United States                                     Office of Transportation and Air Quality
             Environmental Protection                                             EPA-420-B-12-053
                                                                                August 2012

    Implementing Clean Air Act Section 182(d)(l)(A): Transportation Control Measures and
   Transportation Control Strategies to Offset Growth in Emissions Due to Growth in Vehicle
                                      Miles Travelled

Purpose

       The document is intended to provide guidance to Severe and Extreme ozone
nonattainment areas on how to address Clean Air Act (CAA) section 182(d)(l)(A). This section
of the CAA requires such areas to offset growth in emissions due to growth in vehicle miles
traveled (VMT) through the implementation of transportation control strategies and
transportation control  measures (TCMs). This guidance is necessary due to a decision issued by
the U.S. Court of Appeals for the 9th Circuit in a case related to the 1-hour ozone SIP for the
South Coast area in California.

Background

       CAA section 182(d)(l)(A) applies to Severe and Extreme ozone nonattainment areas and
requires that:

       Within 2 years after November 15,  1990, the State shall submit a revision [to their state
       implementation plans (SIPs)] that identifies and adopts specific enforceable
       transportation  control strategies and transportation control measures to offset any growth
       in emissions from growth in vehicle miles traveled or numbers of vehicle trips in such
       area and to attain reduction in motor vehicle emissions as necessary, in combination with
       other emission reduction requirements of this subpart, to comply with the requirements of
       subsection  (b)(2)(B) l and (c)(2)(B) of this section (pertaining to periodic emissions
       reduction requirements).  The State shall consider measures specified in section 108(f) of
       this title, and choose from among and implement such measures  as necessary to
       demonstrate attainment with the national ambient air quality standards; in considering
       such measures, the State should ensure adequate access to downtown, other commercial,
       and residential areas and should avoid measures that increase or relocate emissions and
       congestion rather than reduce them.

       EPA has observed in prior final SIP approvals that section 182(d)(l)(A) contains three
elements [i.e., 1) offsetting growth in motor vehicle emissions from growth in vehicle miles
traveled or vehicle trips, 2) attaining reduction in motor vehicle emissions consistent with
reasonable further progress (RFP) demonstrations, and 3) implementing measures as necessary to
demonstrate attainment of the ozone national ambient air quality standards (NAAQS)] that can
be divided into three separate SIP submissions that could be submitted on different dates. EPA
explained in the SIP approvals that it views the elements of section 182(d)(l)(A) as distinct and
separate from one another.  The elements do not rely on one another in that they are either
considered as a stand-alone element (in the case of the first element) or are considered in
1 So in original. Probably should read "subsections (b)(l)(A)". (Committee Print: Compilation of of Selected Acts
Within the Jurisdiction of the Committee on Energy and Commerce. Clean Air Act Section 182(d)(l)(A). Page 182
U.S. Government Printing Office. Washington, DC. 1993.)

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conjunction with other SIP elements (the 15% and post-1996 RFP demonstrations in the case of
the second element and the attainment demonstration in the case of the third element). This
document relates only to the first element addressed in section 182(d)(l)(A), referred to herein as
the "VMT Offset requirement," not the second or third elements of CAA section 182(d)(l)(A).

       EPA first issued guidance on the VMT Offset requirement in the April 1992 "General
Preamble," which advised states to first estimate on-road volatile organic compound (VOC)
emissions starting in the base year through the area's attainment year.2 Under this guidance, as
long as a state's SIP submission showed that on-road emissions did not increase from year to
year, states could demonstrate that there was no increase in emissions due to growth in VMT.  In
such circumstances, it would not be necessary to include TCMs in the SIP, in order to meet the
VMT Offset requirement of CAA section 182(d)(l)(A). Alternatively, if there was an upturn in
emissions before the attainment year, those increased on-road emissions would need to be offset
with reductions obtained through additional transportation-related measures in the SIP.

       In approving the VMT Offset demonstration submitted in connection with the 2003 South
Coast 1-Hour Ozone SIP, EPA applied its longstanding interpretation of the corresponding CAA
requirement that allowed a state to conclude that no further TCMs are necessary if aggregate
motor vehicle emissions  are projected to decline each year from the base year of the plan to the
attainment year. EPA's approval was then challenged in the U.S. Court of Appeals for the 9th
Circuit. One aspect of the suit concerned EPA's approval of the VMT Offset demonstration that
showed compliance with the VMT Offset requirement by showing an annual decline in
aggregate motor vehicle emissions for the area though the attainment year. The Court ruled
against EPA in early 2011, saying in part that EPA should have required TCMs to be
implemented to offset growth in emissions from growth in VMT, because in the Court's view
EPA incorrectly interpreted the phrase "growth in emissions"  as meaning a growth in "aggregate
motor vehicle emissions." Association of Irritated Residents v. EPA, 632 F.3d 584, at 596-597
(9th Cir. 2011), reprinted as amended on January 27, 2012.

