Historical Information

State Implementation Plan

Additional Articles on Conformity and the SIP:

Current Conformity Rules Declared Ineffective

Congressional Hearings Discuss Changes to Conformity Rules (Posted 07.31.02)

Summary of Environmental Challenges to SIP in 5th Circuit (Posted 06.11.02)

What is Conformity & why is it of paramount importance?

What the problems with conformity and what can be done to make it more efficient?

Summary of Suit Filed Against Conformity Plan in 2001

Summary of Suit Filed Against Houston SIP in Washington District Court 10/02 Update-Suit is dismissed.

Implementation Timeline of Houston SIP NOx Reductions (Acrobat Reader Required)

WHA on Intervention in Suit Brought by Environmental Defense (Posted 12/2001)

In Congressional testimony (July, 2002) a United States GAO survey found that the majority of planning organizations surveyed felt that transportation conformity was "ineffective in helping their areas achieve air quality goals." Senator Bob Smith provided this graph at the hearing which shows why conformity is largely ineffective at reducing emissions and why it will become even less effective in the future.

The graph depicts the effectiveness of technological controls at reducing emissions and the ineffectiveness of growth controls (limiting road construction). The graph shows that emissions (NOx and VOC) have decreased since 1970 and will continue to decrease despite additional road building (reflected in part by the increased vehicle miles traveled or VMT). Based on this trend, transportation conformity will become even more ineffective at helping areas achieve air quality goals in the future. Transportation conformity therefore needs to be significantly re-worked in the upcoming TEA-21 reauthorization

Notice To West Houston Association Members:

With our Association’s involvement in the clean air, state implementation process and the lawsuits filed by so-called environmental groups over the last 18 months, we have learned that the transportation conformity process needs to change and change rapidly.

Although intended to be a positive process of making sure transportation plans “conform” to a state implementation plan to reduce air emissions from mobile sources, it is in reality an arcane bureaucratic nightmare for the agencies that constantly have to perform emission modeling on even the smallest of changes to a regional transportation plan. It has become little more than a tool to be used by no-growthers to stop roadway projects they do not wish to see built.

Congress is in the process of determining if it can modify conformity to make it less cumbersome. Here are some notes from the July 30th Senate Environment & Public Works Committee hearing on the Congestion Mitigation Air Quality (CMAQ) program, transportation conformity, and new technologies.

SUMMARY OF HEARING

The purpose of the hearing was to review the CMAQ and transportation conformity programs to determine if legislative changes were needed in the upcoming reauthorization of TEA-21. According to members of the committee and most of the testifying panelists, changes are needed. Senator James Jeffords, Chairman of the Committee, said "we can and should refine the air quality linkage to build on success and make improvements." These improvements are especially needed with the expected doubling of nonattainment areas under EPA's new air quality standards. Hundreds of cities and counties will be thrown into the transportation conformity process for the first time. The doubling in the number of nonattainment areas will also mean more hungry mouths to feed with limited CMAQ funding. Making improvements now will be more effective and efficient than making changes after new nonattainment areas are designated.

A. CMAQ

On the issue of CMAQ, the Senators and the panelists spoke most about the effectiveness of the program. Senator Voinovich asked, "Are the CMAQ projects getting us the best air quality reductions for the money we are spending, in other words are they cost-effective?" Several panelists and committee members commented on the fact that measures under the CMAQ program were not as effective at reducing pollution as technological solutions (e.g. traffic light synchronization vs. the catalytic converter). The committee also discussed the allocation of funding between nonattainment and new nonattainment areas.

B. Transportation Conformity

The discussion on transportation conformity was varied, but about all of the panelists (including EPA and DOT) agreed that changes were necessary. Below are highlights from the testimony:

- The United States General Accounting Office submitted written testimony entitled, The Federal Government Could Help Communities Better Plan for Transportation that Protects Air Quality. In the GAO's testimony, the GAO stated, "While recognizing that the conformity requirement has encourage certain communities to look for ways to reduce emissions, only 31 percent of the planners responding to our survey found the process of demonstrating conformity to be effective in helping their areas achieve air quality goals (40 percent found it to be ineffective)."

- Senator Bob Smith stated, "transportation and air quality officials have raised concerns that conformity is becoming increasingly process driven, and that the result, cleaner air, is becoming a secondary factor. Moreover, there are ambiguities in the statute and regulations being resolved in litigation, which increasingly indicates a lack of clarity that Congress should address."

- DOT Administrator Peters stated, "our stakeholders indicate that conformity lapses have occurred because areas could not complete the complex, comprehensive transportation planning and conformity processes within the required time frames, even though they met their emissions budgets."

- Jeff Holmstead, EPA, stated, "According to some transportation planners, conformity is required too often, leaving them with little time to focus on planning. [. . .] EPA intends to eliminate some of the 18-month "SIP triggers" in the conformity rule in an upcoming rulemaking. Though further discussion must occur on the issue of how often conformity must be done, amending the rule would simplify the process and address some of the concern."

