States, Groups Blast Proposal to Ax Popular Diesel Program
March 7, 2017
By Camille von Kaenel and Sean Reilly
A preliminary spending blueprint for U.S. EPA eliminates a popular grant program to reduce nitrogen oxides (NOx) pollution from old diesel engines.
The elimination of the Diesel Emissions Reduction Act (DERA) grants would shave $50 million off the annual budget. That would bring the administration one small step closer to cutting EPA’s $8.2 billion annual spending by about a quarter, though state clean air agencies and the diesel technology industry are saying it makes little sense to scrap a popular, inexpensive and voluntary program.
The spending blueprint suggested administration officials believe the grants are obsolete.
“Other sources of federal and state funding are available to fund high priority projects and the legacy fleet will eventually be replaced by vehicles that use newer, cleaner engines,” the document says, according to a source who has read it.
It identifies a $2.7 billion pot of money — set aside from the settlement between Volkswagen AG and regulators over its cheating on emissions tests — for states to reduce NOx pollution from old diesel engines in the next 10 years as an alternative source of funding. It would provide states with more than five times more funds than the usual DERA grants each year.
The White House is still hammering out details, and Congress must still sign off on it. The program has attracted criticism over its management, but Congress has repeatedly put money back into it, despite proposed reductions by former President Obama.
Clean air officials say the DERA grants and the Volkswagen mitigation trust fund aren’t completely interchangeable.
“Air quality officials are eager to reduce those emissions, and any tools that help are important, and we would hate to lose them,” said Mary Douglas, a staff member at the National Association of Clean Air Agencies.
Opposing the administration’s tactic is Sen. Tom Carper of Delaware, the top Democrat on the Senate Environment and Public Works Committee. The DERA program ranks among the most efficient in the air quality field, with health and economic benefits outweighing costs by an average ratio of 13-to-1, Carper said in a statement to E&E News this morning.
“I’m pleased that states have the flexibility to use Volkswagen settlement dollars to supplement the program, but those settlement dollars will not satisfy the need for a strong federal investment,” Carper said.
A broad industry coalition including engine makers Cummins Inc. and Navistar International Corp. and the National School Transportation Association urged EPA Administrator Scott Pruitt to save the grants in a letter Friday. They said the DERA program “continues to be needed because of the long-lived nature of diesel engines.”
“Without a program like DERA, these older vehicles will stay on the road until they wear out, increasing emissions that could be significantly reduced if replaced with newer technology,” the letter said.
Air quality officials recognized that the incoming funds from Volkswagen would vastly overshadow any DERA grants. Available grants this year number $8.6 million to $14.9 million because they are only partially funded by a continuing resolution.
But they say some DERA projects may fall by the wayside because they may not be eligible for funding under the Volkswagen mitigation trust fund.
Those could include some electrification projects or non-road equipment replacements, said Kevin Downing, the clean diesel program coordinator at Oregon’s Department of Environmental Quality.
“There is an overlap between the Volkswagen settlement and what’s funded under DERA, but DERA provides funding for a broader range of activities,” Downing said.
There are still “huge amounts of old diesel equipment that need to be cleaned up,” said Susan Mudd, a senior policy advocate at the Environmental Law & Policy Center, a Chicago-based nonprofit that also favors the program. The short-term “opportunity” afforded by the VW settlement, she added, “is not the same as something that was meant to accelerate the diminution of NOx emissions over time.”
States wanting to use the Volkswagen money can choose from a set menu of projects, including replacing old diesel school buses or forklifts with electric ones, or a separate “DERA option” that provides a link toward some of the activities usually funded under DERA.
But clean air advocates are concerned that if the DERA program is cut, that option would no longer exist.
“We see a significant contribution of emissions from non-road equipment that would persist if we did not have the opportunity under DERA to fund projects like that,” Downing said.
From 2009 through 2013, bolstered by a big shot of stimulus money, EPA awarded about $520 million in DERA grants to replace or retrofit almost 59,000 engines used in vehicles, locomotives and other equipment, according to a report released last year. Over the long term, the resulting shift to cleaner-burning engines will save more than 400 million gallons of fuel and cut emissions of nitrogen oxides by almost 313,000 tons, the agency estimated.
But the program has also come under fire for slipshod management. In a 2014 audit summary of six grant recipients, EPA’s inspector general questioned more than 90 percent of the expenditures reviewed and found that four of the six recipients had not fully met the objectives of their grant awards.
President Obama repeatedly tried to cut funding, only to be reversed by Congress. In fiscal 2016, for example, lawmakers appropriated $50 million after Obama had proposed $10 million. For fiscal 2017, Obama again sought $10 million in direct DERA funding, coupled with a longer-term proposal to curb diesel emissions. The Republican-controlled House then approved $100 million.
During the House floor debate last July on the 2017 spending bill that covers EPA, Rep. Gary Palmer (R-Ala.) offered an amendment that ultimately failed to strike all funding. DERA grants had gone toward “questionable” projects, such as $1 million for electrified parking spaces at a Delaware truck stop and $750,000 for cherry pickers, Palmer said. His amendment failed by a vote of 175-250. While the broader EPA spending bill passed the House, it never advanced beyond that and was replaced by the continuing resolution that expires April 28.
The program’s authorization expired at the end of last September. Carper, who last year introduced a bipartisan re-authorization bill that stalled, plans to try again this session of Congress.
EPA, White House and Office of Management and Budget officials did not respond to requests for comment.