oversight

Air Pollution: EPA Not Adequately Ensuring Vehicles Comply With Emission Standards

Published by the Government Accountability Office on 1990-07-25.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

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.Jrlly                1!)!I0
                                                                        AIR POLLUTION
                                                                        EPA Not Adequately
                                                                        Ensuring Vehicles
                                                                        Comply With Emission
                                                                        Standards


                                                                                                                           142208




                                                                        RESTRICTED----Not     to be released outside the
                                                                        General Accounting OB’ice unless specifIcally
                                                                        approved by the Office of Congressional
     Resources, Community,   and
     Economic Development    Division

     B-236368

     July 25,199O

     The Honorable John D. Dingell
     Chairman, Subcommittee on
       Oversight and Investigations
     Committee on Energy and Commerce
     House of Representatives

     Dear Mr. Chairman:

     This report responds to your request that we assess the effectiveness of the Environmental
     Protection Agency’s (EPA) efforts to control air pollution from motor vehicles. The report
     discusses the adequacy of EPA'S efforts to (1) identify vehicles exceeding emission standards
     before and after they are sold to the public, (2) ensure that such vehicles are returned to
     compliance, and (3) monitor state programs to reduce motor vehicle emissions.

     IJnless you publicly release its contents earlier, we plan no further distribution of this report
     until 30 days from the date of this letter. At that time, we will send copies of the report to
     appropriate congressional committees; the Administrator, EPA; and other interested parties.
     We will make copies available to others upon request.

     This work was performed under the direction of Richard L. Hembra, Director, Environmental
     Protection Issues, who may be reached at (202) 275-6111. Major contributors to this report
     are listed in appendix II.

     Sincerely yours,




V
/I   J. Dexter Peach
     Assistant Comptroller General
Executive Summary


                   The nation’s 157 million motor vehicles-122 million cars and 35 million
Purpose            light duty trucks-are   a major source of air pollution, mainly ozone, or
                   smog, and carbon monoxide. Currently, motor vehicles are responsible
                   for over one-half of the annual emissions of these pollutants, which irri-
                   tate the eyes, aggravate the respiratory system, and disrupt the flow of
                   oxygen to the body’s organs and tissues. The Clean Air Act and subse-
                   quent amendments required the Environmental Protection Agency (EPA)
                   to establish programs to limit vehicles’ contribution to air pollution.

                   The Chairman, Subcommittee on Oversight and Investigations, House
                   Committee on Energy and Commerce, requested GAO to review the effec-
                   tiveness of EPA'S efforts to control air pollution from motor vehicles. GAO
                   reviewed the adequacy of EPA'S efforts to (1) identify vehicles exceeding
                   emission standards before and after the vehicles are sold to the public,
                   (2) ensure that such vehicles are returned to compliance, and (3) mon-
                   itor state programs to reduce motor vehicle emissions.


                   The Clean Air Act, as amended, established limits on the amounts of
Background         pollutants motor vehicles can emit throughout their useful life, which
                   for passenger cars the act defined as 5 years or 50,000 miles. In carrying
                   out its responsibility for ensuring that vehicles meet the mandated emis-
                   sion standards, EPA tests vehicles (1) before they are sold to the public in
                   order to certify they will meet the standards when in use and (2) after
                   they are purchased, driven, and properly maintained in order to deter-
                   mine if the vehicles actually comply with the standards during their
                   useful life. The Congress is currently considering Clean Air Act
                   reauthorization legislation, which may toughen emission standards and
                   extend the useful life of passenger cars.

                   In addition, many states have implemented motor vehicle inspection/
                   maintenance (I/M) programs for metropolitan areas exceeding air quality
                   standards for ozone and/or carbon monoxide. These programs are com-
                   plementary to, but different from, the federal emission testing program
                   in that they (1) identify vehicles emitting excessive amounts of pollut-
                   ants because of poor maintenance or tampering and (2) require such
                   vehicles’ repair by their owners. EPA is responsible for approving these
                   state programs and ensuring their effectiveness.


                   EPA'S program for testing vehicles before they are sold to the public is
Results in grief   not adequately identifying those that will fail to meet emission stan-
                   dards in use. EPA relies on emission testing of prototype vehicles and


                   Page 2                                   GAO/RCED-90-128   Motor   Vehicle Emissions
                      Executive   Summary




                      projected deterioration rates to forecast expected emission system per-
                      formance. However, EPA'S procedure for calculating emission system
                      deterioration rates does not reflect the actual conditions under which
                      vehicles are used. Three-fourths of the vehicles EPA has tested since
                      1981 after they have been used by the public have failed to meet the
                      standards because the emission systems actually deteriorated at a rate
                      significantly greater than projected.

                      In its testing of vehicles after they have been sold to the public, EPA has
                      little assurance it is identifying all properly maintained in-use vehicles
                      that are failing to meet the standards. Because of resource constraints,
                      EPA, since 1981, has reduced by one-half its testing of in-use vehicles.
                      EPA'S testing now accounts for only one-third of the vehicles of the most
                      recently tested model year. EPA tests the vehicles it believes are most
                      likely to fail to meet the standards, but the agency is unable to verify
                      that the remaining two-thirds are meeting the standards.

                      When EPA identifies failing vehicles, it orders their recall so that they
                      can be returned to compliance; however, the public is not required to
                      have the vehicles repaired and has been reluctant to do so. Between
                      1986 and 1987, less than one-half of the vehicles recalled for emission
                      system problems were repaired. Options exist for improving the
                      response to recalls, but EPA has not pursued them.

                      In its monitoring of state I/M programs, EPA is not ensuring that they
                      comply with approved plans and operate effectively. EPA lacks sufficient
                      data to measure programs’ compliance because states are not providing
                      EPA with comprehensive program data. Further, EPA does not routinely
                      determine the effectiveness of all programs in meeting specified emis-
                      sion reduction requirements.



Principal Findings

Forecasts Have Been   All vehicles sold in the United States must be certified by EPA as capable
Inaccurate            of meeting federal emission standards throughout their useful life. To do
                      this, EPA requires manufacturers to submit test data for each engine
                      family-vehicles    with common engines and emission systems-they
             Y        intend to sell. The data consist of the results of emission testing and a
                      deterioration rate determined by the manufacturer in accordance with
                      an EPA-approved test procedure. This test procedure, however, does not


                      Page 3                                  GAO/RCED-90-128   Motor   Vehicle Emissions
                           Executive   Summary




                           accurately forecast actual emission system deterioration. For example,
                           for 1984-86 model year cars, carbon monoxide emissions, which were
                           forecasted to increase about 13 percent during the vehicles’ useful life,
                           in fact increased about 122 percent.

                           Because the test procedure understates emission system deterioration,
                           EPA'S predictions of vehicles’ compliance with federal emission stan-
                           dards have been inaccurate. EPA data show that since 1981, about 75
                           percent of the vehicles EPA has tested after consumer use have exceeded
                           the standards. EPA recognizes that the procedure for determining deteri-
                           oration rates needs to be revised to reflect actual on-road conditions, but
                           EPA currently has no plans to revise it because doing so would require
                           additional resources.


Testing Levels Have Been   Because of funding constraints, EPA has reduced the number of vehicles
Inadequate                 it tests to monitor manufacturers’ compliance with federal emission
                           standards. This reduction has significantly affected EPA'S ability to
                           ensure it has identified all classes of in-use vehicles failing to meet the
                           standards. EPA has reduced in-use testing by over 50 percent since 1981,
                           and for this type of testing, manufacturers’ data are not available.

                           To compensate for its reduced testing, EPA attempts to target the vehi-
                           cles most likely to fail in-use testing. Although EPA officials believe they
                           have identified most vehicles that are failing to meet emission stan-
                           dards, GAO found that EPA does not sample nontargeted vehicles. As a
                           result, EPA has no assurance that two-thirds of the vehicles of the most
                           recent model year fleet-unrepresented        in the agency’s testing-are
                           actually meeting the standards.


Many Vehicles Failing      EPA has the authority   to require manufacturers to recall and repair in-
Standards Have Not Been    use vehicles that fail to meet emission standards. However, less than
                           half of the vehicle owners respond to manufacturers’ recalls. From 1985
Repaired                   to 1987, only about 3 million, or approximately 46 percent, of the 6.5
                           million vehicles recalled were brought in for emission system repairs.
                           EPA and vehicle manufacturers consider this response rate
                           unsatisfactory.

                           Options such as tying recalls to state vehicle registration or I/M pro-
                           grams, or requiring manufacturers to meet a minimum recall response
                           rate could increase the number of emission systems repaired. For



                           Page 4                                   GAO/RCEXNO-128   Motor   Vehicle Emissions
                               Executive   Summary




                                example, a California pilot program tying recalls to registration is pro-
                               jected to increase the recall response rate to about 90 percent. However,
                                EPA currently does not have the legal authority to require that owners
                                have vehicles repaired as a condition for state registration or that manu-
                                facturers meet a minimum recall rate, and EPA would have to change its
                                regulations to tie recalls to state I/M programs. EPA has not established a
                               timetable for pursuing these options to increase the recall response rate.


Monitoring of Inspectior       State I/M programs must meet certain specifications, such as a required
Maintenance Programs           number of vehicles to be tested annually. However, EPA is unable to
                               determine if all programs comply with these specifications because it
Has Been Inadequate            has not required states to provide the specific data needed to assess
                               compliance. Twenty-one of the 36 programs in operation from January
                               1987 to June 1989 provided 50 percent or less of the needed data. F’ur-
                               ther, EPA has not measured 14 programs’ effectiveness in meeting their
                               emission reduction requirement.


                               To better identify vehicles that exceed emission standards, GAO recom-
Recommendationsto              mends among other things that the Administrator, EPA,
the Agency
                           .   change the method for (1) determining deterioration rates of emission
                               systems to provide more accurate forecasts of the emission levels of in-
                               use vehicles and (2) selecting vehicles for in-use testing to provide more
                               comprehensive coverage of the in-use vehicle fleet (see ch. 2) and
                           .   select and implement the best option to increase the response rate to
                               emission system recalls (see ch. 3).

                               GAO is also making other recommendations to improve the oversight of
                               state I/M programs (see ch. 4).


                               Currently proposed amendments to the Clean Air Act would provide EPA
Recommendationto               with the authority to recover a portion of its in-use testing costs by
the Congress                   charging these costs to manufacturers. GAO recommends that the Con-
                               gress include in final Clean Air Act legislation such a user fee provision.


                               GAO discussed the information   in this report with EPA officials, who gen-
Agency Comments                erally agreed with the information presented. However, as requested by
                               the Chairman, GAO did not obtain official agency comments on this
                               report.


