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

                                                   Calendar No. 219

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

======================================================================
 
                 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.
---------------------------------------------------------------------------
    \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).

----------------------------------------------------------------------------------------------------------------
                                                                    By fiscal year, in millions of dollars--
                                                               -------------------------------------------------
                                                                                                           2017-
                                                                 2017   2018   2019   2020   2021   2022   2022
----------------------------------------------------------------------------------------------------------------
                                 INCREASES IN SPENDING SUBJECT TO APPROPRIATION
 
Authorization Level...........................................      0    100    100    100    100    100     500
Estimated Outlays.............................................      0     85     95    100    100    100     480
----------------------------------------------------------------------------------------------------------------

    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.--* * *

           *       *       *       *       *       *       *

  (c) Applications.--
          (1) Expedited process.--
                  (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.

           *       *       *       *       *       *       *

                                  [all]
```