September 10, 1973
Page 29029
EPA REGULATION ON CATALYSTS
Mr. MUSKIE. Mr. President, a key provision of the Clean Air Act is the section – section 207 – which requires that auto manufacturers warrant the performance of their emission control systems for 5 years or 50,000 miles. This warranty is to apply except for reasonable maintenance.
In June of this year, the Environmental Protection Agency published a regulation declaring that one replacement of a catalyst during the 5-year or 50,000-mile life of an automobile would be considered reasonable maintenance. In effect, this Environmental Protection Agency regulation allowed manufacturers to impose upon the consumer a cost which has been estimated to be as high as $150 for catalyst replacements.
I did not view it as consistent with the intent of Congress that consumers should assume unreasonable expenses in maintaining their emission control systems. Therefore, I wrote to the Comptroller General requesting his opinion of this regulation. Today I received his response and that response states clearly and distinctly that:
... it is our view that replacement of the catalytic converter may not be considered reasonable maintenance so as to require that replacement be at the vehicle owner's expense. Therefore, in our opinion, the regulations allowing one replacement of the catalytic converter at the vehicle owner's expense during the warranty period is not consistent with the law and its legislative history.
Mr. President, this is an important victory for America's consumers. I ask unanimous consent that my letter and the full text of the Comptroller General's opinion be printed in the RECORD.
There being no objection,. the letter and opinion were ordered to be printed in the RECORD, as follows:
June 29, 1973.
Hon. ELMER B. STAATS,
Comptroller General of the United States,
General Accounting Office,
Washington, D.C.
DEAR MR. COMPTROLLER: The warranty provisions of the Clean Air Act are essential to effective implementation of the program.
Section 202(d) of the Clean Air Act prescribes a minimum useful life of five years or fifty thousand miles for emission control systems for light duty vehicles.
Section 207 specifies the emission control system warranty requirements, and Section 207(c) (3) states that the warranty shall include instructions for "reasonable and necessary" maintenance of the emission control system.
Thus, only "reasonable" maintenance is to be permitted for emission control systems without being covered by the 5-year or 50,000 mile warranty provision of the law.
On June 4, 1973, the Environmental Protection Agency published final regulations regarding the allowable maintenance of emission control systems on 1975 model year light duty vehicles. These regulations allow one replacement of a catalyst in the 5-year or 50,000 mile use to be considered as maintenance.
In May, the Subcommittee on Air and Water Pollution received testimony from auto manufacturers that replacement of the catalytic converters, as intended to be allowed in the EPA maintenance regulations, might cost as much as $150. In addition, the auto companies are utilizing the catalytic converters as the essential item of emission control equipment to achieve the 1975 auto emission standards. General Motors testified: "It is our assumption that the catalytic converter should be treated as much as a part of the system as the carburetor or any other part."
Because of the cost of the catalytic converter system, it appears inconsistent with the intent of the law to allow replacement of such a device to be construed as "reasonable" maintenance. The intent of the provisions of the Clean Air Act requiring that emission control systems be guaranteed for 5 years or 50,000 miles was to assure that manufacturers would introduce effective, vehicle life emission control systems and that unreasonable costs would not be imposed on the consumer to maintain a vehicle's emission control systems. This intent would appear to be violated by these regulations in that replacement of catalytic converters at the expense of the consumer at the time of replacement would be accepted as "reasonable" maintenance.
Discussing catalyst replacement before the Subcommittee on Air and Water Pollution in May of 1972, former Environmental Protection Agency Administrator William D. Ruckelshaus stated:
"In order to achieve the standard, as I have tried to state on page eight of my decision, one replacement was necessary.
"It is my belief that this ought to be paid for at the time the car is purchased. We are currently researching our authority. I am not sure that I have the authority to require this under the Act. In the event that we do, it is my feeling that the consumer is far more likely to replace the catalyst when necessary than if we leave that replacement cost up to his own discretion, or being caught in some test that requires replacement."
Subsequently I received an opinion from the EPA General Counsel's Office which concluded,
"The Administrator may, pursuant to § 206 (a), impose as a term of a manufacturer's certificate of conformity the requirement that the manufacturer provide to the ultimate or subsequent purchaser of the vehicle a replacement catalyst at no cost to the purchaser, other than any replacement cost which may be included in the vehicle's original selling price."
Thus, EPA has stated that the intent of the law is to ensure that catalyst replacement is included in the warranty provisions (by including any prospective replacement in the initial purchase price). The Environmental Protection Agency also concluded that they have authority to impose such a requirement.
I request that the General Accounting Office review the regulations, the law and legislative history to determine if this regulation is consistent with the law requiring that only "reasonable" maintenance be demanded as a condition of fulfillment of the warranty.
