subject to a new non-methane hydrocarbon (NMHC) exhaust
emissions standard at 20° F. Vehicles at or below 6,000 pounds gross vehicle weight rating
(GVWR) would be subject to a sales-weighted fleet average NMHC level of 0.3 grams/mile.
Vehicles between 6,000 and 8,500 pounds GVWR and medium-duty passenger vehicles would
be subject to a sales-weighted fleet average NMHC level of 0.5 grams/mile. For lighter vehicles,
the standard would phase in between 2010 and 2013. For heavier vehicles, the new standards
would phase in between 2012 and 2015. We are also proposing a credit program and other
provisions designed to provide flexibility to manufacturers, especially during the phase-in
periods. These provisions are designed to allow the earliest possible phase-in of standards and
help minimize costs and ease the transition to new standards
We are also proposing a set of nominally more stringent evaporative emission standards
for all light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles. The proposed
standards are equivalent to California's Low Emission Vehicle II (LEV II) standards, and they
reflect the evaporative emissions levels that are already being achieved nationwide. The
standards we propose today would codify the approach that manufacturers are already taking for
50-state evaporative systems, and thus the standards would prevent backsliding in the future. We
are proposing to implement the evaporative emission standards in 2009 for lighter vehicles and
in 2010 for the heavier vehicles.
Gasoline Fuel Standards
We are proposing that beginning January 1, 2011, refiners and fuel importers would meet
an average gasoline benzene content standard of 0.62% by volume on all their gasoline, both
reformulated and conventional (except for California, which is already covered by a similar
relatively stringent state program).
This proposed fuel standard would result in air toxics emissions reductions that are
greater than required under all existing gasoline toxics programs. As a result, EPA is proposing
that upon full implementation in 2011, the regulatory provisions for the benzene control program
would become the single regulatory mechanism used to implement the RFG and Anti-dumping
annual average toxics requirements. The current RFG and Anti-dumping annual average
provisions would be replaced by the proposed benzene control program. The MSAT2 benzene
control program would also replace the MS ATI requirements. In addition, the program would
satisfy certain fuel MS AT conditions of the Energy Policy Act of 2005. In all of these ways, we
would significantly consolidate and simplify the existing national fuel-related MSAT regulatory
program.
We are also proposing that refiners could generate benzene credits and use or transfer
them as a part of a nationwide averaging, banking, and trading (ABT) program. From 2007-
2010 refiners could generate benzene credits by taking early steps to reduce gasoline benzene
levels. Beginning in 2011 and continuing indefinitely, refiners could generate credits by
producing gasoline with benzene levels below the 0.62% average standard. Refiners could apply
the credits towards company compliance, "bank" the credits for later use, or transfer ("trade")
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them to other refiners nationwide (outside of California) under the proposed program. Under
this program, refiners could use credits to achieve compliance with the benzene content standard.
Portable Gasoline Container (Gas Can) Controls
Portable gasoline containers, or gas cans, are consumer products used to refuel a wide
variety of gasoline-powered equipment, including lawn and garden equipment, recreational
equipment, and passenger vehicles that have run out of gas. We are proposing standards that
would reduce hydrocarbon emissions from evaporation, permeation, and spillage. These
standards would significantly reduce benzene and other toxics, as well as VOC more generally.
VOC is an ozone precursor.
We propose a performance-based standard of 0.3 grams per gallon per day of
hydrocarbons, based on the emissions from the can over a diurnal test cycle. The standard would
apply to gas cans manufactured on or after January 1, 2009. We also propose test procedures
and a certification and compliance program, in order to ensure that gas cans would meet the
emission standard over a range of in-use conditions. The proposed standards would result in the
best available control technologies, such as durable permeation barriers, automatically closing
spouts, and cans that are well-sealed.
California implemented an emissions control program for gas cans in 2001, and since
then, several other states have adopted the program. Last year, California adopted a revised
program, which will take effect July 1, 2007. The revised California program is very similar to
the program we are proposing. Although a few aspects of the program we are proposing are
different, we believe manufacturers would be able to meet both EPA and California requirements
with the same gas can designs.
Projected Impacts
The following paragraphs and tables summarize the projected emission reductions and
costs associated with the emission standards. See the detailed analysis later in this document for
further discussion of these estimates.