- Judge Ron Harris stated, "There are three predominate concerns. First, SIP and emission budgets have a relatively short-term horizon, while conformity of the Transportation Plan may be 25 years in the future with little unknown out-year emission technology benefits. Second, The Environmental Protection Agency (EPA) can establish new emission rate software at irregular intervals. This creates a conflict on how to include new information or the often suggested inconsistency of comparing transportation air quality impacts between two very different EPA software versions. Third, conformity is often used as a litigation mechanism instead of the transportation assessment Congress established."

- James Stevenson, ARTBA, stated, "There are two things I hope you take from this hearing today, (1) that government agencies and planning bodies need more flexibility on conformity and (2) the public -- especially those who contract with government agencies to build transportation improvement projects – need more predictability in the transportation conformity process."

If you are interested in reviewing the complete statements or watching the testimony, please see the following website: http://epw.senate.gov/stmts_0.ht

Timeline for Briefs in the 5th Circuit SIP Challenge:

The 5th Circuit has upheld the validity of the Houston State Implementation Plan as of October 2003. Challenges mentioned in the following brief have been dismissed.

Summary of Briefs filed by Groups Challenging Houston SIP in 5th Circuit

This Summary was provided by Jed Anderson of Vinson & Elkins.

The Sierra Club, Environmental Defense, Natural Resources Defense Council, BCCA Appeal Group and Brazoria/Fort Bend Counties all filed briefs in the 5th Circuit litigation over the Houston/Galveston Ozone Plan. This was the first formal step in the 5th Circuit litigation. Below is a summary of the Environmental Petitioner's briefs.

1. Sierra Club - Sierra Club alleged that the Houston SIP failed to include all "reasonably available control measures." The Clean Air Act requires nonattainment areas to adopt all "reasonably available control measures" in their ozone plans. Sierra Club complained that Houston failed to consider or adopt such measures. As support for its allegation, Sierra Club pointed out that Houston adopted only 8 Transportation Control Measures (TCMs) in its ozone plan, though EPA identified a list of 70 potential TCMs for nonattainment areas to consider. Sierra Club identified the following TCMs as measures Houston should consider or adopt: (1) Decreased Highway Expansion; (2) Location Efficient Mortgages; (3) Land Use Measures (zoning and design review ordinances); (4) Congestion Pricing (tolls based on time of day); (5) Emissions/Mileage Tax (tax based on odometer readings); (6) Trip Reduction Ordinances (mandatory conditions imposed on commercial developers, such as transportation impact fees used to foster trip reduction and other design measures aimed at minimizing single occupant vehicle use), (7) Employer-Based Transportation Management Programs (ride-share, charging for on-site parking); and (8) Insurance Pricing. [It is possible that the Sierra Club will ask EPA to adopt these TCMs in the SIP settlement discussions or ask for adoption of these measures in informal discussions with HGAC, TNRCC, or EPA. Also, one or more of these TCMs could potentially be conceded for removal of the 55 mph control measure.]

2. Environmental Defense/GHASP/Galveston Bay Conservation and Preservation Association - The brief submitted by Environmental Defense focused on allegations that EPA's model was flawed and that Houston's ozone plan did not provide enough emissions reductions to demonstrate attainment. Most of the brief complained about an emissions "shortfall" in the plan and EPA's subsequent reliance on enforceable commitments (promises to adopt control measures in the near future) to satisfy this shortfall--rather than actually adopted control measures. Because of this alleged failure, Environmental Defense asked the Court to reject both the Houston ozone plan and the motor vehicle emissions budget.

Environmental Defense's argument over the motor vehicle emissions budget was that the budget should not be used for transportation conformity purposes because it is too high. Environmental Defense argued that most of the enforceable commitments identified in the ozone plan apply toward mobile sources. For this reason, Environmental Defense reasoned that the budget was artificially high and could not be used for conformity purposes. [This attack is interesting in light of last year's settlement agreement over the 195 ton motor vehicle emissions budget. As you will recall, Environmental Defense advocated the use of the 156 ton motor vehicle emissions budget. Environmental Defense is now attacking that same budget. Environmental Defense wants to continue lowering the budget to make it more difficult for Houston to demonstrate conformity and build new roads.

3. Natural Resources Defense Council (NRDC) - This brief complained that the Voluntary Mobile Emissions Reduction Program and the Texas Emissions Reduction Program in the Houston Ozone Plan were unenforceable, ill-defined, unspecific, understaffed, and inadequately funded. NRDC argued it was improper to rely on emissions reductions from the Texas Emission Reduction Program in light of the fact that the Texas Supreme Court held that the Program's largest means of funding was unconstitutional. NRDC argued that EPA did not properly identify and describe the control measures that comprise the Voluntary Mobile Emissions Reduction Program.