       The following is intended to provide guidance to Severe  and Extreme ozone
nonattainment areas on how to address this CAA requirement in light of the Court's decision.

       This guidance is not a final action, and is merely based on CAA requirements and does
not create any new requirements.  The CAA contains legally binding requirements. This
document is not a substitute for those provisions and it is not a regulation itself. Thus, it does not
impose legally binding requirements on EPA, or states, and may not apply to a particular
situation based upon the circumstances. This guidance may be revised periodically without
public notice. This guidance recommends how states and local government agencies might
address the CAA section 182(d)(l)(A) VMT Offset requirement, taking into consideration the 9th
Circuit's  aforementioned decision.
  See 57 Fed. Reg. 13,498, at 13,521-15,523 (April 16, 1992).

                                           2

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The 9th Circuit's Decision

       In its February 2011 decision the Court determined that the question that it needed to
address was "whether 'any growth in emissions' can mean any growth in aggregate motor
vehicle emissions, or is unambiguous in meaning any increase in the level of emissions solely
from VMTs."  The Court concluded that EPA's longstanding guidance on the requirements of
CAA section 182(d)(l)(A) gave meaning only to the portion of the provision that requires TCMs
to be used if they are needed for RFP or attainment purposes and did not give meaning to the
portion of the provision that "contemplates using TCMs to reduce VMT." The decision included
a review  of legislative history for this CAA section. For example, the decision included
language from the House Committee report which states that the baseline for determining
"growth in emissions" should be established by calculating the "level of vehicle emissions that
would  occur if VMT held constant in the area." (H.R.Rep. No. 101-490, pt. 1 at 242 (1990)) The
Court concluded that in order to give meaning to all of the requirements in CAA section
182(d)(l)(A) EPA should have required TCMs that offset the growth in emissions that was due
to the increase in VMT in addition to requiring TCMs if they were needed for RFP or attainment
purposes. However, even in purporting to reject EPA's longstanding interpretation of the phrase
"growth in emissions," the Court  acknowledged that "clean car technology" advances could
result in there being no increase in emissions even in the face of VMT growth, which would then
allow VMT to increase without triggering the requirement to adopt offsetting TCMs:  "we cannot
ignore  the possibility that with  advances in clean car technology, one day VMT could increase
without a corresponding increase  in emissions. If that happens, under the  statute, EPA would not
need to impose TCMs even though VMT increased."  Association of Irritated Residents v. EPA.,
632 F.3d 584, at 596-597 (9th Cir. 2011), reprinted as amended on January 27, 2012.

       Note that the Court held that "EPA should have required transportation control
measures," which are clearly defined in the CAA and in EPA's implementing regulations. See
CAA section 108(f) and 40 C.F.R. 51.100(r). However, the Court omitted any reference to
"transportation control strategies," which are not specifically defined in the CAA, but which
under CAA section  182(d)(l)(A)  are equally eligible to offset any growth in emissions resulting
from growth in VMT. Similarly,  EPA regulations do not explicitly define "transportation control
strategies." Instead, EPA's regulations at 40 C.F.R. 51.100(n) broadly define "control strategy"
to mean "a combination of measures designated to achieve the aggregate reduction of emissions
necessary for attainment and maintenance of national standards, including, but not limited to,
measures such as: [...] (6) Emission control measures applicable to in-use motor vehicles,
including, but not limited to, measures such as mandatory maintenance, installation of emission
control devices, and conversion to gaseous fuels; [. . .] (8) Any variation of, or alternative to any
measures delineated herein." Clearly, several "control strategies" under EPA regulations are
transportation-related, and the regulations do not therefore on their face appear to restrict what
kinds of measures might be eligible for treatment as "transportation control strategies" for
purposes of section  182(d)(l)(A)'s VMT Offset requirement.

