2012....................................................               0               0               0               0               0               0
2015....................................................              23               0               7              30               4              26

2020....................................................             143               3              42             187              24             164
2030....................................................             409               8             118             535              67             468
2040....................................................             619              12             175             806              99             707
NPV at 3%...............................................           4,031              75           1,157           5,264             654           4,610
NPV at 7%...............................................           1,575              29             453           2,057             256           1,801
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown, we have estimated the net present value for the years
2006 through 2040 of the annual operating costs at $5.2 billion using a
three percent discount rate and $2.1 billion using a seven percent
discount rate. The operating costs are zero until Tier 4 engines start
being sold since only the Tier 4 engines are expected to incur
increased operating costs (note that operating costs associated with
the remanufacturing programs are discussed below). Reductant use
represents the largest source of increased operating costs. Because
reductant use is meant for controlling NOX emissions, most
of the operating costs are associated with NOX+NMHC control.
(4) Engineering & Operating Costs Associated With the Remanufacturing
Programs
    We have also estimated engineering costs associated with the
locomotive and marine remanufacturing programs. The remanufacturing
process is not a low cost endeavor. However, it is much less costly
than purchasing a freshly manufactured engine. The engineering costs we
have estimated associated with the remanufacturing program are not
meant to capture the remanufacturing process but rather the incremental
engineering costs to that process. Therefore, the remanufacturing costs
estimated here are only those engineering and operating costs resulting
from the requirement to meet a more stringent standard than the engine
was designed to meet at its original sale. In addition to incremental
hardware costs, we expect that some remanufactured engines will see a
fuel consumption impact. We expect a 1 percent fuel consumption
increase will occur for remanufactured Tier 0 locomotives because we
believe that the tighter NOX standard will be met using
retarded timing. For the same reason, we expect a 2 percent fuel
consumption increase for remanufactured C2 marine engines. The marine
engines will have timing retarded to the same degree as locomotives,
but the relative degree of timing retard will be greater for marine
engines given their initial state of control. These engineering and
operating costs and how they were generated are detailed in Chapter 5
of the final RIA and are summarized in Table V-5.\177\ As shown, we
have estimated the net present value for the years 2006 through 2040 of
the annual engineering and operating costs associated with the
locomotive and marine remanufacturing programs at $2.1 billion using a
3 percent discount rate and $1.2 billion using a 7 percent discount
rate.
---------------------------------------------------------------------------

    \177\ Costs associated with the remanufaturing program are split
evenly between NOX+NMHC and PM. Note that the costs
associated with the marine remanufacturing program are consistent
with the inventory reductions discussed in section II. Our estimate
of the number of remanufactured engines is presented in a memorandum
from Amy Kopin to the docket for this rule (see Docket Item No. EPA-
HQ-OAR-2003-0190-0847).

   Table V-5.--Estimated Hardware and Operating Costs Associated With the Locomotive & Marine Remanufacturing
                                                    Programs
                                           [Millions of 2005 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                                Total for
              Year                  Locomotive        Marine           Total       Total for PM      NOX+NMHC
----------------------------------------------------------------------------------------------------------------
2008............................             $59             $16             $75             $38             $38
2009............................              32              21              54              27              27
2010............................              58              27              85              42              42
2011............................             111              32             143              71              71
2012............................              91              44             135              68              68
2015............................              52              37              89              44              44
2020............................              37              26              63              31              31
2030............................              94              12             106              53              53
2040............................             158               3             161              80              80
NPV at 3%.......................           1,669             450           2,120           1,060           1,060
NPV at 7%.......................             864             289           1,153             577             577
----------------------------------------------------------------------------------------------------------------

(5) Total Engineering & Operating Costs
    The total engineering and operating costs associated with today's
final rule are the summation of the new engine and new equipment
engineering costs, both fixed and variable, the new engine operating
costs for freshly manufactured engines, and the hardware and operating
costs associated with the locomotive and marine remanufacturing
programs. These costs are summarized in Table V-6.

                                          Table V-6.--Total Engineering & Operating Costs of the Final Program
                                                               (Millions of 2005 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Freshly         Freshly       Hardware and
                                             Freshly      manufactured    manufactured   operating costs
                                          manufactured      equipment       engine &     associated with       Total                      Total NOX+NMHC
                  Year                   engine related      related        equipment          the          engineering   Total PM costs       costs
                                           engineering     engineering      operating    remanufacturing       costs
                                              costs           costs           costs          programs
--------------------------------------------------------------------------------------------------------------------------------------------------------
2008...................................             $34              $0              $0              $75            $109             $49             $60
2009...................................              34               0               0               54              87              38              49
2010...................................              68               0               0               85             153              65              88
2011...................................             138               0               0              143             281             121             160
2012...................................              80               0               0              135             215              94             121
2015...................................             123              24              30               89             266             116             150
2020...................................              82              17             187               63             349             106             242
2030...................................              99              20             535              105             759             181             578
2040...................................              98              17             806              161           1,082             240             842
NPV at 3%..............................           1,764             260           5,264            2,120           9,407           2,680           6,727
NPV at 7%..............................             974             122           2,057            1,153           4,307           1,333           2,973
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As shown, we have estimated the net present value of the annual
engineering costs for the years 2006 through 2040 at $9.4 billion using
a 3 percent discount rate and $4.3 billion using a 7 percent discount
rate. Roughly half of these costs are operating costs, with the bulk of
those being reductant related costs. As explained above in the
operating cost discussion, because reductant use is meant for
controlling NOX emissions, most of the operating costs and,
therefore, the majority of the total engineering costs are associated
with NOX+NMHC control.
    Figure V-1 graphically depicts the annual engineering costs
associated with the program being finalized today. The engine costs
shown represent the engineering costs associated with engine research
and tooling, etc., and the incremental costs for new hardware such as
DPFs and reductant SCR systems. The equipment costs shown represent the
engineering costs associated with equipment redesign efforts and the
incremental costs for new equipment-related hardware such as reductant
storage and delivery systems, sheet metal and brackets. The
remanufacturing program costs include incremental hardware and
operating costs for the locomotive and marine remanufacturing programs.
The operating costs include incremental increases in operating costs
associated with reductant use, DPF maintenance, and a 1 percent fuel
consumption increase for new Tier 4 engines. The total program
engineering costs are shown in Table V-6 as $9.4 billion at a 3 percent
discount rate and $4.3 billion at a 7 percent discount rate.
BILLING CODE 6560-50-P

[GRAPHIC] [TIFF OMITTED] TR06MY08.006

BILLING CODE 6560-50-C

B. Cost Effectiveness

    As discussed in section VI, this rule is very cost beneficial, with
social benefits far outweighing social costs. However, this does not
shed light on how cost effective this control program is compared to
other control programs at providing the expected emission reductions.
One tool that can be used to assess the value of the final program is
the ratio of engineering costs incurred per ton of emissions reduced
and comparing that ratio to other control programs. As we show in this
section, the PM and NOX emissions reductions from the new
locomotive and marine diesel program compare favorably--in terms of
cost effectiveness--to other mobile source control programs that have
been or will soon be implemented. We note that today's action builds
upon the efforts undertaken by the engine manufacturing industry to
comply with our recent 2007/2010 heavy-duty highway and nonroad Tier 4
(NRT4) rulemakings. As such, and as discussed at length in Chapter 5 of
the final RIA, much of the research and development associated with
diesel emission controls builds upon the work done to comply with those
earlier rules. This does not change the conclusion that the cost
effectiveness of today's action compares favorably with other actions
deemed appropriate for society.
    We have calculated the cost per ton of our program based on the net
present value of all engineering costs incurred and all emission
reductions generated from the current year 2006 through the year 2040.
This approach captures all of the costs and emissions reductions from
our program including those costs incurred and emissions reductions
generated by the locomotive and marine remanufacturing programs. The
baseline case for this evaluation is the existing set of engine
standards for locomotive and marine diesel engines and the existing
remanufacturing requirements. The analysis timeframe is meant to
capture both the early period of the program when very few new engines
that meet the standards would be in the fleet, and the later period
when essentially all engines would meet the new standards.
    Table V-7 shows the emissions reductions associated with today's
rule. These reductions are discussed in more detail in section II of
this preamble and Chapter 3 of the final RIA.

        Table V-7.--Estimated Emissions Reductions Associated With the New Locomotive and Marine Program
                                                  (Short tons)
----------------------------------------------------------------------------------------------------------------
                      Year                             PM2.5        PM\10\ \a\          NOX            NMHC
----------------------------------------------------------------------------------------------------------------
2015............................................           7,000           8,000         161,000          14,000
2020............................................          14,000          15,000         371,000          26,000
2030............................................          27,000          27,000         795,000          40,000
2040............................................          37,000          38,000       1,144,000          52,000
NPV at 3%.......................................         308,000         318,000       8,757,000         492,000
NPV at 7%.......................................         134,000         139,000       3,708,000        221,000
----------------------------------------------------------------------------------------------------------------
Note: (a) Note that, PM2.5 is estimated to be 97 percent of the more inclusive PM\10\ emission inventory.

    In Section II we generate and present PM2.5 inventories
since recent research has determined that these are of greater health
concern. Similarly, NMHC is estimated to be 93 percent of the more
inclusive VOC emission inventory. Traditionally, we have used PM\10\
and NMHC in our cost effectiveness calculations. Since cost
effectiveness is a means of comparing control measures to one another,
we use PM\10\ and NMHC in our cost effectiveness calculations for
comparisons to past control measures.
    Using the engineering costs shown in Table V-6 and the emission
reductions shown in Table V-7, we can calculate the $/ton associated
with today's rule. These are shown in Table V-8. The resultant cost per
ton numbers depend on how the engineering costs presented above are
allocated to each pollutant. Therefore, as described in section V.A, we
have allocated costs as closely as possible to the pollutants for which
they are incurred. These allocations are also discussed in detail in
Chapter 5 of the final RIA.

               Table V-8.--Final Program Aggregate Cost per Ton and Long-Term Annual Cost per Ton
----------------------------------------------------------------------------------------------------------------
                                                  2006 thru 2040  2006 thru 2040
                                                    discounted      discounted     Cost per ton    Cost per ton
                    Pollutant                      lifetime cost   lifetime cost      in 2030         in 2040
                                                   per ton at 3%   per ton at 7%
----------------------------------------------------------------------------------------------------------------
NOX+NMHC........................................            $730            $760            $690            $700
PM..............................................           8,440           9,620           6,620           6,360
----------------------------------------------------------------------------------------------------------------

    The costs per ton shown in Table V-8 for 2006 through 2040 use the
net present value of the annualized engineering costs and emissions
reductions associated with the program for the years 2006 through 2040.
We have also calculated the costs per ton of emissions reduced in the
years 2030 and 2040 using the annual engineering costs and emissions
reductions in those specific years. These numbers are also shown in
Table V-8. All of the costs per ton include costs and emission
reductions that will occur from the locomotive and marine
remanufacturing programs.
    In comparison with other emissions control programs, we believe
that the new locomotive and marine program represents a cost effective
strategy for generating substantial NOX+NMHC and PM
reductions. This can be seen by comparing the cost effectiveness with
the cost effectiveness of a number of standards that EPA has adopted in
the past. Table V-9 and Table V-10 summarize the cost per ton of
several past EPA actions to reduce emissions of NOX+NMHC and
PM from mobile sources.

