Environment & Energy Report

Planned Truck Rule Exemption Will Test EPA’s Policy Defenses

Jan. 18, 2018, 1:21 PM

Only a few truck and engine makers cheered the EPA’s plans to park some Obama-era truck emissions limits, so now the agency must decide whether to listen to the niche equipment makers that its plan would benefit, or to the rest of the trucking industry.

“That’s the million-dollar question. How do you go against all the comments saying, ‘Do not change the language in the final rule’?” Glen Kedzie, energy and environmental counsel for the American Trucking Associations, told Bloomberg Environment.

The Environmental Protection Agency in November proposed to exempt “glider kits"—which are new truck chassis and cab assemblies built for used engines and transmissions—from Obama-era greenhouse gas standards for heavy-duty trucks. That move has since sparked sharp backlash from almost all corners.

Environmental groups and former EPA staffers say the plans have little legal standing and no rational justification, given the significant negative public health impacts such an exemption would cause.

State regulators say the move will hamper their ability to meet federal air quality standards, and that they could move to control glider kits in the agency’s place if the EPA backs away from the regulations.

And the country’s largest truck and engine manufacturers, including companies like Daimler Inc., and Volvo Group North America, say the EPA’s move mocks the millions in investments they’ve made to clean up their engines and fleets and undercuts the regulatory compromise they struck with the Obama EPA.

“If there was any rational policymaking going on, this proposal wouldn’t have gone out. And in light of all the opposition and dearth of real basis supporting it, it would never go final,” John Hannon, a former assistant general counsel in the EPA’s Air and Radiation legal office, told Bloomberg Environment.

“If it does, some political reason has overridden all of that,” Hannon, who retired from the agency in 2014, said.

Legal Reinterpretation

The 2016 regulation placed first-time emissions limits on vehicles that use glider kits, requiring rebuilt engines installed in those trucks to meet pollution standards applicable in the year the glider kit was made. The Obama-era rule allowed a yearly 300-glider kit exemption until 2021.

The Trump administration’s November proposal, however, adopts a legal interpretation pushed by glider kit makers that the EPA only has authority to regulate “showroom new” vehicles under the Clean Air Act. A glider vehicle, because it uses a rebuilt engine, wouldn’t fall within that definition.

Major truck and engine manufacturers warn that that legal interpretation sets up a slippery slope that could have impacts far beyond glider kits.

The “illogical extreme” of the EPA’s proposal is any engine with one non-new part would essentially fall out of the agency’s authority, Jed Mandel, president of the Truck and Engine Manufacturers Association, told Bloomberg Environment. “It would be a disaster.”

His group’s members, which include Caterpillar Inc., Cummins Inc., and PACCAR Inc., have invested hundreds of millions to meet the EPA’s emissions limits. “They would not like to see unscrupulous competitors or importers from overseas now being able to enter the U.S. market” without having to meet emissions requirements, he said.

Both Mandel and Kedzie said their groups didn’t meet with the EPA before it decided to move forward with plans to scrap the glider kit limits.

Regulatory Overreach?

But glider kit makers and their supporters argue the Obama-era rule is an example of overreaching regulation.

The justification for regulating glider kits is “completely bogus,” Joe Rajkovacz, director of governmental affairs and communications for the Western States Trucking Association, told Bloomberg Environment. He said the EPA’s data on public health impacts from glider vehicles is false.

“We actually think that we might have some more reasoned people at the head of EPA,” Rajkovacz said. “This might be one of those rare victories for small businesses against government intrusion, unwarranted government intrusion into the marketplace based on ideology.”

Though basing its decision on the change in legal interpretation, the EPA also incorporated in its November proposal a report from Tennessee Technological University that found rebuilt engines used in glider vehicles were as clean as new truck engines that meet the EPA’s standards. The study was funded by Fitzgerald Glider Kits, the largest maker of the equipment in North America.

Environmental and trucking industry groups alike have torn apart that study. Tommy Fitzgerald, founder of Fitzgerald Glider Kits, met privately with EPA Administrator Scott Pruitt in May, just a few months before the agency indicated it planned to repeal the glider kit limits.