       In fact, in light of the Court's statement that clean car technologies could advance such
that there is no increase in emissions from growth in VMT and therefore no need to adopt TCMs
for this purpose, the Court seems  to sensibly recognize and imply that improvements in vehicle
technology, motor vehicle fuels and other control strategies that are transportation-related might

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reasonably be counted as offsetting "any increase in emissions due solely to VMT," as the Court
put it.  This guidance suggests how these technology improvements might be included by states
in the group of measures that the CAA refers to as "transportation control strategies" which may
be used to offset growth in emissions from VMT growth.3 We now recommend that both
transportation control strategies and TCMs should be included in calculations for the purpose of
determining the degree to which any hypothetical growth in emissions due to growth in VMT
should be offset.

Revised Guidance

       As noted above EPA's earlier guidance advised states to estimate VOC emissions starting
in the state implementation plan's base year through the attainment year and, if there is ever an
upturn in emissions, that emissions increase must be offset. Under the earlier guidance, states
calculated on-road emissions for each year starting with the SIP's base year through the area's
attainment year in order to determine if an upturn in emissions ever occurred.

       Under today's revised guidance states would no longer need to calculate year to year
changes in  emissions. Instead the state would estimate emissions in only two years, the
nonattainment area's base year and its attainment year. We believe that states' estimating
emissions in these two years rather than in every year would be reasonable because examining
the base year and attainment year would be consistent with the overall purpose of SIPs, which is
to provide for attainment of the NAAQS, because of the long lead time necessary to achieve
significant  emissions reductions from  adoption and implementation of transportation control
strategies (such as new vehicle emissions standards or engine retrofit or replacement programs),
and because the only other reasonable analysis years to evaluate would be the periodic milestone
years (for RFP) and transportation-related requirements for those years are addressed separately
in the second element of CAA section 182(d)(l)(A). The decision did not take up the issue of
what temporal period should be used to determine whether emissions  were being sufficiently
offset. Rather, the Court merely referred to changed circumstances compared to "a prior year"
without specifying which prior year, without being clear whether it was comparing year-to-year
changes or a base year to a much later year change.

       The following paragraphs describe recommended  calculations that could be done to
determine if sufficient transportation control  strategies and TCMs have been adopted and
implemented to offset the growth in emissions due solely to growth in VMT. A flow chart
depicting the process described below is included in the appendix.

       The state would present the base year on-road VOC emissions. The  base year on-road
emissions should be based on VMT in that year and it should reflect all transportation control
strategies and TCMs in place in the base year.  This would include the vehicle emissions
3 Based on the definition of "control strategy" found in 40 CFR 51.100(n) and the Court's acknowledgement that
"clean car technology" advances could result in there being no increase in emissions even in the face of VMT
growth, "transportation control strategies" could include but would not be limited to: motor vehicle inspection and
maintenance programs, reformulated gasoline, low Reid vapor pressure gasoline, and new vehicle emissions
standards (e.g., federal Tier 2 and California Low Emission Vehicle emissions standards and the fuel requirements
associated with these regulations).

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standards, state and local control programs such as inspection and maintenance programs or fuel
rules, and any implemented TCMs that were already required by or credited in the SIP as of that
base year. For the attainment year the state would present three emissions estimates as shown in
the graph below, two of which would represent hypothetical emissions scenarios that would
provide the basis to identify the "growth in emissions" due to growth in VMT, and one that
would represent projected actual motor vehicle emissions after fully accounting for projected
VMT growth and emissions reductions obtained by all creditable TCMs and transportation
control strategies.

       The first emissions calculation for the attainment year would be based on the projected
VMT for that year, and assuming that no new transportation control strategies or TCMs have
been put in place since the base year. This calculation demonstrates how emissions would
hypothetically  change if no new transportation control strategies or TCMs were implemented,
and VMT was  allowed to grow at the projected rate from the base year. In other words, this
estimate would show the potential for an "increase in emissions due solely to VMT," as the
Court put it. This emissions estimate is shown as the red bar in the graph below, and represents a
no-action-taken scenario.  It should be noted that even though no new transportation control
strategies or TCMs were hypothetically implemented and VMT was allowed to increase,
emissions in the attainment year may be lower than those in the base year.  This would be due to
the fleet that was on the road  in the base year gradually being replaced through fleet turnover
with newer vehicles  certified  to the emissions standards that were in effect for new production in
the area's base year and were already accounted for in the SIP.

