to CO includes both ambient and nonambient components; and both
components may contribute to adverse health effects.
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    Human clinical studies of subjects with coronary artery disease
show a decrease in the time to onset of exercise-induced angina (chest
pain) and electrocardiogram changes following CO exposure. In addition,
epidemiologic studies show associations between short-term CO exposure
and cardiovascular morbidity, particularly increased emergency room
visits and hospital admissions for coronary heart disease (including
ischemic heart disease, myocardial infarction, and angina). Some
epidemiologic evidence is also available for increased hospital
admissions and emergency room visits for congestive heart failure and
cardiovascular disease as a whole. The ISA concludes that a causal
relationship is likely to exist between short-term exposures to CO and
cardiovascular morbidity. It also concludes that available data are
inadequate to conclude that a causal relationship exists between long-
term exposures to CO and cardiovascular morbidity.
    Animal studies show various neurological effects with in-utero CO
exposure. Controlled human exposure studies report inconsistent neural
and behavioral effects following low-level CO exposures. The ISA
concludes the evidence is suggestive of a causal relationship with both
short- and long-term exposure to CO and central nervous system effects.
    A number of epidemiologic and animal toxicological studies cited in
the ISA have evaluated associations between CO exposure and birth
outcomes such as preterm birth or cardiac birth defects. The
epidemiologic studies provide limited evidence of a CO-induced effect
on preterm births and birth defects, with weak evidence for a decrease
in birth weight. Animal toxicological studies have found associations
between perinatal CO exposure and decrements in birth weight, as well
as other developmental outcomes. The ISA concludes these studies are
suggestive of a causal relationship between long-term exposures to CO
and developmental effects and birth outcomes.

    Epidemiologic studies provide evidence of effects on respiratory
morbidity such as changes in pulmonary function, respiratory symptoms,
and hospital admissions associated with ambient CO concentrations. A
limited number of epidemiologic studies considered copollutants such as
ozone, SO2, and PM in two-pollutant models and found that CO
risk estimates were generally robust, although this limited evidence
makes it difficult to disentangle effects attributed to CO itself from
those of the larger complex air pollution mixture. Controlled human
exposure studies have not extensively evaluated the effect of CO on
respiratory morbidity. Animal studies at levels of 50-100 ppm CO show
preliminary evidence of altered pulmonary vascular remodeling and
oxidative injury. The ISA concludes that the evidence is suggestive of
a causal relationship between short-term CO exposure and respiratory
morbidity, and inadequate to conclude that a causal relationship exists
between long-term exposure and respiratory morbidity.
    Finally, the ISA concludes that the epidemiologic evidence is
suggestive of a causal relationship between short-term exposures to CO
and mortality. Epidemiologic studies provide evidence of an association
between short-term exposure to CO and mortality, but limited evidence
is available to evaluate cause-specific mortality outcomes associated
with CO exposure. In addition, the attenuation of CO risk estimates
which was often observed in copollutant models contributes to the
uncertainty as to whether CO is acting alone or as an indicator for
other combustion-related pollutants. The ISA also concludes that there
is not likely to be a causal relationship between relevant long-term
exposures to CO and mortality.
e. Air Toxics
    Light-duty vehicle emissions contribute to ambient levels of mobile
source air toxics, which are compounds that are known or suspected as
human or animal carcinogens, or that have noncancer health
effects.\685\ The population experiences an elevated risk of cancer and
other noncancer health effects from exposure to the class of pollutants
known collectively as air toxics.\686\ These compounds include, but are
not limited to, benzene, 1,3-butadiene, formaldehyde, acetaldehyde,
acrolein, polycyclic organic matter, and naphthalene. These compounds
were identified as national or regional risk drivers or contributors in
the 2005 National-scale Air Toxics Assessment and have significant
inventory contributions from mobile sources.\687\
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    \685\ U.S. Environmental Protection Agency (2007). Control of
Hazardous Air Pollutants from Mobile Sources; final rule. 72 FR
8434, February 26, 2007.
    \686\ U.S. EPA. (2011) Summary of Results for the 2005 National-
Scale Assessment. www.epa.gov/ttn/atw/nata2005/05pdf/sum_results.pdf. Docket EPA-HQ-OAR-2010-0799.
    \687\ U.S. EPA (2011) 2005 National-Scale Air Toxics Assessment.
http://www.epa.gov/ttn/atw/nata2005. Docket EPA-HQ-OAR-2010-0799.
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i. Benzene
    The EPA's Integrated Risk Information System (IRIS) database lists
benzene as a known human carcinogen (causing leukemia) by all routes of
exposure, and concludes that exposure is associated with additional
health effects, including genetic changes in both humans and animals
and increased proliferation of bone marrow cells in
mice.688,689,690 EPA states in its IRIS database that data
indicate a causal relationship between benzene exposure and acute
lymphocytic leukemia and suggest a relationship between benzene
exposure and chronic non-lymphocytic leukemia and chronic lymphocytic
leukemia. The International Agency for Research on Carcinogens (IARC)
has determined that benzene is a human carcinogen and the U.S.
Department of Health and Human Services (DHHS) has characterized
benzene as a known human carcinogen.691,692
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    \688\ U.S. EPA. 2000. Integrated Risk Information System File
for Benzene. This material is available electronically at http://www.epa.gov/iris/subst/0276.htm. Docket EPA-HQ-OAR-2010-0799.
    \689\ International Agency for Research on Cancer. 1982.
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 29. Some industrial chemicals and dyestuffs, World
Health Organization, Lyon, France, p. 345-389. Docket EPA-HQ-OAR-
2010-0799
    \690\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry,
V.A. 1992. Synergistic action of the benzene metabolite hydroquinone
on myelopoietic stimulating activity of granulocyte/macrophage
colony-stimulating factor in vitro, Proc. Natl. Acad. Sci. 89:3691-
3695. Docket EPA-HQ-OAR-2010-0799.
    \691\ See IARC, Note 689, above.
    \692\ U.S. Department of Health and Human Services National
Toxicology Program 11th Report on Carcinogens available at: http://ntp.niehs.nih.gov/go/16183. Docket EPA-HQ-OAR-2010-0799
---------------------------------------------------------------------------

    A number of adverse noncancer health effects including blood
disorders, such as preleukemia and aplastic anemia, have also been
associated with long-term exposure to benzene.693,694 The
most sensitive noncancer effect observed in humans, based on current
data, is the depression of the absolute lymphocyte count in
blood.695,696 In addition, published work, including studies
sponsored by the Health Effects Institute (HEI), provides evidence that
biochemical responses are occurring at lower levels of benzene exposure
than previously known.697,698,699,700 EPA's IRIS program has
not yet evaluated these new data.
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    \693\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of
benzene. Environ. Health Perspect. 82: 193-197. Docket EPA-HQ-OAR-
2010-0799.
    \694\ Goldstein, B.D. (1988). Benzene toxicity. Occupational
medicine. State of the Art Reviews. 3: 541-554. Docket EPA-HQ-OAR-
2010-0799.
    \695\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E.
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes (1996)
Hematotoxicity among Chinese workers heavily exposed to benzene. Am.
J. Ind. Med. 29: 236-246. Docket EPA-HQ-OAR-2010-0799.
    \696\ U.S. EPA (2002) Toxicological Review of Benzene (Noncancer
Effects). Environmental Protection Agency, Integrated Risk
Information System, Research and Development, National Center for
Environmental Assessment, Washington DC. This material is available
electronically at http://www.epa.gov/iris/subst/0276.htm. Docket
EPA-HQ-OAR-2010-0799.
    \697\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.;
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.;
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok,
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003) HEI Report 115,
Validation & Evaluation of Biomarkers in Workers Exposed to Benzene
in China. Docket EPA-HQ-OAR-2010-0799.
    \698\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et
al. (2002) Hematological changes among Chinese workers with a broad
range of benzene exposures. Am. J. Industr. Med. 42: 275-285. Docket
EPA-HQ-OAR-2010-0799.
    \699\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. (2004)
Hematotoxically in Workers Exposed to Low Levels of Benzene. Science
306: 1774-1776. Docket EPA-HQ-OAR-2010-0799.
    \700\ Turtletaub, K.W. and Mani, C. (2003) Benzene metabolism in
rodents at doses relevant to human exposure from Urban Air. Research
Reports Health Effect Inst. Report No.113. Docket EPA-HQ-OAR-2010-
0799.
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ii. 1,3-Butadiene
    EPA has characterized 1,3-butadiene as carcinogenic to humans by
inhalation.701,702 The IARC has determined that 1,3-
butadiene is a human carcinogen and the U.S. DHHS has characterized
1,3-butadiene as a known human carcinogen.703,704 There

are numerous studies consistently demonstrating that 1,3-butadiene is
metabolized into genotoxic metabolites by experimental animals and
humans. The specific mechanisms of 1,3-butadiene-induced carcinogenesis
are unknown; however, the scientific evidence strongly suggests that
the carcinogenic effects are mediated by genotoxic metabolites. Animal
data suggest that females may be more sensitive than males for cancer
effects associated with 1,3-butadiene exposure; there are insufficient
data in humans from which to draw conclusions about sensitive
subpopulations. 1,3-butadiene also causes a variety of reproductive and
developmental effects in mice; no human data on these effects are
available. The most sensitive effect was ovarian atrophy observed in a
lifetime bioassay of female mice.\705\
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    \701\ U.S. EPA (2002) Health Assessment of 1,3-Butadiene. Office
of Research and Development, National Center for Environmental
Assessment, Washington Office, Washington, DC. Report No. EPA600-P-
98-001F. This document is available electronically at http://www.epa.gov/iris/supdocs/buta-sup.pdf. Docket EPA-HQ-OAR-2010-0799.
    \702\ U.S. EPA (2002) Full IRIS Summary for 1,3-butadiene (CASRN
106-99-0). Environmental Protection Agency, Integrated Risk
Information System (IRIS), Research and Development, National Center
for Environmental Assessment, Washington, DC http://www.epa.gov/iris/subst/0139.htm. Docket EPA-HQ-OAR-2010-0799.
    \703\ International Agency for Research on Cancer (1999)
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 71, Re-evaluation of some organic chemicals,
hydrazine and hydrogen peroxide and Volume 97 (in preparation),
World Health Organization, Lyon, France. Docket EPA-HQ-OAR-2010-
0799.
    \704\ U.S. Department of Health and Human Services (2005)
National Toxicology Program 11th Report on Carcinogens available at:
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932. Docket EPA-HQ-OAR-2010-0799.
    \705\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996)
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by
inhalation. Fundam. Appl. Toxicol. 32:1-10. Docket EPA-HQ-OAR-2010-
0799.
---------------------------------------------------------------------------

iii. Formaldehyde
    In 1991, EPA concluded that formaldehyde is a carcinogen based on
nasal tumors in animal bioassays.\706\ An Inhalation Unit Risk for
cancer and a Reference Dose for oral noncancer effects were developed
by the Agency and posted on the Integrated Risk Information System
(IRIS) database. Since that time, the National Toxicology Program (NTP)
and International Agency for Research on Cancer (IARC) have concluded
that formaldehyde is a known human carcinogen.707,708,709
---------------------------------------------------------------------------

    \706\ EPA. Integrated Risk Information System. Formaldehyde
(CASRN 50-00-0) http://www.epa.gov/iris/subst/0419/htm.
    \707\ National Toxicology Program, U.S. Department of Health and
Human Services (HHS), 12th Report on Carcinogens, June 10, 2011.
    \708\ IARC Monographs on the Evaluation of Carcinogenic Risks to
Humans Volume 88 (2006): Formaldehyde, 2-Butoxyethanol and 1-tert-
Butoxypropan-2-ol.
    \709\ IARC Mongraphs on the Evaluation of Carcinogenic Risks to
Humans Volume 100F (2012): Formaldehyde.
---------------------------------------------------------------------------

    The conclusions by IARC and NTP reflect the results of
epidemiologic research published since 1991 in combination with
previous animal, human and mechanistic evidence. Research conducted by
the National Cancer Institute reported an increased risk of
nasopharyngeal cancer and specific lymphohematopoietic malignancies
among workers exposed to formaldehyde.710,711,712 A National
Institute of Occupational Safety and Health study of garment workers
also reported increased risk of death due to leukemia among workers
exposed to formaldehyde.\713\ Extended follow-up of a cohort of British
chemical workers did not report evidence of an increase in
nasopharyngeal or lymphohematopoietic cancers, but a continuing
statistically significant excess in lung cancers was reported.\714\
Finally, a study of embalmers reported formaldehyde exposures to be
associated with an increased risk of myeloid leukemia but not brain
cancer.\715\
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    \710\ Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R.
B.; Blair, A. 2003. Mortality from lymphohematopoetic malignancies
among workers in formaldehyde industries. Journal of the National
Cancer Institute 95: 1615-1623. Docket EPA-HQ-OAR-2010-0799.
    \711\ Hauptmann, M..; Lubin, J. H.; Stewart, P. A.; Hayes, R.
B.; Blair, A. 2004. Mortality from solid cancers among workers in
formaldehyde industries. American Journal of Epidemiology 159: 1117-
1130. Docket EPA-HQ-OAR-2010-0799.
    \712\ Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P.
A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. Mortality from
lymphohematopoietic malignancies among workers in formaldehyde
industries: The National Cancer Institute cohort. J. National Cancer
Inst. 101: 751-761. Docket EPA-HQ-OAR-2010-0799.
    \713\ Pinkerton, L. E. 2004. Mortality among a cohort of garment
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61:
193-200. Docket EPA-HQ-OAR-2010-0799.
    \714\ Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended
follow-up of a cohort of British chemical workers exposed to
formaldehyde. J National Cancer Inst. 95:1608-1615. Docket EPA-HQ-
OAR-2010-0799.
    \715\ Hauptmann, M,; Stewart P. A.; Lubin J. H.; Beane Freeman,
L. E.; Hornung, R. W.; Herrick, R. F.; Hoover, R. N.; Fraumeni, J.
F.; Hayes, R. B. 2009. Mortality from lymphohematopoietic
malignancies and brain cancer among embalmers exposed to
formaldehyde. Journal of the National Cancer Institute 101:1696-
1708.
---------------------------------------------------------------------------