   Table V-9.--New Locomotive and Marine Program Compared to Previous
                   Mobile Source Programs for NOX+NMHC
------------------------------------------------------------------------
               Program                          $/ton NOX+NMHC
------------------------------------------------------------------------
Today's locomotive & marine                                         $730
 standards..........................
Tier 4 Nonroad Diesel (69 FR 39131).                               1,140
Tier 2 Nonroad Diesel (EPA420-R-98-                                  710
 016, Chapter 6)....................
Tier 3 Nonroad Diesel (EPA420-R-98-                                  480
 016, Chapter 6)....................
Tier 2 vehicle/gasoline sulfur (65                          1,580--2,650
 FR 6774)...........................
2007 Highway HD (66 FR 5101)........                               2,530
2004 Highway HD (65 FR 59936).......                           250--480
------------------------------------------------------------------------
Note: Costs adjusted to 2005 dollars using the Producer Price Index for
  Total Manufacturing Industries.

  Table V-10.--New Locomotive and Marine Standards Compared to Previous
                      Mobile Source Programs for PM
------------------------------------------------------------------------
               Program                             $/ton PM
------------------------------------------------------------------------
Today's locomotive & marine                                       $8,440
 standards..........................
Tier 4 Nonroad Diesel (69 FR 39131).                              12,630
Tier 1/Tier 2 Nonroad Diesel (EPA420-                              2,700
 R-98-016, Chapter 6)...............

2007 Highway HD (66 FR 5101)........                             15,990
------------------------------------------------------------------------
Note: Costs adjusted to 2005 dollars using the Producer Price Index for
  Total Manufacturing Industries.

C. EIA

    We prepared an Economic Impact Analysis (EIA) to estimate the
social costs associated with the final control program to estimate the
market-level changes in prices and outputs for affected markets, the
social costs of the program, and the expected distribution of those
costs across stakeholders. As defined in EPA's Guidelines for Preparing
Economic Analyses, social costs are the value of the goods and services
lost by society resulting from (a) the use of resources to comply with
and implement a regulation and (b) reductions in output.\178\
---------------------------------------------------------------------------

    \178\ EPA Guidelines for Preparing Economic Analyses, EPA 240-R-
00-003, September 2000, p 113. A copy of this document can be found
at http://yosemite.epa.gov/ee/epa/eed.nsf/webpages/Guidelines.html.
---------------------------------------------------------------------------

    A quantitative Economic Impact Model (EIM) was developed to
estimate price and quantity changes and total social costs associated
with the emission control program.
    The EIM is a computer model comprised of a series of spreadsheet
modules that simulate the supply and demand characteristics of each of
the markets under consideration. The model methodology is firmly rooted
in applied microeconomic theory and was developed following the
methodology set out in OAQPS's Economic Analysis Resource
Document.\179\ Chapter 7 of the RIA contains a detailed description of
the EIM, including the economic theory behind the model and the data
used to construct it, the baseline equilibrium market conditions, and
the model's behavior parameters. The EIM and the estimated compliance
costs presented above are used to estimate the economic impacts of the
program. The results of this analysis are summarized below.
---------------------------------------------------------------------------

    \179\ U.S. Environmental Protection Agency, Office of Air
Quality Planning and Standards, Innovative Strategies and Economics
Group, OAQPS Economic Analysis Resource Document, April 1999. A copy
of this document can be found at http://www.epa.gov/ttn/ecas/
econdata/Rmanual2/.
---------------------------------------------------------------------------

    The engineering costs we used in the EIA are an earlier version of
the estimated compliance costs developed for this final rule. The net
present value of the engineering costs used in the EIA is estimated to
be approximately $9.17 billion (NPV over the period of analysis at 3
percent discount rate), which is about $240 million less than the net
present value of the final estimated engineering costs of about $9.41
billion. This difference is the sum of various cost adjustments, the
largest of which are an increase of about $222 million in operating
costs for the marine markets and $42 million in the operating costs for
the rail markets (NPV over the period of analysis at 3 percent discount
rate). These changes are not expected to have a substantial impact on
the market level results because the differences are relatively small
on an annual basis. For example, operating costs for C2 marine markets
increase by about 15 percent in 2030 (from $107 million to $123
million). The previous estimate of $107 million was associated with an
increase of approximately 1.1 in the price of marine transportation
services and a decrease of approximately 0.5 percent in the quantity of
marine transportation services provided. A small increase in operating
costs is not likely to change those results by very much. The market-
level impacts on the other downstream markets are also likely to be
very small and not economically significant. Finally, the difference in
compliance costs will not affect the distribution of social costs,
which is a function of the price elasticity of supply and demand.
(1) Market Analysis Results
    In the market analysis, we estimate how prices and quantities of
goods and services affected by the emission control program can be
expected to change once the program goes into effect.
    The compliance costs associated with the new locomotive and marine
diesel engine standards are expected to lead to price and quantity
changes in these markets. A summary of the market analysis results is
presented in Table V-11 for 2012, which is representative of the first
year of the Tier 3 standards; 2016, which is representative of the
first year of the Tier 4 standards; and 2030, which represents market
impacts of the program in the long-term. Results for all years can be
found in Chapter 7 of the RIA.
    For all markets, the market impacts for the early years of the
program are driven by the transportation markets. In these years, the
only direct compliance costs are associated with the remanufacture
programs; there are no variable costs associated with the Tier 3
standards and therefore no direct compliance costs. The transportation
markets will experience operating costs increases; these will result in
small increases in transportation market prices, which will translate
to small contractions in demand for locomotives and marine diesel
engines and vessels. This is expected exert marginal downward pressure
on prices in those markets, of less than 0.1 percent. The production
decreases are also expected to be very small, at 0.1 percent or less.
    The Tier 4 programs are expected to result in larger market changes
due to the direct compliance costs associated with Tier 4 standards and
the continuing costs of the remanufacture programs. For the locomotive
markets, the price increases in 2016 are expected to be about 4 percent
for line haul locomotives and about one percent for switchers in 2016.
In the long term (by 2030), prices are expected to increase to about
3.2 percent for line haul locomotives and about 1.5 percent for
switchers. These small price increases reflect the relative amount of
the compliance costs compared to the total cost of a locomotive or
switcher (the engine is only a small part of the total cost of the
locomotive). In all cases, the decrease in the quantity of line haul
locomotives or switchers produced is expected to be less than 0.5
percent.
    In the marine markets, price increases for engines are expected to
be larger in 2016, varying from about 9 percent for C1 engines above
600 kW (800 hp) to 17 percent for auxiliary engines and C2 engines
above 600 kW.\180\ The price increases for vessels that use these
engines, however, are smaller (about 2 percent and 7 percent,
respectively), reflecting the relative amount of the compliance costs
compared to the price of a commercial marine vessel. Production
quantities are expected to decrease by less than 4 percent for engines
and vessels. The long-term price impacts are similar, with expected
price increases of about 12 percent for engines C2 above 600 kW and 7
percent for C1 engines above 600 kW, and vessel price

increases of less than 5 percent. Long-term production quantity
decreases are expected to be less than 3 percent.
---------------------------------------------------------------------------

    \180\ Results presented in this section are by marine engine
category in kW; the actual EIA analysis presented in Chapter 7 of
the RIA was performed using marine engine categories by hp.

                           Table V-11.--Estimated Market Impacts for 2012, 2016, 2030
                                                     (2005$)
----------------------------------------------------------------------------------------------------------------
                                                   Average         Change in price         Change in quantity
                                                   variable  ---------------------------------------------------
                    Market c                     engineering
                                                   cost per     Absolute     Percent      Absolute     Percent
                                                     unit
----------------------------------------------------------------------------------------------------------------
                      2012
Rail Sector:
    Locomotives................................           $0         -535        -0.03           -1         -0.1
    Switcher/Passenger.........................            0         -348        -0.03            0         -0.1
    Transportation Services....................           NA         a NA          0.1         a NA         -0.1
Marine Sector
Engines:
    Auxiliary >600 kW..........................            0          -47         0.00            0         -0.1
        C1>600 kW..............................            0           -8         0.00            0          0.0
        C2>600 kW..............................            0         -139        -0.03            0         -0.1
        Other marine...........................            0            0         0.00            0          0.0
Vessels
    C1>600 kW..................................            0         -174        -0.01            0          0.0
    C2>600 kW..................................            0       -2,419        -0.07            0         -0.1
    Other marine...............................            0           -3         0.00            1          0.0
Transportation Services........................           NA         a NA          0.2         a NA         -0.1
                      2016
Rail Sector:
    Locomotives................................       84,274       83,227          4.2           -1         -0.1
    Switcher/Passenger.........................       14,175       13,494          1.0            0         -0.1
    Transportation Services....................           NA         a NA          0.3         a NA         -0.1
Marine Sector
Engines:
    Auxiliary >600 kW..........................       37,097       35,569         17.1          -11         -3.4
        C1>600 kW..............................       18,483       16,384          8.5          -15         -3.7
        C2>600 kW..............................       71,806       71,602         16.3            0         -0.2
        Other marine...........................            0            0         0.00            0          0.0
Vessels:
    C1>600 kW..................................        8,277     b 34,043          2.1          -14         -3.7
    C2>600 kW..................................       12,107    b 255,143          7.0            0         -0.2
    Other marine...............................            0           -4         0.00           -1          0.0
Transportation Services........................           NA         a NA          0.4         a NA         -0.2
                      2030
Rail Sector:
    Locomotives................................       65,343       63,019          3.2           -4         -0.3
    Switcher/Passenger.........................       21,139       19,628          1.5           -1         -0.3
    Transportation Services....................           NA         a NA          0.6         a NA         -0.3
Marine Sector
Engines:
    Auxiliary >600 kW..........................       28,359       27,021         13.0          -11         -2.8
        C1>600 kW..............................       14,131       12,479          6.5          -13         -2.9
        C2>600 kW..............................       54,893       54,264         12.3           -1         -0.5
        Other marine...........................            0           -1          0.0            0          0.0
Vessels:
    C1>600 kW..................................        6,933     b 25,768          1.6          -12         -2.9
    C2>600 kW..................................       10,169    b 164,774          5.1            0         -0.5
    Other marine...............................            0          -12          0.0           -4          0.0
Transportation Services........................           NA         a NA          1.1         a NA        -0.5
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ The prices and quantities for transportation services are normalized (1 for 1 unit of services provided) and
  therefore it is not possible to estimate the absolute change price or quantity; see <IP_ADDRESS>.
\b\ The estimated vessel impacts include the impacts of direct vessel compliance costs and the indirect impacts
  of engine markets for both propulsion and auxiliary engines. See Chapter 7 of the RIA.
\c\ Results presented in this table are by marine engine category in kW; the actual EIA analysis presented in
  Chapter 7 of the RIA was performed using marine engine categories by hp.

(2) Economic Welfare Analysis
    In the economic welfare analysis, we look at the total social costs
associated with the program and their distribution across key
stakeholders.
    The total estimated social costs of the program are about 221
million, 284 million, $332 million and 738 million for 2012, 2016,
2020, and 2030. These estimated social costs are nearly identical to
the total compliance costs for those years. The slight reduction in
social costs when compared to compliance costs occurs because the total
engineering costs do not reflect the

decreased sales of locomotives, engines and vessels that are
incorporated in the total social costs. Results for all years are
presented in Chapter 7 of the RIA.
    Table V-12 shows how total social costs are expected to be shared
across stakeholders for selected years.
    We estimate the net social costs of the program to be approximately
$738 million in 2030.\181\ The rail sector is expected to bear about
62.5 percent of the social costs of the program in 2030, and the marine
sector is expected to bear about 37.5 percent. In each of these two
sectors, these social costs are expected to be born primarily by
producers and users of locomotive and marine transportation services
(about 98 percent). The remaining 2 percent is expected to be borne by
locomotive, marine engine, and marine vessel manufacturers and fishing
and recreational users.
---------------------------------------------------------------------------

    \181\ All estimates presented in this section are in 2005$.

