\736\ We estimate that the ORVR requirements in both the
proposal and Alternative 1 would result in a reduction of
approximately 0.3 million (calendar year 2027) to 4.8 million
(calendar year 2045) gallons of gasoline, representing roughly 0.1
percent of gasoline consumption from impacted vehicles.
---------------------------------------------------------------------------

3. Repair Cost Impacts Associated With Longer Warranty and Useful Life
Periods
    The extended warranty and useful life requirements being proposed
would have an impact on emission-related repair costs incurred by truck
owners. Researchers have noted the relationships among quality,
reliability, and warranty for a variety of goods.\737\ Wu,\738\ for
instance, examines how analyzing warranty data can provide ``early
warnings'' on product problems that can then be used for design
modifications. Guajardo et al. describe one of the motives for
warranties to be ``incentives for the seller to improve product
quality;'' specifically for light-duty vehicles, they find that buyers
consider warranties to substitute for product quality, and to
complement service quality.\739\ Murthy and Jack, for new products, and
Saidi-Mehrabad et al. for second-hand products, consider the role of
warranties in improving a buyer's confidence in quality of the
good.740 741
---------------------------------------------------------------------------

    \737\ Thomas, M., and S. Rao (1999). ``Warranty Economic
Decision Models: A Summary and Some Suggested Directions for Future
Research.'' Operations Research 47(6):807-820.
    \738\ Wu, S (2012). Warranty Data Analysis: A Review. Quality
and Reliability Engineering International 28: 795-805.
    \739\ Guajardo, J., M Cohen, and S. Netessine (2016). ``Service
Competition and Product Quality in the U.S. Automobile Industry.''
Management Science 62(7):1860-1877. The other rationales are
protection for consumers against failures, provision of product
quality information to consumers, and a means to distinguish
consumers according to their risk preferences.
    \740\ Murthy, D., and N. Jack (2009). ``Warranty and
Maintenance,'' Chapter 18 in Handbook of Maintenance Management and
Engineering, Mohamed Ben-Daya et al., editors. London: Springer.
    \741\ Saidi-Mehrabad, M., R. Noorossana, and M. Shafiee (2010).
``Modeling and analysis of effective ways for improving the
reliability of second-hand products sold with warranty.''
International Journal of Advanced Manufacturing Technology 46: 253-
265.
---------------------------------------------------------------------------

    On the one hand, we would expect owner-incurred emission repair
costs to decrease due to the proposed program because the longer
emission warranty requirements would result in more repair costs
covered by the OEMs. Further, we would expect improved serviceability
in an effort by OEMs to decrease repair costs they would incur. We
would also expect that the longer useful life periods in proposed
Options 1 or 2 would result in more durable parts to ensure regulatory
compliance over the longer timeframe. On the other hand, we would also
expect that the more costly emission control systems required by the
proposed Options 1 or 2 would result in higher repair costs which could
increase OEM costs during the warranty period and owner costs outside
the warranty period. As further explained below, while the longer
warranty period could potentially increase repair costs incurred by
OEMs, such costs would fall under our estimated warranty cost increases
as part of our indirect cost estimates described in Section V.A.2.
    As discussed in Section V.A.2, we have estimated increased OEM
indirect costs associated with increased warranty liability (i.e.,
longer warranty periods), and for more durable parts resulting from the
longer useful life periods. These costs are accounted for via increased
warranty costs scaled by the longer warranty period, and increased
research and development (R&D) costs scaled by the longer useful life
period. We also included additional aftertreatment costs in the direct
manufacturing costs to address the increased useful life requirements
(e.g., larger catalyst volume; see Chapters 2 and 4 of the draft RIA
for detailed discussions). We estimate that these efforts would help to
reduce emission repair costs during the emission warranty and
regulatory useful life periods, and possibly beyond.
    To estimate impacts on emission repair costs, we began with an
emission repair cost curve.\742\ We describe in detail how we generated
the emission repair cost curve and the data from which it was derived
in Chapter 7 of the draft RIA. Figure V-1 shows, conceptually, the
nature of the emission repair cost curve (the solid line) and the
maintenance and repair cost curve--all maintenance and repair, not just
emission repair--from which it was derived (the dotted line). The
emission repair cost curve is lower than the curve for all maintenance
and repairs since not all repair is emission-related.\743\ We have not
estimated any impact on maintenance costs associated with the longer
warranty and useful life periods in proposed Options 1 and 2, and we
have estimated that just over 10 percent of repair costs are emission-
related repairs impacted by the proposed action (see Chapter 7 of the
draft RIA for this derivation, which is based on the industry
whitepaper).\744\ From the generic emission repair cost curve in Figure
V-1, we generated a unique emission repair cost curve for each type of
vehicle (combination long-haul, single unit short-haul, etc.),
regulatory class (medium heavy-duty, heavy heavy-duty, etc.) and fuel
type (diesel, gasoline, etc.).
---------------------------------------------------------------------------

    \742\ See ``Mitigating Rising Maintenance & Repair Costs for
Class-8 Truck Fleets, Effective Data & Strategies to Leverage Newer
Trucks to Reduce M&R Costs,'' Fleet Advantage Whitepaper Series,
2018.
    \743\ Maintenance includes oil changes, tire replacements, brake
replacements, etc., i.e., items that are expected to wear out and
require replacement. Repair is the fixing of broken parts that are
not necessarily expected to break. Repairs might include replacing a
cracked particulate filter or a broken mirror or door handle.
    \744\ See ``Mitigating Rising Maintenance & Repair Costs for
Class-8 Truck Fleets, Effective Data & Strategies to Leverage Newer
Trucks to Reduce M&R Costs,'' Fleet Advantage Whitepaper Series,
2018.
---------------------------------------------------------------------------

    As noted, Figure V-1 shows conceptually the relationship between
repair costs and the estimated age at

which the warranty period is reached for any given vehicle, where
repair costs are relatively low during the warranty period and repair
cost rates begin to increase every year beyond the warranty period.
Similarly, at the estimated age at which the useful life period ends,
maintenance and repair cost rates increase yet again until, in the
figure, costs flatten out. The ``estimated ages'' mentioned are meant
to reflect not the required warranty and/or useful life ages, but
rather the age at which the warranty (or useful life) is reached based
on the average miles traveled per year by a given vehicle type relative
to the required warranty/useful life ages and mileages. For example, a
current long-haul Class-8 truck has a required warranty of 5 years or
100,000 miles, whichever occurs first. Since the mileage accumulation
of such a vehicle is over 100,000 miles in the first year, the
``estimated age'' at which the warranty is reached would be 1
year.\745\
---------------------------------------------------------------------------

    \745\ See ``Estimated Warranty and Useful Life Ages Used in
Estimating Emission Repair Costs'' memorandum from Todd Sherwood to
docket EPA-HQ-OAR-2019-0055.
---------------------------------------------------------------------------

    The flattening of costs per mile shown in Figure V-1 is due to a
lack of data beyond seven years of operation and, as such, we have
chosen to maintain a flat repair cost rate for subsequent years.\746\
We considered estimating increases in maintenance and repair cost per
mile beyond the useful life, but decided that increases in the cost per
mile rate applied to both the baseline case and the proposal would have
no net impact.
---------------------------------------------------------------------------

    \746\ The only data source we are aware of is this industry
whitepaper, which includes costs through seven years of operation;
``Mitigating Rising Maintenance & Repair Costs for Class-8 Truck
Fleets, Effective Data & Strategies to Leverage Newer Trucks to
Reduce M&R Costs,'' Fleet Advantage Whitepaper Series, 2018.
[GRAPHIC] [TIFF OMITTED] TP28MR22.003

    Figure V-2 illustrates how the generic cost curve was adjusted to
estimate the emission repair cost per mile for specific vehicles. To do
this, we first estimated the vehicle age (in years) at which the
warranty and useful life periods would end based on the typical miles
driven per year over the first seven years of operation.\747\ The
vehicle ages at which the warranty and useful life periods are
estimated to end are then applied to the generic emission repair cost
curve to generate a unique emission repair cost curve for each vehicle
depending on the unique warranty/useful life provisions and mileage
accumulation rates for that vehicle. Figure V-2 shows, conceptually,
the baseline emission repair cost curve (the solid line in Figure V-1
but now the dotted line, note the new y-axis scale) and the emission
repair cost curve under the proposal (the solid line, not shown in
Figure V-1). In this conceptual example, the warranty would expire in
year 5 instead of year 1. Further, the age at which the useful life has
been reached would be year 9 instead of year 6. Lastly, the emission
repair cost curve would reach a higher cost/mile level during the
warranty period, at the end of useful life, and then beyond the useful
life. This is due to the more costly emission controls that we estimate
would be fitted to engines as a result of the proposed requirements (as
discussed in Section V.A).
---------------------------------------------------------------------------

    \747\ We have chosen 7 years for this estimate as a fair
snapshot on costs; including fewer years would result in a higher
average number of miles/year given that mileage accumulation rates
tend to decrease year-over-year and, therefore, including more years
would tend to result in a lower average mileage accumulation rate.
We chose seven years as the fair, middle ground.

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

[GRAPHIC] [TIFF OMITTED] TP28MR22.004

    The emission repair cost/mile curves shown in Figure V-2 would
result in an incremental cost/mile that is negative for the operating
years 2 through 7. During the first year, the incremental cost/mile
would be slightly higher due to the marginal technology costs
associated with the hypothetical proposed standard. From years 1
through 7, the cost/mile would be lower on increment due to the longer
warranty and useful life periods and the efforts we are estimating
manufacturers would undertake to improve durability to avoid warranty
costs after sale (efforts paid for in upfront indirect costs as
described in Section V.A.2). In the years of operation beyond the
useful life, emission repair costs/mile would then be expected to be
marginally higher, again due to the marginal technology costs
associated with the hypothetical proposed standard. Importantly, in
those later years of operation, miles driven per year tend to decrease
year-over-year, which serves to offset somewhat the effect of the
higher estimated cost/mile value on a cost/year basis. In the end, for
most vehicle types (i.e., MOVES sourcetypes) our analysis shows that,
in general, the net emission repair costs over the first 10 years of
operation would decrease (see Section 7.2.3 of the draft RIA).
    We believe that it is reasonable to estimate that the emission
repair costs would remain flat, as shown in Figure V-2, during the
longer warranty periods being proposed under either option because of
the increased warranty and research and development costs we are
estimating in our technology costs. Note that we are also estimating
that the emission repair costs beyond the useful life would increase at
a slightly higher rate based on the source data which suggested such a
trend. Again, cost/mile rates are estimated to flatten beyond the
useful life since the source data included operating costs through only
seven years. It is possible that cost/mile rates continue to increase
with age and that those would increase at similar rates in both the
baseline case and under the proposed options. If true, the net effect
would be the same as estimated here and the net effect is of primary
concern in our analysis.
    As noted, our methodology and estimated impacts are presented in
more detail in Chapter 7 of the draft RIA. We request comment on all
aspects of our approach. In particular, we request comment on how we
have used the data from which our repair cost curve was derived and how
we have adjusted that curve to represent costs for all of the vehicle
types under consideration. Further, we request data that would allow us
to build upon our approach or change our approach if a better one
exists.

C. Program Costs

    Using the cost elements outlined in Sections V.A and V.B, we have
estimated the costs associated with the proposed criteria pollutant
standards; costs associated with proposed Options 1 and 2 are shown in
Table V-16 and Table V-17, respectively. Costs are presented in more
detail in Chapter 7 of the draft RIA. As noted earlier, costs are
presented in 2017 dollars in undiscounted annual values along with net
present values at both 3 and 7 percent discount rates with values
discounted to the 2027 calendar year.
    We are not including an analysis of the costs of the Alternative
(described in Sections III and IV) because we currently do not have
sufficient information to conclude that the Alternative standards would
be feasible in the MY 2027 timeframe.
    As shown in these tables, and more clearly in Figure V-3, our
analysis shows that the proposed Options 1 and 2 would result in
similar costs in the early years, but proposed Option 1 would result in
lower costs the longer term, despite higher costs in the mid-term
years, compared to proposed Option 2.

