Senate Report 115-155 - DIESEL EMISSIONS REDUCTION ACT OF 2017

[Senate Report 115-155]
[From the U.S. Government Publishing Office]

Calendar No. 219

115th Congress} { Report
SENATE
1st Session } { 115-155

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DIESEL EMISSIONS REDUCTION ACT OF 2017

_______

September 13, 2017.--Ordered to be printed

_______

Mr. Barrasso, from the Committee on Environment and Public Works,
submitted the following

R E P O R T

[To accompany S. 1447]

[Including cost estimate of the Congressional Budget Office]

The Committee on Environment and Public Works, to which was
referred a bill (S. 1447) to reauthorize the diesel emissions
reduction program, and for other purposes, having considered
the same, reports favorably thereon without amendment and
recommends that the bill do pass.

General Statement and Background

Established pursuant to the Energy Policy Act of 2005, the
Diesel Emissions Reduction Act (DERA) is a voluntary program
that incentivizes vehicle, engine and equipment owners to
retrofit existing heavy-duty diesel vehicles, engines and
equipment with new technology, or replace vehicles, engines and
equipment through the disbursal of federal and state grants and
rebates. Diesel engines are reliable and efficient, but older
ones emit significant amounts of exhaust including particulate
matter (PM) and nitrogen oxides (NOX), which can
harm human health. Initially a grant program, the Environmental
Protection Agency (EPA) started awarding the first DERA grants
in 2008 with the purpose of reducing diesel exhaust from older
engines. In January 2011, DERA was reauthorized through fiscal
year (FY) 2016 and the EPA was given the authority to offer
rebates in addition to grants pursuant to the Diesel Emissions
Reduction Act of 2010. EPA started the first rebate program in
2012 targeting school bus replacement.
The DERA program is administered by EPA's National Clean
Diesel Campaign within the Office of Transportation and Air
Quality. According to the agency's latest report to
Congress,\1\ the DERA program is considered one of the most
cost-effective federal clean air programs. EPA reports that
from FY2008 through FY2013, DERA upgraded almost 73,000
vehicles or pieces of equipment. Over the same time, the
lifetime emission reductions attributable to DERA funding
totaled 14,700 tons of PM and 335,200 tons of NOX.
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\1\United States Environmental Protection Agency, ``Third Report to
Congress: Highlights From the Diesel Emission Reduction Program,''
February 2016, available at: https://nepis.epa.gov/Exe/
ZyPDF.cgi?Dockey=P100OHMK.pdf.
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Part of the program's success is its focus on areas that
need it most. DERA grants have increasingly been awarded to
areas that are in nonattainment for PM or ozone, thereby
maximizing benefits and overall effectiveness. EPA's latest
report reveals that 81 percent of projects awarded are located
in areas with air quality challenges. Prioritization of goods
movement projects have proven especially beneficial for
communities located next to ports, rail yards and distribution
centers that are disproportionately impacted by higher levels
of diesel exhaust.
The DERA program benefits are far-reaching and cost-
effective. DERA grant recipients can tailor projects to the
needs of targeted communities with benefits continuing long
after the project period closes. DERA funding has impacted a
variety of sectors and supported many clean diesel technologies
spurring market innovation. According to the EPA's latest
report, each federal dollar invested in DERA has leveraged as
much as $3 from non-federal sources, such as other government
agencies, private organizations, industry, and nonprofit
organizations. Further, the agency has improved DERA's cost-
effectiveness by changing the Requests for Proposal so that
funding of individual projects in which the vehicle or fleet
owner derives an economic benefit is reduced.
Demand and necessity for the DERA program will continue.
Despite the program's success, according to EPA's last report
to Congress, approximately 10.3 million older diesel engines
remain in use. EPA estimates that by 2030 over 1 million older,
higher-emitting diesel engines will still be in use. As DERA is
the only EPA program focused on providing health benefits from
the reduction of diesel exhaust, the demand from fleet owners
has far exceeded DERA's available funds. In fact, funding
requests for the National Clean Diesel Rebate Program exceeded
awards by as much as 35:1 and requests in the national grant
competitions exceeded availability by 7:1. S. 1447 answers this
demand by authorizing the program through 2022, which will
ensure a continuation of the successful DERA program and its
associated benefits.
While the DERA program has generally been a success, minor
changes to the program are appropriate to make implementation
more equitable across the country. In the past, EPA has denied
state requests for funding for reasons not directly tied to a
statutory or regulatory requirement. Current law does not
explicitly state that EPA must recognize differing diesel
vehicle, engine, equipment or fleet use concerns that may occur
(especially between large metropolitan areas and less populated
areas) when funding DERA projects through the national or state
program. S. 1447 would clarify that in implementing both the
national competitive program and the state-administered
program, EPA must recognize that typical diesel vehicle,
engine, equipment and fleet use differs across the country. For
example, equipment in less populated areas such as Wyoming may
have a longer expected useful life than in more populated
areas.
In addition, S. 1447 makes funding of the DERA program more
equitable. Under current law, all states are eligible for equal
funding shares under the state-administered program. If states
choose not to participate in the state-administered program,
their shares of funding are distributed to participating states
on a population-weighted basis, which disadvantages less-
populated states. Any funding given to participating states
that is not used by a state is then reallocated to the national
competitive program. S. 1447 would require all money left over
from the state-administered program (whether for a state that
chooses not to participate or allocated to a state but unused)
to be reallocated to the national competitive program.

