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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D. C. 20460
oOo
PUBLIC HEARING
on
CALIFORNIA WAIVER REQUEST
May 16 - May 19, 1977
Conference Rooms A-B-C
EPA Region IX Office
San Francisco, California
VOLUME IV
Pages 558 - 697
May 19, 1977
Reported by:
JERRY R. SMYTHE and
RICHARD S. ADAMS
THOMAS R. WILSON
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559
19290
HEARING PANEL
BENJAMIN R. JACKSON - Presiding Officer
Director, Mobile Source Enforcement Division
U\_S. Environmental Protection Agency
Washington, D. C.
ERIC- 0. STORK.
Deputy Assistant Administrator for
Mobile Source and Noise Enforcement
EPA STAFF
DANIEL M. STEINWAY
Attorney-Advi sor
U. S. Environmental Protection Agency
Washington, D. C.
JAMES MC NAB, III
Attorney-Advisor
U.. S.,Environmental Protection Agency
Washington, D. C.
MARILYN J. HERMAN
Program Analyst
U. S. Environmental Protection Agency
Washington, D. C.
oOo
THOMAS R. WILSON
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560
INDEX
Page
561
CALIFORNIA AIR RESOURCES BOARD
THOMAS AUSTIN
Deputy Executive Officer, Technical
KINGSLEY MACOMBER
Chief Counsel
MOTOR CYCLE INDUSTRY COUNCIL
586
STUART PHILIP ROSS
Attorney with Hogan and Hartson of
Washington, D. C.
ALAN R. ISLEY
President, Motorcycle Industry Council
MOTOR CAR DEALERS OF SOUTHERN CALIFORNIA 617
HOWARD C. BARISH
President, Motor Car Dealers of Southern
California
ROBERT ESTES
Vice President, Motor Car Dealers of
Southern California
FORD MOTOR COMPANY 636
JOHN EPPEL
Associate Counsel
HELEN PETRAUSKAS
Staff Attorney
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560A
INDEX (Cont'd) Page
GENERAL MOTORS CORPORATION 659
RICHARD.:I. PETERSEN
Attorney
CHRYSLER CORPORATION 672
M.W. GRICE
Staff Attorney
AMERICAN MOTORS CORPORATION 679
WILLIAM C. JONES
Manager of Emissions and Energy Standards
AUTOMOBILE IMPORTERS OF AMERICA 688
DONALD SCHWENTKER
Attorney, Busby, Rivkin, Sherman, Levy & Rehm
Washington, D.C.
oOo
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CHAIRMAN JACKSON: Good morning, Mr. Austin.
MR. AUSTIN: Good morning, Mr. Jackson.
CHAIRMAN JACKSON: I guess we are ready to hear from
you about the general waiver.
MR. AUSTIN: All right. Kingsley Macomber, our
chief counsel, will give our testimony on this issue.
MR. MACOMBER: Mr. Chairman, I'll be reading from
our written comments which were provided to intereted persons
earlier.
I'd like to point out that Pages 5 and 6 were
inverted in order, just to dispel any confusion that may have
been created by that.
Subject to certain qualifications set forth below,
California supports EPA's proposal to grantCalifornia a
general waiver from the prohibitions of Section 209(a) of the
federal Clean Air Act. We believe the general waiver concept,
and the procedures associated therewith, will more faithfully
carry out the clear Congressional intent, which has been intact
in federal law since 1967, to allow California to occupy a
role of national leadership in the control of vehicular
emissions from new vehicles.
Under current waiver procedures, California first
adopts a more stringent emission standard, test procedure or
enforcement program, and then applies to the Administrator for
a waiver pursuant to Section 209(b). Our records show that
California has generally filed its waiver application with the
Administrator within three weeks after action fay the Air
Resources Board. Following the receipt of California's waiver
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CARB
application, the Administrator determines which issues must be
set for a public hearing in accordance with Section 209(b),
and, for those issues, schedules a public hearing. Ordinarily,
this process has consumed about two or three months. To allow
adequate notice to interested persons, the hearing has
typically been scheduled to take place within one to two months
after the notice has been published in the Federal Register.
Following the hearing, the Administrator has taken in the
range of two to six months to publish a final decision on
California's waiver request, with most of the decisions coming
toward the end of this two-to six-month period. Overall, the
entire cycle has historically ranged from nine to twelve
months in length.
As evidenced by the foregoing sequence, the ARB's
greatest concern is that the waiver procedure, as currently
constituted, takes too long. In order to keep abreast of
advances in emission control techniques, California has
ordinarily followed the custom of adopting emission standards
which force technology and have minimal lead time cushions
for the manufacturers. If the lead times associated with
California requirements continue to be drawn out by the lengthy
waiver procedures outlined above, California's ability to keep
its standards abreast of technology becomes much more diffi-
cult, and in some cases may actually be significantly impaired.
This result, we think, is clearly inconsistent with the intent
of Congress to allow California to adopt and enforce emission
standards which incorporate the latest technological advances
in emission control, and which will ensure significant
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CARB
563
reductions, in automobile emissions at the earliest possible
dates.
To underline this point, we would refer EPA to the
proceedings of Congress in 1967, when it was considering the
Air Quality Act of 1967. During those proceedings, the
question of whether California would be allowed to adopt its
own new vehicle emission control program was debated at
length. The result was a provision, now Section 209 of the
Clean Air Act, requiring the Administrator to waive federal
preemption for California's program unless the Administrator
makes certain contrary findings. We will discuss the pro-
cedures applicable to the Administrator's decision in subse-
quent paragraphs, but before doing so, we would like to
direct EPA's attention to several of Congress1 more relevant
findings.
In the Report of the Senate Committee of Public
Works authored by Senator Muskie, the California waiver, or
the so-called "Murphy amendment", was discussed in some detail.
At Page 32 of the Report, the following summary was presented,
and this is a partial quote from that summary:
"1. Most importantly California will be able
to continue its already excellent program to the benefit
of the people of that State.
"2. The Nation will have the benefit of
California's experience with lower standards which will
require new control systems and design. In fact
California will continue to be the testing area for
such lower standards and should those efforts to achieve
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lower emission levels be successful, it is expected that
the Secretary " now the Administrator "will,
if required to assure protection of the national health
and welfare, give serious consideration to strengthening
the federal standards."
We think these words adequately convey the sense of
the Senate Committee that there would be a national benefit
to allowing California to push technology to reasonable limits.
Again, in the Report of the House Committee on
Interstate and Foreign Commerce a similar provision was
reported to Whole House. On the floor of the House,
Representative Moss of California proposed an amendment to
strengthen California's waiver. The so-called "Moss Amendment"
passed, but it is significant that Mr. Moss had these words
about his amendment, and I quote? this is from the Congres-
sional Record of July 18:
"The amendment permits California to continue a role
of leadership which it has occupied among the States
of this Union for at least the last two decades. As
I said in general debate, it offers a unique laboratory,
with all of the resources necessary, to develop effective
control devices which can become a part of the resources
of this Nation and contribute significantly to the
lessening of the growing problems of air pollution
throughout the Nation."
As in the Senate, California's role was perceived to
be one of national preeminence in vehicular emission control,
a national test laboratory, in effect.
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We have recalled these words, which are no doubt
quite familiar to EPA, and to the manufacturers as well, to
pinpoint what Congress intended. The point we wish to
emphasize is that EPA's waiver procedure should be one which
best effectuates Congress1 intent. For reasons to be dis-
cussed, we believe the general waiver is superior to the
current procedures in this regard.
While the Air Resources Board has steadfastly main-
tained that lead time, even under the current procedures,
should begin counting from the date of action by California
rather than from the date of the Administrator's waiver
decision, and is still of this opinion, we believe that the
proposed general waiver offers an alternative procedure which
will both preserve the public hearing rights of the manu-
facturers, and, at the same time, obviate the lead time
constraints of the current procedure.