EPA's response to these briefs is due September 5, 2002. Intervener's briefs (Harris County, City of Houston, HGAC, TNRCC, etc.) are due September 26, 2002.

Historical Issues Related to Houston's SIP Development and Previous Challenges

WHA has asked TCEQ, Governor of Texas, Texas Department of Transportation and Houston Galveston Area Council to consider intervention in Natural Resources Defense Council v. Whitman, No. 99-2976 filed in Washington D.C. District Court. In this motion groups have asked the judge to order the EPA to undertake a federal implementation plan for 56 tons of NOx reductions.

Here is our letter to Harris County Commissioners Court and the City of Houston.

Here is our letter to government bodies:

December 17, 2001

Mr. Jeffrey Saitas, MC 109

Executive Director

TNRCC

P.O. Box 13087

Austin, TX 78711-3087

To Mr. Saitas:

The West Houston Association is writing to share with you our concern over a lawsuit that poses a significant threat to the future growth and welfare of the Houston area. We are asking TNRCC to vigorously pursue intervention in the following matter.

As you know, several national environmental groups recently filed a motion challenging the Houston/Galveston area’s plan to achieve attainment with the air quality standard for ozone. Instead of challenging the plan in Texas, where it would be easier for state agencies, local governments, businesses, and citizens to participate in the litigation, the national environmental groups attacked the plan far away in Washington, D.C.—in a lawsuit where the U.S. Environmental Protection Agency (EPA) is the only other party. Because this attack poses a significant threat to economic development and regional mobility, and because of the lack of local representation, the West Houston Association requests that TNRCC vigorously pursue intervention in this lawsuit to protect the interests of our state and our community.

On November 8, 1999, the Natural Resources Defense Council (NRDC) and other national environmental groups filed a lawsuit against EPA complaining that states were not timely submitting their ozone State Implementation Plans (SIPs). On May 31, 2000, EPA and NRDC entered into a consent decree requiring Houston and several other cities to submit an ozone SIP and receive EPA’s approval of the SIP by October 15, 2001. The Consent Decree stipulated that if a city failed to meet the requirements and deadlines of the Consent Decree, EPA was required to adopt a Federal Implementation Plan (FIP) for that city. Of course, Houston’s SIP was approved by the EPA before the October 15, 2001 deadline, but the environmental plaintiffs filed a motion on November 21, 2001, claiming that EPA’s approval was improper. The plaintiffs have asserted that the SIP violates the Clean Air Act because it relies on 56 tons worth of emissions reductions to be achieved from pollution controls that will be adopted in the next couple of years.

The environmental plaintiffs are asking the court in Washington, D.C. to require EPA to develop a FIP for the Houston/Galveston area within the next 6 months. If successful, the action would have two obvious and detrimental impacts on business, transportation, and development interests in the Houston/Galveston area. First, the area would be required to further reduce emissions from existing sources, or place additional burdens on new sources of emissions to make up for the 56-ton pollution reduction now expressed as "enforceable commitments." Second, a victory by the plaintiffs would shift control of air pollution control decisions from state and local regulatory authorities to the federal EPA.

A victory by the plaintiffs might also have two less obvious, but potentially even more detrimental impacts on the community. First, if EPA fails to develop a FIP within the 6-

month timeframe of the Consent Decree, the Court could potentially order the U.S. Department of Transportation to withhold federal highway funding for the Houston/Galveston area. Second, the FIP might trigger a "conformity freeze" or "conformity lapse" under previsions of the federal Clean Air Act and Transportation Equity Act that require local transportation plans to conform to regional clean air plans. A FIP could easily trigger a conformity freeze or lapse that would prevent many area road and highway projects from moving forward.

Any of these possibilities would have a significant impact on the Houston/Galveston community, especially on mobility within the community. HGAC estimates that traffic congestion is already costing the community approximately $2 billion per year. With population levels expected to double in the next 25 years, Houston cannot afford any result to this litigation that jeopardizes current and future road, highway, and mass transit development. It is painfully clear to anyone who commutes to work in Houston that Houston needs as much transportation infrastructure as it can build to provide for the welfare of its citizens. It is also equally clear that the local economy cannot presently bear to lose the thousands of construction jobs that would be lost if a majority of road and highway construction projects were cancelled or significantly postponed as a result of this lawsuit.

Members of the West Houston Association are particularly concerned with the potential impacts of the litigation on the improvements scheduled for I-10. For this reason, and in order to protect the broader interests of regional mobility and economic security, we ask TNRCC to vigorously pursue intervention in the NRDC lawsuit. We hope that your efforts will help ensure that local interests are adequately represented and prevent the "federalization" of emission control decisions that should be made here in Texas.

Thank you for your consideration.

Sincerely,

Roger H. Hord

President & CEO

What is Transportation Conformity?