                               Page 5                                   GAO/RCXD-90-128   Motor   Vehicle Emissions
Contents


Executive Summary                                                                                        2

Chapter 1                                                                                             8
Introduction            Clean Air Act Established Vehicle Emission Standards
                        EPA Office of Mobile Sources Tests Vehicles
                                                                                                     11
                                                                                                     11
                        Objectives, Scope, and Methodology                                           14

Chapter 2                                                                                            17
Inadequate              OMS’ Forecasts of Vehicles’ Compliance With Emission
                             Standards Have Not Been Accurate
                                                                                                     18
Forecasting and         Testing Reductions Hamper OMS’ Ability to Monitor In-                        21
Monitoring Inhibit           Use Vehicles
Vehicle Emission        Proposed Legislation Could Affect Testing Programs                           26
                        Conclusions                                                                  29
Control                 Recommendations to the Administrator, EPA                                    31
                        Recommendation to the Congress                                               31

Chapter 3                                                                                            32
Efforts to Recall In-   Manufacturers Are Required to Recall In-Use Vehicles
                             That Do Not Meet Standards
                                                                                                     32
Use Vehicles Have Not   Public Response to Recall Notices Is Limited                                 33
Eken Effective          Options Exist for Improving Response to Recalls of In-Use                    34
                             Vehicles
                        Conclusions                                                                  36
                        Recommendation                                                               37

Chapter 4                                                                                            38
OMS’ Monitoring of      OMS Oversees I/M Programs
                        OMS Has Insufficient Data to Measure I/M Programs’
                                                                                                     38
                                                                                                     39
Vehicle Inspection/         Compliance
Maintenance PrOgramS    OMS Has Not Assessed the Effectiveness of Many                               42
                            Programs
Is Inadequate           Conclusions                                                                  44
                        Recommendations                                                              44

Appendixes              Appendix I: Inspection/Maintenance Programs in                               46
                            Operation as of August 1989
           i
                        Appendix II: Major Contributors to This Report                               48




                        Page 0                                GAO/RCED-90428   Motor   Vehicle Emhion~
          Contents




Table     Table 2.1: In-Use Test Failures for Model Year 1986                             19
              Vehicles

Figures   Figure 1.1: Areas in the United States That Exceeded Air                            9
               Quality Standards for Ozone and/or Carbon
               Monoxide
          Figure 1.2: U.S. Sources of Air Pollution                                      10
          Figure 1.3: A Vehicle on a Dynamometer                                         12
          Figure 2.1: Comparison of Failure Rate and Fleet                               24
               Coverage of In-Use Vehicles, Model Years 1981 to
               1986




          Abbreviations

          EPA        Environmental Protection Agency
          GAO        General Accounting Office
          I/M        inspection/maintenance
          NAAQS      National Ambient Air Quality Standards
          NESCAUM    Northeast States for Coordinated Air Use Management
          OMS        Office of Mobile Sources
          RCED       Resources, Community, and Economic Development Division
          SIP        State Implementation Plan


          Page 7                                GAO/RCED-90-128   Motor   Vehicle Emissions
Chapter 1                                                                                   . .

Introduction


               For nearly 3 decades, the public has become increasingly concerned
               about the need to improve our nation’s air quality. Increased burning of
               coal, oil, and other fossil fuels to satisfy our energy needs is responsible
               for smog that is in our cities, acid rain that is damaging our forests, and
               greenhouse gases that may lead to global warming. Of particular con-
               cern have been the health problems related to high levels of ozone, com-
               monly referred to as smog, and of carbon monoxide.

               On the basis of data compiled between 1986 and 1988, the Environ-
               mental Protection Agency (EPA) has identified locations that did not
               meet national air quality standards for ozone and carbon monoxide.
               Formed through the chemical reaction of hydrocarbons and nitrogen
               oxides in the presence of sunlight, ozone irritates the eyes, aggravates
               respiratory problems, and causes crop damage. The 101 locations that
               did not meet the standard for ozone were mostly major metropolitan
               areas, inhabited by nearly 112 million people. Carbon monoxide, a color-
               less, odorless gas that is poisonous and harmful to human health, also
               poses a significant air pollution problem. When inhaled, carbon mon-
               oxide enters the bloodstream and disrupts the delivery of oxygen to the
               body’s organs and tissues. EPA has identified 44 areas-inhabited    by
               over 29 million people- that exceeded acceptable carbon monoxide
               levels. Figure 1.1 shows the areas of the country that exceeded the
               National Ambient Air Quality Standards (NAAQS) for ozone and/or
               carbon monoxide.




               Page 8                                   GAO/RCED@O-128   Motor   Vehicle Emissions
                                           chapter 1
                                           Introduction




FIQw~   1.1: Ames in the United States That Exceeded Air Qualitv Standards for Ozone and/or Carbon Monoxide




                                            ggj@ Areas Exceeding Ozone NAAQS
                                                     Areas Exceeding Carbon Monoxide NAAQS

                                                     Areas Exceeding Ozone and Carbon Monoxide NAAQS



                                            Source: GAO illustration based on EPA data.


                      Y
                                            Mobile sources, which include passenger cars, trucks, motorcycles,
                                            buses, locomotives, boats, aircraft, farm equipment, construction
                                            machinery, and recreational vehicles, are major producers of ozone and
                                            carbon monoxide. As shown in figure 1.2, EPA estimates that during


                                            Page 9                                             GAO/RCED80-128   Motor   Vehicle Emissions
                                            Chapter 1
                                            Introduction




                                            1987, emissions from mobile sources were responsible for over two-
                                            thirds of the carbon monoxide emissions, nearly one-half of the nitrogen
                                            oxide emissions, and one-third of the hydrocarbon emissions in the air.


Figure 1.2: U.S. Sources of Air Pollution
                                            100    PO&     of Emlasionm

                                             90

                                             So

                                             70

                                             60

                                             30

                                             40

                                             30

                                             30

                                             10

                                              0




                                                   I       Mobile Sources
                                                           Stationary Sources
                                                           Other Sources


                                            Source: EPA



                                            Although all mobile sources produce emissions that contribute to air pol-
                                            lution, passenger cars and light duty trucks (which we will refer to as
                                            motor vehicles in this report) are the major contributors of pollution.
                                            Consequently, over the past 2 decades, EPA has given pollution by motor
                                            vehicles the most attention, About 157 million motor vehicles-122 mil-
                                            lion cars and 35 million light duty trucks-were    operated in the United
                                            States during calendar year 1988.




                                            Page 10                                GAO/RCED-90-128   Motor   Vehicle Emissions
                                 Chapter 1
                                 Mroduction




                                 Congress enacted the Clean Air Act to address the problem of air pollu-
Clean Air Act                    tion. An important part of the act, as amended, is the recognition that
Established Vehicle              motor vehicles are a major contributor to the problem. The act requires
Emission Standards               EPA to prescribe federal standards for the emission of air pollutants from
                                 motor vehicles for a specified period of time referred to as the “useful
                                 life” of the vehicles. The act currently defines the useful life of pas-
                                 senger cars as 6 years or 50,000 miles. As part of the Clean Air Act
                                 reauthorization, Congress is currently considering several proposed
                                 amendments that would establish more stringent emission standards for
                                 motor vehicles.


                      To carry out its responsibilities under the act, EPA established the Office
EPA Office of Mobile  of Mobile Sources (OMS) for regulating, testing, and monitoring emissions
SourcesTests Vehicles from motor vehicles. This office is responsible for certifying that motor
                                 vehicles sold in the United States meet federal emission standards
                                 throughout the various stages of their useful life. To do this, OMS estab-
                                 lished a testing program to determine if vehicles are meeting the federal
                                 standards. To confirm test data submitted by manufacturers, OMS con-
                                 ducts emission tests on vehicles from selected engine families, which are
                                 manufacturers’ groupings of vehicles with common engine configura-
                                 tions. The testing procedure involves operating each vehicle on a dyna-
                                 mometer, a device that allows a vehicle to remain stationary while it is
                                 being driven much as it would be under normal use, as shown in figure
                                 1.3. Emissions are collected from the vehicle’s exhaust pipe and mea-
                                 sured. The results are compared to the current exhaust emission
                                 standards.




                                 Page 11                                GAO/RCED-90-128   Motor   Vehicle Emissions
                                           Chapter 1
                                           Introduction




Figure 1.3: A Vehicle on a Dynamometer




                                           Source: EPA.


                                           In addition to measuring vehicle exhaust emissions, OMStests vehicles
                                           for emissions resulting from fuel evaporation. After a short drive, the
                                           vehicle is placed with the motor off in an enclosed chamber for a speci-
                                           fied period. The hydrocarbon emissions released from the vehicle are
                                           measured and compared to the evaporative emission standard.

                                           The purpose of OMS' testing program is to ensure that vehicles are
                                           designed to achieve emission standards, comply when they are pro-
                                           duced, and remain in compliance throughout their useful life. To achieve
                                           its purpose, the program involves testing vehicles at different stages in
                                           the vehicles’ life. In its testing program, OMS tests prototype and produc-
                                           tion vehicles before they have been driven by the public, and it tests in-
                                           use vehicles after they have been driven by the public for 2 to 3 years:

                                         . Prototype vehicles are tested under OMS' Certification Program before
                                           the manufacturer begins producing them, to determine if engine fami-
                                           lies, as designed, can meet the emission standards. Manufacturers test
                                           100 percent of the engine families they produce and provide the test
                                           data to OMS. As a quality assurance check, OMS retests some of the vehi-
                                           cles to confirm the manufacturers’ test results. Engines must meet the
                                           standards, or they have to be redesigned until they do.




                                           Page 12                                 GAO/RCED-90-128   Motor   Vehicle Emissions
  chaptm 1
  Introduction




. Production vehicles off the assembly line are tested under OMS' Selective
  Enforcement Audit Program, to ensure that approved designs are suc-
  cessfully translated into production and that quality control on the
  assembly line reasonably guarantees compliance with the emission stan-
  dards by vehicles in use. As a check on manufacturers’ quality control
  procedures, OMSofficials visit assembly plants and select a sample of
  vehicles for manufacturers to test on site. Most auto manufacturers rou-
  tinely conduct their own emission testing on production vehicles and
  provide the test results to OMS.
l In-use vehicles are tested under OMS' Recall Program, to determine how
  well emission control devices are holding up over time. OMS provides
  small incentives-such    as a free tank of gas and an engine tune-up-to
  vehicle owners in exchange for allowing OMSto test their vehicles. The
  process involves testing six properly maintained vehicles from an engine
  family.] If the average emissions from these vehicles exceed the stan-
  dards, then OMS tests an additional 10 vehicles from the same family to
  confirm the results.

  If OMS determines that an engine family fails to meet the emission stan-
  dards under any of its three programs, it has broad powers to ensure
  that these vehicles are brought into compliance. If an engine family fails
  to meet the emission standards during prototype or production testing,
  OMS can prevent the auto manufacturer from selling the vehicles. If an
  engine family fails the in-use tests, OMS can require the manufacturer to
  recall and repair the vehicles.

  OMS also has an important role in ensuring that states adequately mon-
  itor and control motor vehicle emissions. A 1977 amendment to the
  Clean Air Act established a December 1982 deadline for states to meet
  the NAAQS for ozone and carbon monoxide. As the deadline approached,
  it became apparent that most states had not been able to implement suf-
  ficient actions to enable them to meet the standards. Those states that
  could not meet the standards were granted an extension until December
   1987. However, the amendment required states receiving the extension
  to implement a vehicle inspection and maintenance (I/M) program. EPA
  limits the requirement to designated non-attainment areas with popula-
  tions of 200,000 or more.

  An I/M program has two primary functions: (1) to identify vehicles pro-
  ducing excessive emissions and (2) to require the necessary maintenance
  or repair to bring these vehicles into compliance. Under the program,

  ‘Vehiclesmust be maintainedaccordingto the termsof the manufacturer’swarranty.



  Page 13                                          GAO/RCED-90-128    Motor   Vehicle Emissions
                            Chapter I
                            Introduction




                            motorists are required to have their vehicles’ emission control systems
                            tested periodically by a trained inspector. The procedure generally
                            involves placing an instrument inside the tailpipe while a vehicle is
                            idling. The instrument is connected to a computerized analyzer that
                            measures the vehicle’s emissions. The standards against which the test
                            results are measured can vary with each program, depending upon an
                            area’s need to improve air quality. If the vehicle fails, it must be
                            repaired and retested. OMS can monitor the compliance and effectiveness
                            of I/M programs by (1) auditing them and examining operating data sub-
                            mitted by the states and (2) measuring the overall emission reductions
                            being achieved by the programs.