As we understand it, the proposed general waiver
procedure would operate as follows: following this public
hearing, the Administrator would announce the grant of a
general waiver for California's vehicle emission control
program as presently constituted, and as may be constituted
in the future by formal actions of the ARB, subject to the
right of any interested person, including automobile manu-
facturers, in a public hearing, to demonstrate that California
does not require standards more stringent than applicable
federal standards to meet compelling and extraordinary con-
ditions or that California's standards and accompanying
enforcement procedures are not consistent with Section 202(a).
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CARB 566
This latter requirement, as has been the case to date, would
extend to issues of lead time, technological feasibility,
and cost of compliance.
We further understand that the effect of this new
procedure will be to assure that the manufacturers1 lead time
for complying with the California standards and test pro-
cedures starts counting from the date of action taken by the
ARB. We think this effect is justified and indeed from a
legal standpoint inevitable, because all requirements, at
both the federal and state levels, for fully enforceable
regulations by California will have been met, i.e., California
will have adopted enforceable regulations under its own
sovereign powers, which regulations will automatically be
relieved of federal preemption by the general waiver
previously granted by the Administrator. With California's
requirements thus enforceable at both federal and state levels,
it follows that the manufacturers' lead time must then start
running.
We emphasize that this interpretation of the effect
of the general waiver on the lead time issue is essential to
our support for the general waiver concept. If EPA agrees
with our interpretation, EPA's agreement should be made clear
in its announcement of the grant of a general waiver.
There are several other procedural aspects of the
general waiver which we think merit comment. First, we suggest
that EPA propose a reasonably short limitation upon the time
available for interested persons to challenge the general
waiver with respect to any specific action taken by the ARB.
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567
CARB
A short filing period is necessary to prevent prejudice to
California's stringent program, and to promote certainty with
respect to its program. We recommend that the limitation be
30 days. We base our recommendation upon a similar limita-
tion established by Section 207(b)(1) of the federal Clean
Air Act for challenges to the vehicular emission standards
adopted by the Administrator under Section 202. In our view,
the adoption of emission standards, test procedures, and
Associated enforcement programs by the ARB is similar in
nature to the adoption of emission standards and test pro-
cedures by the Administrator under Section 202, and should be
governed by the same statute of limitations.
We also urge that the statute commence running upon
the date of formal action by the ARB. We do not believe that
further or subsequent notice by the Administrator is necessary.
All persons who are interested in California's vehicular
emission control program receive notice under California law
of changes to the program through formal publication in news-
papers of general circulation in California, and through
advance notice by mail from the ARB. In all cases, notice
is given 30 days in advance of the action proposed to be
taken by the Board. This is a provision that's established in
California law, and my statement contains some citations. We
see no reason why this form of notice should not be adequate
for the purpose of commencing the aforedescribed 30-day
statute of limitations to run. We also recommend that EPA
require waiver challenges to be drawn precisely to identify
what issues are to be heard and what facts bear on the issues.
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The hearing, of course, should be limited only to the issues
raised. Finally, we urge, as was suggested in the EPA public
hearing announcement of April 13 of this year, that the
Administrator retain the authority to reject, without hearing,
frivolous or dilatory petitions.
We have addressed these procedural issues in some
detail in order to assure that the manufacturers and other
interested persons will receive both an expeditious hearing
and decision. We believe the Administrator will be able to
schedule, hear and decide waiver petitions under the general
waiver more quickly than under the current procedures, since
there should be fewer hearings and the issues will be
generally more limited and more precisely defined. The general
waiver is more consistent with the intent of Congress than are
the current procedures in another way. As things now stand,
California, rather than the manufacturers, is apparently
subject to the jeopardy of having to account for lead time
delays associated with obtaining a waiver decision from EPA.
We believe that the Clean Air Act clearly requires that the
manufacturers, rather than California, assume all risks
associated with the Administrator's need to hear and consider
any challenge to the California waiver. This result is
generally consistent with the notion of forcing technology
which underlies the Clean Air Act, and California law as well.
In addition, it more faithfully implements the Congressional
intent of allowing California to move ahead with its own
requirements at its own pace. Presently EPA's reaction time to
California's waiver requests constitutes a significant
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569
CARB
constraint, in some cases, upon what California desires to
accomplish. We do not believe that Congress intended for
procedural obstacles to impede California's efforts. The
current waiver procedures, to some degree, have this effect
and we believe that a general waiver would promote California's
vehicular emission control program in the manner in which
Congress intended for it to be promoted.
To emphasize our point, we refer EPA to the express
language of Section 209(b), which states that the
Administrator "shall. . . waiver application" of federal
preemption to California "unless" he makes certain findings.
As we read these words, they clearly establish the notion that
California should not have the burden of justifying why it is
entitled to a waiver, but rather that the EPA and/or the
manufacturers should have the burden of showing why California
is not entitled to a waiver. The legislative history bears
out this view. For example, in stating their separate views
on the House version of Senate Bill 780, Congressmen Moss and
Van Deerlin stated: "The burden should be on the Secretary
now the Administrator to show why California, which already has
a successful antipollution law of its own, should not be
allowed to go beyond the federal limitations in adopting and
enforcing its own standards." And again, from the same
document, "Implicit in this provision i.e., the waiver
provision "is the right of the Secretary to withdraw"
I'd like to emphasize the word "withdraw" "the waiver at
any time after notice and an opportunity for public hearing
he finds that the State of California no longer complies with
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the conditions of that waiver." As we view it, the general
waiver is entirely consistent with this notion that Congress
has already given California a waiver, which is subject to
being withdrawn rather than sought and justified at each
step of its development.
We anticipate that some manufacturers may argue that
the general waiver concept is inconsistent with the prior
public hearing requirement set forth in Section 209(b). We
submit that any such argument misreads the language of
Section 209 taken as a whole, and contrary to what Congress
intended, requires California to justify each of its actions.
The purpose of the public hearing requirement in Section 209(b)
is to allow manufacturers and other interested persons the
opportunity to present their views and comments as to whether
California is entitled to a waiver of federal preemption prior
to their having to comply with California's requirements.
The proposed general waiver procedure is fully consistent with
this purpose. The manufacturers and other interested persons
will have a prior opportunity to challenge California's
eligibility for a waiver. The same issues which are presently
raised during waiver hearings will be eligible for considera-
tion under the general waiver, and the manufacturers will have
the same opportunity for obtaining delays in the implementation
of any standard, test procedure, or program proposed by
California, based upon the usual constraints of lead time,
technological feasibility, and so on. The general waiver
itself, of course, if adopted, will have complied with the
public hearing requirements of Section 209(b) on account of
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today1s proceedings.
We would like to emphasize one final point. We
believe that the Administrator has the discretion to adopt any
procedure which meets the basic requirement of Section 209(b)
that interested persons be afforded, prior to compliance,
the opportunity to address California's eligibility for a
waiver of federal preemption. The current procedure has,
in our opinion, produced an unnecessary administrative burden,
both on the ARB and EPA. Public hearings have been held on
issues which have essentially been noncontroversial in nature,
and at which the manufacturers have made only token or pro-
forma appearances. The proposed general waiver procedure
will have the advantage of placing on the public hearing
agenda only those issues which are seriously contested by
the manufacturers or other interested persons. We would
expect the manufacturers to concur with our assumption that
they would not request a public hearing to review the general
waiver in cases where they do not have significant lead time
or technological feasibility and I should add cost of
compliance issues to raise. Even if the number of
hearings will not be reduced, the time needed to schedule the
hearings, and for the Administrator to make a decision, should
be reduced. Accordingly, we anticipate that the general
waiver procedure will reduce administrative burdens on the
ARB and EPA, and on the manufacturers as well, without in any
way curtailing the opportunity of the manufacturers to be
heard.