[GRAPHIC] [TIFF OMITTED] TP28MR22.005

[GRAPHIC] [TIFF OMITTED] TP28MR22.006

[GRAPHIC] [TIFF OMITTED] TP28MR22.007

VI. Estimated Emission Reductions From the Proposed Program

    The proposed criteria pollutant emission control program described
in Sections III and IV is expected to reduce emissions from highway
heavy-duty engines in several ways.\748\ We project reduced tailpipe
emissions of NOX as a result of the proposed emission
standards for heavy-duty diesel engines. The combination of the
proposed low-load duty-cycle standard and off-cycle standards for
diesel engines would help to ensure that the reduction in tailpipe
emissions is achieved in-use, not only under high-speed, on-highway
conditions, but under low-load and idle conditions as well. We also
project reduced tailpipe emissions of NOX, CO, PM, and VOCs
from heavy-duty gasoline engines, particularly under cold-start and
high-load operating conditions. The proposed longer emission warranty
and regulatory useful life requirements for heavy-duty diesel and
gasoline engines would help to maintain the expected emission
reductions for all pollutants for a longer portion of the operational
life of the engine.\749\ The proposed onboard refueling vapor recovery
requirements for heavy-duty gasoline engines would reduce VOCs and
associated air toxics. See draft RIA Chapter 5, Appendix 5.3 for
details on projected emission reductions of each pollutant.
---------------------------------------------------------------------------

    \748\ This section describes estimated emission reductions from
the proposed criteria pollutant program described in Sections III
and IV. Discussion on estimated emission impacts from the proposed
revisions to the HD GHG Phase 2 rule are addressed in Section XI.
    \749\ See Section IV.A for more discussion on the operational
life of the engine relative to useful life.
---------------------------------------------------------------------------

    Section VI.A provides an overview of the methods used to estimate
emission reductions from our proposed program. All of the projected
emission reductions from the proposed Option 1 or 2 are outlined in
Section VI.B, with more details provided in the draft RIA Chapter 5.
Section VI.C presents projected emission reductions from Option 1 or 2
by engine operations and processes (e.g., medium-to-high load or low-
load engine operations). Section VI.D presents results of the
Alternative that we analyzed. Section VI.E discusses how heavy-duty
electric vehicles could affect the baseline emission inventory in the
final rule and requests comment on this topic.
    As discussed in Section I and detailed in Sections III and IV,
proposed Option 2 is generally less stringent than MY 2031 standards in
proposed Option 1 due to the combination of higher numeric levels of
the NOX emission standards and shorter useful life periods
in proposed Option 2. The Alternative is more stringent than the Option
1 MY 2031 standards due to the combination of shorter lead time, lower
numeric levels of the NOX and HC emission standards, and
longer useful life periods in the Alternative. The proposed Options 1
and 2 standards generally contain values that represent a lower and
upper bound of the combined range of options that we are considering
for lead time, duty-cycle test standards, off-cycle standards, emission
warranty, and useful life requirements. We would need additional
information to be able to project that the Alternative is feasible in
the MY 2027 timeframe and thereby consider adopting it in the final
rule (see Section III for details).
    The proposed Options 1 and 2 thus generally bracket the overall
range of options that EPA is currently considering and the range of
estimated emission inventory impacts that we currently project (see
Section I.G for discussion on potentially finalizing a program
different from our proposal based on additional data that we collect
and stakeholder input on this proposal).

A. Emission Inventory Methodology

    To estimate the emission reductions from the proposed program as a
whole, we updated EPA's Motor Vehicle Emission Simulator (MOVES) model
to include several changes related

specifically to heavy-duty vehicle emissions and activity (e.g., heavy-
duty engine start and running exhaust emission rates, heavy-duty
vehicle start and idle activity). These model updates are summarized in
Chapter 5.2 of the draft RIA and described in detail in several peer-
reviewed technical reports that are available in the docket for this
proposed rulemaking.\750\
---------------------------------------------------------------------------

    \750\ Sonntag, Darrell. Memorandum to docket EPA-HQ-OAR-2019-
0055: ``Updates to MOVES for Emissions Analysis of the HD 2027
NPRM``. May 2021
---------------------------------------------------------------------------

    The draft RIA also provides a detailed description of our
methodology to develop model inputs for the proposed and alternative
control scenarios (see draft RIA Chapter 5.3.2 and 5.3.3). The model
inputs for the proposed and alternative control scenarios capture
emission reductions outlined in the introduction to this section.\751\
---------------------------------------------------------------------------

    \751\ Note that our modeling does not include emission
reductions from the proposed useful life and warranty requirements
for gasoline and natural gas vehicles. These proposed control
requirements are expected to further decrease heavy-duty engine
emissions. See draft RIA Chapter 5 for details on anticipated
emission impacts and our expectations for modeling emission impacts
in the final rule where feasible based on data and modeling
capabilities.
---------------------------------------------------------------------------

    We invite stakeholders to comment and provide additional
information on our approaches to use MOVES for modeling the proposed
duty-cycle and off-cycle standards, as well as longer warranty and
useful life periods; commenters may also provide input on other data or
modeling approaches that EPA should consider when estimating emission
inventory impacts in the final rulemaking.

B. Estimated Emission Reductions From the Proposed Criteria Pollutant
Program

    As discussed in Sections I.G and III, EPA is co-proposing two
regulatory options with different numeric levels of emission standards,
as well as different regulatory useful life and emissions warranty
periods.\752\ Our estimates of the emission impacts that would result
from the proposed Options 1 and 2 in calendar years 2030, 2040, and
2045 are presented below in Table VI-1 Table VI-2, respectively. As
shown in Table VI-1, we estimate that the criteria pollutant program in
proposed Option 1 would reduce NOX emissions from highway
heavy-duty vehicles by 61 percent nationwide in 2045. We also estimate
a 26 percent reduction in primary exhaust PM2.5 from highway
heavy-duty vehicles. VOC emissions from heavy-duty vehicles would be 21
percent lower. Emissions of CO from heavy-duty vehicles are estimated
to decrease by 17 percent. Emission impacts of the proposed Option 1 on
other pollutants, including air toxics, range from an estimated
reduction of about 27 percent for benzene to no change in 1,3-
butadiene.\753\ As shown in Table VI-2, proposed Option 2 is estimated
to reduce heavy-duty vehicle NOX emissions by 47 percent in
2045; the estimated reductions in other pollutants are similar to
reductions from proposed Option 1. Draft RIA Chapter 5.5.3 includes
additional details on the emission reductions by vehicle fuel type;
Chapter 5.5.5 provides our estimates of criteria pollutant emissions
reductions for calendar years 2027 through 2045.
---------------------------------------------------------------------------

    \752\ As summarized in Section I and detailed in Sections III
and IV, the proposed Option 1 would be implemented in two steps,
while the proposed Option 2 would be implemented in a single step
starting in MY 2027. The numeric values of the proposed Option 2
standards are less stringent than the proposed Option 1 MY 2031
standards, with useful life and warranty mileages similar to those
in proposed Option 1 MY 2027 standards.
    \753\ No change is observed in 1,3-butadiene emissions in the
control scenarios because 1,3-butadiene emissions do not contribute
to VOC emissions from MY 2027 and later diesel running and start
emissions, heavy-duty gasoline running emissions, and gasoline
refueling emissions in the version of MOVES updated for use in this
rulemaking, referred to as MOVES CTI NPRM.
---------------------------------------------------------------------------

    As the proposed standards are implemented, emission reductions are
expected to increase over time as the fleet turns over to new,
compliant engines.\754\ Under either proposed Option 1 or 2, we
estimate no change in CO2 emissions, based on data in our feasibility
and cost analyses of the proposed criteria pollutant program (see
Section III for more discussion).\755\ As shown in Tables VI-1 and
Table VI-2, we estimate a less than 1% reduction in CH4 emissions from
heavy-duty vehicles.\756\ On the whole, we expect either proposed
Option 1 or 2 to have only minor impacts on GHG emissions; however, we
request comment on the potential for GHG emission impacts from proposed
Option 1 or 2.
---------------------------------------------------------------------------

    \754\ We do not currently expect the proposed rule to
incentivize additional market shifts to electrification; however, if
such shifts were to occur then additional emission reductions beyond
those projected in Section VI.B could occur.
    \755\ This estimate includes the assumption that vehicle sales
will not change in response to the proposed rule. See Section X for
further discussion on vehicle sales impacts of this proposed rule.
See Section XI for discussion on estimated CO2 emission
impacts of the proposed revisions to the Heavy Duty GHG Phase 2
rulemaking.
    \756\ The CH4 emissions reductions would be due to lower total
hydrocarbon emission rates from the tailpipe of heavy-duty gasoline
vehicles (see draft RIA Chapter 5.2.2 for more detail).

Table VI-1--Annual Emission Reductions From Heavy-Duty Vehicles in Calendar Years (CY) 2030, 2040, and 2045--Proposed Option 1 Emissions Relative to the
                                                          Heavy-Duty Vehicle Emissions Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      CY2030                          CY2040                          CY2045
                        Pollutant                        -----------------------------------------------------------------------------------------------
                                                          US short  tons   %  Reduction   US short  tons   %  Reduction   US short  tons   %  Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOX.....................................................         153,608            16.4         491,318            55.9         558,780            60.5
VOC.....................................................           4,681             5.0          15,199            18.7          17,975            21.0
Primary Exhaust PM2.5...................................             408             3.4           1,741            23.7           2,005            26.4
CO......................................................          51,154             3.2         241,974            15.2         289,835            17.2
1,3-Butadiene...........................................               0             0.0               0             0.0               0             0.0
Acetaldehyde............................................               8             0.4              46             2.5              52             2.7
Benzene.................................................              42             4.1             181            23.1             221            26.8
Formaldehyde............................................              12             0.5              63             4.1              75             4.6
Methane (CH4)...........................................             166             0.2             881             0.7           1,025             0.7
Naphthalene.............................................             1.3             0.9             6.5            14.3               8            16.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

Table VI-2--Annual Emission Reductions From Heavy-Duty Vehicles in Calendar Years (CY) 2030, 2040, and 2045--Proposed Option 2 Emissions Relative to the
                                                          Heavy-Duty Vehicle Emissions Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      CY 2030                         CY 2040                         CY 2045
                        Pollutant                        -----------------------------------------------------------------------------------------------
                                                          US short  tons   %  Reduction   US short  tons   %  Reduction   US short  tons   %  Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOX.....................................................         140,691            15.0         383,350            43.6         437,869            47.4
VOC.....................................................           4,645             5.0          14,623            18.0          17,283            20.2
Primary Exhaust PM2.5...................................             408             3.4           1,600            21.8           1,856            24.4
CO......................................................          51,154             3.2         216,413            13.6         262,574            15.6
1,3-Butadiene...........................................               0             0.0               0             0.0               0             0.0
Acetaldehyde............................................               8             0.4              32             1.8              37             1.9
Benzene.................................................              41             4.0             167            21.3             202            24.5
Formaldehyde............................................              12             0.5              51             3.3              61             3.7
Methane (CH4)...........................................             160             0.1             654             0.5             770             0.6
Naphthalene.............................................             1.2             0.8             5.7            12.6               7            14.6
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Estimated Emission Reductions by Engine Operations and Processes

    Looking more closely at the NOX emission inventory from
highway heavy-duty vehicles, our analysis shows that the proposed
standards would reduce emissions across several engine operations and
processes, with the greatest reductions attributable to medium-to-high
load engine operations, low-load engine operations, and age effects
(i.e., deterioration and mal-maintenance of emission controls, as well
as tampering). As noted in Section I, without the proposed program,
these processes are projected to contribute the most to the heavy-duty
NOX emission inventory in 2045. Table VI-3 compares
NOX emissions in 2045 from different engine operations and
processes with and without the proposed Options 1 and 2 standards.
Additional details on our analysis of NOX emissions by
process are included in the draft RIA Chapter 5.5.4.