    Health effects of formaldehyde in addition to cancer were reviewed
by the Agency for Toxics Substances and Disease Registry in 1999 \716\
and supplemented in 2010,\717\ and by the World Health
Organization.\718\ These organizations reviewed the literature
concerning effects on the eyes and respiratory system, the primary
point of contact for inhaled formaldehyde, including sensory irritation
of eyes and respiratory tract, pulmonary function, nasal
histopathology, and immune system effects. In addition, research on
reproductive and developmental effects and neurological effects were
discussed.
---------------------------------------------------------------------------

    \716\ ATSDR. 1999. Toxicological Profile for Formaldehyde, U.S.
Department of Health and Human Services (HHS), July 1999.
    \717\ ATSDR. 2010. Supplement to the Toxicological Profile for
Formaldehyde U.S. Department of Health and Human Services (HHS),
October 2010.
    \718\ IPCS. 2002. Concise International Chemical Assessment
Document 40. Formaldehyde. World Health Organization.
---------------------------------------------------------------------------

    EPA released a draft Toxicological Review of Formaldehyde--
Inhalation Assessment through the IRIS program for peer review by the
National Research Council (NRC) and public comment in June 2010.\719\
The draft assessment reviewed more recent research from animal and
human studies on cancer and other health effects. The NRC released
their review report in April 2011 \720\ (http://www.nap.edu/catalog.php?record_id=13142). The EPA is currently revising the draft
assessment in response to this review.
---------------------------------------------------------------------------

    \719\ EPA (U.S. Environmental Protection Agency). 2010.
Toxicological Review of Formaldehyde (CAS No. 50-00-0)--Inhalation
Assessment: In Support of Summary Information on the Integrated Risk
Information System (IRIS). External Review Draft. EPA/635/R-10/002A.
U.S. Environmental Protection Agency, Washington DC [online].
Available: http://cfpub.epa.gov/ncea/irs_drats/recordisplay.cfm?deid=223614.
    \720\ NRC (National Research Council). 2011. Review of the
Environmental Protection Agency's Draft IRIS Assessment of
Formaldehyde. Washington DC: National Academies Press.
---------------------------------------------------------------------------

iv. Acetaldehyde
    Acetaldehyde is classified in EPA's IRIS database as a probable
human carcinogen, based on nasal tumors in rats, and is considered
toxic by the inhalation, oral, and intravenous routes.\721\
Acetaldehyde is reasonably anticipated to be a human carcinogen by the
U.S. DHHS in the 11th Report on Carcinogens and is classified as
possibly carcinogenic to humans (Group 2B) by the
IARC.722,723 EPA is currently conducting a reassessment of
cancer risk from inhalation exposure to acetaldehyde.
---------------------------------------------------------------------------

    \721\ U.S. EPA. 1991. Integrated Risk Information System File of
Acetaldehyde. Research and Development, National Center for
Environmental Assessment, Washington, DC. Available at http://www.epa.gov/iris/subst/0290.htm. Docket EPA-HQ-OAR-2010-0799.
    \722\ U.S. Department of Health and Human Services National
Toxicology Program 11th Report on Carcinogens available at:
ntp.niehs.nih.gov/index.cfm?objectid=32BA9724-F1F6-975E-7FCE50709CB4C932. Docket EPA-HQ-OAR-2010-0799.
    \723\ International Agency for Research on Cancer. 1999. Re-
evaluation of some organic chemicals, hydrazine, and hydrogen
peroxide. IARC Monographs on the Evaluation of Carcinogenic Risk of
Chemical to Humans, Vol 71. Lyon, France. Docket EPA-HQ-OAR-2010-
0799.
---------------------------------------------------------------------------

    The primary noncancer effects of exposure to acetaldehyde vapors
include irritation of the eyes, skin, and respiratory tract.\724\ In
short-term (4 week) rat studies, degeneration of olfactory epithelium
was observed at various concentration levels of acetaldehyde
exposure.725,726 Data from

these studies were used by EPA to develop an inhalation reference
concentration. Some asthmatics have been shown to be a sensitive
subpopulation to decrements in functional expiratory volume (FEV1 test)
and bronchoconstriction upon acetaldehyde inhalation.\727\ The agency
is currently conducting a reassessment of the health hazards from
inhalation exposure to acetaldehyde.
---------------------------------------------------------------------------

    \724\ See Integrated Risk Information System File of
Acetaldehyde, Note 721, above.
    \725\ Appleman, L.M., R.A. Woutersen, V.J. Feron, R.N. Hooftman,
and W.R.F. Notten. 1986. Effects of the variable versus fixed
exposure levels on the toxicity of acetaldehyde in rats. J. Appl.
Toxicol. 6: 331-336. Docket EPA-HQ-OAR-2010-0799.
    \726\ Appleman, L.M., R.A. Woutersen, and V.J. Feron. 1982.
Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute
studies. Toxicology. 23: 293-297. Docket EPA-HQ-OAR-2010-0799.
    \727\ Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda,
T. 1993. Aerosolized acetaldehyde induces histamine-mediated
bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1):
940-3. Docket EPA-HQ-OAR-2010-0799.
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v. Acrolein
    Acrolein is extremely acrid and irritating to humans when inhaled,
with acute exposure resulting in upper respiratory tract irritation,
mucus hypersecretion and congestion. The intense irritancy of this
carbonyl has been demonstrated during controlled tests in human
subjects, who suffer intolerable eye and nasal mucosal sensory
reactions within minutes of exposure.\728\ These data and additional
studies regarding acute effects of human exposure to acrolein are
summarized in EPA's 2003 IRIS Human Health Assessment for
acrolein.\729\ Evidence available from studies in humans indicate that
levels as low as 0.09 ppm (0.21 mg/m\3\) for five minutes may elicit
subjective complaints of eye irritation with increasing concentrations
leading to more extensive eye, nose and respiratory symptoms.\730\
Lesions to the lungs and upper respiratory tract of rats, rabbits, and
hamsters have been observed after subchronic exposure to acrolein.\731\
Acute exposure effects in animal studies report bronchial hyper-
responsiveness.\732\ In one study, the acute respiratory irritant
effects of exposure to 1.1 ppm acrolein were more pronounced in mice
with allergic airway disease by comparison to non-diseased mice which
also showed decreases in respiratory rate.\733\ Based on these animal
data and demonstration of similar effects in humans (e.g., reduction in
respiratory rate), individuals with compromised respiratory function
(e.g., emphysema, asthma) are expected to be at increased risk of
developing adverse responses to strong respiratory irritants such as
acrolein.
---------------------------------------------------------------------------

    \728\ U.S. EPA (U.S. Environmental Protection Agency). (2003)
Toxicological review of acrolein in support of summary information
on Integrated Risk Information System (IRIS) National Center for
Environmental Assessment, Washington, DC. EPA/635/R-03/003. p. 10.
Available online at: http://www.epa.gov/ncea/iris/toxreviews/0364tr.pdf. Docket EPA-HQ-OAR-2010-0799.
    \729\ See U.S. EPA 2003 Toxicological review of acrolein, Note
728, above.
    \730\ See U.S. EPA 2003 Toxicological review of acrolein, Note
728, at p. 11.
    \731\ Integrated Risk Information System File of Acrolein.
Office of Research and Development, National Center for
Environmental Assessment, Washington, DC. This material is available
at http://www.epa.gov/iris/subst/0364.htm. Docket EPA-HQ-OAR-2010-
0799.
    \732\ See U.S. 2003 Toxicological review of acrolein, Note 728,
at p. 15.
    \733\ Morris JB, Symanowicz PT, Olsen JE, et al. 2003. Immediate
sensory nerve-mediated respiratory responses to irritants in healthy
and allergic airway-diseased mice. J Appl Physiol 94(4):1563-1571.
Docket EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

    EPA determined in 2003 that the human carcinogenic potential of
acrolein could not be determined because the available data were
inadequate. No information was available on the carcinogenic effects of
acrolein in humans and the animal data provided inadequate evidence of
carcinogenicity.\734\ The IARC determined in 1995 that acrolein was not
classifiable as to its carcinogenicity in humans.\735\
---------------------------------------------------------------------------

    \734\ U.S. EPA. 2003. Integrated Risk Information System File of
Acrolein. Research and Development, National Center for
Environmental Assessment, Washington, DC. This material is available
at http://www.epa.gov/iris/subst/0364.htm. Docket EPA-HQ-OAR-2010-
0799.
    \735\ International Agency for Research on Cancer. 1995.
Monographs on the evaluation of carcinogenic risk of chemicals to
humans, Volume 63. Dry cleaning, some chlorinated solvents and other
industrial chemicals, World Health Organization, Lyon, France.
Docket EPA-HQ-OAR-2010-0799.
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vi. Polycyclic Organic Matter
    The term polycyclic organic matter (POM) defines a broad class of
compounds that includes the polycyclic aromatic hydrocarbon compounds
(PAHs). One of these compounds, naphthalene, is discussed separately
below. POM compounds are formed primarily from combustion and are
present in the atmosphere in gas and particulate form. Cancer is the
major concern from exposure to POM. Epidemiologic studies have reported
an increase in lung cancer in humans exposed to diesel exhaust, coke
oven emissions, roofing tar emissions, and cigarette smoke; all of
these mixtures contain POM compounds.736,737 Animal studies
have reported respiratory tract tumors from inhalation exposure to
benzo[a]pyrene and alimentary tract and liver tumors from oral exposure
to benzo[a]pyrene.\738\ In 1997 EPA classified seven PAHs
(benzo[a]pyrene, benz[a]anthracene, chrysene, benzo[b]fluoranthene,
benzo[k]fluoranthene, dibenz[a,h]anthracene, and indeno[1,2,3-
cd]pyrene) as Group B2, probable human carcinogens.\739\ Since that
time, studies have found that maternal exposures to PAHs in a
population of pregnant women were associated with several adverse birth
outcomes, including low birth weight and reduced length at birth, as
well as impaired cognitive development in preschool children (3 years
of age).740,741 These and similar studies are being
evaluated as a part of the ongoing IRIS assessment of health effects
associated with exposure to benzo[a]pyrene.
---------------------------------------------------------------------------

    \736\ Agency for Toxic Substances and Disease Registry (ATSDR).
1995. Toxicological profile for Polycyclic Aromatic Hydrocarbons
(PAHs). Atlanta, GA: U.S. Department of Health and Human Services,
Public Health Service. Available electronically at http://www.atsdr.cdc.gov/ToxProfiles/TP.asp?id=122&tid=25.
    \737\ U.S. EPA (2002). Health Assessment Document for Diesel
Engine Exhaust. EPA/600/8-90/057F Office of Research and
Development, Washington DC. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060. Docket EPA-HQ-OAR-2010-0799.
    \738\ International Agency for Research on Cancer (IARC).
(2012). Monographs on the Evaluation of the Carcinogenic Risk of
Chemicals for Humans, Chemical Agents and Related Occupations. Vol.
100F. Lyon, France.
    \739\ U.S. EPA (1997). Integrated Risk Information System File
of indeno(1,2,3-cd)pyrene. Research and Development, National Center
for Environmental Assessment, Washington, DC. This material is
available electronically at http://www.epa.gov/ncea/iris/subst/0457.htm.
    \740\ Perera, F.P.; Rauh, V.; Tsai, W-Y.; et al. (2002) Effect
of transplacental exposure to environmental pollutants on birth
outcomes in a multiethnic population. Environ Health Perspect. 111:
201-205.
    \741\ Perera, F.P.; Rauh, V.; Whyatt, R.M.; Tsai, W.Y.; Tang,
D.; Diaz, D.; Hoepner, L.; Barr, D.; Tu, Y.H.; Camann, D.; Kinney,
P. (2006) Effect of prenatal exposure to airborne polycyclic
aromatic hydrocarbons on neurodevelopment in the first 3 years of
life among inner-city children. Environ Health Perspect 114: 1287-
1292.
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vii. Naphthalene
    Naphthalene is found in small quantities in gasoline and diesel
fuels. Naphthalene emissions have been measured in larger quantities in
both gasoline and diesel exhaust compared with evaporative emissions
from mobile sources, indicating it is primarily a product of
combustion. Acute (short-term) exposure of humans to naphthalene by
inhalation, ingestion, or dermal contact is associated with hemolytic
anemia and damage to the liver and the nervous system.\742\ Chronic
(long term) exposure of workers and rodents to naphthalene has been
reported to cause cataracts and retinal