In conclusion, we recommend that the Administrator
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grant a general waiver for California in the manner proposed
and subject to the constraints discussed above. In doing so,
EPA should make it clear that the primary effect of the
general waiver will be to commence the manufacturers' lead
time for meeting California's requirements from the date of
action by the ARB. Aside from this effect, which we think is
entirely consistent with how Congress intended for California's
waiver to operate, we believe the proposed general waiver
will promote administrative economy without impeding in any
way the opportunity for manufacturers or other interested
persons to obtain a public hearing on waiver issues prior to
having to comply with California's stringent vehicular emission
control program.
That completes my prepared statement. I am
available for questions if there are any.
MR. STORK; Mr. Macomber, I appreciate your
thoughtful, comprehensive statement. You set forth a per-
suasive case. It makes me wonder why, if the interpretation
of the applicable statute that you outlined in considerable
detail is as clearly supportive of the proposal to grant a
general waiver and not to hold specific waiver hearings unless
requested by a party for good and sufficient reasons, if that
is so valid and so clear as your statement outlines, why
California, in view of the delays that California has suffered
in the past, has not taken aggressive steps in the past years
to propose precisely this kind of procedure.
MR. MACOMBER: I would say that until the most
recent several years that the existing procedure has not had
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CARB
573
the impact on our program that it has had in the last several
years. I would say the pressure has been building in this
regard.
So I think California has been making a swifter
pace, more changes than it had, say, in the early 1970's.
And perhaps that is one explanation, perhaps the
explanation of why we have not until this time moved to support
this kind of recommendation.
At the end of my statement, you may have detected
the suggestion that we are really dealing with alternative
procedures. I think that the Administrator has discretion to
go either way. But in view of the administrative burdens
that I think have been created in the past several years,
pressure has raised and has created a need, or at least more
of a need than we had before, for this kind of changed
procedure.
CHAIRMAN JACKSON: One other effect that I foresee
of such a waiver, which I would like your comments on, is the
frequently recurring charges that due process has been denied
because of some false or flaw in the procedures by California
or by EPA in dealing with the CARB and other issues of
constitutionality with regard to some of the things that you
are trying to do.
As I foresee these issues being handled in the
future, if such waiver were granted, it would be incumbent
upon the manufacturers to go to the appropriate judicial body
to seek resolution as opposed to asking the Administrator to
resolve such matters in the context of a waiver hearing.
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CARB 574
MR. MACOMBER: I am a little surprised by that
question, because it's my understanding, you can correct me if
I am wrong, that EPA has taken the position that those con-
siderations are not relevant to the waiver hearing.
CHAIRMAN JACKSON: That's right, but I am not
suggesting that they are not valid either.
MR. MACOMBER: Yes, I am not conceding that they are
valid. If those deficiencies exist, they can be adequately
challenged by the California law by declaratory relief action
or injunctive relief. There are various ways it can be done,
or perhaps by administrative writ. But the means exist under
California law.
And I do agree with EPA's position to date that
those constitutional and due process questions are not strictly
speaking at all relevant to our waiver, to whether or not we
should be able to obtain a waiver.
The considerations which enter into that are set
forth in the Clean Air Act, lead time within the tech-
nological feasibility within the lead time remaining, cost of
compliance, consistency and stringency. Those are the basic
issues, and I think they are well established and EPA should
not and probably cannot under the Clean Air Act go beyond
those.
CHAIRMAN JACKSON: The one question that we were
just discussing here is you suggested a 30-day period in
which the particular action could be challenged in the context
of the general waiver.
Would that be 100 percent comprehensive? There
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CARB 3 '3
wouldn't be any other out? For example, if new information
were made available at some later date, would there be a
a basis for an additional consideration? Do you foresee that?
MR. MACOMBER: Assuming that, say, a manufacturer
does encounter some kind of problem and it really is new
evidence and the petition alleges it is new evidence and does
so in a reasonably explicit way, I think there would be the
flexibility there prior to having to recomply with the
requirement to petition EPA to, in effect, reconsider a waiver
that had been, say, approved for California.
I assume you are talking about a case where the
manufacturer has challenged previously and has not prevailed.
In other words, California's general waiver remained in
effect; is that right?
CHAIRMAN JACKSON: Well, or didn't challenge. In
other words, the basis for challenging wasn't there within
30 days after the action, but it manifested itself somewhere
later on. I don't know that I have a real good example.
MR. MACOMBER: To proceed with my answer, I think
generally that the procedure should have the flexibility to
allow the subsequent filing of a challenge to the general
waiver if new evidence is presented. I think there is some
evidence in the Congressional history, for example, that if
conditions are such and perhaps if they change, then the
manufacturers or other interested persons could bring a
challenge to the general waiver at a subsequent date after
the 30 days has elapsed.
But I'd like to emphasize that that should be on the
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CARB 576
basis of information that was not available at the time
California acted or on the basis of new or changed circum-
stances. I'd like to emphasize that in that case I think
the petition for the hearing would have to allege in a
sufficient way and with particularity what the new circum-
stances are. There could not just be an unsupported allega-
tion that new conditions exist.
CHAIRMAN JACKSON: You are almost suggesting that if
we were to grant such a waiver the decision granting it would
contain some sort of guideline that would lay all this out.
MR. MACOMBER: Yes. I would definitely say that
based upon the hearing notice itself that EPA does have before
it the task of outlining some procedures to guide interested
persons in how to file petitions challenging the general
waiver and perhaps
CHAIRMAN JACKSON: And finding bona fide
MR. MACOMBER: Definitely. I think rejecting a
petition that is not bona fide would not be, in and of itself,
adequate. I think this ties in with my statements in the
written statement that the petition should be fairly precisely
drawn and it should allege, at least in lawyer's terms,
prima facie evidence to indicate as to why the general waiver
should not be kept in effect.
And I think that gets right back into the bona fide.
If you can't detect from those facts as alleged, you are going
to have a decent basis for deciding if the petition is dila-
tory or not in good faith.
MR. STORK: Mr. Macomber, I am a bit uncomfortable
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CARB
577
with that. If what we are seeking is a means for greatly
simplifying the basic procedure by which decisions are made
on whether or not California can impose a more stringent
standard and if there truly does not exist within 30 days
after California's initial action or California's final action
information on the basis of which to challenge California's
action, then why in your view should the Environmental Pro-
tection Agency remain involved in this problem forever;
because new information always arises, even if it is just
that one manufacturer has particular problems that he didn't
know he'd have? Why should not California live with that
burden itself, and if 45 or 60 days, a year later new informa-
tion arises, should not California deal with that and live
with whatever the results are?
MR. MACOMBER: I think there are several questions
involved in what you have said.
First, I would state that California would be
concerned about new circumstances. If they came to our
attention, we would consider them. If appropriate, we would
perhaps change our regulations, whatever, whatever is
appropriate so there is potential for relief at that end.
But as to EPA's involvement, that's a statutory
involvement and it can't be just cast aside. I do think
that EPA, if a valid petition is presented, has to undertake
the efforts necessary to consider the petition.
If I understand what you are getting at, you want
finality, you want to shut the door after 30 days, and I am
not sure that the history of the Clean Air Act would support
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CARB
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that. I know that administrative considerations are
important to your agency and to us, and I think to the manu-
facturers as well. These hearings do consume a lot of time
and effort, but that doesn't mean that we can ignore valid
petitions based upon new circumstances as alleged.
I think that applies not only to California, as I
previously stated, but also to EPA.
MR. STORK; Well, would you argue, Mr. Macomber,
that even under the present procedures if EPA has granted a
waiver the subject remains open forever and the manufacturers
can approach EPA at any time to rescind that waiver?
