Copyright 1999 Federal Document Clearing House, Inc.
Federal Document Clearing House Congressional Testimony
July 21, 1999
SECTION: CAPITOL HILL HEARING TESTIMONY
LENGTH: 4163 words
HEADLINE:
TESTIMONY July 21, 1999 MARGO OGE DIRECTOR, OFFICE OF MOBILE SOURCES
HOUSE SCIENCE ENERGY AND ENVIRONMENT SULPHER IN
GASOLINE AND DIESEL FUEL
BODY:
TESTIMONY OF MARGO OGE DIRECTOR, OFFICE OF MOBILE SOURCES OFFICE OF AIR AND
RADIATION U.S. ENVIRONMENTAL PROTECTION AGENCY BEFORE THE SUBCOMMITTEE ON ENERGY
AND ENVIRONMENT OF THE COMMITTEE ON SCIENCE U.S. HOUSE OF REPRESENTATIVES July
21, 1999 Thank you, Mr. Chairman and Members of the Subcommittee, for the
invitation to appear here today to discuss our proposed Tier 2 standards for
cars and light-duty trucks and the accompanying low sulfur
requirements for gasoline. Our proposal follows from sweeping
changes over the past couple of decades in how Americans move around. We ve gone
from under 100 million light vehicles in 1970 to 200 million last year. And we
re driving farther -- from about one trillion miles per year in 1970 to over two
trillion miles per year today. And as you probably know, there has been a
dramatic shift in recent years toward sales of the larger light vehicles meeting
emission standards 2 to 5 times less stringent than passenger cars. All
indications are that these trends will continue indefinitely into the future,
and they will have significant impacts on increasing emissions from motor
vehicles without the progress in cleaner engines and gasoline
that we propose. Our proposal, over the next decade, will improve and maintain
the nation s air quality by phasing-in both cleaner engines and cleaner burning
gasoline using flexible, market driven mechanisms that we
believe are fair to industry and will result in minimal consumer costs while
preserving vehicle choice. JUSTIFICATION FOR ACTION These issues were
highlighted in the context of the Clean Air Act s requirement that we reassess
light-duty standards. We reported to Congress last year on the three issues
specified in the statute: whether there would be an air quality need for new
tailpipe standards in the post-2004 time frame, whether such standards could be
technologically feasible, and whether they could be cost-effective. We presented
evidence in the report that we believe supports our proposed determination that
new standards are in fact needed and that significantly more stringent standards
would be feasible and cost-effective. In our proposed rule, published last May
13, we assessed these issues further and presented a sizeable body of new data
and analysis to support our conclusions. Before I summarize the content of the
proposal, let me say a few more words about the strong case we see for new
emission standards for passenger cars and light trucks. As we describe in much
detail in the proposed rule, our air quality projections identified large parts
of the country, involving about one hundred thirty million residents, that would
be at or near unhealthy levels of pollution in the middle of the next decade,
even with all expected control programs in place. A large part of that problem
will be ozone, which reduces the lung function of otherwise healthy people and
increases hospital admissions for people with respiratory ailments like asthma
and which, under longer exposures, permanent lung damage can occur. Particles
are the other major part of the problem because they can penetrate deep into the
lungs and are linked with premature death, increased hospital admissions, and
changes in lung tissue. Other environmental problems related to pollution from
motor vehicles, such as agricultural damage, impaired visibility, and nitrogen
deposition in our nation s waterways, also remain a concern across the nation.