All transportation plans must comply with the Clean Air Act. The process of determining whether they do or not is call Conformity. If a plan "conforms" it is an assurance that the projects included in the plan meet the vehicle emission targets established for mobile source emissions in the current state implementation plan.

Transportation Conformity

(Prepared April, 2002 by Vinson & Elkins, L.L.P. For more information contact Jed Anderson 713.758.4470)

Issue: Nonattainment areas throughout the United States (including any areas that will be designated as nonattainment under the new 8-hour ozone or particulate matter standards) are or will be required to demonstrate that their transportation plans conform to the area’s air quality plan. This demonstration is called transportation conformity. As it currently stands, the transportation conformity process is onerous, inflexible, and largely ineffective.

Background: Under the Clean Air Act’s State Implementation Plan requirements, nonattainment areas are required to set a limit on the quantity of emissions from cars and trucks in an area in order to attain the ozone standard (this limit is called the "motor vehicle emissions budget"). Nonattainment areas are then required to demonstrate that car and truck emissions associated with current and future road, highway, and transit projects listed in the area’s transportation plan conform to this budget.

Timing of Transportation Conformity: Nonattainment areas are continually and exhaustingly performing transportation conformity demonstrations. Although the Clean Air Act requires a conformity demonstration once every three years, numerous other triggers render this requirement meaningless. Under EPA’s rules, nonattainment areas must demonstrate conformity each time EPA proposes or approves a SIP revision, each time the EPA modifies a control measure that impacts the motor vehicle emissions budget, and each time a transportation control measure is added, modified, or deleted. Conformity demonstrations are also needed each time the metropolitan planning organization needs to add or modify a project in its transportation plan (since a road or transit project cannot move forward unless it is specifically included in a conforming transportation plan). This overabundance of conformity triggers means that planning organizations are continually performing over-lapping demonstrations, wasting valuable time and resources.

Requirements of Transportation Conformity: Transportation conformity demonstrations are a prolonged and arduous process. The metropolitan planning organization (typically a local council of governments) must conduct extensive modeling and inventory work. All conformity demonstrations must go through an interagency consultation process and other agency scrutiny that involves EPA, FHWA, TNRCC, and TxDOT. Conformity demonstrations must also go through public notice and comment and public hearing procedures.

Ramifications of Transportation Conformity: Once a conformity demonstration is complete (often after more than a year and hundreds of thousands of dollars worth of work), each conformity demonstration becomes subject to a potential lawsuit from environmental organizations and others who are unhappy with such issues as urban sprawl, the construction of certain road projects, or the area’s mass transit choices. Transportation conformity lawsuits have occurred across the country; including Houston, Atlanta, Sacramento, San Francisco, and Salt Lake City. These suits force local governments or other interested parties to mount legal defenses which are expensive and time consuming. The cost of these legal defenses takes funds that could otherwise be used to provide services to the public. The potential repercussions of a successful lawsuit or repercussions for failing to demonstrate conformity are the withholding of federal highway funding or the halting of road and transit projects, including those that do not receive any federal funding.

Problems with Transportation Conformity:

Onerous and Inflexible

The regulations employed to implement the transportation conformity requirements of the Clean Air Act result in an inefficient, cumbersome, and non-stop process of study and evaluation. The core problem with the transportation conformity process is best illustrated by use of a hypothetical. Consider a situation where both stationary sources and off-road mobile sources (e.g., a fork-lift) have emissions budgets. If this were the case, Company A could not add a fork-lift to accommodate its growing operations unless emissions from the new fork-lift were specifically listed in the SIP (or a conforming plan for off-road vehicle growth). If the emissions from the fork-lift were listed in an approved plan, the company could not purchase a pallet-truck instead of a fork-lift or purchase the fork-lift one year earlier, unless the applicable plan was revised. Similarly, Company B, a stationary source, could not change its plans to purchase a specific electric generator without first obtaining a revision of an area-wide plan. This tedious and futile exercise would be debilitating to businesses and government agencies alike. Companies would be unable to alter their future business decisions. State and local governments would be relegated to pushing hundreds of plan revisions through an arduous conformity process.

In light of this hypothetical, the problems with using an emissions budget for on-road motor vehicles become glaringly apparent. Using an emissions budget for on-road vehicles results in the same kind of inflexibility and regulatory grid-lock as using an emissions budget for off-road vehicles or stationary sources. Planning organizations currently cannot make simple changes to a road segment or transit project without going through the extensive transportation conformity process.