MR. MACOMBER: I wouldn't go so far as it remains
open forever for any reason, which I think was the thrust of
your statement.
MR. STORK: I would not say for frivolous reasons,
but for valid reasons, let us say, such as a new problem on
lead time. Under the procedures, if a manufacturer finds out
after the waiver is granted and he did not go to court to
contest it that he did not have lead time to meet California
standards, would under present procedures in your judgment
relief be obtainable by petitioning EPA to rescind the waiver?
MR. MACOMBER: Not under the present procedure, I
don't believe so.
MR. STORK: Then why should it be under the new
procedure we are discussing?
MR. MACOMBER: If I understand your example, you are
saying the manufacturer believes at the time of the waiver
hearing his company can meet the standards but because of some
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reason, internal problems perhaps or who knows, the manu-
facturer determines subsequently that they can't meet the
standards. I would not say that constitutes new conditions.
We are talking about externally imposed conditions, I think,
over which the manufacturer has no control.
I also would say that perhaps what we are talking
about here is not necessarily facts which are unique to any
one manufacturer. I think that, as we have considered in
the past, we should look at the industry as a whole essentially.
If we are talking about the industry as a whole, we are talking
about, I think, issues that have come up here before about the
basic satisfying the basic market demand.
So I would be reluctant to say that an individual
manufacturer could come up with a case of individual hardship
under the scheme that I am proposing.
MR. STORK: Let me accept your definition of the
causes and using the present procedures and let us assume
that something changes and one or more manufacturers now
believe that they cannot meet a standard that has been waived
for which preemption has been waived by the EPA.
Under the present procedures, would in your view
the relief that the manufacturer or manufacturers might seek
be addressable to California or to EPA?
MR. AUSTIN: Both, and EPA should decide, based on
the number of petitions received or petitions received from
more than one manufacturer filed jointly, whether there's
adequate basis for reopening the question, for addressing the
new conditions which didn't exist at the time that California
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CARB 580
took action.
If, for example, enough manufacturers petition EPA
such that EPA can see that if the manufacturers petitioning
cannot in fact meet the standards, there be questions of basic
market demand being satisfied, then I think EPA would be
compelled to address that issue and conduct a public hearing
involving all manufacturers and the public as well as the
Air Resources Board.
MR. STORK: Well, I'm not an attorney, Mr. Austin.
Of course, you are not either. That may indeed be the law,
but it seems sort of odd if it is.
Once waiver is granted, assuming this new condition
is one about which there is no technical dispute, presumably
California under its sovereign authority would take action
to solve the problem. If, however, there is dispute and
California believes that its standards can still be met,
why at that point should EPA come back in to judge the matter?
MR. AUSTIN: All I am telling you is an engineer's
reading of the legislative history indicates to me that there
is some obligation put on the Environmental Protection Agency
to oversee the California program, and should conditions
change, it appears to me that there's a statutory obligation
on the Environmental Protection Agency to review the matter
at that time.
Quite often, in fact in the last year, EPA has made
decisions on waivers indicating that they did not find
EPA did not find that in fact technological feasibility existed,
rather EPA found that given the remaining lead time, there was
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CARB 301
a high potential for the systems to be developed which could
meet the standard. Under those waivers granted under those
kinds of circumstances, it may very well have to be opened up
again at some subsequent point because the company becomes
clear at some subsequent point that the development of the
technology required to meet the standard did not progress as
California expected it to, as the Environmental Protection
Agency expected that it might.
MR. STORK: You may be right, and obviously the
lawyers can study that.
But leaving the law aside and looking only on
policy as policy might be established if it is not constrained
by statute, is it your view that it would be desirable to
retain EPA in the circle of decision making after waiver has
once been granted, or is it your view that it would be more
desirable once the waiver has been granted or not contested
and, therefore, granted that from there on out how to proceed
and whether to proceed should be California's alone? If
California could have it anyway it wanted it, how would you
prefer it?
MR. AUSTIN: I am not sure your question or any
response to it is at all relevant, but I think my personal
preference would be for California to retain the right to
address those issues should they come up in the future. I
wouldn't have any personal problem with EPA not being involved.
I think there is a question, though, of the statutory
responsibility that EPA carries under 209.
MR. STORK: I agree with you, the relevance of my
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CARB
question depends on what the lawyers tell us we have flexi-
bility to establish as procedures.
If the lawyers do tell us that we do have authority
to establish it, as you just stated you prefer, then I am glad
to have your response on the record.
MR. MACOMBER: I think another reason, from a legal
standpoint why EPA has to perhaps remain involved in the waiver
context, is that the considerations which California has to
take into account when it adopts emission standards and test
procedures under state law are not necessarily the same
provisions that apply under the waiver. These considerations
that we have here today are not necessarily controlling or
even in some cases relevant under California law. So, there
is a difference in what has to be considered.
Even if California doesn't take action with respect
to a manufacturer's problem or even the industry's problem,
it may still be relevant for waiver purposes.
MR. STEINWAY: Mr. Macomber, certain manufacturers
raised in their testimony substantial questions with regard to
due process violations. That is, they claim granting a
general waiver would result in deprivations of property in
accordance with the Fuentes line of cases.
Does California believe that granting a general
waiver would result in the violations of the due process
clause, or are in fact the manufacturers investing substantial
amounts of capital now in the same fashion that they would be
if the general waiver was granted and, therefore, they are
just merely following the same kind of customs that they have
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CARB
583
followed in the past in prior California waiver situations.
MR. MACOMBER: As to the latter half of your
question, I think we can only testify on the basis of what we
know. It might be more appropriate to ask the manufacturers
what their habits and customs have been as to whether or
not they make these capital expenditures prior to getting
a waiver decision.
But it's our general belief that in most cases, the
manufacturers do start investing and working as if the
California action started the lead time, and in many cases as
if California would obtain the waiver. The history of waiver
decisions in most cases has been that California has obtained
the waiver requested, and I think acknowledgment of that
pattern, the fact that California has taken care in the past
to make sure that it& programs do have adequate lead time and
are reasonable from a cost standpoint, the manufacturers
Again, I am just basing this on my personal knowledge.
Maybe Mr. Austin can comment further.
The manufacturers have been investing based on
California actions and the date of California's action.
MR. AUSTIN: I totally agree with that. I think
there is a very good reason for it. Section 209 is rather
narrowly drafted. The EPA does not have a broad discretion
with respect to granting of the waiver.
Only when certain conditions can be shown to exist,
such as a clear lack of adequate lead time to develop the
required technology or a lack of compelling and extraordinary
need, can EPA deny the waiver application by California"
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In the past, those issues have been so obvious that
it wouldn't have made good business sense for a manufacturer
to have delayed the start of his program until after the EPA
waiver hearing process. Generally, it's less expensive for
a development program to be carried out over a longer period
of time than during a shorter period of time. Accelerated
programs are expensive, and to reduce the cost associated with
compliance, the manufacturers have historically started
development work upon California action.
MR. MACOMBER: To address the first part of your
question relating to possible violation of due process, from
our viewpoint what we are proposing is not a violation of
due process. It's simply another kind of due process. It's
a different procedure. It's an alternative procedure.
As we understand it, under the proposed general
waiver procedures, the manufacturers and other interested
persons would have a prior opportunity to contest the general
waiver as might an employee to any specific California program.
Some of the detailed procedures that I have addressed in my
written statement are designed to, hopefully, expedite and
make more precise the format for these hearings challenging
a general waiver, with the hope that it would provide a
quicker opportunity and an earlier opportunity for a decision
than we have now.
So, that's our position on that question.
