420F99026
United States Air and Radiation EPA420-F-99-026
Environmental Protection June 1999
Agency
Office of Mobile Sources
x>EPA TRAQ Technical Brief
Transportation Air Quality Center
Commuter Choice: Guidance Overview
Commuter Choice is an important strategy to reduce emissions from
passenger vehicles and improve air quality. Through Commuter Choice
programs, employers offer one or more options from a diverse menu of
commute benefits encouraging employees to commute by modes that are
less polluting than driving alone. In addition, Commuter Choice programs
can improve public transit systems and potentially reduce congestion. This
technical brief is an introduction to the document "State Implementation
Plan (SIP) Development Guidance: Using Emission Reductions from
Commuter Choice Programs to Meet Clean Air Act Requirements". SIPs
enumerate plans for implementation, maintenance, and enforcement of the
National Ambient Air Quality Standards (NAAQS) in each air quality
control region of a state. The Guidance directs State and local
governments to the available tools and necessary requirements for
including Commuter Choice programs in State Implementation Plans.
) Printed on Recycled Paper
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Significance
Since 1970, the amount people drive annually has more than doubled, and
more people are driving. Employee commute trips to work make up ap-
proximately 28% of the vehicle miles traveled (VMT) on our roads today.
The problem is that emissions from growing VMT and congestion threaten
to offset and, in some areas, overwhelm the air quality benefits of today's
cleaner cars and/or fuels. Auto emissions contribute heavily to air pollution
and to increased greenhouse gases in the atmosphere. Both pose recognized
risks to the environment and to people.
Since Commuter Choice programs can reduce VMT, auto emissions and
greenhouse gases, they can improve public health and contribute to climate
change prevention efforts. Commuter Choice can be an essential tool used
by State and local air quality planning authorities to address transportation
issues and air pollution concerns. The programs can be developed by an
individual company or as part of a wider regional strategy.
Commuter Choice programs can help regions meet Clean Air Act goals.
Emissions reductions generated through Commuter Choice programs may
be included in SBPs for any criteria pollutant (e.g., ozone, particulate matter)
in both nonattainment and maintenance areas. EPA is prepared to approve
emission reductions in SIPs that may be used to meet Reasonable Further
Progress (RFP) requirements, baseline determinations, redesignation, and
maintenance demonstrations. EPA's Office of Mobile Sources (QMS) has
issued a guidance document to assist State and local governments and
agencies in calculating the emissions benefits of Commuter Choice pro-
grams in SIPs. QMS will provide technical guidance and assistance on SIP
submittals, quantification expertise, outreach workshops, and location of
funding information.
How
Commuter
Choice
Programs
Work
Reducing the frequency that commuters drive alone generates air quality
benefits. Commuter Choice programs may be run by States, local agencies,
or individual employers. However, economies of scale and the synergistic
effects of large programs make community and regional efforts, including
public-private partnerships, most effective. Such projects may include one,
all, or a combination of the following individual benefits:
• Free or reduced cost passes for public transportation (such as subway
cards, bus tokens, or train tickets).
• Transit or vanpool vouchers and subsidies.
Services to facilitate vanpools and carpools (such as providing vans,
ridematching, and guaranteed ride home services).
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• Park and Ride subsidies.
• Telecommuting options (so employees can work at home more often).
• Proximate Commuting: a program that matches employees of multi-
site employers (such as banks or chain stores) to the branch office
nearest their home.
• Incentives to bike or walk.
• Parking Cash Out: employees can trade an employer-paid parking
space for cash or other benefits.
• Guaranteed Ride Home programs.
With more options, commuters can be expected to use single-occupant
vehicles less often.
Benefits of
Tax Code
Changes
Federal tax benefits and-cost savings can motivate employers to offer more
commute benefits for working upple. Recognizing the air quality benefits
of VMT reduction, Congress has established tax incentives giving employ-
ers and employees new ways to get tax savings in association with speci-
fied work commute benefits. These provisions, amended by the Transporta-
tion Eguity Act for the 21st Century (title 9 section 910, PL 105-178), are
contained in the Internal Revenue Code Section 132(f). The new tax law
provides direct benefits for transit, vanpooling, and parking.