           Table V-12.--Summary of Estimated Social Costs for 2012, 2016, 2020, 2030 (2005$, $million)
----------------------------------------------------------------------------------------------------------------
                                                                        2012                      2016
                                                             ---------------------------------------------------
                    Stakeholder group \a\                       Surplus                   Surplus
                                                                 change      Percent       change      Percent
----------------------------------------------------------------------------------------------------------------
Locomotives:
    Locomotive producers....................................        -35.1         15.9         -8.3          2.9
    Line haul producers.....................................        -27.8         12.6         -0.9          0.3
    Switcher/Passenger producers............................         -7.2          3.3         -7.4          2.6
    Rail transportation service providers...................        -21.4          9.7        -43.4         15.3
    Rail transportation service consumers...................        -68.4         31.0       -138.9         48.8
    Total locomotive sector.................................       -124.9         56.6       -190.6         67.0
Marine:
    Marine engine producers.................................        -45.8         20.7         -2.1          0.7
    Auxiliary > 600 kW......................................        -16.0          7.3         -0.5          0.2
    C1 > 600 kW.............................................        -19.0          8.6         -1.6          0.5
    C2 > 600 kW.............................................        -10.7          4.9         -0.0          0.0
    Other marine............................................          0.0          0.0          0.0          0.0
    Marine vessel producers.................................         -0.3          0.1        -15.8          5.6
    C1 > 600 kW.............................................         -0.1          0.0        -13.5          4.7
    C2 > 600 kW.............................................         -0.1          0.1         -2.2          0.8
    Other marine............................................         -0.1          0.0         -0.1          0.0
    Recreational and fishing vessel consumers...............          0.0          0.0          0.0          0.0
    Marine transportation service providers.................        -11.9          5.4        -18.1          6.4
    Marine transportation service consumers.................        -38.1         17.3        -57.9         20.3
    Auxiliary engines > 600 kW..............................          0.0          0.0          0.0          0.0
    Total marine sector.....................................        -96.1         43.5        -93.8         33.0
                                                             ---------------------------------------------------
        Total Program.......................................       -221.0  ...........       -284.4  ...........
----------------------------------------------------------------------------------------------------------------

                                                                        2020                      2030
                      Stakeholder group                      ---------------------------------------------------
                                                                Surplus      Percent      Surplus      Percent
----------------------------------------------------------------------------------------------------------------
Locomotives:
    Locomotive producers....................................         -1.1          0.3         -3.1          0.4
        Line haul producers.................................         -1.0          0.3         -2.7          0.4
        Switcher/Passenger producers........................         -0.1          0.0         -0.4          0.1
Rail transportation service providers.......................        -46.4         14.0       -109.0         14.8
Rail transportation service consumers.......................       -148.6         44.8       -348.9         47.3
Total locomotive sector.....................................       -196.1         59.1       -461.1         62.5
Marine:
    Marine engine producers.................................         -1.8          0.5         -2.0          0.3
        Auxiliary > 600 kW..................................         -0.4          0.1         -0.5          0.1
        C1 > 600 kW.........................................         -1.3          0.4         -1.4          0.2
        C2 > 600 kW.........................................          0.0          0.0         -0.1          0.0
        Other marine........................................          0.0          0.0          0.0          0.0
    Marine vessel producers.................................        -10.3          3.1         -9.2          1.2
        C1 > 600 kW.........................................         -8.8          2.7         -8.2          1.1
        C2 > 600 kW.........................................         -1.3          0.4         -0.7          0.1
        Other marine........................................         -0.1          0.0         -0.3          0.0
        Recreational and fishing vessel consumers...........          0.0          0.0          0.0          0.0
    Marine transportation service providers.................        -29.5          8.9        -63.3          8.6
    Marine transportation service consumers.................        -94.4         28.4       -202.5         27.4
    Auxiliary engines > 600 kW..............................          0.0          0.0          0.0          0.0
    Total marine sector.....................................       -135.9         40.9       -277.0         37.5
                                                             ---------------------------------------------------
        Total Program.......................................       -332.0  ...........       -738.1  ...........
----------------------------------------------------------------------------------------------------------------
Note: \a\ Results presented in this table are by marine engine category in kW; the actual EIA analysis presented
  in Chapter 7 of the RIA was performed using marine engine categories by hp.

    Table V-13 shows the distribution of total surplus losses for the
program from 2007 through 2040. This table shows that the rail sector
is expected to bear about 62 percent of the total program social costs
through 2040 (NPV 3%), and that most of the costs are expected to be
borne by the rail transportation consumers. The marine sector is
expected to bear about 38 percent of the total program social costs
through 2040 (NPV 3%), most of which are also expected to be borne by
the marine transportation consumers. This is consistent with the
structure of the program, which leads to high compliance costs for the
rail marine transportation sectors.

            Table V-13. Estimated Net Social Costs 2007 Through 2040 by Stakeholder ($million, 2005$)
----------------------------------------------------------------------------------------------------------------
                                                                            Percent of                Percent of
                   Stakeholder Groups \a\                       Surplus       total       Surplus       total
                                                                 change      surplus       change      surplus
----------------------------------------------------------------------------------------------------------------
Locomotives.................................................       NPV 3%  ...........       NPV 7%
Locomotive producers........................................      -$221.1          2.4      -$160.4          3.8
Line Haul...................................................       -172.2                    -124.5
Switcher/Passenger..........................................        -48.9                     -35.9
Rail transportation service providers.......................     -1,302.7         14.2       -568.6         13.6
Rail transportation service consumers.......................     -4,168.7         45.6     -1,819.5         43.5
Total locomotive sector.....................................     -5,692.6         62.6     -2,548.5         61.0
Marine......................................................
Marine engine producers.....................................       -307.5          3.4       -229.4          5.5
Auxiliary > 600 kW..........................................        -87.3                     -64.0
C1 > 600 kW.................................................       -106.8                     -74.6
C2 > 600 kW.................................................        -56.8                     -42.6
Other marine................................................        -56.7                     -48.1
Marine vessel producers.....................................       -150.0          1.6        -72.5          1.7
C1 > 600 kW.................................................       -126.8                     -60.8
C2 > 600 kW.................................................        -19.7                     -10.2
Other marine................................................         -3.5                      -1.5
Recreational and fishing vessel consumers...................          0.2                       0.1
Marine transportation service providers.....................       -704.6          7.7       -308.4          7.4
Marine transportation service consumers.....................     -2,254.7         24.6       -986.9         23.6
Auxiliary Engines <600 kW...................................        -40.2          0.4        -34.2         -0.8
Total marine sector.........................................      3,456.7         37.8     -1,631.3         39.0
----------------------------------------------------------------------------------------------------------------
    Total Program...........................................     -9.149.2                  -4,179.8
----------------------------------------------------------------------------------------------------------------
Note: \a\ Results presented in this table are by marine engine category in kW; the actual EIA analysis presented
  in Chapter 7 of the RIA was performed using marine engine categories by hp.

(3) What Are the Significant Limitations of the Economic Impact
Analysis?
    Every economic impact analysis examining the market and social
welfare impacts of a regulatory program is limited to some extent by
limitations in model capabilities, deficiencies in the economic
literatures with respect to estimated values of key variables necessary
to configure the model, and data gaps. In this EIA, there three
potential sources of uncertainty: (1) Uncertainty resulting from the
way the EIM is designed, particularly from the use of a partial
equilibrium model; (2) uncertainty resulting from the values for key
model parameters, particularly the price elasticity of supply and
demand; and (3) uncertainty resulting from the values for key model
inputs, particularly baseline equilibrium price and quantities.
    Uncertainty associated with the economic impact model structure
arises from the use of a partial equilibrium approach, the use of the
national level of analysis, and the assumption of perfect competition.
These features of the model mean it does not take into account impacts
on secondary markets or the general economy, and it does not consider
regional impacts. The results may also be biased to the extent that
firms have some control over market prices, which would result in the
modeling over-estimating the impacts on producers of affected goods and
services.
    The values used for the price elasticities of supply and demand are
critical parameters in the EIM. The values of these parameters have an
impact on both the estimated change in price and quantity produced
expected as a result of compliance with the new standards and on how
the burden of the social costs will be shared among producer and
consumer groups. In selecting the values to use in the EIM it is
important that they reflect the behavioral responses of the industries
under analysis.
    Finally, uncertainty in measurement of data inputs can have an
impact on the results of the analysis. This includes measurement of the
baseline equilibrium prices and quantities and the estimation of future
year sales. In addition, there may be uncertainty in how similar
engines and equipment were combined into smaller groups to facilitate
the analysis. There may also be uncertainty in the compliance cost
estimations.
    While variations in the above model parameters may affect the
distribution of social costs among stakeholders and the estimated
market impacts, they will not affect the total social costs of the
program. This is because the total social costs are directly related to
the total compliance costs. To explore the effects of key sources of
uncertainty on the distribution of social costs and on estimated price
and quantity impacts, we performed a sensitivity analysis in which we
examine the results of using alternative values for several model
parameters. The results of these analyses are contained in Appendix 7H
of the RIA prepared for this rule.
    Despite these uncertainties, we believe this economic impact
analysis provides a reasonable estimate of the expected market impacts
and social welfare costs of the new standards in future. Acknowledging
benefits omissions and uncertainties, we present a best estimate of the
social costs based on our interpretation of the best available
scientific literature and methods supported by EPA's Guidelines for
Preparing Economic Analyses and

the OAQPS Economic Analysis Resource Document.

VI. Benefits

    This section presents our analysis of the health and environmental
benefits that are estimated to occur as a result of the final
locomotive and marine engine standards throughout the period from
initial implementation through 2030. Nationwide, the engines that are
subject to the emission standards in this rule are a significant source
of mobile source air pollution. The standards will reduce exposure to
NOX and direct PM emissions and help avoid a range of
adverse health effects associated with ambient PM2.5 and
ozone levels. In addition, the standards will help reduce exposures to
diesel PM exhaust, various gaseous hydrocarbons and air toxics. As
described below, the reductions in PM and ozone from the standards are
expected to result in significant reductions in premature deaths and
other serious human health effects, as well as other important public
health and welfare effects.
    EPA typically quantifies and monetizes PM- and ozone-related
impacts in its regulatory impact analyses (RIAs) when possible. The RIA
for the proposal for this rulemaking only quantified benefits from PM;
in the current RIA we quantify and monetize the ozone-related health
and environmental impacts associated with the final rule. The science
underlying the analysis is based on the current ozone criteria
document.\182\ To estimate the incidence and monetary value of the
health outcomes associated with this final rule, we used health impact
functions based on published epidemiological studies, and valuation
functions derived from the economics literature.\183\ Key health
endpoints analyzed include premature mortality, hospital and emergency
room visits, school absences, and minor restricted activity days. The
analytic approach to characterizing uncertainty is consistent with the
analysis used in the RIA for the proposed O3 NAAQS.
---------------------------------------------------------------------------

    \182\ U.S. Environmental Protection Agency (2006) Air quality
criteria for ozone and related photochemical oxidants (second
external review draft) Research Triangle Park, NC: National Center
for Environmental Assessment; report no. EPA/600R-05/004aB-cB, 3v.
Available: http://cfpub.epa.gov/ncea/cfm/
recordisplay.cfm?deid=137307 [March 2006]
    \183\ Health impact functions measure the change in a health
endpoint of interest, such as hospital admissions, for a given
change in ambient ozone or PM concentration.
---------------------------------------------------------------------------