                                           Table VI-3--Heavy-Duty NO Emission Reductions by Process in CY2045
                                                                        [US tons]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Emission              Tons reduced               Percent reduction from            Emission inventory
                                             inventory   --------------------------------          baseline  (%)            contribution with  proposed
                                           contribution                                  --------------------------------          options  (%)
       Engine operation or process            without        Proposed        Proposed                                    -------------------------------
                                             proposed        Option 1        Option 2        Proposed        Proposed        Proposed        Proposed
                                           options  (%)                                      Option 1        Option 2        Option 1        Option 2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Medium- to High-Load....................              36         286,661         243,887              81              73              17              18
Low-Load................................              28         183,971         149,913              70              57              21              23
Aging...................................              24          82,340          23,389              38              11              38              40
Extended Idle & APU.....................               2          11,717          10,340              66              58               2               2
Starts..................................               4          12,091          10,341              31              26               8               6
Historical Fleet (MY 2010 to 2026)......               6               0               0               0               0              14              11
--------------------------------------------------------------------------------------------------------------------------------------------------------

D. Estimated Emission Reductions From the Alternative

    As discussed in Section III, in addition to the proposed program,
EPA analyzed an alternative set of emission standards, with different
regulatory useful life and emissions warranty periods.\757\ Our
estimates of the emission impacts that would result from the
Alternative are presented below in Table VI-4. The Alternative is
estimated to reduce heavy-duty vehicle NOX emissions by 61
percent in 2045; estimated reductions in other pollutants are generally
higher in the Alternative compared to the proposed Options 1 or 2.
---------------------------------------------------------------------------

    \757\ Under the Alternative, the numeric values of the
NOX and HC standards are lower than the proposed Option 1
MY 2031 standards; the useful life and warranty mileages are also
longer than those in proposed Option 1 for MY 2031.

  Table VI-4--Annual Emission Reductions From Heavy-Duty Vehicles in Calendar Years 2030, 2040, and 2045--``the Alternative'' Emissions Relative to the
                                                          Heavy-Duty Vehicle Emissions Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      CY 2030                         CY 2040                         CY 2045
                        Pollutant                        -----------------------------------------------------------------------------------------------
                                                          US short  tons   %  Reduction   US short  tons   %  Reduction   US short  tons   %  Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
NOX.....................................................         155,954            16.7         500,367            56.9         566,100            61.3
VOC.....................................................           4,716             5.0          15,312            18.9          18,069            21.1
Primary Exhaust PM2.5...................................             408             3.4           1,822            24.8           2,090            27.5
CO......................................................          51,154             3.2         247,475            15.5         295,561            17.5
1,3-Butadiene...........................................               0             0.0               0             0.0               0             0.0

Acetaldehyde............................................               9             0.4              49             2.7              56             2.9
Benzene.................................................              44             4.3             183            23.3             222            26.9
Formaldehyde............................................              13             0.6              66             4.3              78             4.7
Methane (CH4)...........................................             172             0.2             934             0.7           1,076             0.8
Naphthalene.............................................             1.4             0.9             6.6            14.6             8.0            16.9
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. Evaluating Emission Impacts of Electric Vehicles in the Proposed
Emission Inventory Baseline

    As described in Section III, we relied on next-generation emission
control technologies for CI and SI engines in our technology
feasibility assessment for the proposed standards. Since BEV and FCEV
technologies were not included in our feasibility assessment, and
because these technologies currently make up less than 1 percent of the
current heavy-duty market based on current EPA certification data, we
did not include BEV and FCEV technologies in our emission inventory
analysis described in Sections VI.B through VI.D, and detailed in draft
RIA Chapter 5.\758\ However, we have conducted a sensitivity analysis
of BEV and FCEV tailpipe emission impacts based on potential market
adoption (see draft RIA Chapter 1.4 and Chapter 5.5.5). Results of our
analysis show that we would not expect a significant change in the
percent emission reductions from the proposed criteria pollutant
program if BEVs were to make up a larger percentage of heavy-duty
vehicles in the 2045 baseline emission inventory (i.e., 28 percent of
medium heavy-duty and 10 percent of heavy heavy-duty vehicle sales in
MY 2045).759 760
---------------------------------------------------------------------------

    \758\ In MY 2019 manufacturers certified approximately 350
heavy-duty BEVs, based on production volume reports submitted to the
agency. This is out of nearly 615,000 heavy-duty diesel vehicles
certified in MY 2019, which represents approximately 0.06 percent of
the market. See Sections IV and XI, and RIA Chapter 1.4 for more
details on current and potential future production volumes of BEVs
and FCEVs.
    \759\ See Preamble Section XI for discussion on our current
expectations for how additional electrification of the heavy-duty
market could impact the emission reductions expected from the HD GHG
Phase 2 program.
    \760\ We used proposed Option 1 to conduct this sensitivity
analysis but expect similar results with proposed Option 2.
---------------------------------------------------------------------------

    We recognize that it is important to properly define the baseline
emission inventory for the final rule (i.e., heavy-duty emissions
without emission controls from this proposed EPA rule as finalized),
which could include projected market penetration rates of BEVs and
FCEVs. Specifically, in the final rule we may account for the recent
Advanced Clean Truck (ACT) rulemaking in California,\761\ and the
Memorandum of Understanding (MOU) signed by 15 states.\762\
---------------------------------------------------------------------------

    \761\ As noted in Section I.D, EPA is reviewing a waiver request
under CAA section 209(b) from California for the ACT rule; we may
consider including some analyses that account for BEVs and FCEVs
produced to meet the CARB ACT requirements in the final EPA rule.
    \762\ ``Multi-state Medium- and Heavy-Duty Zero Emission Vehicle
Memorandum of Understanding'' July 13, 2020. Available online at:
https://www.nescaum.org/topics/zero-emission-vehicles.
---------------------------------------------------------------------------

    As discussed in the draft RIA Chapter <IP_ADDRESS>, the CA ACT requires
manufacturers to sell a certain percentage of zero emission heavy-duty
vehicles (BEVs or FCEVs) for each model year, starting in MY
2024.763 764 765 The sales requirements vary by vehicle
class, but start at 5 to 9 percent of total MY 2024 heavy-duty vehicle
sales in California and increase up to 40 to 75 percent of sales for MY
2035 and beyond.\766\ The 15-state MOU affirms a commitment to strive
towards at least 30 percent of new heavy-duty vehicle sales being zero
emission vehicles by 2030 and to reach 100 percent of new sales by
2050. While the MOU does not impose any binding requirements, it may
result in higher sales of BEVs and FCEVs in participating states.
---------------------------------------------------------------------------

    \763\ California Air Resources Board. ``Notice of Decision:
Advanced Clean Truck Regulation.'' June 2020. Available online at:
https://ww3.arb.ca.gov/regact/2019/act2019/nod.pdf.
    Additional discussion on the CARB ACT is also included in
Preamble XI.
    \764\ Buysse and Sharpe. (July 20, 2020) ``California's Advanced
Clean Trucks regulation: Sales requirements for zero-emission heavy-
duty trucks``, available online at: https://theicct.org/publications/california-hdv-ev-update-jul2020 (last accessed August
11, 2021).
    \765\ California is also developing an Advanced Clean Fleets
regulation that would require fleets that are well suited for
electrification to transition to BEVs or FCEVs where feasible. For
more information, see: California Air Resources Board. ``Advanced
Clean Fleets Fact Sheet.'' August 2021. Available at: https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-fleets-fact-sheet.
    \766\ CARB. ``Appendix A Proposed Regulation Order'' Advanced
Clean Truck Regulation.'' May 2020. Available online at: https://ww3.arb.ca.gov/regact/2019/act2019/30dayatta.pdf (accessed July 24,
2020).
---------------------------------------------------------------------------

    EPA solicits comment on whether and how to reflect the expectations
for higher sales volumes of BEVs and FCEVs in California and other
states in the baseline emission inventory for the final rule (i.e.,
without this EPA rule as finalized). EPA will consider public comments
and other relevant information in deciding to how to reflect future
sales volumes of BEVs and FCEVs in the emission inventory analysis of
the final rule.

VII. Air Quality Impacts of the Proposed Program

    As discussed in Section VI, we expect the standards in the proposed
Options 1 and 2 to result in meaningful reductions in emissions of
NOX, VOC, CO and PM2.5. In this section, we
summarize the results of our air quality modeling based on the
projected emission reductions from the proposed Option 1
standards.\767\ The ``base'' case represents 2016 air quality. The
``reference'' scenario represents projected 2045 air quality without
the proposed rule and the ``control'' scenario represents projected
2045 emissions with proposed Option 1. Air quality modeling was done
for the future year 2045 when the program would be fully implemented
and when most of the regulated fleet would have turned over.
---------------------------------------------------------------------------

    \767\ Due to resource constraints, we only conducted air quality
modeling for the proposed Option 1. As noted in Chapter 5.4 of the
draft RIA, while we refer to this modeling as for the proposed
Option 1, there are differences between the proposed Option 1
standards, emission warranty, and useful life provisions presented
in Sections III and IV of this preamble and those included in the
control scenario modeled for the air quality analysis.
---------------------------------------------------------------------------

    The air quality modeling predicts decreases in ambient
concentrations of air pollutants in 2045 due to the proposed Option 1,
including significant improvements in ozone concentrations. Ambient
PM2.5, NO2 and CO concentrations are also

predicted to improve in 2045 as a result of the proposed Option 1. The
proposed Option 1 is expected to result in improvements in nitrogen
deposition and visibility but is predicted to have relatively little
impact on ambient concentrations of air toxics. Additional information
and maps showing expected changes in ambient concentrations of air
pollutants in 2045 due to proposed Option 1 are included in Chapter 6
of the draft RIA and in the Air Quality Modeling Technical Support
Document.\768\
---------------------------------------------------------------------------

    \768\ USEPA (2021) Technical Support Document: Air Quality
Modeling for the HD 2027 Proposal. EPA-HQ-OAR-2019-0055. October
2021.
---------------------------------------------------------------------------

A. Ozone

    The proposed rule would reduce 8-hour ozone design values
significantly in 2045. The proposed Option 1 would decrease ozone
design values by more than 2 ppb in over 150 counties, and over 200
additional modeled counties are projected to have decreases in ozone
design values of between 1 and 2 ppb in 2045. Our modeling projections
indicate that some counties would have design values above the level of
the 2015 NAAQS in 2045, and the proposed Option 1 would help those
counties, as well as other counties, in reducing ozone concentrations.
Table VII-1 shows the average projected change in 2045 8-hour ozone
design values due to the proposed Option 1 standards. Counties within
10 percent of the level of the NAAQS are intended to reflect counties
that, although not violating the standard, would also be affected by
changes in ambient levels of ozone as they work to ensure long-term
attainment or maintenance of the ozone NAAQS. The projected changes in
design values, summarized in Table VII-1, indicate in different ways
the overall improvement in ozone air quality due to emission reductions
from the proposed Option 1 standards, if implemented as modeled.