Under current law, qualified parking, transit and vanpool benefits offered
by employers are not subject to certain Federal taxes (up to specified
limits). Employers may also offer Parking Cash Out, a program in which
employees can trade employer-paid parking spaces for cash or other quali-
fied benefits.
How
Commute
Benefits Are
Offered
Tax savings from Commuter Choice vary, depending on which commute
benefits are offered by the employer and how they are provided to the
employee. Below are three qualified methods:
1. "In-Addition-to" Compensation / Additional Benefit
Employees may receive the benefit in addition to their current wages.
Specifically, they can receive transit, vanpool, and parking benefits com-
pletely free of all U.S. payroll and Federal income taxes up to specified
limits. The employer pays for the benefit and receives a deduction from its
Federal business income taxes for the value of the benefit. Neither the
employer nor employee pays payroll-related taxes or costs on the benefit.
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2. "In-Lieu-of' Compensation / Pre-Tax Benefit
An employer may permit employees to set aside some of their income,
before taxes, to pay for qualified commutes. Employees may use this pre-
tax income to pay for transit, vanpools, or parking. Employees would not
pay Federal income taxes or payroll taxes on the amount they elect to set
aside for the commute option, and employers would not pay U.S. payroll
taxes or other payroll related costs since the amount is treated as a benefit
rather than as taxable salary.
:. Cost-Sharing
An employer may share the cost of commuting to and from work with their
employees. They could do this through a combination of the two benefits
above.
Under the new tax law, employers can offer the specified benefits for their
work commutes in addition to or in lieu of compensation, Federal-tax-free,
up to these Federal limits: *
Up to $175 for parking at or near work site and transit facilities
Up to $65 for public transit
Up to $65 for vanpool services
(For transit and vanpooling, this amount will increase to $100/month
for taxable years beginning after December 31, 2001.)
Note: Tax breaks on benefits only apply directly to transit, vanpool and
parking benefits. The cash option from Parking Cash Out and any other cash
incentives are taxable for the individual employee. In addition, the employer
must pay payroll taxes related to the cashed out parking spot. Subsidized
parking and other transportation benefits do not become taxable if an em-
ployer offers them along with the Parking Cash Out option. Although the
tax laws do not specifically relate to benefits like telecommuting,
carpooling, biking, walking, and other commute options, employers may
still offer or encourage these choices. One way to provide an incentive for
these options is through Parking Cash Out, where employees can choose the
cash benefit and commute by these alternative modes.
* Any amount of benefit in excess of the federal limits will be subject to
Federal income and payroll taxes. In addition, States may apply taxes even
when the Federal government does not.
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Additional
Economic
Benefits to
Communities
Enhancing Downtown Parking
Commuter Choice can free up parking now used by downtown employees
for other uses, making downtowns more attractive business locations. In
addition, Commuter Choice can aid urban transit agencies whose services
now compete with free parking to commuters. Cities using the program
effectively can experience increased demand for alternative modes of
transportation and increased efficiency, both aiding urban revitalization and
efforts to prevent climate change. Commuter Choice can help revive
downtowns as areas of transportation alternatives and multiple uses, rather
than areas of gridlock.
Raising Tax Revenue
In a study of eight California employers who implemented Parking Cash
Out, it was found that the tax base was increased. State and federal tax
revenues from the employers increased by $48 annually for each employee
electing the taxable cash option.
The
Guidance
Document
The document, "SIP Development Guidance: Using Emission Reductions
from Commuter Choice Programs to Meet Clean Air Act Requirements,"
includes information that:
Describes the range of measures that are included under the Com-
muter Choice umbrella.
Summarizes the analytical details for quantifying the emissions
reductions from Commuter Choice programs, including a basic four-
step methodology.
Reviews legal and administrative requirements for using the emissions
reductions in SIPs.
Estimating Emissions
Reductions
The guidance pro-
vides a four-step
methodology for
developing protocols
used to project
emission reductions
from Commuter
Choice programs.