    The benefits modeling is based on peer-reviewed studies of air
quality and health and welfare effects associated with improvements in
air quality and peer-reviewed studies of the dollar values of those
public health and welfare effects. These methods are consistent with
benefits analyses performed for the recent analysis of the proposed
Ozone NAAQS and the final PM NAAQS analysis.184, 185 They
are described in detail in the RIAs prepared for those rules.
---------------------------------------------------------------------------

    \184\ U.S. Environmental Protection Agency. August 2007.
Proposed Regulatory Impact Analysis (RIA) for the Proposed National
Ambient Air Quality Standards for Ozone. Prepared by: Office of Air
and Radiation. Available at http://www.epa.gov/ttn/ecas/
ria.html#ria2007.
    \185\ U.S. Environmental Protection Agency. October 2006. Final
Regulatory Impact Analysis (RIA) for the Proposed National Ambient
Air Quality Standards for Particulate Matter. Prepared by: Office of
Air and Radiation. Available at http://www.epa.gov/ttn/ecas/
ria.html.
---------------------------------------------------------------------------

    The range of PM benefits associated with the final standards is
estimated based on risk reductions estimated using several sources of
PM-related mortality effect estimates. In order to provide an
indication of the sensitivity of the benefits estimates to alternative
assumptions about PM mortality risk reductions, in Chapter 6 of the RIA
we present a variety of benefits estimates based on two epidemiological
studies (including the ACS study and the Six Cities Study) and the
recent PM mortality expert elicitation.\186\ EPA intends to ask the
Science Advisory Board to provide additional advice as to which
scientific studies should be used in future RIAs to estimate the
benefits of reductions in PM-related premature mortality.
---------------------------------------------------------------------------

    \186\ Industrial Economics, Incorporated (IEc). 2006. Expanded
Expert Judgment Assessment of the Concentration-Response
Relationship Between PM2.5 Exposure and Mortality. Peer
Review Draft. Prepared for: Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, NC. August.
---------------------------------------------------------------------------

    The range of ozone benefits associated with the final standards is
also estimated based on risk reductions estimated using several sources
of ozone-related mortality effect estimates. There is considerable
uncertainty in the magnitude of the association between ozone and
premature mortality. This analysis presents four alternative estimates
for the association based upon different functions reported in the
scientific literature. We use the National Morbidity, Mortality and Air
Pollution Study (NMMAPS),\187\ which was used as the primary basis for
the risk analysis in the ozone Staff Paper \188\ and reviewed by the
Clean Air Science Advisory Committee (CASAC).\189\ We also use three
studies that synthesize ozone mortality data across a large number of
individual studies.190, 191, 192 Note that there are
uncertainties within each study that are not fully captured by this
range of estimates.
---------------------------------------------------------------------------

    \187\ Bell, M.L., et al. 2004. Ozone and short-term mortality in
95 US urban communities, 1987-2000. JAMA, 2004. 292(19): p. 2372-8.
    \188\ U.S. EPA (2007) Review of the National Ambient Air Quality
Standards for Ozone, Policy Assessment of Scientific and Technical
Information. OAQPS Staff Paper. EPA-452/R-07-003. This document is
available in Docket EPA-HQ-OAR-2003-0190. This document is available
electronically at: http:www.epa.gov/ttn/naaqs/standard/ozone/s_o3_
cr_sp.html.
    \189\ CASAC (2007). Clean Air Scientific Advisory Committee's
(CASAC) Review of the Agency's Final Ozone Staff Paper. EPA-CASAC-
07-002. March 26.
    \190\ Bell, M.L., F. Dominici, and J.M. Samet. A meta-analysis
of time-series studies of ozone and mortality with comparison to the
national morbidity, mortality, and air pollution study.
Epidemiology, 2005. 16(4): p. 436-45.
    \191\ Ito, K., S.F. De Leon, and M. Lippmann. Associations
between ozone and daily mortality: analysis and meta-analysis.
Epidemiology, 2005. 16(4): p. 446-57.
    \192\ Levy, J.I., S.M. Chemerynski, and J.A. Sarnat. 2005. Ozone
exposure and mortality: an empiric bayes metaregression analysis.
Epidemiology, 2005. 16(4): p. 458-68.
---------------------------------------------------------------------------

    Recognizing that additional research is necessary to clarify the
underlying mechanisms causing these effects, we also consider the
possibility that the observed associations between ozone and mortality
may not be causal in nature. EPA has requested advice from the National
Academy of Sciences on how best to quantify uncertainty in the
relationship between ozone exposure and premature mortality in the
context of quantifying benefits associated with ozone control
strategies.
    The range of total ozone- and PM-related benefits associated with
the final standards is presented in Table VI-1. We present total
benefits based on the PM-and ozone-related premature mortality function
used. The benefits ranges therefore reflect the addition of each
estimate of ozone-related premature mortality (each with its own row in
Table VI-1) to estimates of PM-related premature mortality, derived
from either the epidemiological literature or the expert elicitation.
The estimates in Table VI-1, and all monetized benefits presented in
this section, are in year 2006 dollars.

 Table VI-1.--Estimated 2030 Monetized PM- and Ozone-Related Health Benefits of the Final Locomotive and Marine
                                               Engine Standards a
----------------------------------------------------------------------------------------------------------------
                                                            Mean total benefits          Mean total benefits
    Premature ozone mortality          Reference           (billions, 2006$, 3%          (billions, 2006$, 7%
     function or assumption                                 discount rate) c d            discount rate) c d
----------------------------------------------------------------------------------------------------------------
         2030 Total Ozone and PM Benefits--PM Mortality Derived From American Cancer Society Analysis a
----------------------------------------------------------------------------------------------------------------
NMMAPS..........................  Bell et al., 2004..  $9.7........................  $8.9.
Meta-analysis...................  Bell et al., 2005..  $11.........................  $9.8.
                                  Ito et al., 2005...  $11.........................  $10.
                                  Levy et al., 2005..  $11.........................  $10.
Assumption that association is not causal............  $9.2........................  $8.4.
----------------------------------------------------------------------------------------------------------------
                2030 Total Ozone and PM Benefits--PM Mortality Derived From Expert Elicitation b
----------------------------------------------------------------------------------------------------------------
NMMAPS..........................  Bell et al., 2004..  $5.2 to $37.................  $4.8 to $34.
Meta-analysis...................  Bell et al., 2005..  $6.2 to $38.................  $5.8 to $35.
                                  Ito et al., 2005...  $6.7 to $39.................  $6.3 to $35.
                                  Levy et al., 2005..  $6.7 to $39.................  $6.4 to $35.
Assumption that association is not causal............  $4.7 to $37.................  $4.4 to $33.
----------------------------------------------------------------------------------------------------------------
Notes:
a Total includes ozone and PM2.5 benefits. Range was developed by adding the estimate from the ozone premature
  mortality function to the estimate of PM2.5-related premature mortality derived from the ACS study (Pope et
  al., 2002).
b Total includes ozone and PM2.5 benefits. Range was developed by adding the estimate from the ozone premature
  mortality function to both the lower and upper ends of the range of the PM2.5 premature mortality functions
  characterized in the expert elicitation. The effect estimates of five of the twelve experts included in the
  elicitation panel fall within the empirically-derived range provided by the ACS and Six-Cities studies. One of
  the experts fall below this range and six of the experts are above this range. Although the overall range
  across experts is summarized in this table, the full uncertainty in the estimates is reflected by the results
  for the full set of 12 experts. The twelve experts' judgments as to the likely mean effect estimate are not
  evenly distributed across the range illustrated by arraying the highest and lowest expert means.
c Note that total benefits presented here do not include a number of unquantified benefits categories. A
  detailed listing of unquantified health and welfare effects is provided in Table VI-6.
d Results reflect the use of both a 3 and 7 percent discount rate, as recommended by EPA's Guidelines for
  Preparing Economic Analyses and OMB Circular A-4. Results are rounded to two significant digits for ease of
  presentation and computation.

(1) Quantified Human Health and Environmental Effects of the Final
Standards
    In this section we discuss the ozone and PM2.5 health
and environmental impacts of the final standards. We discuss how these
impacts are monetized in the next section. It should be noted that the
emission control scenarios used in the air quality and benefits
modeling are slightly different than the final emission control
program. The differences reflect further refinements of the regulatory
program since we performed the air quality modeling for this rule.
Emissions and air quality modeling decisions are made early in the
analytical process. Chapter 3 of the RIA describes the changes in the
inputs and resulting emission inventories between the preliminary
assumptions used for the air quality modeling and the final emission
control scenario.

Estimated Ozone and PM Impacts

    To model the ozone and PM air quality benefits of this rule we used
the Community Multiscale Air Quality (CMAQ) model. CMAQ simulates the
numerous physical and chemical processes involved in the formation,
transport, and deposition of particulate matter. This model is commonly
used in regional applications to estimate the ozone and PM reductions
expected to occur from a given set of emissions controls. The
meteorological data input into CMAQ are developed by a separate model,
the Penn State University / National Center for Atmospheric Research
Mesoscale Model, known as MM5. The modeling domain covers the entire
48-State U.S., as modeled in proposed ozone NAAQS analysis.\193\ The
grid resolution for the modeling domain was 12 x 12 km.
---------------------------------------------------------------------------

    \193\ See the Regulatory Impact Analysis for the Proposed Ozone
NAAQS (EPA-452/R-07-008, July 2007). This document is available at
http://www.epa.gov/ttn/ecas/ria.html#ria2007.
---------------------------------------------------------------------------

    While this rule will reduce ozone levels generally and provide
national ozone-related health benefits, this is not always the case at
the local level. Due to the complex photochemistry of ozone production,
reductions in NOX emissions lead to both the formation and
destruction of ozone, depending on the relative quantities of
NOX, VOC, and ozone catalysts such as the OH and HO\2\
radicals. In areas dominated by fresh emissions of NOX,
ozone catalysts are removed via the production of nitric acid which
slows the ozone formation rate. Because NOX is generally
depleted more rapidly than VOC, this effect is usually short-lived and
the emitted NOX can lead to ozone formation later and
further downwind. The terms ``NOX disbenefits'' or ``ozone
disbenefits'' refer to the ozone increases that can result from
NOX emissions reductions in these localized areas. According
to the North American Research Strategy for Tropospheric Ozone (NARSTO)
Ozone Assessment, these disbenefits are generally limited to small
regions within specific urban cores and are surrounded by larger
regions in which NOX control is beneficial.\194\ For this
analysis, we observed two urban areas that, to some degree, experience
ozone disbenefits: Southern California and Chicago.
---------------------------------------------------------------------------

    \194\ The NARSTO Assessment Document synthesizes the scientific
understanding of ozone pollution, giving special consideration to
behavior on expanded scales over the North American continent,
encompassing Canada, the United States, and Mexico. Successive
drafts of this Assessment Document experienced progressive stages of
review by its authors and by outside peers, and transcripts were
recorded containing the review comments and the corresponding
actions. This included an external review by the NRC, the comments
of which were addressed and incorporated in the final draft. NARSTO,
2000. An Assessment of Tropospheric Ozone Pollution--A North
American Perspective. NARSTO Management Office (Envair), Pasco,
Washington. http://narsto.org/
---------------------------------------------------------------------------