      Table VII-1--Average Change in Projected 8-Hour Ozone Design Values in 2045 Due to Proposed Option 1
----------------------------------------------------------------------------------------------------------------
                                                                                Population-
                                                                                weighted
                                                     Number of         2045       Average change      average
         Projected design value category             counties      Population\a\  in 2045 design     change in
                                                                                value  (ppb)    design value
                                                                                (ppb)
----------------------------------------------------------------------------------------------------------------
All modeled counties............................             457     246,949,949           -1.87           -2.23
Counties with 2016 base year design values above             118     125,319,158           -2.12           -2.43
 the level of the 2015 8-hour ozone standard....
Counties with 2016 base year design values                   245      93,417,097           -1.83           -2.10
 within 10% of the 2015 8-hour ozone standard...
Counties with 2045 reference design values above              15      37,758,488           -2.26           -3.03
 the level of the 2015 8-hour ozone standard....
Counties with 2045 reference design values                    56      39,302,665           -1.78           -2.02
 within 10% of the 2015 8-hour ozone standard...
Counties with 2045 control design values above                10      27,930,138           -2.36           -3.34
 the level of the 2015 8-hour ozone standard....
Counties with 2045 control design values within               42      31,395,617           -1.69           -1.77
 10% of the 2015 8-hour ozone standard..........
----------------------------------------------------------------------------------------------------------------
\a\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. (2015). Complete Demographic
  Database. Washington, DC. http://www.woodsandpoole.com/index.php.

B. Particulate Matter

    The proposed rule would reduce 24-hour and annual PM2.5
design values in 2045. The proposed Option 1 standards would decrease
projected annual PM2.5 design values in the majority of
modeled counties by between 0.01 and 0.05 ug/m3 and by greater than
0.05 ug/m3 in over 75 additional counties. The proposed Option 1
standards would decrease projected 24-hour PM2.5 design
values by between 0.15 and 0.5 ug/m3 in over 150 counties and by
greater than 0.5 ug/m3 in 5 additional counties. Our air quality
modeling projections indicate that some counties would have design
values above the level of the 2012 PM2.5 NAAQS in 2045 and
the proposed Option 1 would help those counties, as well as other
counties, in reducing PM2.5 concentrations. Table VII-2 and
Table VII-3 present the average projected changes in 2045 annual and
24-hour PM2.5 design values. Counties within 10 percent of
the level of the NAAQS are intended to reflect counties that, although
not violating the standards, would also be affected by changes in
ambient levels of PM2.5 as they work to ensure long-term
attainment or maintenance of the annual and/or 24-hour PM2.5
NAAQS. The projected changes in PM2.5 design values,
summarized in Table VII-2 and Table VII-3, indicate in different ways
the overall improvement in PM2.5 air quality due to the
emission reductions resulting from the proposed Option 1 standards, if
implemented as modeled.

      Table VII-2--Average Change in Projected Annual PM2.5 Design Values in 2045 Due to Proposed Option 1
----------------------------------------------------------------------------------------------------------------
                                                                                Population-
                                                                                Average change     weighted
                                                     Number of         2045       in 2045 design  average change
         Projected design value category             counties     Population \a\    value  (ug/      in design
                                                                                m\3\)        value (ug/
                                                                                m\3\)
----------------------------------------------------------------------------------------------------------------
All modeled counties............................             568     273,604,437           -0.04           -0.04

Counties with 2016 base year design values above              17      26,726,354           -0.09           -0.05
 the level of the 2012 annual PM2.5 standard....
Counties with 2016 base year design values                     5       4,009,527           -0.06           -0.06
 within 10% of the 2012 annual PM2.5 standard...
Counties with 2045 reference design values above              12      25,015,974           -0.10           -0.05
 the level of the 2012 annual PM2.5 standard....
Counties with 2045 reference design values                     6       1,721,445           -0.06           -0.06
 within 10% of the 2012 annual PM2.5 standard...
Counties with 2045 control design values above                10      23,320,070           -0.10           -0.05
 the level of the 2012 annual PM2.5 standard....
Counties with 2045 control design values within                8       3,417,349           -0.08           -0.09
 10% of the 2012 annual PM2.5 standard..........
----------------------------------------------------------------------------------------------------------------
\a\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. (2015). Complete Demographic
  Database. Washington, DC. http://www.woodsandpoole.com/index.php.

      Table VII-3--Average Change in Projected 24-Hour PM2.5 Design Values in 2045 Due to Proposed Option 1
----------------------------------------------------------------------------------------------------------------
                                                                                Population-
                                                                                Average change     weighted
                                                     Number of         2045       in 2045 design  average change
         Projected design value category             counties     Population \a\    value  (ug/      in design
                                                                                m\3\)        value (ug/
                                                                                m\3\)
----------------------------------------------------------------------------------------------------------------
All modeled counties............................             568     272,852,777           -0.12           -0.17
Counties with 2016 base year design values above              33      28,394,253           -0.40           -0.67
 the level of the 2006 daily PM2.5 standard.....
Counties with 2016 base year design values                    15      13,937,416           -0.18           -0.27
 within 10% of the 2006 daily PM2.5 standard....
Counties with 2045 reference design values above              29      14,447,443           -0.38           -0.55
 the level of the 2006 daily PM2.5 standard.....
Counties with 2045 reference design values                    12      22,900,297           -0.30           -0.59
 within 10% of the 2006 daily PM2.5 standard....
Counties with 2045 control design values above                29      14,447,443           -0.38           -0.55
 the level of the 2006 daily PM2.5 standard.....
Counties with 2045 control design values within               10      19,766,216           -0.26           -0.60
 10% of the 2006 daily PM2.5 standard...........
----------------------------------------------------------------------------------------------------------------
\a\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. (2015). Complete Demographic
  Database. Washington, DC. http://www.woodsandpoole.com/index.php.

C. Nitrogen Dioxide

    Our modeling indicates that in 2045 the proposed Option 1 would
decrease annual NO2 concentrations in most urban areas and
along major roadways by more than 0.3 ppb and would decrease annual
NO2 concentrations by between 0.01 and 0.1 ppb across much
of the rest of the country. The proposed Option 1 emissions reductions
would also likely decrease 1-hour NO2 concentrations and
help any potential nonattainment areas attain and maintenance areas
maintain the NO2 standard.\769\ Section 6.3.4 of the draft
RIA contains more detail on the impacts of the proposed Option 1 on
NO2 concentrations.
---------------------------------------------------------------------------

    \769\ As noted in Section II, there are currently no
nonattainment areas for the NO2 NAAQS.
---------------------------------------------------------------------------

D. Carbon Monoxide

    Our modeling indicates that in 2045 the proposed Option 1 would
decrease annual CO concentrations by more than 0.5 ppb in many urban
areas and would decrease annual CO concentrations by between 0.02 and
0.5 ppb across much of the rest of the country. The emissions
reductions from proposed Option 1 would also likely decrease 1-hour and
8-hour CO concentrations and help any potential nonattainment areas
attain and maintenance areas maintain the CO standard.\770\ Section
6.3.5 of the draft RIA contains more detail on the impacts of the
proposed Option 1 on CO concentrations.
---------------------------------------------------------------------------

    \770\ As noted in Section II, there are currently no
nonattainment areas for the CO NAAQS.
---------------------------------------------------------------------------

E. Air Toxics

    In general, our modeling indicates that the proposed Option 1 would
have relatively little impact on national average ambient
concentrations of the modeled air toxics in 2045. The proposed Option 1
standards would have smaller impacts on air toxic pollutants dominated
by primary emissions (or a decay product of a directly emitted
pollutant), and relatively larger impacts on air toxics that primarily
result from photochemical transformation, in this case due to the
projected large reductions in NOX emissions. Specifically,
in 2045, our modeling projects that the proposed Option 1 would
decrease ambient benzene and naphthalene concentrations by less than
0.001 ug/m3 across the country.

Acetaldehyde concentrations would increase slightly across most of the
country, while formaldehyde would generally have small decreases in
most areas and some small increases in urban areas. Section 6.3.6 of
the draft RIA contains more detail on the impacts of the proposed
Option 1 on air toxics concentrations.

F. Visibility

    Air quality modeling of Option 1 was used to project visibility
conditions in 145 Mandatory Class I Federal areas across the U.S. The
results show that the proposed Option 1 standards would improve
visibility in these areas.\771\ The average visibility at all modeled
Mandatory Class I Federal areas on the 20 percent most impaired days is
projected to improve by 0.04 deciviews, or 0.37 percent, in 2045 due to
the proposed Option 1. Section 6.3.7 of the draft RIA contains more
detail on the visibility portion of the air quality modeling.
---------------------------------------------------------------------------

    \771\ The level of visibility impairment in an area is based on
the light-extinction coefficient and a unitless visibility index,
called a ``deciview'', which is used in the valuation of visibility.
The deciview metric provides a scale for perceived visual changes
over the entire range of conditions, from clear to hazy. Under many
scenic conditions, the average person can generally perceive a
change of one deciview. The higher the deciview value, the worse the
visibility. Thus, an improvement in visibility is a decrease in
deciview value.
---------------------------------------------------------------------------

G. Nitrogen Deposition

    Our air quality modeling conducted for the proposed rule projects
substantial decreases in nitrogen deposition in 2045 as a result of the
proposed Option1. The proposed Option 1 standards would result in
annual decreases of greater than 4 percent in some areas and greater
than 1 percent over much of the rest of the country. For maps of
deposition impacts, and additional information on these impacts, see
Section 6.3.8 of the draft RIA.

H. Demographic Analysis of Air Quality

    When feasible, EPA's Office of Transportation and Air Quality
conducts full-scale photochemical air quality modeling to demonstrate
how its national mobile source regulatory actions affect ambient
concentrations of regional pollutants throughout the United States. As
described in draft RIA Chapter 6.2, the air quality modeling we
conducted supports our analysis of future projections of
PM2.5 and ozone concentrations in a ``baseline'' scenario
absent the proposed rule and in a ``control'' scenario that assumes the
proposed Option 1 is in place. The incremental reductions in estimated
air quality concentrations between the two scenarios are therefore
attributed to the proposed rule. These baseline and control scenarios
are also used as inputs to the health benefits analysis. As
demonstrated in draft RIA Chapter 6.3 and Chapter 8.6, the ozone and
PM2.5 improvements that are projected to result from the
proposed rule, and the health benefits associated with those pollutant
reductions would be substantial.
    This air quality modeling data can also be used to conduct a
demographic analysis of human exposure to future air quality in
scenarios with and without the proposed rule in place. To compare
demographic trends, we sorted projected 2045 baseline air quality
concentrations from highest to lowest concentration and created two
groups: areas within the contiguous U.S. with the worst air quality
(highest 5 percent of concentrations) and the rest of the country. This
approach can then answer two principal questions to determine disparity
among people of color:
    1. What is the demographic composition of areas with the worst
baseline air quality in 2045?
    2. Are those with the worst air quality benefiting more from the
proposed rule?
    We found that in the 2045 baseline, the number of people of color
projected to live within the grid cells with the highest baseline
concentrations of ozone (26 million) is nearly double that of NH-Whites
(14 million). Thirteen percent of people of color are projected to live
in areas with the worst baseline ozone, compared to seven percent of
NH-Whites. The number of people of color projected to live within the
grid cells with the highest baseline concentrations of PM2.5
(93 million) is nearly double that of NH-Whites (51 million). Forty-six
percent of people of color are projected to live in areas with the
worst baseline PM2.5, compared to 25 percent of NH-Whites.
    We also found that the largest predicted improvements in both ozone
and PM2.5 are estimated to occur in areas with the worst
baseline air quality, where larger numbers of people of color are
projected to reside. Chapter 6.3.9 of the draft RIA describes the data
and methods used to conduct the demographic analysis and presents our
results in detail. We seek comment on how to improve this analysis for
the final rule.