Objectives of the Legislation

The bill reauthorizes the Diesel Emissions Reduction Act
program through 2022. The bill also makes it clear that EPA
must recognize differences in how vehicles, engines, equipment,
and fleets are used across the country and equalizes funding
opportunities for all states.

Section-by-Section Analysis

Section 1. Short title

Section 1 states that the Act may be cited as the ``Diesel
Emissions Reduction Act of 2017''.

Section 2. Reauthorization of diesel emissions reduction program

Section 2 extends the authorization of the program through
fiscal year 2022.

Section 3. Recognizing differences in diesel vehicle, engine,
equipment, and fleet use

Section 3 changes current law to make it clear that EPA
must recognize that there are differing diesel vehicle, engine,
equipment or fleet use concerns in different areas of the
country as the agency funds DERA projects. Section 3(a) would
clarify that in prioritizing projects for funding under the
national competitive program, EPA must ``recogniz[e]
differences in typical vehicle, engine, equipment, and fleet
use.'' Section 3(b) commits the agency to ``recognition, for
purposes of implementing this section, of differences in
typical vehicle, engine, equipment, and fleet use throughout
the United States, including expected useful life'' in guidance
that the agency issues to states to assist in preparing funding
applications under the state-administered program.

Section 4. Reallocation of unused state funds

Section 4 changes current law by requiring all money left
over from the state-administered program (whether for a state
that chooses not to participate or allocated to a state but
unused) would be reallocated to the national competitive
program.

Legislative History

On June 27, 2017, Senator Carper introduced S. 1447, the
Diesel Emissions Reduction Act. Senators Inhofe, Barrasso, and
Whitehouse were original cosponsors of the legislation. The
bill was referred to the Senate Committee on Environment and
Public Works.

Hearings

No committee hearings were held on S. 1447.

Rollcall Votes

On July 12, 2017, the Committee on Environment and Public
Works met to consider S. 1447. The bill was ordered favorably
reported by voice vote. No roll call votes were taken.

Regulatory Impact Statement

In compliance with section 11(b) of rule XXVI of the
Standing Rules of the Senate, the Committee finds that S. 1447
does not create any additional regulatory burdens, nor will it
cause any adverse impact on the personal privacy of
individuals.

Mandates Assessment

In compliance with the Unfunded Mandates Reform Act of 1995
(Public Law 104-4), the Committee notes that the Congressional
Budget Office found, ``S. 1447 contains no intergovernmental or
private-sector mandates as defined in the Unfunded Mandates
Reform Act (UMRA) and would impose no costs on state, local, or
tribal governments.''