Although today s vehicles are over 90% cleaner than cars available twenty-five
years ago, the vehicles covered by the proposal -- cars, minivans and full-size
vans, pickups, and SUVs -- are big contributors to air quality problems. For
example, they will be responsible for about 20% of ozone causing NOx emissions
nationwide and approach 40% in some metropolitan areas like Atlanta in 2004. And
since more vehicles are being purchased and more miles are being driven, total
emissions from these vehicles will increase after 2010, eroding the progress
made by local and state government in cleaning the air. This was a large part of
the evidence that led to our decision to propose new standards for this vehicle
class. Based on a significant body of industry and government data, we have
proposed that much lower vehicle emission standards are within reach of current
and developing emission control technologies; improvements in today s
technology, not new breakthroughs, are what will be needed. In fact, many
vehicles being sold today in California and the Northeastern U.S. are already
employing technologies that can achieve lower emission levels when operated on
low sulfur gasoline. Based on data generated by industry test
programs and our own vehicle certification process, we believe that
substantially lower emission levels are technologically achievable. Since these
large emission reductions would come at a fairly modest cost, we estimated that
the program would be cost-effective compared to other programs that could
achieve similar air quality results. All in all, our broader analyses for the
proposed rule reinforce the findings on air quality need, feasibility, and cost-
effectiveness that we reported to Congress last year and confirm our direction
regarding new emission standards for light vehicles. On the fuel side of the
equation, it became clear early on that lower sulfur gasoline
will be needed to allow the improved emission control technologies to be
effective in reducing emissions. There is widespread agreement that
sulfur degrades emission control performance for all vehicles,
reducing the effectiveness of the catalyst in converting pollutants such as
hydrocarbons, carbon monoxide, nitrogen oxides, and particulate matter. Further,
a joint industry research project by the Coordinating Research Council, a
consortium of oil and auto companies, as well as other research, has found that
high levels of sulfur permanently damages vehicle emission
controls. Unfortunately, this problem will get worse in the future because as
emissions levels are lowered, the more effective emission control systems are
even more sensitive to sulfur. So we recognized that
gasoline sulfur levels must be reduced -- significantly -- to
enable cleaner emission control technologies to work their potential and to
reduce the damage to current vehicles emission control performance, and we have
proposed a comprehensive program to reduce gasoline sulfur
levels. Though our proposed program would not directly regulate California
vehicles, ozone levels in California will be reduced through reductions in
emissions from vehicles sold outside California that later enter California
temporarily or permanently. According to California, about 7 to 10 percent of
all car and light truck travel in California takes place in vehicles originally
sold outside of California. Shortly after we released our Tier
2/Gasoline Sulfur Control proposal, a panel of the Court of
Appeals for the District of Columbia Circuit ruled, among other things, that the
Clean Air Act provisions EPA relied on in promulgating national ambient air
quality standards (NAAQS) for ozone and PM represented unconstitutional
delegations of authority, and remanded the record to EPA for further
consideration. We have since issued a Supplemental Notice that analyzes this
decision in the context of our Tier 2/Gasoline Sulfur proposal.
We stated that the decision of the panel does not change EPA s proposed
requirements for a Tier 2 program and does not impact EPA s proposed
determination that the Tier 2 program is a necessary and appropriate regulatory
program that would provide cleaner air and greater public health protection. In
addition, the Supplemental Notice also provides additional ozone modeling
information that supports the need for the proposed program. For example, in our
original proposal, we established that states will need the Tier
2/gasoline sulfur program to attain and maintain the old
(1-hour) ozone standard and pre-existing PM-10 standard, as well as the new
(8-hour) standard and revised PM-10 standard. In the Supplemental Notice, we
presented a more detailed description of the available ozone modeling data,
which shows a strong need for additional emission reductions to meet the 1-hour
standard. We concluded that more than 70 million people living in 17 areas will
be affected by violations of the 1- hour standard. We also concluded that 15
million people living in 21 counties will be impacted by violations of the
pre-existing PM- 10 NAAQS. In total, approximately 83 million people in this
country will live in areas that violate one or both of these air quality
standards in 2007. Additional emission reductions will be needed to meet these
standards, and since light-duty vehicles contribute a significant fraction of
these emissions, the emission reductions that will be obtained from the Tier
2/gasoline sulfur proposal will help to address this need.
PROCESS Our proposal is the culmination of an extensive deliberative process
during which we worked intensively with a wide range of stakeholders. Before
completing the proposal, we met repeatedly with the vehicle manufacturing
industry, the oil refining industry (including a special outreach process with
small refiners), states, environmental organizations, and other parts of the
federal government. We logged many hours at all management levels in meetings
with individual companies and trade associations, state organizations, and
others to understand the issues and the capabilities of each group to respond to
these concerns. The perspectives of these many stakeholders are reflected in the
design of our proposed program and the principles on which we based it.