VIII. Benefits of the Proposed Program

    The highway heavy-duty engines and vehicles subject to the proposed
criteria pollutant program are significant sources of mobile source air
pollution, including emissions of directly-emitted PM2.5 as
well as NOX and VOCs (both precursors to ozone formation and
secondarily-formed PM2.5). The proposed program would reduce
exhaust emissions of these pollutants from the regulated engines and
vehicles, which would reduce ambient concentrations of ozone and
PM2.5 (see Section VII). Exposures to these pollutants are
linked to adverse environmental and human health impacts, such as
premature deaths and non-fatal illnesses (see Section II).
    In this section, we present the quantified and monetized human
health benefits from reducing concentrations of ozone and
PM2.5 using the air quality modeling results described in
Section VII. For the proposed rulemaking, we have quantified and
monetized health impacts in 2045, representing projected benefits in a
year when the program would be fully implemented and when most of the
regulated fleet would have turned over. Overall, we estimate that the
proposed program would lead to a substantial decrease in adverse
PM2.5- and ozone-related health impacts.
    We adopt an updated analysis approach that was recently used to
quantify the benefits of changes in PM2.5 and ozone in the
final Revised Cross-State Air Pollution Rule (CSAPR) Update
RIA.772 773 While the steps to performing a criteria
pollutant benefits analysis remain unchanged from past mobile source
rulemakings (e.g., Tier 3 Motor Vehicle Emission and Fuel Standards
Final Rule),\774\ the final CSAPR RIA updated the suite of quantified
health endpoints included in the benefits analysis, as well as the data
used to quantify each health endpoint, to reflect more recent
scientific evidence. These updates were based on information drawn from
the recent PM2.5 and ozone Integrated Science Assessments
(ISAs), which were reviewed by the Clean Air Science Advisory Committee
(CASAC) and the public,775 776 and are summarized in a

technical support document (TSD) originally published for the final
Revised CSAPR Update titled Estimating PM2.5- and Ozone-
Attributable Health Benefits.\777\
---------------------------------------------------------------------------

    \772\ U.S. Environmental Protection Agency (U.S. EPA). 2021.
Regulatory Impact Analysis for the Final Revised Cross-State Air
Pollution Rule (CSAPR) Update for the 2008 Ozone NAAQS. EPA-452/R-
21-002. March.
    \773\ On March 15, 2021, EPA finalized the Revised Cross-State
Air Pollution Rule Update for the 2008 ozone National Ambient Air
Quality Standards (NAAQS). Starting in the 2021 ozone season, the
rule will require additional emissions reductions of nitrogen oxides
(NOX) from power plants in 12 states. https://www.epa.gov/csapr/revised-cross-state-air-pollution-rule-update.
    \774\ U.S. Environmental Protection Agency (U.S. EPA). 2014.
Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle
Emission and Fuel Standards Rule Regulatory Impact Analysis. EPA-
420-R-14-005. March.
    \775\ U.S. Environmental Protection Agency (U.S. EPA). 2019.
Integrated Science Assessment (ISA) for Particulate Matter (Final
Report, 2019). U.S. Environmental Protection Agency, Washington, DC,
EPA/600/R-19/188, 2019.
    \776\ U.S. Environmental Protection Agency (U.S. EPA). 2020.
Integrated Science Assessment (ISA) for Ozone and Related
Photochemical Oxidants (Final Report). U.S. Environmental Protection
Agency, Washington, DC, EPA/600/R-20/012, 2020.
    \777\ U.S. Environmental Protection Agency (U.S. EPA). 2021.
Estimating PM2.5- and Ozone-Attributable Health Benefits.
Technical Support Document (TSD) for the Final Revised Cross-State
Air Pollution Rule Update for the 2008 Ozone Season NAAQS. EPA-HQ-
OAR-2020-0272. March.
---------------------------------------------------------------------------

    Table VIII-1 and Table VIII-2 present quantified health benefits
from reductions in human exposure to ambient PM2.5 and
ozone, respectively, from proposed Option 1 in 2045.\778\ Table VIII-3
presents the total monetized benefits attributable to the proposed
Option 1 in 2045.
---------------------------------------------------------------------------

    \778\ As noted in Section VII, due to resource constraints we
only conducted air quality modeling for the proposed Option 1. Since
the air quality modeling results are necessary to quantify estimates
of avoided mortality and illness attributable to changes in ambient
PM2.5 or ozone due to the proposed rule, we only have
these estimates for proposed Option 1.
---------------------------------------------------------------------------

    We estimate that in 2045, the proposed Option 1 criteria pollutant
program would result in total annual monetized benefits of $12 and $33
billion at a 3 percent discount rate and $10 and $30 billion at a 7
percent discount rate (2017 dollars).
    There are additional human health and environmental benefits
associated with reductions in exposure to ambient concentrations of
PM2.5, ozone, and NO2 that EPA has not quantified due to
data, resource, or methodological limitations. There would also be
benefits associated with reductions in air toxic pollutant emissions
that result from the proposed program, but EPA is not currently able to
monetize those impacts due to methodological limitations. The proposed
criteria pollutant standards would also reduce methane (CH4)
emissions due to lower total hydrocarbon emission rates from the
tailpipe of heavy-duty gasoline vehicles (see draft RIA Chapter 5.2.2
for more detail). The estimated benefits of the proposal would be
larger if we were able to monetize all unquantified benefits at this
time. We request comment on how to address the climate benefits and
other categories of non-monetized benefits of the proposed rule. For
more detailed information about the benefits analysis conducted for the
proposal, please refer to draft RIA Chapter 8 that accompanies this
preamble.

Table VIII-1--Estimated Avoided PM2.5 Mortality and Illnesses for the Proposed Option 1 Policy Scenario for 2045
                                    [95 percent confidence interval] \a\ \b\
----------------------------------------------------------------------------------------------------------------
                                                                                Proposed option 1
----------------------------------------------------------------------------------------------------------------
                                           Avoided premature mortality
----------------------------------------------------------------------------------------------------------------
                                              Turner et al. (2016)--Ages 30+......                           740
                                                                                (500 to 980)
                                              Di et al. (2017)--Ages 65+..........                           800
                                                                                (780 to 830)
                                              Woodruff et al. (2008)--Ages < 1....                           4.1
                                                                                (-2.6 to 11)
----------------------------------------------------------------------------------------------------------------
                                      Non-fatal heart attacks among adults
----------------------------------------------------------------------------------------------------------------
Short-term exposure.........................  Peters et al. (2001)................                           790
                                                                                (180 to 1,400)
                                              Pooled estimate.....................                            85
                                                                                (31 to 230)
----------------------------------------------------------------------------------------------------------------
                                                Morbidity effects
----------------------------------------------------------------------------------------------------------------
Long-term exposure..........................  Asthma onset........................                         1,600
                                                                                (1,500 to 1,600)
                                              Allergic rhinitis symptoms..........                        10,000
                                                                                (2,500 to 18,000)
                                              Stroke..............................                            41
                                                                                (11 to 70)
                                              Lung cancer.........................                            52
                                                                                (16 to 86)
                                              Hospital Admissions--Alzheimer's                               400
                                               disease.                                             (300 to 500)
                                              Hospital Admissions--Parkinson's                                43
                                               disease.                                               (22 to 63)
----------------------------------------------------------------------------------------------------------------
Short-term exposure.........................  Hospital admissions--cardiovascular.                           110
                                                                                (76 to 130)
                                              ED visits--cardiovascular...........                           210
                                                                                (-82 to 500)
                                              Hospital admissions--respiratory....                            68
                                                                                (23 to 110)
                                              ED visits--respiratory..............                           400
                                                                                (78 to 830)
                                              Asthma symptoms.....................                       210,000
                                                                                (-100,000 to 520,000)

                                              Minor restricted-activity days......                       460,000
                                                                                (370,000 to 550,000)
                                              Cardiac arrest......................                            10
                                                                                (-4.2 to 24)
                                              Lost work days......................                        78,000
                                                                                (66,000 to 90,000)
----------------------------------------------------------------------------------------------------------------
\a\ Values rounded to two significant figures.
\b\ PM2.5 exposure metrics are not presented here because all PM health endpoints are based on studies that used
  daily 24-hour average concentrations. Annual exposures are estimated using daily 24-hour average
  concentrations.

Table VIII-2--Estimated Avoided Ozone Mortality and Illnesses for the Proposed Option 1 Policy Scenario for 2045
                                      [95 percent confidence interval] \a\
----------------------------------------------------------------------------------------------------------------
                                                                Metric and season
                                                                       \b\                Proposed Option 1
----------------------------------------------------------------------------------------------------------------
                                           Avoided premature mortality
----------------------------------------------------------------------------------------------------------------
Long-term exposure...............  Turner et al. (2016).....  MDA8................                         2,100
                                                              April-September.....              (1,400 to 2,700)
Short-term exposure..............  Katsouyanni et al (2009).  MDA1................                           120
                                                              April-September.....                  (-69 to 300)
----------------------------------------------------------------------------------------------------------------
                                                Morbidity effects
----------------------------------------------------------------------------------------------------------------
Long-term exposure...............  Asthma onset \c\.........  MDA8................                        16,000
                                                              June-August.........            (14,000 to 18,000)
Short-term exposure..............  Allergic rhinitis          MDA8................                        88,000
                                    symptoms.                 May-September.......           (47,000 to 130,000)
                                   Hospital admissions--      MDA1................                           350
                                    respiratory.              April-September.....                  (-91 to 770)
                                   ED visits--respiratory...  MDA8................                         5,100
                                                              May-September.......             (1,400 to 11,000)
                                   Asthma symptoms--Cough     MDA8................                       920,000
                                    \d\.                      May-September.......        (-50,000 to 1,800,000)
                                   Asthma symptoms--Chest     MDA8................                       770,000
                                    Tightness \d\.            May-September.......         (85,000 to 1,400,000)
                                   Asthma symptoms--          MDA8................                       390,000
                                    Shortness of Breath \d\.  May-September.......       (-330,000 to 1,100,000)
                                   Asthma symptoms--Wheeze    MDA8................                       730,000
                                    \d\.                      May-September.......        (-57,000 to 1,500,000)
                                   Minor restricted-activity  MDA1................                     1,600,000
                                    days \d\.                 May-September.......        (650,000 to 2,600,000)
                                   School absence days......  MDA8................                     1,100,000
                                                              May-September.......       (-150,000 to 2,200,000)
----------------------------------------------------------------------------------------------------------------
\a\ Values rounded to two significant figures.
\b\ MDA8--maximum daily 8-hour average; MDA1--maximum daily 1-hour average. Studies of ozone vary with regards
  to season, limiting analyses to various definitions of summer (e.g., April-September, May-September or June-
  August). These differences can reflect state-specific ozone seasons, EPA-defined seasons or another seasonal
  definition chosen by the study author. The paucity of ozone monitoring data in winter months complicates the
  development of full year projected ozone surfaces and limits our analysis to only warm seasons.
\c\ The underlying metric associated with this risk estimate is daily 8-hour average from 10 a.m.-6 p.m. (AVG8);
  however, we ran the study with a risk estimate converted to MDA8.
\d\ Applied risk estimate derived from full year exposures to estimates of ozone across a May-September ozone
  season. When risk estimates based on full-year, long-term ozone exposures are applied to warm season air
  quality projections, the resulting benefits assessment may underestimate impacts, due to a shorter timespan
  for impacts to accrue.