CHAIRMAN JACKSON: I guess you are sure of coming
around to saying, in a summation of the total of what I have
heard, that the arbiter influence that EPA has is an effective
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CARB 30
means of hammering out the differences between what the
CARB wants to do and the problems that the manufacturers have
and that you don't see that really going away in the context
of a general waiver. For example, in the past, and probably
in the very near future, waivers have been granted, will be
granted where they are conditioned on California doing some-
thing, which is based on some sort of contention by the
manufacturers, or indeed during the course of these proceed-
ings, things have been worked out such that agreements have
been made which change the concerns the manufacturers have
about some of the things that CARB is doing.
MR. AUSTIN: That has happened quite frequently.
However, many of these items which you refer to which have
been worked out during the waiver hearing processes have
in fact been worked out ahead of time.
Yesterday, as another example, we heard some
testimony from American Motors regarding the problem they had
with the way we constructed some language, I believe relating
to the whether we would automatically give an allowance
for methane content in the exhaust of light-duty trucks, them
believing it was inappropriate for us to have drafted the
regulations the way we did. I think because of the fact
we have the waiver hearing process, manufacturers quite often
postpone their comments on certain aspects of California
regulations in an attempt to use the hearing process and
a means of accomplishing changes in California regulations
which they are seeking.
In our opinion, that's a totally inappropriate
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CARB/MIC
use of the hearing procedure, and I think a number of manu-
facturers have failed to understand the rather narrow
responsibilities which EPA has under the law and have too
frequently used the hearings as a basis for bringing forth
some of the problems they have had with the specifics in
California emission regulation. Without that process beinq
available to them routinely, I think we will probably see a
little more participation at the California Board meetings,
Air Resources Board meetings, and we will see more of this
worked out ahead of time than is currently the case.
CHAIRMAN JACKSON: Mr. Macomber, are you going to
continue to be available today?
MR. MACOMBER: Yes, I'll be here all day as long as
the hearing goes.
CHAIRMAN JACKSON: Thank you very much, gentlemen.
MR. ROSS: Mr. Jackson, I am Stuart Ross testifying
on behalf of the Motorcycle Industry Council.
I want to thank the panel, Miss Herman, and my
colleagues in the audience for allowing me, because of a
scheduling matter, to appear earlier in the proceedings than
I was originally scheduled to. I appreciate that very much.
If I may prior to delivering my written remarks,
I'd like to make a comment or two generally based upon the
testimony which was just given. It's my view that the
questions, particularly which Mr. Stork asked, and the
responses which were given point up the fact that the request
of California is really one which falls in the wrong forum,
in that this request should be directed to the Congress of the
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MIC 30 '
United States if there is indeed a desire to amend the
specifically defined language of Section 209. It is fact
that,, as Mr. Felix Frankfurter called it, we were engaging in
what I thought were mental genetics with respect to the
record of the Congressional and legislative consideration of
this matter, points that up quite dramatically. I think
having researched the legislative history, as obviously the
state has done, and having failed to come up with a definitive
statement which would permit the general waiver, I think
that they must stand on that record. I think that that record
points up the fact, really, that we are talking about amending
a law as distinguished from expanding someone's authority in
an area where there is a substantial question as to whether
or not they have it.
In the past, the industry that I represent and the
companies and indeed the industries represented in the
audience today have had engineering and scientific and
technological disputes, or shall we say exchanges, with the
California Air Resources Board. But I think today we are
really not talking about technology or metallurgy or things
like that. I think we are talking about whether or not there
exists a statutory basis for a very broad and general grant
of power and whether that statutory basis presently resides
in the Environmental Protection Agency under the Clean Air
Act as it's been amended. There is a grave question in my
mind as to whether or not it does. In fact, I do not believe
it does.
Having made those general remarks, I'll get to my
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MIC
588
testimony.
If I may add one additional factor, and that is that
near the end of the testimony of my colleagues who preceded
me someone, I don't know whether it was Mr. Macomber or Mr.
Austin, in speaking of Section 209 categorized it as a
narrowly drafted provision. Indeed, I believe it is. I
believe that points up exactly what we are here for, and the
position that I'll advocate today is that it is a narrowly
drafted statute and does not permit the sweeping, broad
delegation to the State of California.
Having said that, I'll get to my testimony.
The MIC appears today in opposition to any general
waiver grant by the EPA to the California Air Resources Board.
The MIC is a national trade association of motorcycle
manufacturers, distributors and those engaged in allied
industries and trades. There are 103 members of the MIC, and
included therein are 17 original equipment motorcycle manu-
facturers who account for approximately 94 percent of motor-
cycle registrations in the State of California.
As explained herein, we believe that a general
waiver of federal preemption for all future CARB standards
and test procedures with respect to the control of emissions
from new motor vehicles or new motor vehicle engines would
conflict sharply with the language and purpose of Section 209,
and, accordingly, the granting of any such general waiver
by the EPA would be illegal, as an act done in excess of the
authority given the EPA by the Congress.
In amending the Clean Air Act of 1963, in 1965, as
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MIC
589
subsequently further amended by the National Emission
Standards Act, Congress sought generally to preempt the field
of control of air pollution attributable to motor vehicles.
Section 202(a), as now codified, sets forth Congress'
direction that the Administrator of the EPA "shall be
regulation prescribe . . . standards applicable to the
emission of any air pollutant from any class or classes of new
motor vehicles or new motor vehicle engines, which in his
judgment causes or contributes to, or is likely to cause or to
contribute to, air pollution which endangers the public health
or welfare."
Recognizing the need to avoid the potentially
significant adverse economic consequences of hastily imposed
federal emission standards, Congress also directed, by
Section 202(a)(2), that no regulation prescribed under
Section 2 02 may take effect until the end of "such period as
the Administrator finds necessary to permit the development
and application of the requisite technology, giving appropriate
consideration to the cost of compliance within such period. "
Congress lodged responsibility for promulgating
the federal standards, and for assessing technological
feasibility and the cost of compliance, with a single expert
federal administrative agency the EPA. Further, as a
complement to Section 202, Congress, in Section 209,
specifically directed that "no state or any political sub-
division thereof shall adopt or attempt to enforce any
standard relating to the control of emissions from new motor
vehicles or new motor vehicle engines subject to this part."
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MIC
590
Federal preemption in the establishment of standards
relating to the control of emissions from new motor vehicles
or new motor vehicle engines was intended to be total, except
in the carefully circumscribed situation described in Section
209(b), pursuant to which the Administrator may waive appli-
cation of Section 2 09 to any state which has adopted
standards, other than crankcase emission standards for the
control of emissions from new motor vehicles or new motor
vehicle engines prior to March 30, 1966. He may waive the
prohibitions of Section 209, however, only "after notice and
opportunity for public hearing. . . unless he finds" either:
(1) That such state does not require standards more
stringent than applicable federal standards to meet compelling
and extraordinary conditions, or
(2) That "such state standards and accompanying
enforcement procedures" are not consistent with Section 202(a),
quoted above.
Section 209, therefore, preserves the integrity of
federal minimum standards for motor vehicle emissions by
generally proscribing the adoption or enforcement of "any
(state) standard" relating to the same, prior to a specific
waiver granted pursuant to Section 209(b), and by requiring
the Administrator to make findings prior to the granting of
a waiver:
(1) That the state standards are more stringent
than applicable federal standards;
(2) That there exist compelling and extraordinary
conditions requiring the state standard;
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591
MIC
(3) That the state standard meet such compelling
and extraordinary conditions; and
(4) That the state standard and accompanying
enforcement procedures are not inconsistent with Section 202
including Section 202's requirement that any standard not
"take effect until after such period as the Administrator
finds necessary to permit the development and application of
the requisite technology, giving appropriate consideration to
the cost of compliance within such period."
The proposed California general waiver of the
explicit prohibitions of Section 2 09 would turn this carefully
qualified and limited waiver procedure into a radically
different procedure under which the EPA would reserve only a
potential veto power over California emission standards.