                            The Chairman, Subcommittee on Oversight and Investigations, House
Objectives, Scope,and       Committee on Energy and Commerce, requested that we examine the
Methodology                 effectiveness of OMS’ operations in regulating and controlling air pollu-
                            tion resulting from motor vehicles. Specifically, the Chairman was con-
                            cerned that OMS’ enforcement programs, involving the inspection,
                            surveillance, and testing of new and in-use vehicles, may not be ade-
                            quate or effective.

                            In meetings with the Chairman’s office, we subsequently agreed to
                            review EPA'S programs that

                        . test vehicle emissions to identify vehicles exceeding emission standards,
                        l ensure the return to compliance of those vehicles exceeding the stan-
                          dards, and
                        l monitor state and local I/M programs designed to identify for repair
                          those vehicles producing excessive emissions.

                            Our work was conducted primarily at OMS’ Motor Vehicle Emissions Lab-
                            oratory, in Ann Arbor, Michigan, and at EPA headquarters, in Wash-
                            ington, DC. We visited EPA Region V, Chicago, Illinois, and EPA Region VI,
                            Dallas, Texas, to assess the data provided by states under their jurisdic-
                            tion. We also visited the California Air Resources Board, in El Monte,
                            California, to review its vehicle emission testing programs.” In addition,
                            we reviewed reports and studies to obtain the most current information
                            on 0~s’ motor vehicle emission control program, on OMS’ strategies to


                            “The California Air ResourcesBoardis a state air pollution control agency.The functions and opera-
                            tions of its Mobile SourceDivision, including its vehicle testing activities, largely parallel thoseof
                            EPA’sOffice of MobileSources.



                            Page 14                                                GAO/RCED-90-128Motor Vehicle Emissions
Chapter 1
Introduction




control motor vehicle emissions, and on trends in air quality. We also
reviewed legislation that could affect our findings.

To determine 0~s' effectiveness in assessing emissions from motor vehi-
cles at various stages in their life cycle, we interviewed OMS officials at
the Ann Arbor facility and Washington headquarters. We also spoke
with representatives from automotive companies to solicit their views
on OMS' testing efforts. We interviewed representatives of trade and
interest groups, including the Motor Vehicle Manufacturers Association,
the American Lung Association, and the American Automobile Associa-
tion Further, we discussed OMS' federal vehicle emission control pro-
gram with officials from the California Air Resources Board.

We also reviewed OMS' production testing data to assess the adequacy of
the coverage provided. We analyzed OMS' in-use vehicle testing data to
determine the extent of noncompliance for vehicles of model years 1981
through 1986 (the most current for which data were available). We then
divided the test results for model year 1986 into four quarters to deter-
mine if the noncompliance rates for vehicles in the last quarter (lower
priority targeted vehicles) were comparable to those for vehicles in the
first quarter (higher priority targeted vehicles).

To determine how effective OMS has been in ensuring that noncomplying
motor vehicles are brought back to compliance, we discussed OMS'
enforcement actions with officials from OMS and each of the three
domestic auto manufacturers. With California Air Resources Board offi-
cials, we also discussed a pilot project of the board and Chrysler’s to
increase recall response rates, and we reviewed the preliminary results.
In addition, we reviewed OMS' recall reports for 1985 through 1987 to
determine the number of vehicles recalled due to emission system viola-
tions that were ultimately repaired. We chose this time period so that
auto owners would have had at least 2 years to respond to the recall.

To determine how well OMS has monitored I/M programs to ensure that
they are meeting program objectives, we spoke with OMS officials at the
Ann Arbor facility and at EPA'S Chicago and Dallas regional offices. We
reviewed OMS files to determine the frequency of the Office’s I/M audits
and its efforts to measure the programs’ effectiveness. We also
reviewed, summarized, and documented OMS' inventory of I/M operating
data to determine the extent to which the Office had obtained informa-
tion necessary to monitor I/M programs’ compliance and effectiveness.
We obtained data from the period January 1987 through June 1989 for
the 37 I/M programs that had been in operation for at least 1 year at the


Page 15                                  GAO/RCEDBO-128Motor Vehicle Emissions
Chapter 1
Introduction




time of our review. We chose this period because it was during this time
frame that EPA began requesting states with I/M programs to submit spe-
cific program operating data. Also, because reporting cycles can vary
from program to program, we obtained data from a period that would
allow us to review several cycles for each program. Furthermore, this
approach allowed us to review the most recent reporting data for each
program.

We sought the views of EPA officials, who generally agreed with the fac-
tual information discussed in this report, and we incorporated their
comments where appropriate. However, as requested, we did not obtain
official agency comments from EPA on a draft of this report. We con-
ducted our review from February through October, 1989, in accordance
with generally accepted government auditing standards.




Page 16                                GAO/RCED-90-128   Motor   Vehicle Emissions
Chapter ‘z

hadequate Forecastingand Monitoring Inhibit
Vehicle EmissionControl

                  Under the Clean Air Act, EPA is responsible for determining that motor
                  vehicles are capable of meeting federal emission standards throughout
                  their useful life. The act authorizes EPA to test vehicles at two stages to
                  determine if they conform to standards. First, the act requires EPA to
                  obtain and review emission test data on new vehicles before they are
                  sold, to determine if they are designed to meet the standards once they
                  are on the road. Second, the act authorizes EPA to test vehicles that have
                  been sold to consumers and used on the road to determine if the vehicles
                  in use actually meet the emission standards. These testing activities
                  have two objectives: (1) to prevent the sale of vehicles that would be
                  excessive polluters and (2) to identify for repair those already sold that
                  are exceeding the standards.

                  However, OMS' vehicle testing programs are not adequately meeting
                  these objectives:

              l   OMS' procedure for forecasting the emissions of vehicles before they are
                sold to the public includes a deterioration rate that does not reflect
                actual on-road use. Consequently, although all vehicles sold have been
                certified as capable of meeting the standards over their useful life, since
                 1981 about 75 percent of the in-use vehicles subsequently tested by OMS
                have failed to meet emission standards.
              . OMS' testing of vehicles after they are sold to the public does not provide
                adequate coverage of the vehicle fleet. Despite a continuing high failure
                rate of in-use vehicles, OMS has reduced its testing of these vehicles
                because of resource constraints, and now only tests a sample repre-
                senting one-third of the model year fleet. As a result, OMS does not know
                if the remaining two-thirds of the in-use vehicle fleet is complying with
                federal emission standards.

                  Proposed Clean Air Act reauthorization legislation to make emission
                  standards more stringent and extend the useful life of vehicles could put
                  an even greater demand on OMS' testing resources.




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                       Section 206 of the Clean Air Act requires OMSto ensure that new vehi-
OMS’ Forecasts of      cles conform to emission standards and issue a certificate of conformity
Vehicles’ Compliance   to all complying vehicles. In order to provide this certification, OMS tests
With Emission          prototype vehicles to forecast emissions over vehicles’ useful life. OMS
                       develops its emission forecast by a two-step process. First, OMSobtains
Standards Have Not     emission test data on prototype vehicles either through its own or the
Been Accurate          manufacturers’ testing. All manufacturers are required to provide emis-
                       sion test data, and OMS conducts its own testing on a limited number of
                       prototype vehicles to verify data supplied by manufacturers.

                       Second, recognizing that emission systems do not perform at the same
                       level throughout the useful life of vehicles, OMS also requires manufac-
                       turers to develop deterioration rates to project what emission levels will
                       be once the vehicles are in use. Each engine family has a specified dete-
                       rioration rate determined by manufacturers according to an OMS-
                       approved procedure. For passenger cars, manufacturers are required to
                       test three vehicles of every engine family certified-two     to obtain data
                       on emissions and one to obtain data on durability.

                       OMS' past forecasts of conformance to emission standards, however,
                       have not been accurate for either passenger cars or light duty trucks.
                       Although all vehicles sold have been certified by OMS as conforming to
                       the standards, OMS' testing of in-use vehicles shows that most of the
                       vehicles tested after being sold to consumers and used on the road do
                       not meet all of the federal emission standards. Since 1981, about 75 per-
                       cent of the in-use vehicles tested have not achieved the federal emission
                       standards. Most recently, about 67 percent of the in-use passenger cars
                       and 70 percent of the in-use light duty trucks tested by OMS in 1988
                       failed to meet at least one of the standards.

                       While some vehicles failed by relatively small amounts, most vehicles
                       failed to meet the standards by significant amounts. For example, of the
                       140 in-use vehicles tested in 1988, 70 failed to meet the emission stan-
                       dard for carbon monoxide, and half of these failing vehicles emitted
                       carbon monoxide at levels 54 percent greater than the federal standard.
                       The results of OMS' 1988 emission testing-which    was conducted on
                       model year 1986 vehicles-are shown in table 2.1.




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Table 2.1: In-Use Test Failures for Model                                                                              _,. .   , .
Year 1986 Vehlcler                                                                                                         Percent of excess
                                                                                                        Number of test     emissions for test
                                            Pollutant standard                                               failure@               failuresb
                                            Carbon monoxide                                                             70                           54
                                            Hydrocarbon                                                                 40                           35
                                            Nitrogen oxide
                                            --                                                                          18                           45
                                            Evaoorative hvdrocarbon                                                     28                          103
                                            ‘%ome of the 140 vehicles tested failed to meet more than one of the standards.
                                            bWe used the median value-rather      than the average value-of   excess emissions from the failed vehi,
                                            cles to lessen the effect of extreme cases.


                                            In our review of OMS' in-use vehicle data base, we found examples of
                                            vehicles that exceeded the emission standards by significant margins.
                                            For example, we found one engine family-representing      302,000 vehi-
                                            cles-that exceeded the carbon monoxide standard by more than 14
                                            times. Another family of over 127,000 vehicles exceeded the standard
                                            by nearly 6 times.


Procedure for Determining                   During certification, OMS' forecasts of emission system performance
Deterioration Rate Does                     have not been accurate because the Office’s procedure for developing
                                            deterioration rates does not reflect the actual deterioration that occurs
Not Reflect On-RoadUse                      in use. OMS requires manufacturers to calculate an emission system dete-
                                            rioration rate using test results from a prototype vehicle-sometimes
                                            virtually handbuilt-that     has accumulated 50,000 miles on a dynamom-
                                            eter located outside of a building. This deterioration rate is then applied
                                            to the test results of two emission test vehicles-which     are production
                                            vehicles from the same engine family-that       have been driven 4,000
                                            miles, in order to prcject the emission levels of these vehicles at 50,000
                                            miles. If these projected emission levels are lower than the federal emis-
                                            sion standards, OMS certifies the engine family will conform with the
                                            standards in use.

                                            However, because manufacturers test prototype vehicles for durability
                                             on dynamometers for a brief period, vehicles are not subjected to key
                                             factors causing emission systems to deteriorate, including numerous
                                            engine starts, numerous short trips with a cold engine, weather
                                            extremes, rough terrain, and aging. As a result, most vehicles are pro-
                                            jected to have a low rate of emission system deterioration. According to
                                            OMS data on 1984-86 model year passenger cars, the emission systems of
                                             most engine families were projected to deteriorate by about 50 percent




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over the useful life of the vehicles, and some were projected to not dete-
riorate at all. However, we found that after the vehicles were used by
the public, the actual deterioration rates were considerably higher than
the projected rates. For example, OMS projected that carbon monoxide
emissions would increase by 13 percent over the vehicles’ useful life.
However, OMS data on vehicles tested after consumer use showed that
carbon monoxide emissions actually increased by 122 percent.

This problem with how OMS develops deterioration rates has been cited
in a 1988 study conducted for the Northeast States for Coordinated Air
Use Management (NESCAUM).~ According to the study, OMS’ prototype
testing process measures vehicle emissions in an artificial environment
(very carefully maintained vehicles are tested under perfect driving
conditions, operated by well-trained drivers on ideal roads or dynamom-
eters). As a result, the study concluded that “. . . one cannot say with
confidence that cars that pass certification will inevitably perform well
in use.”