Emissions Reductions
Toxics
Air toxic emissions from light-duty vehicles depend on both fuel benzene content and
vehicle hydrocarbon emission controls. Similarly, the air toxic emissions from gas cans depend
on both fuel benzene content and the gas can emission controls. Tables 1 and 2 below
summarize the expected reductions in benzene and total MSAT emissions, respectively, from our
proposed vehicle, fuel, and gas can controls. Although the proposal does not apply to nonroad
engines or the gasoline distribution industry, the fuels controls would reduce benzene emissions
from these sources as well due to lower benzene levels in gasoline. In 2030, annual benzene
emissions from gasoline on-road mobile sources would be 44% lower as a result of this proposal.
Annual benzene emissions from gasoline light-duty vehicles would be 45% lower in 2030 as a
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result of this proposal. Gasoline would have 37% lower benzene overall. Finally, this proposal
would reduce annual emissions of benzene from gas cans by 78% in 2030.
Table 1: Estimated Reductions in Benzene Emissions from Proposed Control Measures by
Sector, 2020 and 2030 (tons)
2020 2030
Fuels 18,145 20,272
Vehicles 28,105 47,689
Gas Cans 1,567 1,772
Total 45,241 65,282
Table 2: Estimated Reductions in MSAT Emissions from Proposed Control Measures by
Sector, 2020 and 2030 (tons)
Fuels
Vehicles
Gas Cans
Total
2020
18,145
181,509
24,158
221,081
20,272
308,887
27,342
351,894
2030
voc
VOC emissions would be reduced by the hydrocarbon emission standards for both light-
duty vehicles and gas cans. Annual VOC emission reductions from these sources would be 35%
lower in 2030 because of this proposal.
Table 3: Estimated Reductions in VOC Emissions from Light-Duty Gasoline Vehicles and
Gas Cans, 2020 and 2030 (tons)
Vehicles
Gas Cans
Total
2020
536,484
192,683
729,167
913,439
218,080
1,131,519
2030
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PM2.5
We expect that only the proposed vehicle control would reduce emissions of direct PM2.5.
As shown in Table 4, we expect this control to reduce direct PM2.s emissions by about 20,000
tons in 2030. In addition, the VOC reductions from the proposed vehicle and gas can standards
would also reduce secondary formation of PM25
Table 4. Estimated National Reductions in Direct PMi.s Exhaust Emissions from Light-
Duty Gasoline Vehicles and Trucks, 2020 and 2030 (tons)
PM2.5 Reductions from Proposed
Vehicle Standards (tons)
2020
11,803
2030
20,096
Costs
Fuels
The refinery model estimates that the proposed benzene standard would cost 0.13 cents
per gallon, averaged over the entire U.S. gasoline pool. (When averaged only over those
refineries which are assumed to take steps to reduce their benzene levels, the average cost would
be 0.19 cents per gallon.) This per-gallon cost would result from an industry-wide investment in
capital equipment of $500 million to reduce gasoline benzene levels. This would amount to an
average of $5 million in capital investment in each refinery that adds such equipment. The
aggregate costs for the fuel program for 2020 and 2030 are provided in Table 5. The increase in
costs is due to the projected increase in gasoline usage.
Table 5. Estimated Aggregate Annual Cost for the Proposed Benzene Standard, 2020 and
2030
2020 2030
Fuels program $212,606,000 $248,421,000
Vehicles
We project that the average incremental costs associated with the new cold temperature
standards would be less than $1 per vehicle. We are not projecting changes to vehicle hardware
as a result of the proposed standard. Costs would be associated with vehicle R&D and
recalibration as well as facilities upgrades to handle additional development testing under cold
conditions. Also, we are not anticipating additional costs for the proposed new evaporative
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emissions standard. We expect that manufacturers will continue to produce 50-state evaporative
systems that meet LEV II standards. Therefore, harmonizing with California's LEV-II
evaporative emission standards would streamline certification and be an "anti-backsliding"
measure. It also would codify the approach manufacturers have already indicated they are taking
for 50-state evaporative systems.
We also estimated annual aggregate costs associated with the new cold temperature
emissions standards. These costs are projected to increase with the phase-in of standards and
peak in 2014 at about $13.4 million per year, then decrease as the fixed costs are fully amortized.
As shown in Table 6, the costs would be fully amortized by 2020.
Table 6. Estimated Aggregate Annual Cost for the Proposed Vehicle Standards, 2020 and
2030
2020 2030
Vehicles program $0 $0
Gas Cans
Table 7 summarizes the projected near-term and long-term per unit average costs to meet
the new emission standards. Long-term impacts on gas cans are expected to decrease as
manufacturers fully amortize their fixed costs. The table also shows our projections of average
fuel savings over the life of the gas can.
Table 7 Estimated Average Gas Can Costs and Lifetime Fuel Savings
Cost
Near-Term Costs $2.69
Long-Term Costs $1.52
Fuel Savings (NPV) $4.24
We have also estimated aggregate costs and fuel savings which are projected to peak in
2013 at about $51 million and then drop to about $29 million once fixed costs are recovered.