    Table VIII-3--Total Ozone and PM2.5-Attributable Benefits for the
               Proposed Options 1 Policy Scenarios in 2045
         [95 percent confidence interval; billions of 2017$] a b
------------------------------------------------------------------------
                                              Total annual benefits in
                                                        2045
------------------------------------------------------------------------
3% Discount Rate..........................  $12 ($0.72 to $31) \c\ and
                                             $33 ($3.5 to $87) \d\
7% Discount Rate..........................  $10 ($0.37 to $28) \c\ and
                                             $30 ($3.0 to $78) \d\
------------------------------------------------------------------------
\a\ The benefits associated with the standards presented here do not
  include the full complement of health, environmental, and climate-
  related benefits that, if quantified and monetized, would increase the
  total monetized benefits.
\b\ Values rounded to two significant figures. The two benefits
  estimates separated by the word ``and'' signify that they are two
  separate estimates. The estimates do not represent lower- and upper-
  bound estimates though they do reflect a grouping of estimates that
  yield more and less conservative benefit totals. They should not be
  summed.
\c\ Sum of benefits using the Katsouyanni et al. (2009) short-term
  exposure ozone respiratory mortality risk estimate and the Turner et
  al. (2016) long-term exposure PM2.5 all-cause risk estimate.
\d\ Sum of benefits using the Turner et al. (2016) long-term exposure
  ozone respiratory mortality risk estimate and the Di et al. (2017)
  long-term exposure PM2.5 all-cause risk estimate.

    The full-scale criteria pollutant benefits analysis for Option 1
presented in this section reflects spatially and temporally allocated
emissions inventories (see draft RIA Chapter 5), photochemical air
quality modeling (see draft RIA Chapter 6), and PM2.5 and
ozone benefits generated using BenMAP-CE (see draft RIA Chapter 8), all
for conditions projected to occur in calendar year 2045. As we
presented in Sections V and VI, national estimates of emissions and
program costs were generated for each analysis year from Option 1's
proposed implementation to a year when Option 1 would be fully phased-
in and the vehicle fleet would be approaching full turnover (2027-
2045). The computational requirements needed to conduct photochemical
air quality modeling to support a full-scale benefits analysis for
Option 2 in 2045 and for all Option 1 and Option 2 analysis years from
2027 to 2044 precluded the Agency from conducting benefits analyses
comparable to the calendar year 2045 Option 1 benefits analysis.
Instead, we have used a reduced-form approach to scale total Option 1
benefits in 2045 back to 2027 using projected reductions in year-over-
year NOX emissions so that we can estimate the present and
annualized values of the stream of estimated benefits for Option 1. We
have also used year-over-year Option 2 NOX emissions
reductions to scale the total benefits associated with Option 1 to
derive a best estimate of criteria pollutant benefits associated with
Option 2.\779\ For more information on the benefits scaling approach we
applied to estimate criteria pollutant benefits over time for the
proposed Options 1 and 2, please refer to draft RIA Chapter 8.7 that
accompanies this preamble.
---------------------------------------------------------------------------

    \779\ Because NOX is the dominating pollutant
controlled by the proposed Options, we make a simplifying assumption
that total PM and ozone benefits can be scaled by NOX
emissions, even though emissions of other pollutants are controlled
in smaller amounts by the proposed program.
---------------------------------------------------------------------------

    Table VIII-4 and Table VIII-5 present the annual, estimated
undiscounted total health benefits (PM2.5 plus ozone) for
the stream of years beginning with the first year of rule
implementation, 2027, through 2045 for the proposed Options 1 and
2.\780\ The tables also present the present and annualized values of
benefits over this time series, discounted using both 3 percent and 7
percent discount rates and reported in 2017 dollars. Table VIII-4
presents total benefits as the sum of short-term ozone respiratory
mortality benefits for all ages, long-term PM2.5 all-cause
mortality benefits for ages 30 and above, and all monetized avoided
illnesses. Table VIII-5 presents total benefits as the sum of long-term
ozone respiratory mortality benefits for ages 30 and above, long-term
PM2.5 all-cause mortality benefits for ages 65 and above,
and all monetized avoided illnesses.
---------------------------------------------------------------------------

    \780\ We are not including an analysis of benefits of the
Alternative (described in Sections III and IV) because we currently
do not have sufficient information to conclude that the Alternative
standards would be feasible in the MY 2027 timeframe (see Section
III for details).

 Table VIII-4--Undiscounted Stream and Present Value of Human Health Benefits From 2027 Through 2045: Monetized
  Benefits Quantified as Sum of Short-Term Ozone Respiratory Mortality Ages 0-99, and Long-Term PM2.5 All-Cause
                                               Mortality Ages 30+
                         [Discounted at 3 percent and 7 percent; billions of 2017$] a b
----------------------------------------------------------------------------------------------------------------
                                                         Proposed Option 1               Proposed Option 2
                                                 ---------------------------------------------------------------
                                                        3%              7%              3%              7%
----------------------------------------------------------------------------------------------------------------
2027............................................           $0.57           $0.51           $0.52           $0.47
2028............................................             1.2             1.1             1.1            0.98
2029............................................             1.8             1.7             1.7             1.5
2030............................................             2.5             2.3             2.3             2.1
2031............................................             3.4             3.1             3.1             2.7
2032............................................             4.3             3.9             3.8             3.4
2033............................................             5.0             4.5             4.3             3.9
2034............................................             5.6             5.0             4.9             4.4
2035............................................             6.3             5.7             5.4             4.8
2036............................................             6.9             6.2             5.8             5.3
2037............................................             7.8             7.0             6.3             5.7
2038............................................             8.6             7.7             6.7             6.0
2039............................................             9.1             8.2             7.1             6.4
2040............................................             9.6             8.6             7.5             6.7
2041............................................              10             9.0             7.8             7.1
2042............................................              10             9.4             8.2             7.4
2043............................................              11             9.8             8.5             7.6
2044............................................              11              10             8.8             7.9
2045 \c\........................................              12              10             9.1             8.2
Present Value...................................              87              50              71              41

Annualized Value................................             6.1             4.9             5.0             4.0
----------------------------------------------------------------------------------------------------------------
\a\ The benefits associated with the standards presented here do not include the full complement of health,
  environmental, and climate-related benefits that, if quantified and monetized, would increase the total
  monetized benefits.
\b\ Benefits calculated as value of avoided: PM2.5--attributable deaths (quantified using a concentration-
  response relationship from the Turner et al. 2016 study); Ozone-attributable deaths (quantified using a
  concentration-response relationship from the Katsouyanni et al. 2009 study); and PM2.5 and ozone-related
  morbidity effects.
\c\ Year in which PM2.5 and ozone air quality associated with Option 1 was simulated (2045).

 Table VIII-5--Undiscounted Stream and Present Value of Human Health Benefits From 2027 Through 2045: Monetized
   Benefits Quantified as Sum of Long-Term Ozone Respiratory Mortality Ages 30+, and Long-Term PM2.5 All-Cause
                                               Mortality Ages 65+
                         [Discounted at 3 percent and 7 percent; billions of 2017$] a b
----------------------------------------------------------------------------------------------------------------
                                                         Proposed Option 1               Proposed Option 2
                                                 ---------------------------------------------------------------
                                                        3%              7%              3%              7%
----------------------------------------------------------------------------------------------------------------
2027............................................            $1.6            $1.4            $1.4            $1.3
2028............................................             3.3             2.9             3.0             2.7
2029............................................             5.1             4.6             4.7             4.2
2030............................................             7.0             6.3             6.4             5.8
2031............................................             9.6             8.6             8.5             7.6
2032............................................              12              11              11             9.5
2033............................................              14              13              12              11
2034............................................              16              14              14              12
2035............................................              18              16              15              14
2036............................................              20              18              17              15
2037............................................              22              20              18              16
2038............................................              24              22              19              17
2039............................................              26              23              20              18
2040............................................              28              25              21              19
2041............................................              29              26              23              20
2042............................................              30              27              24              21
2043............................................              31              28              24              22
2044............................................              32              29              25              23
2045 \c\........................................              33              30              26              23
Present Value...................................             250             140             200             120
Annualized Value................................              17              14              14              11
----------------------------------------------------------------------------------------------------------------
\a\ The benefits associated with the standards presented here do not include the full complement of health,
  environmental, and climate-related benefits that, if quantified and monetized, would increase the total
  monetized benefits.
\b\ Benefits calculated as value of avoided: PM2.5--attributable deaths (quantified using a concentration-
  response relationship from the Di et al. 2017 study); Ozone-attributable deaths (quantified using a
  concentration-response relationship from the Turner et al. 2016 study); and PM2.5 and ozone-related morbidity
  effects.
\c\ Year in which PM2.5 and ozone air quality for Option 1 was simulated (2045).

    This analysis includes many data sources as inputs that are each
subject to uncertainty. Input parameters include projected emission
inventories, air quality data from models (with their associated
parameters and inputs), population data, population estimates, health
effect estimates from epidemiology studies, economic data, and
assumptions regarding the future state of the world (i.e., regulations,
technology, and human behavior). When compounded, even small
uncertainties can greatly influence the size of the total quantified
benefits. Please refer to draft RIA Chapter 8 for more information on
the uncertainty associated with the benefits presented here.

IX. Comparison of Benefits and Costs

    This section compares the estimated range of total monetized health
benefits to total costs associated with proposed Options 1 and 2 of the
criteria pollutant program. This section also presents the range of
monetized net benefits (benefits minus costs) associated with the same
options. Criteria pollutant program costs are detailed and presented in
Section V of this preamble. Those costs include costs for both the new
technology and the operating costs associated with that new technology,
as well as costs associated with the proposed warranty and useful life
provisions for Options 1 and 2. Criteria pollutant program benefits are
presented in Section VIII. Those benefits are the monetized economic
value of the reduction in PM2.5- and ozone-related premature
deaths and illnesses that result from reductions in NOX
emissions and directly emitted PM2.5 attributable to
implementation of the proposed options.
    As noted in Sections IV through VIII, these estimated benefits,
costs, and net benefits do not reflect all of the anticipated impacts
of the proposed

revisions to the criteria pollutant program.\781\
---------------------------------------------------------------------------

    \781\ As noted in draft RIA Chapter 5.4, there are differences
between the standards, emission warranty, and useful life provisions
of proposed Option 1 presented in Sections III and IV and those
included in our control case scenario modeled for the air quality
analysis (as noted in Section VII, due to resource constraints we
only conducted air quality modeling for the proposed Option 1). As
detailed in draft RIA Chapter 8, estimates of health benefits are
based on our air quality analysis, and thus differences between
proposed Option 1 and modeling are not reflected in the benefits
analysis.
---------------------------------------------------------------------------

A. Methods

    EPA presents three different benefit-cost comparisons for proposed
Options 1 and 2: \782\
---------------------------------------------------------------------------

    \782\ We are not including an analysis of costs or benefits of
the Alternative (described in Sections III and IV) because we
currently do not have sufficient information to conclude that the
Alternative standards would be feasible in the MY 2027 timeframe
(see Section III for details).
---------------------------------------------------------------------------

    1. A future-year snapshot comparison of annual benefits and costs
in the year 2045, chosen to approximate the annual health benefits that
would occur in a year when the program would be fully implemented and
when most of the regulated fleet would have turned over. Benefits,
costs and net benefits are presented in year 2017 dollars and are not
discounted. However, 3 percent and 7 percent discount rates were
applied in the valuation of avoided premature deaths from long-term
pollution exposure to account for a twenty-year segmented cessation
lag.
    2. The present value (PV) of the stream of benefits, costs and net
benefits calculated for the years 2027-2045, discounted back to the
first year of implementation of the proposed rule (2027) using both a 3
percent and 7 percent discount rate, and presented in year 2017
dollars. Note that year-over-year costs are presented in Section V and
year-over-year benefits can be found in Section VIII.
    3. The equivalent annualized value (EAV) of benefits, costs and net
benefits representing a flow of constant annual values that, had they
occurred in each year from 2027 to 2045, would yield an equivalent
present value to those estimated in method 2 (using either a 3 percent
or 7 percent discount rate). Each EAV represents a typical benefit,
cost or net benefit for each year of the analysis and is presented in
year 2017 dollars.
    The two estimates of monetized benefits (and net benefits) in each
of these benefit-cost comparisons reflect alternative combinations of
the economic value of PM2.5- and ozone-related premature
deaths summed with the economic value of illnesses for each discount
rate (see draft RIA Chapter 8 for more detail).

