The EPA this year rolled out new rules to cut on-road diesel emissions by over 90 percent by 2007. The off-road rules, drafted jointly by the EPA and the White House Office of Management and Budget (OMB), will slash off-road emissions by similar levels, according to an EPA presentation given in May.

Studies show that the new rules could prevent about 8,500 premature deaths a year and reduce asthma and other respiratory ailments linked with human exposure to air particles.

"This may be the most important positive rulemaking on air pollution that the Bush administration undertakes this term," said Paul Billings, a policy expert at the American Lung Association.

"These (off-road vehicles) are the last big part of the inventory that is under-regulated," Billings said.

The rules could affect one million vehicles and conveyances that operate off-road, including bulldozers, tractors, portable generators, forklifts and airport service equipment, according to the EPA presentation.

EPA could send the rules to the OMB for approval in January, and a final rule could come in 2004, environmentalists said.

But the EPA has signaled that it is considering emissions trading measures which could weaken the impact of the rules, environmentalists said.

The EPA is weighing whether to include schemes to use averaging or banking, which could allow vehicle companies to avoid using cleaner off-road engines by using credits gained by improving their on-road engines, they said.

"So far what EPA plans to do about emissions trading is a wild-card," said Frank O'Donnell with the Clean Air Trust. "We want to make sure that the regulations aren't riddled with loopholes."

Heavy equipment to be affected by the rules make up less than 5 percent of the U.S. vehicle fleet, but account for a disproportionately higher 30 percent of sulfur emissions. Urban areas with heavy road construction like Atlanta and Houston are especially plagued by dirty exhaust from those sources.

The new rules would require fuel refiners to produce diesel with a sulfur content of just 15 parts per million (ppm), down from about 3,000 ppm currently, starting in 2008. It would also make manufacturers reconfigure diesel engines starting in 2009 with more effective control devices to remove particles from exhaust.

High sulfur levels now contained in fuel can clog pollution-reduction devices in diesel engines and render them ineffective.

The American Petroleum Institute, representing industry interests, has lobbied the EPA for a phased in approach that would not reach the 15 ppm level until 2010, with reductions starting in 2007.

The OMB hosted a meeting with industry groups in late November, which included OMB administrator John Graham and officials from API and large refiners like Conoco Phillips, Marathon Ashland Oil Co. and Shell Oil Co.

Environmentalists say they are upbeat on the new diesel rules, but are reserving judgment on the administration's proposal.

"They deserve credit, but it has to be tempered by the fact that they're obliged to do this" by the Clean Air Act, said John Walke, an attorney for the Natural Resources Defense Council.