    Marginal changes in ozone in these areas are much more dependent
upon baseline air quality conditions than PM due to nonlinearities
present in the chemistry of ozone formation. A marginal decrease in
NOX emissions modeled on its own in these areas, as

was done for this analysis, may yield a very different ambient ozone
concentration than if it were modeled in combination with other planned
or future controls. For example, recent California SIP modeling
indicates that with a combined program of national and local controls,
California can reach ozone attainment by 2024 through a mixture of
substantial NOX (and VOC) reductions.\195\ In areas prone to
ozone disbenefits, our ability to draw conclusions based on air quality
modeling conducted for the final rule is limited because the yet-to-
occur emission reductions in these areas are not accounted for in our
analytical approach. Within these regions, it is expected that the
additional NOX reductions from SIP-based controls would lead
to fewer ozone disbenefits from the marginal changes modeled here. More
detailed information about the air quality modeling conducted for this
analysis is included in the air quality modeling technical support
document (TSD), which is located in the docket for this rule.
---------------------------------------------------------------------------

    \195\ SCAQMD (2007). Final 2007 Air Quality Management Plan.
Available at: http://www.aqmd.gov/aqmp(07aqmp/index.html. Accessed
November 8, 2007.
---------------------------------------------------------------------------

    The modeled ambient air quality data serves as an input to the
Environmental Benefits Mapping and Analysis Program (BenMAP).\196\
BenMAP is a computer program developed by EPA that integrates a number
of the modeling elements used in previous Regulatory Impact Analyses
(e.g., interpolation functions, population projections, health impact
functions, valuation functions, analysis and pooling methods) to
translate modeled air concentration estimates into health effects
incidence estimates and monetized benefits estimates.
---------------------------------------------------------------------------

    \196\ Information on BenMAP, including downloads of the
software, can be found at http://www.epa.gov/air/benmap.
---------------------------------------------------------------------------

    The addition of ozone mortality to our health impacts analysis has
led to an increased focus on the issue of ozone disbenefits for two
related reasons: (1) The monetized value of ozone-related benefits, in
terms of ozone's contribution to total rule-related benefits, has
increased due to the inclusion of ozone mortality; and (2) The overall
ozone impacts of NOX reductions in certain geographic
regions of the U.S., when modeled on the margin, may be negative.
    Figure 1 shows the diurnal pattern of ozone concentrations in the
2030 baseline and post-control scenarios for a grid cell in Orange
County, CA during July. From this figure it is clear that the
disbenefits (points when the control case ozone levels are higher than
the baseline) are occurring primarily during nighttime hours when ozone
is generally low.
    This diurnal pattern means that the extent of the disbenefits is
not as large as one might have thought. Our conversion from using a 24-
hour metric to using the maximum 8-hour average metric in the ozone
mortality studies (see page 6-4 and the health impacts section)
excludes the nighttime hours when NOX-related disbenefits
are most likely to occur.
BILLING CODE 6560-50-P

[GRAPHIC] [TIFF OMITTED] TR06MY08.007

BILLING CODE 6560-50-C

    Table VI-2 presents the estimates of ozone- and PM-related health
impacts for the years 2020 and 2030, which are based on the modeled air
quality changes between a baseline, pre-control scenario and a post-
control scenario reflecting the final emission control strategy.
    The use of two sources of PM mortality reflects two different
sources of information about the impact of reductions in PM on
reduction in the risk of premature death, including both the published
epidemiology literature and an expert elicitation study conducted by
EPA in 2006. In 2030, based on the estimate provided by the ACS study,
we estimate that PM-related emission reductions related to the final
rule will result in 1,100 fewer premature fatalities annually. The
number of premature mortalities avoided increases to 2,600 when based
on the Six Cities study. When the range of expert opinion is used, we
estimate between 500 and 4,900 fewer premature mortalities in 2030. We
also estimate 680 fewer cases of chronic bronchitis, 2,500 fewer non-
fatal heart attacks, 870 fewer hospitalizations (for respiratory and
cardiovascular disease combined), 720,000 fewer days of restricted
activity due to respiratory illness and approximately 120,000 fewer
work-loss days. This analysis projects substantial health improvements
for children from reduced upper and lower respiratory illness, acute
bronchitis, and asthma attacks. These results are based on an assumed
cutpoint in the long-term mortality concentration-response functions at
10 [mu]g/m3, and an assumed cutpoint in the short-term
morbidity concentration-response functions at 10 [mu]g/m3.
The impact using four alternative cutpoints (10 [mu]g/m3,
7.5 [mu]g/m3, 12 [mu]g/m3, and 14 [mu]g/
m3) has on PM 2.5-related mortality incidence
estimation is presented in Chapter 6 of the RIA.
    For ozone, we estimate a range of between 54-250 fewer premature
mortalities as a result of the final rule in 2030, assuming that there
is a causal relationship between ozone exposure and mortality. We also
estimate that by 2030, the final rule will result in over 500 avoided
respiratory hospital admissions and emergency room visits, 290,000
fewer days of restricted activity due to respiratory illness, and
110,000 school loss days avoided.

 Table VI-2.--Estimated Reduction in Incidence of Adverse Health Effects
      Related to the Final Locomotive and Marine Engine Standards a
------------------------------------------------------------------------
                                            2020              2030
------------------------------------------------------------------------
Health Effect                        Mean Incidence Reduction
                                     (5th-95th percentile)
------------------------------------------------------------------------

----------------------------------------------------------------------------------------------------------------
PM-Related Endpoints............................................................................................
----------------------------------------------------------------------------------------------------------------
Premature Mortality--Derived from      Adult, age 30+--ACS      490 (190-790)..........  1,100 (440-1,800)
 Epidemiology Literature.               cohort study (Pope et
                                        al., 2002).
                                       Adult, age 25+--Six-     1,100 (610-1,600)......  2,600 (1,400-3,700)
                                        Cities study (Laden et
                                        al., 2006).
                                       Infant, age <1 year--    1 (1-2)................  2 (1-3)
                                        Woodruff et al. 1997.
Premature Mortality--Derived from      Adult, age 25+--Lower    220 (0-1,100)..........  500 (0-2,400)
 Expert Elicitation \b\.                Bound (Expert K).

                                       Adult, age 25+--Upper    2,200 (1,100-3,300)....  4,900 (2,500-7,500)
                                        Bound (Expert E).
----------------------------------------------------------------------------------------------------------------
Chronic bronchitis (adult, age 26 and over)...................  310 (56-560)...........  680 (130-1,200)
Acute myocardial infarction (adults, age 18 and older)........  1,000 (550-1,500)......  2,500 (1,300-3,600)
Hospital admissions--respiratory (all ages) \c\...............  120 (58-170)...........  270 (130-400)
Hospital admissions--cardiovascular (adults, age >18) \d\.....  240 (150-330)..........  600 (380-820)
Emergency room visits for asthma (age 18 years and younger)...  410 (240-580)..........  890 (520-1,300)
Acute bronchitis (children, age 8-12).........................  1,000 (-35-2,100)......  2,300 (-77-4,600)
Lower respiratory symptoms (children, age 7-14)...............  9,200 (4,400-14,000)...  20,000 (9,700-31,000)
Upper respiratory symptoms (asthmatic children, age 9-18).....  6,700 (2,100-11,000)...  15,000 (4,600-25,000)
Asthma exacerbation (asthmatic children, age 6-18)............  8,400 (920-24,000).....  19,000 (2,000-53,000)
Work loss days (adults, age 18-65)............................  59,000 (51,000-67,000).  120,000 (110,000-
                                                                                140,000)
Minor restricted-activity days (adults, age 18-65)............  350,000 (290,000-        720,000 (610,000-
                                                                 400,000).                830,000)
----------------------------------------------------------------------------------------------------------------
Ozone-Related Endpoints.........................................................................................
----------------------------------------------------------------------------------------------------------------
Premature Mortality, All ages--        Bell et al., 2004......  13 (-22-49)............  54 (-43-150)
 Derived from NMMAPS.
Premature Mortality, All ages--        Bell et al., 2005......  44 (-47-140)...........  180 (-69-420)
 Derived from Meta-analyses.
----------------------------------------------------------------------------------------------------------------
                                       Ito et al., 2005.......  60 (-34-150)...........  240 (-14-500)
                                       Levy et al., 2005......  62 (-14-140)...........  250 (44-450)
----------------------------------------------------------------------------------------------------------------
Premature Mortality--Assumption that association between ozone  0......................  0
 and mortality is not causal.
Hospital admissions--respiratory causes (children, under 2;     14 (-150-170)..........  260 (-350-890)
 adult, 65 and older) \e\.
Emergency room visit for asthma (all ages)....................  69 (-89-270)...........  250 (-190-830)
Minor restricted activity days (adults, age 18-65)............  84,000 (43,000-120,000)  290,000 (150,000-
                                                                                430,000)

School absence days...........................................  33,000 (-17,000-77,000)  110,000 (-15,000-
                                                                                240,000)
----------------------------------------------------------------------------------------------------------------
Notes:
(a) Incidence is rounded to two significant digits. PM and ozone estimates represent impacts from the final
  standards nationwide.
(b) Based on effect estimates derived from the full-scale expert elicitation assessing the uncertainty in the
  concentration-response function for PM-related premature mortality (IEc, 2006).\197\
The effect estimates of five of the twelve experts included in the elicitation panel fall within the empirically-
  derived range provided by the ACS and Six-Cities studies. One of the experts fall below this range and six of
  the experts are above this range. Although the overall range across experts is summarized in this table, the
  full uncertainty in the estimates is reflected by the results for the full set of 12 experts. The twelve
  experts' judgments as to the likely mean effect estimate are not evenly distributed across the range
  illustrated by arraying the highest and lowest expert means.
(c) Respiratory hospital admissions for PM include admissions for chronic obstructive pulmonary disease (COPD),
  pneumonia, and asthma.
(d) Cardiovascular hospital admissions for PM include total cardiovascular and subcategories for ischemic heart
  disease, dysrhythmias, and heart failure.
(e) Respiratory hospital admissions for ozone include admissions for all respiratory causes and subcategories
  for COPD and pneumonia.

(2) Monetized Benefits
    Table VI-3 presents the estimated monetary value of reductions in
the incidence of health and welfare effects. Tables VI-4 and VI-5
present the total annual PM- and ozone-related health benefits, which
are estimated to be between $9.2 and $11 billion in 2030, assuming a 3
percent discount rate, or between $8.4 and $10 billion, assuming a 7
percent discount rate, using the ACS-derived estimate of PM-related
premature mortality (Pope et al., 2002) and the range of ozone-related
premature mortality studies derived from the epidemiological
literature. The range of benefits expands to between $4.7 and $39
billion, assuming a 3 percent discount rate, when the estimate includes
the opinions of outside experts on PM and the risk of premature death,
or between $4.4 and $35 billion, assuming a 7 percent discount rate.
All monetized estimates are stated in 2006$. These estimates account
for growth in real gross domestic product (GDP) per capita between the
present and the years 2020 and 2030. As the tables indicate, total
benefits are driven primarily by the reduction in premature fatalities
each year.
---------------------------------------------------------------------------

    \197\Industrial Economics, Incorporated (IEc). 2006. Expanded
Expert Judgment Assessment of the Concentration-Response
Relationship Between PM 2.5 Exposure and Mortality. Peer
Review Draft. Prepared for: Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, NC. August.
---------------------------------------------------------------------------

    The above estimates of monetized benefits include only one example
of non-health related benefits. Changes in the ambient level of PM
2.5 are known to affect the level of visibility in much of
the U.S. Individuals value visibility both in the places they live and
work, in the places they travel to for recreational purposes, and at
sites of unique public value, such as at National Parks. For the final
standards, we present the recreational visibility benefits of
improvements in visibility at 86 Class I areas located throughout
California, the Southwest, and the Southeast. These estimated benefits
are approximately $170 million in 2020 and $400 million in 2030, as
shown in Table VI-3.
    Table VI-3, VI-4 and VI-5 do not include those additional health
and environmental benefits of the rule that we were unable to quantify
or monetize. These effects are additive to the estimate of total
benefits, and are related to two primary sources. First, there are many
human health and welfare effects associated with PM, ozone, and toxic
air pollutant reductions that remain unquantified because of current
limitations in the methods or available data. A full appreciation of
the overall economic consequences of the final standards requires
consideration of all benefits and costs projected to result from the
new standards, not just those benefits and costs which could be
expressed here in dollar terms. A list of the benefit categories that
could not be quantified or monetized in our benefit estimates are
provided in Table VI-6.

