LegiStorm

Summary:

On March 3, 2014, the Environmental Protection Agency finalized new (Tier 3) emission standards for light duty (and some larger) motor vehicles. Light duty vehicles include cars, SUVs, vans, and most pickup trucks. Phase-in of the standards will begin with Model Year 2017. By the time Tier 3 is fully implemented in Model Year 2025, the standards for light duty vehicles will require reductions of about 80% in tailpipe emissions of non-methane organic gases and nitrogen oxides (both of which contribute to the formation of ground-level ozone) and of about 70% in tailpipe emissions of particulates. Ozone and particulates are the most widespread air pollutants in the United States. Both contribute to respiratory illness and premature mortality. EPA estimates that implementation of the standards will reduce premature mortality by 770 to 2,000 persons annually, as well as providing reductions in hospital admissions, lost work days, school absences, and restricted activity days for persons with respiratory illness. Assigning monetary values to these benefits, EPA estimates the annual benefits at between $6.7 billion and $19 billion in 2030. Like the current Tier 2 standards, which were promulgated in 2000 and phased in between Model Years 2004 and 2009, the Tier 3 standards treat vehicles and fuels as a system: reductions in vehicle emissions are easier to achieve if the fuel used contains less sulfur. The Tier 3 standards will require that gasoline contain no more than 10 parts per million (ppm) sulfur on an annual average basis beginning January 1, 2017, down from 30 ppm under the Tier 2 program. The fuel standards will match limits already attained in California and in much of the world, including the European Union, Japan, and Korea, and proposed for adoption in China. Further, the rule extends the required useful life of emission control equipment from 120,000 miles to 150,000 miles, and sets standards for heavier duty gasoline-powered vehicles. The standards will also require about a 50% reduction in evaporative emissions (some of which also contribute to ozone formation and/or cause health problems directly). EPA estimates the cost of the rules at $1.1 billion annually in 2017 to $1.5 billion annually in 2030. The agency estimates that the rule will add $33 to $88 to the cost of a new vehicle, and less than one cent to the price of a gallon of gasoline. The effect on gasoline prices has been the most controversial issue: the American Petroleum Institute contends that the tighter sulfur controls will impose almost $10 billion in refinery capital expenditures and increase gasoline manufacturing costs by 6 to 9 cents per gallon. But, in addition to EPA, at least two studies by third-party consultants conclude that the costs will be far less than APIs estimate. To address refining industry concerns, the final rule will allow a three-year delay in compliance for small refiners. It also includes averaging, banking, and trading programs that will give the refining industry some flexibility in meeting the standards. The auto industry is generally supportive of the rulefive auto companies, five trade groups, and the United Auto Workers union have issued statements of support, and a GM executive joined the EPA Administrator as she announced the standards. The standards facilitate the adoption of new technologies necessary to meet greenhouse gas standards already promulgated by EPA. In addition, California and 12 other states have already adopted tailpipe standards similar to Tier 3. Proponents contend that the harmonization of national standards eliminates the threat of a patchwork of state requirements and decreases compliance costs by preserving a unified national market. Many in Congress have expressed concern about the potential impacts of the rule. As a result, Congress can be expected to continue oversight as the rule is implemented.