       The second emissions calculation for the attainment year would also assume that no new
transportation control strategies or TCMs beyond those already credited were added or
implemented after the base year and would also assume that there was no growth in VMT
between the base year and  attainment year.  This estimate would reflect the hypothetical
emissions level that would have occurred had no further TCMs or transportation control
strategies been adopted or implemented and had VMT levels "held constant," in the Court's
words. This is shown as the green bar in the graph below, and, like the first estimate, emissions
in the attainment year may be lower than those in the base year due to the fleet that was on the
road in the base year gradually being replaced through fleet turnover. This emissions estimate
would reflect a ceiling on the emissions that should be allowed to occur under the statute as
interpreted by the Court in the attainment year because it shows what would happen under a
scenario in which no new transportation control strategies  or TCMs are put in place and VMT is
"held constant" during the  period from the area's base year to its attainment year. While this
estimate obviously would reflect a hypothetical status quo that is extremely unlikely to exist in
reality, under the Court's reasoning it is a necessary step in identifying the target level of
emissions from which states would determine whether further TCMs or transportation control
strategies would need to be adopted and implemented in order to remedy "any increase in
emissions due  solely to VMT" as shown by the first calculation.  The comparison of these first
two calculations would thus identify whether there is a hypothetical growth in emissions from
growth in VMT that would need to be offset.

       Finally, the state would present the emissions that are actually expected to occur in the
area's attainment year.  This estimate would be based on the VMT that is expected to occur in

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the attainment year (i.e., the VMT level from the first estimate) and all of the transportation
control strategies and TCMs that are in reality expected to be in place and for which the SIP will
take credit in the area's attainment year, including any TCMs and transportation control
strategies adopted and credited since the baseline year (i.e., the estimate of such measures that
existed prior to the baseline year, plus any additional measures that come into place by the
attainment year). This is shown as the blue bar in the graph below. If this emissions estimate is
less than or equal to the emissions ceiling that was established in the second calculation, the
credited transportation control strategies or TCMs for the attainment year would be sufficient to
offset the hypothetical growth in emissions represented by comparing the first two calculations.
If, instead, the estimated attainment year emissions are greater than the ceiling which was
established in the second calculation, the state would need to implement  additional transportation
control strategies or TCMs to further offset the growth in emissions and bring the actual
emissions down to at least the "had VMT held constant" ceiling estimated in the second
calculation.

       When a state makes a SIP submittal that addresses the section 182(d)(l)(A)'s VMT
Offset requirement, that submittal should include the calculations described above and it should
clearly identify the transportation control strategies and TCMs that were  included in the
calculations for the base year and the attainment year.  If any additional transportation control
strategies or TCMs are required in order to offset growth in  emissions, those transportation
control strategies and TCMs should also be clearly identified and distinguished from the list of
strategies and measures included in the initial calculations for the base year and the three
scenarios required for the attainment year.

                                         Figure 1
  Graphical Depiction of the Results of the Calculations for the Base Year and Attainment Year
                           for a Hypothetical Nonattainment Area
                                                I Base year emissions
                                                I Emissions assuming no
                                                 new measures with VMT
                                                 growth
                                                 Emissions assuming no
                                                 new measures and no
                                                 VMT growth
                                                I Actual Emissions with
                                                 controls and VMT growth
             Base year
Attainment Year

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Appendix

   Flow Chart Describing the Steps in the Process for Determining if Additional Transportation
   Control Strategies or TCMs are Necessary to Offset Growth in Emissions Due to Growth in
                                                      VMT
  Any increased emissions
  due to increased VMT
  have been adequately
  offset and no additional
  transportation control
  strategies or TCMs are
  needed.
V
      No
                                      Step I: Calculate base year on-road VOC
                                      emissions based on VMT and all in place
                                      transportation control strategies and TCMs.
                                      Step 2: Calculate hypothetical attainment
                                      year emissions based on projected VMT for
                                      that year with the transportation control
                                      strategies and TCMs in place in the base
                                      year.
                                      Step 3: Calculate hypothetical attainment
                                      year emissions based on the VMT in the base
                                      year and the transportation control strategies
                                      and TCMs in place in the base year.  This is
                                      the "ceiling" on attainment year emissions.
                                      Step 4: Calculate attainment year emissions
                                      based on the VMT in the attainment year and
                                      the transportation control strategies and
                                      TCMs that are expected to be in place in that
                                      year and for which the SIP will take credit.
Are the emissions calculated
in Step 4 greater than the
emissions ceiling calculated
in Step 3?
Adopt and implement
additional transportation
control strategies and/or
TCMs to fully offset the
difference between the
emissions calculated in Step
4 and the "ceiling"
calculated in Step 3.

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