Emissions Rules Up in the Air EPA, automakers forge ahead despite court ruling

federal appeals court threw in a monkey wrench at the eleventh hour, but for now the Environmental Protection Agency and automa-kers appear to be proceeding according to plan in dealing with proposed new Tier 2 vehicle pollution standards. As they are written now, the new rules will force automakers to sharply cut tailpipe emissions and oil refiners to produce much cleaner fuels beginning in 2004.

Under the Tier 2 regulations, light trucks will have to meet the same tougher emissions standards set to begin phase-in for passenger cars beginning 2004. All vehicles below 6,000 lbs. will have to meet the standards by 2007.

The result will be cars that burn 77% cleaner than today and light trucks that are 95% less polluting. To accomplish this, the oil industry will be required to produce gasoline averaging only 30 parts per million (ppm) sulfur and no greater than 80 ppm. The smallest refineries will get until 2008 and could apply for an extension of as long as two years after that.

Vehicles weighing more than 6,000 lbs. (2,700 kg), which include behemoths such as Ford Motor Co.'s new Excursion and comprise about 11% of vehicles sold, would be required to meet the new standards in a three-step phase-in that would see half complying by 2008 and the remainder by 2009.

The EPA puts the cost of compliance at $100 per car and less than $200 per light truck, with consumers paying less than 2 cents per gallon more for gasoline, perhaps as little as $20 per year. Oil industry sources say the cost would likely be higher, averaging 5 to 6 cents per gallon.

After years of wrangling between oil companies, automakers and government regulators, President Bill Clinton on May 1 announced the tough new U.S. air pollution regulations, which phase in new emissions standards for cars and trucks. Then on May 14 a federal appeals court, in a case brought by the American Trucking Assn. and a wide consortium of other business groups, struck down the proposed new air quality standards as unconstitutional.

In a 2-1 decision, judges of the U.S. Court of Appeals said the standards violate the Constitution because the EPA "failed to state intelligibly how much (pollution) is too much," The Wall Street Journal reports. The judges also said the EPA's process of setting the standards amounted to an unconstitutional delegation of powers that rest with Congress.

Industry insiders say the Clean Air Act has allowed the EPA an unprecedented amount of discretion in setting new rules, rather than specifically spelling them out. But most view this new latitude as a positive that will lead to rational, achievable goals. Some call the appeals court ruling downright bizarre.

The EPA said it will immediately appeal the decision and is expected to finalize the Tier 2 rules during the appeal process, which is expected to take about a year. The case is likely to go to the Supreme Court, possibly after a review by the full appeals court.

Although the truckers and the Chamber of Commerce have their own reasons for challenging Tier 2 (and conspiracy theorists already are wondering whether those groups are merely "front men" for the auto and oil interests), what actually may be mitigating against the EPA is a strong undercurrent of faltering credibility.

Last year, a group of several EPA employee whistleblowers drafted a letter published in the Washington Times, that called the agency on the carpet for, among other matters, the EPA's use of poor science in creating regulations and in enforcing those laws.

The EPA recently suffered another serious credibility blow when gasoline oxygenate MTBE - a substance EPA clean-air regulations dictate be used by oil refiners to make cleaner-burning gasoline - was banned in California because of widespread contamination of drinking water sources by MTBE. And evidence now is beginning to mount that proves MTBE's effect on air quality may be negligible at best. If that's not enough, the agency also is taking heat for its continued pressure on individual states with areas of poor air-quality to adopt expensive dynamometer-based emissions-testing programs that have proved dismally ineffective in relation to their cost.

Ironically, then, with Tier 2 the EPA has crafted next-generation tailpipe standards that the auto industry believes are reasonable, yet the wide-ranging new emissions guidelines may be scuttled not by the traditional - and expected - auto industry outcry, but by the EPA's own ineptitude and ill-conceived politics.

If they are overturned, the EPA's rules limiting emissions and tiny particles of soot called particulates will cost industry billions of dollars. However, those who have not been following the regulatory process closely will be shocked to see the auto industry isn't celebrating over this latest roadblock. Instead it's displaying a remarkable can-do attitude toward the new clean air regulations, rather than adopting the traditional adversarial approach, bashing them and saying they're impossible to meet.

Automakers even have backed away from blaming high air pollution levels on the tens of millions of vehicles that are 10 years old or older that form an increasingly large part of the nation's vehicle population. Automakers used to argue that taking millions of smoke-belching clunkers off the road would do more for air quality than making already clean new cars more pristine.