B. Results

    Table IX-1 presents the benefits, costs and net benefits of
proposed Options 1 and 2 in annual terms for year 2045, in PV terms,
and in EAV terms.

 Table IX-1--Annual Value, Present Value and Equivalent Annualized Value of Costs, Benefits and Net Benefits of
                                       the Proposed Option 1 and Option 2
                                              [Billions, 2017$] a b
----------------------------------------------------------------------------------------------------------------
                                                         Proposed Option 1               Proposed Option 2
                                                 ---------------------------------------------------------------
                                                    3% Discount     7% Discount     3% Discount     7% Discount
----------------------------------------------------------------------------------------------------------------
2045:
    Benefits....................................         $12-$33         $10-$30        $9.1-$26        $8.2-$23
    Costs.......................................            $2.3            $2.3            $2.9            $2.9
    Net Benefits................................        $9.2-$31        $8.1-$28        $6.2-$23        $5.3-$21
Present Value:
    Benefits....................................        $88-$250        $52-$150        $71-$200        $41-$120
    Costs.......................................             $27             $19             $30             $21
    Net Benefits................................        $61-$220        $33-$130        $41-$170         $21-$96
Equivalent Annualized Value:
    Benefits....................................        $6.0-$17        $4.7-$13        $5.0-$14        $4.0-$11
    Costs.......................................            $1.9            $1.9            $2.1            $2.0
    Net Benefits................................        $4.1-$15        $2.9-$12        $2.9-$12       $2.0-$9.3
----------------------------------------------------------------------------------------------------------------
\a\ All benefits estimates are rounded to two significant figures; numbers may not sum due to independent
  rounding. The range of benefits (and net benefits) in this table are two separate estimates and do not
  represent lower- and upper-bound estimates, though they do reflect a grouping of estimates that yield more and
  less conservative benefits totals. The costs and benefits in 2045 are presented in annual terms and are not
  discounted. However, all benefits in the table reflect a 3 percent and 7 percent discount rate used to account
  for cessation lag in the valuation of avoided premature deaths associated with long-term exposure.
\b\ The benefits associated with the standards presented here do not include the full complement of health,
  environmental, and climate-related benefits that, if quantified and monetized, would increase the total
  monetized benefits.

    Annual benefits of proposed Option 1 are larger than the annual
costs in 2045, with annual net benefits of $8.1 and $28 billion using a
7 percent discount rate, and $9.2 and $31 billion using a 3 percent
discount rate.\783\ Benefits also outweigh the costs when expressed in
PV terms (net benefits of $33 and $130 billion using a 7 percent
discount rate, and $61 and $220 billion using a 3 percent discount
rate) and EAV terms (net benefits of $2.9 and $12 billion using a 7
percent discount rate, and $4.1 and $15 billion using a 3 percent
discount rate).\784\
---------------------------------------------------------------------------

    \783\ The range of benefits and net benefits presented in this
section reflect a combination of assumed PM2.5 and ozone
mortality risk estimates and selected discount rate.
    \784\ As noted in Chapter 5.4 of the draft RIA, there are
differences between the proposed Option 1 standards, emission
warranty, and useful life provisions presented in Sections III and
IV of this preamble and those included in the control scenario
modeled for the air quality analysis. In contrast, our cost analysis
includes the proposed Option 1 standards, emission warranty, and
useful life provisions presented in Sections III and IV. As such,
our comparisons of benefits and costs of the proposed options may
underestimate the true benefits of each option.
---------------------------------------------------------------------------

    The benefits also outweigh the costs in annual 2045 terms when
looking at proposed Option 2, with annual net benefits of $5.3 and $21
billion using a 7 percent discount rate and $6.2 billion and $23
billion using a 3 percent discount rate. The benefits of proposed
Option 2 also outweigh the costs in PV and EAV terms.
    Comparing proposed Options 1 and 2, our analysis shows that Option
2 has lower net benefits than Option 1 due to both higher costs and
lower emission reductions relative to Option 1. As outlined in Section
I.G and detailed in

Sections III and IV, we have considered several other factors,
including lead time and technological feasibility, in developing these
options and considering possible regulatory options.
    Given these results, EPA expects that implementation of either
proposed option would provide society with a substantial net gain in
welfare, notwithstanding the health and other benefits we were unable
to quantify (see draft RIA Chapter 8.8 for more information about
unquantified benefits). EPA does not expect the omission of
unquantified benefits to impact the Agency's evaluation of regulatory
options since unquantified benefits generally scale with the emissions
impacts of the proposed options.

X. Economic Impact Analysis

    This section describes our Economic Impact Analysis for the
proposed rule. Our analysis focuses on the potential impacts of the
proposed standards on heavy-duty (HD) vehicles (sales, mode shift,
fleet turnover) and employment in the HD industry. The sub-sections
below describe our evaluation.

A. Impact on Vehicle Sales, Mode Shift, and Fleet Turnover

    This proposed rulemaking, if finalized, would require HD engine
manufacturers to develop and implement emission control technologies
capable of controlling NOX at lower levels over longer
emission warranty and regulatory useful life periods. These changes in
requirements would increase the cost of producing and selling compliant
HD vehicles. These increased costs are likely to lead to increases in
prices for HD vehicles, which might lead to reductions in truck sales.
In addition, there may be a period of ``pre-buying'' in anticipation of
potentially higher prices, during which there is an increase in new
vehicle purchases before the implementation of new requirements,
followed by a period of ``low-buying'' directly after implementation,
during which new vehicle purchases decrease. EPA acknowledges that the
proposed standards may lead to some pre-buy before the implementation
date of the standards, and some low-buy after the standards are
implemented. EPA is unable to estimate sales impacts based on existing
literature, and as such contracted with ERG to complete a literature
review, as well as conduct original research to estimate sales impacts
for previous EPA HD vehicle standards on pre- and low-buy for HD
vehicles. The resulting analysis examines the effect of four HD truck
regulations, those that became effective in 2004, 2007, 2010 and 2014,
on the sales of Class 6, 7 and 8 vehicles over the twelve months before
and after each standard. The 2004, 2007 and 2010 rules focused on
reducing criteria pollutant emissions. The 2014 regulation focused on
reducing GHG emissions. The report finds little evidence of sales
impacts for Class 6 and 7 vehicles. For Class 8 vehicles, evidence of
pre-buy was found before the 2010 and 2014 standards, and evidence of
low-buy was found after the 2002, 2007 and 2010 standards. Based on the
results of this study, EPA is outlining an approach that could be used
to estimate pre- and low-buy effects in the final RIA. In the draft
RIA, we explain the methods used to estimate sales effects, as well as
how the results could be applied to a regulatory analysis (see the
draft RIA, Chapter 10.1, for further discussion). Our example results
for proposed Option 1 suggest pre- and low-buy for Class 8 trucks may
range from zero to an approximately two percent increase in sales over
a period of up to 8 months before the 2031 standards begin (pre-buy),
and a decrease in sales from zero to approximately two percent over a
period of up to 12 months after the 2031 standards begin (low-buy). We
request comment on the approach that is discussed in the draft RIA, as
well as the specific inputs and methods. In addition, we request
comment on how additional external factors, including the current
global COVID-19 pandemic, might impact any pre- or low-buy that may
result from this proposed rulemaking. Commenters are encouraged to
provide data on how factors such as the pandemic may affect HD vehicle
sales, including on any possible pre- and low-buy resulting from this
proposed rule, as well as on the length of the possible sales effects.
    In addition to potential sales impacts from changes in purchase
price, the proposed requirement for longer useful life and emission
warranty periods may also affect vehicle sales. While longer emission
warranty periods are likely to increase the purchase price of new HD
vehicles, these increases may be offset by reduced operating costs.
This is because longer useful life periods are expected to make
emission control technology components more durable, and more durable
components, combined with manufacturers paying for repairs during the
proposed longer warranty periods, would in turn reduce repair costs for
vehicle owners. These combined effects may increase (or reduce the
decrease in) sales of new HD vehicles if fleets and independent owner-
operators prefer to purchase more durable vehicles with overall lower
repair costs.\785\ EPA is unable to quantify these effects because
existing literature does not provide clear guidance on the relationship
between warranty changes, increases in prices due to increased warranty
periods, and sales impacts. EPA continues to investigate methods for
estimating sales impacts of extended warranty provisions, and requests
comment on data and methods to use in such analysis. See the draft RIA,
Chapter 10.1.1, for more information.
---------------------------------------------------------------------------

    \785\ The reduced repair costs may counteract some of the sales
effect of increased vehicle purchase cost. As a result, they may
reduce incentives for pre- and low-buy and mitigate adverse sales
impacts.
---------------------------------------------------------------------------

    In addition to potential sales impacts, another potential effect of
the proposed standards is transportation mode shift, which is a change
from truck to another mode of transportation (typically rail or
marine). Whether shippers switch to a different transportation mode for
freight depends not only on the cost per mile of the shipment (freight
rate), but also the value of the shipment, the time needed for
shipment, and the availability of supporting infrastructure. This
proposed rule is not expected to have a large impact on truck freight
rates given that the price of the truck is only a small part of the
cost per mile of a ton of goods. For that reason, we expect little mode
shift due to the proposed standards. The draft RIA, Chapter 10.1.3,
discusses this issue.
    Another potential area of impact of the proposed standards is on
fleet turnover and the associated reduction in emissions from new
vehicles. After the implementation of the proposed standards, each
individual new vehicle sold would produce lower emissions per mile
relative to legacy vehicles. However, the proposed standards would
reduce total HD highway fleet emissions gradually. This is because,
initially, the vehicles meeting the proposed standards would be only a
small portion of the total fleet; over time, as more vehicles subject
to the standards enter the market and older vehicles leave the market,
greater emission reductions would occur. If pre-buy and low-buy
behaviors occur, then the initial emission reductions are likely to be
smaller than expected. This is because, under pre-buy conditions, the
pre-bought vehicles would be certified to less stringent standards and
their emission reductions would be smaller than would be realized if
those vehicles were subject to the proposed standards. However, the new
vehicles are likely less polluting than the older vehicles

that they are most likely to displace, and there may be an earlier
reduction in emissions than would have occurred without the standards
since the vehicles are being purchased ahead of the implementation of
new standards, rather than at a natural point in the purchase cycle.
Under low-buy, emission reductions would be slower because there is
slower adoption of new vehicles than without the standards. See the
draft RIA, Chapter 10.1.2, for more information on this, as well as the
vehicle miles traveled (VMT) discussion below.
    An additional possible effect of the standards is a net reduction
in new vehicle sales if there is either a smaller pre-buy than the
post-standards low-buy, or some potential buyers decide not to purchase
at all. In this case, the VMT of older vehicles may increase to
compensate for the ``missing'' vehicles. To the extent that the older
vehicles emit more than the vehicles for which they are substituting,
emissions may increase. However, the VMT is more likely to be shifted
to the newer HD vehicles among the existing fleet. Because most of
those vehicles are expected to be in compliance with the previous tiers
of HD vehicle standards, the emission effect of increased VMT for older
vehicles is expected to be small.
    EPA requests comment on all aspects of the estimated impact on
vehicle sales, mode shift, and fleet turnover, including the approach
outlined in the draft RIA to quantify sales impacts, and requests
stakeholder to recommend any additional methods and data that could be
used to inform our understanding of potential impacts on HD VMT, fleet
turnover, mode shift and vehicles sales.