The aggregate annual costs and fuel savings estimates for 2020 and 2030 are provided in Table
Table 8. Estimated Aggregate Annual Cost and Fuel Savings for the Proposed Gas Can
Standards, 2020 and 2030
2020 2030
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Gas Can Costs $31,767,000 $38,724,000
Gas Can Fuel Savings $98,861,000 $111,210,000
Cost Per Ton
We have calculated the cost per ton of HC, benzene, total MSATs, and PM emissions
reductions associated with the proposed fuel, vehicle, and gas can programs. We have calculated
the costs per ton using the net present value of the annualized costs of the program, including gas
can fuel savings, from 2009 through 2030 and the net present value of the annual emission
reductions through 2030. We have also calculated the cost per ton of emissions reduced in the
year 2020 and 2030 using the annual costs and emissions reductions in that year alone. This
number represents the long-term cost per ton of emissions reduced. For fuels, the cost per ton
estimates include costs and emission reductions that will occur from all motor vehicles and
nonroad engines fueled with gasoline as well as gas cans and gasoline distribution.
We have not attempted to apportion costs across these various pollutants for purposes of
the cost per ton calculations since there is no distinction in the technologies, or associated costs,
used to control the pollutants. Instead, we have calculated costs per ton by assigning all costs to
each individual pollutant. If we apportioned costs among the pollutants, the costs per ton
presented here would be proportionally lowered depending on what portion of costs were
assigned to the various pollutants. The results of the analysis are provided in Tables 9 through
12.
The cost per ton estimates for each individual program are presented separately in the
tables below, and are part of the justification for each of the programs. For informational
purposes, we also present the cost per ton for the three programs combined.
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Table 9 HC Aggregate Cost per Ton and Long-Term Annual Cost Per Ton
($2003)
Vehicles
Gas Cans
(without fuel
savings)
Gas Cans (with
fuel savings)
Combined (with
fuel savings)
Discounted
Lifetime
Cost per ton at 3%
$14
$230
$0
$0
Discounted
Lifetime
Cost per ton at 7%
$18
$250
$0
$0
Long-Term Cost
per Ton in 2020
$0
$160
$0
$0
Long-Term Cost
per Ton in 2030
$0
$180
$0
$0
Table 10 Benzene Aggregate Cost per Ton and Long-Term Annual Cost Per Ton
($2003)
Fuels
Vehicles
Gas Cans
(without fuel
savings)
Gas Cans (with
fuel savings)
Combined (with
fuel savings)
Discounted
Lifetime
Cost per ton at 3%
$11,700
$260
$27,800
$0
$3,700
Discounted
Lifetime
Cost per ton at 7%
$11,900
$340
$30,900
$0
$4,000
Long-Term Cost
per Ton in 2020
$11,700
$0
$20,000
$0
$3,200
Long-Term Cost
per Ton in 2030
$12,300
$0
$21,600
$0
$2,700
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Table 11 MSAT Aggregate Cost per Ton and Long-Term Annual Cost Per Ton
($2003)
Fuels
Vehicles
Gas Cans
(without fuel
savings)
Gas Cans (with
fuel savings)
Combined (with
fuel savings)
Discounted
Lifetime
Cost per ton at 3%
$11,700
$40
$1,800
$0
$770
Discounted
Lifetime
Cost per ton at 7%
$11,900
$53
$2,000
$0
$850
Long-Term Cost
per Ton in 2020
$11,700
$0
$1,300
$0
$660
Long-Term Cost
per Ton in 2030
$12,300
$0
$1,400
$0
$500
Table 12 Direct PM Aggregate Cost per Ton and Long-Term Annual Cost Per Ton
($2003)
Vehicles
Discounted
Lifetime
Cost per ton at 3%
$620
Discounted
Lifetime
Cost per ton at 7%
$820
Long-Term Cost
per Ton in 2020
$0
Long-Term Cost
per Ton in 2030
$0
Benefits
This analysis projects significant benefits throughout the period from initial
implementation of the proposed standards through 2030. When translating emission benefits to
health effects and monetized values, however, we only quantify the PM-related benefits
associated with the proposed cold temperature vehicle standards. The reductions in PM from the
proposed cold temperature vehicle standards would result in significant reductions in premature
deaths and other serious human health effects, as well as other important public health and
welfare effects. Table 13 provides the estimated monetized benefits of the proposed cold
temperature vehicle standards for 2020 and 2030. We estimate that in 2030, the benefits we are
able to monetize are expected to be approximately $6.5 billion using a 3 percent discount rate
and $5.9 billion using a 7 percent discount rate, assuming a background PM threshold of 3 ug/m3
in the calculation of PM mortality. There are no compliance costs associated with the proposed
cold temperature vehicle program after 2019; vehicle compliance costs are primarily research
and development, and facility costs are expected to be recovered by manufacturers over the first
ten years of the program beginning in 2010. Total costs of the entire MSAT proposal, which
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include both the proposed gasoline container and vehicle fuel standards, are $205 million in 2030
(in 2003$, including fuel savings).