PRINCIPLES Through this broad deliberative process, we developed a list of
overarching principles for the design of a strong, national program, including:
Do not constrain consumer choice of vehicles or driving styles, either due to
cost or technical factors, Treat vehicles and fuels as one system; Hold cars and
light trucks to the same emission standards, since in the vast majority of cases
they are used for the same purposes, and the fleet mix is shifting toward larger
vehicles; Set emission standards that build on the success of the National Low
Emission Vehicle Program (NLEV) and that are fuel neutral, so that it won t
matter whether the vehicle is fueled by gasoline, diesel, or an
alternative fuel; Make sure that the standards and accompanying program not
preclude the introduction of technologies that are both low emission and fuel
efficient; Employ performance standards and provide both automakers and
gasoline refiners a menu of flexible provisions for
demonstrating compliance with the program; and Provide sufficient lead time to
allow automakers to design even their heaviest light-duty trucks to meet our
standards and to allow refiners to install the necessary equipment. VEHICLE
PROGRAM The auto and oil industries and other stakeholders provided meaningful
proposals during the development of the proposal. Based on our work with all
stakeholders, including offices within the Administration, we drafted a proposed
set of standards which balance concerns regarding cost, benefits, and timing. We
believe that the Tier 2/gasoline sulfur standards that we
proposed in May represent a common sense, cost-effective plan resulting from the
many levels of interaction and cooperation we experienced in this process. Our
proposal consists of two parts: Tier 2 emission standards and gasoline
sulfur requirements. Even though the focus of this hearing is on
gasoline sulfur levels, I want to briefly talk about the
vehicle requirements included in the Tier 2 program since it is critical to
treat vehicles and fuels as one system in order to achieve the full air quality
benefits of additional control requirements. The emission standards require
manufacturers to meet a corporate average NOx standard of 0.07 grams/mile -- a
77% reduction from NLEV levels and approximately 90% reduction from Tier 1
levels. These standards are phased-in over time beginning in 2004, and the
heavier vehicles (between 6,000 lbs. and 8,500 lbs GVWR) are given the greatest
amount of time, until 2009. During the phase-in period, the remaining cars and
smaller trucks will continue to meet NLEV emission levels, and the heavier
trucks, which are currently certified to Tier 1 standards, will have to meet
much cleaner average levels of 0.2 g/mi NOx. The program as proposed should
provide flexibility for manufacturers to comply with the Tier 2 standards while
still meeting their customers desires for larger trucks and SUVs, potentially
including clean-technology diesel-fueled vehicles. For example, manufacturers
that surpass their corporate average standard in a given year could bank NOx
credits for future use or sell them for use by manufacturers that are having
trouble meeting the corporate average standards. Based on vehicles already in
development, including some on the road today, as well as technology
demonstration at our own laboratory, we believe that these challenging levels
are technically feasible and that manufacturers can comply with these standards
in the proposed time frame, even for the increasingly popular larger light
trucks. Overall, we have estimated that these requirements will result in only
modest increases to the cost of producing these vehicles. We estimate that the
technologies required for cars and the smaller light trucks will average about
$100/vehicle. The heavier trucks will require more changes, particularly since
they are starting from less stringent standards; still, this technology will
average about $200/vehicle. GASOLINE SULFUR PROGRAM To enable
the emission control technologies necessary to meet these proposed standards, we
have proposed a national gasoline sulfur standard of 30 ppm on
an annual average basis and a maximum cap of 80 ppm, with a credit program to
allow for compliance as late as 2006. Based on the air quality concerns I
mentioned earlier, we believe a national program is the best option, due to the
permanent damage that sulfur causes to vehicle emission control
performance and the magnitude of environmental benefits to be achieved from this
program. The technologies anticipated to be used to meet Tier 2 emission levels
are expected to be even more sensitive to sulfur than today s
technologies, and these new technologies simply cannot operate on high
sulfur levels and continue to perform as designed. Current
information also indicates that these catalysts will have a partial but
permanent loss in performance if they are exposed to high
sulfur levels for even a short period of time. This permanent
damage can on average mean a loss of as much as 50% of the emission-reducing
