CRS Report: RL30298 - Air Quality and Motor Vehicles: An Analysis of Current and Proposed Emission Standards

RL30298: Air Quality and Motor Vehicles:
An Analysis of Current and
Proposed Emission Standards

ABSTRACT

The Clean Air Act Amendments of 1990 (Pi. 101-549) established "Tier I" emission standards for new motor vehicles, which became effective in model year (MY) 1994. On May 13, 1999, the Environmental Protection Agency (EPA) proposed more stringent "Tier 2" vehicle emission standards that would be phased in between MY2004 and MY2009. Because sulfur in gasoline impairs the operation of emission control technologies, EPA also is proposing national limits on gasoline sulfur levels which would become effective in 2004. Compliance within these time frames would be mandatory if the standards are finalized. Prior to its Tier 2 proposal, EPA completed a voluntary agreement in March 1998 with 8 northeastern states and 23 vehicle manufacturers to establish a National Low Emission Vehicle (LEV) Program. Manufacturers agreed to sell cleaner vehicles in the Northeast and the District of Columbia beginning in MY1999 and nationwide in MY2001. This report provides background information on the regulation of vehicle emissions in the United States, analyzes key elements of the National LEV program and EPA's Tier 2 proposal, summarizes major views on the proposal that have been expressed by the automobile industry, the oil refining industry, and some environmental organizations, and discusses relevant legislative activity in the 106^th Congress. This report will be updated as developments occur.

The extent to which emissions from motor vehicles and the amount of sulfur in commercial gasoline should be regulated has become a controversial issue. The Clean Air Act Amendments of 1990 (P.L. 101-549) established 'Tier I" emission standards for new motor vehicles, which became effective in model year (MY) 1994. The law also required the Environmental Protection Agency (EPA) to determine by December 31, 1999, whether more stringent "Tier 2" standards would be necessary, technologically feasible, and cost-effective in MY2004 to improve air quality. EPA proposed such standards on May 13, 1999, and also proposed national limits on gasoline sulfur levels in order to improve the efficiency of emission control technologies. Compliance with these standards would be mandatory if finalized. Prior to its Tier 2 proposal, EPA completed a voluntary agreement in March 1998 with 8 northeastern states and 23 vehicle manufacturers to establish a National Low Emission Vehicle (LEV) Program, which began in the Northeast and the District of Columbia in MY1999 and will be applied nationwide in MY2001.

The National LEV program adopts California's current low emission standards for non-methane organic gases (NMOG), nitrogen oxides (NO_x), carbon monoxide (CO), particulate matter (PM), and formaldehyde (HCHO). The program focuses on controlling the formation of ground-level ozone pollution by requiring a 70% reduction in NMOG emissions and a 50% reduction in NO, emissions. Reductions in emissions of CO and PM are not as sharp, and the new standard for HCHO is aimed at reducing emissions of carcinogenic pollutants. However, the air quality benefits of the National LEV program may be less promising than the stringency of the emission standards alone would suggest due to high sulfur levels in commercial gasoline and the use of more lenient emission standards for light trucks, sport utility vehicles, and minivans above 3,750 pounds. Congressional oversight is a possibility as the program expands from regional to national implementation in MY2001.

EPA based its Tier 2 proposal on California's new low emission standards. The proposed Tier 2 controls would require all new cars and light trucks up to 8,500 pounds to meet the same standards by MY2009, rather than MY2004 as California requires. Overall emissions of NO_x would be reduced by 88% to 95%, and sharp reductions in NMOG and PM also would occur. Limits on CO and HCHO would be similar to what the National LEV program requires. The Tier 2 proposal also would limit gasoline sulfur levels to an average of 30 parts per million (ppm) nationwide in 2004, roughly 90% less than the national average of 340 ppm. The oil refining industry claims that the proposed sulfur controls would be too costly and unattainable by 2004, whereas the automobile industry insists that low sulfur gasoline is essential to meet the proposed vehicle emission standards. In Congress, there is both support for and opposition to the Tier 2 proposal. While legislation has been introduced to regulate gasoline sulfur levels according to levels that are similar to what EPA is proposing, legislation to scale back EPA's gasoline sulfur proposal or to address emission standards for motor vehicles has not been introduced to date.

The Environmental Protection Agency (EPA) has proposed stricter controls on motor vehicle emissions and is currently implementing a voluntary program to introduce cleaner vehicles nationwide by model year (MY) 2001. Congress first required vehicle emissions to be regulated when it amended the Clean Air Act under the Motor Vehicle Air Pollution Control Act of 1965 (P.L. 89-272). While Congress subsequently amended the Clean Air Act in 1967, 1970, 1977, and 1990 to tighten controls on vehicle emissions, the Department of Transportation reports that the number of miles traveled by passenger cars and light trucks has risen from 1.0 trillion in 1970 to 2.3 trillion in 1996.1 The rise in travel has offset much of the pollution reductions achieved by emission controls, and as a result, motor vehicles continue to be major sources of air pollution. EPA reports that in 1997 on-road vehicles accounted for about 58% of carbon monoxide (CO) emissions in the United States, nearly 30% of nitrogen oxides (NO_x), roughly 27% of volatile organic compounds (VOCs), and about 9% of particulate matter (PM).2 NO_x and VOCs contribute to ground-level ozone pollution, commonly known as smog. 3

Despite current pollution controls, areas in many states have not attained the National Ambient Air Quality Standards (NAAQS).4 Attainment of the ozone standard has been a persistent problem in the Northeast due to high levels of NO_x and VOCs. The Clean Air Act Amendments of 1990 (P.L. 101-549) established "Tier I" standards that placed stricter limits on tailpipe emissions from new motor vehicles beginning in MY1994. The law also required EPA to determine by December 31, 1999 if more stringent 'Tier 2" standards would be necessary in MY2004 to attain or maintain the NAAQS, and if so, to promulgate them. However, before promulgation, EPA was to assess the availability and cost-effectiveness of pollution control technologies that would be necessary to achieve further reductions in emissions. In a report submitted to Congress in August 1998, EPA concluded that tougher standards are necessary and essential technologies are available and cost-effective.5 As a result, EPA proposed stricter Tier 2 standards on May 13, 1999.6 Subsequently, the agency held a series of public hearings from June 9-17, 1999 in Philadelphia, Atlanta, Denver, and Cleveland, and received additional public comment until August 2, 1999. EPA is planning to issue a final rule by the end of the year.

As proposed, the Tier 2 standards would be phased in between MY2004 and MY2009. All new passenger cars and light trucks up to 6,000 pounds would become subject to the standards by MY2007, but heavier trucks between 6,001 and 8,500 pounds (including some sport utility vehicles and minivans) would not be required to meet them until MY2009. Because sulfur in gasoline impairs the operation of emission control technologies, the proposal also would limit gasoline sulfur levels to an average of 30 parts per million (ppm) nationwide beginning in 2004, roughly 90% below the current national average of 340 ppm.7 In congressional testimony and in comments submitted to EPA, the oil refining industry claims that such limits on sulfur levels would be too costly and unattainable by 2004, whereas the automobile industry insists that low sulfur gasoline is necessary to meet the proposed emission standards for motor vehicles. EPA may address these and other issues in its final rule.