To avoid undue inconvenience to the auto companies in planning for implementation of 1975 standards and to clarify this matter as expeditiously as possible, I request that this interpretation be provided to me within two weeks.
Sincerely,
EDMUND S. MUSKIE, Chairman, Subcommittee on Air and Water Pollution.
COMPTROLLER GENERAL OF THE UNITED STATES,
Washington, D.C.,
September 5,1973.
Hon. EDMUND S. MUSKIE,
Chairman,
Subcommittee on Air and Water Pollution,
Committee on Public Works,
U.S. Senate.
DEAR MR. CHAIRMAN: By letter dated June 29, 1973, you requested our opinion as to whether the regulations issued on June 4, 1973, 38 F.R. 14682, by the Environmental Protection Agency (EPA) regarding catalytic converters in emission control systems for light duty vehicles are consistent with the applicable provisions of section 207 of the Clean Air Act, as amended by section 8(a) of Public Law 91-604, approved December 31, 1970, 42 U.S.C. 1857. As we earlier advised you, we found it necessary to obtain the views of the Administrator of the EPA prior to rendering an opinion. We received those views in a letter dated August 2, 1973, from EPA's Associate General Counsel, Air Quality and Radiation Division.
You state that in testimony given in May 1973 before your subcommittee, auto manufacturers stated that the catalytic converter, which was described as an essential and major item of emission control equipment to achieve the 1975 auto emission standards, might cost as much as $150 to replace. You point out that section 202(d) of the Clean Air Act, as amended, 42 U.S.C. 1857f-1(d), prescribes a minimum useful life of five years or fifty thousand miles for emission control systems for light duty vehicles. Section 207 of the Act, 42 U.S.C. 1857f-5a, specifies the emission control system warranty requirements, with subsection 207(c) (3) – 42 U.S.C. 1857f-5a (c) (3) stating that the warranty shall include such instructions for maintenance and use of the vehicle or engine as may be reasonable and necessary to assure the proper functioning of the emission control system. While you state that EPA has published final regulations regarding the allowable maintenance of emission control systems on 1975 model year light duty vehicles and that these regulations allow one replacement catalyst in the 5 year or 50,000 mile period to be considered as maintenance, it is your view that–
"Because of the cost of the catalytic converter system, it appears inconsistent with the intent of the law to allow replacement of such a device to be construed as 'reasonable' maintenance. The intent of the provisions of the Clean Air Act requiring that emission control systems be guaranteed for 5 years or 50,000 miles was to assure that manufacturers would introduce effective, vehicle life emission control systems and that unreasonable costs would not be imposed on the consumer to maintain a vehicle's emission control system. This intent would appear to be violated by these regulations in that replacement of catalytic converters at the expense of the consumer at the time of replacement would be accepted as 'reasonable' maintenance."
You state that EPA has concluded that it has the authority to impose a requirement upon the approval of a manufacturer's warranty that catalyst replacement be included in the warranty provision, the cost of which would presumably be recovered in the initial purchase price of the vehicle. It is your view that this approach is consistent with, and demanded by, the terms of the Clean Air Act and you request this Office to review the law, legislative history and regulations to determine if EPA's present regulations are consistent with the statutory provisions requiring that only reasonable maintenance be demanded as a condition of fulfillment of the warranty.
As noted, section 207(a) creates a defects warranty that requires the manufacturer to warrant that each new vehicle or engine is designed, built, and equipped in conformity with applicable regulations at the time of sale and that each is free from defects in materials and workmanship which will cause such vehicle or engine to fail to conform with applicable regulations for its useful life of 5 years or 50,000 miles. Section 207(b) creates, in effect, a performance warranty which comes into effect once the Administrator of EPA determines that facilities and equipment are available to carry out test methods and procedures to assure that the vehicle or engine are performing properly. That warranty is required to provide that if the vehicle is maintained and operated in accordance with the manufacturer's instructions issued pursuant to subsection 207(c) (3), and it fails to conform during its useful life to the applicable regulations and if the ultimate purchaser or any subsequent purchaser has to bear any penalty or other sanction under Federal or State law, the manufacturer shall remedy such nonconformity at its own cost.
At this point we might note that EPA's Associate General Counsel informs us that the agency's initial proposal – requiring, in effect, incorporation of the replacement cost into the purchase price of the vehicle – was to be a condition of approval of a manufacturer's proposed maintenance and was not intended to be incorporated into either the subsection (a) defects warranty or the subsection (b) performance warranty.
