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Statement of Need: States are working to attain National Ambient Air Quality Standards for ozone, PM, and NOx. Light-duty vehicles are responsible for a significant portion of the precursors to these pollutants and are large contributors to ambient air toxic pollution. For example, without future controls, by 2014 light-duty vehicles are projected to contribute 25 percent of nationwide mobile-source NOx, 40 percent of nationwide mobile-source VOC, and 10 percent nationwide mobile-source PM. Importantly, by 2020 mobile sources are expected to be as much as 50 percent of the inventories for some individual urban areas without future controls. Light-duty vehicles also contribute about half of the 2030 mobile source inventory of toxics; the 2002 National-Scale Air Toxics Assessment showed that mobile sources were responsible for over 50 percent of cancer risk and over 80 percent of noncancer hazard. Clearly, there is a need for tighter light-duty vehicle standards and fuel standards as part of a comprehensive approach to reducing pollution from motor vehicles. Renewable fuels are recognized to pose potential air quality concerns, and EPA has a mandate to address them under Clean Air Act section 211(q) and 211(v). Specifically, both EPAct of 2005 and EISA (2007) amended the CAA to require EPA to determine adverse air quality impacts of renewable fuels and to implement appropriate measures to mitigate these impacts to the greatest extent achievable.

Summary of the Legal Basis: The Clean Air Act, section 202(a)(1), states "The Administrator shall by regulation prescribe (and from time to time revise) in accordance with the provisions of this section, standards applicable to the emission of any air pollutant from any class, or class of new motor vehicles or new motor vehicle engines, which in his judgment cause, or contribute to, air pollution which may be reasonably be anticipated to endanger public health or welfare." Section 202(a) covers all on-highway vehicles, including medium and heavy-duty trucks. EPA is also using its authority under section 211(c) of the Clean Air Act to address gasoline sulfur controls, section 211(h) to address Reid Vapor Pressure, and section 211(v), which requires that the Administrator promulgate fuel regulations to implement appropriate measures to mitigate, to the greatest extent achievable, and considering the results of the anti-backsliding study completed under section 211(v) (1), any adverse impacts on air quality as a results of the renewable volumes or make a determination that no such measures are necessary.

Alternatives: The rulemaking proposal will include an evaluation of regulatory alternatives that can be considered in addition to the Agency's primary proposal.

Anticipated Costs and Benefits: Detailed analysis of economy-wide cost impacts, emissions reductions, and societal benefits will be performed during the rulemaking process.

Risks: The failure to set new Tier 3 vehicle/fuel standards will adversely impact the population living in nonattainment areas, where reductions from the Tier 3 rule are needed to help attain and maintain the ozone and PM NAAQS (and to mitigate adverse effects of renewable fuels). Also, without the new Tier 3 vehicle/fuel standards, the sizeable population living, working, and going to school near roads will continue to be exposed to higher levels of air toxics, which is a current environmental justice and children's health concern.