damage.\743\ EPA released an external review draft of a reassessment of
the inhalation carcinogenicity of naphthalene based on a number of
recent animal carcinogenicity studies.\744\ The draft reassessment
completed external peer review.\745\ Based on external peer review
comments received, a revised draft assessment that considers all routes
of exposure, as well as cancer and noncancer effects, is under
development. The external review draft does not represent official
agency opinion and was released solely for the purposes of external
peer review and public comment. The National Toxicology Program listed
naphthalene as ``reasonably anticipated to be a human carcinogen'' in
2004 on the basis of bioassays reporting clear evidence of
carcinogenicity in rats and some evidence of carcinogenicity in
mice.\746\ California EPA has released a new risk assessment for
naphthalene, and the IARC has reevaluated naphthalene and re-classified
it as Group 2B: possibly carcinogenic to humans.\747\ Naphthalene also
causes a number of chronic non-cancer effects in animals, including
abnormal cell changes and growth in respiratory and nasal tissues.\748\
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    \742\ U.S. EPA. 1998. Toxicological Review of Naphthalene
(Reassessment of the Inhalation Cancer Risk), Environmental
Protection Agency, Integrated Risk Information System, Research and
Development, National Center for Environmental Assessment,
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm.
    \743\ U.S. EPA. 1998. Toxicological Review of Naphthalene
(Reassessment of the Inhalation Cancer Risk), Environmental
Protection Agency, Integrated Risk Information System, Research and
Development, National Center for Environmental Assessment,
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm.
    \744\ U.S. EPA. 1998. Toxicological Review of Naphthalene
(Reassessment of the Inhalation Cancer Risk), Environmental
Protection Agency, Integrated Risk Information System, Research and
Development, National Center for Environmental Assessment,
Washington, DC. This material is available electronically at http://www.epa.gov/iris/subst/0436.htm. Docket EPA-HQ-OAR-2010-0799.
    \745\ Oak Ridge Institute for Science and Education. (2004).
External Peer Review for the IRIS Reassessment of the Inhalation
Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403. Docket EPA-HQ-OAR-2010-0799.
    \746\ National Toxicology Program (NTP). (2004). 11th Report on
Carcinogens. Public Health Service, U.S. Department of Health and
Human Services, Research Triangle Park, NC. Available from: http://ntp-server.niehs.nih.gov.
    \747\ International Agency for Research on Cancer (IARC).
(2002). Monographs on the Evaluation of the Carcinogenic Risk of
Chemicals for Humans. Vol. 82. Lyon, France. Docket EPA-HQ-OAR-2010-
0799.
    \748\ U.S. EPA. 1998. Toxicological Review of Naphthalene,
Environmental Protection Agency, Integrated Risk Information System,
Research and Development, National Center for Environmental
Assessment, Washington, DC. This material is available
electronically at http://www.epa.gov/iris/subst/0436.htm.
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viii. Other Air Toxics
    In addition to the compounds described above, other compounds in
gaseous hydrocarbon and PM emissions from light-duty vehicles will be
affected by this rule. Mobile source air toxic compounds that would
potentially be impacted include ethylbenzene, propionaldehyde, toluene,
and xylene. Information regarding the health effects of these compounds
can be found in EPA's IRIS database.\749\
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    \749\ U.S. EPA Integrated Risk Information System (IRIS)
database is available at: www.epa.gov/iris.
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f. Exposure and Health Effects Associated With Traffic-Related Air
Pollution
    Populations who live, work, or attend school near major roads
experience elevated exposure to a wide range of air pollutants, as well
as higher risks for a number of adverse health effects. While the
previous sections of this preamble have focused on the health effects
associated with individual criteria pollutants or air toxics, this
section discusses the mixture of different exposures near major
roadways, rather than the effects of any single pollutant. As such,
this section emphasizes traffic-related air pollution, in general, as
the relevant indicator of exposure rather than any particular
pollutant.
    Concentrations of many traffic-generated air pollutants are
elevated for up to 300-500 meters downwind of roads with high traffic
volumes.\750\ Numerous sources on roads contribute to elevated roadside
concentrations, including exhaust and evaporative emissions, and
resuspension of road dust and tire and brake wear. Concentrations of
several criteria and hazardous air pollutants are elevated near major
roads. Furthermore, different semi-volatile organic compounds and
chemical components of particulate matter, including elemental carbon,
organic material, and trace metals, have been reported at higher
concentrations near major roads.
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    \750\ Zhou, Y.; Levy, J.I. (2007) Factors influencing the
spatial extent of mobile source air pollution impacts: a meta-
analysis. BMC Public Health 7: 89. doi:10.1186/1471-2458-7-89 Docket
EPA-HQ-OAR-2010-0799.
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    Populations near major roads experience greater risk of certain
adverse health effects. The Health Effects Institute published a report
on the health effects of traffic-related air pollution.\751\ It
concluded that evidence is ``sufficient to infer the presence of a
causal association'' between traffic exposure and exacerbation of
childhood asthma symptoms. The HEI report also concludes that the
evidence is either ``sufficient'' or ``suggestive but not sufficient''
for a causal association between traffic exposure and new childhood
asthma cases. A review of asthma studies by Salam et al. (2008) reaches
similar conclusions.\752\ The HEI report also concludes that there is
``suggestive'' evidence for pulmonary function deficits associated with
traffic exposure, but concluded that there is ``inadequate and
insufficient'' evidence for causal associations with respiratory health
care utilization, adult-onset asthma, chronic obstructive pulmonary
disease symptoms, and allergy. A review by Holguin (2008) notes that
the effects of traffic on asthma may be modified by nutrition status,
medication use, and genetic factors.\753\
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    \751\ HEI Panel on the Health Effects of Air Pollution. (2010)
Traffic-related air pollution: a critical review of the literature
on emissions, exposure, and health effects. [Online at
www.healtheffects.org] Docket EPA-HQ-OAR-2010-0799.
    \752\ Salam, M.T.; Islam, T.; Gilliland, F.D. (2008) Recent
evidence for adverse effects of residential proximity to traffic
sources on asthma. Current Opin Pulm Med 14: 3-8. Docket EPA-HQ-OAR-
2010-0799.
    \753\ Holguin, F. (2008) Traffic, outdoor air pollution, and
asthma. Immunol Allergy Clinics North Am 28: 577-588. Docket EPA-HQ-
OAR-2010-0799.
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    The HEI report also concludes that evidence is ``suggestive'' of a
causal association between traffic exposure and all-cause and
cardiovascular mortality. There is also evidence of an association
between traffic-related air pollutants and cardiovascular effects such
as changes in heart rhythm, heart attack, and cardiovascular disease.
The HEI report characterizes this evidence as ``suggestive'' of a
causal association, and an independent epidemiological literature
review by Adar and Kaufman (2007) concludes that there is ``consistent
evidence'' linking traffic-related pollution and adverse cardiovascular
health outcomes.\754\
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    \754\ Adar, S.D.; Kaufman, J.D. (2007) Cardiovascular disease
and air pollutants: evaluating and improving epidemiological data
implicating traffic exposure. Inhal Toxicol 19: 135-149. Docket EPA-
HQ-OAR-2010-0799.
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    Some studies have reported associations between traffic exposure
and other health effects, such as birth outcomes (e.g., low birth
weight) and childhood cancer. The HEI report concludes that there is
currently ``inadequate and insufficient'' evidence for a causal
association between these effects and traffic exposure. A review by
Raaschou-Nielsen and Reynolds (2006) concluded that evidence of an
association between childhood cancer and traffic-related air pollutants
is weak, but noted the inability to draw firm conclusions based on
limited evidence.\755\
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    \755\ Raaschou-Nielsen, O.; Reynolds, P. (2006) Air pollution
and childhood cancer: A review of the epidemiological literature.
Int J Cancer 118: 2920-2929. Docket EPA-HQ-OAR-2010-0799.

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    There is a large population in the United States living in close
proximity of major roads. According to the Census Bureau's American
Housing Survey for 2007, approximately 20 million residences in the
United States, 15.6% of all homes, are located within 300 feet (91 m)
of a highway with 4+ lanes, a railroad, or an airport.\756\ Therefore,
at current population of approximately 309 million, assuming that
population and housing are similarly distributed, there are over 48
million people in the United States living near such sources. The HEI
report also notes that in two North American cities, Los Angeles and
Toronto, over 40% of each city's population live within 500 meters of a
highway or 100 meters of a major road. It also notes that about 33% of
each city's population resides within 50 meters of major roads.
Together, the evidence suggests that a large U.S. population lives in
areas with elevated traffic-related air pollution.
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    \756\ U.S. Census Bureau (2008) American Housing Survey for the
United States in 2007. Series H-150 (National Data), Table 1A-7.
[Accessed at http://www.census.gov/hhes/www/housing/ahs/ahs07/ahs07.html on January 22, 2009] Docket EPA-HQ-OAR-2010-0799.
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    People living near roads are often socioeconomically disadvantaged.
According to the 2007 American Housing Survey, a renter-occupied
property is over twice as likely as an owner-occupied property to be
located near a highway with 4+ lanes, railroad or airport. In the same
survey, the median household income of rental housing occupants was
less than half that of owner-occupants ($28,921/$59,886). Numerous
studies in individual urban areas report higher levels of traffic-
related air pollutants in areas with high minority or poor
populations.757,758,759
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    \757\ Lena, T.S.; Ochieng, V.; Carter, M.; Holgu[iacute]n-Veras,
J.; Kinney, P.L. (2002) Elemental carbon and PM2.5 levels
in an urban community heavily impacted by truck traffic. Environ
Health Perspect 110: 1009-1015. Docket EPA-HQ-OAR-2010-0799.
    \758\ Wier, M.; Sciammas, C.; Seto, E.; Bhatia, R.; Rivard, T.
(2009) Health, traffic, and environmental justice: collaborative
research and community action in San Francisco, California. Am J
Public Health 99: S499-S504. Docket EPA-HQ-OAR-2010-0799.
    \759\ Forkenbrock, D.J. and L.A. Schweitzer, Environmental
Justice and Transportation Investment Policy. Iowa City: University
of Iowa, 1997. Docket EPA-HQ-OAR-2010-0799.
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    Students may also be exposed in situations where schools are
located near major roads. In a study of nine metropolitan areas across
the United States, Appatova et al. (2008) found that on average greater
than 33% of schools were located within 400 m of an Interstate, U.S.,
or state highway, while 12% were located within 100 m.\760\ The study
also found that among the metropolitan areas studied, schools in the
Eastern United States were more often sited near major roadways than
schools in the Western United States.
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    \760\ Appatova, A.S.; Ryan, P.H.; LeMasters, G.K.; Grinshpun,
S.A. (2008) Proximal exposure of public schools and students to
major roadways: A nationwide U.S. survey. J Environ Plan Mgmt Docket
EPA-HQ-OAR-2010-0799.
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    Demographic studies of students in schools near major roadways
suggest that this population is more likely than the general student
population to be of non-white race or Hispanic ethnicity, and more
often live in low socioeconomic status locations.761,762,763
There is some inconsistency in the evidence, which may be due to
different local development patterns and measures of traffic and
geographic scale used in the studies.\760\
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    \761\ Green, R.S.; Smorodinsky, S.; Kim, J.J.; McLaughlin, R.;
Ostro, B. (2004) Proximity of California public schools to busy
roads. Environ Health Perspect 112: 61-66. Docket EPA-HQ-OAR-2010-
0799.
    \762\ Houston, D.; Ong, P.; Wu, J.; Winer, A. (2006) Proximity
of licensed child care facilities to near-roadway vehicle pollution.
Am J Public Health 96: 1611-1617. Docket EPA-HQ-OAR-2010-0799.
    \763\ Wu, Y.; Batterman, S. (2006) Proximity of schools in
Detroit, Michigan to automobile and truck traffic. J Exposure Sci
Environ Epidemiol 16: 457-470. Docket EPA-HQ-OAR-2010-0799.
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3. Environmental Effects of Non-GHG Pollutants
    In this section we discuss some of the environmental effects of PM
and its precursors such as visibility impairment, atmospheric
deposition, and materials damage and soiling, as well as environmental
effects associated with the presence of ozone in the ambient air, such
as impacts on plants, including trees, agronomic crops and urban
ornamentals, and environmental effects associated with air toxics.
a. Visibility
    Visibility can be defined as the degree to which the atmosphere is
transparent to visible light.\764\ Visibility impairment is caused by
light scattering and absorption by suspended particles and gases.
Visibility is important because it has direct significance to people's
enjoyment of daily activities in all parts of the country. Individuals
value good visibility for the well-being it provides them directly,
where they live and work, and in places where they enjoy recreational
opportunities. Visibility is also highly valued in significant natural
areas, such as national parks and wilderness areas, and special
emphasis is given to protecting visibility in these areas. For more
information on visibility see the final 2009 PM ISA.\765\
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    \764\ National Research Council, 1993. Protecting Visibility in
National Parks and Wilderness Areas. National Academy of Sciences
Committee on Haze in National Parks and Wilderness Areas. National
Academy Press, Washington, DC. Docket EPA-HQ-OAR-2010-0799. This
book can be viewed on the National Academy Press Web site at http://www.nap.edu/books/0309048443/html/.
    \765\ See U.S. EPA 2009 Final PM ISA, Note 669.
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    EPA is pursuing a two-part strategy to address visibility
impairment. First, EPA developed the regional haze program (64 FR
35714) which was put in place in July 1999 to protect the visibility in
Mandatory Class I Federal areas. There are 156 national parks, forests
and wilderness areas categorized as Mandatory Class I Federal areas (62
FR 38680-38681, July 18, 1997). These areas are defined in CAA section
162 as those national parks exceeding 6,000 acres, wilderness areas and
memorial parks exceeding 5,000 acres, and all international parks which
were in existence on August 7, 1977. Second, EPA has concluded that
PM2.5 causes adverse effects on visibility in other areas
that are not protected by the Regional Haze Rule, depending on
PM2.5 concentrations and other factors that control their
visibility impact effectiveness such as dry chemical composition and
relative humidity (i.e., an indicator of the water composition of the
particles), and has set secondary PM2.5 standards to address
these areas. The existing annual primary and secondary PM2.5
standards have been remanded by the DC Circuit and EPA has proposed to
revise the suite of secondary PM standards by adding a distinct
standard for PM2.5 to address PM-related visibility
impairment.\766\
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    \766\ See American Farm Bureau v. EPA, 559 F. 3d 512, 528-32 (DC
Cir. 2009) (remanding secondary NAAQS) and 77 FR 38979-991
(proposing distinct secondary standard for PM2.5 to
address visibility impairment).
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b. Plant and Ecosystem Effects of Ozone
    Elevated ozone levels contribute to environmental effects, with
impacts to plants and ecosystems being of most concern. Ozone can
produce both acute and chronic injury in sensitive species depending on
the concentration level and the duration of the exposure. Ozone effects
also tend to accumulate over the growing season of the plant, so that
even low concentrations experienced for a longer duration have the
potential to create chronic stress on vegetation. Ozone damage to
plants includes visible injury to leaves and impaired photosynthesis,
both of which can lead to reduced plant growth and reproduction,
resulting in reduced crop yields, forestry production, and use of
sensitive ornamentals in landscaping. In addition, the impairment of
photosynthesis, the process by which