Ineffective

Transportation conformity was created as a means to keep motor vehicle emissions in "check" by controlling growth from road building and transit development. Transportation conformity has largely failed in this endeavor. Why? For one primary reason: motor vehicle emissions technologies and fuels are always improving, which decreases emissions from on-road mobile sources and allows for continued development of roads and mass transit infrastructure. If a community fails to demonstrate transportation conformity by one of the deadlines specified by EPA, the failure is almost never due to the building of additional roads, but is almost always due to problems with the timing of multiple deadlines for revising the motor vehicle emissions budget and revising the transportation plan. Because of this reality, transportation conformity is largely ineffective at controlling growth from road and transit building. Congress, state or local governments should therefore choose a more effective and appropriate means of land-use planning if they so desire, rather than using the Clean Air Act’s transportation conformity process as a means to achieve back-door growth controls.

Necessary Changes If the Whole Program is Not Entirely Re-Worked:

Reduce Triggers

Transportation conformity determinations should only be required once every three years. Currently, full transportation conformity determinations are required each time the EPA or the state proposes or approves a SIP revision, each time the EPA or state modifies a control measure that impacts the motor vehicle emissions budget, and each time a transportation control measure is added, modified, or deleted. Conformity determinations are also currently required if the planning organization needs to add to or revise a transportation project in the transportation plan (since road and transit projects cannot generally proceed unless they are specifically included in the plan).

Provide for Administrative Decision Making

Planning organizations should have the ability to add or modify a road or transit project (to some degree) without the need for a full conformity demonstration. Currently, planning organizations must go through a full conformity analysis to make minor changes. This exercise is unnecessary and a waste of valuable local, state, and federal resources.

Vehicle for Change: Congressional leaders have identified transportation conformity as one of the issues that will be considered as part of the reauthorization of the Transportation Efficiency Act of the 21st Century (TEA-21). Preliminary work, including hearings, will be conducted during 2002.

For more information, please contact Larry Nettles of Vinson & Elkins at (713) 758-4586 or Jed Anderson at (713) 758-4470.

855303_1.DOC

November 21, 2001 Natural Resources Defense Council files Motion Attacking Houston's State Implementation Plan

A Coalition of environmental groups asked a federal district court judge in Washington D.C. to require EPA to develop a Federal Implementation Plan (FIP) to identify emission reduction sources for 56 tons on NOx that they feel is not adequately addressed in the EPA approved Houston SIP. As in last spring's transportation conformity suit, no local parties are included. This suit was dismissed by the court.

At the close of last year, the Association spent considerable time and effort bringing to everyone’s attention to this suit filed in Washington D.C. by the National Resources Defense Council over the Houston SIP.

We believed the issue NRDC chose to sue over was a minute one, but the main issue to the Association was that an organization from New York was suing a Washington D.C. federal agency over OUR air emission plan in a Washington D.C. court. Thanks to our efforts, Harris County, the City of Houston, HGAC and TNRCC where notified and initial brief material provided and they subsequently intervened.

While that is one win, Houston’s SIP remains under strong attack in the 5^th Circuit Court. These suits are now in confidential settlement talks between the enviro-plaintives, EPA, TNRCC and local agencies. Because the participants have signed a confidentially agreement, none of us in the public may be told the details of what is being discussed OR agreed to by any of the parties to the suit. Harris County, City of Houston and HGAC are local agencies participating in these talks but they are unable to share with us any of the details.

While we applaud the dismissal of the Washington suit, the Association is deeply concerned at the potential of severe consequences from the settlement talks over the 5^th District suits. Because of this, working with other Houston organizations, we are asking that the confidentially requirement be lifted and that we be kept apprised of progress in the talks.

We are acting with other organizations to stay abreast of what is happening on this matter and will keep you posted.

Click here for our letter to TNRCC, the Governor's office, TxDOT and HGAC

On December 10th, the WHA asked Harris County to intervene in this action:

December 10, 2001

To: Harris County Judge and Commissioners

The West Houston Association is writing to inform you of a significant threat to the future growth and welfare of Harris County. Several national environmental groups recently filed a motion challenging the Houston/Galveston area’s plan to achieve attainment with the air quality standard for ozone. Instead of challenging the plan in Texas, where it would be easier for local governments, businesses, and citizens to participate in the litigation, the national environmental groups attacked the plan far away in Washington, D.C.—in a lawsuit where the U.S. Environmental Protection Agency (EPA) is the only other party.

Because this attack poses a significant threat to regional mobility and because of the lack of local representation, the West Houston Association requests that Harris County intervene immediately to protect the interests of our community.

The following may be helpful in understanding the litigation and its potential adverse impact on business, transportation, and development interests in the Houston area.

Of course, Houston’s SIP was approved by the EPA before the October 15, 2001 deadline, but the environmental plaintiffs filed a motion on November 21, 2001, claiming that the approval was improper. The plaintiffs argued that the SIP violated the Clean Air Act because it relied on 56 tons worth of enforceable commitments instead of adopted pollution controls. Enforceable commitments are commitments to adopt pollution controls in the future as new technologies are developed and better understood. The environmental

plaintiffs have asserted that enforceable commitments are improper because they do not result in immediate emissions reductions, and they have asked a court in Washington, D.C. to order EPA to develop a FIP for the Houston/Galveston area.