The Associate General Counsel advises that the preamble to the proposed regulations, which raised the issue of requiring manufacturers to warrant the replacement of the catalysts to the owner of the motor vehicle, would have resulted in the incorporation of the replacement cost into the purchase price of the vehicle. It was thought that if the replacement had already been paid for, the vehicle owner would have been more likely to have the part replaced. He notes that the proposal was not principally designed as a consumer protection measure but to help assure replacement. As to the reason the proposal was not implemented, he explains:
"This proposal was met with almost universally adverse comments. Problems cited were the windfall benefit which would accrue to the manufacturers for replacements paid for but not made, the administrative problems involved in the reimbursement of vehicle owners or dealers for replacements, and most importantly, the expected 'tying' effect to the manufacturers' dealers and parts for the replacements, thereby cutting out independent parts manufacturers and garages. These comments are still on file, of course, and I shall be happy to make them available to you if you wish."
The Associate General Counsel further states that while EPA does not disagree that section 207(c) (3) of the Act is intended in part to restrict emission system maintenance required by the manufacturer to that which is reasonable and that in reviewing recommended maintenance instructions the costs associated with maintenance items are considered in determining reasonableness, it appears that replacement cost of the catalysts – a part of the total emission system – will be visited upon the vehicle owner at some time. He points out that the replacement cost is not expected by the agency to differ whether it is included in the original vehicle purchase price or whether it is paid at the time of replacement.
Thus, due primarily to economic considerations EPA determined that its original proposal was not feasible. Accordingly, although the agency apparently considers that it has sufficient authority to require the manufacturers to include, in effect, the replacement cost of catalytic converters in the purchase price of their vehicles, it determined that it was not required by the law to do so and that for reasons of economic policy it was not prudent to institute such a requirement. Rather, it determined it could accomplish its overall responsibilities under the Clean Air Act through other means. The Associate General Counsel explains:
"By not adopting a requirement that manufacturers cover by warranty the replacement of the catalytic converter, the Agency has had to place greater reliance upon the interest in air pollution control of the motor vehicle owning public, and upon the development of emissions inspection and testing programs by States and localities. The latter activity, which is clearly contemplated by both § § 110 and 210 of the Clean Air Act, will presumably be utilized by the States and localities where the greatest motor vehicle pollution problems exist. The Agency believes that vehicle owners subject to these programs will be forced to make the necessary replacement, while those in less urbanized areas may not, which makes sense both from air quality and economic standpoints."
EPA's position was further set forth in the introduction to the final regulations on the matter as follows:
"The provision to require warning devices to alert the vehicle operator to the need for EGR system and catalytic converter maintenance has been included in response to comments received on means of inducing vehicle owners to perform maintenance. Comments had been requested on this issue of EPA's requiring that manufacturers warrant the cost of catalytic converter and EGR system replacement. Many comments received were opposed to warranty because its application would be anticompetitive and difficult to administer.
"Also, the loss of a vehicle and the inconvenience of bringing it to a dealer were considered to far outweigh the prepayment incentive and therefore it was argued that the recall rate would be low.
No comments opposed warning devices and some groups called them the best hope for performance of maintenance. Several other groups commented that warning devices could complement the implementation of State inspection programs by providing an easy means to determine whether EGR systems and catalytic converters were functioning. Based upon these comments and its further assessment of the relative practicability of warning devices and warranties, EPA has determined that warning devices provide the best incentive at this time for the performance of maintenance on EGR systems and catalytic converters."
"Under the regulations the catalytic converter may be serviced once during 50,000 miles if the vehicle is equipped with a warning device that will alert the vehicle operator to the need for such maintenance; the signal shall be activated either at a specified interval or upon component failure. There are no unscheduled maintenance provisions for catalytic converters in addition to the one allowable scheduled or unscheduled servicing point. The reason for not allowing an additional unscheduled servicing of catalytic converters is that the cost of such servicing is expected to be high, and it is unlikely, since there would probably be no adverse driveability as a result of converter malfunction or failure, that owners would absorb the cost of replacement more than once during 50,000 miles." 38 F.R. 14683 (June 4, 1973)
The regulations issued on June 4, 1973, revised section 85.075-6 of part 85, title 40 of the Code of Federal Regulations as applicable to 1975 model year light duty vehicles. New subsection (a) (4) thereof provides:
"(4) The catalytic converter may be serviced once during 50,000 miles if an audible and/or visible signal approved by the Administrator alerts the vehicle operator to the need for maintenance. The signal may be activated either by component failure or need for maintenance at a scheduled point." 38 F.R. 14685 (June 4, 1973)
The major issue, as framed in your letter, is whether the replacement of the converter at an expense to the consumer of up to $150 at the time of replacement – if necessary – can be considered as "reasonable and necessary" maintenance in view of the provisions of section 202 and section 207(a) and (c) (3).