Prior to EPA's Tier 2 proposal, 8 northeastern states and 23 vehicle manufacturers completed a voluntary agreement in March 1998 to develop a National Low Emission Vehicle (LEV) Program aimed at achieving additional emission reductions before MY2004.8 Under the National LEV program, manufacturers began to produce cleaner vehicles for sale in the Northeast and the District of Columbia in MY1999 and will expand the program nationwide in MY2001.9 The program uses the same low emission standards that are currently in effect in California, New York, Massachusetts, Vermont, and Maine. The main incentive for manufacturers to participate in the National LEV program is that they are able to produce a single fleet of vehicles for sale nationwide rather than having to produce a separate fleet to meet stricter requirements in only a few states. While the National LEV standards are more stringent than the current Tier I standards, they demand fewer reductions than EPA's Tier 2 proposal would require. For example, the National LEV standards require a 50% reduction in overall NO_x emissions, whereas the proposed Tier 2 standards would require overall emissions of this pollutant to be reduced by 88% to 95%.

While the National LEV program is based on a voluntary agreement, it arose out of attempts by a few states and EPA to mandate stricter standards in the Northeast prior to MY2004 and as a result of subsequent litigation challenging their authority to do so. In February 1994, the Ozone Transport Commission (OTC), which represents 12 northeastern states and the District of Columbia, recommended that EPA require the adoption of California's LEV program in the Northeast to help improve air quality.10 Subsequently, EPA issued a rule in January 1995 to implement the OTC's recommendation.11 New York, Massachusetts, Vermont, and Maine have adopted California's LEV program. However, Virginia and several vehicle manufacturers legally challenged EPA's authority to mandate stricter standards. A federal court ruled that EPA does not have the authority under the Clean Air Act to impose stricter standards for new vehicles prior to MY2004 even if air quality problems warrant it.12 As an alternative, EPA negotiated a voluntary agreement with states and manufacturers to establish the National LEV program based on California's current low emission standards.

In addition to challenging EPA's authority to mandate stricter standards, manufacturers also were concerned that many states with poor air quality would adopt California's sales target for zero emission vehicles (ZEVs). To encourage the participation of manufacturers, the National LEV program does not include ZEV sales targets. Industry views such targets as unrealistic because the costs of electric and fuel cell technologies necessary to eliminate all emissions remain significantly higher than conventional gasoline and diesel engines and the market for vehicles using these technologies is not yet established. Due to similar concerns, EPA's Tier 2 proposal would not impose a ZEV sales mandate but would offer credits for producing such vehicles, which could be used to help meet compliance requirements.

Implementation of the National LEV program is currently underway, and oversight is a possibility in the 106^th Congress as the program expands beyond the Northeast in MY2001. Congressional interest in EPA's Tier 2 proposal has focused primarily on the potential regulation of gasoline sulfur levels, and there has been both opposition and support among Members of Congress. The following sections of this report provide background information on the regulation of vehicle emissions in the United States, analyze key elements of the National LEV program and EPA's Tier 2 proposal, summarize major views on the proposal that have been expressed by the automobile industry, the oil refining industry, and some environmental organizations, and discuss relevant legislative activity in the 106^th Congress.

The Clean Air Act Amendments of 1990 (P.L. 101-549) established "Tier I" standards that placed stricter limits on tailpipe emissions from new motor vehicles. The Tier I standards replaced less stringent requirements previously introduced under the Clean Air Act Amendments of 1977 (P.L. 95-95). While the Clean Air Act prohibits individual states from enforcing vehicle emission standards of their own, it allows California to enforce stricter requirements to help address serious air quality problems in many of that state's metropolitan areas. In addition, other states with poor air quality can choose to adopt California's standards but cannot develop different standards of their own. To date, New York, Massachusetts, Vermont, and Maine have adopted California's standards. The federal Tier I standards and California's more stringent requirements are discussed below.

The Tier I standards regulate emissions of non-methane hydrocarbons (NMHC), CO, N0_x, and PM from each new vehicle manufactured or imported for sale in the United States.13 To reduce the regulatory burden on manufacturers, the standards were phased in gradually over 3 years beginning in MY 1994. Light trucks between 3,751 and 5,750 pounds are subject to standards that are roughly 1.5 times less stringent than those for cars and light trucks up to 3,750 pounds. Heavier trucks weighing more than 5,750 pounds are subject to the most lenient standards, which are about 2.5 times less stringent than those for lighter vehicles up to 3,750 pounds. In addition, each weight category is subject to separate standards for different intervals of vehicle use: an intermediate useful life of 5 years or 50,000 miles and a full useful life of 10 years or 100,000 miles (II years or 120,000 miles for heavier tucks weighing more than 5,750 pounds). (Refer to Table I on page 7.)

EPA approved California's LEV I program in January 1993 with authority provided under Section 209 of the Clean Air Act.14 The program became effective in MY 1994 and requires the automobile industry to comply with low emission standards for vehicles produced for sale in the state. It retains the basic structure of the Tier I requirements, under which passenger cars and light trucks are subject to separate sets of standards according to vehicle weight and amount of use. In addition to stricter standards, California's program differs from the Tier I requirements in three ways. First, it replaced the NMHC testing procedure with a test for non-methane organic gases (NMOG) that more accurately measures hydrocarbons, and it added a new standard for formaldehyde (HCHO), a carcinogen. Second, manufacturers must certify each vehicle under one of five categories: California Tier I vehicles, transitional low emission vehicles (TLEVs), low emission vehicles (LEVs), ultra low emission vehicles (ULEVs), or zero emission vehicles (ZEVs). However, manufacturers have the flexibility to demonstrate compliance by using fleet emission averages instead of certifying each vehicle according to the same stringency. The use of fleet emission averages allows manufacturers broad flexibility in selecting which set of standards apply to different models of vehicles, while still meeting the air quality objective of lowering overall emissions to a specific level. Third, the program requires that ZEVs comprise 10% of total vehicle sales in the state by MY2003. On November 5, 1998, the California Air Resources Board, a state agency, finalized revisions to its current LEV I standards, which will become effective in MY2004.15 The LEV II standards will require further reductions in emissions and subject all new passenger cars and light trucks up to 8,500 pounds to the same regulations. California's current LEV I standards will remain in effect through MY2003.

The National LEV program adopts California's current LEV I standards for NMOG, N0_x, CO, PM, and HCHO. It also follows California's practice of allowing manufacturers to use fleet emission averages instead of certifying each vehicle according to the same stringency. The program focuses on controlling the formation of ground-level ozone pollution by requiring a 70% reduction in NMOG and a 50% reduction in NO_x. The standards require fewer reductions in CO primarily because ambient concentrations of this pollutant have been declining steadily since 1987. Gasoline-powered vehicles are not significant sources of PM, and the low emission standard for this pollutant is limited to diesel-powered vehicles. The standard for HCHO would reduce emissions of carcinogenic pollutants. However, vehicles certified under the National LEV program are likely to emit greater quantities of pollutants in actual use than the low emission standards indicate due to the use of less stringent emission standards for light trucks above 3,750 pounds and high sulfur levels in commercial gasoline. Sulfur in gasoline inhibits emission control systems, and gasoline used to certify vehicles according to the National LEV standards contains much less sulfur than commercial gasoline available outside of California. Specific requirements of the National LEV program, estimates of air quality benefits and costs, and the potential effects of gasoline sulfur levels and less stringent light truck standards on actual emissions are discussed below.