The environmental plaintiffs are asking the court to require EPA to develop the FIP for the Houston/Galveston area within the next 6 months. If successful, the action would have two obvious and detrimental impacts on business, transportation, and development interests in the Houston/Galveston area. First, the area would be required to further reduce emissions from existing sources, or place additional burdens on new sources of emissions to make up for the 56-ton pollution reduction now expressed as "enforceable commitments." This could include additional controls on emissions from the transportation sector. Second, a victory by the plaintiffs would shift control of air pollution control decisions from state and local regulatory authorities to the federal EPA.

A victory by the plaintiffs might also have two less obvious, but potentially even more detrimental impacts on the community. First, if EPA fails to develop a FIP within the 6-month timeframe of the Consent Decree, the Court could potentially order the U.S. Department of Transportation to withhold federal highway funding for the Houston/Galveston area. Second, the FIP might trigger a conformity freeze or conformity lapse where many area road and highway projects could not move forward, including those that would be funded pursuant to the recently approved County bond election.

Any of these possibilities would have a significant impact on the Houston/Galveston community, especially on mobility within the community. Members of the West Houston Association are particularly concerned with the potential impacts on the improvements scheduled for I-10. For this reason, and in order to protect the broader interests of regional mobility and economic security, we ask the County to intervene in the NRDC lawsuit. We hope that intervention by the County will help ensure that local interests are adequately represented and prevent the "federalization" of emission control decisions that should be made locally. Thank you for your consideration.

Sincerely,

Roger H. Hord

President & CEO

Cc: WHA Board of Directors & WHA Membership

Why Did Environmental Groups File Suit?

Environmental Defense, the Sierra Club, GHASP and several individuals filed a suit challenging the amount of emissions the EPA has indicated mobile sources must reduce in order to have a conforming plan.

The West Houston Association views this suit as an attempt by environmental groups to control what projects are planned and built in the Houston eight county planning area and by extension the nature of growth in the area.

On March 21, 2001, the West Houston Association Board of Directors authorized the our intervention in this lawsuit. We believe with their suit, ED and others are attempting to interject their bias transportation priorities and no-growth philosophy into the mobility planning and implementation process, superceding the normal public participation process. The Board is concerned that Houston is at risk of losing or suffering significant delay of essential transportation projects like Interstate 10, Grand Parkway and West Park Toll Road.

Without a voice in any settlement or litigation, this risk is greatly magnified.

RE:	Summary of Environmental Defense, et. al. v. EPA Settlement Agreement

As many of you know, Environmental Defense, Sierra Club and local environmental plaintiffs brought suit against the U.S. Environmental Protection Agency (EPA) in an effort to compel EPA to require draconian reductions in air emissions from motor vehicles in the 8-county Houston-Galveston region and to prevent the construction of road and highway projects opposed by the plaintiff environmental organizations. The Fort Bend Economic Development Council, West Houston Association, and North Houston Association filed motions to intervene in this lawsuit so that local interests would be represented, and they were soon followed by the Houston-Galveston Area Council (HGAC), Harris County, and Fort Bend County, which also sought to intervene to protect the interests of local citizens. Settlement negotiations ensued, and an agreement in principle was reached yesterday, May 9, 2001. While the terms of the settlement are still being finalized, EPA has already issued a guidance memorandum to accompany the settlement. EPA also issued a letter late yesterday disapproving the 195 ton motor vehicle emissions budget (MVEB) that was at the center of the lawsuit, and this disapproval, under the terms of the EPA guidance memorandum, will prevent a conformity lapse which otherwise would have occurred on May 12, 2001.

A copy of the agreement in principle is attached to this memorandum. The terms of the proposed settlement are a vast improvement over the settlement terms originally proposed by the environmental plaintiffs on April 6, 2001. This improvement is largely due to the pressure of intervening parties and a flood of phone calls and letters to EPA, the Federal Highway Administration (FHWA), and elected officials. The originally proposed settlement terms included a 151 ton MVEB to be applicable in June 2002, an even lower MVEB to be applicable in 2007 (perhaps as low as 125 tons, which would preclude virtually all new road construction), the halting of 270 road projects contained in the regional transportation improvement plan, the adoption of policies to encourage high density development, and the aggressive development of 9 rail projects. In contrast, the current settlement terms do not: require a lower motor vehicle emissions budget of 125 tons; halt specific road projects; require construction of plaintiff-selected rail projects, or impose any land use controls. Additionally, the applicable motor vehicle emissions budget is a more appropriate number (156.6 instead of 151), which should allow many mobility improvement projects to proceed as previously planned.

Despite the improvements described above, the settlement is far from perfect. HGAC may be forced to drop currently planned projects from the regional transportation improvement plan to get below the 156.6 ton limit before June 2002. The settlement could also limit future flexibility in interpreting the Clean Air Act and/or EPA’s conformity rules. Finally, the lawsuit settlement could encourage additional lawsuits.