Both auto manufacturers and OMS officials we spoke with agreed that
certification testing does not indicate how well a vehicle’s emission
system will perform in use. They differ, however, on the reason why.
Auto manufacturers believe that the reason in-use vehicles fail to meet
emission standards is inadequate maintenance by owners. Manufac-
turers said that the public generally does not follow proper maintenance
procedures, particularly regarding emission equipment, According to the
manufacturers, the public is not especially concerned about maintaining
this equipment at the proper specifications unless not maintaining it will
affect driveability (e.g., by causing slow starting or rough idling). They
added that although OMS attempts to select only well-maintained vehi-
cles for in-use testing, determining if the emission control equipment has
been properly maintained is very difficult, unless the catalytic converter
is removed and taken apart.

OMS officials, however, disagree with this position. They believe that
poor design is the primary reason in-use vehicles do not continue to meet
emission standards. They said their testing of failed vehicles has usually
identified a problem attributable to the workmanship or design of the
pollution control equipment, which is the responsibility of the manufac-
turer. OMS’ Recall Branch Chief added that although improper vehicle

‘Critical Analysis of the FederalMotor VehicleControl Program,NortheastStatesfor Coordinated
Air UseManagement,July 1988.NESCAUMis a coalition of eight states:Connecticut,Maine,Massa-
chusetts,New Hampshire,New Jersey,New York, RhodeIsland, and Vermont.



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                      maintenance contributes to excess emissions, improperly maintained
                      VehiCkS   are not a factor in OMS' in-use testing because OMS’ selection pro-
                      cedures require inspection of the vehicles and documentation showing
                      that proper maintenance was conducted, thereby screening such vehi-
                      cles from the test sample. They added that representatives of the manu-
                      facturers are involved in the inspections and that any vehicle OMS or the
                      manufacturers believe has not been maintained properly is not selected
                      for in-use testing.

                      An August 1989 study by the California Air Resources Board also
                      attributes much of the problem of in-use noncompliance to manufac-
                      turers.’ The study attributes 60 percent of the excess emissions from all
                      noncomplying in-use vehicles to poor design and manufacture. It attrib-
                      utes the remaining excess emissions to other factors, such as improper
                      maintenance, tampering, and abuse.

                      OMS officials acknowledged that they need to do a better job forecasting
                      emission system performance for vehicles in use. The branch chief
                      responsible for developing procedures for calculating deterioration rates
                      told us that the rates need to be made more realistic by accounting for
                      the conditions emission systems are subject to in use. OMS officials sug-
                      gested two possible solutions: (1) Deterioration rates could be modified
                      to include data from actual in-use vehicles tested by OMS, and/or (2) pro-
                      totype vehicles could be equipped with emission system components
                      that have been artificially aged to reflect actual driving conditions.
                      However, OMSofficials added that because of limited resources, they cur-
                      rently have no plans to change the procedure for forecasting emission
                      system performance based on prototype data. They said additional
                      resources would be needed to study and develop alternative methods
                      and/or procedures for calculating deterioration rates and for promul-
                      gating new regulations to implement any new procedures.


                      To ensure that all vehicles meet emission standards throughout their
Testing Reductions    useful life, OMS tests vehicles at various stages in their life cycle. How-
Hamper OMS’ Ability   ever, because of budget constraints, OMS officials said they have had to
to Monitor In-Use     cut back their testing, most notably of in-use vehicles. To compensate,
                      OMS uses a sampling approach that targets its testing resources on vehi-
Vehicles              cles it suspects exceed the emission standards. Nevertheless, under the
          ”           current approach, it does not test samples representing nearly two-

                      “Assessmentof the Current In-UseRecallProgramand a ProposedPlan to Improve Its Effectiveness,
                      Stateof California Air ResourcesBoard(August 1989).



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                              thirds of the model year fleet, and it has no way of knowing for certain
                              whether these vehicles comply with the emission standards.


Limited Information Is        Between 1981 and 1988, OMS’ budget increased slightly in actual dollars,
Available for Assessing In-   from $21.3 million to $22.6 million, However, in constant dollars,3 OMS’
                              budget was actually reduced by about 18 percent. At the same time,
Use Emission Levels           added responsibilities, such as having to monitor and control emissions
                              from heavy duty motor vehicles, placed further demands on OMS’
                              resources. To compensate, OMS reduced its vehicle testing programs in all
                              three phases-prototype,    production, and in-use-by 26 percent, 62
                              percent, and 57 percent, respectively, between 1981 and 1988.4

                              These reductions did not significantly affect OMS’ ability to monitor the
                              emission system performance of prototype and production vehicles. In
                              the case of prototype vehicles, 0~s requires auto manufacturers to
                              submit test data that document emission system performance for vehi-
                              cles of all engine families intended for sale during the coming model
                              year. Manufacturers are not required by federal regulation to conduct
                              their own production testing. However, most manufacturers do. Collec-
                              tively, auto manufacturers conduct emission tests on thousands of vehi-
                              cles and provide the data to OMS. For model year 1988, manufacturers
                              provided 100 percent of the prototype vehicle test data and about 93
                              percent of the production vehicle test data OMS needed to assess emission
                              system performance. OMS conducts limited testing to confirm manufac-
                              turers’ data.

                              In contrast, OMS has limited information to assess in-use vehicle emission
                              system performance. OMS does not have manufacturers’ test data on in-
                              use vehicles to supplement its own test data. Federal regulations do not
                              require auto manufacturers to conduct in-use testing of properly main-
                              tained vehicles, and auto manufacturers we spoke with informed us that
                              they generally do not do so. Manufacturers said they are reluctant to do
                              such testing because OMS could require them to submit the test data and
                              could use the data to order a motor vehicle recall.

                              Because OMS has reduced its testing of in-use vehicles, it has limited the
                              amount of information it has to assess in-use vehicle emissions. From


                              “Constantdollars reflect actual 1981dollars adjustedfor inflation.
                              4Datafor prototype and production testing were availableon a fiscal year and calendaryear basis,
                              respectively.



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                                1981 to 1988, OMS reduced its testing of in-use vehicles by 57 percent,
                                from 322 vehicles in 1981 to 140 vehicles in 1988.


In-Use Testing Level May        Although the Clean Air Act requires OMSto ensure that manufacturers
Not Be Adequate                 produce vehicles that throughout their useful life continue to meet the
                                federal emission standards, OMS lacks emission information on most of
                                the in-use vehicles to assess their compliance. OMS' testing level for 1988
                                provided emission data on 37 percent of the in-use vehicles. In prior
                                years, OMS' testing of in-use vehicles generated emission data on as much
                                as 64 percent of the in-use vehicle fleet. Consequently, OMS' current cov-
                                erage of the emission system performance of in-use vehicles may not be
                                adequate.

                                OMS officials agreed that by testing fewer vehicles, they are generating
                                less information with which to assess emission system performance.
                                However, they believe the current level of in-use testing is adequate
                                because OMS' “targeting,” or testing of vehicles suspected of noncompli-
                                ance, identifies most of the noncomplying vehicles. According to the *
                                officials, more testing would not identify a significantly greater number
                                of vehicles failing the emission standards. OMSofficials could not provide
                                us documented evidence to support this position but added that their
                                position is based on their knowledge and experience in identifying vehi-
                                cles that fail emission standards.

                                However, our analysis of OMS' testing levels and the vehicle failure rates
                                indicates that the level of in-use noncompliance could be significant for
                                those vehicles not represented in OMS' targeted sample. Therefore,
                                testing reductions may not have been justified. The following conditions
                                support this position:

                            . Historically, OMS has found a higher percentage of noncomplying vehi-
                              cles when it has conducted more testing.
                            l Vehicles OMS identified as being less likely to exceed emission standards
                              (Le., those ranked lower on OMS' testing priority list) are failing at a high
                              rate.

High Failure Rates Do Not       For model year 1986 (the most recent model year for which testing was
Justify Decreased Testing       completed at the time of our review), when fleet coverage declined to 37
                                percent, 68 percent of the in-use vehicles failed to meet one or more of
                                the emission standards. However, in prior years, when OMS' in-use
                                testing provided greater coverage of the in-use vehicle fleet, the percent-
                                ages of vehicles that failed to meet emission standards were comparable


                                Page 23                                 GAO/RCED-99-128   Motor   Vehicle Emissions
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                                         to that for model year 1986. For example, for model year 1981, when
                                         fleet coverage was 64 percent, OMS determined that 77 percent of the in-
                                         use vehicles tested failed to meet the emission standards. If over the
                                         years OMS had been finding a significant decline in the vehicle failure
                                         rate, its reduction of in-use testing would be more justifiable, but such is
                                         not the case, as shown in figure 2.1.


Figure 2.1: Comparison of Failure Rate
and Fleet Coverage of In-Use Vehicles,
Model Years 1981 to 1986                 100     Psrcontags of Vohicloa




                                          1961                  1962              1982      1984              1985                 1986
                                          Modal Year

                                                 -        Vehidefailure  rate
                                                 -1-1     Vehiclefleet coverage



                                         The California Air Resources Board recently proposed increases in its in-
                                         use testing levels based on the percentage of vehicles that have
                                         exceeded emission standards. In 1988 the board was testing a sample
                                         representing about 42 percent of the in-use vehicles, finding a failure
                                         rate of 54 percent. However, the board has subsequently recommended
                                         increasing its testing levels to cover 51 percent of the in-use vehicle pop-
                                         ulation. As justification for increasing its in-use testing level, the board
                                         cited the high failure rate as well as an indication that most manufac-
                                         turers produce one or more engine families with emission systems that
                                         lack durability for 5 years or 50,000 miles.




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Noncompliance Is High for All   Under OMS’ “targeting” approach, designed to make effective use of
Targeted Vehicles               testing resources, OMS prepares a list, based on prior years’ test data and
                                information from other programs, of vehicles to procure for testing that
                                it suspects may be exceeding the emission standards. The list is gener-
                                ally ranked in descending order, with the suspected worst violators first
                                on the list. Beginning at the head of the list and continuing until
                                resources run out, OMS tests as many of the targeted vehicles as possible.
                                OMS officials believe that this approach identifies most of the noncom-
                                plying vehicles. However, the Chief of OMS’ Recall Branch agreed that if
                                the Office were given more resources for testing, it probably could iden-
                                tify more noncomplying vehicles, although he was unable to estimate
                                how many.

                                Our analysis of OMS’ in-use data base, however, indicates that in-use non-
                                compliance could extend beyond those vehicles tested by OMS. We believe
                                failure rates should begin to drop off dramatically near the end of the
                                targeted sample to indicate that most of the noncomplying vehicles have
                                been identified. We did not find this trend in our analysis of test results
                                for vehicles of the 1986 model year. We divided the emission test results
                                into quarters to compare failure rates for those targeted vehicles most
                                likely to exceed emission standards and those targeted vehicles least
                                likely to exceed the standards. We found that targeted vehicles in the
                                fourth quarter, those least likely to fail, had a failure rate of 58 percent,
                                almost the same as the 60 percent failure rate for vehicles in the second
                                quarter. While the failure rate for vehicles in the fourth quarter was not
                                as high as the 83 percent rate for vehicles in the first quarter, we believe
                                a failure rate of 58 percent is high enough to raise concerns about the
                                adequacy of the testing level.


OMSNeeds Information on         Despite the conditions discussed above, OMS maintains its position that
Nontargeted Vehicles to         current testing levels are adequate and that most of the noncomplying
                                vehicles are being identified. However, it does not know for certain
Adequately Monitor In-Use       whether it has identified most of the in-use vehicles of engine families
Compliance                      that do not comply with the emission standards without more informa-
                                tion on that part of the fleet it did not test. Testing a statistical sample
                                of those remaining vehicles not targeted would give OMS information on
                                how effective its targeting approach had been. Also, doing so would pro-
                                vide OMS with information on where it should focus its testing resources
                                in the future.

