New restrictions on hazardous air pollution from automobile emissions and fuels could improve breathing conditions in the Washington region and other major cities -- and are now the subject of negotiations between the federal government and environmental groups.

The Sierra Club and U.S. Public Interest Research Group sued the U.S. Environmental Protection Agency last year in federal court in Washington, saying the agency had promised to write rules to control hazardous air pollutants from motor vehicles no later than July 2003 and had failed to do so -- in violation of the Clean Air Act.

Bush administration lawyers urged a federal judge to dismiss the lawsuit on grounds that EPA Administrator Stephen L. Johnson has the discretion not to issue such rules. But Judge Reggie B. Walton of the U.S. District Court for the District of Columbia ruled in February that EPA was wrong. He said the agency's own regulations explicitly state that the administrator "shall propose" such rules by the 2003 deadline. He ordered that the lawsuit go forward.

Then, at a hearing late last month, lawyers for the EPA and Sierra Club told Walton they are now working to resolve the dispute over the vehicle emissions rules. The judge agreed to give them until June 24 to hammer out a deal, which several close to the case say now focuses on when EPA would begin issuing rules to control air pollution from automobiles.

"The parties are hopeful that this case can be settled, and are requesting that litigation in this matter be stayed until June 24 to allow the parties to focus on settlement discussions," the Justice Department and Sierra Club attorneys wrote in a joint statement to the court.

James Pew, lead attorney for the Sierra Club, said that EPA under the Bush administration wanted to avoid considering new pollution-control requirements, but that they "don't have a leg to stand on anymore" since Walton's February ruling.

"It's been a series of twists and turns in which they've tried to avoid doing anything at all," Pew said. "Now they can do it sooner or not so sooner. It's just a question of when now."

Chet Thompson, associate deputy general counsel for EPA, confirmed that settlement talks are focused on the timing for EPA to consider and review new rules. But he stressed that doesn't automatically mean EPA will launch a new set of strict curbs on hazardous air pollutants. The separate rulemaking process will help EPA determine what's necessary to protect public health, so it's possible the changes will be minor.

"Yes, it's not a matter of if, but when," he said. "We are negotiating the schedule under which we will do a rulemaking."

A deal in the case could likely have a major impact on Washington area air. The District has repeatedly been among a handful of cities with the worst smog in the country. Pew said EPA has color-coded maps that illustrate the concentrations of air pollutants from vehicles in various areas. White areas have very little toxic concentration, pink areas have more, and red regions are in trouble.

"Washington, D.C. is purple-black -- as bad as it gets," Pew said. "If you live in Washington and you walk outdoors, you breathe this stuff."

According to EPA reports, motor vehicles are the leading source of hazardous air pollutants in America, releasing more than a million tons of the material each year. That includes releases of 168,000 tons of benzene, 83 tons of formaldehyde and 23,500 tons of butadiene. In 1996, EPA researchers warned of increased cancer risks for people regularly exposed to large concentrations of air toxins. The agency said it focused its study on 32 common air toxins "because they pose the greatest potential risks to public health in urban areas."

A spokesman for the Justice Department, which is representing the EPA, declined comment on the suit and settlement talks.