EPA's consistent approach has been to model premature mortality associated with PM
exposure as a nonthreshold effect; that is, with harmful effects to exposed populations modeled
regardless of the absolute level of ambient PM concentrations. This approach has been shaped
and supported by advice from EPA's technical peer review panel, the Science Advisory Board's
Health Effects Subcommittee (SAB-HES). Note, however, that it is not certain whether there
exists a threshold below which there would be no benefit to further reductions in PM2.5. We
consider the impact of a threshold in the PM-mortality concentration response function in
Section 12.6.1.1 oftheRIA.
Table 13 Estimated Monetized PM-Related Health Benefits of the Proposed Mobile Source
Air Toxics Standards: Cold Temperature Controls
Using a 3% discount rate
Using a 7% discount rate
Total Benefits3' b'c (billions 2003$)
2020
$3.4 + B
$3.1 + B
2030
$6.5 + B
$5.9 + B
Benefits include avoided cases of mortality, chronic illness, and other morbidity health endpoints. PM-related
mortality benefits estimated using an assumed PM threshold at background levels (3 ug/m3). There is
uncertainty about which threshold to use and this may impact the magnitude of the total benefits estimate. For a
more detailed discussion of this issue, please refer to Section 12.6.1.1 of the PJA.
For notational purposes, unqualified benefits are indicated with a "B" to represent the sum of additional
monetary benefits and disbenefits. A detailed listing of unqualified health and welfare effects is provided in
Table 13-2 of the RIA.
Results reflect the use of two different discount rates: 3 and 7 percent, which are recommended by EPA's
Guidelines for Preparing Economic Analyses and OMB Circular A-4. Results are rounded to three significant
digits for ease of presentation and computation.
Economic Impact Analysis
We prepared a draft Economic Impact Analysis (EIA) to estimate the economic impacts
of the proposed emission control program on the gas can, gasoline fuel, and light-duty vehicle
markets. We estimate the net social costs of the proposed program for 2020 and 2030 are
provided in Table 14 below. These estimates reflects the estimated costs associated with the
gasoline, gas can, and vehicle controls and the expected fuel savings from better evaporative
controls on gas cans. The results of the economic impact modeling performed for the gasoline
fuel and gas can control programs suggest that the social costs of those two programs are
expected to be about $244.3 million in 2020 with consumers of these products expected to bear
about 60 percent of these costs. We estimate fuel savings of about $72.8 million in 2020 that
will accrue to consumers. There are no social costs associated with the vehicle program in 2020.
Table 14 Net Social Costs Estimates for the Proposed Program (Millions of 2003$)
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2020 2030
Net Social Costs 171.5 205.2
Impact on Small Businesses
We prepared a Regulatory Flexibility Analysis, which evaluates the potential impacts of
new standards and fuel controls on small entities. Before issuing our proposal, we analyzed the
potential impacts of this rule on small entities. As a part of this analysis, we interacted with
several small entities representing the various affected sectors and convened a Small Business
Advocacy Review Panel to gain feedback and advice from these representatives. This feedback
was used to develop regulatory alternatives to address the impacts of the rule on small
businesses. Small entities raised general concerns related to potential difficulties and costs of
meeting the upcoming standards.
The Panel consisted of members from EPA, the Office of Management and Budget, and
the Small Business Administration's Office of Advocacy. We either are proposing or requesting
comment on the Panel's recommendations. These provisions would reduce the burden on small
entities that would be subject to this rule's requirements. We have proposed provisions that give
small light-duty vehicle manufacturers, small gasoline refiners, and small gas can manufacturers
several compliance options aimed specifically at reducing the burden on these small entities. In
general, for vehicles and fuels, the options proposed are similar to small entity provisions
adopted in prior rulemakings where EPA set vehicle and fuel standards. The options proposed
for small gas can manufacturers are unique to this rulemaking since we are proposing gas can
standards for the first time. The small entity provisions for the three industry sectors would
reduce the burden on small entities that would be required to meet this proposed rule's
requirements.
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