the plant makes carbohydrates (its source of energy and food), can lead
to a subsequent reduction in root growth and carbohydrate storage below
ground, resulting in other, more subtle plant and ecosystems impacts.
    These latter impacts include increased susceptibility of plants to
insect attack, disease, harsh weather, interspecies competition and
overall decreased plant vigor. The adverse effects of ozone on forest
and other natural vegetation can potentially lead to species shifts and
loss from the affected ecosystems, resulting in a loss or reduction in
associated ecosystem goods and services. Lastly, visible ozone injury
to leaves can result in a loss of aesthetic value in areas of special
scenic significance like national parks and wilderness areas. The final
2006 Ozone Air Quality Criteria Document presents more detailed
information on ozone effects on vegetation and ecosystems.
c. Atmospheric Deposition
    Wet and dry deposition of ambient particulate matter delivers a
complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum,
cadmium), organic compounds (e.g., polycyclic organic matter, dioxins,
furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial
and aquatic ecosystems. The chemical form of the compounds deposited
depends on a variety of factors including ambient conditions (e.g.,
temperature, humidity, oxidant levels) and the sources of the material.
Chemical and physical transformations of the compounds occur in the
atmosphere as well as the media onto which they deposit. These
transformations in turn influence the fate, bioavailability and
potential toxicity of these compounds. Atmospheric deposition has been
identified as a key component of the environmental and human health
hazard posed by several pollutants including mercury, dioxin and
PCBs.\767\
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    \767\ U.S. EPA (2000) Deposition of Air Pollutants to the Great
Waters: Third Report to Congress. Office of Air Quality Planning and
Standards. EPA-453/R-00-0005. Docket EPA-HQ-OAR-2010-0799.
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    Adverse impacts on water quality can occur when atmospheric
contaminants deposit to the water surface or when material deposited on
the land enters a waterbody through runoff. Potential impacts of
atmospheric deposition to waterbodies include those related to both
nutrient and toxic inputs. Adverse effects to human health and welfare
can occur from the addition of excess nitrogen via atmospheric
deposition. The nitrogen-nutrient enrichment contributes to toxic algae
blooms and zones of depleted oxygen, which can lead to fish kills,
frequently in coastal waters. Deposition of heavy metals or other
toxics may lead to the human ingestion of contaminated fish, impairment
of drinking water, damage to freshwater and marine ecosystem
components, and limits to recreational uses. Several studies have been
conducted in U.S. coastal waters and in the Great Lakes Region in which
the role of ambient PM deposition and runoff is
investigated.768,769,770,771,772
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    \768\ U.S. EPA (2004) National Coastal Condition Report II.
Office of Research and Development/Office of Water. EPA-620/R-03/
002. Docket EPA-HQ-OAR-2010-0799.
    \769\ Gao, Y., E.D. Nelson, M.P. Field, et al. 2002.
Characterization of atmospheric trace elements on PM2.5
particulate matter over the New York-New Jersey harbor estuary.
Atmos. Environ. 36: 1077-1086. Docket EPA-HQ-OAR-2010-0799.
    \770\ Kim, G., N. Hussain, J.R. Scudlark, and T.M. Church. 2000.
Factors influencing the atmospheric depositional fluxes of stable
Pb, 210Pb, and 7Be into Chesapeake Bay. J. Atmos. Chem. 36: 65-79.
Docket EPA-HQ-OAR-2010-0799.
    \771\ Lu, R., R.P. Turco, K. Stolzenbach, et al. 2003. Dry
deposition of airborne trace metals on the Los Angeles Basin and
adjacent coastal waters. J. Geophys. Res. 108(D2, 4074): AAC 11-1 to
11-24. Docket EPA-HQ-OAR-2010-0799.
    \772\ Marvin, C.H., M.N. Charlton, E.J. Reiner, et al. 2002.
Surficial sediment contamination in Lakes Erie and Ontario: A
comparative analysis. J. Great Lakes Res. 28(3): 437-450. Docket
EPA-HQ-OAR-2010-0799.
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    Atmospheric deposition of nitrogen and sulfur contributes to
acidification, altering biogeochemistry and affecting animal and plant
life in terrestrial and aquatic ecosystems across the United States.
The sensitivity of terrestrial and aquatic ecosystems to acidification
from nitrogen and sulfur deposition is predominantly governed by
geology. Prolonged exposure to excess nitrogen and sulfur deposition in
sensitive areas acidifies lakes, rivers and soils. Increased acidity in
surface waters creates inhospitable conditions for biota and affects
the abundance and nutritional value of preferred prey species,
threatening biodiversity and ecosystem function. Over time, acidifying
deposition also removes essential nutrients from forest soils,
depleting the capacity of soils to neutralize future acid loadings and
negatively affecting forest sustainability. Major effects include a
decline in sensitive forest tree species, such as red spruce (Picea
rubens) and sugar maple (Acer saccharum), and a loss of biodiversity of
fishes, zooplankton, and macro invertebrates.
    In addition to the role nitrogen deposition plays in acidification,
nitrogen deposition also leads to nutrient enrichment and altered
biogeochemical cycling. In aquatic systems increased nitrogen can alter
species assemblages and cause eutrophication. In terrestrial systems
nitrogen loading can lead to loss of nitrogen sensitive lichen species,
decreased biodiversity of grasslands, meadows and other sensitive
habitats, and increased potential for invasive species. For a broader
explanation of the topics treated here, refer to the description in
Section <IP_ADDRESS>.1 of the RIA.
    Adverse impacts on soil chemistry and plant life have been observed
for areas heavily influenced by atmospheric deposition of nutrients,
metals and acid species, resulting in species shifts, loss of
biodiversity, forest decline, damage to forest productivity and
reductions in ecosystem services. Potential impacts also include
adverse effects to human health through ingestion of contaminated
vegetation or livestock (as in the case for dioxin deposition),
reduction in crop yield, and limited use of land due to contamination.
    Atmospheric deposition of pollutants can reduce the aesthetic
appeal of buildings and culturally important articles through soiling,
and can contribute directly (or in conjunction with other pollutants)
to structural damage by means of corrosion or erosion. Atmospheric
deposition may affect materials principally by promoting and
accelerating the corrosion of metals, by degrading paints, and by
deteriorating building materials such as concrete and limestone.
Particles contribute to these effects because of their electrolytic,
hygroscopic, and acidic properties, and their ability to adsorb
corrosive gases (principally sulfur dioxide).
d. Environmental Effects of Air Toxics
    Emissions from producing, transporting and combusting fuel
contribute to ambient levels of pollutants that contribute to adverse
effects on vegetation. Volatile organic compounds, some of which are
considered air toxics, have long been suspected to play a role in
vegetation damage.\773\ In laboratory experiments, a wide range of
tolerance to VOCs has been observed.\774\ Decreases in harvested seed
pod weight have been reported for the more sensitive plants, and some
studies have reported effects on seed germination, flowering and fruit

ripening. Effects of individual VOCs or their role in conjunction with
other stressors (e.g., acidification, drought, temperature extremes)
have not been well studied. In a recent study of a mixture of VOCs
including ethanol and toluene on herbaceous plants, significant effects
on seed production, leaf water content and photosynthetic efficiency
were reported for some plant species.\775\
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    \773\ U.S. EPA. 1991. Effects of organic chemicals in the
atmosphere on terrestrial plants. EPA/600/3-91/001. Docket EPA-HQ-
OAR-2010-0799.
    \774\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M
Skewes, DN Price AR Brown, AD Sharpe. 2003. Effects of VOCs on
herbaceous plants in an open-top chamber experiment. Environ.
Pollut. 124:341-343. Docket EPA-HQ-OAR-2010-0799.
    \775\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M
Skewes, DN Price AR Brown, AD Sharpe. 2003. Effects of VOCs on
herbaceous plants in an open-top chamber experiment. Environ.
Pollut. 124:341-343. Docket EPA-HQ-OAR-2010-0799.
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    Research suggests an adverse impact of vehicle exhaust on plants,
which has in some cases been attributed to aromatic compounds and in
other cases to nitrogen oxides.776,777,778 The impacts of
VOCs on plant reproduction may have long-term implications for
biodiversity and survival of native species near major roadways. Most
of the studies of the impacts of VOCs on vegetation have focused on
short-term exposure and few studies have focused on long-term effects
of VOCs on vegetation and the potential for metabolites of these
compounds to affect herbivores or insects.
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    \776\ Viskari E-L. 2000. Epicuticular wax of Norway spruce
needles as indicator of traffic pollutant deposition. Water, Air,
and Soil Pollut. 121:327-337. Docket EPA-HQ-OAR-2010-0799.
    \777\ Ugrekhelidze D, F Korte, G Kvesitadze. 1997. Uptake and
transformation of benzene and toluene by plant leaves. Ecotox.
Environ. Safety 37:24-29. Docket EPA-HQ-OAR-2010-0799.
    \778\ Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D
Knoppik, B Hock. 1987. Toxic components of motor vehicle emissions
for the spruce Picea abies. Environ. Pollut. 48:235-243. Docket EPA-
HQ-OAR-2010-0799.
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4. Air Quality Impacts of Non-GHG Pollutants
    Air quality modeling was performed to assess the impact of the
vehicle standards on criteria and air toxic pollutants. In this
section, we present information on current levels of pollution as well
as projections for 2030, with respect to ambient PM2.5,
ozone, selected air toxics, visibility levels and nitrogen and sulfur
deposition. The results are discussed in more detail in Section 6.2.2
of the RIA.
a. Ozone
i. Current Levels
    Concentrations that exceed the level of the ozone NAAQS occur in
many parts of the country. The primary and secondary NAAQS for ozone
are 8-hour standards with a level of 0.075 ppm. The most recent
revision to the ozone standards was in 2008; the previous 8-hour ozone
standards, set in 1997, had a level of 0.08 ppm. In 2004, the U.S. EPA
designated nonattainment areas for the 1997 8-hour ozone
NAAQS.779,780 As of July 20, 2012, there were 43 ozone
nonattainment areas for the 1997 ozone NAAQS composed of 237 full or
partial counties, with a total population of over 129 million.
Nonattainment designations for the 2008 ozone standards were finalized
on April 30, 2012 and May 31, 2012.\781\ These designations include 46
areas, composed of 227 full or partial counties, with a population of
over 123 million. As of July 20, 2012, 140 million people are living in
ozone nonattainment areas.
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    \779\ 69 FR 23858 (April 30, 2004).
    \780\ A nonattainment area is defined in the Clean Air Act (CAA)
as an area that is violating an ambient standard or is contributing
to a nearby area that is violating the standard.
    \781\ 77FR 30088 (May 21, 2012).
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ii. Projected Levels Without the Vehicle Standards
    States with ozone nonattainment areas are required to take action
to bring those areas into attainment. The attainment date assigned to
an ozone nonattainment area is based on the area's classification. Most
ozone nonattainment areas are required to attain the 1997 8-hour ozone
NAAQS in the 2007 to 2013 time frame and attainment dates for the 2008
8-hour ozone NAAQS are in the 2015 to 2032 timeframe.\782\ Once an
ozone nonattainment area has attained the NAAQS they are then required
to maintain it thereafter.
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    \782\ The Los Angeles South Coast Air Basin 8-hour ozone
nonattainment area and the San Joaquin Valley Air Basin 8-hour ozone
nonattainment area are designated as extreme and will have to attain
before June 15, 2024. The Sacramento, Coachella Valley, Western
Mojave and Houston 8-hour ozone nonattainment areas are designated
as severe and will have to attain by June 15, 2019.
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    EPA has already adopted many emission control programs that are
expected to reduce ambient ozone levels. As a result of these and other
federal, state and local programs, 8-hour ozone levels are expected to
improve in the future. Even so, our air quality modeling projects that
in 2030, with all current controls but excluding the impacts of the
vehicle standards, up to 10 counties with a population of over 30
million would have projected design values above the level of the 2008
ozone standard of 0.075 ppm (75 ppb). These numbers do not account for
those areas that are close to (e.g., within 10 percent of) the 2008
ozone standard. These areas, although not above the standards, will
also be impacted by changes in ozone concentrations as they work to
ensure long-term maintenance of the ozone NAAQS.
iii. Projected Levels With the Vehicle Standards
    Our modeling indicates that there will be very small changes in
ambient ozone concentrations across most of the country. However, there
will be small decreases in ozone design value concentrations in some
areas of the country and small increases in ozone design value
concentrations in other areas.\783\ The increases in ozone design
values are likely due mainly to the VMT rebound effect in some places
and in other places are likely due mainly to increased electricity
generation. The ozone decreases are likely due mainly to changes in the
location of EGUs, or power plants, in some places and in other places
are likely due mainly to reduced fuel production. The average modeled
8-hour ozone design values are projected to increase by 0.01 ppb in
2030 and the design values for those counties that are projected to be
above the 2008 ozone standard in 2030 will decrease by 0.14 ppb due to
the vehicle standards.
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    \783\ An 8-hour ozone design value is the concentration that
determines whether a monitoring site meets the 8-hour ozone NAAQS.
The full details involved in calculating an 8-hour ozone design
value are given in appendix I of 40 CFR part 50.
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b. Particulate Matter
i. Current Levels
    There are many areas of the country that are currently in
nonattainment for the PM2.5 NAAQS. There are two NAAQS for
PM2.5: An annual standard (15 micrograms per cubic meter
([mu]g/m\3\) and a 24-hour standard (35 [mu]g/m\3\). The most recent
revisions to these standards were in 1997 and 2006. In June 2012, EPA
proposed to revise the PM2.5 NAAQS and is scheduled to issue
final revisions in December 2012 under a court-ordered schedule. The
proposed changes include revising the annual PM2.5 standard
to a level between 12 and 13 [mu]g/m\3\, and establishing a distinct
secondary PM2.5 standard for the protection of visibility,
particularly in urban areas.
    In 2005 EPA designated nonattainment areas for the 1997
PM2.5 NAAQS.\784\ As of July 20, 2012, over 91 million
people lived in the 35 areas that are designated as nonattainment for
the 1997 PM2.5 NAAQS. These PM2.5 nonattainment
areas are comprised of 191 full or partial counties. On October 8,
2009, the EPA issued final nonattainment area designations for the 2006
24-hour PM2.5 NAAQS.\785\ These designations include 32
areas,