capacity of a catalyst, which means some Tier 2 vehicles would have emissions
performance similar to vehicles currently available. For example, a 1999 Ford
Taurus designed to meet National LEV standards that was a part of an industry
testing program only recovered 40 percent of its capacity after a short exposure
to gasoline with a sulfur content typical of
current gasoline. As vehicles are required to maintain tighter
controls on operations in order to meet low emission standards over a range of
operating conditions, the ability of the catalyst to reverse the negative
sulfur impact is further lost. Hence, tighter emission
standards would require not only substantial reductions in
sulfur levels, but timely and uniform reductions across the
country to protect the new technology. There are additional reasons for a
nationwide sulfur control program. NLEV vehicles being sold
today in the Northeast and by 2001 in the rest of the country are currently
using high sulfur fuels. As a result, NOx emissions from these
vehicles may be on average 140% higher than they would be for an NLEV vehicle
operated on 30 ppm gasoline. Sulfur reductions will thus result
in emission benefits from existing vehicles as well as enabling future Tier 2
vehicles. A low sulfur program will also be consistent with
similar programs currently in place in California and Japan and in Canada and
Europe by 2005, thereby helping facilitate introduction of cleaner vehicles
worldwide. The role that sulfur irreversibility will play on
vehicles which travel across the country also supports the need for a national
program. A regional sulfur control program would compromise the
ability of a vehicle/fuel program to achieve the air quality reductions needed
to protect public health by limiting the effectiveness of the emission control
systems in "high-sulfur" regions versus
"low-sulfur" regions. In addition, clean vehicles which for any
number of reasons might travel to a "high-sulfur" region would
be irreversibly damaged. Along those lines, although the State of California
already has a strong gasoline sulfur control program, that
state will see additional air quality benefits from a national program from
vehicles crossing the border as well as gasoline market
benefits associated with the broader availability of clean
gasoline. A national program will better provide broad
environmental and health benefits including: reduced levels of criteria
pollutants such as nitrogen oxides and particulate matter, reduced air toxics,
reduced acid rain, improved visibility, reduced nitrogen deposition in our
nation s waterways, and reduced agricultural damage. Finally, we believe that a
national 30 ppm sulfur program would likely be sufficient to
enable the introduction of fuel efficient technologies, such as
gasoline direct injection. We believe that there are a number
of promising technologies available to refineries to remove
sulfur now or in the near future. Several technologies have
been developed that reduce the capital investment, the loss of octane value, and
the energy consumption involved in desulfurizing gasoline
compared to conventional methods. Two specific technologies, CDTech s
CDHydro/CDHDS and Mobil s OCTGAIN, were closely examined during the development
of this proposal and we believe they will be cost- effective viable technologies
for removing sulfur from gasoline. In addition, a number of
refineries and other companies are exploring other technologies. We believe the
industry will make extensive use of these technologies in meeting the proposed
requirements. To enhance the flexibility of compliance for the oil industry, we
have proposed to provide refiners with two additional years, until 2006, to
comply with the proposed requirements through a voluntary banking and trading
credit program. This credit program will allow sulfur credits
to be generated as early as 2000 by refineries making early reductions in
sulfur levels. To provide some protection to the Tier 2
vehicles that will be phasing into the fleet in this same time frame as the
credit program for refiners, refiners will meet a maximum cap standard of 300
ppm in 2004 and of 180 ppm in 2005 as well as actual in-use average
sulfur level standards that are substantially lower than
current sulfur levels. The rule is expected to be finalized at
the end of this year. Under this proposal, refiners will have four years for
planning and construction. If early credits are generated and sold, refiners
purchasing those credits would have up to two additional years to phase-in the
30 ppm average standard. In addition to these provisions, the particular
problems of small refiners have been carefully considered. We convened a panel
under the Small Business Regulatory Enforcement Fairness Act (SBREFA) to
evaluate the potential impact on small refiners of our proposed gasoline
sulfur standards. The panel used the Small Business Administration
(SBA) definition of small refiner based on the total number of employees in the
corporation, including any non-refining functions. Based on the panel s
recommendations, we have proposed to allow refiners employing no more than 1,500