Four-Step Methodology
Stepl
Step 2
Step 3a
Step 3b
Step 4
Population of Commute Vehicles
Estimate the relevant population of vehicles driven to work
Potentially Affected Population
Estimate the proportion of these vehicles driven to employer worksites
where Commuter Choice options are or will be available
Participation Rates
Forecast the typical effectiveness of a commute benefit options program
Uncertainty
Incorporate compliance and programmatic uncertainty factors
Emission Reductions
Estimate the total change in VMT and associated emission changes
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For More Information
This document and additional information on
transportation and air quality are available
electronically at the IRAQ Center on the EPA
Internet server at:
http://www.epa.gov/oms/traq
For a hard copy of this technical brief or the
full document SIP Development Guidance:
Using Emission Reductions from Commuter
Choice Programs to Meet Clean Air Act
Requirements, please call the National Service
Center for Environmental Publications
(NSCEP) at (800) 490-9198.
EPA Staff Contacts
For more information, please contact one of
the following staff members.
Office of Mobile Sources Headquarters
Contact:
Deanne Upson
U.S. Environmental Protection Agency
Transportation Air Quality (TRAQ) Center
2000 Traverwood Dr.
Ann Arbor, MI 48105
phone: (734) 214-4283
fax: (734) 214-4052
e-mail: upson.deanne@epa.gov
Or call the TRAQ Center Information Request
Line at: (734) 214-4100
EPA Regional Contacts:
Region 1
JeffButensky(CAQ)
Air Quality Planning Unit
Office of Ecosystem Protection
1 Congress Street, Suite 1100
Boston, MA 02114-2023
phone: (617) 565-3583
fax: (617) 565-4940
e-mail: butensky.jeff@epa.gov
Region 2 Linda Kareff
Air Programs Branch
Environmental Planning and Protection Division
290 Broadway, 25th Floor
New York, NY 10007-1866
phone: (212) 637-3741
fax: (212) 637-3901
e-mail: kareff.linda@epa.gov
Air Program Main Phone: (212) 637-4249
Region 3
Paul T. Wentworth / Larry Budney
Energy, Radiation, and Indoor Environment
Division
1650 Arch St.
Philadelphia, PA 19103
phone (Wentworth): (215) 814-2183
phone (Budney): (215) 814-2184
fax (Wentworth): (215) 814-2124
fax (Budney): (215) 814-2134
e-mail: wentworth.paul@epa.gov;
budney.larry@epa.gov
Main phone number: 215-814-2100
Region 4
Alan Powell
Pesticides and Toxics Management Division
Regulatory Planning Section
61ForsythSt., SW
Atlanta, GA 30303
phone: (404) 562-9045
fax: (404) 562-9068
e-mail: powell.alan@epa.gov
Division Main Phone: (404) 562-9077
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Region 5
Patricia Morris
Air and Radiation Division
77 W. Jackson Blvd.
Chicago, IL 60604-3590
phone: (312) 353-8656
fax:(312)886-5824
e-mail: morris.patricia@epa.gov
Main Phone Number: (312) 353-2211
Region 6
J. Behnam (6PDL)
Air Planning Section
Multimedia Planning and Permitting Division
1445 Ross Avenue
Dallas, TX 75202
phone: (214) 665-7247
fax: (214) 665-7263
e-mail: behnam.jahanbakhsh@epa.gov
Main Phone Number: (214) 665-7214
Region 7
Christopher D. Hess
Air Planning and Development Branch
Air, RCRA and Toxics Division
901 North 5th Street
Kansas City, KS 66101
phone: (913) 551-7213
fax:(913)551-7844
e-mail: hess.christopher@epa.gov
Main Phone Number: (913) 551-7020
Region 8
JeffHouk(8P2-A)
Air Program
999 18th Street, Suite 500
Denver, CO 80202
phone: (303) 312-6446
fax:(303)312-6064
e-mail: houk.jeff@epa.gov
Program Main Phone: (303) 312-6470
Region 9
Mark Brucker (AIR 2)
75 Hawthorne St.
San Francisco, CA 94105
phone: (415) 744-1231
fax:(415)744-1076
e-mail: brucker.mark@epa.gov
Division Main Phone: (415) 744-1264
Region 10
Wayne Elson (OAQ-107)
U.S. EPA Office of Air Quality
1200 6th Ave.
Seattle, WA 98101
phone: (206) 553-1463
fax:(206)553-0110
e-mail: elson.wayne@epa.gov
Main Phone Number: (206) 553-0218
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