   Table VI-3.--Estimated Monetary Value in Reductions in Incidence of
                       Health and Welfare Effects
                     [In millions of 2006$] \a\ \b\
------------------------------------------------------------------------
                                            2020              2030
------------------------------------------------------------------------
PM2.5-Related Health Effect          Estimated Mean Value of Reductions
                                     (5th and 95th percentile)
------------------------------------------------------------------------

Premature Mortality--Derived from      Adult, age 30+--ACS
 Epidemiology Studies c d.              study (Pope et al.,
                                        2002)
                                       3% discount rate.......  $3,400 ($810-$7,000)...  $8,100 ($1,900-$16,000)
                                       7% discount rate.......  $3,100 ($730-$6,300)...  $7,300 ($1,700-$15,000)
                                       Adult, age 25+--Six-
                                        cities study (Laden et
                                        al., 2006)
                                       3% discount rate.......  $7,800 ($2,200-$15,000)  $18,000 ($5,100-
                                                                                $35,000)
                                       7% discount rate.......  $7,000 ($1,900-$13,000)  $17,000 ($4,600-
                                                                                $32,000)
                                       Infant Mortality, <1
                                        year--(Woodruff et al.
                                        1997)
                                       3% discount rate.......  $7 ($2-$14)............  $13 ($3.5-$26)
                                       7% discount rate.......  $7 ($2-$13)............  $12 ($3.1-$23)
Premature mortality--Derived from      Adult, age 25+--Lower
 Expert Elicitation c d e.              bound (Expert K)
                                       3% discount rate.......  $1,500 ($0-$7,700).....  $3,600 ($0-$18,000)
                                       7% discount rate.......  $1,400 ($0-7,000)......  $3,200 ($0-$16,000)
                                       Adult, age 25+--Upper
                                        bound (Expert E)
                                       3% discount rate.......  $15,000 ($4,100-         $36,000 ($9,500-
                                                                 $30,000).                $70,000)

                                       7% discount rate.......  $14,000 ($3,700-         $32,000 ($8,600-
                                                                 $27,000).                $63,000)
----------------------------------------------------------------------------------------------------------------
Chronic bronchitis (adults, 26 and over)......................  $150 ($12-$500)........  $340 ($28-$1,100)
Non-fatal acute myocardial infarctions:
    3% discount rate..........................................  $110 ($34-$230)........  $260 ($74-$550)
    7% discount rate..........................................  $110 ($31-$230)........  $250 ($69-$540)
Hospital admissions for respiratory causes....................  $2.1 ($1.0-$3.2).......  $4.9 ($2.4-$7.3)
Hospital admissions for cardiovascular causes.................  $6.7 ($4.2-$9.2).......  $17 ($11-$23)
Emergency room visits for asthma..............................  $0.15 ($0.08-$0.23)....  $0.33 ($0.18-$0.49)
Acute bronchitis (children, age 8-12).........................  $0.08 ($0-$0.2)........  $0.17 ($0-$0.42)
Lower respiratory symptoms (children, 7-14)...................  $0.18 ($0.07-$0.33)....  $0.40 ($0.15-$0.73)
Upper respiratory symptoms (asthma, 9-11).....................  $0.21 ($0.06-$0.46)....  $0.46 ($0.13-$1.0)
Asthma exacerbations..........................................  $0.45 ($0.05-$1.3).....  $1.0 ($0.11-$2.9)
Work loss days................................................  $8.9 ($7.7-$10)........  $18 ($16-$21)
Minor restricted-activity days (MRADs)........................  $22 ($13-$32)..........  $46 ($27-$66)
Recreational Visibility, 86 Class I areas.....................  $170 (na)\f\...........  $400 (na)
----------------------------------------------------------------------------------------------------------------
Ozone-related Health Effect
----------------------------------------------------------------------------------------------------------------
Premature Mortality, All ages--        Bell et al., 2004......  $100 (-$170-$420)......  $440 (-$340-$1,400)
 Derived from NMMAPS.
Premature Mortality, All ages--        Bell et al., 2005......  $340 (-$360-$1,200)....  $1,400 (-$550-$3,900)
 Derived from Meta-analyses.
                                       Ito et al., 2005.......  $460 (-$260-$1,400)....  $1,900 (-$120-$4,700)
                                       Levy et al., 2005......  $480 (-$110-$1,300)....  $2,000 ($280-$4,400)
----------------------------------------------------------------------------------------------------------------
Premature Mortality--Assumption that association between ozone  $0.....................  $0
 and mortality is not causal.
Hospital admissions--Respiratory causes (children, under 2;     -$0.54 (-$4.6-$3.3)....  $2.7 (-$11-$17)
 adult, 65 and older).
Emergency room visit for asthma (all ages)....................  $0.03 (-$0.03-$0.1)....  $0.09 (-$0.07-$0.30)
Minor restricted activity days (adults, age 18-65)............  $2.5 (-$4.0-$9.9)......  $8.8 (-$7.8-$28)
School absence days...........................................  $2.9 (-$1.5-$6.8)......  $11 (-$1.3-$21)
Worker Productivity...........................................  $0.53 (na) \f\.........  $2.9 (na) \f\
----------------------------------------------------------------------------------------------------------------
Notes:
(a) Monetary benefits are rounded to two significant digits for ease of presentation and computation. PM and
  ozone benefits are nationwide.
(b) Monetary benefits adjusted to account for growth in real GDP per capita between 1990 and the analysis year
  (2020 or 2030)
(c) Valuation assumes discounting over the SAB recommended 20 year segmented lag structure. Results reflect the
  use of 3 percent and 7 percent discount rates consistent with EPA and OMB guidelines for preparing economic
  analyses (EPA, 2000; OMB, 2003).
(d) The valuation of adult premature mortality, derived either from the epidemiology literature or the expert
  elicitation, is not additive. Rather, the valuations represent a range of possible mortality benefits.
(e) Based on effect estimates derived from the full-scale expert elicitation assessing the uncertainty in the
  concentration-response function for PM-related premature mortality (IEc, 2006).\198\ The effect estimates of
  five of the twelve experts included in the elicitation panel fall within the empirically-derived range
  provided by the ACS and Six-Cities studies. One of the experts fall below this range and six of the experts
  are above this range. Although the overall range across experts is summarized in this table, the full
  uncertainty in the estimates is reflected by the results for the full set of 12 experts. The twelve experts'
  judgments as to the likely mean effect estimate are not evenly distributed across the range illustrated by
  arraying the highest and lowest expert means.
(f) We are unable at this time to characterize the uncertainty in the estimate of benefits of worker
  productivity and improvements in visibility at Class I areas. As such, we treat these benefits as fixed and
  add them to all percentiles of the health benefits distribution.

---------------------------------------------------------------------------

    \198\ Industrial Economics, Incorporated (IEc). 2006. Expanded
Expert Judgment Assessment of the Concentration-Response
Relationship between PM2.5 Exposure and Mortality. Peer
Review Draft. Prepared for: Office of Air Quality Planning and
Standards, U.S. Environmental Protection Agency, Research Triangle
Park, NC. August.

                         Table VI-4.--Total Monetized Benefits of the Final Locomotive and Marine Engine Rule--3% Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 Total Ozone and PM Benefits (Billions, 2006$)--PM Mortality Derived From the ACS Study
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                        2020                                                                         2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Ozone mortality
      Ozone mortality function              Reference          Mean total benefits          function              Reference         Mean total benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMMAPS.............................  Bell et al., 2004.....  $4.0..................  NMMAPS...............  Bell et al., 2004....  $9.7
Meta-analysis......................  Bell et al., 2005.....  $4.2..................  Meta-analysis........  Bell et al., 2005....  $11
                                     Ito et al., 2005......  $4.4..................  .....................  Ito et al., 2005.....  $11
                                     Levy et al., 2005.....  $4.4..................  .....................  Levy et al., 2005....  $11
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Assumption that association is not causal           $3.9..................    Assumption that association is not causal   $9.2
--------------------------------------------------------------------------------------------------------------------------------------------------------

                Total Ozone and PM Benefits (Billions, 2006$)--PM Mortality Derived From Expert Elicitation (Lowest and Highest Estimate)
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                        2020                                                                         2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Ozone mortality
      Ozone mortality function              Reference          Mean total benefits          function              Reference         Mean total benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMMAPS.............................  Bell et al., 2004.....  $2.1 to $16...........  NMMAPS...............  Bell et al., 2004....  $5.2 to $37
Meta-analysis......................  Bell et al., 2005.....  $2.4 to $16...........  Meta-analysis........  Bell et al., 2005....  $6.2 to $38
                                     Ito et al., 2005......  $2.5 to $16...........  .....................  Ito et al., 2005.....  $6.7 to $39
                                     Levy et al., 2005.....  $2.5 to $16...........  .....................  Levy et al., 2005....  $6.7 to $39
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Assumption that association is not causal           $2.0 to $16...........    Assumption that association is not causal   $4.7 to $37
--------------------------------------------------------------------------------------------------------------------------------------------------------

                         Table VI-5.--Total Monetized Benefits of the Final Locomotive and Marine Engine Rule--7% Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                   Total Ozone and PM Benefits (Billions, 2006$)--PM Mortality Derived From Epidemiology Studies (ACS and Six Cities)
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                        2020                                                                         2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Ozone mortality
      Ozone mortality function              Reference          Mean total benefits          function              Reference         Mean total benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMMAPS.............................  Bell et al., 2004.....  $3.7..................  NMMAPS...............  Bell et al., 2004....  $8.9
Meta-analysis......................  Bell et al., 2005.....  $3.9..................  Meta-analysis........  Bell et al., 2005....  9.8
                                     Ito et al., 2005......  $4.0..................  .....................  Ito et al., 2005.....  $10
                                     Levy et al., 2005.....  $4.0..................  .....................  Levy et al., 2005....  $10
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Assumption that association is not causal           $3.6..................    Assumption that association is not causal   $8.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

                Total Ozone and PM Benefits (Billions, 2006$)--PM Mortality Derived From Expert Elicitation (Lowest and Highest Estimate)
---------------------------------------------------------------------------------------------------------------------------------------------------------
                                        2020                                                                         2030
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Ozone mortality
      Ozone mortality function              Reference          Mean total benefits          function              Reference         Mean total benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
NMMAPS.............................  Bell et al., 2004.....  $2.0 to $14...........  NMMAPS...............  Bell et al., 2004....  $4.8 to $34
Meta-analysis......................  Bell et al., 2005.....  $2.2 to $15...........  Meta-analysis........  Bell et al., 2005....  $5.8 to $35
                                     Ito et al., 2005......  $2.3 to $15...........  .....................  Ito et al., 2005.....  $6.3 to $35
                                     Levy et al., 2005.....  $2.3 to $15...........  .....................  Levy et al., 2005....  $6.4 to $35
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Assumption that association is not causal           $1.9 to $14...........    Assumption that association is not causal   $4.4 to $33
--------------------------------------------------------------------------------------------------------------------------------------------------------