Similar to California's LEV I program, the National LEV program requires manufacturers to certify each vehicle according to one of four categories subject to increasingly stringent emission standards: federal Tier I, TLEVs, LEVs, or ULEVs. (Refer to Table I on page 7.) While the National LEV program does not include California's ZEV sales target, manufacturers also can certify their vehicles as ZEVs and receive credit for their air quality benefits. Relative to the NMOG standard, TLEVs are 50% cleaner than Tier I vehicles, LEVs are 70% cleaner, and ULEVs are 85% cleaner. Like the Tier I standards and California's requirements, passenger cars and light trucks weighing up to 3,750 pounds are subject to stricter standards than heavier trucks weighing between 3,751 and 5,750 pounds. Trucks weighing more than 5,750 pounds are not regulated under the National LEV program and therefore remain subject to the less stringent Tier I standards. In addition, certified vehicles also must meet other low emission standards for the Supplemental Federal Test Procedure, which measures emissions during high speed acceleration, high speed driving, and air conditioning use.

While certified vehicles are subject to low emission standards for a total of five pollutants, manufacturers will demonstrate compliance by averaging only the NMOG emissions of their vehicle fleets, which represent the most significant reductions under the program. Similar to the certification standards, passenger cars and light trucks up to 3,750 pounds are expected to meet stricter fleet emission averages than heavier trucks between 3,751 and 5,750 pounds. Vehicles sold in the Northeast in MY1999 and MY2000 will be expected to meet less stringent fleet emission averages than those that will become effective nationwide in MY2001. At this time, the fleet average emission standards will become as stringent as the LEV certification standards for NMOG measured to reflect an intermediate vehicle use of 50,000 miles. To preserve regional air quality benefits, manufacturers must calculate fleet emission averages for vehicles sold in the Northeast separately from those sold in other states.

To provide additional flexibility in demonstrating compliance, manufacturers can trade NMOG credits to meet the fleet average emission standards. A manufacturer will generate credits in a model year if its fleet emissions average is lower than the standard, and will generate debits if its fleet emissions average exceeds the standard. Manufacturers with debits can purchase credits from others to achieve compliance. However, trading will be conducted separately in the Northeast to prevent manufacturers from using credits generated in states outside of the region with relatively clean air to achieve compliance in more heavily polluted northeastern states. Manufacturers also can save credits for use or sale in future model years. However, these credits will lose a portion of their value each year and will no longer be valid after the fourth year held. As an incentive to introduce cleaner vehicles nationwide sooner than the program requires, manufacturers are eligible for early reduction credits if they meet the fleet average emission standards in states outside of the Northeast prior to MY2001.

Vehicle Type/Weight	Intermediate Useful Life (grams/mile)^a					Full Useful Life (grams/mile)^a
Vehicle Type/Weight	NMHC/ NMOG ^b	CO	NO_x	PM ^c	HCHO	NMHC/ NMOG ^b	CO	NO_x	PM ^c	HCHO
Tier 1 Standards LDVs/LDTs (< 3,751 lbs.)	0.250	3.4	0.4	0.08	n/a	0.310	4.2	0.60	0.10	n/a
LDTs (3,751-5,750 lbs.)	0.320	4.4	0.7	0.08	n/a	0.400	5.5	0.97	0.10	n/a
National LEV Standards LDVs/LDTs (< 3,751 lbs.)
Fleet Averages ^d
MY1999 (Northeast)	0.148	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
MY2000 (Northeast)	0.095	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
MY2001(Nationwide)	0.075	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Certification Standards
TLEV	0.125	3.4	0.4	n/a	0.015	0.156	4.2	0.60	0.08	0.018
LEV	0.075	3.4	0.2	n/a	0.015	0.090	4.2	0.30	0.08	0.018
ULEV	0.040	1.7	0.2	n/a	0.008	0.055	2.1	0.30	0.04	0.011

LDTs (3,751-5,750 lbs.)
Fleet Averages ^d
MY1999 (Northeast)	0.190	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
MY2000 (Northeast)	0.124	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
MY2001(Nationwide)	0.100	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
Certification Standards
TLEV	0.160	4.4	0.7	n/a	0.018	0.200	5.5	0.90	0.10	0.023
LEV	0.100	4.4	0.4	n/a	0.018	0.130	5.5	0.50	0.10	0.023
ULEV	0.050	2.2	0.4	n/a	0.009	0.070	2.8	0.50	0.05	0.013

The main air quality benefit of the National LEV program would be reductions in the ozone precursors NMOG and NO_x. Other benefits would be reductions in PM, formaldehyde and benzene.16 Based on the stringency of the certification standards, EPA estimates that by 2005 the National LEV program would reduce N0_x emissions by 400 tons per day nationwide, NMOG by 279 tons, PM by 29 tons, benzene by 7 tons, and formaldehyde by 4 tons.17 Whether the program is able to achieve these reductions will depend to a large extent on whether certified vehicles operate as cleanly in actual use as they do under test conditions. While the reductions estimated by EPA would help to reduce pollution from new vehicles, they are relatively small (less than 1%) compared to nationwide emissions from all sources combined.18 On the other hand, such reductions could be more critical in urban areas where mobile sources typically account for a greater share of total pollution.

EPA analyzed the costs of the National LEV program based on cost estimates of vehicles sold in California. The California Air Resources Board estimates that the cost of an LEV in the state is $96 higher on average than a Tier I vehicle. EPA estimates a somewhat lower cost of $76 on average under the National LEV program due to four major reasons. First, advances in technology could reduce costs. Second, economies of scale also could lower costs since manufacturers are be able to produce a single fleet of vehicles subject to the same standards nationwide. Third, past cost estimates from the California Air Resources Board have proven higher than actual price differences. Fourth, industry historically has lowered vehicle prices in successive model years after the introduction of new technologies. Based on projections of vehicle sales nationwide, EPA estimates that the total cost of the National LEV program to consumers would be $950 million annually.19

Vehicles certified under the National LEV program may not operate as cleanly in actual use as the certification standards suggest because high gasoline sulfur levels could impair the operation of emission controls. Sulfur occurs naturally in crude oil, and the amount remaining in gasoline varies widely among refineries. Gasoline sulfur levels average 340 ppm nationwide and can reach as high as 1,000 ppm.20 Levels are lowest in California where a cap is currently in place that limits sulfur to a maximum of 80 ppm with a statewide average of 30 ppm. To meet emission standards, motor vehicles primarily depend on catalytic converters to reduce levels of CO, N0„ and VOCs from the exhaust. However, the sulfur in gasoline can react with the surface of the catalyst and inhibit the removal of other pollutants. The extent to which sulfur increases emissions depends mostly on the design of the catalyst, materials used, air to fuel mixture of the engine, and range of exhaust temperatures.