As indicated above, the pertinent provisions of law (sections 202 and 207 of the Clean Air Act, as amended) in effect require the manufacturer to warrant the vehicle and engine, including the emission control system, so that the prescribed emission standards shall be met for five years or 50,000 miles, whichever comes first, except that the manufacturer may require the owner to use and maintain the vehicle and engine as may be reasonable and necessary to assure the proper functioning of the emission system. The pertinent legislative history is contained in the conference committee report, House Report 91-1783, dated December 17, 1970, in the accompanying Statement of the Managers on the Part of the House, at pp. 50-51. In pertinent part it is stated therein:
"The House bill required manufacturers to warrant that vehicles or engines they produce are of substantially the same construction as the prototype vehicle with respect to which the certificate of conformity was issued. The Senate amendment required (effective 90 days after the Administrator establishes feasible testing methods and procedures) that manufacturers warrant that vehicles and engines will conform with applicable emission standards throughout their useful life (set at 5 years or 50,000 miles) if maintenance and certain other requirements are met.
"The Senate amendment also authorized the Administrator, if he determined that any class or category of vehicles or engines did not conform with applicable emission standards, to require manufacturers to notify purchasers of such nonconformity. Moreover, if a manufacturer discovered such nonconformity during the term of any warranty required under the Senate amendment, he was required to notify purchasers of the nonconformity and to remedy such nonconformity at no cost to the owner. "The conference substitute adopts substantially the provisions of the House bill relating to prototype and production line testing and the provisions of the Senate amendment relating to compliance after sale and warranty.
"The provision for warranty follows the Senate bill except in addition to establishing test procedures, the Administrator must find that inspection facilities or equipment are available to enforce individual vehicle compliance. Also a warranty will not become effective for a vehicle unless failure to comply with a standard subjects the purchaser to sanctions. Proper operation and maintenance are a precondition to the manufacturer's obligation. In addition to the performance warranty, the conference substitute calls for a defect warranty for materials and workmanship.
"If the Administrator determines (on the basis of inspections or studies) that a substantial number of any class of vehicles of engines, although properly maintained and used, do not meet the emission standards during the useful life of such vehicles or engines, he shall notify the manufacturer of such nonconformity, and he shall require the manufacturer to submit a plan for remedying such nonconformity. In the case of properly used and maintained vehicles and engines, this is to be done at the expense of the manufacturer. If a manufacturer disagrees with such determination the Administrator shall afford the manufacturer and other interested persons an opportunity to present their views at a public hearing. Unless, upon such hearings, the Administrator withdraws such determination, he shall, within 60 days after completion of the hearing, order the manufacturer to notify purchasers. The Administrator shall prescribe regulations concerning notification procedure. Any cost obligation incurred by any dealer is to be borne by the manufacturer and transfer of such cost obligation through franchise or any agreements from a manufacturer to a dealer is prohibited.
"If a manufacturer's advertising makes any statement respecting the cost or value of emission control devices or systems, such statement must set forth the cost or value attributed to such devices or systems by the Secretary of Labor (through the Bureau of Labor Statistics). The manufacturer shall furnish such written instructions for maintenance and use of any vehicles and engines by ultimate purchasers as are necessary to assure proper functioning of emission control devices or systems."
Considering the language of the statutory provisions in question and the pertinent legislative history, it appears that the Congress intended that the cost of keeping the vehicle and engine, including the emission control system, in conformance with applicable emission standards during the useful life (five years or 50,000 miles) of the vehicle and engine was to be at the expense of the manufacturer except for "reasonable and necessary" maintenance. Thus, as indicated above, the question that arises here is whether the replacement of the catalytic converter described as an essential and major item of the emission control system – at a cost of up to $150 – during the warranty period may be considered as "reasonable" maintenance.”
Since the catalytic converter apparently is a major part of the emission control system, it is our view its replacement would constitute something more than "reasonable maintenance." To put it another way the replacement of the catalytic converter is the replacement of a major part of the emission control systems rather than "reasonable maintenance" of such system or of the vehicle and engine. While it may be that if the Administrator had required replacement to be at the expense of the manufacturer, such cost would have been included in the price of the vehicle, that does not require the conclusion that replacement of such an item constitutes reasonable maintenance. In fact if replacement of the catalytic converter be considered reasonable maintenance, we question whether the Administrator could require replacement at the manufacturer's expense, since under the law reasonable maintenance necessary to assure proper functioning of the emission control system is to be at the vehicle owner's expense. In light of the foregoing and based on the record presently before us, it is our view that replacement of the catalytic converter may not be considered reasonable maintenance so as to require that replacement be at the vehicle owner's expense. Therefore, in our opinion, the regulations allowing one replacement of the catalytic converter at the vehicle owner's expense during the warranty period is not consistent with the law and its legislative history.
Sincerely yours,
ELMER B. STAATS,
Comptroller General of the United States.