                                Moreover, OMS has weakened its ability to deter further noncompliance.
                                Auto manufacturers informed us that the real impact of in-use testing


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                           Chapter 2
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-
                           and a subsequent recall is the bad publicity it generates for them. The
                           public are less likely to purchase a motor vehicle from an auto manufac-
                           turer if they continually see the manufacturer’s vehicles recalled. If the
                           current testing coverage is to continue, OMS is in effect holding auto man-
                           ufacturers accountable for only approximately one-third of the most
                           recent model year fleet. A statistical sample of the remaining,
                           nontargeted vehicles would extend the threat of a recall to the entire
                           model year fleet. However, a statistical sample component comple-
                           menting OMS' targeting approach would most likely require added testing
                           resources, especially if the sample shows that additional testing is
                           warranted.


                           The demand on OMS' testing resources could be even greater if proposals
Proposed Legislation       to amend the Clean Air Act are enacted. Proposed legislation to amend
Could Affect Testing       the Clean Air Act currently being considered could significantly change
Programs                   the emission standards vehicles must meet. For example, two changes
                           proposed for passenger cars could have a significant impact on OMS'
                           testing programs:

                       . lowering the emission standards from .41 to .31 grams per mile for
                         hydrocarbons and from 1.0 to .40 grams per mile for nitrogen oxide
                         (carbon monoxide emissions would remain at the current level of 3.4
                         grams per mile), and
                       . extending the period of time for which a passenger car must meet the
                         emission standards, referred to as a vehicle’s “useful life,” from 5 years
                         or 50,000 miles to 10 years or 100,000 miles.

                           The proposed legislation also contains provisions to require manufac-
                           turers to pay the cost of in-use testing, which could provide resources to
                           increase the testing done under the programs.


Lowering Emission          Auto manufacturers believe that lower emission standards would be
Standards                  more difficult for them to achieve initially for prototype and production
                           vehicles and certainly for in-use vehicles. According to OMSofficials, if
                           emission standards are lowered, OMS would have to do a better job of
                           forecasting the compliance of vehicles once they would be in use by cus-
                           tomers. Also, OMS conceivably would have to do more testing, at least in
                           the early years, to substantiate that the auto manufacturers are
                           designing and selling vehicles that meet the tighter standards.




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                           An OMS official in charge of prototype testing informed us that given
                           cited budget constraints, his section would probably try to do a better
                           job of targeting rather than conduct additional testing. This targeting
                           would involve screening auto manufacturers’ test data and selecting for
                           confirmatory testing those vehicles that just barely met the standards or
                           that have new, untested emission control technology.

                           In the opinion of an OMS official responsible for the in-use testing pro-
                           gram, auto companies have already demonstrated with those vehicles
                           sold in California, where emission standards are similar to those pro-
                           posed nationally, that they can design and build vehicles to meet stricter
                           standards.” Consequently, the official does not believe manufacturers
                           will have any more difficulty meeting the standards than they have
                           already. California Air Resource Board officials, however, informed us
                           that they also are detecting a high rate of noncompliance by in-use vehi-
                           cles. For the model year 1986 (the most recent model year for which
                           information was available), 54 percent of the vehicles tested by the
                           board exceeded the California emission standards.


Extending Vehicle Useful   Auto manufacturers also believe that extending the useful life of pas-
Life                       senger cars could make it more difficult for their vehicles to meet in-use
                           emission standards. They believe that failure on the part of auto owners
                           to maintain their vehicles properly is already a major reason why these
                           vehicles are failing in-use emission tests. According to auto manufac-
                           turers, auto owners are even less likely to maintain their vehicles prop-
                           erly as the vehicles get older.

                           Extending the useful life of passenger cars beyond 5 years or 50,000
                           miles conceivably could dilute OMS’ resources even more than they have
                           been, as OMS would have a larger span of years/miles to monitor. For
                           example, as of July 1, 1988, there were about 122 million passenger cars
                           on the road. Of these, about 48 million were still required to meet the
                           current federal emission standards. If the proposed standard of 10 years
                           of useful life for passenger cars is applied to this universe of nearly 122
                           million vehicles, OMS would instead be responsible for monitoring the
                           emissions from about 94 million vehicles. Light duty trucks would not be
                           affected by this proposed legislation because they currently have a
                           useful life of 10 years.


                           ‘The eight northeasternstatesthat formedNESCAUMare alsoin the processof adoptingthe Cali-
                           fornia emissionstandards.



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                            The Chief of OMS’ Recall Branch anticipated that obtaining high mileage
                            vehicles suitable for testing would be difficult and costly. OMSwould
                            have to screen more vehicles to find those that have been properly
                            maintained. If OMS could not demonstrate that these vehicles have been
                            properly maintained, auto manufacturers could successfully dispute the
                            test results.


Requiring Manufacturers     Proposed legislation in both the Senate and the House of Representa-
to Pay for In-Use Testing   tives would provide OMS with t.he authority to impose user fees that
                            would require manufacturers to pay the cost of in-use vehicle testing.
                            For example, according to a Senate bill, the Administrator may require
                            the manufacturer of those in-use vehicles that the Administrator
                            believes may not conform to regulations to pay the costs incurred in pro-
                            curing and testing such vehicles or engines.

                            OMS officials stated that they support the concept of user fees. They said
                            that a user fee provision requiring that fees go directly to OMSfor use in
                            vehicle testing, which the proposed legislation would do, would enable
                            them to fund more testing and better ensure that the vehicle fleet is
                            meeting the mandated emission standards. OMS officials pointed out that
                            under the general authority of the Independent Offices Appropriation
                            Act of 1962 (31 U.S.C. 9701), commonly referred to as the “User Charge
                            Statute,” they already could impose fees for specific services, goods, or
                            things of value that are provided to identifiable beneficiaries and that
                            do not primarily benefit the general public. However, under the statute,
                            fees collected must be deposited in the Treasury as miscellaneous
                            receipts and therefore could not be used by OMSto fund agency pro-
                            grams directly. Because of this, OMS officials said they have not previ-
                            ously imposed user fees for emission testing activities.

                            The imposition of user fees appears to be justified on the basis that auto
                            manufacturers are identifiable beneficiaries of the testing program. For
                            example, about one-third of the in-use testing information generated for
                            model year 1986 could be used by auto manufacturers to help rectify
                            problems with their emission control systems. Further, it is reasonable
                            to expect manufacturers to help fund the cost of testing activities
                            designed to ensure they meet federal emission standards since it is the
                            responsibility of the manufacturers-not    oMs-to comply with these
                            standards.

                            User fees for vehicle testing are used at the state level. The California
                            Air Resources Board currently charges auto manufacturers user fees for


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              all of its emission testing programs. The authority to charge user fees to
              manufacturers is granted by California’s Clean Air Act. In 1988 the
              board collected about $4.5 million from fees charged to manufacturers
              for vehicle certification.


              Recognizing the contribution of motor vehicles to the nation’s air pollu-
Conclusions   tion problem, the Clean Air Act has sought to reduce motor vehicle emis-
              sions by requiring the establishment of emission standards that the
              vehicles must meet throughout their useful life. The act made EPA
              responsible for ensuring that the vehicles meet these standards. In this
              regard, the act authorizes EPA to test vehicles or require that they be
              tested before and after they are sold, to determine that the vehicles
              meet and will continue to meet emission standards throughout their
              useful life.

              The efforts of EPA'S Office of Mobile Sources to carry out these testing
              activities, however, have not been adequate in both areas. OMS has not
              developed an effective procedure for identifying, before vehicles are
              sold to the public, those that in use will fail emission standards. Conse-
              quently, many vehicles certified by OMS as capable of meeting emission
              standards throughout their useful life actually emit excess pollutants
              once they are in use. For the most recent model year tested, the failure
              rate for vehicles sold to and used by the public was 68 percent, a high
              failure rate in view of current air pollution problems and the objectives
              of the Clean Air Act.

              OMS is also not conducting sufficient testing of in-use vehicles to ensure
              it is identifying those that are failing to meet the standards. Since 1981
              OMS has reduced its level of in-use testing by more than one-half to the
              point where the information only accounts for one-third of the vehicle
              fleet on the road. With its limited testing, OMS finds that most vehicles do
              not meet the federal standards. However, it lacks emission system
              performance data to assess the compliance of nearly two-thirds of the
              in-use fleet, the portion not represented in its testing.

              OMS' current procedure for determining emission system deterioration
              rates over vehicles’ useful life does not reflect actual on-road use and
              consequently does not accurately forecast the deterioration that will                  .
              occur in emission system performance. We recognize that it may not be
              possible to determine the actual deterioration rate for each vehicle
              before it is produced and sold to the public. To account for the differ-
              ences between the calculated and actual deterioration rates, OMS could


              Page 29                                  GAO/RCED-90-128   Motor   Vehicle Emissions
    Chapter 2
    Inadequate Forecasting and Monitoring
    Inhiblt Vehicle Emission Control




    use historical data, which show that deterioration rates based on the
    current procedure are not accurate, to develop an adjustment factor to
    add to its current procedure. Such an adjustment factor could result in
    better forecasts of the emission system performance of vehicles on the
    road.

    OMS' current targeting approach is a realistic use of scarce testing
    resources. However, OMS is not testing vehicles other than those targeted
    to ensure that nontargeted vehicles are not emitting excess pollutants
    and to verify that its targeting process is accurate. The current level of
    testing-covering     for model year 1986 only one-third of the fleet-may
    not be justified in light of the 68 percent failure rate that is occurring
    among the vehicles tested.

    Additional testing will, however, require additional resources. The most
    likely source is a user fee to be paid by the manufacturers. We believe
    such a fee can be justified because (1) OMS provides data to manufac-
    turers on the causes of emission system problems and solutions to return
    the vehicles to compliance and (2) the testing activities have the sole
    purpose of ensuring that manufacturers fulfill their responsibility to
    produce vehicles that comply with federal emission standards. A fee for
    each car tested-whether      or not it fails-would spread the burden
    equally among manufacturers and could provide the needed resources.

    We realize that some disagreement may exist over the need to revise the
    procedure for calculating deterioration rates and to conduct additional
    in-use testing and over how to pay for any changes. In particular,
    vehicle manufacturers may believe that greater deterioration rates may
    make it more difficult for their vehicles to pass certification and may
    result in higher costs to develop emission control equipment. However,
    in our opinion, changes to improve the testing procedures may have
    three significant benefits over the long term:

. Fewer in-use vehicles that fail to meet the standards will be sold to con-
  sumers, so air pollution would be reduced.
. In-use testing levels needed to ensure that noncomplying vehicles are
  identified could eventually decline as fewer vehicles that fail to meet the
  standards over their useful life are produced.
l Manufacturers’ overall costs may be reduced as fewer vehicles would
  have to be recalled for emission system repairs.

    The proposed changes to the Clean Air Act make the need for these revi-
    sions to OMS' testing programs even more critical. The proposed changes


    Page 30                                  GAO/RCED-SO-128   Motor   Vehicle Embsio~
                         chapter 2
                         Inadequate Foreca&in#    and Monitoring
                         InhIblt Vehicle Emission Control




                         will require manufacturers to produce vehicles that meet more stringent
                         emission standards and will require the vehicles to meet the standards
                         for a longer period of time. Consequently, both the deterioration of emis-
                         sion system performance and the ability of vehicles to meet the stan-
                         dards over their useful life will be of greater concern.