The following is a summary of the major provisions of the settlement agreement.

1. EPA is required to issue a guidance document interpreting its conformity timing requirements. The document will state that the 18-month time period during which a new conformity demonstration must be submitted and approved (which started to run when TNRCC submitted the November 1999 MVEB of 195 tons) stopped when EPA disapproved the 195 ton MVEB. Additionally, the guidance document will require HGAC to demonstrate conformity to the new 156.6 MVEB by June 2002. The settlement agreement binds the environmental plaintiffs to these timing interpretations with respect to the current lawsuit (challenging the 195 ton MVEB) and the lawsuit that they have threatened to file to challenge the 283 ton MVEB that is now in effect and the transportation improvement plan that conforms to that budget.

2. EPA agrees to disapprove the 195 ton MVEB (which they did on May 9, 2001) and agrees to allow the 283 ton MVEB to remain in effect until June 20, 2002. The Texas Natural Resource Conversation Commission (TNRCC) agrees to submit a 156.6 ton MVEB as a 2007 rate-of-progress budget, in addition to submitting it as an attainment budget. [This allows the plaintiffs to file a lawsuit challenging the overall ozone attainment plan (the "SIP") without losing the benefit of the 156.6 MVEB.] Finally, EPA agrees to approve the rate-of-progress MVEB submitted by TNRCC and to not approve the SIP in October 2001 unless TNRCC submits the 156.6 ton MVEB as a 2007 rate-of-progress budget.

3. All parties agree that HGAC must demonstrate conformity before June 20, 2002 or Houston will fall into conformity lapse (i.e., the 283 ton MVEB will expire, federal highway funds will be cut-off, and regionally significant road and highway projects may not proceed). Additionally, HGAC must demonstrate that the then-current transportation improvement plan conforms to all 156.6 ton MVEB and to any subsequently submitted MVEBs determined to be adequate by EPA prior to such conformity determination (i.e., if TNRCC submits a lower MVEB, then the lower budget will apply subsequent to its submittal).

4. TNRCC agrees to revise the 156.6 ton MVEB if any additional on-road motor vehicle control measures are added to the SIP, or if the agency submits additional on-road motor vehicle control measures to fulfill enforceable emission reduction commitments in the SIP.

5. The environmental plaintiffs are not limited in their ability to file additional lawsuits challenging the 283 ton conformity determination, any of HGAC’s future conformity determinations (including the one relating to the 156.6 MVEB that is due by June 20, 2002), or any road or highway project that they don’t like. The parties also agree to engage in further discussions regarding transportation and transit strategies to reduce motor vehicle emissions.

6. The environmental plaintiffs agree to dismiss the lawsuit after EPA, HGAC, and TNRCC have performed the tasks described above, and EPA agrees that the plaintiffs are eligible for attorney’s fees (payable from the U.S. Treasury).

As mentioned above, EPA has already issued the guidance document required by the proposed settlement and has already issued its disapproval of the 195 ton MVEB. The environmental plaintiffs have agreed that there will be no conformity lapse in the Houston-Galveston region before June 2002. It will now be up to HGAC to develop a new transportation improvement plan that conforms to the 156.6 ton MVEB by the June 2002 deadline. Finally, all parties interested in regional mobility will need to remain prepared to defend additional lawsuits that the environmental plaintiffs may file.

Please let us know if you have any questions with respect to these matters.

Final Draft Agreement in Principle to Settle 5th Cir. MVEB litigation

May 9, 2001, 11 am

1. EPA issued written guidance construing the application of the 40 CFR 93.104(e) with respect to determining when a conformity determination is required. FHWA issued a letter concurring with EPA's guidance construing the rule. Such Guidance and FHWA's letter is attached hereto, and incorporated herein. Petitioners support this interpretation in this case, except that petitioners only support EPA's interpretation of the application of §93.120(a) in this case and in the case of notice of intent to sue mentioned in paragraph 6 of this agreement. Petitioners support of the guidance does not waive or in any way compromise any of the arguments set forth in the Petitioners’ intent to sue identified in paragraph 6 of this settlement agreement.

2. The parties agree that dismissal of this litigation is contingent, in part, upon the performance of the following actions:

1) EPA has determined that the 195 ton per day ("t/d") motor vehicle emission budget ("MVEB") for NOx and a parallel MVEB for VOC are not adequate pursuant to 40 CFR §93.118(e);

2) the submission by Texas of an MVEB for NOx as part of its rate of progress("ROP") SIP that limits NOx emissions in 2007 to 156.6 t/d, and that allows emissions estimates used to demonstrate conformity to be derived using the assumptions used to develop this emissions budget for the attainment SIP pursuant to §93.122(a)(6); and

3) EPA's approval of or determination of adequacy for the MVEB submitted by Texas as part of the Texas ROP SIP.