Cost of Legislation

Section 403 of the Congressional Budget and Impoundment
Control Act requires that a statement of the cost of the
reported bill, prepared by the Congressional Budget Office, be
included in the report. That statement follows:

July 21, 2017.
Hon. John Barrasso,
Chairman, Committee on Environment and Public Works,
U.S. Senate, Washington, DC.
Dear Mr. Chairman: The Congressional Budget Office has
prepared the enclosed cost estimate for S. 1447, the Diesel
Emissions Reduction Act of 2017.
If you wish further details on this estimate, we will be
pleased to provide them. The CBO staff contact is Jon Sperl.
Sincerely,
Keith Hall.
Enclosure.

S. 1447--Diesel Emissions Reduction Act of 2017

Summary: S. 1447 would authorize the appropriation of $100
million annually through 2022 for the Environmental Protection
Agency (EPA) to provide grants for projects and state programs
that reduce emissions from diesel engines. The bill also would
require the EPA to provide guidance to states about technical
differences in vehicles, engines, equipment, and vehicle
fleets. Finally, the bill would specify that any funds not
claimed by states for diesel programs be reallocated for
projects that retrofit vehicles.
Assuming appropriation of the authorized amounts, CBO
estimates that implementing S. 1447 would cost $480 million
over the 2018-2022 period.
Enacting the bill would not affect direct spending or
revenues; therefore, pay-as-you-go procedures do not apply. CBO
estimates that enacting S. 1447 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2028.
S. 1447 contains no intergovernmental or private-sector
mandates as defined in the Unfunded Mandates Reform Act (UMRA)
and would impose no costs on state, local, or tribal
governments.
Estimated cost to the Federal Government: The estimated
budgetary impact of S. 1447 is shown in the following table.
The costs of this legislation fall within budget function 300
(natural resources and environment).

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By fiscal year, in millions of dollars--
-------------------------------------------------
2017-
2017 2018 2019 2020 2021 2022 2022
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INCREASES IN SPENDING SUBJECT TO APPROPRIATION

Authorization Level........................................... 0 100 100 100 100 100 500
Estimated Outlays............................................. 0 85 95 100 100 100 480
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Basis of estimate: For this estimate, CBO assumes that S.
1447 will be enacted near the end of fiscal year 2017, that the
specified amounts will be appropriated in each year starting in
2018, and that outlays will follow historical spending patterns
for the program. The program received an appropriation of $50
million in fiscal year 2017.
Pay-As-You-Go considerations: None.
Increase in long-term deficit and direct spending: CBO
estimates that enacting S. 1447 would not increase net direct
spending or on-budget deficits in any of the four consecutive
10-year periods beginning in 2028.
Intergovernmental and private-sector impact: S. 1447
contains no intergovernmental or private-sector mandates as
defined in UMRA and would impose no costs on state, local, or
tribal governments.
Estimate prepared by: Federal costs: Jon Sperl; Impact on
state, local, and tribal governments: Jon Sperl; Impact on the
private sector: Amy Petz.
Estimate approved by: H. Samuel Papenfuss, Deputy Assistant
Director for Budget Analysis.

Changes in Existing Law

In compliance with section 12 of rule XXVI of the Standing
Rules of the Senate, changes in existing law made by the bill
as reported are shown as follows: Existing law proposed to be
omitted is enclosed in [black brackets], new matter is printed
in italic, existing law in which no change is proposed is shown
in roman:

* * * * * * *

ENERGY POLICY ACT OF 2005

* * * * * * *

SEC. 2. [42 U.S.C. 15801] DEFINITIONS.

Except as otherwise provided, in this Act:
(1) Department.--* * *

* * * * * * *

SEC. 792. [42 U.S.C. 16132] NATIONAL GRANT, REBATE, AND LOAN PROGRAMS.