Competing Data

“In my private discussions with member companies, they scoffed at that study. Engineers that have been working on these issues their entire lifetime, who know all the ins and outs of the modeling ... they chuckled when they looked at that study,” the American Trucking Associations’ Kedzie said.

And an EPA report released Nov. 20 directly contradicted the Tennessee Tech study. According to the new agency data, glider vehicles tested at the EPA’s Ann Arbor, Mich., vehicles lab emitted generally four to 40 times more nitrogen oxides and 50 to 450 times more particulate matter than new model year 2014 and 2015 trucks.

The EPA report is “littered with significant and fatal flaws,” including that the agency doesn’t incorporate data to reflect the use of cleaner diesel, the Glider Kits Association of America, a trade group formed in September 2017, said in Jan. 5 comments.

“The timing of the report’s release reveals the true agenda of certain EPA career employees,” the group wrote.

Glider kit makers’ criticisms of the EPA report have no real footing, Dave Cooke, senior vehicles analyst with the Union of Concerned Scientists, said. For example, Cooke said, the use of cleaner diesel results in a emissions difference of only a few percentage points—a small impact given the large pollution profile of glider vehicles’ engines.

“It’s clear they are grasping at straws to discredit EPA technical staff,” Cooke told Bloomberg Environment. Trying to suggest agency career staff are under political influence “is pretty rich coming from the company that bought and paid for the Tennessee Tech study and provided the testing facility.”

In Come the States

Hannon, the former EPA staffer, said the EPA’s proposal lacks other elements that would make it legally defensible. Those include a failure to conduct an analysis of the environmental impact of eliminating the glider kit requirements and a realistic analysis of the burden an exemption would place on states and others in the trucking industry.

“This is deadly stuff,” Steven Silverman, who was a staff attorney at the EPA for 37 years and worked on the 2016 truck rule, told Bloomberg Environment. “To say the Clean Air Act, designed to keep this kind of thing from happening, can’t reach it is legally very, very far fetched. It’s outrageous.”

Silverman, now a consultant with the Environmental Defense Fund, also said the impacts of EPA’s plans could cascade to other sources.

State regulators have included emissions reductions from limits on glider kits in their budgets for meeting federal air quality standards. If those limits are lifted, states will have to “ratchet down not just on other mobile sources, but also stationary sources” to get the reductions they need, Silverman said.

States also could step in to regulate glider vehicles on their own. “If EPA’s legal authority does not extend to the regulation of glider vehicles, glider engines and glider kits, then state and local agencies are not preempted from regulating them and may do so,” the National Association of Clean Air Agencies, which represents air regulators from 40 states, said in Jan. 5 comments.

That could prompt a regulatory “patchwork,” Kedzie said. “If you have a glider and authority goes to the states, I don’t know how you’ll get across the country. It could force you into a situation where you’ll have to get rid of gliders anyways.”

Is Compromise Possible?

It’s unlikely at this point the EPA could escape a legal challenge, Kedzie said, adding that if it finalizes the glider kit exemption, he thinks the agency would lose. It’s possible the agency could offer a compromise, but it’s unclear whether that would be successful, either in garnering enough support or in withstanding legal scrutiny.

The agency’s November proposal offers two alternative options: increasing the yearly glider exemption for small businesses or allowing glider kit makers a longer phase-in period before emissions limits take effect.

Mandel said if the EPA wants to consider those options, it should put forth a new, “more thoughtful” proposal to fully examine their impacts, including “what any potential downside risk would be.”

The agency also would have to explain why it was again proposing options it already considered—and shot down—in crafting the original 2016 regulation, Cooke of the Union of Concerned Scientists said.

“Those arguments have already been hashed out,” he added, noting the 300 glider kit cap was “literally a number that Fitzgerald said they can be profitable at.”

Rajkovacz said he didn’t directly respond to the alternative options offered by the EPA because to him, it’s “all or nothing. I’m not interested in negotiating a halfway point.”

To contact the reporter on this story: Abby Smith in Washington at asmith@bloombergenvironment.com

To contact the editor responsible for this story: Rachael Daigle at rdaigle@bloombergenvironment.com

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