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We all know that the use of lead additives in gasolines has been an extremely cost effective means of improving the efficiency and performance of our automotive vehicles by permitting high compression ratios in spark ignition reciprocating engines.

It has been less costly to produce the required octane gasolines by means of lead additives than by refining technology. Why now are the lead additives suddenly undesirable? Let me try to put this in perspective.

This has not been a sudden realization, but a growing awareness on the part of many that at some point in time the lead additives in motor vehicle fuels would have to be eliminated.

Our growing population coupled with the rising per capita ownership and use of automotive vehicles has caused more and more stringent emission requirements to be set by the Department of Health, Education, and Welfare.

In addition, data shows that blood levels of lead in traffic policemen and garage mechanics are significantly higher than the average blood level of lead and too close to the values at which toxic effects are observed to provide an adequate margin of safety.

These data, coupled with the uncertainty as to the effects of longterm changes in these levels have led to considerable concern with respect to the health aspects of lead entering the atmosphere from motor vehicle fuels.

There is an increasing awareness on the part of the public of the state of the environment and the desire to improve its quality. These forces coupled with the auto industry's general statements that it will be extremely difficult if not impossible to meet the 1975 automotive emission standards with a leaded fuel come together in such a way to make it desirable to begin decreasing the lead content in gasolines immediately.

The Commerce Technical Advisory Board recently convened a panel at the request of the Department of Health, Education, and Welfare and the Cabinet Committee on Environment to study the relationship between automotive fuels and air pollution.

It issued a preliminary report which called for general availability of low lead fuel by the end of calendar year 1972 and general availability of unleaded fuel by July 1, 1974.

This report concluded that a low or unleaded fuel would be more costly than fully leaded fuel, and thus, by the fall of 1974, we must have universally available unleaded gasoline at a price that will not preclude its acceptance.

This conclusion clearly indicates that one must impose a price penalty on the lead additive in order to make the lower lead or clear fuels more attractive to the consumer.

The automotive companies have indicated that they will begin marketing this fall automobiles which will not require more than a 91 octane fuel. This fuel can be full leaded, low lead, or unleaded. Manufacturers will specify if their products require a specific lead content fuel. They have also announced that they intend to continue manufacturing engines of this octane requirement. This means that then we will be adding to our automotive population at a rate of about 10 percent a year, vehicles which can operate on the newer fuels.

All octane numbers are Research Octane Numbers.

In addition, perhaps 20 to 30 percent of the existing automotive population can also operate satisfactorily on 91 RON fuel. And so while there is no absolute requirement for widespread availability of a clear fuel until the summer of 1974 it would be imprudent not to start moving toward that direction immediately.

There are a number of reasons why the Federal Government should take action now and not delay. Any one of these, by itself, is not enough to cause such a change in direction, but taken altogether constitute a conclusive case for imposing a tax on the lead additive to motor fuels.

Let me briefly summarize them:

(1) One of these already mentioned, is that the imposition of the tax would exert strong pressures on oil companies to convert refining capacities and change marketing practices so they can produce and market adequate quantities of the new fuels.

Since there is at least a 2-year time span from a decision to go on new refinery capacity, and some months before that in preliminary design phases, one must start the wheels turning now in order that we are not caught in a costly construction rush 3 or 4 years from now.

A recently executed economic analysis indicates that the proposed tax of $4.25 per pound of additive is an appropriate incentive to induce production of 91 RON fuel on both a short- and long-term basis.

(2) Some automobile manufacturers have already chosen emission control technology for the 1974 model year cars. Others will make the decision shortly. It would be extremely useful to have firm Federal positions both on the lead tax and fuel additive regulations as soon as possible in order to allow industry to make these decisions with confidence and minimum cost to society.

(3) There are those who indicate that certain thermal reactor devices can operate on a fully leaded fuel. Our investigations indicate that the behavior of some of these devices is satisfactory on fully leaded fuels under some conditions. However, they do not meet the necessary auto manufacturers test prior to going into general service. If the way in which automotive vehicles were used and maintained were controlled, then there would be much more flexibility in choice of technology for emission control. However, we cannot and should not dictate the condition of operation of automobiles. In addition, the reactor devices that work on a fully leaded fuel work significantly better and can be made from cheaper materials when operated on unleaded fuels.