composed of 121 full or partial counties, with a population of over 70
million. In total, there are 50 PM2.5 nonattainment areas
with a population of over 105 million people.\786\
---------------------------------------------------------------------------

    \784\ 70 FR 19844 (April 14, 2005).
    \785\ 74 FR 58688 (November 13, 2009).
    \786\ Data come from Summary Nonattainment Area Population
Exposure Report, current as of July 20, 2012 at: http://www.epa.gov/oar/oaqps/greenbk/popexp.html and contained in Docket EPA-HQ-OAR-
2010-0799.
---------------------------------------------------------------------------

ii. Projected Levels Without the Vehicle Standards
    States with PM2.5 nonattainment areas will be required
to take action to bring those areas into attainment in the future. The
1997 PM2.5 nonattainment areas are required to attain the
1997 PM2.5 NAAQS in the 2010 to 2015 time frame and then
maintain it thereafter. The 2006 24-hour PM2.5 nonattainment
areas are required to attain the 2006 24-hour PM2.5 NAAQS in
the 2014 to 2019 time frame and then maintain it thereafter.\787\
---------------------------------------------------------------------------

    \787\ U.S. EPA. (2011). PM Standards Revision--2006: Timeline.
Available at http://www.epa.gov/PM/naaqsrev2006.html#timeline.
Accessed December 31, 2011.
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    EPA has already adopted many mobile source emission control
programs that are expected to reduce ambient PM levels. As a result of
these and other federal, state and local programs, the number of areas
that fail to meet the PM2.5 NAAQS in the future is expected
to decrease. Even so, our air quality modeling projects that in 2030,
with all current controls but excluding the impacts of the vehicle
standards adopted here, at least 4 counties with a population of almost
7 million would have projected design values above the level of the
1997 annual PM2.5 standard of 15 [mu]g/m\3\ and 21 counties
with a population of over 31 million would have projected design values
above the level of the 2006 24-hour PM2.5 standard of 35
[mu]g/m\3\. These numbers do not account for those areas that are close
to (e.g., within 10 percent of) the PM2.5 standards. These
areas, although not above the standards, will also be impacted by any
changes in PM2.5 concentrations as they work to ensure long-
term maintenance of the PM2.5 NAAQS.
iii. Projected Levels With the Vehicle Standards
    Our modeling indicates that there will be very small changes in
ambient PM2.5 concentrations across most of the country.
However, there will be small decreases in PM2.5 design value
concentrations in some areas of the country and small increases in
PM2.5 design value concentrations in other areas.\788\ The
decreases in PM2.5 design values for some counties are
likely due to emission reductions related to lower fuel production and
the increases are likely due to increased emissions from the VMT
rebound effect or increased electricity generation.
---------------------------------------------------------------------------

    \788\ An annual PM2.5 design value is the
concentration that determines whether a monitoring site meets the
annual NAAQS for PM2.5. The full details involved in
calculating an annual PM2.5 design value are given in
appendix N of 40 CFR part 50. A 24-hour PM2.5 design
value is the concentration that determines whether a monitoring site
meets the 24-hour NAAQS for PM2.5. The full details
involved in calculating a 24-hour PM2.5 design value are
given in appendix N of 40 CFR part 50.
---------------------------------------------------------------------------

c. Air Toxics
i. Current Levels
    The majority of Americans continue to be exposed to ambient
concentrations of air toxics at levels which have the potential to
cause adverse health effects.\789\ The levels of air toxics to which
people are exposed vary depending on where people live and work and the
kinds of activities in which they engage, as discussed in detail in
U.S. EPA's 2007 Mobile Source Air Toxics Rule.\790\ According to the
National Air Toxic Assessment (NATA) for 2005,\791\ mobile sources were
responsible for 43 percent of outdoor toxic emissions and over 50
percent of the cancer risk and noncancer hazard associated with primary
emissions. Mobile sources are also large contributors to precursor
emissions which react to form secondary concentrations of air toxics.
Formaldehyde is the largest contributor to cancer risk of all 80
pollutants quantitatively assessed in the 2005 NATA. Mobile sources
were responsible for over 40 percent of primary emissions of this
pollutant in 2005, and are major contributors to formaldehyde precursor
emissions. Benzene is also a large contributor to cancer risk, and
mobile sources account for over 70 percent of ambient exposure. Over
the years, EPA has implemented a number of mobile source and fuel
controls which have resulted in VOC reductions, which also reduced
formaldehyde, benzene and other air toxic emissions.
---------------------------------------------------------------------------

    \789\ U.S. Environmental Protection Agency (2007). Control of
Hazardous Air Pollutants from Mobile Sources; final rule. 72 FR
8434, February 26, 2007.
    \790\ U.S. Environmental Protection Agency (2007). Control of
Hazardous Air Pollutants from Mobile Sources; final rule. 72 FR
8434, February 26, 2007.
    \791\ U.S. EPA. (2011). 2005 National-Scale Air Toxics
Assessment. http://www.epa.gov/ttn/atw/nata2005/.
---------------------------------------------------------------------------

ii. Projected Levels
    Our modeling indicates that national average ambient concentrations
of the modeled air toxics change less than 1 percent across most of the
country due to the final standards. Additional detail on the air toxics
results can be found in Section <IP_ADDRESS> of the RIA.
d. Nitrogen and Sulfur Deposition
i. Current Nitrogen and Sulfur Deposition Levels
    Over the past two decades, the EPA has undertaken numerous efforts
to reduce nitrogen and sulfur deposition across the U.S. Analyses of
long-term monitoring data for the U.S. show that deposition of both
nitrogen and sulfur compounds has decreased over the last 17 years. The
data show that reductions were more substantial for sulfur compounds
than for nitrogen compounds. In the eastern U.S., where data are most
abundant, total sulfur deposition decreased by about 44 percent between
1990 and 2007, while total nitrogen deposition decreased by 25 percent
over the same time frame.\792\ These numbers are generated by the U.S.
national monitoring network and they likely underestimate nitrogen
deposition because neither ammonia nor organic nitrogen is measured.
Although total nitrogen and sulfur deposition has decreased over time,
many areas continue to be negatively impacted by deposition. Deposition
of inorganic nitrogen and sulfur species routinely measured in the U.S.
between 2005 and 2007 were as high as 9.6 kilograms of nitrogen per
hectare (kg N/ha) averaged over three years and 20.8 kilograms of
sulfur per hectare (kg S/ha) averaged over three years.\793\
---------------------------------------------------------------------------

    \792\ U.S. EPA. (2012). U.S. EPA's Report on the Environment.
Data accessed online February 15, 2012 at: http://cfpub.epa.gov/eroe/index.cfm?fuseaction=detail.viewPDF&ch=46&lShowInd=0&subtop=341&lv=list.listByChapter&r=216610 and contained in Docket EPA-HQ-OAR-
2010-0799.
    \793\ U.S. EPA. (2012). U.S. EPA's Report on the Environment.
Data accessed online February 15, 2012 at: http://cfpub.epa.gov/eroe/index.cfm?fuseaction=detail.viewPDF&ch=46&lShowInd=0&subtop=341&lv=list.listByChapter&r=216610 and contained in Docket EPA-HQ-OAR-
2010-0799.
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ii. Projected Nitrogen and Sulfur Deposition Levels
    Our air quality modeling projects increases in nitrogen deposition
in some localized areas across the U.S. along with a few areas of
decreases in nitrogen deposition as a result of the GHG standards. The
increases in nitrogen deposition are likely due to projected upstream
emissions increases in NOX from increased electricity
generation and increased driving due to the VMT rebound effect. The
decreases in nitrogen deposition are likely due to projected upstream
emissions decreases in NOX from changes in the location of
electricity generation. The remainder of

the country will experience only minimal changes in nitrogen
deposition, ranging from decreases of less than 0.5% to increases of
less than 0.5%.
    Our air quality modeling also projects both increases and decreases
in sulfur deposition as a result of the GHG standards. The decreases in
sulfur deposition are likely due to projected upstream emissions
decreases from changes in the location of electricity generation and
from reduced gasoline production. The increases in sulfur deposition
are likely due to projected upstream emissions increases from increased
electricity generation. The remainder of the country will experience
only minimal changes in sulfur deposition, ranging from decreases of
less than 0.5% to increases of less than 0.5%.
    For maps of 2030 deposition impacts and additional information on
these impacts see Section <IP_ADDRESS> of the RIA.
e. Visibility
i. Current Visibility Levels
    As mentioned in Section III.G.4.i, millions of people live in
nonattainment areas for the PM2.5 NAAQS. These populations,
as well as large numbers of individuals who travel to these areas, are
likely to experience visibility impairment. In addition, while
visibility trends have improved in mandatory class I federal areas, the
most recent data show that these areas continue to suffer from
visibility impairment. In summary, visibility impairment is experienced
throughout the U.S., in multi-state regions, urban areas, and remote
mandatory class I federal areas.
ii. Projected Visibility Levels
    Air quality modeling was used to project visibility conditions in
139 mandatory class I federal areas across the U.S. The results show
that in 2030 all the modeled areas would continue to have annual
average deciview levels above background.\794\ Overall the vehicle
standards will have a very small impact on visibility. The average
visibility at all modeled mandatory class I federal areas on the 20
percent worst days is projected to improve by 0.003 deciviews, or 0.03
percent, in 2030. Section <IP_ADDRESS> of the RIA contains more detail on
the visibility portion of the air quality modeling.
---------------------------------------------------------------------------

    \794\ 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.
---------------------------------------------------------------------------