To accomplish this result, EPA has determined the 195 ton per day NOx MVEB and the MVEB for VOC submitted together as part of the November 1999 SIP revision are, taken together, not adequate because the Houston Galveston area will not be able to demonstrate attainment with these budgets. EPA has issued a letter to that effect that will be immediately effective upon signature. The Texas Natural Resource Conservation Commission has proposed to adopt a 156.6 t/d MVEB for NOx and a parallel MVEB for VOC as part of its ROP SIP, and agrees to submit such MVEBs to EPA in June 2001.

EPA anticipates that under the terms of a separate consent agreement prescribing time frames for agency actions, NRDC v. Whitman, D.C. District No.99-2976(CKK), EPA will take final action on a SIP revision containing both rate of progress ("ROP") and attainment MVEBs by October 15,2001. EPA agrees that it will not take action on the attainment demonstration SIP until TNRCC adopts and submits MVEBs for NOx and VOC as part of its ROP SIP.

3. The parties agree that dismissal of this litigation depends, in part, on the schedule for the development of a metropolitan transportation plan and transportation improvement program ("TIP") that conforms to the motor vehicle emissions reductions required by the proposed Texas SIP. Accordingly, EPA has issued regulatory guidance attached as Exhibit -interpreting 40 CFR §93.104(e) of the current conformity rule and the corresponding provision of the Texas conformity SIP, 30 Texas Administrative Code §114.260, as requiring that the conformity status of the metropolitan transportation plan and TIP will lapse 18 months after the December 2000 submission of the ROP SIP on June 20, 2002, if a new determination of conformity is not made prior thereto. EPA interprets the rule as requiring that such conformity determination shall be made with respect to all the MVEBs in the applicable implementation plan as revised by the SIP revision to be acted upon by EPA in October 2001, and any submitted MVEBs determined to be adequate by EPA prior to such conformity determination. EPA agrees to request the written concurrence of the Texas Natural Resource Conservation Commission to this interpretation of the rule. The Houston-Galveston Area Council has indicated in correspondence to EPA that it intends to complete a new conformity analysis against all motor vehicle emissions budgets in the applicable implementation plan as revised by EPA's action in October 2001, no later than June 20, 2002, or 8 months after EPA signs a notice approving the attainment SIP, whichever is later.

4. EPA agrees not to approve the attainment SIP unless Texas includes in the SIP revision scheduled for submission in June 2001 an enforceable commitment stating that:

SIP Text: If the Commission adopts additional control measures to reduce on-road motor vehicle emissions as a SIP revision, the Commission will concurrently revise the motor vehicle emissions, budget(s) for the attainment SIP and submit such revised budget(s) to EPA as a revision to the attainment SIP.

5. EPA agrees to repropose approval of the Houston attainment demonstration SIP to clarify that EPA proposes to approve the budgets in the SIP only until and if the State submits any control measures to fulfill its enforceable commitments that affect the budgets, along with new budgets that reflect those measures, and EPA finds these budgets adequate. Once EPA finds these budgets adequate, they will become the applicable budgets for future conformity determinations until replaced.

6. All parties specifically agree that a notice of intent to sue has been issued by the environmental plaintiffs dated June 29, 2000, regarding conformity under the Clean Air Act of the Metropolitan transportation Plan ("MTP") and Transportation Improvement Program ("TIP") adopted by the Houston-Galveston Area Council in April 2000 and approved by the US Department of Transportation in April 28, 2000. All parties agree that nothing in this settlement agreement is intended to settle or compromise the ability of any party to seek or oppose relief with respect to the claims set forth in such notice or any other claims related to the adoption of such MTP and TIP. Further, ongoing discussions regarding this notice of intent to sue will continue regarding transportation and transit strategies available to reduce motor vehicle emissions in the Houston-Galveston area.

7. Petitioners agree that the 5th Circuit challenge be dismissed with prejudice upon performance of the various commitments undertaken in paragraphs 1-4 hereof, including but not limited to obtaining the written concurrence from TNRCC pursuant to paragraph 3, provided that no final conformity determination with respect to a metropolitan transportation plan or TIP has been made by us DOT in reliance upon the MVEB declared to be inadequate. Following dismissal of Petitioners' claims on the merits, the court shall retain jurisdiction only to resolve any dispute between the parties regarding an award of appropriate costs of litigation, including reasonable attorneys fees, pursuant to CAA §307(f).

8. EPA agrees petitioners are eligible for an award of the costs of litigation as authorized by CAA §307(f), including reasonable attorney fees. [The settlement agreement will include an appropriate schedule governing the process for requesting, negotiating, and, if necessary litigating an application for fees. SETTLEMENT AGREEMENT LANGUAGE TO BE INSERTED IN SUBSTITUTION OF THIS SENTENCE.]

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