A discrepancy currently exists between sulfur levels in commercial gasoline and the amount in certification fuels. Under the National LEV program, manufacturers can certify their vehicles with the test fuel for California's LEV program or the federal test fuel for Tier I vehicles. Sulfur levels in California's test fuel are frequently below 30 ppm, and the amount in federal test fuel is typically less than 100 ppm, both of which are lower than average gasoline sulfur levels nationwide. Even in areas where the second phase of reformulated gasoline will be sold in 2000, sulfur levels will average as much as 150 ppm and continue to exceed test fuel amounts.21 In effect, vehicles certified under the National LEV program may emit more pollution in actual use than the certification standards suggest, and therefore, produce fewer air quality benefits. However, the extent to which the air quality benefits of the program might be compromised is difficult to determine since different models of vehicles do not respond the same to high sulfur gasoline.

The vehicle manufacturing and oil refining industries have conducted studies to examine the effects of gasoline sulfur levels on emissions. They conclude that actual emissions depend on the amount of sulfur in gasoline, and N0„ emissions seem to be more affected by sulfur than other pollutants. However, sensitivity to sulfur varies among vehicles. EPA has combined the test results from two industry studies that indicate a wide range of effects among LEVs and ULEVs when operated on high sulfur gasoline. For example, emissions of NO_x from the 9 most sensitive vehicles increased by 251% when operated on gasoline with a national sulfur average of 3 40 ppm, whereas NO_x emissions from the 9 least sensitive vehicles increased by only 61%. These studies also tested the effects of sulfur on Tier I vehicles and observed a lower increase in NO_x emissions of 13.6%, which indicates that the technologies used to achieve the LEV and ULEV standards are significantly more sensitive than those typically used in Tier I vehicles.22

Like the Tier I standards under the Clean Air Act and California's current LEV I standards, the National LEV program continues the practice of allowing light trucks over 3,750 pounds to meet less stringent emission standards. Congress initially established more lenient standards for these heavier trucks because their capacity for carrying large loads compromised emissions performance and they composed a smaller portion of the vehicle fleet, which made less of an impact on air quality. However, light trucks now account for a much larger share of total vehicle sales. According to industry sales data, light trucks accounted for about 20% of total vehicle sales in 1980.23 By 1998, the market share of these vehicles had increased to nearly 48%.24 The sharp rise in sales is mostly due to the heightened popularity of sport utility vehicles and minivans. Sport utility vehicles alone accounted for about 18% of total vehicle sales in 1998, while minivans accounted for roughly 8%.25 However, the historical change in the market share of light trucks somewhat underestimates the actual growth in sales. While the number of passenger cars sold in the United States has decreased since 1980, the number of light trucks sold has more than tripled from 2.2 million in 1980 to 7.4 million in 1998. Consequently, the contribution of light trucks to total emissions from motor vehicles has increased as well. 26

Based on the number and weight of vehicles certified to meet the federal Tier I standards, EPA estimates that about 37% of all vehicles sold outside of California in 1998, including light trucks, sport utility vehicles, and minivans, weigh in excess of 3,750 pounds.27 These heavier vehicles are subject to less stringent emission standards even though they are used primarily for personal transportation rather than for carrying heavy loads, which the more lenient standards were initially designed to accommodate. The increasing market share of heavier light trucks, sport utility vehicles, and minivans could alter the composition of the vehicle fleet significantly enough to increase total emissions and offset the sharper reductions from lighter cars and trucks. As a result, overall reductions in vehicle emissions under the National LEV program might be less promising.

While states and vehicle manufacturers have voluntarily agreed to participate in the National LEV program, compliance with EPA's Tier 2 proposal would be mandatory if finalized. EPA based its proposal on California's LEV II program to ensure that vehicle manufacturers remain subject to the same requirements nationwide. Following California's example, the proposed Tier 2 standards would address the issue of rising light truck emissions by regulating all new passenger cars and light trucks up to 8,500 pounds according to the same emission standards. The proposed standards would be phased in gradually between MY2004 and MY2009. All new passenger cars and light trucks up to 6,000 pounds would be required to achieve full compliance by MY2007, but heavier trucks between 6,001 and 8,500 pounds would not be required to meet the same standards until two years later in MY2009. EPA is also proposing to follow California's example of regulating gasoline sulfur levels to improve the operation of emission control technologies. The Tier 2 proposal would limit gasoline sulfur levels to an average of 30 ppm nationwide beginning in 2004, roughly 90% less than the current national average of 340 ppm.

Like the National LEV program, the proposed Tier 2 standards would limit tailpipe emissions of NMOG, N0_x, CO, PM, and HCHO. The proposed standards would require the greatest reductions in emissions of NMOG and NO_x to help control the formation of ground-level ozone pollution. Relative to the Tier I standards, the fleet average emissions standard for NO_x would require vehicle manufacturers to reduce overall emissions by 88% to 95%. The proposed standards also would require at least an 80% reduction in PM emissions. Unlike the National LEV program, the proposed PM standard would apply to both gasoline and diesel-powered vehicles. Limits on emissions of CO and HCHO would be similar to those under the National LEV program. Manufacturers would have the flexibility to select from among several different sets of emission standards instead of certifying each vehicle according to the same stringency. While the certification standards would limit emissions of all five regulated pollutants, EPA would determine compliance by averaging the NO_x emissions of a manufacturer's vehicle fleet, which would represent the largest reductions under the program. The use of fleet emission averages would allow manufacturers broad flexibility in selecting which set of standards applies to different models of vehicles, while still meeting the air quality objective of lowering overall N0„ emissions to a specific level. Key elements of EPA's Tier 2 proposal, estimates of air quality benefits and costs, responses from industry and environmental organizations, and potential legal challenges that some opponents might raise are discussed below.

Manufacturers would be able to select from among several different sets (or "bins") of emission standards when certifying their vehicles. (Refer to Table 2 on page 13.) Each bin would include separate limits on emissions measured to reflect an intermediate and full useful life of vehicle operation. The benchmark for a vehicle's intermediate useful life would continue to be 50,000 miles, as the Tier I and National LEV standards require. However, EPA's proposal would increase the full useful life benchmark from 100,000 to 120,000 miles to match the performance requirement adopted under California's LEV II program. The least stringent emissions bin would serve as a cap on the maximum amount of pollution that each vehicle would be allowed to emit and is based on the Tier 2 guidelines specified in Section 202(i) of the Clean Air Act. As such, it would allow a certified vehicle to emit .20 grams per mile of N0„ nearly three times as much as the fleet average emission standard of .07 grams per mile that EPA is proposing. The most stringent bin would be reserved solely for certifying ZEVs, which would require that emissions of all five regulated pollutants be reduced to unmeasurable levels. While EPA's proposal does not include a ZEV sales mandate, the agency included a bin for such vehicles to allow manufacturers that make them to receive credit for their air quality benefits when calculating their fleet emission averages. In addition to the certification standards, each vehicle also would be required to meet stricter limits on evaporative emissions and tougher requirements under the Supplemental Federal Test Procedure, which measures emissions during high speed acceleration, high speed driving, and air conditioning use. During the phase-in period beginning in MY2004, vehicles not certified according to the Tier 2 standards would be subject to a less stringent set of interim standards which are based on the National LEV program.