In any case it is unlikely that reactors will meet the proposed 1980 research goals.

(4) The goals of several of the companies have been publicly stated with regard to emission control devices for the 1975 model year. They are likely to use catalysts with 100,000-mile life in ordinary passenger service with no special maintenance requirements.

(5) The industry has also indicated that it will begin marketing cars with advanced emission control devices for testing in fleet services as soon as possible, in order to get larger-scale experience in general use. This testing will require widespread availability of unleaded fuel.

(6) There is evidence that decreasing lead content in motor fuel would decrease hydrocarbon emissions. Clear fuel would probably reduce hydrocarbon emissions from existing properly maintained automotive

vehicles between 7 and 20 percent. This reduction would also hold for the new vehicles that would be marketed requiring an unleaded fuel.

(7) Recent data obtained by an auto manufacturer indicates that lead particles account for at least 39 percent ? of the particulate matter in automotive exhaust and under some conditions account for perhaps as much as 90 percent. Decreasing or eliminating the lead content in fuel would undoubtedly reduce the amount of particulate matter entering the atmosphere.

This reduction is significant because of the health aspects of ingested particles of any composition and because information is becoming available that indicates these aerosols serve as nuclei for smog formation.

(8) It is undeniable that blood lead levels in people exposed to heavy auto traffic are significantly higher than average.

Although we do not know positively the cause and effect relationship between automotive exhaust produced lead particles and health, we do know that lead levels in blood are coming much too close to the level at which lead poisoning appears in some people.

Since we do not know what the long-term effects of prolonged increased blood levels of lead are, it is not prudent to wait until positive evidence develops.

(9) It is true that lower lead or zero lead fuel will be more expensive than the present leaded fuels, and if the industry were required to suddenly go from present gasolines to unleaded gasolines at the same octane quality, the investments required and thus the cost to the consumer would be prohibitive.

However, no such move is intended. In fact the auto industry is making possible a large new market for low octane fuel. The pool octane value of some companies in some parts of the country is already at 91. The national average is between 88 and 89.

This means that some companies can market limited amounts of unleaded 91 octane fuel changing little except their marketing strategies.

Since a half gram of lead produces about three octane numbers, those companies with an 88 octane pool can market a 91 octane fuel containing a half gram of lead with no change in their refinery operations.

Companies with a high pool octane number (91) such as Union Oil in California, can produce 93 octane gas with only a half gram of lead in it at little or no increase in price.

The recent Commerce Technical Advisory Board Panel on Automotive Fuels and Air Pollution estimated that a reasonable transition to low lead and eventually unleaded fuels should not cost the refiner more than the order of 172 cents per gallon to produce. This means a maximum of the order $15 to $20 per year for the average driver with no credit for reduced maintenance cost.

The users of these new fuels should have reduced maintenance costs for operating their vehicles. The lower cost will show up in longer life for spark plugs and longer life for exhaust system components, and for longer intervals between oil changes.

There is evidence that indicates that on balance there will be no or little or no net cost to the automotive vehicle owner resulting from a slightly more expensive unleaded fuel.

Depends upon definition of particulate and measuring technique.

(10) Another reason for encouraging the use of low lead or unleaded fuel by as many new vehicles as possible is that it appears that the lifetime characteristics of vehicles operated on unleaded fuels are more desirable from an emissions point of view than those vehicles operated on a fully leaded basis.

This difference is not very apparent in the early stages of automotive vehicle life but is more important in the later years when vehicle performance usually tends to degrade.

(11) The imposition of a lead tax at this time may have other benefits whose effects are difficult to estimate. As soon as the price of lead additive rises, all refinery operators will examine the economies of their gasoline production, trading off the price for lead against unused octanemaking capacity where it is available.

As a result, a number of companies might quickly reduce their lead content and produce gasolines of suitable quality that can satisfy a large percentage of the existing automotive population.

For example, the Union Oil Co. of California is now marketing a 93-octane gasoline containing a half gram of lead per gallon. Such a fuel can satisfy 60-50 percent of the existing automotive vehicles in the State of California.

If a number of major companies followed such a pattern on a national basis, one might very rapidly have on the market a lower lead fuel which could satisfy perhaps 50 percent of the existing automotive vehicles.