                         In order to better prevent the sale of vehicles that in use fail to meet
Recommendationsto        emission standards, and to better identify those already sold, we recom-
the Administrator,       mend that the Administrator, EPA,
EPA                  . change the method for determining deterioration rates of emission sys-
                       tems to include the use of actual data from in-use vehicles to provide
                       more accurate forecasts of whether vehicles will meet emission stan-
                       dards throughout their useful life,
                     l change the testing of in-use vehicles to include a sample of nontargeted
                       vehicles and thereby provide more comprehensive coverage of the in-use
                       motor vehicle fleet, and
                     . determine the appropriate level of testing necessary to ensure noncom-
                       plying vehicles are identified and determine the resources needed to
                       fund any additional testing.


                         Currently proposed amendments to the Clean Air Act would provide EPA
Recommendation to        with the authority to recover a portion of its in-use testing costs by
the Congress             charging these costs to manufacturers. We endorse such a provision
                         because (1) testing coverage has been curtailed due to resource limita-
                         tions, (2) manufacturers are ultimately responsible for complying with
                         emission standards, and (3) in-use vehicles fail at a high rate and need
                         to be identified and repaired. We therefore recommend that the Con-
                         gress include in final Clean Air Act legislation a user fee provision
                         authorizing EPA to charge manufacturers for some or all of the testing
                         costs.




                         Page 31                                   GAO/RCED-90-128   Motor   Vehicle Emissiona
                                                                                                 I




Chapter 3                                                                                               -4
Efforts to RecallIn-UseVehiclesHave Not                                                                  -
Eken Effective

                         The primary goal of OMS' testing program is to ensure that vehicles sold
                         to the public meet the federal emission standards throughout their
                         useful life. If vehicles fail to meet the standards after being sold to the
                         public, OMS is responsible for ensuring that auto manufacturers recall
                         these vehicles and repair the emission systems. However, despite manu-
                         facturers’ efforts, the public response to recalls has been poor: Less than
                         one-half of all vehicles recalled for deficient emission systems are subse-
                         quently brought in for repairs. Although reasons for the poor response
                         are not fully known, OMS and vehicle manufacturers believe that the
                         public has no incentive to return vehicles for repair. Consequently, some
                         improvement in air quality is lost since millions of noncomplying vehi-
                         cles are still on the road.

                         OMS could pursue options to increase the public response rate to recalls.
                         These options include tying recalls to state vehicle registration or
                         inspection/maintenance programs and/or requiring manufacturers to
                         meet a minimum recall response rate. OMS has not pursued these options
                         primarily because it does not have the necessary legal authority.


                         Vehicles that fail to meet emission standards during their useful life con-
Manufacturers Are        tribute to the nation’s air pollution problem. According to the August
Required to Recall In-   1989 California Air Resources Board report on the effectiveness of its
Use Vehicles That Do     in-use vehicle recall program, the excess emissions contributed by only
                         one engine family with defective emission equipment can be staggering.
Not Meet Standards       The report cited the effects of one engine family that emitted hydrocar-
                         bons and carbon monoxide at levels 8 times the applicable standards. A
                         group of selected engine families-representing     in California 130,000
                         vehicles-produced      emissions equal to those of 1 million complying
                         vehicles. Our analysis of OMS' in-use testing program confirms the
                         board’s conclusion about the significance of noncompliance by the vehi-
                         cles of even one engine family. For example, the 302,000 vehicles of a
                         single engine family that exceeded the carbon monoxide standard by 14
                         times, as discussed in chapter 2, generated emissions equal to those of
                         4.2 million complying vehicles.

                         Because of the potential impact of noncomplying vehicles on air quality,
                         the Clean Air Act requires manufacturers to recall in-use vehicles that
                         fail emission tests. Section 207 of the Clean Air Act requires the Admin-
                         istrator to notify a manufacturer if a substantial number of any class or
                         category of vehicles, although properly maintained and used, do not
                         conform with emission standards. The manufacturer in turn is required



                         Page 32                                 GAO/RCED-90-128   Motor   Vehicle Emissions
      .
  .
                      Chapter 3
                      Efforts to RecaIl In-Use Vehicles   Have Not
                      Been EfPectlve




                      to submit a plan to OMS for repairing the vehicles, and the manufacturer,
                      not the vehicle owners, must pay for the repairs.

                      Manufacturers also detect emission system problems through their own
                      testing and have voluntarily requested the recall of some vehicles. Alto-
                      gether, during calendar years 1985-87,6.5 million vehicles were identi-
                      fied by manufacturers and OMS for recall because of emission system
                      problems.

                      In a recall, manufacturers send notices through the mail to owners,
                      requesting them to bring their vehicles to an authorized dealer for
                      repair. Owners are informed that the repairs are at no cost to them.
                      They are also advised to respond promptly to the notice or face the pos-
                      sibility that any subsequent repair would not be covered under the war-
                      ranty. Generally, manufacturers send a follow-up letter to remind
                      owners to bring their vehicles in for repair.


                      Although repairs are performed at no cost to the owners, public
Public Responseto     response to recall notices has generally been inadequate. Less than one-
Recall Notices Is     half of the recalled vehicles are returned to an authorized dealer for
Limited               repair. According to our review of information provided to OMS by
                      vehicle manufacturers, only about 3.0 million, or 46 percent, of the 6.5
                      million vehicles that were recalled for emission system violations during
                      calendar years 1985-87 were brought in for repair.

                      Both representatives of the manufacturers and OMS officials agree that
                      this response rate to vehicle recall notices is unsatisfactory. They attrib-
                      uted the low response rate to several causes:

                    9 Because emission system problems often do not affect driveability,
                      owners see no reason to return their vehicles to a dealer. Also, owners
                      may fail to respond if they believe that the driveability of their vehicles
                      may be adversely affected by the repair.
                    . In some cases, as many as 10 percent of the vehicles are unavailable. A
                      vehicle may be unavailable because it has been scrapped or destroyed, it
                      has been resold and its owner is unknown to the manufacturer, or the
                      owner has moved and cannot be located.
                    . Without a requirement to respond, many owners simply ignore the recall
                      notice.




                      Page 33                                        GAO/RCED-90-128   Motor   Vehicle Emissions
                           Chapter   3
                           Efforte to Recall In-Use Vehicles Have Not
                           Been Effective




                           The response to emission system recalls is similar to that for safety
                           recalls. The National Highway Traffic Safety Administration is respon-
                           sible for requiring recalls of motor vehicles for defects that reduce
                           safety. According to its Associate Administrator for Enforcement, the
                           response rate to safety recalls has been approximately 54 percent.


                           OMS officials acknowledge that there is a need to improve the current
Options Exist for          recall response rate. According to the OMS Recall Branch Chief, OMS is
Improving Responseto       concerned about the low response rate because such a rate lessens the
Recalls of In-Use          impact of the in-use testing program and the agency’s efforts to ensure
                           vehicles meet emission standards. The effort to identify noncomplying
Vehicles                   in-use vehicles is of little value, he pointed out, if owners will not bring
                           their vehicles in for repair.

                           Some suggested options that OMS could pursue to improve the response
                           rate to recall notices include

                           requiring repairs before vehicles can be reregistered,
                           requiring repairs as part of I/M programs, and
                           requiring manufacturers to achieve specified recall response rates.


Requiring Repairs Before   One method that could be pursued to improve the response to recalls is
Reregistration             to require all owners of recalled vehicles to have the repair completed
                           before the vehicles can be reregistered. This approach is currently being
                           tested in California. To address the problem of poor public response to
                           recalls in its state, the California Air Resources Board initiated a pilot
                           project with the Department of Motor Vehicles and the Chrysler Corpo-
                           ration. Owners of recalled motor vehicles are required to show proof
                           that their vehicles have been repaired before the vehicles can be reregis-
                           tered with the state. California Air Resources Board officials believe the
                           project has the potential to increase the recall response rate to about 90
                           percent.

                           OMS' Recall Branch Chief said that this option has widespread benefits,
                           as it could apply to all recalled vehicles in the country. However, OMS
                           officials have not suggested a program similar to California’s because
                           they believe states would be reluctant to participate unless the federal
                           government would compensate them for any related expenses that
                           would be incurred. Further, OMS' major concern is that this option could
                           overburden vehicle owners. For instance, owners, under a deadline to
                           get their vehicles reregistered, could be unfairly penalized by the state if


                           Page 34                                      GAO/RCED-90-128   Motor   Vehicle Emissions
                          Chapter 3
                          Ef’forta to Recall In-Use Vehicles   Have Not
                          Been Effective




                          they could not get repairs done because manufacturers, under no addi-
                          tional requirements, have not adequately supplied dealers with parts.


Tying Recalls to          Recalls could be tied to state and local I/M programs that require owners
Inspection/Mainte nance   to have their vehicles’ emissions tested periodically. Under this option,
                          states with I/M programs could be required to have owners show as part
Programs                  of the I/M test that they have responded to a recall notice. Owners
                          unable to demonstrate that they had the emission system repaired
                          would not be allowed to pass the test.

                          According to OMSofficials, this approach would have less of an impact
                          than tying recalls to reregistration because it would only affect a limited
                          number of vehicles, Assuming that the current nationwide recall
                          response rate of about 50 percent would also apply to vehicles in I/M
                          areas, OMSwould only be able to affect the remaining 50 percent. At the
                          same time, only about one-third of the vehicles on the road are currently
                          covered under state I/M programs. Consequently, at best this approach
                          would affect only one-sixth of all vehicles nationwide. However, the
                          benefit of such an approach, as cited by OMS, is that it focuses on the
                          areas that have the most severe air pollution problems, as I/M programs
                          are only required in areas that do not meet ambient air quality
                          standards.


Requiring Manufacturers   A third option would involve putting more responsibility on the auto
to Achieve Minimum        manufacturers to improve the recall response rate. Manufacturers
                          would be required to continue taking actions to have vehicles brought in
Recall ResponseRates      for repair until the manufacturers achieve the minimum response rate.

                          Auto manufacturers we interviewed were not in favor of this option
                          because it would probably involve providing financial incentives to the
                          public, which they believe could prove to be very costly for them. They
                          added that this option may exacerbate the problem of getting owners to
                          respond quickly to recall notices. According to manufacturers, once
                          owners become aware that manufacturers may have to provide financial
                          incentives, some owners will delay bringing their vehicles in for repair
                          until the larger incentives are offered.




                          Page 35                                         GAO/RCED-90-128   Motor   Vehicle Emissions
                                                                                                                .
                           Chapter 3
                           Efforts to RedI   In-Use Vehicles   Have Not
                           Been Effective




OMSHas Limited             Although OMSofficials stated that the recall response rates have not
Authority to Improve       been good and that all three options could improve the response rates,
                           they pointed out, and officials from EPA'S Office of General Counsel
Responseto Recalls         agreed, that OMS does not have the authority to require actions under the
                           first and third options and that the agency’s regulations would have to
                           be amended to implement the second option.

                       l Requiring vehicles to be repaired before they can be reregistered is not
                         authorized by the Clean Air Act, as the act prohibits EPA itself from
                         requiring owners to submit their vehicles for inspection or repairs. Con-
                         sequently, while EPA can encourage states to require owners of recalled
                         vehicles to have the repair completed as a condition of registration, the
                         agency cannot require states to do so.
                       . Requiring vehicles to be repaired before they can pass I/M programs is
                         not currently a component of approved I/M programs, but could be under
                         EPA'S current authority. The Clean Air Act states that inspection of a
                         vehicle for purposes of a recall is voluntary on the part of vehicle
                         owners, except as may be provided by any state or local inspection pro-
                         gram. Under this authority, EPA could amend its regulations to require
                         states with I/M programs to include response to recalls as a program
                         element.
                       . Requiring manufacturers to meet certain recall response rates is not spe-
                         cifically authorized in the Clean Air Act. The act provides that manufac-
                         turers must recall vehicles under specified conditions, but does not
                         specify a required response rate that manufacturers must achieve.