Moreover, that veto would be exercisable only after an
interested party had taken it upon itself to shoulder the
burden of seeking EPA review of the particular state
standard. As explained below, such a blanket prospective
authorization to the CARB is contrary to the language of
Section 209, and beyond the scope of the power of the EPA to
grant a waiver pursuant to Section 209(b).
First, with respect to the language of Section 209
itself, that section appears clearly to preclude a prospective
waiver as to all future CARB emission standards. Under
Section 209(b), the Administrator is required to make findings
with respect to the particular state standards concerning
which a waiver of Section 209 is sought: specifically,
before a waiver may be granted, the Administrator must find
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MIC
592
"that such state standards and accompanying enforcement
procedures are not (in) consistent with Section I857f-1 of
this title", and that such state standards are more stringent
than applicable federal standards.
Even if it may fairly be presumed that the CARB
would have no rational reason to promulgate a standard that
is not more stringent than the parallel federal standard, it
cannot similarly be assumed that the CARB would reach the
same conclusion as that of the Administrator in making the
required Section 202 inquiry regarding technological feasi-
bility, sufficiency of lead time and costs of compliance.
Indeed, Congress has denied the EPA any authority to make such
an assumption: The Congressional directive is clear and
unambiguous in requiring these findings to be made by the
Administrator and prior to any waiver of the Section 209
prohibition.
Therefore, "to grant California a general waiver of
federal preemption for all standards and test procedures. . .
adopted by the CARB in the future that relate to the control
of emissions from new motor vehicles or new motor engines,"
and that's a quote from the notice of today's hearing
would constitute an impermissible departure from the specific
Congressional directive set forth in Section 209. The blanket
waiver approach would substitute a general prospective
presumption of validity, until rebutted, in place of the
required specific findings with respect to a specific promul-
gated state standard. As such, the EPA, in effect, would have
relinquished so much of its Section 209 mandate as requires it
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to evaluate any proposed state emission standard prior to its
taking effect.
Where the language of the authorizing statute is as
clear and unambiguous as that of Section 209, it is dispositive
in a case such as this, because, in the words of the United
States Supreme Court, "when Congress passes an Act empowering
administrative agencies to carry on governmental activities, th
power of those agencies is circumscribed by the authority
granted." Citing from Stark V. Wickard, and there are addi-
tional citations there which I won't read. The EPA's powers
are no broader than those specified in the statute creating
them. Quoting from a Law Review article:
"Administrative agencies are not born in heaven
and do not, as Wordsworth said of infants, come to us
'trailing clouds of glory.' They are purely creatures
of mundane legislatures. The powers they have are by
virtue of a grant from the legislature and not otherwise
(except for those special executive powers recognized by
the Constitution). Many commentators and all too many
administrators and courts seem to overlook this seemingly
obvious point in the course of affirming broad and protean
administrative powers which go far beyond anything that is
discernible within the creative statutes." And that's
from 75 Columbia 771 at 775.
No inference of a power to grant to the CARB the type
of general waiver discussed here can be drawn from the explicit
terms of Section 209.
It is no answer to the foregoing to suggest that;
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"In the event that California is granted such a waiver, the
Administrator would provide notice and an opportunity for a
public hearing, upon submission of a bona fide request by any
interested party, to consider whether California continued to
comply with the conditions of such a waiver in light of any
such future standards and test procedures." Where compliance
with a regulation involves a significant capital expenditure
for research, development and design as do emission
standards generally the timing of EPA review may be a
critical economic factor.
A comparison of the situation as it exists today,
under the explicit terms of Section 209, with the radically
different posture in which manufacturers would be placed under
the proposed general waiver illustrates graphically how
material is the difference between a pre-enforcement waiver
and a retrospective denial of a general waiver. As Section
209(a) is now written, "no state. . . shall adopt or attempt
to enforce any standard. . ." until a specific waiver has been
granted. Accordingly, a manufacturer may now await the
Administrator's waiver decision before commencing preparation
for compliance, with the full and reasonable expectation that,
even if a waiver is ultimately granted to the CARB, the
Administrator, viewing the situation from the perspective of
the date on which the waiver is ultimately granted, must
necessarily consider whether adequate lead time remains until
the effective date of the state standard. If the remaining
period of time is inadequate, the Administrator need simply
condition his grant of a waiver on the CARB's granting an
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extended period for compliance.
By contrast, under the proposed general waiver, as
drafted, any covered CARB emission standard would be pre-
sumptively valid, as of the date of promulgation by the CARB,
subject only to a subsequent veto by the Administrator. Under
the general waiver, therefore, manufacturers might have to
begin preparation for compliance immediately, even though they
intend simultaneously to challenge the CARB standard before
the EPA, particularly where the lead time provided by the
CARB is too short to allow for any delay in design or
development. In order that the interested party not risk
severe penalties for noncompliance, in the event that the
subject standard is not ultimately invalidated, that party
must simultaneously both begin preparing to comply with the
standard and seek review of the standard by EPA.
In an analogous situation, the United States Supreme
Court has recognized that, notwithstanding the general pro-
hibition against pre-enforcement judicial review of a federal
regulation, an exception must be permitted where "the impact
of the regulations upon the petitioners is sufficiently direct
and immediate as to render the issue appropriate for judicial
review at that stage." Cited from Abbott Laboratores which
involved a prescription drug labeling requirement issued by
the Commissioner of Food and Drugs. In Abbott Laboratories,
the Court recognized the dilemma posed where a person either
must comply with the regulation's requirement, and thereby
incur the requisite start-up or changeover costs, or continue
to follow its present course and risk prosecution or civil
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sanction. The Court there, in response to the government's
contention that mere financial expense is not a justification
for pre-enforcement judicial review, pointed to the fact that
the regulation at issue "requires petitioners to make
significant changes in their everyday business practices, if
they fail to observe the Commissioner's rule, they are quite
clearly exposed to the imposition of strong sanctions."
Even where an interested party ultimately succeeds in
invalidating a future CARB emission standard, the start-up
costs, costs of interim compliance, may prove to be unrecover-
able costs particularly where the contestant has simul-
taneously begun to comply, pending EPA review, while its
competitors have awaited an EPA decision on the CARB standard.
Any interim attempt to resort to state judicial declaratory
or injunctive relief from a promulgated CARB standard, pending
EPA review, would likely be met with an argument that the
petitioner had not yet exhausted its remedies under the general
waiver's review provision, and that the court must await a dis-
position by the federal agency, the EPA, having primary juris-
diction of the matter,
A significant policy issue surrounding the entire air
pollutant control problem is involved here as well. Congress
expressly indicated its concern, in Section 202(a)(2), with
the cost of compliance. Congress recognized that our commit-
ment to improvement of the environment cannot proceed unmind-
ful of economic consequences. Accordingly, by placing
responsibility on the State of California to petition for any
waiver, it spread the cost of the state's adoption and
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enforcement of its own standards as broadly as possible among
the beneficiaries of the more stringent state standard.
In contrast, the EPA would, via the terms of the
proposed CARB general waiver, in fact exacerbate the costs to
interested parties that elect to contest any future California
emission standards and test procedures, while relieving the
Administrator from his obligation under Section 209(b). The
proposed general waiver, it appears, would have the effect of
shifting the primary burden of contesting an invalid CARB
standard to the first interested person to act, thus dispro-
portionately shifting one of the costs of enforcement to that
person or to those consumers, if any, to whom that person may
be able to pass through such costs.