Benefits of even a 10-percent hydrocarbon emission reduction that would accrue from 50 percent of our vehicles and the resulting reduction of particulate emission are benefits not to be ignored.

If the tax worked in this way it would do exactly what it is intended to do, that is, reduce markedly and very rapidly' the lead content in fuels and thus the lead entering the atmosphere.

In addition, it would not eliminate the leaded fuels that must be available for those vehicles in the automotive population that must have the high octane fuels obtainable only by the lead addition.

The number of people paying lead tax would decrease very rapidly and the revenue derived from this tax would very rapidly approach a small quantity and eventually disappear.

The above listing of benefits is substantial and cannot be ignored.

I would also like to speak to several other points related to removing lead from gasoline as there has been considerable confusion on them.

There has been some publicity that taking the lead out of gasoline can increase smog. It is true that if one took the lead out of gasoline and kept the same octane values, one would have to increase the aromatic content in gasolines considerably. There is data that indicates higher aromatic content fuels can produce more smog. However, it is intended to go to unleaded fuel of 91 octane number, and not 94 and 100, and this does not require significant amounts of aromatics to be added.

In addition, control devices contemplated for cars in the near future are such that they selectively eliminate the hy«Irocarbons that result from the high aromaticity components so that what comes out of the exhaust is independent of the aromatic content of what goes in.

However, this is not true for automotive vehicles presently on the road. Therefore, it is not recommended that all cars now operating on a high octane fuel move immediately to unleaded high octane but that they continue using fuels with some lead in them.

There has been also considerable publicity that the use of unleaded gasoline will lead to the rapid deterioration of automobile engines.

It is true that some existing engines could be adversely affected if operated continuously on unleaded fuels in some kinds of service. The more severe the service, the more likely there is a problem. That is prolonged high-speed, high-power operation such as pulling trailers up long hills could lead to difficulties. However, the various manufacturers differ on the extent of this difficulty. Some indicate there is no problem at all and others indicate there is. I suspect that if unleaded fuels were to become widely available, the manufacturers would provide information that would allow individual consumers to make judgments as to how often they should use a gasoline with some lead in it if this were necessary.

Since we do not anticipate calling for outright ban on lead, but a gradual transition, we feel that all existing automotive vehicles could obtain low lead gasoline frequently enough to prevent any premature engine failures. Even if they continuously used low-level (3 gram) gasoline, this would represent an 80-percent reduction in lead use.

Mr. Chairman, we must act now, we cannot afford spasmodic and disorderly approaches to our environmental problem. We must begin to plan our actions to avoid unnecessary disruptions of our increasingly complex society and yet accomplish the job. The lead tax proposal before you now does just that.

I urge your support.

Thank you.

The CHAIRMAN. Thank you, Dr. Heffner, for your statement. We thank all of you for your very fine statements. Secretary Kennedy, you suggested that you had some draft language of minor changes.

Secretary KENNEDY. Yes, sir; we have.

The CHAIRMAN. Without objection, that will be included at this point in the record.

(The draft language referred to follows:) A BILL To amend the Internal Revenue Code of 1954 to accelerate the collection of estate and gift taxes,

and for other purposes Be it enacted by the Senate and the House of Representatives of the United States of America in Congress assembled, SECTION 1. SHORT TITLE ETC.

(a) SHORT TITLE.—This Act may be cited as the "Estate and Gift Tax Amendments Act of 1970”.

(b) Wherever in this Act an amendment is expressed in terms of an amendment to a section or other provision, the reference shall be considered to be made to a section or other provision of the Internal Revenue Code of 1954. SEC. 2. GIFT TAX. (a) AMENDMENTS TO SUBCHAPTER A OF CHAPTER 12.(1) Section 2501.

(A) Paragraph (1) of subsection (a) of section 2501 (relating to imposi

tion of tax) is amended to read as follows: “(1) GENERAL RULE.—For the first calendar quarter of calendar year 1971 and each calendar quarter thereafter a tax, computed as provided in section 2502, is hereby imposed on the transfer of property by gift during such calendar quarter by any individual, resident or nonresident."

(B) Paragraph (4) of such subsection is amended by deleting calendar year” and inserting in lieu thereof "calendar quarter”. (2) Section 2502.

(A) All of subsection (a) of section 2502 before the rate schedule is amended to read as follows:

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