5. Other Unquantified Health and Environmental Effects
    In the NPRM, EPA sought comment on whether there are any other
health and environmental impacts associated with advancements in
vehicle GHG reduction technologies that the agency should consider. In
particular, EPA requested information on studies or research underway
on a vehicle's life-cycle impacts (e.g., materials usage,
manufacturing, end of life disposal) beyond issues regarding fuel
production and distribution (upstream) discussed in Section III.C.\795\
---------------------------------------------------------------------------

    \795\ See 76 FR 75112.
---------------------------------------------------------------------------

    EPA received a mix of comments on this topic, many highlighting
recent or upcoming studies including new research from the University
of California, Davis and the University of Michigan. Some commenters
argued that EPA should base future GHG standards on life-cycle
emissions in order to avoid favoring technologies that have lower
emissions during operation or the ``use phase,'' but higher total
greenhouse gas emissions when production and other stages of a
vehicle's life are considered. For example, several organizations from
the steel industry recommended that EPA and NHTSA consider
incorporating life-cycle assessment into vehicle regulations as part of
the 2018 mid-term evaluation and outlined one potential framework for
establishing such life-cycle based standards.
    Other commenters agreed with the agencies' proposal not to consider
life-cycle impacts as part of the standards, arguing that life-cycle
analysis (LCA) is beyond the intended scope of the rulemaking and that
regulating emissions from vehicle operation addresses the majority of
GHG emissions. The American Chemistry Council also noted, ``Further,
this type of rulemaking is not an appropriate place to apply LCA
because of the lack of consensus regarding how to calculate inputs and
outputs in an LCA evaluation at this time.''
    EPA is glad to see the advances in research on this important topic
and plans to monitor new work in this area. However, the agency
continues to believe that, as of the time of this rulemaking, there is
too much uncertainty about the life-cycle impacts of future advanced
technologies to conduct the type of detailed, vehicle-specific
assessments that would be needed in a regulatory context. See the EPA
Response to Comments document for a more detailed discussion on this
topic and a fuller summary of comments received.\796\
---------------------------------------------------------------------------

    \796\ Also, see Ch. 6 of NHTSA's Environmental Impact Statement
for this rulemaking, ``Literature Synthesis of Life-cycle
Environmental Impacts of Certain Vehicle Materials and
Technologies,'' Docket No. NHTSA-2011-0056. The range of different
models and approaches utilized in the surveyed LCA studies, and the
sensitivity of the results to study assumptions, demonstrate the
challenge of developing a fair and robust method to evaluate life-
cycle impacts across a range of different vehicle technologies at
this time.
---------------------------------------------------------------------------

H. What are the estimated cost, economic, and other impacts of the
rule?

    In this section, EPA presents the costs and impacts of the GHG
standards. It is important to note that NHTSA's CAFE standards and
EPA's GHG standards will both be in effect, and each will lead to
average fuel economy increases and CO2 emissions reductions.
The two agencies' standards comprise the National Program, and this
discussion of costs and benefits of EPA's GHG standard does not change
the fact that both the CAFE and GHG standards, jointly, will be the
source of the benefits and costs of the National Program. These costs
and benefits are appropriately analyzed separately by each agency and
should not be added together.
    This section outlines the basis for assessing the benefits and
costs of the GHG standards and provides estimates of these costs and
benefits. Some of these effects are private, meaning that they affect
consumers and producers directly in their sales, purchases, and use of
vehicles. These private effects include the increase in vehicle prices
due to costs of the technology, fuel savings, and the benefits of
additional driving and reduced refueling. Other costs and benefits
affect people outside the markets for vehicles and their use; these
effects are termed external, because they affect people in ways other
than the effect on the market for and use of new vehicles and are
generally not taken into account by the purchaser of the vehicle. The
external effects include the climate impacts, the effects on non-GHG
pollutants, energy security impacts, and the effects on traffic,
accidents, and noise due to additional driving. The sum of the private
and external benefits and costs is the net social benefits of the
standards.
    There is some debate about the behavior of private markets in the
context of these standards: if consumers optimize their purchases of
fuel economy, with full information and perfect foresight, in perfectly
efficient markets, they should have already

considered these benefits in their vehicle purchase decisions. If so,
then no net private benefits would result from the program, because
consumers would already buy vehicles with the amount of fuel economy
that is optimal for them; requiring additional fuel economy would alter
both the purchase prices of new cars and their lifetime streams of
operating costs in ways that will inevitably reduce consumers' well-
being. Section III.H.1 discusses this issue more fully.
    The net benefits of EPA's rule consist of the effects of the
standards on:
     The vehicle costs;
     Fuel savings associated with reduced fuel usage resulting
from the program;
     Greenhouse gas emissions;
     Other air pollutants;
     Other impacts, including noise, congestion, accidents;
     Energy security impacts;
     Changes in refueling events;
     Increased driving due to the VMT ``rebound'' effect.
    EPA also presents the cost per ton of GHG reductions associated
with the GHG standards on a CO2eq basis, in Section III.H.3
below.
    The total present value of monetized benefits (excluding fuel
savings) under the standards are projected to be between $257 to $743
billion, using a 3 percent discount rate and depending on the value
used for the social cost of carbon. With a 7 percent discount rate, the
total present value of monetized benefits (excluding fuel savings)
under the standards are projected to be between $118 to $604 billion,
depending on the value used for the social cost of carbon. These
benefits are summarized below in Table 103. The present value in 2012
of technology and maintenance costs of the standards are estimated to
be between $247 to $561 billion for new vehicle technology (assuming a
7 and 3 percent discount rate, respectively, and costs through 2050),
less $607 to $1,600 billion in savings realized by consumers through
fewer fuel expenditures (calculated using pre-tax fuel prices and using
a 7 and 3 percent discount rate, respectively, and fuel savings through
2050). These costs are summarized below in Table III-101 and the fuel
savings are summarized in Table III-102. The total net present value of
net benefits under the standards are projected to be between $1,290 and
$1,780 billion, using a 3 percent discount rate and depending on the
value used for the social cost of carbon. With a 7 percent discount
rate, the total net present value of net benefits under the standards
are projected to be between $478 billion to $964 billion, depending on
the value used for the social cost of carbon. The estimates developed
here use as a baseline for comparison the greenhouse gas performance
and fuel economy associated with MY 2016 standards. To the extent that
greater fuel economy improvements than those assumed to occur under the
baseline may have occurred due to market forces alone (absent these
standards), the analysis overestimates private and social net benefits.
    While NHTSA and EPA each modeled their respective regulatory
programs, the analyses were generally consistent and featured similar
parameters. For this rule, EPA has not conducted an overall uncertainty
analysis of the impacts associated with its regulatory program, though
it did conduct sensitivity analyses of individual components of the
analysis (e.g., alternative SCC estimates, VMT rebound effect, battery
costs, mass reduction costs, the indirect cost markup factor, and cost
learning curves); these analyses are found in Chapters 3, 4, and 7 of
the EPA RIA. NHTSA, however, conducted a Monte Carlo simulation of the
uncertainty associated with its regulatory program. The focus of the
simulation model was variation around the chosen uncertainty parameters
and their resulting impact on the key output parameters, fuel savings,
and net benefits. Because of the similarities between the two analyses,
EPA references NHTSA RIA Chapters X and XII as indicative of the
relative magnitude, uncertainty and sensitivities of parameters of the
cost/benefit analysis. EPA has also analyzed the potential impact of
this rule on vehicle sales and employment. These impacts are not
included in the analysis of overall costs and benefits of the
standards. Further information on these and other aspects of the
economic impacts of EPA's rule are summarized in the following sections
and are presented in more detail in the RIA for this rulemaking.
1. Conceptual Framework for Evaluating Consumer Impacts
    For this rule, EPA projects significant private gains to consumers
in three major areas: (1) reductions in spending on fuel; (2) for
gasoline-fueled vehicles, time saved due to less refueling; and (3)
additional driving that results from the VMT rebound effect. In
combination, these private benefits, mostly from fuel savings, appear
to outweigh the costs of the standards, even without accounting for
externalities.
    Admittedly, these findings pose an economic conundrum. On the one
hand, consumers are expected to gain significantly from the rules, as
the increased cost of fuel-efficient cars is smaller than the fuel
savings. Yet many of these technologies are readily available;
financially savvy consumers could have sought vehicles with improved
fuel efficiency, and auto makers seeking those customers could have
offered them. Assuming full information, perfect foresight, perfect
competition, and financially rational consumers and producers, standard
economic theory suggests that normal market operations would have
provided the private net gains to consumers, and the only benefits of
the rule would be due to external benefits. If our analysis projects
net private benefits that consumers have not realized in this perfectly
functioning market, then, with the above assumptions, there must be
additional costs of these private net benefits that are not accounted
for. This calculation assumes that consumers accurately predict and act
on all the fuel-saving benefits they will get from a new vehicle, and
that producers market products providing those benefits. The estimate
of large private net benefits from this rule, then, suggests either
that the assumptions noted above do not hold, or that EPA's analysis
has missed some factor(s) tied to improved fuel economy that reduce(s)
consumer welfare.
    This subsection discusses the economic principles underlying the
assessment of impacts on consumer well-being due to the changes in the
vehicles. Because conventional gasoline- and diesel-fueled vehicles
have quite different characteristics from alternatively fueled vehicles
(especially electric vehicles), the principles for these different
kinds vehicles are discussed separately below.
a. Conventional Vehicles
    For conventional vehicles, the estimates of technology costs
developed for this rule take into account the cost needed to ensure
that vehicle utility (including performance, reliability, and size)
stay constant, except for fuel economy and vehicle price, with some
minor exceptions (e.g., see the discussion of the ``Atkinson-cycle''
engine and towing capacity in III.D.5). For example, using a 4-cylinder
engine instead of a 6-cylinder engine reduces fuel economy, but also
reduces performance; turbocharging the 4-cylinder engine, though,
produces fuel savings while maintaining performance. The cost estimates
assume turbocharging accompanies engine downsizing. As a result, if the
market for fuel economy is efficient and these

cost estimates are correct, then the existence of large private net
benefits implies that there would need to be some other changed
qualities, missed in the cost estimates, which would reduce the
benefits consumers receive from their vehicles.
    We sought comments that identify any such changed qualities omitted
from the analysis. Some comments asserted that these costs must exist,
because it is implausible that the market would otherwise not provide
all the cost-effective fuel savings found in the rule. In the absence
of identified impacts, though, the conundrum remains. A number of
comments discussed consumer acceptance of the vehicles that will be
built in response to this rule; some expressed worry that people would
not want them, and that they will find their choices of vehicles
limited; others expressed confidence that people will want more fuel-
efficient vehicles and note the increase in choices that will be
available to consumers. We note that the footprint-based standards are
intended to preserve the current range of choice of vehicles, and the
costs of the rule take into account the costs of preserving the current
attributes of those vehicles (see RIA Chapter 1.3). Some comments
suggested that auto makers would substitute improvements in fuel
economy for improvements in other vehicle attributes, such as power.
Though that tradeoff may be true for a given engine or vehicle cost,
those comments do not take into account that it is possible to have
improvements in both fuel economy and other attributes through
applications of additional technologies. Those combinations would
increase vehicle costs. The costs of this rule have been estimated for
vehicles with maintained power, size, and other attributes. Because
increases in power or changes in other vehicle attributes are voluntary
design choices by auto makers, we have not included the costs of those
changes in the rule. If those changes would have taken place in the
absence of the rule, and if those changes would be more expensive for
vehicles with increased fuel economy, then there may be some
incremental costs of these technologies not accounted for in the rule--
the difference in cost, for instance, for greater power with and
without higher fuel economy. In the absence of data to estimate this
effect, we rely on our cost estimates based on holding those other
attributes constant.
    The central conundrum observed in this market, that consumers
appear not to purchase products featuring levels of energy efficiency
that are in their economic self-interest, has been referred to as the
Energy Paradox in this setting (and in several others).\797\ There are
many possible reasons discussed in academic research why this might
occur: \798\
---------------------------------------------------------------------------

    \797\ Jaffe, A.B., and Stavins, R.N. (1994). ``The Energy
Paradox and the Diffusion of Conservation Technology.'' Resource and
Energy Economics 16(2), 91-122. Docket EPA-HQ-OAR-2010-0799-0651.
    \798\ For an overview, see Helfand, Gloria and Ann Wolverton,
``Evaluating the Consumer Response to Fuel Economy: A Review of the
Literature.'' International Review of Environmental and Resource
Economics 5 (2011): 103-146, Docket EPA-HQ-OAR-2010-0799-0652.
---------------------------------------------------------------------------