Congress' deliberate choice in establishing the
administrative scheme set forth in Section 209(b) of the Clean
Air Act reflects its acknowledgement that an active evaluative
role for the EPA is a necessary pre-condition to any departure
by California from the Administrator's standards. Congress
recognized the administrative and economic benefits to be
gained by subjecting any California standard to advance
scrutiny by the EPA the federal agency which possesses the
necessary expertise in this field. Had Congress not intended
that the Administratorshould exercise such pre-enforcement
review of any California standard potentially eligible for a
waiver of Section 209, it instead could have simply directed
the Administrator to establish federal emission standards,
without more, thereby leaving any aggrieved private parties to
their undoubted right to contest the applicability of any
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conflicting state standard pursuant to the existing tests that
have developed under the traditional doctrine of federal
preemption. That, in fact, it did not do so suggests that
the EPA may not now, in the face of the blanket prohibition
in Section 209(a) and the explicit requirements for pre-waiver
EPA findings in Section 209(b), act in a way which would have a
result which Congress did not intend.
Moreover, even if consideration of the proposed
general prospective waiver is prompted by a desire to permit
speedier promulgation and enforcement, it has not been shown
that the statutorily defined procedure for an advance
determination by the EPA, pursuant to Section 209(b), is not
the speediest and most convenient method to be followed. In
the Abbott Laboratories case, discussed above, the government
argued that "to permit resort to the Courts in this type of
case may delay or impede effective enforcement," to which the
Supreme Court responded that, in fact, the "challenge
involved there was calculated to speed enforcement. If the
government prevails, a large part of the industry is bound
by the decree; if the government loses, it can more quickly
revise its regulation." 387 U.S at 154. Why is the same not
also the case with respect to CARB emission standards?
In sum, we respectfully submit, the proposed general
waiver for all future CARB emission standards and test pro-
cedures should not be granted, in view of the language and
purpose of Section 209 itself and, further, in view of the
policy considerations outlined above.
I appreciate the opportunity to appear and to testify
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MIC 599
CHAIRMAN JACKSON: Mr. Ross, without making any
judgments about the adequacy of your legal argument, which we
probably won't do at this forum, can you give us any practical
reasons why this would affect the parties you represent?
Let me cite what I am talking about. The CARB, along
with giving a brief legal argument, also cited some practical
effects which they thought would accrue as a result of the
granted waiver; one, that the manufacturers would be more
responsive in terms of the rule making process and the things
that they leave for resolution in these forums would be
resolved with the CARB, and the other was that it would be
more clear that the lead time started upon the adoption by
California and that would have the effect of setting in motion
the desired effects on their part.
MR. ROSS: I think I understand what you are getting
at with respect to the type of response you want.
Initially, I would say that, insofar as it related
to technology, I represent a trade association. We will have
the individual manufacturers who will be here today to testify,
but practically I'm not so sure that I can't supply some
answers.
There was a situation several years ago in connection
with CARB's desire to adopt motorcycle emission standards,
with which you are now familiar, and let us assume that the
general waiver was in effect at that time they were holding
their hearings.
We went to those hearings, testifying in connection
with one proposed standard, the one gram standard across the
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board, which we had been given advance notice of. And within
15 minutes at that particular hearing, they came up with a
different standard subsequent to the manufacturers having
testified.
I was very, very glad and remained glad that at the
time that procedure was adopted, I knew that those standards
would be subjected to the scrutiny of the Environmental
Protection Agency. Now I know that you all have taken the
position in the past that procedurally you are not going to go
behind the record, so to speak, but nevertheless as an
attorney representing that industry I knew that sooner or
later, if it became necessary, I would have that kind of an
argument available. I would hate to think that something like
that could conceivably be wrapped up in a general waiver and
not available in the future if it was done in the context of
California having had a general waiver.
Practically speaking, I'd refer to recently there
has been, again with respect to our industry, an effort to
control evaporative emissions insofar as it related to the
seepage from gas tank filling. We had a rather practical
problem there when the concept which was designed to work for
automobile tanks would not have fit into a motorcycle tank at
all. If one would look at the record of that particular
hearing, one would find, shall we say, less than scientific
criteria being put forward as being capable of solving that
particular problem, such things as extensions out of motor-
cycle gas tanks and certain other technical things which the
manufacturers can testify to.
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But practically, again, I think that those kinds of
considerations should be subject to EPA review. I must admit,
having heard your question sitting here, that I find it very
difficult in the scheme of Section 209 to answer your question,
because I feel that the responsibility is so clearly lodged in
EPA to review these things after California has acted. It's
difficult.
CHAIRMAN JACKSON: I presume you followed the dis-
cussion we had with the CARB wherein we talked about the
bona fide petition for review after the adoption. Do you not
think that would offer you the kind of opportunity that you
are reflecting on in your answer to the first question?
MR. ROSS: No, I do not. I think it would be a
radical departure from the specific statutory scheme.
I hate to give you a legal answer when you are
seeking a practical answer, but I think that that points up
the preliminary point I made, that this is the wrong forum. I
believe that that's a policy consideration, Mr. Jackson, and
that the Congress spoke on it. I do not think it would be
adequate.
For instance, I was not satisfied with respect to an
intervening development, shall we say a metallurgical develop-
ment, which might have taken place in which a particular metal
was being used, shall we say, as part of the process of
complying and there was some thought that if in full production
would hold up as they thought it would during preliminary
testing, they might be able to meet that lead time, and
subsequent to production-type testing indicated it wouldn't.
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I would think that that sort of situation would have to be
taken into account by EPA, and that it's best to be taken
into account for in the specific process we have now where
statutorily EPA is required to focus on that lead time issue
again.
CHAIRMAN JACKSON: I don't disagree with your
response. It's just that I see the process working somewhat
like this: I don't know what your experience with these
waivers has been, but there haven't been too many of them
denied.
MR. ROSS: That's been my experience.
CHAIRMAN JACKSON: Generally, there has been some
sort of change or alteration of the original procedure that
ends up being the one that's waived. It seems to me like if
we had this general waiver in effect and there were these
problems that existed which were resolved as a result of waiver
hearings in the past in EPA's review, that the manufacturers
could, on the basis of these problems, file their petition for
review with the agency, in the meantime placing a certain
amount of pressure on the Air Resources Board to address the
specific concerns that you had raised in your petition prior
to the time it would go to a hearing. That is, a more
genuine negotiation period would result in that whatever
period of time is available for the petition to be filed.
And it seems to me like that may end up in the same
place that we end up normally, without having to go through
this involving the third party.
Do you disagree with that?
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MR. ROSS: I would respond as follows: the fact
that there has been agreement and modifications and changes
which have resulted from this process is probably good. It's
probably help speed up the ARB's genuine concern and helped
them implement their reasonable and proper regulations.
But I think that the problem you have with attempting
to cut through some of the red tape and procedure which has
come about as a result of the entire waiver situation has to
be remedied by the Congress. I just don't think that with the
existing status of the law, we can do anything other than hope
that those gives and takes and understandings will continue to
take place in connection with waiver hearings.
I think, too, that Excuse me. My colleague,
Mr. Isley, President of the MIC, whom I did not unfortunately
introduce earlier, would like to respond.
MR. ISLEY: Yes. I think in a practical sense the
existence of a general waiver would encourage the California
Air Resources Board to engage in a practice that I think they
are already into.
Motorcycles are a relatively small part of the
emissions problem in California, yet for expediency in passing
rules for, quote, vehicles as they are defined in California
administrative codes, sometimes motorcycles are either
inadvertently or at least with less than careful consideration
included in rules that are basically intended for automobiles
or light-duty vehicles. I'm afraid with the existence of a
general waiver that this would encourage the ARB to adopt
blanket rules? therefore placing the burden on the motorcycle
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604
industry to very regularly apply for consideration of that
waiver by the EPA, where I'm not sure the burden belongs in
one particular segment of the vehicle industry or one particu-
lar manufacturer to consider the rules that are being adopted.