While each vehicle would be subject to limits on emissions of all five regulated pollutants, EPA would determine compliance by averaging the N0„ emissions of each manufacturer's vehicle fleet. The fleet average emissions standard would limit N0„ emissions to .07 grams per mile measured at a full useful life of 120,000 miles. All passenger cars and light trucks up to 6,000 pounds would be required to meet this standard in MY2007, and all heavier trucks between 6,001 and 8,500 pounds would become subject to it two years later in MY2009. During the phase-in period, manufacturers also would be subject to less stringent fleet emission averages for vehicles certified according to the interim standards. The interim fleet average emissions standard for passenger cars and light trucks up to 6,000 pounds would be .30 grams per mile, but heavier trucks between 6,001 and 8,500 pounds would be subject to a stricter interim fleet average emissions standard of .20 grams per mile due to the more lenient phase-in schedule for these heavier vehicles. While the National LEV program and the state of California require each manufacturer to average its fleet emissions of NMOG to determine compliance, EPA expects that its proposal to use fleet average emission standards for NO_x would result in comparable reductions of NMOG as well.

Passenger cars and light trucks up to 6,000 pounds would be subject to an earlier phase-in schedule than heavier trucks between 6,001 and 8,500 pounds. Vehicle manufacturers would be required to certify at least 25% of their passenger cars and light trucks up to 6,000 pounds according to the Tier 2 standards in MY2004, at least 50% in MY2005, at least 75% in MY2006, and 100% in MY2007. Vehicles in this weight class that are not certified according to the Tier 2 standards between MY2004 and MY2006 would be subject to the interim standards. Manufacturers would not be required to certify any of their light trucks between 6,001 and 8,500 pounds according to the Tier 2 standards until MY2008. However, they would be required to certify at least 25% of these heavier vehicles according to the interim standards in MY2004, at least 50% in MY2005, at least 75% in MY2006, and 100% in MY2007. Trucks in this heavier weight class that are not certified according to the interim standards between MY2004 and MY2006 would remain subject to the current Tier I standards under the Clean Air Act. Beginning in MY2008, manufacturers would be required to certify at least 50% of their light trucks weighing between 6,001 and 8,500 pounds according to the Tier 2 standards with the remaining 50% still being subject to the interim standards. The phase-in period would end in MY2009 when all new passenger cars and light trucks weighing up to 8,500 pounds would be subject to the Tier 2 standards, at which time the interim standards would no longer apply.

Similar to the National LEV program, EPA's proposal would provide additional flexibility by allowing vehicle manufacturers to bank and trade N0_x credits that could be used to demonstrate compliance. Manufacturers would earn credits for reducing their overall N0_x emissions below the fleet average emissions standard, and manufacturers having difficulty in controlling their fleet emissions could purchase such credits to achieve compliance. EPA also would allow manufacturers to bank any earned or purchased credits for use or sale in the future. While credits banked under the National LEV program lose their value after 4 years, EPA's Tier 2 proposal would not restrict the number of years that NO_x credits could be banked prior to their use. If a manufacturer is unable to meet the fleet average emissions standard after using all of the credits that it holds, an emissions deficit could be carried into the next model year. However, the manufacturer would have to earn or purchase enough credits during that model year to offset the deficit or face enforcement actions. During the phase-in period, NO_x credits earned for reducing overall emissions below the less stringent interim fleet average emission standards would be traded separately from those generated for controlling emissions beyond the stricter fleet average emissions standard for Tier 2 vehicles. Requiring such credits to be traded separately would prevent manufacturers from making large amounts of easier reductions under the interim standards to comply with the tougher Tier 2 requirements.

EPA based its proposal to limit gasoline sulfur levels on fuel formula requirements that have been in effect in California since 1996. Each oil refinery would be required to reduce sulfur levels in gasoline to an average of 30 ppm beginning in 2004, a reduction of over 90% below the current national average of 340 ppm. Refineries would also be subject to a less stringent cap on the amount of sulfur in each gallon of gasoline. The cap would be phased in gradually and limit sulfur levels to 300 ppm per gallon in 2004, 180 ppm per gallon in 2005, and 80 ppm per gallon in 2006 and thereafter. However, small refineries would be subject to more lenient gasoline sulfur limits between 2004 and 2007 and would not be required to comply with the 30 ppm average standard and 80 ppm cap until 2008.28 Hardship extensions also would be available to small refineries that could extend the compliance deadline to 2010. EPA expects that a more lenient compliance schedule for small refineries would help to ease the regulatory burden on such businesses without significantly affecting the emission reduction potential of Tier 2 vehicles, since small refineries produce only about 2.5% of all gasoline in the United States.

Similar to the trading program for vehicle manufacturers, the gasoline sulfur trading program would allow the oil refining industry the flexibility to bank or trade credits to meet the national limit on average gasoline sulfur levels. Oil refiners would generate credits for reducing their average sulfur levels below the 30 ppm standard. Such credits could be used in the year in which they were generated, banked for future use, or sold to other refiners having difficulty in demonstrating compliance. However, banked credits would have a limited useful life of 5 years from the time that they were generated or purchased, whereas the trading program for vehicle manufacturers would allow unlimited use of banked credits. While refiners could use credits to comply with the average sulfur standard of 30 ppm, they would still be subject to the per gallon cap on sulfur levels of 300 ppm in 2004, 180 ppm in 2005, and 80 ppm in 2006 and thereafter. Like the trading program for vehicle manufacturers, the gasoline sulfur trading program would allow an oil refiner who is unable to demonstrate compliance after using all of the credits that it holds to carry the resulting deficit into the next year. The refiner would then have to earn or purchase enough credits during that year to offset the deficit or face enforcement actions. Additionally, refiners could earn early credits between 2000 and 2003 for reducing average sulfur levels to 150 ppm or less and could use these early credits to help them achieve compliance when the 30 ppm standard becomes effective in 2004. However, oil refiners would be required to use early credits by 2007, after which time such credits would entirely lose their value.

Like the National LEV program, the primary air quality benefit of EPA's Tier 2 proposal would be reductions in the ozone precursors N0_x and NMOG. Other benefits would include reductions in PM, CO, and the carcinogenic pollutants formaldehyde and benzene.29 Based on the stringency of the Tier 2 standards and the projected number of vehicle miles traveled in future years, EPA estimates that vehicular NO_x emissions would decline by 25% from 3.2 to 2.4 million tons in 2007 when passenger cars and light trucks up to 6,000 pounds would be required to achieve full compliance. At this time, EPA predicts that such reductions would lower the number of metropolitan areas expected to exceed the I-hour NAAQS for ozone from 8 to 4 and would reduce those expected to violate the revised 8-hour NAAQS for ozone from 28 to 25.30 In 2010, the Tier 2 standards are expected to assist 7 additional areas in meeting the revised 8-hour standard. By 2020, EPA projects that vehicular N0_x emissions would decline by 68% from 3.2 to 1.0 million tons once Tier 2 vehicles represent the majority of the on-road vehicle fleet.31

While EPA expects that the above reductions in NO_x emissions would lower the overall amount of ground-level ozone pollution, the agency acknowledges that a few locations in the centers of large metropolitan areas could actually experience an increase in air quality problems. The atmospheric chemistry of these areas causes a reverse effect which tends to result in higher ozone levels as concentrations of NO_x fall. In such areas, reducing VOCs, rather than NO_x, is the critical factor in controlling ground-level ozone pollution. However, EPA predicts that this effect would begin to diminish as these areas implement planned measures to reduce VOCs, since reducing both VOCs and NO_x in significant amounts at the same time ultimately results in progressively lower ozone levels. EPA may explore this issue further in its final rule and might present sufficient data to identify which metropolitan areas and how many people could experience higher ground-level ozone pollution as a result of NO_x reductions under the Tier 2 standards.