  Table VI-6.--Unquantified and Non-Monetized Potential Effects of the
              Final Locomotive and Marine Engine Standards
------------------------------------------------------------------------
                                             Effects Not Included in
           Pollutant/Effects                  Analysis--Changes in:
------------------------------------------------------------------------
Ozone Health \a\.......................  Chronic respiratory damage \b\
                                         Premature aging of the lungs
                                          \b\
                                         Non-asthma respiratory
                                          emergency room visits
                                         Exposure to UVb (+/-) \e\
Ozone Welfare..........................  Yields for
                                         --commercial forests
                                         --some fruits and vegetables
                                         --non-commercial crops
                                         Damage to urban ornamental
                                          plants
                                         Impacts on recreational demand
                                          from damaged forest aesthetics
                                         Ecosystem functions
                                         Exposure to UVb (+/-) \e\
PM Health \c\..........................  Premature mortality--short term
                                          exposures \d\
                                         Low birth weight
                                         Pulmonary function
                                         Chronic respiratory diseases
                                          other than chronic bronchitis
                                         Non-asthma respiratory
                                          emergency room visits
                                         Exposure to UVb (+/-) \e\
PM Welfare.............................  Residential and recreational
                                          visibility in non-Class I
                                          areas
                                         Soiling and materials damage
                                         Damage to ecosystem functions
                                         Exposure to UVb (+/-) \e\
Nitrogen and Sulfate Deposition Welfare  Commercial forests due to
                                          acidic sulfate and nitrate
                                          deposition
                                         Commercial freshwater fishing
                                          due to acidic deposition
                                         Recreation in terrestrial
                                          ecosystems due to acidic
                                          deposition
                                         Existence values for currently
                                          healthy ecosystems

                                         Commercial fishing,
                                          agriculture, and forests due
                                          to nitrogen deposition
                                         Recreation in estuarine
                                          ecosystems due to nitrogen
                                          deposition
                                         Ecosystem functions
                                         Passive fertilization
CO Health..............................  Behavioral effects
HC/Toxics Health \f\...................  Cancer (benzene, 1,3-butadiene,
                                          formaldehyde, acetaldehyde)
                                         Anemia (benzene)
                                         Disruption of production of
                                          blood components (benzene)
                                         Reduction in the number of
                                          blood platelets (benzene)
                                         Excessive bone marrow formation
                                          (benzene)
                                         Depression of lymphocyte counts
                                          (benzene)
                                         Reproductive and developmental
                                          effects (1,3-butadiene)
                                         Irritation of eyes and mucus
                                          membranes (formaldehyde)
                                         Respiratory irritation
                                          (formaldehyde)
                                         Asthma attacks in asthmatics
                                          (formaldehyde)
                                         Asthma-like symptoms in non-
                                          asthmatics (formaldehyde)
                                         Irritation of the eyes, skin,
                                          and respiratory tract
                                          (acetaldehyde)
                                         Upper respiratory tract
                                          irritation and congestion
                                          (acrolein)
HC/Toxics Welfare......................  Direct toxic effects to animals
                                         Bioaccumulation in the food
                                          chain
                                         Damage to ecosystem function
                                         Odor
------------------------------------------------------------------------
Notes:
(a) The public health impact of biological responses such as increased
  airway responsiveness to stimuli, inflammation in the lung, acute
  inflammation and respiratory cell damage, and increased susceptibility
  to respiratory infection are likely partially represented by our
  quantified endpoints.
(b) The public health impact of effects such as chronic respiratory
  damage and premature aging of the lungs may be partially represented
  by quantified endpoints such as hospital admissions or premature
  mortality, but a number of other related health impacts, such as
  doctor visits and decreased athletic performance, remain unquantified.

(c) In addition to primary economic endpoints, there are a number of
  biological responses that have been associated with PM health effects
  including morphological changes and altered host defense mechanisms.
  The public health impact of these biological responses may be partly
  represented by our quantified endpoints.
(d) While some of the effects of short-term exposures are likely to be
  captured in the estimates, there may be premature mortality due to
  short-term exposure to PM not captured in the cohort studies used in
  this analysis. However, the PM mortality results derived from the
  expert elicitation do take into account premature mortality effects of
  short term exposures.
(e) May result in benefits or disbenefits.
(f) Many of the key hydrocarbons related to this rule are also hazardous
  air pollutants listed in the Clean Air Act.

(3) What Are the Significant Limitations of the Benefit-Cost Analysis?
    Every benefit-cost analysis examining the potential effects of a
change in environmental protection requirements is limited to some
extent by data gaps, limitations in model capabilities (such as
geographic coverage), and uncertainties in the underlying scientific
and economic studies used to configure the benefit and cost models.
Limitations of the scientific literature often result in the inability
to estimate quantitative changes in health and environmental effects,
such as potential increases in premature mortality associated with
increased exposure to carbon monoxide. Deficiencies in the economics
literature often result in the inability to assign economic values even
to those health and environmental outcomes which can be quantified.
These general uncertainties in the underlying scientific and economics
literature, which can lead to valuations that are higher or lower, are
discussed in detail in the RIA and its supporting references. Key
uncertainties that have a bearing on the results of the benefit-cost
analysis of the final standards include the following:
     The exclusion of potentially significant and unquantified
benefit categories (such as health, odor, and ecological benefits of
reduction in air toxics, ozone, and PM);
     Errors in measurement and projection for variables such as
population growth;
     Uncertainties in the estimation of future year emissions
inventories and air quality;
     Uncertainty in the estimated relationships of health and
welfare effects to changes in pollutant concentrations including the
shape of the C-R function, the size of the effect estimates, and the
relative toxicity of the many components of the PM mixture;
     Uncertainties in exposure estimation; and
     Uncertainties associated with the effect of potential
future actions to limit emissions.
    As Table VI-3 indicates, total benefits are driven primarily by the
reduction in premature mortalities each year. Some key assumptions
underlying the premature mortality estimates include the following,
which may also contribute to uncertainty:
     Inhalation of fine particles is causally associated with
premature death at concentrations near those experienced by most
Americans on a daily basis. Although biological mechanisms for this
effect have not yet been completely established, the weight of the
available epidemiological, toxicological, and experimental evidence
supports an assumption of causality. The impacts of including a
probabilistic representation of causality were explored in the expert
elicitation-based results of the recently published PM NAAQS RIA.
Consistent with that analysis, we discuss the implications of these
results in the RIA for the final standards.
     All fine particles, regardless of their chemical
composition, are equally potent in causing premature mortality. This is
an important assumption, because PM produced via transported precursors
emitted from locomotive and marine engines may differ significantly
from PM precursors released from

electric generating units and other industrial sources. However, no
clear scientific grounds exist for supporting differential effects
estimates by particle type.
     The C-R function for fine particles is approximately
linear within the range of ambient concentrations under consideration
(above the assumed threshold of 10 [mu]g/m3). Thus, the
estimates include health benefits from reducing fine particles in areas
with varied concentrations of PM, including both regions that may be in
attainment with PM2.5 standards and those that are at risk
of not meeting the standards.
     There is considerable uncertainty in the magnitude of the
association between ozone and premature mortality. The range of ozone
benefits associated with the final standards is estimated based on the
risk of several sources of ozone-related mortality effect estimates.
Recognizing that additional research is necessary to clarify the
underlying mechanisms causing these effects, we also consider the
possibility that the observed associations between ozone and mortality
may not be causal in nature. EPA has requested advice from the National
Academy of Sciences on how best to quantify uncertainty in the
relationship between ozone exposure and premature mortality in the
context of quantifying benefits.
    Despite these uncertainties, we believe this benefit-cost analysis
provides a conservative estimate of the estimated economic benefits of
the final standards in future years because of the exclusion of
potentially significant benefit categories. Acknowledging benefits
omissions and uncertainties, we present a best estimate of the total
benefits based on our interpretation of the best available scientific
literature and methods supported by EPA's technical peer review panel,
the Science Advisory Board's Health Effects Subcommittee (SAB-HES). The
National Academies of Science (NRC, 2002) also reviewed EPA's
methodology for analyzing the health benefits of measures taken to
reduce air pollution. EPA addressed many of these comments in the
analysis of the final PM NAAQS.199 200 The analysis of the
final standards incorporates this most recent work to the extent
possible.
---------------------------------------------------------------------------

    \199\ National Research Council (NRC). 2002. Estimating the
Public Health Benefits of Proposed Air Pollution Regulations. The
National Academies Press: Washington, DC.
    \200\ U.S. Environmental Protection Agency. October 2006. Final
Regulatory Impact Analysis (RIA) for the Proposed National Ambient
Air Quality Standards for Particulate Matter. Prepared by: Office of
Air and Radiation. Available at http://www.epa.gov/ttn/ecas/
ria.html.
---------------------------------------------------------------------------

(4) Benefit-Cost Analysis
    In estimating the net benefits of the final standards, the
appropriate cost measure is ``social costs.'' Social costs represent
the welfare costs of a rule to society. These costs do not consider
transfer payments (such as taxes) that are simply redistributions of
wealth. Table VI-7 contains the estimates of monetized benefits and
estimated social welfare costs for the final rule and each of the final
control programs. The annual social welfare costs of all provisions of
this final rule are described more fully in Section VII of this
preamble.
    The results in Table VI-7 suggest that the 2020 monetized benefits
of the final standards are greater than the expected social welfare
costs. Specifically, the annual benefits of the total program will
range between $3.9 to $8.8 billion annually in 2020 using a three
percent discount rate, or between $3.6 to $8.0 billion assuming a 7
percent discount rate, compared to estimated social costs of
approximately $330 million in that same year. These benefits are
expected to increase to between $9.2 and $22 billion annually in 2030
using a three percent discount rate, or between $8.4 and $20 billion
assuming a 7 percent discount rate, while the social costs are
estimated to be approximately $740 million. Though there are a number
of health and environmental effects associated with the final standards
that we are unable to quantify or monetize (see Table VI-6), the
benefits of the final standards far outweigh the projected costs. When
we examine the benefit-to-cost comparison for the rule standards
separately, we also find that the benefits of the specific engine
standards far outweigh their projected costs.
---------------------------------------------------------------------------

    \201\ U.S. Environmental Protection Agency, 2000. Guidelines for
Preparing Economic Analyses. www.yosemite1.epa.gov/ee/epa/eed/hsf/
pages/Guideline.html.
    \202\ Office of Management and Budget, The Executive Office of
the President, 2003. Circular A-4. http://www.whitehouse.gov/omb/
circulars.