"We've been trying to get away from arguing whether or not there is a need for these more stringent standards with EPA," says Robert S. Strassburger, corporate manager, Technical Affairs at Nissan North America Inc. and a frequent spokesman for the Alliance of Automobile Manufacturers. "We basically accepted what they (EPA) wanted to do, and said, okay, if this is your goal let us look at what we can do to achieve that goal. "Frankly speaking, there probably is some question about air quality need, but a debate like that takes us down a path we don't want to go anymore." Poor vehicle maintenance causes more pollution problems than sheer age, Mr. Strassburger adds.

Emphasizing how the jousting over emissions regulations has changed, Ford Motor Co. announced on May 17 that regardless of government regulations, it planned to make all of its 2000 model light trucks as clean burning as its cars.

"We're not being driven by what the regulations are," says Ford President Jac Nasser. "We're being driven by several factors. The first is an overriding belief that it's the right thing to do, and that it is a competitive advantage for those enterprises that can do it. The second thing is we know how to do it. The third thing is you have a great impact on clean air because we can contain the cost, there's no penalty in terms of pricing and we can get a wide range of volumes almost immediately. Although what was announced last Friday (the court decision striking down the new EPA rules) was interesting from a legal perspective, it really isn't what's driving us. What we're being driven by is the fundamental belief that we need to do this."

A few years ago such comments would have been considered high treason in Detroit, and an invitation - no, a dare - to government regulators to clamp down even harder with tougher legislation.

But the times, they are a-changing, thanks to a regulatory process being described as more "consultative and collaborative," where automakers are allowed to give lots of input on what is technologically feasible and what is not.

Most importantly, automakers were able to convince EPA regulators that vehicles and fuels are interrelated systems. For years automakers have been arguing that North America's sulfur-laden fuels significantly hinder efforts to curb tailpipe emissions, and complain that the U.S. has the distinction of having the most stringent air regulations in the world while at the same time allowing the dirtiest fuels. (Sulfur in fuels builds up inside catalytic converters and reduces their efficiency.)

Although the oil industry disputes it, cleaner fuels are recognized as key enablers for meeting future low emission - and high fuel economy - requirements.

That's because the efficient engines of tomorrow, both diesel and spark ignition, will operate under what engineers refer to as "lean" burning conditions. Lean burn means an engine uses proportionally more air than fuel when compared with conventional spark-ignition engines.

Lean burn operation boosts fuel economy, but at the same time it makes it more difficult for catalytic converters to decrease emissions of oxides of nitrogen (NOx). Some emissions, such as hydrocarbons and carbon monoxide, actually decrease under lean burn conditions, but converters struggle with NOx emissions, especially with high sulfur fuels.

Industry experts say wide availability of low-sulfur fuels would give automakers a huge advantage in reducing tailpipe emissions because they then could employ advanced aftertreatment devices such as lean-burn catalysts. Currently low-sulfur fuels are only available in California, as well as much of Europe and Japan. Gasoline and diesel fuels in Europe and Japan contain far less sulfur than in the U.S. in part, oil industry sources say, because European refineries are designed differently.

And if the rules stick, the biggest losers in the equation by far will be oil companies. They will be forced to make huge new investments in refinery equipment in order to produce a new generation of cleaner gasoline and diesel fuels averaging only 30 parts per million (ppm) sulfur, compared to today's current levels of 250 to 350 ppm.

Michael E. Leister, manager of fuels at Marathon Ashland Petroleum LLC, says requiring refineries to produce gasoline with only 30 or 40 ppm sulfur could force them into investing heavily in untested new technology or older technology that would become obsolete too quickly.

But thanks to the new, more open rulemaking process, the auto industry got pretty much what it wanted in the EPA's Tier 2 emissions and gasoline sulfur standards released May 1. But it's still hoping to sway the agency on a couple of key issues, says Josephine S. Cooper, president of the Alliance of Automobile Manufacturers.

Ms. Cooper says the alliance is comfortable with the proposal, but still would like to see sulfur content further reduced to 5 ppm in 2008. The organization also is calling for a feasibility study in 2004 to determine if the industry has the technological capability to meet the tougher standards for vehicles heavier than 6,000 lbs. It also wants the EPA to be flexible when it comes to new technologies - such as lean-burn engines - which might have fuel economy benefits but be unable to meet the stringent Tier 2 NOx emissions standards.

"There are some areas where we believe our proposal is preferable, even from an environmental perspective," Ms. Cooper says.

Despite the May 14 appellate court ruling, EPA is hoping to conclude the rulemaking process by year's end. The agency is expected to propose additional diesel fuels rule in spring 2000.

Four public hearings still will be held on Tier 2: Philadelphia (June 9-10), Atlanta (June 11), Denver (June 15) and Cleveland (June 17). Public comment on the new rules closes Aug 2. o - with Bill Visnic