people an additional four to six years (beyond 2004) before they will be held to
the 30 ppm average/80 ppm cap standards. In the interim, about half of these
small refiners would have to reduce their sulfur levels below
300 ppm, but they would not have to meet the same levels that the majority of
refiners will be held to in 2004. This delay would allow small refiners to make
the required investments over a longer time, and we expect that all of them
would be able to comply by the end of the delay period. Throughout the proposal
development process a number of specific issues were identified as a concern. We
listed these issues in the proposal and are asking for comment on how to address
these concerns. As an example, we have asked for specific comment on other
potential definitions for small refiners -- ranging from the crude oil
processing capacity of the refinery to counting employees only involved in
gasoline production. While the purpose of these provisions is
to provide some relief to the smallest refiners, we are looking forward to
working with the entire industry to find the most appropriate definition. A
number of other issues are outlined in the proposal where we are keenly aware of
the concerns likely to be expressed and are seeking input and ideas from the
public and the industry. A specific example is the concerns expressed by
refiners regarding the time constraints on being able to construct the necessary
desulfurization equipment in time to meet our standards or to generate credits
through early reductions. We have proposed to work with industry and the states
to streamline the construction permitting process to minimize the potential that
permitting could be a roadblock to early compliance. In addition, we are
requesting comments on a general hardship provision. Although I believe our
proposal expresses a clear willingness to design the most workable program
possible, I do not want to minimize the cost and effort that the oil industry
will expend in meeting the proposed standards. We estimate that it will cost 1-2
cents/gallon to reduce gasoline sulfur levels to the proposed
standards. However with the flexibilities we have outlined in the proposal and
the advances in desulfurization technologies that have occurred in recent years,
we believe we have outlined a sound and effective proposal for reducing
sulfur from gasoline. Since diesel cars and light trucks will
also be impacted by the proposed vehicle standards, we ve also released an
Advance Notice of Proposed Rulemaking which raises questions about the need to
control diesel sulfur levels to enable these technologies to
meet the Tier 2 standards. After we consider the comments we received last week
on the issues associated with controlling diesel sulfur levels,
we plan to issue a Notice of Proposed Rulemaking late this year, so that
refiners have this information at the same time that they receive our final
regulations for gasoline sulfur control. Since this decision
has significant implications for the refining industry, we would work with
representatives of this industry to identify workable options and we would work
with small refiners to address their unique concerns. PUBLIC HEARINGS To gather
reaction to our proposal, we held five days of public hearings in June in four
sites across the country: Philadelphia, Atlanta, Denver, and Cleveland. We heard
testimony from a large number of individuals, representing environmental and
public interest groups, automotive and oil companies, states and state
organizations and many private citizens. By and large, the responses we ve
received have been positive. While we received constructive feedback about
specific aspects of our proposed program, the majority of testifiers expressed
support for our proceeding with Tier 2 emission standards and the associated
gasoline sulfur standards. The comment period for the proposal
closes on August 2, 1999. We look forward to working with the states,
environmental organizations, oil and auto industries, and other stakeholders to
better understand their recommendations so that we can develop the strongest
possible program. As an example, we are currently working with the Western
Governor s Association to better address concerns of Western states and Western
refiners in our program. We intend to complete this process and issue final
requirements for Tier 2 vehicles and gasoline sulfur levels by
the end of this year. CONCLUSION In conclusion, let me emphasize that we believe
that the progress that has been made to date to bring cleaner vehicles to our
nation s highways has been one of the reasons our air quality continues to
improve. However, as we move into the next century, there is no doubt that even
cleaner vehicles and gasoline need to continue to be part of
the solution as we strive to ensure clean air across our nation. Thank you again
for this opportunity to discuss our program with you. I would be happy to
respond to any questions that you may have.
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July 24, 1999