Regulators Set to Unveil New Standards
To Reformulate Gasoline, Cut Emissions

By Anna Wilde Mathews, Staff reporter of the Wall Street Journal
Copyright 1999 Wall Street Journal
December 14, 1999

WASHINGTON -- Environmental regulators are close to announcing sweeping new standards that will reformulate the nation's gasoline and sharply cut tailpipe emissions from trucks and sport-utility vehicles.

The U.S. Environmental Protection Agency's plan, to be unveiled in the next few weeks, is expected to cut sharply the level of gasoline sulfur, which clogs cars' catalytic converters. The plan also is expected to put all vehicles, from small cars to the biggest SUVs, under the same broad set of pollution requirements, a move that will win applause from environmentalists at a time when consumers are snapping up ever-larger SUVs and trucks.

The plan, which would begin taking effect in 2004, is expected to remain close to a proposal issued in April. Industry, environmental and government officials expect the final version to contain relatively small concessions to smooth the way with various interests, though the details are still being debated and could change before they become public. An EPA spokesman declined to comment.

The EPA projected that the earlier proposed plan would cost industry and consumers $3.4 billion to $4.4 billion. That included an extra one cent to two cents per gallon of gasoline and an added cost of $100 per car and $200 per sport-utility vehicle. The benefits from that plan were projected at $16.6 billion, the agency said.

Easier Transition

Compared with the earlier proposal, the final rule is likely to provide an easier transition to tough new requirements for cleaner gasoline. The EPA is expected to stick to its sharp cut in the levels of sulfur from the current average of 300 parts per million to a cap of 80 parts per million in 2006, according to industry and environmental officials. But the agency is likely to make changes to a program that allows oil companies to bank and trade sulfur rights for a limited time. The adjustments would make it easier for refiners to earn credits that allow them to temporarily maintain higher sulfur levels.

The EPA also is expected to give some concessions to Western states, which have argued that the agency's requirements are too onerous for their smaller refiners, though the details of this are still being refined. The agency is considering granting certain refiners in some Western states extra time to comply with the clean-fuel requirements, but regulators must walk a fine line because any special privileges could become a trade issue if foreign companies demand similar rights.

Jo Cooper, president of the Alliance of Automobile Manufacturers, says the industry supports the EPA's move to link cleaner gasoline to lower tailpipe emissions. But she says auto makers hoped the agency would cut sulfur levels even more than in its earlier proposal.

The oil industry has sought slower, less drastic moves toward low-sulfur gasoline. Changing the fuel mix can be costly, forcing refineries to retool equipment.

For auto makers' benefit, environmental and industry officials expect the agency to comply with an industry proposal for a review in the future that would examine whether technology had advanced enough to make the EPA plan feasible. The review is likely to be narrower in scope than the industry proposal, however, and would be unlikely to derail the regulations.

More Time to Redesign

The auto industry isn't likely to get more time than the earlier proposal granted to redesign its biggest trucks and sport utilities, industry and environmental officials said. Under the new plan to be phased in by 2009, auto makers will have to meet a certain average level of pollution for their entire fleets. Bigger trucks would be dirtier than that average, and the smallest cars would have to balance that by being cleaner.

Auto makers want to widen that range, so the dirtiest vehicles could emit more of certain pollutants than they would under the earlier EPA proposal, but leave the overall fleet average levels for key pollutants the same. That would allow more production of diesels, which the industry sees as a path to greater fuel efficiency. But environmentalists say that particulate matter, a pollutant found in diesel emissions, would rise under the plan.

As a compromise, industry and environmental officials say, the EPA may provide some more flexibility for auto makers but refuse to add a more-polluting level to the averaging plan. The EPA is leaning against any permanent move to add a higher-polluting level to benefit diesels, according to people with knowledge of the matter. In addition, the agency is expected to please environmental groups by adding to its fleet-averaging plan the largest SUVs, those that weigh more than 8,500 pounds, pleasing "green" groups by cracking down on the growing number of vehicles in the category.

The EPA also is expected to respond to auto makers' complaints that the proposal forced them to redesign too many vehicles at once, industry officials said. The agency will likely adjust some of its interim standards to match some requirements of California rules, industry officials said. Under this plan, auto makers wouldn't have to come up with so many new configurations because they already designed vehicles to meet state rules.

--Jeanne Cummings contributed to this article.

Write to Anna Wilde Matthews at

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