     Consumers might be ``myopic'' and hence undervalue future
fuel savings in their purchasing decisions.
     Consumers might lack the information necessary to estimate
the value of future fuel savings, or not have a full understanding of
this information even when it is presented.
     Consumer may be accounting for uncertainty in future fuel
savings when comparing upfront cost to future returns.
     Consumers may consider fuel economy after other vehicle
attributes and, as such, not optimize the level of this attribute
(instead ``satisficing''--that is, selecting a vehicle that is
acceptable rather than optimal--or selecting vehicles that have some
sufficient amount of fuel economy).
     Consumers might be especially averse to the short-term
losses associated with the higher prices of energy efficient products
relative to the future fuel savings (the behavioral phenomenon of
``loss aversion'').
     Consumers might associate higher fuel economy with
inexpensive, less well designed vehicles.
     When buying vehicles, consumers may focus on visible
attributes that convey status, such as size, and pay less attention to
attributes such as fuel economy that do not visibly convey status.
     Even if consumers have relevant knowledge, selecting a
vehicle is a highly complex undertaking, involving many vehicle
characteristics. In the face of such a complicated choice, consumers
may use simplified decision rules.
     In the case of vehicle fuel efficiency, and perhaps as a
result of one or more of the foregoing factors, consumers may have
relatively few choices to purchase vehicles with greater fuel economy
once other characteristics, such as vehicle class, are chosen.\799\
---------------------------------------------------------------------------

    \799\ For instance, in MY 2010, the range of fuel economy
(combined city and highway) available among all listed 6-cylinder
minivans was 18 to 20 miles per gallon. With a manual-transmission
4-cylinder minivan, it is possible to get 24 mpg. See http://www.fueleconomy.gov, which is jointly maintained by the U.S.
Department of Energy and the EPA.
---------------------------------------------------------------------------

    A great deal of work in behavioral economics identifies and
elaborates factors of this sort, which help account for the Energy
Paradox.\800\ This paradox is found in the context of fuel savings (the
main focus here), but it applies equally to the other private benefits,
including reductions in refueling frequency and additional driving. For
example, it might well be questioned whether significant reductions in
refueling frequency, and corresponding private savings, are fully
internalized when consumers are making purchasing decisions.
---------------------------------------------------------------------------

    \800\ Jaffe, A.B., and Stavins, R.N. (1994). ``The Energy
Paradox and the Diffusion of Conservation Technology.'' Resource and
Energy Economics 16(2), 91-122, Docket EPA-HQ-OAR-2010-0799-0651.
---------------------------------------------------------------------------

    EPA discussed this issue at length in the MYs 2012-2016 light duty
rulemaking and in the medium- and heavy-duty greenhouse gas rulemaking
(see 75 FR 25510-13; 76 FR 57315-19), as well in as the NPRM and in RIA
Chapter <IP_ADDRESS>. Considerable research indicates that the Energy
Paradox may be a real and significant phenomenon, although the
literature has not reached a consensus about the reasons for its
existence. Studies regularly show that fuel economy plays a role in
consumers' vehicle purchases, but modeling that role is still in
development, and there is no consensus that most consumers make fully
informed tradeoffs.\801\ A review commissioned by EPA finds great
variability in estimates of the role of fuel economy in consumers'
vehicle purchase decisions.\802\ Of 27 studies, significant numbers of
them find that consumers undervalue, overvalue, or value approximately
correctly the fuel savings that they will receive from improved fuel
economy. The variation in the value of fuel economy in these studies is
so high that it appears to be inappropriate to identify one central
estimate of this value from the literature. Thus, estimating consumer
response to higher vehicle fuel economy is still unsettled science.
---------------------------------------------------------------------------

    \801\ Helfand, Gloria and Ann Wolverton, ``Evaluating the
Consumer Response to Fuel Economy: A Review of the Literature.''
International Review of Environmental and Resource Economics 5
(2011): 103-146 (Docket EPA-HQ-OAR-2010-0799-0652).
    \802\ Greene, David L. ``How Consumers Value Fuel Economy: A
Literature Review.'' EPA Report EPA-420-R-10-008, March 2010 (Docket
EPA-HQ-OAR-2010-0799-0711).
---------------------------------------------------------------------------

    EPA requested and received a number of comments discussing the role
of the Energy Paradox in consumer vehicle

purchase decisions. Some comments argued that it is possible that
consumers rationally discount higher than the 3 and 7 percent rates
used in this rulemaking, because of uncertainty and volatility related
to fuel savings; those comments recommend that those higher rates
should be used in estimating the value of the fuel savings achieved by
the rule. Other comments support the use of 3 and 7 percent as the
discount rates in our analysis of fuel savings as representing the
opportunity costs of capital. We note that the high discount rates
affect how consumers think about fuel savings in the course of buying a
vehicle, and thus may affect vehicle sales (see Section III.H.11), but
do not represent the social opportunity costs of capital that the
discount rate is intended to reflect; we thus continue our use of 3 and
7 percent as the discount rates for fuel savings in the benefit-cost
analysis. Other arguments state that it is unprofitable for
manufacturers to make vehicles with better fuel economy and the vehicle
attributes that consumers desire, because consumers are unwilling to
pay for the fuel-saving technologies; if there are profit-making
opportunities, EPA has not explained why auto makers have not pursued
them. These arguments, which do not come with data or references to
support them, serve to reinforce the existence of the paradox without
explaining it. EPA cannot fully explain why we appear to have
identified possible profit-making opportunities associated with fuel-
saving technologies that the auto makers have historically not adopted.
We agree that the forces of competition would be expected to lead to
auto makers offering these technologies in response to consumer demand.
As discussed in Section III.D.1, though, we do not have a basis to
expect that auto makers will go beyond the standards for MY 2016 in the
absence of this rule. Other comments emphasize the ``positional''
nature of cars and trucks: people buy them as a reflection of their
status, and focus on vehicle attributes, such as size, that visibly
convey that status. These comments argue that consumers may become
better off through reduced incentives to compete on these positional
attributes and perhaps increased incentives to compete on fuel economy.
EPA acknowledges that vehicles can be positional, and appreciates the
possibility that fuel economy may become a more valued attribute for
consumers; at the same time, the positional nature of vehicles may not
be sufficient by itself to explain the energy paradox, and increasing
the visibility of fuel economy as an attribute may not by itself be
sufficient to meet the greenhouse gas standards of this rule. Any
increase in the desirability of fuel economy, though, would be expected
to facilitate meeting those emissions goals. Other comments addressed
consumer heterogeneity: though some will benefit, others may be made
worse off, and a ``one size fits all'' policy reduces consumer options.
We note that the footprint-based standard as well as the numerous
flexibilities in the rule mean that there are many different paths to
compliance that maintain consumer options; we expect no reduction in
consumer choices. Some commenters expressed that the rule would
increase choices through options for advanced technologies. Though some
consumers who drive little may face longer-than-average payback
periods, those who drive more are expected to benefit, with the gains
outweighing the losses.\803\
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    \803\ One commenter noted that aggregating consumers'
preferences is a controversial area of economic theory. In fact,
aggregating consumers' preferences is the basis of benefit-cost
analysis and welfare analysis more generally. Though people discuss
the merits of benefit-cost analysis as a decision rule versus a
contribution to a decision, and ethical questions can arise about
the distributional impacts of policies, the practice of aggregating
preferences is quite common.
---------------------------------------------------------------------------

    EPA and NHTSA recently revised the fuel economy label on new
vehicles in ways intended to improve information for consumers.\804\
For instance, it presents fuel consumption data in addition to miles
per gallon, in response to the concern over the difficulties of
translating mpg into fuel savings; it also reports expected fuel
savings or additional costs relative to an average vehicle. Whether the
new label will help consumers to overcome the energy paradox is not
known at this point. A literature review that contributed to the fuel
economy labeling rule points out that consumers increasingly do a great
deal of research on the internet before going to an auto dealer.\805\
To the extent that the label improves consumers' understanding of the
value of fuel economy, purchase decisions could change. At least until
the newly revised labels enter the marketplace with MY 2013 vehicles
(or optionally sooner), the agencies may not be able to determine how
vehicle purchase decisions are likely to change as a result of the new
labels.
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    \804\ Environmental Protection Agency and Department of
Transportation, ``Revisions and Additions to Motor Vehicle Fuel
Economy Label,'' Federal Register 76(129) (July 6, 2011): 39478-
39587.
    \805\ PRR, Inc., ``Environmental Protection Agency Fuel Economy
Label: Literature Review.'' EPA-420-R-10-906, August 2010, available
at http://www.epa.gov/fueleconomy/label/420r10906.pdf 2010 (Docket
EPA-HQ-OAR-2010-0799-0712).
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    If there is a difference between expected fuel savings and
consumers' willingness to pay for those fuel savings, the next question
is, which is the appropriate measure of consumer benefit? Fuel savings
measure the actual monetary value that consumers will receive after
purchasing a vehicle; the willingness to pay for fuel economy measures
the value that, before a purchase, consumers place on additional fuel
economy. As noted, there are a number of reasons that consumers may
incorrectly estimate the benefits that they get from improved fuel
economy, including risk or loss aversion, and poor ability to calculate
savings. Also as noted, fuel economy may not be as salient as other
vehicle characteristics when a consumer is considering vehicles. If
these arguments are valid, then there will be significant gains to
consumers of the government mandating additional fuel economy. Several
commenters specifically supported this argument in support of using
expected future fuel savings in the benefit-cost analysis. Other
comments argued that consumers are willing to pay only 25 percent of
expected future fuel savings, and that that value should be used in the
benefit-cost analysis,\806\ while also arguing against the existence of
the energy paradox.\807\ We note, again, the difference between what
consumers think about when they buy their vehicles (which may not be
expected future fuel savings) and what they will experience once they
have bought their vehicles.
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    \806\ The comment that consumers are willing to pay for only 25
percent of expected future fuel savings is based on a study, not of
consumer preferences, but rather of vehicle technology
(Bandivadekar, Anup, et al. (July 2008). On the Road in 2035:
Reducing Transportation's Petroleum Consumption and GHG Emissions,
Massachusetts Institute of Technology, Laboratory for Energy and the
Environment Report No. LFEE 2008-05 RP, Docket EPA-HQ-OAR-2010-0799-
0736); it is based on a comparison of the fuel-saving technology
that auto companies provide in European vs. U.S. vehicles.
Technology tradeoffs do not estimate consumer behavior, unless auto
manufacturers perfectly understand and respond to consumer desires.
Using the technology tradeoffs to measure consumer behavior is
additionally unnecessary and inappropriate because a number of
studies specifically examine consumer behavior for fuel economy;
see, e.g., Greene's review in note 802, above.
    \807\ These two statements are contradictory. The existence of
the energy paradox is based on comparing consumer willingness to pay
for fuel savings with the expected fuel savings they will receive.
If consumers are willing to pay for only 25% of fuel savings, they
undervalue fuel savings, and there is an energy paradox; if they do
not undervalue fuel savings, and there is no energy paradox, they
are willing to pay for 100% of fuel savings.

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

    While acknowledging the conundrum, EPA continues to value fuel
savings from the standards using the projected market value over the
vehicles' entire lifetimes, and to report that value among private
benefits of the rule. Improved fuel economy will significantly reduce
consumer expenditures on fuel, thus benefiting consumers. Real money is
being saved and accrued by the initial buyer and by subsequent owners.
We note that comments arguing for use of less than fuel savings did not
dispute the existence of those fuel savings, but only how to estimate
their value; we continue to use the market valuation rather than the
subjective preference at the time of vehicle purchase. In addition to
these other factors, using a measure based on consumer consideration at
the time of vehicle purchase would involve a very wide range of
uncertainty, due to the lack of consensus in the relevant literature on
the value of additional fuel economy. Due partly to this factor, it is
true that limitations in modeling affect our ability to estimate how
much of these savings would have occurred in the absence of the rule.
For example, some of the technologies predicted to be adopted in
response to the rule may already be in the deployment process due to
shifts in consumer demand for fuel economy, or due to expectations by
auto makers of future GHG/fuel economy standards. It is possible that
some of these savings would have occurred in the absence of the
standards.\808\ To the extent that greater fuel economy improvements
than those assumed to occur under the baseline may have occurred due to
market forces alone (absent the standards), the analysis overestimates
private and social benefits and also overestimates the rule's costs. As
discussed below, limitations in modeling also affect our ability to
estimate the effects of the rule on net benefits in the market for
vehicles.
---------------------------------------------------------------------------

    \808\ However, as discussed at section III.D.1 above, the
assumption of a flat baseline absent this rule rests on strong
historic evidence of lack of increase in fuel economy absent either
regulatory control or sharply rising fuel prices.
---------------------------------------------------------------------------

    Consumer vehicle choice models estimate what vehicles consumers buy
based on vehicle and consumer characteristics. In principle, such
models could provide a means of understanding both the role of fuel
economy in consumers' purchase decisions and the effects of this rule
on the benefits that consumers will get from vehicles. Helfand and
Wolverton discuss the wide variation in the structure and results of
these models.\809\ Models or model results have not frequently been
systematically compared to each other. When they have, the results show
large variation over, for instance, the value that consumers place on
additional fuel economy.
---------------------------------------------------------------------------

    \809\ Helfand, Gloria and Ann Wolverton, ``Evaluating the
Consumer Response to Fuel Economy: A Review of the Literature.''
International Review of Environmental and Resource Economics 5
(2011): 103-146 (Docket EPA-HQ-OAR-2010-0799-0652).
---------------------------------------------------------------------------