In addition to controlling overall ground-level ozone pollution, EPA also expects that large reductions in emissions of particulate matter would occur as a result of the Tier 2 standards. Vehicular emissions of particulate matter are expected to decline by 60% in 2007 from 39,209 to 15,830 tons and by 63% in 2020 from 51,102 to 19,071 tons.32 Reductions in particulate matter would likely be high from the start instead of rising substantially over time because all vehicles, and not just those certified to meet the Tier 2 standards, should emit less particulate matter when operated on lower sulfur gasoline. However, the reductions estimated by EPA would have limited effects on overall air quality because they are relatively small (around 1%) compared to total emissions of particulate matter from all sources combined.

EPA estimates that the total costs of meeting the Tier 2 vehicle emission standards and national limits on gasoline sulfur levels would be approximately $3.5 billion annually once these requirements are fully phased in.33 The total annual cost of $3.5 billion is expected to be nearly equal to or exceed the monetized value of public health benefits, which may range from a low estimate of $3.2 billion to as much as $19.5 billion annually.34 EPA estimates that the vehicle manufacturing industry would likely need to spend as much as $5 million in research and development for each vehicle line certified to meet the stricter Tier 2 emission standards.35 However, the actual costs of research and development may be lower than this amount if innovations in one vehicle line could be applied to others. Additionally, EPA estimates that the oil refining industry would likely need to spend $4.7 billion in initial capital investments to install the technologies that would be necessary to reduce average gasoline sulfur levels to 30 ppm. The annual cost of operating these technologies could be as high as $1.5 billion annually.36

EPA estimates that the costs of complying with a national limit on average gasoline sulfur levels of 30 ppm would be 1.7 cents per gallon during the first year of compliance in 2004, but would decline over time to a low of 1.4 cents per gallon in 2015.37 However, these estimates are based upon the assumption that recent advancements in desulfurization technologies would become widely available to most refiners in the near future. Based on currently available technologies, the oil refining industry has estimated a higher cost of 5 to 6 cents per gallon to meet an average sulfur content of 30 ppm nationwide.38 More recent industry estimates predict a lower cost of about 2.5 cents per gallon if EPA were to adopt a less stringent sulfur limit of 40 ppm and restrict its applicability to the eastern portion of the country where regional ozone problems are more severe.39

Increases in the purchase price of vehicles certified to meet the Tier 2 standards would likely be higher for heavier trucks since these vehicles generally need more extensive modifications to control emissions. For example, EPA estimates that the purchase price of light trucks over 5,750 pounds would initially increase by $266 in the first year of production and then fall to an increase of $209 during the 6~ year and thereafter.40 In comparison, the price of passenger cars and light trucks up to 3,750 pounds is expected to increase by roughly $70 during the first year of production and then decline to an increase of around $45 during the 6* year and thereafter. EPA predicts that increases in the purchase price of Tier 2 vehicles would experience a downward trend after the first few years of production due to three major factors. First, production efficiencies typically improve over time. Second, more efficient and less costly technologies to control pollution may become available as a result of ongoing research. Third, manufacturers may be able to recover capital investments in more advanced emission control systems within a few years.

The vehicle manufacturing industry, the oil refining industry, and some environmental organizations have expressed numerous concerns about EPA's Tier 2 proposal. The 106^th Congress has held four hearings which focused on the potential regulation of gasoline sulfur levels. The Subcommittee on Clean Air of the Senate Committee on Environment and Public Works conducted hearings on May 18, 1999, May 19, 1999, and July 21, 1999. The Subcommittee on Energy and Environment of the House Committee on Science also conducted a hearing on July 29, 1999. In addition to testimony received by the 106^th Congress, EPA held a series of public field hearings on the proposed Tier 2 standards from June 9-17, 1999 in Philadelphia, Atlanta, Denver, and Cleveland, and received public comments until August 2, 1999.41 Major views that have been expressed by the vehicle manufacturing industry, the oil refining industry, and some environmental organizations are summarized below.

Vehicle Manufacturing Industry. Vehicle manufacturers generally support stricter Tier 2 emission standards if gasoline sulfur levels are regulated accordingly. However, the Alliance of Automobile Manufacturers, as well as individual manufacturers, have voiced at least three concerns over EPA's proposal. First, gasoline sulfur levels lower than 30 ppm might be necessary to ensure that advanced emission control technologies function properly. For example, near zero to 5 ppm sulfur levels would be necessary for direct-injection engine technologies to be maximally effective in reducing emissions. Second, additional and less stringent emission bins might be necessary for the heaviest trucks to meet the certification standards without impairing vehicle performance. Third, requiring heavier trucks between 6,001 and 8,500 pounds to meet the same emission standards as lighter vehicles by MY2009 may be too costly. A later compliance schedule for heavier trucks might be necessary to allow additional time for more affordable and effective emission control technologies to become widely available.

Oil Refining Industry. While oil refiners generally agree that sulfur does impair the performance of emission control technologies, the National Petrochemical and Refiners Association and numerous individual refiners have expressed at least three major reservations about EPA's Tier 2 proposal. First, the compliance schedule of 2004 to 2006 might not allow sufficient time for promising developments in desulfurization technologies to become commercially available to most refineries. Second, they argue that gasoline sulfur levels could be regulated as effectively and at a lower cost on a regional basis, primarily in the eastern portion of the country where air quality problems are more severe. Third, the sulfur trading program may provide little regulatory relief because not enough time would be allowed to generate enough credits prior to the time at which the standards would take effect in 2004. In light of these concerns, the oil refining industry warns that small refineries could be forced out of business and gasoline prices and supplies could be affected if EPA does not adopt a later phase-in schedule and offer the industry more flexibility.

Environmental Organizations. The environmental community has generally applauded EPA for proposing more stringent emission standards for motor vehicles. However, some environmental organizations, such as the Sierra Club, the U.S. Public Interest Research Group, and others, have expressed numerous concerns about EPA's Tier 2 proposal. First, the later compliance deadline of MY2009 for light trucks over 6,000 pounds would delay some of the emission reductions and reduce the immediate air quality benefits of the stricter standards. Second, the upper weight limit of 8,500 pounds would exclude the largest sport utility vehicles from regulation under the Tier 2 standards. While these vehicles currently represent a relatively small share of total vehicle sales, their rising popularity and use as passenger vehicles could result in higher pollution levels. Further, the proposed standards may encourage some manufacturers to increase the weight of certain vehicles that are just under 8,500 pounds so that these vehicles escape regulation. Third, the two top emission bins are not strict enough and would permit certain vehicles to pollute more excessively than California's LEV II program would allow. Fourth, they argue that the phase-in schedule for the sulfur standards would be too late because lower sulfur levels would be necessary before 2004 to maximize the air quality benefits of the National LEV program when it becomes effective nationwide in MY2001. Fifth, permitting vehicle manufacturers and oil refiners to carry compliance deficits into the following year would allow emissions to exceed the stricter standards in the short-term.