                           OMS believes that it would be beneficial to pursue these options for
                           increasing the recall response rate. The Chief of OMS' Recall Program
                           said that OMS attempted to obtain the authority to require manufac-
                           turers to meet minimum recall response rates, requesting that such
                           authority be included in the proposed Clean Air Act amendments, but its
                           request was not adopted. The official added that at this time, OMS has no
                           efforts underway to improve the response rate to recalls. He said that
                           the Office is following the results of the California pilot project, which
                           links recalls to reregistration, and may review other options in the
                           future. However, he was unable to provide us with any timetable for
                           when OMS may take action to increase recall response rates.


                           The testing of new and used vehicles is only the first step in ensuring
Conclusions-               vehicles meet emission standards. Once vehicles have been tested, the
                           second and key step is to have those that fail the tests brought in to
                           dealers for repair and returned to compliance with emission standards.


                           Page 36                                        GAO/RCED-99-128   Motor   Vehicle Emissions
      .
  .
                 Chapter 8
                 Efforta to Recall In-Use Vehicles   Have Not
                 Been Effective




                 The repair rate for vehicles that do not meet emission standards, how-
                 ever, has not been adequate. The Clean Air Act provided a mechanism
                 to recall noncomplying vehicles so that they are repaired without cost to
                 the vehicle owners. Yet less than half of the noncomplying vehicles
                 recalled are subsequently brought in for repair. As a result, some
                 improvement in air quality is lost since many noncomplying vehicles are
                 still on the road,

                 Although the reasons for the low response rate are not fully known, OMS
                 and auto manufacturers believe that owners do not respond because of
                 little incentive or no requirement to do so. However, options exist that
                 could overcome these impediments. These options would either require
                 owners to comply with a recall notice-as would be the case with tying
                 recalls to state vehicle registration or inspection/maintenance pro-
                 grams-or would require manufacturers to meet minimum response
                 rates, possibly by providing financial incentives to owners. OMS agrees
                 that the current recall response rate is not satisfactory; however, prima-
                 rily due to a lack of legislative authority, it has not aggressively pursued
                 these options to increase the recall response rate.

                 In our opinion, the significance of the problem warrants that OMS pursue
                 both the regulatory and legislative options necessary to improve the cur-
                 rent low recall response rate. The poor response largely negates the ben-
                 efits of OMS’ in-use vehicle testing program since most of the
                 noncomplying vehicles are not repaired as intended. Further, a primary
                 objective of the Clean Air Act-to ensure that motor vehicles meet emis-
                 sion standards throughout their useful life-is not being achieved.
                 Improving the recall response rate would enhance the effectiveness of
                 the in-use testing program and help achieve the air quality goals envi-
                 sioned under the act.


                 We recommend that the Administrator, EPA, select and implement
Recommendation   options that would best increase recall response rates. If warranted, the
                 Administrator should seek additional legislative authority to implement
                 those options that are not currently within the Administrator’s
                 authority to implement.




                 Page 37                                        GAO/RCED-90-128   Motor   Vehicle Emissions
                                                                                         ,

Chapter 4

OMS’Monitoring of Vehicle Inspect’ion/                                                          ’
MaintenanceProgramsIs Inadequate

                  State inspection/maintenance programs were designed as one measure
                  to help improve the air quality in metropolitan areas with populations
                  of 200,000 or more that exceed national air quality standards. The pro-
                  grams identify vehicles emitting excess pollutants and require the main-
                  tenance or repair necessary to reduce the emissions of those vehicles
                  and bring them into compliance with applicable emission standards. OMS
                  is responsible for ensuring that the I/M programs comply with state
                  plans to improve air quality and that they operate effectively.

                  However, OMS'efforts to ensure the compliance and effectiveness of
                  state I/M programs have been limited. OMSlacks sufficient data to mea-
                  sure I/M programs’ compliance because (1) many states are not providing
                  comprehensive program data to the Office and (2) OMSdoes not audit
                  programs frequently enough to obtain the needed data. Further, OMS
                  does not routinely measure the effectiveness of all programs. As a
                  result, OMScannot ensure that all I/M programs are operating in COmpli-
                  ante with their state plans and achieving the air quality benefits
                  anticipated.


                  The Clean Air Act established provisions for states to reduce levels of
OMS OverseesI/M   air pollution from motor vehicles. To do this, the act required each state
Programs          to develop an EPA-apprOVC?dState Implementation Plan (SIP) for
                  achieving air quality standards. Where a state had one or more air
                  quality control regions with populations of 200,000 or more that did not
                  meet the National Ambient Air Quality Standards, the act required the
                  state to include in the SIP a schedule for implementing an I/M program. In
                  these cases, the SIPalso set out the I/M program specifications to which
                  the state commits. As of August 31,1989,38 I/M programs operated in
                  over 60 different urban areas. These I/M programs, and the affected
                  urban areas, are listed in appendix I. Two more programs, affecting four
                  more urban areas, are scheduled to begin operation within the next 2
                  years.

                  Approximately one-third of the nation’s vehicles, or about 60 million
                  vehicles, are subject to I/M programs, with most of the program expenses
                  borne by both vehicle owners and local governments. EPAestimates that
                  the annual inspection cost to motorists is about $600 million. Emission
                  control system repairs required as a result of failing an emission test
                  could cost a vehicle owner $100 or more. Further, some state and local
                  governments individually spend over a million dollars annually for pro-
                  gram administration.



                  Page 38                                 GAO/RCED-90-128   Motor   Vehicle Emissions
                       Chapter4
                       OMS’ Mon.itming of Vehicle Inspection/
                       Maintenance   Programs Is Inadequate




                       OMS is responsible for assessing each program’s compliance with the spe-
                       cific provisions of its SIP, with each SIP setting out the specifications to
                       which the state commits for its I/M program. Specifications would
                       include, for example, the vehicles by model year to be tested annually,
                       the procedures to be followed to ensure that noncomplying vehicles are
                       not operated on public roads, and the number of station audits to be
                       conducted by the state. Once a state commits to operating an I/M pro-
                       gram as specified in its approved SIP, the commitments have the force of
                       federal law.

                       Additionally, OMS is responsible for assessing each program’s effective-
                       ness in reducing vehicle emissions, Each SIP specifies an overall perform-
                       ance commitment, called the minimum emission reduction requirement,
                       that the program must meet. This reduction requirement is a measure of
                       the program’s effectiveness stated as a percentage reduction in vehicle
                       emissions over what emission levels would be without an I/M program.
                       The specifications of each program are designed so that a properly oper-
                       ating program will meet the minimum emission reduction requirement.


                       In order to measure programs’ compliance with the provisions specified
OMS Has Insufficient   in their SIP, OMS needs current operating data from each I/M program.
Data to Measure I/M    Depending on the structure of the individual program, this operating
Programs’ Compliance   data can consist of up to 17 specific items. The specific data include key
                       indicators of a program’s performance, such as the number of vehicles
                       tested, vehicles passing and failing emission tests, vehicles waived from
                       test requirements, and audits of I/M facilities conducted by the state.
                       OMS' program audit guidelines-used      for conducting audits of state I/M
                       programs-suggest that these data be provided to OMS on a biannual
                       basis.

                       According to the I/M project manager, OMS obtains the information to
                       evaluate program compliance by reviewing operating data submitted by
                       the states (or in some cases, local agencies) that administer the pro-
                       grams. OMS can also obtain operating data as part of the periodic I/M pro-
                       gram audit process. However, we found that states are not providing
                       comprehensive data, and OMS does not audit programs frequently
                       enough to offset this shortfall in data.




                       Page 39                                  GAO/RCED-90-128   Motor   Vehicle Emissions
                             Chapter 4
                             OMS’ Monitoring   of Vehicle Inspection/
                             Maintenance   Programs Is Inadequate




States Do Not Always         To monitor states’ compliance with their implementation plan, OMS relies
Provide Comprehensive        on states with I/M programs to provide program operating data. After
                             reviewing the data obtained from 36 of the 38 programs in operation, we
Operating Data               found that states are not always providing comprehensive operating
                             data.* From January 1987 through June 1989,21 of the programs pro-
                             vided 60 percent or less of the data required by the OMS audit guidelines.
                             Nine of these programs provided less than 30 percent of the data, and
                             two programs did not provide any data during the period. The
                             remaining 15 programs provided more than 50 percent of the data, but
                             only 1 of these programs provided 100 percent of the requested data.
                             Often the data not provided are necessary in order to assess a program’s
                             compliance. Some specific examples follow.

                         9 Four programs did not submit data pertaining to the number of monthly
                           station audits conducted by the state. This auditing is an important pro-
                           gram quality assurance activity that the state, in its SIP, commits to
                           conduct.
                         l Six programs did not submit data concerning the failure rate for vehi-
                           cles that failed initial testing, were repaired to the extent required by
                           the specific program, and subsequently retested. In order for a program
                           to achieve the emission reduction benefits it was designed to, failed
                           vehicles that have not been waived from a program’s requirements must
                           be repaired to bring them into compliance. The retest failure rate indi-
                           cates the success of the program in bringing failed vehicles back into
                           compliance with emission requirements.
                         l Six programs did not provide data indicating the number of vehicles to
                           be tested during a specific period of time. Without knowing this infor-
                           mation, OMS cannot determine whether the number of vehicles actually
                           tested was at or near the level to which the program committed in its SIP.


States Lack Specific         OMS has attempted to encourage states to provide specific program oper-
Reporting Requirements       ating data; however, as indicated above, it has had limited success.
                             According to I/M program officials, states do not always provide compre-
                             hensive operating data to OMS primarily because they are not specifically
                             required to do so.

                             As required by SIPS, states must report annually to OMS information
                             relating to the operation of their I/M programs. However, when most SIPS

                             ‘Two programswere excludedfrom the analysis.OMSis not collectingdata from oneprogramdue to
                             the program’ssevereoperationalproblems,and anotherprogramhad not beenin operationfor a full
                             year at the time of our review.



                             Page 40                                          GAO/RCEDSO-128    Motor   Vehicle Emissions
                           Chapter   4
                           OMS’Monitmlng of     Vehicle Inspection/
                           Maintenance   Programs Is Inadequate




                           were approved in 1982, OMS had not established a minimum requirement
                           defining the specific data to be reported. OMS instead allowed states to
                           define what information they should report. According to the I/M project
                           manager, this was because OMS(1) was not yet certain of the data that
                           would ultimately prove most beneficial to track and reasonable to obtain
                           and (2) did not want to impose a reporting burden upon the states when
                           the benefit was unclear.

                           Since about 1985, OMS' oversight of I/M programs has allowed it to deter-
                           mine the specific data needed to monitor the ongoing operation of I/M
                           programs effectively. According to the I/M project manager, OMS has been
                           requesting and encouraging states to provide this data since 1987. How-
                           ever, OMS has not formally required states to provide specific operating
                           data as part of their SIP requirement. According to the I/M project man-
                           ager, without additional legal authority, OMS could require states to pro-
                           vide specific operating data as part of their SIP. Moreover, the official
                           believes that a specific reporting requirement should have been formally
                           imposed during the mid-1980s, when it became clear to OMS which data
                           were mOSt critical for StateS to report. OMS also has a new I/M policy
                           called “enhanced I/M," which includes a provision for states to submit
                           specific operating data on a semiannual basis. However, OMS has decided
                           to await the final reauthorization of the Clean Air Act before imple-
                           menting more stringent reporting requirements. At the time our audit
                           work was completed, legislative action on the Clean Air Act was
                           ongoing.