(a) In General.--* * *

* * * * * * *

(4) Priority.--In providing a grant, rebate, or loan
under this section, the Administrator shall give
highest priority to proposed projects that, as
determined by the Administrator--
(A) maximize public health benefits;
(B) are the most cost-effective;
(C) serve areas--
(i) with the highest population
density;
(ii) that are poor air quality areas,
including areas identified by the
Administrator as--
(I) in nonattainment or
maintenance of national ambient
air quality standards for a
criteria pollutant;
(II) Federal Class I areas;
or
(III) areas with toxic air
pollutant concerns;
(iii) that receive a disproportionate
quantity of air pollution from diesel
fleets, including truckstops, ports,
rail yards, terminals, construction
sites, schools, and distribution
centers; or
(iv) that use a community-based
multistakeholder collaborative process
to reduce toxic emissions;
(D) include a certified engine configuration,
verified technology, or emerging technology
that has a long expected useful life,
recognizing differences in typical vehicle,
engine, equipment, and fleet use throughout the
United States;

* * * * * * *

SEC. 793. [42 U.S.C. 16133] STATE GRANT, REBATE, AND LOAN PROGRAMS.

(a) In General.--Subject to the availability of adequate
appropriations, the Administrator shall use 30 percent of the
funds made available for a fiscal year under this subtitle to
support grant, rebate, and loan programs administered by States
that are designed to achieve significant reductions in diesel
emissions.
(b) Applications.--The Administrator shall--
(1) provide to States guidance for use in applying
for grant, rebate, or loan funds under this section,
including information regarding--
(A) the process and forms for applications;
(B) permissible uses of funds received[; and]
;
(C) the cost-effectiveness of various
emission reduction technologies eligible to be
carried out using funds provided under this
section; and
(D) the recognition, for purposes of
implementing this section, of differences in
typical vehicle, engine, equipment, and fleet
use throughout the United States, including
expected useful life; and
(2) establish, for applications described in
paragraph (1)--
(A) an annual deadline for submission of the
applications;
(B) a process by which the Administrator
shall approve or disapprove each application;
and
(C) a streamlined process by which a State
may renew an application described in paragraph
(1) for subsequent fiscal years.
(c) Allocation of Funds.--
(1) In general.--For each fiscal year, the
Administrator shall allocate among States for which
applications are approved by the Administrator under
subsection (b)(2)(B) funds made available to carry out
this section for the fiscal year.
(2) Allocation.--
(A) In general.--Except as provided in
subparagraphs (B) and (C), using not more than
20 percent of the funds made available to carry
out this subtitle for a fiscal year, the
Administrator shall provide to each State
qualified for an allocation for the fiscal year
an allocation equal to \1/53\ of the funds made
available for that fiscal year for distribution
to States under this paragraph.
(B) Certain territories.--
(i) In general.--Except as provided
in clause (ii), Guam, the United States
Virgin Islands, American Samoa, and the
Commonwealth of the Northern Mariana
Islands shall collectively receive an
allocation equal to \1/53\ of the funds
made available for that fiscal year for
distribution to States under this
subsection, divided equally among those
4 States.
(ii) Exception.--If any State
described in clause (i) does not
qualify for an allocation under this
paragraph, the share of funds otherwise
allocated for that State under clause
(i) shall be reallocated pursuant to
subparagraph (C).
(C) Reallocation.--If any State does not
qualify for an allocation under this paragraph,
the share of funds otherwise allocated for that
State under this paragraph shall be reallocated
[to each remaining qualified State in an amount
equal to the product obtained by multiplying--
(i) the proportion that the
population of the State bears to the
population of all States described in
paragraph (1); by
(ii) the amount otherwise allocatable
to the nonqualifying State under this
paragraph] to carry out section 792.

* * * * * * *

SEC. 797. [42 U.S.C. 16137] AUTHORIZATION OF APPROPRIATIONS.

(a) In General.--There is authorized to be appropriated to
carry out this subtitle $100,000,000 for each of fiscal years
2012 through [2016] 2022, to remain available until expended.
(b) Management and Oversight.--The Administrator may use not
more than 1 percent of the amounts made available under
subsection (a) for each fiscal year for management and
oversight purposes.

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