As discussed above, numerous aspects of EPA's proposal could motivate some opponents to legally challenge the Tier 2 standards in court if the agency's final rule does not satisfy their concerns. However, a court ruling on the revised NAAQS for ozone and particulate matter might have a more direct bearing on potential litigation. A U.S. Court of Appeals remanded the revised NAAQS for ozone and particulate matter on May 14, 1999 partly because it viewed EPA's promulgation of the stricter standards under the Clean Air Act as an unconstitutional delegation of congressional authority to an executive agency.42 The court also remanded the revised NAAQS because it felt that EPA did not adequately justify why the specific numerical standards that the agency promulgated were necessary to protect public health. EPA primarily based its justification of the proposed Tier 2 standards on the expectation that further reductions in emissions from motor vehicles would be necessary for states to attain and maintain both the I-hour and the revised 8-hour NAAQS for ozone as well as the revised standards for particulate matter. Since the court found EPA's justification of the revised NAAQS to be insufficient, some opponents of the Tier 2 proposal have taken the opportunity to question the need for further emission reductions from motor vehicles to assist states in complying with more stringent NAAQS that may ultimately be overturned or significantly modified.

To deter potential legal challenges to the Tier 2 standards once they are finalized, EPA issued a supplemental notice on June 30, 1999 that clarifies the need for stricter vehicle emission standards and national limits on gasoline sulfur levels to attain and maintain the I-hour NAAQS for ozone.43 To further substantiate its claim, EPA presented an alternative analysis of air quality modeling data which predicts that 17 metropolitan areas outside of California will likely exceed the 1-hour NAAQS for ozone by 2007. As discussed earlier on page 15, the agency originally predicted that a total of 8 metropolitan areas would be in violation of the I-hour ozone standard without stricter Tier 2 controls in place. Despite EPA's claims that further emission reductions from motor vehicles would be necessary to meet the I-hour ozone standard, some opponents may still challenge the agency's authority to promulgate stricter controls based on the doctrine of unconstitutional delegation invoked in the Court of Appeals ruling on the revised NAAQS. However, if the court ultimately upholds the revised NAAQS, such a decision would affirm EPA's authority to promulgate stricter air quality standards, which could deter opponents of the Tier 2 standards from legally challenging them.

Implementation of the National LEV program began in MY 1999. A total of 23 automobile manufacturers are voluntarily producing vehicles for sale in 8 northeastern states and the District of Columbia, which are certified to meet low emission standards that are more stringent than the current Tier I requirements under the Clean Air Act. Before the National LEV standards become nationwide in MY2001, oversight of the program is a possibility in the 106^th Congress to determine whether it is functioning as the automobile industry, the northeastern states, and EPA intended. Some of the issues that could possibly be examined during oversight include whether the use of fleet emission averages and tradeable credits offers automobile manufacturers sufficient flexibility to demonstrate compliance, the extent to which vehicle prices have increased as a result of using more expensive pollution control technologies, and whether stricter emission standards are producing the amount of air quality benefits that EPA predicted would occur under the program.

Congressional interest in EPA's Tier 2 proposal has focused primarily on the potential regulation of gasoline sulfur levels, rather than on the stricter emission standards that would apply to new motor vehicles. Some Members of Congress have expressed opposition to the proposed limits on gasoline sulfur levels due to the effects that they could possibly have on small refineries and gasoline supplies and prices. Senator Inhofe, Chairman of the Senate Environment Subcommittee on Clean Air, has suggested that he might introduce legislation to modify or revoke the Tier 2 sulfur controls if EPA finalizes them as proposed. However, other Members of Congress have indicated support for EPA's Tier 2 proposal, and legislation has been introduced that would regulate the sulfur content of gasoline nationwide. To date, legislation has not been introduced in the 106^th Congress that would address emission standards for motor vehicles. Considering the controversial nature of the proposed Tier 2 standards, congressional oversight is a possibility after EPA issues a final rule.

Earlier this year, two bills were introduced in the House and Senate that would require the content of sulfur in commercial gasoline to be reduced to levels that are similar to what EPA is proposing. Senator Moynihan introduced the Clean Gasoline Act of 1999 (S. 171) on January 19, 1999, and Representative Kildee introduced a companion bill (H.R. 888) in the House on March 1, 1999. Beginning 4 years after enactment, each bill would limit gasoline sulfur levels to 40 ppm per gallon nationwide, or alternatively to 80 ppm per gallon as long as the average sulfur content of a refiner's annual production is less than 30 ppm. Six years after enactment, each bill also would require EPA to submit a report to Congress on the extent to which low sulfur gasoline has helped to improve urban and regional air quality. If EPA's findings were to indicate that further reductions in sulfur would result in significant air quality benefits or would enable advanced technologies to control emissions more effectively, the agency would be granted the authority to regulate gasoline sulfur levels more stringently than the amounts stipulated in the bill.

The automobile industry has been complying with low emission standards in California for the past few years. During this time, manufacturers have demonstrated that the technology to produce cleaner vehicles is currently available. However, the ability of this technology to reduce emissions in actual use depends on how sensitive a vehicle is to the amount of sulfur in gasoline. At this time, California is the only state that requires the sale of low sulfur gasoline to ensure that low emission vehicles operate as cleanly in actual use as they do under test conditions. Consequently, efforts under the National LEV program to reduce vehicle emissions with current technologies in areas where cleaner fuels are not available could prove extremely difficult In addition, the rising market share of heavier trucks, sport utility vehicles, and minivans could result in expanding the emissions inventory of the nation's on-road vehicle fleet and offset some of the sharper reductions in emissions from passenger cars and lighter weight trucks certified under the National LEV program. While Congress has not pursued an oversight role thus far, it may do so as the implementation of the program expands beyond the Northeast to include the rest of the country in MY2001. Through its Tier 2 proposal, EPA is attempting to address the regulatory issues of gasoline sulfur levels and light truck emissions which were left unresolved under the National LEV program. Whether the Tier 2 standards would be economically feasible and attainable within the time frame that EPA has proposed depends on numerous factors, including the extent to which advanced pollution control technologies are able to reduce emissions from the heaviest trucks to the same degree as lighter vehicles and the commercial availability of recent advancements in technologies to control gasoline sulfur levels. The number of areas that will need the amount of emission reductions which EPA is proposing will depend in part on whether the revised NAAQS for ozone and particulate matter are upheld, modified, or overturned. The vehicle manufacturing industry, the oil refining industry, and some environmental organizations have expressed numerous reservations about the Tier 2 proposal. If their concerns are not adequately addressed in EPA's final rule, some opponents might legally challenge the Tier 2 standards in court, which possibly could result in delaying their implementation or perhaps even overturn them. In Congress, there is both support for and opposition to the Tier 2 proposal. While legislation has been introduced to regulate the amount of sulfur in commercial gasoline according to levels that are similar to what EPA is proposing, legislation to scale back the proposed Tier 2 controls or to address emission standards for motor vehicles has not been introduced to date.