ProcrramAu dits Are Not    OMS can also obtain program operating data during regular audits of I/M
T&-&y Means of Obtaining   programs. However, we found that OMS audits are not a timely means of
                           obtaining operating data. Although the data are needed every 6 months,
Operating Data             OMS' goal is to conduct audits about every other year. The I/M project
                           manager informed us that program audits are not done more frequently
                           because they are very resource intensive. In fact, OMS has not been able
                           to meet this 2-year timetable for audits. In our review of OMS' audit
                           schedule and files of audits completed between September 1987 and
                           August 1989, we found that during the 2-year period, OMS had audited
                           only 18 of the 36 programs. Given the length of time between audits of
                           I/M programs, we believe OMS would not be able to monitor programs
                           effectively if it would rely on audits to obtain needed operating data.
                           Consequently, 0~s must rely on states to submit operating data to
                           ensure that I/M programs are complying with their SIP.




                           Page 41                                    GAO/RCED90-128   Motor   Vehicle Emissions
                       Chapter 4
                       OMS’ Moultorlng   of Vehicle Inspection/
                       Maintenance   Programs Is Inadequate




                       To determine if I/M programs are achieving the overall performance
OMS Has Not Assessed   objectives specified in their SIP, OMS has a computer modeling procedure
the Effectiveness of   to measure the effectiveness of programs. According to I/M officials,
Many Programs          operating data submitted by the states or obtained through audits are
                       used as input to a computer model that estimates the actual emission
                       reduction a program is achieving, which is then compared to a minimum
                       emission reduction requirement committed to in the SIP.

                       According to the project manager, this effectiveness measurement pro-
                       cedure, which OMSterms a “shortfall analysis,” is the only way OMS can
                       ensure and document that most programs are meeting their reduction
                       requirement. However, OMS does not routinely measure the effectiveness
                       of all programs operating nationwide. As of August 31, 1989, OMS had
                       not measured the effectiveness of 14 of the 37 I/M programs.”

                       According to the project manager, effectiveness measurements have not
                       been conducted on all programs because of OMS’ belief that such mea-
                       surements have not been needed in all cases. Although OMSpolicy
                       requires effectiveness measurements be conducted, it does not stipulate
                       how often they should be done. The project manager explained that an
                       effectiveness measurement is generally conducted as part of an audit, or
                       whenever OMSbelieves a program may not be meeting its reduction
                       requirement. Explaining why OMS believes that an effectiveness mea-
                       surement is sometimes unnecessary, the official said that when a pro-
                       gram is operating as designed, OMS presumes that the reduction
                       requirement is being attained. Conversely, he added, if a program is
                       encountering problems to such an extent that non-attainment of the
                       emission reduction requirement is obvious, OMS believes that conducting
                       an effectiveness measurement would be pointless. He added that con-
                       ducting effectiveness measurements for certain types of I/M programs is
                       very resource intensive. Consequently, with limited resources available,
                       OMS has been reluctant to measure the effectiveness of these programs.



Importance of          OMS may be able to determine if certain programs are in compliance with
Effectiveness          their SIP without conducting an effectiveness measurement. However,
                       for noncomplying programs OMS needs to quantify the extent to which
Measurement            they are not meeting their minimum emission reduction requirement so
                       that EPA regional offices can determine and/or assess necessary correc-
                       tive actions. Depending upon the degree to which the emission reduction

                       ‘One programwas excludedfrom the analysissinceit had not beenoperatingfor a full year at the
                       time of our analysis.



                       Page 42                                            GAO/RCED-90-128    Motor   Vehicle Emissions
    .
.
        Chapter 4
        OMS’ MoW.mlng of Vehicle Inspection/
        Maintenance Programa 1s Inadequate




        requirement is not attained, OMScould request a correction as part of an
        audit recommendation, request a corrective action plan from the state’s
        governor, or declare the state’s SIP inadequate. According to an OMS
        branch chief, effectiveness measurements allow OMSto distinguish
        between programs performing very poorly and those performing mar-
        ginally. Further, the results of one state’s I/M effectiveness measurement
        can be compared to another state’s results in order to convince state I/M
        program officials of the magnitude of operating problems.

        Also, conducting regular effectiveness measurements would be consis-
        tent with the goals of EPAmanagement and the conclusions of a recent
        GAOreport. In our August 1988 management assessment of the EPA,we
        stated that it is important for the agency to manage its programs for
        measurable environmental results.3 That is, in order to assess the effec-
        tiveness of its programs, EPAmust correlate some measure of improve-
        ment to the environment to a specific program activity. The
        effectiveness measurement attempts to quantify the operating results of
        a program and measure its impact in terms of improvements in air
        quality. As such, we believe that at present it is the best means of corre-
        lating I/M program activities to environmental benefits.

        Further, standards for internal controls in the federal government
        require that significant agency transactions and events be properly
        recorded.4 Since reducing motor vehicle emissions is the central purpose
        of I/M programs, the attainment or non-attainment of a program’s emis-
        sion reduction requirement is a significant event that should be
        documented.

        Finally, the importance of conducting effectiveness measurements is
        supported by OMS in its proposed enhanced I/M policy, which would
        require that states conduct the analysis to ensure SIPcommitments are
        being met. However, as mentioned earlier, the agency has chosen not to
        implement the policy pending the reauthorization of the Clean Air Act.




        ~%vironmental ProtectionAgency:ProtectingHumanHealth and the EnvironmentThrough
        Improved Management(GAO/RCED_88-101, Aug. 16, 1988).
        41nternalcontrolsthat federal agenciesare required to follow are set forth in GAO’sStandardsfor
        Internal Controlsin the FederalGovernment,publishedin 1983pursuant to the FederalManager’s
        Financial Integrity Act of 1982.



        Page 43                                             GAO/RCED-90-128    Motor   Vehicle Emissions
                  Chapter 4
                  OMS’ Monitoring   of Vehicle Inspection/
                  Maintenance   Programs Is Inadequate




                  The costs and potential benefit of the nation’s I/M programs underscore
Conclusions       the importance of OMS’ role in assessing their compliance and effective-
                  ness. However, OMS does not have the current information to make these
                  assessments in many cases.

                  With respect to compliance, OMS is not obtaining comprehensive oper-
                  ating data from states with I/M programs because it did not impose a
                  specific data reporting requirement upon the states. As a result, most
                  states have submitted far less than the amount of information needed
                  by OMS to assess the programs’ compliance with their respective SIPS. OMS
                  can also obtain needed operating data during audits. However, we found
                  that OMS infrequently audits many programs, with half of the programs
                  not being audited for over 2 years. Given that operating data are needed
                  on a biannual basis, audits are not a timely means of obtaining informa-
                  tion Moreover, scheduled audits could become more infrequent as addi-
                  tional programs begin operation in the near future. Infrequent audits
                  increase the reliance OMS must place on the states’ submission of oper-
                  ating data,

                  OMS has recognized the importance of obtaining specific operating data
                  on I/M programs and has drafted a proposed policy that includes a
                  requirement for states to submit specific operating data on a semiannual
                  basis, However, OMS is awaiting final action on the Clean Air Act
                  reauthorization before formally issuing such a requirement. Such a
                  delay is, in our opinion, unwarranted. Although the inclusion in the act
                  of a stronger policy for I/M programs would help EPA justify its actions to
                  states, EPA currently has the authority to implement such a policy.

                  In addition, OMS has not conducted overall effectiveness measurements
                  for many of the state programs largely because it believes that it can
                  assess the emission reduction status of many of these programs without
                  conducting a formal measurement. However, without the measurement,
                  OMS cannot determine the severity of the operating problems nor the
                  degree to which programs are noncompliant with their SIP. We believe
                  that without measuring and documenting the effectiveness of all pro-
                  grams on a regular basis, OMS is not fully meeting its responsibility to
                  oversee I/M programs.


                  In order to ensure that state I/M programs are operating effectively and
Recommendations   in compliance with their state plans for achieving air quality standards,
                  we recommend that the Administrator, EPA,



                  Page 44                                    GAO/RCED-90-128   Motor   Vehicle Emissions
.
        chapter 4
        OMW Monitoring   of Vehicle Inspection/
        Maintenance  Programs Is Inadequate




    9 not wait for passage of the Clean Air Act amendments and proceed with
      efforts to formally require states to submit semiannually specific oper-
      ating data, such as the number of vehicles by model year passing or
      failing emission tests, and
    l ensure that program results are compared to minimum emission reduc-
      tion requirements by conducting effectiveness measurements of I/M pro-
      grams periodically.




        Page 45                                   GAO/RCED-90-128   Motor   Vehicle Emissions
Appendix I

Inspection/MaintenancePIXI~EWIS
                              in Operation
as of August 1989

              States with I/M programs         Affected urban areas
              Alaskaa                          Anchorage
                                               Fairbanks
              Arizona                          Phoenix
                                               Tucson
              California                       Bakersfield
                                               Fresno
                                               Los Angeles
                                               Sacramento
                                               San Diego
                                               San Francisco
                                               Stockton
                                               Visalia
              --
              Colorado                         ;,oZ;~;o   Springs
                                               Ft. Collins
                                               Greelev
              Connecticut                      Statewide
              Delaware                         Wilmington
              -_--.-
              District of Columbia             Districtwide
              Georgia                          Atlanta
              Idaho                            Boise
              Illinois                         Chicago
                                               East St. Louis
              Indiana                          Chicago suburbs
                                         -..   Louisville suburbs
              f?&tuckya                        Cincinnati suburbs
                                               Louisville
              Louisiana                        Baton Rouge
              Maryland                         Baltimore
                                               Washinaton, D.C., suburbs
              Massachusetts                    Statewide
              Michigan                         Detroit
              Missouri                         St. Louis
              Nevada                           Las Vegas
                                               Reno
              New Hampshire                    Nashua
              New  Jersey                      Statewide
              --
              New Mexico                       Albuquerque
              New York                         New York City
              _________
              North Carolina                   Charlotte
                                               Raleigh
              -.--
              Ohio                             Cincinnati
                                               Cleveland
              __-
              Oklahoma                         Oklahoma City
                                               Tulsa
                                                                                  (continued)




              Page 46                            GAO/RCED-90-128    Motor   Vehicle Emissions
.


    Appendix I
    Inqwction/Maintmauce    Programs      in
    Operation as of August 1989




    States with I/M programs                            Affected urban areas
    Oregon                                              Portland
                                                        Medford
    -_
    Pennsylvania                                        Allentown
                                                        Philadelphia
                                    -                   Pittsburgh
    Tennesseea                                          Memphis        --
                                                        Nashville
    Texas                                               Dallas
                                                        El Paso
                                                        Houston
    ~--.--
    Utah”                                               Davis County
                                                        Provo
                                                        Salt Lake City
    __--___
    Virginia                                            Washington, D.C., suburbs
    Washington                                          Seattle
                                                        Spokane                                      __
    Wisconsin                                           Kenosha
                                                        Milwaukee
                                                        Racine
    aThis state operates a separate I/M program for each affected urban area




    Page 47                                                GAO/RCED-90-128     Motor   Vehicle Emiasiou~
                                                                                                                  .
Appendix II

Major Contributors to This Report


                                  Peter F. Guerrero, Associate Director
Resources,                        William F. McGee, Assistant Director
Community, and                    John R. Schulze, Assignment Manager
                                  Mitchell B. Karpman, Operations Research Analyst
Economic
Development Division,
Washington, D.C.

                                  Anthony A. Krukowski, Evaluator-in-Charge
Detroit       Regiona1   Office   (&jell        We   Bailey   Jr   Site   Senior

                                  Randy M. DiRoia, &aff Evaluator
                                  Kathleen Ward, Technical Analyst




(089446)                          Page     48                                      GAO/RCED-SO-128   Motor   Vehicle   Emissions
                                     ‘(
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