   Table VI-7.--Summary of Annual Benefits, Costs, and Net Benefits of the Final Locomotive and Marine Engine
                                          Standards (Millions, 2006$) a
----------------------------------------------------------------------------------------------------------------
              Description                  2020 (Millions of 2006  dollars)    2020 (Millions of 2006  dollars)
----------------------------------------------------------------------------------------------------------------
Estimated Social Costs: b
    Locomotive:                           $200..............................   $460.
    Marine:                               $140..............................   $280.
Total Social Costs.....................   $330..............................   $740.
Estimated Health Benefits of the Final
 Standards: c d e f
    Locomotive:
        3 percent discount rate........   $2,000 to $4,400..................   $4,300 to $11,000.
        7 percent discount rate........   $1,900 to $4,000..................   $4,000 to $10,000.
    Marine:
        3 percent discount rate........   $1,900 to $4,400..................   $4,900 to $11,000.
        7 percent discount rate........   $1,700 to $4,000..................   $4,400 to $10,000
Total Benefits:
    3 percent discount rate............  $3,900 to $8,800...................  $9,200 to $22,000.
    7 percent discount rate............  $3,600 to $8,000...................  $8,400 to $20,000.
Annual Net Benefits (Total Benefits--
 Total Costs):
    3 percent discount rate............   $3,600 to $8,500..................   $8,500 to $21,000
    7 percent discount rate............   $3,300 to $7,700..................   $7,700 to $19,000
----------------------------------------------------------------------------------------------------------------
Notes:
a All estimates represent annualized benefits and costs anticipated for the years 2020 and 2030. Totals may not
  sum due to rounding.
b The calculation of annual costs does not require amortization of costs over time. Therefore, the estimates of
  annual cost do not include a discount rate or rate of return assumption (see Chapter 7 of the RIA). In Section
  V, however, we do use both a 3 percent and 7 percent social discount rate to calculate the net present value
  of total social costs consistent with EPA and OMB guidelines for preparing economic analyses.

c Total includes ozone and PM2.5 benefits. Range was developed by adding the estimate from the ozone premature
  mortality function, including an assumption that the association is not causal, to both estimates of PM2.5-
  related premature mortality derived from the ACS (Pope et al., 2002) and Six-Cities (Laden et al., 2006)
  studies, respectively.
d Annual benefits analysis results reflect the use of a 3 percent and 7 percent discount rate in the valuation
  of premature mortality and nonfatal myocardial infarctions, consistent with EPA and OMB guidelines for
  preparing economic analyses (US EPA, 2000 and OMB, 2003).201 202
e Valuation of premature mortality based on long-term PM exposure assumes discounting over the SAB recommended
  20-year segmented lag structure described in the Regulatory Impact Analysis for the Final Clean Air Interstate
  Rule (March, 2005).
f Not all possible benefits or disbenefits are quantified and monetized in this analysis. Potential benefit
  categories that have not been quantified and monetized are listed in Table VI-6.

VII. Alternative Program Options

    The program we are finalizing today represents a broad and
comprehensive approach to reducing emissions from locomotive and marine
diesel engines. As we developed this final rule, we considered a number
of alternatives with regard to the scope and timing of the standards.
After carefully evaluating these alternatives, we believe that our new
program provides the best opportunity for achieving timely and
substantial emission reductions from locomotive and marine diesel
engines. Our final program balances a number of key factors: (1)
Achieving significant emissions reductions as early as possible, (2)
providing appropriate lead time to develop and apply advanced control
technologies, and (3) coordinating requirements in this final rule with
existing highway and nonroad diesel engine programs. The alternative
scenarios described here were constructed to further evaluate each
individual aspect of our program, and have enabled us to achieve the
appropriate balance between these key factors. This section presents a
summary of our analysis of these alternative control scenarios. For a
more detailed explanation of our analysis, including a year by year
breakout of expected costs and emission reductions, please refer to
Chapter 8 of the Regulatory Impact Analysis (RIA) prepared for this
final rulemaking.

A. Summary of Alternatives

(1) Alternative 1: Proposed Program From the Notice of Proposed
Rulemaking
    Alternative 1 examines the differences between the program we
proposed and the program we are finalizing in this rulemaking. The
proposal consisted of a three-part program. First, it proposed more
stringent standards for existing locomotives that would apply when they
were remanufactured. These standards would go into effect as soon as a
certified remanufacture system became available. Second, we proposed a
set of near-term emission standards, referred to as Tier 3, for freshly
manufactured locomotives and marine engines that reflected the
application of technologies to reduce engine-out PM and NOX.
Third, we proposed longer-term standards, referred to as Tier 4, that
utilized high-efficiency catalytic aftertreatment technology enabled by
the availability of ULSD. These standards would phase in over time,
beginning in 2014. In addition, we proposed eliminating emissions from
unnecessary locomotive idling.
    The final rule makes a number of important changes to the program
originally set out in the proposal which we believe will yield
significantly greater overall NOX and PM reductions,
especially in the critical early years of the program. In particular,
the adoption of standards for remanufactured marine engines and a 2-
year pull-ahead of the Tier 4 NOX requirements for line-haul
locomotives and for 2000-3700 kW marine engines provide greater near-
term reductions than the proposal. The final rule also expands the
remanufactured locomotive program to include Class II railroads.
    As a stand-alone program, through the year 2040 Alternative 1
provides PM2.5 reductions of 286,000 tons NPV 3%, or 121,000
tons NPV 7%, and NOX reductions of 8,140,000 tons NPV 3%, or
3,320,000 tons NPV 7%. The cost of this alternative through 2040 is
estimated to be $8,760 million NPV 3%, or $3,900 million NPV 7%. In
2020, this alternative provides monetized health and welfare benefits
of $3.3 billion at a 3% discount rate, or $3.0 billion at a 7% discount
rate, and $8.8 billion in 2030 at a 3% discount rate, or $8.0 billion
at a 7% discount rate. Through 2040 our final program provides
additional PM2.5 reductions of 22,000 tons NPV 3%, or 13,000
tons NPV 7%, and additional NOX reductions of 620,000 tons
NPV 3%, or 390,000 tons NPV 7%. Through 2040, the additional costs of
our final program will be $650 million NPV 3%, or $410 million NPV 7%.
The additional PM2.5 monetized health and welfare benefits
in 2020 of our final program are $0.6 billion at a 3% discount rate, or
$0.6 billion at a 7% discount rate, while in 2030 the additional
monetized health and welfare benefits total $0.4 billion at a 3%
discount rate, or $0.4 billion at a 7% discount rate.
(2) Alternative 2: Exclusion of Remanufacturing Standards
    Alternative 2 examines the potential impacts of the locomotive and
marine remanufacturing programs by excluding them from the analysis
(see sections III.B.(1)(a)(i), III.B.(1)(b), and III.B.(2)(b) of this
Preamble for more details on the remanufacturing standards). As a
stand-alone program, Alternative 2 provides PM2.5 reductions
of 240,000 tons NPV 3%, or 96,000 tons NPV 7%, and NOX
reductions of 7,640,000 tons NPV 3%, or 3,030,000 tons NPV 7%, through
the year 2040. The cost of this alternative through 2040 is estimated
to be $8,080 million NPV 3%, or $3,430 million NPV 7%. In 2020, this
alternative provides monetized health and welfare benefits of $2.5
billion at a 3% discount rate, or $2.3 billion at a 7% discount rate,
and $8.2 billion in 2030 at a 3% discount rate, or $7.5 billion at a 7%
discount rate. Compared to the final program, our analysis shows that
by 2040 eliminating the locomotive and marine remanufacture programs
lessen PM2.5 emission reductions by 68,000 tons NPV 3%, or
38,000 tons NPV 7%, and NOX emission reductions by nearly
1,120,000 tons NPV 3%, or 680,000 tons NPV 7%. The cost of this
alternative, as compared to our final program through 2040, is
estimated to be $1,330 million less NPV 3%, or $880 million less NPV
7%. Compared to our final program, eliminating the locomotive and
marine remanufacture programs reduce the monetized health and welfare
benefits by $1.4 billion at a 3% discount rate, or $1.3 billion at a 7%
discount rate in 2020, and $1.0 billion at a 3% discount rate, or $0.9
billion at a 7% discount rate in 2030.
(3) Alternative 3: Elimination of Tier 3
    Alternative 3 eliminates the Tier 3 standards, while retaining the
Tier 4 standards and the combined marine and locomotive remanufacturing
requirements. As a stand-alone program, alternative 3 provides
PM2.5 reductions of 237,000 tons NPV 3%, or 100,000 tons NPV
7%, and NOX reductions of 8,360,000 tons NPV 3%, or
3,530,000 tons NPV 7%, through the year 2040. The cost of this
alternative through 2040 is estimated to be $9,240 million NPV 3%, or
$4,160 million NPV 7%. In 2020, this alternative provides monetized
health and welfare benefits of $2.8 billion at a 3% discount rate, or
$2.6 billion at a 7% discount rate, and $7.8

billion in 2030 at a 3% discount rate, or $7.1 billion at a 7% discount
rate. Comparing this alternative to our final program allows us to
consider the value of the Tier 3 standards on their own merits.
Specifically, this alternative would lessen PM2.5 emissions
reductions by nearly 71,000 tons NPV 3%, or 34,000 tons NPV 7%, and
NOX emissions by 400,000 tons NPV 3%, or 180,000 tons NPV
7%. The cost of this alternative, as compared to our final program
through 2040, is estimated to be $170 million less at NPV 3%, or $150
million less at NPV 7%. The monetized health and welfare benefits that
would be forgone by eliminating Tier 3 are $1.1 billion at a 3%
discount rate, or $1.0 billion at a 7% discount rate in 2020, and $1.4
billion at a 3% discount rate, or $1.3 billion at a 7% discount rate in
2030. Although the remanufacturing programs provide substantial
benefits in the near-term, as evidenced by the analysis of Alternative
2, it is clear that Tier 3 also plays an important role in providing
both near- and long-term emission reductions.
(4) Alternative 4: Tier 4 Exclusively in 2013
    Alternative 4 most closely reflects the program described in our
Advanced Notice of Proposed Rulemaking, whereby we would set new
aftertreatment based emission standards as soon as possible. In this
case, we believe the earliest that such standards could logically be
started is in 2013 (three months after the introduction of 15 ppm ULSD
in this sector). Alternative 4 eliminates our Tier 3 standards along
with the locomotive and marine remanufacturing standards, while pulling
the Tier 4 standards ahead to 2013 for all portions of the Tier 4
program. We are unable to make an accurate estimate of the cost for
such an approach since we do not believe it to be technically feasible
at this time. However, we have reported a cost in the summary table
reflecting the same cost estimation method we used for our primary case
and have denoted unestimated additional costs as `C'. These additional
unestimated costs would include costs for additional engine test cells,
engineering staff, and engineering facilities necessary to introduce
Tier 4 early. As a stand-alone program, alternative 4 provides
PM2.5 reductions of 249,000 tons NPV 3%, or 101,000 tons NPV
7%, and NOX reductions of 8,320,000 tons NPV 3%, or
3,420,000 tons NPV 7% through the year 2040. In 2020, this alternative
provides monetized health and welfare benefits of $3.0 billion at a 3%
discount rate, or $2.8 billion at a 7% discount rate, and $8.4 billion
in 2030 at a 3% discount rate, or $7.6 billion at a 7% discount rate.
Through 2040, this alternative, as compared to our final program, would
decrease PM2.5 reductions by more than 59,000 NPV 3% tons,
or 33,000 tons NPV 7%, and NOX emissions by 440,000 tons NPV
3%, or 290,000 tons NPV 7%. Compared to our final program, the
reduction in monetized health and welfare benefits of this alternative
would be $0.9 billion at a 3% discount rate, or $0.8 billion at a 7%
discount rate in 2020, while in 2030 the reductions in monetized
benefits would be $0.8 billion at a 3% discount rate, or $0.8 billion
at a 7% discount rate.

B. Summary of Results

    A summary of the four alternatives is contained in Table VII-1 and
Table VII-2 below. The PM and NOX emissions reductions from
the alternatives described here compare favorably--in terms of cost
effectiveness--to other mobile source control programs that have been
or will soon be implemented. These alternatives show that each element
of our comprehensive program: the locomotive and marine remanufacturing
programs, the near-term Tier 3 emission standards, and the long-term
Tier 4 emission standards, represent valuable emission control programs
on their own. The collective program results in the greatest emission
reductions we believe to be possible giving consideration to all of the
elements described in this final rule. Overall, our final program will
provide very large reductions in PM, NOX, and toxic
compounds in both the near-term and the long-term. These reductions
will be achieved in a manner that: (1) Leverages technology
developments in other diesel sectors, (2) aligns well with the clean
diesel fuel requirements already being implemented, and (3) provides
the lead time needed to deal with the significant engineering design
workload that is involved.

                                              Table VII-1.--Summary of Inventory and Costs at NPV 3% and 7%