B. Employment Impacts

    This section discusses potential employment impacts due to this
proposed regulation, as well as our partial estimates of those impacts.
We focus our analysis on the motor vehicle manufacturing and the motor
vehicle parts manufacturing sectors because these sectors are most
directly affected.\786\ While the proposed rule primarily affects heavy
duty vehicle engines, the employment effects are expected to be felt
more broadly in the motor vehicle and parts sectors due to the effects
of the standards on sales.
---------------------------------------------------------------------------

    \786\ The employment analysis in the draft RIA is part of the
EPA's ongoing effort to ``conduct continuing evaluations of
potential loss or shifts of employment which may result from the
administration or enforcement of [the Act]'' pursuant to CAA section
321(a). Though the rule primarily affects heavy-duty engines, the
employment effects will be felt more broadly in the motor vehicle
and parts sectors due to the potential effects of the standards on
sales.
---------------------------------------------------------------------------

    In general, the employment effects of environmental regulation are
difficult to disentangle from other economic changes (especially the
state of the macroeconomy) and business decisions that affect
employment, both over time and across regions and industries. In light
of these difficulties, we look to economic theory to provide a
constructive framework for approaching these assessments and for better
understanding the inherent complexities in such assessments.
    Economic theory of labor demand indicates that employers affected
by environmental regulation may change their demand for different types
of labor in different ways. They may increase their demand for some
types, decrease demand for other types, or maintain demand for still
other types. To present a complete picture, an employment impact
analysis describes both positive and negative changes in employment. A
variety of conditions can affect employment impacts of environmental
regulation, including baseline labor market conditions, employer and
worker characteristics, industry, and region.
    In the draft RIA, we describe three ways employment at the firm
level might be affected by changes in a firm's production costs due to
environmental regulation: A demand effect, caused by higher production
costs increasing market prices and decreasing demand; a cost effect,
caused by additional environmental protection costs leading regulated
firms to increase their use of inputs; and a factor-shift effect, in
which post-regulation production technologies may have different labor
intensities than their pre-regulation counterparts.787 788
---------------------------------------------------------------------------

    \787\ Morgenstern, Richard D., William A. Pizer, and Jhih-Shyang
Shih (2002). ``Jobs Versus the Environment: An Industry-Level
Perspective.'' Journal of Environmental Economics and Management 43:
412-436.
    \788\ Berman and Bui have a similar framework in which they
consider output and substitution effects that are similar to
Morgenstern et al.'s three effect (Berman, E. and L.T.M. Bui (2001).
``Environmental Regulation and Labor Demand: Evidence from the South
Coast Air Basin.'' Journal of Public Economics 79(2): 265-295).
---------------------------------------------------------------------------

    Due to data limitations, EPA is not quantifying the impacts of the
proposed regulation on firm-level employment for affected companies,
although we acknowledge these potential impacts. Instead, we discuss
demand, cost and factor-shift employment effects for the regulated
sector at the industry level in the draft RIA. In general, if the
proposed regulation causes HD sales to decrease, fewer people would be
needed to assemble trucks and to manufacture their components. If pre-
buy occurs, HD vehicle sales may increase temporarily in advance of the
standards, leading to temporary increases in employment, but if low-buy
occurs following the standards, there could be temporary decreases in
employment. Though we have outlined a method to quantify sales impacts,
we are not using them to estimate effects on fleet turnover in this
proposed rulemaking. As such, we cannot determine which of these
effects would dominate and therefore we do not estimate the demand-
effect impact on employment due to the proposed standards. In addition,
we do not have information on changes in labor intensity of production
due to the standards, and therefore we cannot estimate the factor-shift
effect on employment.
    We do estimate partial employment impacts, namely labor effects
associated with increased costs of production. This cost effect
includes the impact on employment due to the increase in production
costs needed for vehicles to meet the standards. (Note that this
analysis is separate from any employment effect due to changes in
vehicle sales; in other words, the analysis holds output constant.) In
the draft RIA, we capture these effects using the historic share of
labor as a part of the cost of production to extrapolate future
estimates of the share of labor as a cost of production. This provides
a sense of the order of magnitude of expected impacts on employment.
    These estimates are averages, covering all the activities in these
sectors. The estimates may not be representative of the labor effects
when expenditures are required on specific activities, or when
manufacturing processes change sufficiently that labor intensity
changes. In addition, these estimates do not include changes in
industries that supply these sectors, such as steel or electronics
producers, or in other potentially indirectly affected sectors (such as
shipping). Other sectors that sell, purchase, or service HD vehicles
may also face employment impacts due to the proposed standards. The
effects on these sectors would depend on the degree to which compliance
costs are passed through to prices for HD vehicles and the effects of
warranty requirements on demand for vehicle repair and maintenance. EPA
does not have data to estimate the full range of possible employment
impacts. For more information on how we estimate the employment impacts
due to increased costs, see Chapter 10 of the draft RIA.
    Table X-1 shows the estimated employment effects due to increases
in

vehicle costs based on the ratio of labor to production costs derived
from historic data for proposed Option 1 and proposed Option 2. We only
quantitatively estimate employment impacts due to cost effects. In this
proposed rule, we provide estimates of sales impacts as part of an
example approach for commenters to consider, therefore we do not
estimate potential changes in employment due to changes in vehicle
sales. Results are shown in job-years, where a job-year is, for
example, one year of full-time work for one person, or one year of
half-time work for two people. Increased costs of vehicles and parts
would, by itself and holding labor intensity constant, be expected to
increase employment by 400 to 2,200 job years, and 300 to 1,800 job
years in 2027 and 2032 respectively under proposed Option 1. Employment
would be expected to increase by 400 to 2,200 job years, and 300 to
1,500 job years in 2027 and 2032 respectively under proposed Option 2.

   Table X-1--Employment Effects Due to Increased Costs of Vehicles and Parts (Cost Effect), in Job-Years \a\
----------------------------------------------------------------------------------------------------------------
                                                         Proposed Option 1               Proposed Option 2
                                                 ---------------------------------------------------------------
                                                      Minimum         Maximum         Minimum         Maximum
                      Year                          employment      employment      employment      employment
                                                    due to cost     due to cost     due to cost     due to cost
                                                    effect \b\      effect \c\      effect \b\      effect \c\
----------------------------------------------------------------------------------------------------------------
2027............................................             400           2,200             400           2,200
2028............................................             400           2,100             400           2,000
2029............................................             400           2,000             400           1,900
2030............................................             300           1,800             300           1,700
2031............................................             400           1,900             300           1,600
2032............................................             300           1,800             300           1,500
----------------------------------------------------------------------------------------------------------------
\a\ Due to the data limitations, results do not reflect employment effects that result from changes in heavy-
  duty vehicle sales.
\b\ Minimum employment impacts under both proposed Options are estimated in ASM for NAICS code 336112, Light
  Truck and Utility Vehicle Manufacturing.
\c\ Maximum employment impacts under both proposed Options are estimated in EC for NAICS code 3363, Motor
  Vehicle Parts Manufacturing.

    While we estimate employment impacts, measured in job-years,
beginning with program implementation, some of these employment gains
may occur earlier as vehicle manufacturers and parts suppliers hire
staff in anticipation of compliance with the standards. Additionally,
holding all other factors constant, demand-effect employment may
increase prior to MY 2027 due to pre-buy, and may decrease, potentially
temporarily, afterwards.\789\ We present a range of possible results
because our analysis consists of data from multiple industrial sectors
that we expect would be directly affected by the proposed regulation,
as well as data from multiple sources. For more information on the data
we use to estimate the cost effect, see Chapter 10.2 of the draft RIA.
---------------------------------------------------------------------------

    \789\ Note that the standards are not expected to provide
incentives for manufacturers to shift employment between domestic
and foreign production. This is because the proposed standards would
apply to vehicles sold in the U.S. regardless of where they are
produced.
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XI. Targeted Updates to the Phase 2 Heavy-Duty Greenhouse Gas Emissions
Program

    The transportation sector is the largest U.S. source of GHG
emissions, representing 29 percent of total GHG emissions.\790\ Within
the transportation sector, heavy-duty vehicles are the second largest
contributor, at 23 percent.\791\ GHG emissions have significant impacts
on public health and welfare as evidenced by the well-documented
scientific record and as set forth in EPA's Endangerment and Cause or
Contribute Findings under CAA section 202(a).\792\ Therefore, continued
emission reductions in the heavy-duty vehicle sector are appropriate.
---------------------------------------------------------------------------

    \790\ Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2019 (EPA-430-R-21-005, published April 2021). Can be accessed
at https://www.epa.gov/ghgemissions/inventory-us-greenhouse-gas-emissions-and-sinks.
    \791\ Ibid.
    \792\ 74 FR 66496, December 15, 2009; 81 FR 54422, August 15,
2016.
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    We are at the early stages of a significant transition in the
history of the heavy-duty on-highway sector--a shift to zero-emission
vehicle technologies. This change is underway and presents an
opportunity for significant reductions in heavy-duty vehicle emissions.
Major trucking fleets, manufacturers and U.S. states have announced
plans to shift the heavy-duty fleet toward zero-emissions technology,
and over just the past few years we have seen the early introduction of
zero-emission technology into a number of heavy-duty vehicle market
segments. These developments have demonstrated that further
CO2 reductions in the MY 2027 timeframe are appropriate
considering cost, lead time, and other factors. This proposed action
would adjust the existing HD GHG Phase 2 program to account for the
growth in the market.
    Proposed adjustments to the existing HD GHG Phase 2 program are
responsive to Executive Order 14037 on Strengthening American
Leadership in Clean Cars and Trucks, which identifies three potential
regulatory actions for the heavy-duty vehicle sector for EPA to
consider undertaking: (1) This proposed rule for heavy-duty vehicles
for new criteria pollutant standards and strengthening of the MY 2027
GHG standards; (2) a separate rulemaking to establish more stringent
criteria and GHG emission standards for medium-duty vehicles for MY
2027 and later (in combination with light-duty vehicles); and (3) a
third rulemaking to establish new GHG standards for heavy-duty vehicles
for MY 2030 and later.\793\ The first step includes considering
targeted revisions to the already stringent HD GHG Phase 2 emission
standards for heavy-duty vehicles beginning with MY 2027 in
consideration of the role that heavy-duty zero-emission vehicles (HD
ZEVs) might have in further reducing emissions from certain market
segments. As part of this proposal, we are proposing to increase the
stringency of the existing CO2 emission standards for MY
2027 and later vehicles for many of the vocational vehicle and tractor
subcategories, specifically those where we project early introductions
of zero-emission vehicles. The proposed

increase in stringency is appropriate considering lead time, costs, and
other factors, including the market shifts to zero-emission
technologies in certain segments of the heavy-duty vehicle sector that
are occurring since the HD GHG Phase 2 rule was promulgated in 2016. In
addition, we are requesting comment on potential changes to the
advanced technology incentive program for electric vehicles beginning
in MY 2024. The proposed increased stringency is intended to balance
further incentivizing zero and near-zero emission vehicle development
with ensuring that the standards achieve an appropriate fleet-wide