    In order to develop greater understanding of these models, EPA has
developed a preliminary vehicle choice model. As described in the NPRM,
it uses a ``nested logit'' structure common in the vehicle choice
modeling literature. ``Nesting'' refers to the decision-tree structure
of buyers' choices among vehicles the model employs, and ``logit''
refers to the specific pattern by which buyers' choices respond to
differences in the overall utility that individual vehicle models and
their attributes provide.\810\ The nesting structure in EPA's model
involves a hierarchy of choices. For instance, at the initial decision
node, consumers choose between buying a new vehicle or not. Conditional
on choosing a new vehicle, consumers then choose among passenger
vehicles, cargo vehicles, and ultra-luxury vehicles. After two more
nodes, at the bottom are the individual models. At this bottom level,
vehicles that are similar to each other end up in the same nest; for
example, two such nests are standard subcompacts and prestige large
vehicles. Substitution within a nest is considered much more likely
than substitution across nests, because the vehicles within a nest are
more similar to each other than vehicles in different nests. For
instance, a person is more likely to substitute between a Chevrolet
Aveo and a Toyota Yaris (both subcompacts) than between an Aveo and a
pickup truck. In addition, substitution is greater at low decision
nodes (such as individual vehicles) than at higher decision nodes (such
as the buy/no buy decision), because there are more choices at lower
levels than at higher levels. Parameters for the model (including
demand elasticities and the value of fuel economy in purchase
decisions) are based on a review of values found in the literature on
vehicle choice modeling. Additional discussion of this model can be
found in Chapter <IP_ADDRESS> of the RIA and in the model
documentation.\811\
---------------------------------------------------------------------------

    \810\ Logit refers to a statistical analysis method used for
analyzing the factors that affect discrete choices (i.e., yes/no
decisions or the choice among a countable number of options).
    \811\ Greene, David L., and Changzheng Liu (March 2012).
``Consumer Vehicle Choice Model Documentation.'' Prepared for the
U.S. Environmental Protection Agency by Oak Ridge National
Laboratory. Docket EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

    In the peer review of EPA's model, the reviewers found the basic
structure of the model to be reasonable, while pointing out, first,
that its use in policy analysis depended on its integration with OMEGA,
and second, that conducting uncertainty analysis would be important
given the uncertainties around the model's parameters.\812\ These are
valuable suggestions for next steps in the modeling process, now that a
preliminary model has been developed.
---------------------------------------------------------------------------

    \812\ U.S. Environmental Protection Agency. ``Peer Review for
the Consumer Vehicle Choice Model and Documentation.'' Office of
Transportation and Air Quality, Assessment and Standards Division,
EPA-420-R-12-013, April 2012. Docket EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

    In the NPRM, EPA asked for comments on the use of vehicle choice
modeling for predicting changes in sales mix, and on methods to test
the predictive abilities of models. See 76 FR 75116. Several commenters
expressed concern that consumer choice models are too uncertain to be
used in policy making. One comment argued that the rulemaking should
not continue if the agencies do not use vehicle choice models that have
been subject to public comment and peer review, to reflect consumer
acceptability. As discussed in greater detail in Section 18.1 of the
Response to Comment Document, we disagree that the rulemaking requires
the use of vehicle choice models. Because the predictive ability of
these models has not been well tested, the quality of the information
that would come from a vehicle choice model is not well understood.
Instead, we provide here and in Section III.H.11(a) thorough discussion
of the effects of the rule on consumer welfare and on vehicle sales.
    EPA agrees with some commenters that there is yet much to learn
about consumer vehicle choice models and their predictive abilities.
EPA is therefore not using its preliminary consumer choice model in
this rulemaking because we believe it needs further development and
testing before we have confidence in its use and results. As the peer
review noted, it has not yet been integrated with OMEGA, an important
step for ensuring that changes in the vehicle fleet estimated by the
model will result in a fleet compliant with the standards. In addition,
concerns remain that vehicle choice models have rarely been validated
against real-world data. In response to these concerns, we would expect
any use of the model to involve, at the least,

a number of sensitivity analyses to examine the robustness of results
to key parameters. We will continue model development and testing to
understand better the results and limitations of using the model.
    The next issue is the potential for loss in consumer welfare due to
the rule. As mentioned above (and discussed more thoroughly in Section
III.D.3 of this preamble), the technology cost estimates developed here
for conventional vehicles take into account the costs to hold other
vehicle attributes, such as size and performance, constant.\813\ In
addition, the analysis assumes that the full technology costs are
passed along to consumers. With these assumptions, because paying the
consumers back the technology costs would completely compensate them
for their losses,\814\ the price increase measures the loss to the
buyer.\815\ Assuming that the full technology cost gets passed along to
the buyer as an increase in price, the technology cost thus measures
the welfare loss to the consumer. Increasing fuel economy would have to
lead to other changes in the vehicles that consumers find undesirable
for there to be additional losses not bounded by the technology costs.
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    \813\ If the reference-case vehicles include different vehicle
characteristics, such as improved acceleration or towing capacity,
then the costs for the standards would be, as here, the costs of
adding compliance technologies to those reference-case vehicles.
These costs may differ from those estimated here, due to our lack of
information on how those vehicle characteristics might change
between now and 2025.
    \814\ This approach describes the economic concept of
compensating variation, a payment of money after a change that would
make a consumer as well off after the change as before it. A related
concept, equivalent variation, estimates the income change that
would be an alternative to the change taking place. The difference
between them is whether the consumer's point of reference is her
welfare before the change (compensating variation) or after the
change (equivalent variation). In practice, these two measures are
typically very close together for marketed goods.
    \815\ Indeed, it is likely to be an overestimate of the loss to
the consumer, because the consumer has choices other than buying the
same vehicle with a higher price; she could choose a different
vehicle, or decide not to buy a new vehicle. The consumer would
choose one of those options only if the alternative involves less
loss than paying the higher price. Thus, the increase in price that
the consumer faces would be the upper bound of loss of consumer
welfare, unless there are other changes to the vehicle due to the
fuel economy improvements, unaccounted for in the costs, that make
the vehicle less desirable to consumers.
---------------------------------------------------------------------------

b. Electric Vehicles and Other Advanced Technology Vehicles
    The analysis of this rule finds that alternative-fuel vehicles,
especially electric vehicles (EVs), may form a part (albeit limited) of
some manufacturers' compliance strategies. The following discussion
will focus on EVs, because they are expected to play more of a role in
compliance than vehicles with other alternative fuels, but related
issues may arise for other alternative fuel vehicles. It should be
noted that EPA's projection of the penetration of EVs in the MY 2025
fleet is very small (under 3%).
    Electric vehicles (EVs), at the time of this rulemaking, have very
different refueling infrastructures than conventional gasoline- or
diesel-fueled vehicles: refueling EVs requires either access to
electric charging facilities or battery replacement. In addition,
because of the expense of increased battery capacity, EVs commonly have
a smaller driving range than conventional vehicles. Because of these
differences, the vehicles cannot be considered conventional vehicles
unmodified except for cost and fuel economy. As a result, the consumer
welfare arguments presented above may need adjustments to account for
these differences.
    Comments differed on consumer attitudes toward EVs. The National
Automobile Dealers Association and some fuels-related organizations
argued that consumers are likely to hesitate to buy even hybrid
electric vehicles, in part because they like vehicles that are familiar
to them, and it is risky to depend on EVs to meet the standards of this
program. Some fuels organizations pointed to low sales of existing EVs
and plug-in hybrid electric vehicles (PHEVs) as evidence of consumer
unwillingness to consider these vehicles, and thus as evidence that the
standards are too stringent because they rely on electrification. We
note that electrification is an option for compliance but is not
required under this rule (and indeed, EPA projects minimal penetration
of electrification as the likely compliance path even for the MY 2025
standards, as documented in section III.D.6.c above). Others note the
expense of EVs. Environmental and consumer organizations argue that
there are reasons to be optimistic about consumer adoption of these
vehicles because consumers may appreciate their low or zero gasoline
consumption. EPA recognizes all these as possibilities in response to
this rule. Many of the organizations skeptical of EVs expressed concern
that the rule would reduce vehicle choices for consumers, by requiring
people to buy more fuel-efficient vehicles when they might otherwise
not choose them. Those optimistic about EVs said that choices were
expected to increase, because consumers could choose between
conventional and alternative fuel vehicles.
    A first important point to observe in response to these concerns is
that, although auto makers are required to comply with the standards,
producing EVs as a compliance strategy is not required. Auto makers
will choose to provide EVs either if they have few alternative ways to
comply, or if EVs are, for some range of production, likely to be more
profitable (or less unprofitable) than other ways of complying.
    From the consumer perspective, it is important to observe that
there is no mandate for any consumer to choose any particular kind of
vehicle. An individual consumer will buy an EV only if the price and
characteristics of the vehicle make it more attractive to her than
other vehicles. If the range of vehicles in the conventional fleet does
not shrink, the availability of EVs should not reduce consumer welfare
compared to a fleet with no EVs: increasing options should not reduce
consumer well-being, because other existing options still are
available. On the other hand, if the variety of vehicles in the
conventional market does change, there may be consumers who may need to
substitute to alternative vehicles. The use of the footprint-based
standard is intended in part to help maintain the diversity of vehicle
sizes. Because the agencies do not expect any vehicle classes to become
unavailable, consumers who buy EVs therefore are expected to choose
them voluntarily, in preference to the other vehicles available to
them.
    From a practical perspective, the key issue is whether the consumer
demand for EVs is large enough to absorb all the EVs that automakers
will produce in order to comply with these standards, or whether
automakers will need to increase consumer purchases by providing
subsidies to consumers. If enough consumers find EVs more attractive
than other vehicles, and automakers therefore do not need to subsidize
their purchase, then both consumers and producers will benefit from the
introduction of EVs. On the other hand, it is possible that automakers
will find EVs to be part of a cost-effective compliance technology but
nevertheless need to price them below cost them to sell sufficient
numbers. If so, then there is a welfare loss associated with the sale
of EVs beyond those that would be sold in the free market. While it is
theoretically possible to quantify such a welfare loss, the data needed
to support such a calculation is not available at this time. To
quantify this value, the deadweight loss can be approximated as one-
half of the size of the subsidy needed for the

marginal purchaser, times the number of sales that would need the
subsidy.\816\ Estimating this value would require knowing the number of
sales necessary beyond the expected sales level in an unregulated
market, and the amount of the subsidy that would be necessary to induce
the desired number of sales. Given the fledgling state of the market
for EVs, neither of these values is easily knowable for the 2017 to
2025 time frame.
---------------------------------------------------------------------------

    \816\ This calculation approximately measures the area between
the supply and demand curves for these vehicles when the number sold
exceeds the equilibrium value. The supply curve approximately
measures the costs of producing the vehicles, and the demand curve
estimates how much consumers are willing to pay for the vehicles.
The measure described here estimates the difference between the
extra cost for these excess vehicles and their value to their
buyers.
---------------------------------------------------------------------------

    A number of factors will affect the likelihood of consumer
acceptance of EVs. People with short commutes may find little obstacle
in the relatively short driving range, but others who regularly drive
long distances may find EVs' ranges limiting. The reduced tailpipe
emissions and reduced noise may be attractive features to some
consumers.\817\ Recharging at home could be a convenient, desirable
feature for people who have garages with electric charging capability,
but not for people who park on the street. If an infrastructure
develops for recharging vehicles with the convenience approaching that
of buying gasoline, limited range or lack of home recharging may become
less of a barrier to purchase. Of course, other attributes of the
marketed EVs, such as their cost, performance, and their passenger and
storage capacity, will also affect the share of consumers who will
consider them. As infrastructure, EV technology, and costs evolve over
time, consumer interest in EVs will adjust as well. Thus, modeling
consumer response to advanced technology vehicles in the 2017-2025 time
frame poses even more challenges than those associated with modeling
consumer response for conventional vehicles.
---------------------------------------------------------------------------

    \817\ For instance, Hidrue et al. (Hidrue, Michael K., George R.
Parsons, Willett Kempton, and Meryl P. Gardner. ``Willingness to Pay
for Electric Vehicles and their Attributes.'' Resource and Energy
Economics 33(3) (2011): 686-705 (Docket EPA-HQ-OAR-2010-0799)) find
that some consumers are willing to pay $5100 for vehicles with 95%
lower emissions than the vehicles they otherwise aim to purchase.
---------------------------------------------------------------------------

    Because range is a major factor in EV acceptability, it is starting
to draw attention in the research community. For instance, several
studies have examined consumers' willingness to pay for increased
vehicle range. Results vary, depending on when the survey was conducted
(studies from the early 1990s have much higher values than more recent
studies) and on household income and other demographic factors; some
find range to be statistically indistinguishable from zero, while
others find the value of increasing range from 150 to 300 miles to be
as much as $59,000 (2010$) (see RIA Chapter <IP_ADDRESS> for more
discussion).
    Other research has examined how the range limitation may affect
driving patterns. Pearre et al. observed daily driving patterns for 484
vehicles in the Atlanta area over a year.\818\ In their sample, 9
percent of vehicles never exceeded 100 miles in one day, and 21 percent
never exceeded 150 miles in one day. Lin and Greene compared the cost
of reduced range to the cost of additional battery capacity for
EVs.\819\ They find that an ``optimized'' range of about 75 miles would