1 Department of Transportation. Bureau of Transportation Statistics. National Transportation Statistics 1998.
[ http://www.bts.gov/btsprod/nts ]

2 EPA. Office of Air Quality Planning and Standards. 1997 National Air Quality and Emissions Trends Report. December 1998. p. 112-116.

3 Vehicles do not directly emit ozone. Rather, NO_x and VOCs produce ozone when they chemically react in the presence of sunlight. Vehicles emit VOCs primarily in the form of hydrocarbons (HC).

4 The NAAQS set safe ambient levels for carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter, and sulfur dioxide. To date, EPA reports that 130 areas with a combined population of 113 million are in violation of the NAAQS for one or more pollutants. Nearly 100 million people, roughly 88% of the affected population, reside in ozone nonattainment areas. For a discussion of air quality attainment issues, refer to CRS Issue Brief IB 10004, Clean Air Act Issues in the 106^th Congress, by James McCarthy

5 EPA. Office of Air and Radiation. Tier 2 Report to Congress. July 31, 1998. 55 p.

6 EPA. Federal Register. May 13, 1999. p. 26004-26142. The proposed regulations are available electronically from EPA at
[ http://www.epa.gov/oms/tr2home.htm ].

7 For further discussion of EPA's gasoline sulfur proposal, refer to CRS Report RS20163, Sulfur in Gasoline, by Stephen Thompson and James McCarthy.

8 EPA. Federal Register. June 6, 1997. p. 31192-31270. The 23 vehicle manufacturers include American Honda Motor Company, American Suzuki Motor Corporation, BMW of North America, Chrysler Corporation, Fiat Auto U.S.A., Ford Motor Company, General Motors Corporation, Hyundai Motor America, lsuzu Motors America, Jaguar Motors Ltd., Kia Motors America, Land Rover North America, Mazda (North America), Mercedes-Benz of North America, Mitsubishi Motor Sales of America, Nissan North America, Porsche Cars of North America, Rolls-Royce Motor Cars, Saab Cars USA, Subaru of America, Toyota Motor Sales, U.S.A., Volkswagen of America, and Volvo North America Corporation.

9 The eight Northeastern states are Connecticut, Delaware, Maryland, New Hampshire, New Jersey, Pennsylvania, Rhode Island, and Virginia.

10 Section 184 of the Clean Air Act established an interstate ozone transport region in the Northeast, which includes Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Pennsylvania, Rhode Island, Vermont, Virginia, and the District of Columbia. The Act also directed EPA to establish a commission composed of representatives from these states. The commission's purpose is to determine the degree to which the transport of ozone and its precursors occurs throughout the region, assess strategies for mitigating interstate ozone transport, and recommend measures to assist states in the region with attaining the federal air quality standard for ozone.

12 D.C. Circuit Court of Appeals. Virginia vs. EPA. No. 95-1163. March 11, 1997.

14 EPA. Federal Register. January 13, 1993. p. 4166. Section 209 of the Clean Air Act allows EPA to grant a waiver to California for adopting vehicle emission standards that are more stringent than the federal ones. Section 177 permits other states with serious air quality problems to adopt stricter standards if they are identical to California's.

15 For information on California's new LEV II standards, refer to the California Air Resources Board home page at
[ http://www.arb.ca.gov ].

16 Although there is no standard for benzene, EPA expects that the low emission technologies used to achieve the certification standards also would reduce emissions of this pollutant.

18 EPA. Office of Air Quality Planning and Standards. 1997 National Air Quality and Emissions Trends Report. December 1998. p. 114-116. All sources combined emitted a daily average of 64,608 tons of NO_x, 52,641 tons of VOCs, and 8,526 tons of PM.

20 EPA. Office of Mobile Sources. Staff Paper on Gasoline Sulfur Issues. May 1998. p. 3.

21 Reformulated gasoline (RFG) bums more cleanly and results in fewer emissions of ozone- forming and toxic compounds. Under the Clean Air Act, 10 metropolitan areas with serious air quality problems require the sale of RFG, and 13 additional areas voluntarily require the sale of RFG. The majority of these areas are located in the Northeast.

22 EPA. Office of Mobile Sources. Staff Paper on Gasoline Sulfur Issues. May 1998. p. II. Test results compiled from two studies conducted by the Coordinating Research Council (CRC), representing the oil industry, and by the American Automobile Manufacturers Association and the Association of International Automobile Manufacturers.

23 Automotive News. The 100-Year Almanac and 1996 Market Data Book. p, 120.

26 For further discussion, refer to CRS Report RS20298, Sport Utility Vehicles, Mini-Vans and Light Trucks: An Overview of Fuel Economy and Emission Standards, by Brent D. Yacobucci.

27 EPA. Office of Mobile Sources. Tier 2/Sulfur Draft Regulatory Impact Analysis. April 1999. p. V-24-25. The full text of the document is available electronically from EPA at [ http://www.epa.gov/oms/tr2home.htm ].

28 EPA uses the Small Business Administration's definition of a small petroleum refining business as one that does not have more than 1,500 employees. Approximately 17 of the 160 refineries in the United States meet this definition, and EPA reports that 9 of these 17 refineries already produce gasoline with a sulfur content of 90 ppm or less. The oil refining industry argues that a different definition should be used to allow additional refiners to qualify for the more lenient standards. For a discussion of this issue, refer to CRS Report RS20163, Sulfur in Gasoline, by Stephen Thompson and James McCarthy.

29 EPA expects that emission control measures used to meet the Tier 2 formaldehyde standard would also result in lower levels of benzene emissions, even though there would be no standard for this pollutant.

30 EPA revised the NAAQS for ozone in July 1997. The revised standard for ozone is .08 ppm measured over 8 hours. The previous standard was .12 ppm measured over one hour. States that have not yet met the I-hour standard are required to do so before being subject to the revised 8-hour standard. For further discussion, refer to CRS Report 97-8, Air Quality: Background and Analysis of EPA's 1997 Ozone and Particulate Matter Standards, by John Blodgett, Larry Parker, and James McCarthy.

39 MathPro Inc., Bethesda, Maryland. Costs of Meeting a 40ppm Sulfur Content Standard for Gasoline in PADDS 1-3, via Mobil and CD Tech Desulfurization Processes. February 26,1999. p. 2.

41 Transcripts from each public hearing are available electronically from EPA at [ http://www.epa.oms/tr2home.htm ].

42 D.C. Circuit Court of Appeals. American Trucking Associations v. EPA. No. 97-1440. May 14, 1999. For a summary of the Court of Appeals ruling and an explanation of the legal doctrine of nondelegation, refer to CRS Report RS20228, The D.C. Circuit Remands the Ozone and Particulate Matter Clean Air Standards: American Trucking Associations v. EPA, by Robert Meltz and James McCarthy.

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