I think those should be considered in advance of the hearings
and the procedure by the ARB itself.
I'm particularly concerned about the subject of lead
time. When motorcycles are included in a general regulation
such as the fuel fill pipe specifications without due con-
sideration to technology that exists, the lead time under the
new procedure here would begin at the date of the ARB hearing
and manufacturers would be required to begin development of
something that perhaps is not currently technologically
feasible or at least not cost efficient rather than have the
availability of the time, if you will, that can be provided
by the EPA in their waiver process.
I think that's the most practical example that I
could illustrate at this time. Does that answer what you
were asking for?
CHAIRMAN JACKSON: I don't know. I am familiar with
the problem that you raised, but at the same time we are not
suggesting that you will be denied regress. That's not the
issue.
MR. ROSS: As an abstract concept, and I think that
we maybe can talk about the same level here, if you are going
to the Congress, either EPA or the State of California or
someone who was interested in advancing this, I think safe-
guards could be built into the type of general waiver which
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California seeks and you consider and you have some concerns
about that.
But I come back to the general proposition which is
set forth in our statement that this is the wrong forum and
that the authority that you have now is circumscribed by the
Act which both created and gave you the enforcement powers.
It's very easy, you can say, for me to sit here and say it's
the wrong forum, but I happen to believe that at least in this
situation that's right. If the Congress were to consider this,
you can believe that I would be asking for exactly the same
kind of safeguards that you're concerned with on behalf of our
industry in any such statutory writing of a prospective
general waiver for the State of California. I would be
expressing the same concerns as I think you are feeling right
now as you consider the concept generally, Mr. Jackson.
MR. STORK: Mr. Ross, I'm not satisfied yet as to
the wrong forum; otherwise I would go outside and enjoy the
sunshine. But I came out last night to hear all the testimony,
so I think I'll stay the rest of the day.
I have a number of questions and comments on your
testimony, but I'd like to pursue first some of the discussion
you had with Mr. Jackson.
You, in effect, said that on a motorcycle issue
one proceeding that California had they switched around on
you in 15 minutes and that your basic reaction was: well, we
will talk about it again at the waiver hearing, so what the
hell.
MR. ROSS: That's your categorization.
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MR. STORK: That's my categorization. That's what
I heard. Is that totally incorrect what I heard?
MR. ROSS: Well, certainly the terminology was
yours, but it was very meaningful for me to know that or to
believe that that action being improper that I had someplace
to go ultimately with it.
MR. STORK: I am notorious for expressing myself
bluntly to make things clear.
Does that not suggest that allowing a situation like
that to continue indefinitely encourages If, in fact, the
State of California acts arbitrarily, capriciously, and
irresponsibly in its own proceedings, does that not encourage
them to do so and does it not encourage you also to not take
that proceeding entirely seriously and, therefore, shift the
burden of the serious discussion to a waiver hearing and would
it not be useful to take steps, if, in fact, California's
proceedings are less responsible than you would like, to
structure the process in a way in which both California and
you are required to discuss these things more seriously, more
responsibly?
MR. ROSS: Well, I have to say that that clearly was
not my categorization of the California waiver hearing, and
specifically I think that when the CARB acts, I don't think
they presume that they are acting arbitrarily or capriciously
or in any other fashion, and I think that they act in perfect
good faith.
I think, secondly, that we take those hearings very,
very seriously. I wouldn't want the record to indicate that we
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did not take those hearings seriously.
And, thirdly, I think that since the question was
asked in response to the discussion that I had with Mr. Jackson
it's a perfect example of what eventually happened under this
particular waiver procedure. It became unnecessary for us
to make the procedural arguments, so to speak, because there
was a subsequent confluence of California motorcycle emission
regulations and federal motorcycle emission regulations.
If I recall correctly, not only was California
attempting to force technology, they were attempting to force
the EPA into promulgating their own California emission
regulations.
I think there is a fourth part of your question,
and that is, if I recall all the parts: Does the procedure
as it presently exists make less meaningful the California
waiver hearings? And I think the answer to that is no, it
does not. They are very meaningful. We attempt to present
the best possible testimony we can, and our members do at each
and every California hearing, whether we agree with them or
whether we don't agree with them. But we do it in the sure
knowledge that the Congress has set forth a specific statutory
scheme, which means that the entire record on technological
feasibility and cost of compliance will be reviewed by you
and your colleagues.
I didn't mean to imply, and I want the record to
be clear, that we didn't take those hearings seriously. I
think you are putting your finger on the statement at least
I detect, you can speak for yourself quite clearly, that you
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are putting your finger on the same problem that Mr. Jackson
did, which is the bureaucratic and necessary hearings and
notices which have built up around this procedure.
And I guess I come back to the same point, that
that's the fault of the statute, that's the scheme that was
set up, and in order to streamline and build in these safe-
guards, I think you have to go back to the drawing boards on
the statutes.
MR. STORK: That I am not going to debate with you,
because lawyers thought there was enough to this to make it
worthwhile for EPA to hold this hearing, the idea of which,
by the way, came from EPA, not California.
MR. ROSS: I understand that to be true.
MR. STORK: I have some trouble with your statement
in another of respects, Mr. Ross.
On Page 3, you say a couple of times that the
"Administrator may waive" application of Section 209 under
certain circumstances, and I wonder why you put it that way
when the statute itself very clearly says "the Administrator
shall waiver."
MR. ROSS: Where are you referring to, "he may
waive the prohibitions of Section 209, however, only
after. . ."?
MR. STORK: That and four lines above.
It really changes the whole context of the argument
to establish that he "may" or he "shall." Our understanding
of the statute is that the Administrator "must" waiver 'Unless
he finds. . ."
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MR. ROSS: I agree, and those words were not in
quotes, nor was it my intention to indicate that it was
anything other than what the words of the statute say, which
is "shall."
MR. STORK: Okay.
It seems that to a very large degree, other than
saying this is the wrong forum for the discussion, your
thesis comes to the question of where does lead time start.
You are arguing, as I understand your statement, that lead
time starts when the federal government officially grants
waiver, as distinguished from when California establishes
its standard.
Yet California testified that while it may have
been interpreted as such, they believe all along that lead
time begins when California starts and takes its action.
Did I misunderstand you in that?
MR. ROSS: I think I may have misunderstood the
last thing you said.
The position that I take with respect to lead time
is that under the present regulatory scheme a waiver can be
conditioned upon an acceptable lead time as EPA would find
that to be, and I find that to be a proper statutory require
ment and one which naturally we look to.
MR. STORK: That would not change in any respect.
The question is where does lead time start. Does lead time
start when California takes its action, or does lead time
start when EPA finally after many months gets around to
hearing it and deciding the waiver?
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MR. ROSS: I think your question has to be answered
as follows: What I am saying is that when EPA finally gets
around after its notice of publication and hearings to make
its decision with respect to a California waiver, because it
applies the standard of the requisite lead time it could
condition if it was it could condition the granting of the
waiver upon perhaps a different period of time than California
did when it promulgated it; thereby meeting its responsibili-
ties to ensure that adequate lead time exists.
I guess I am saying that there is a review of that
issue.
MR. STORK: I know there is a review of that issue,
Mr. Ross, and that is and will remain a key issue for review
even when even if this general waiver procedure is adopted.
If the industry comes in and says lead time does
not exist, my question to you is, as I understand your
testimony and I have now found it at the bottom of Page 9
and the top of Page 10. The argument to me that you are
making clearly is that lead time Page 8 and top of Page 9.
Sorry about that.
Clearly that lead time begins on the date on which
the Administrator grants the waiver.
MR. ROSS: Yes.
MR. STORK: That's what you are saying?
MR. ROSS: That's exactly right, sir.
Now I know that you can look back and say we are
really, when we do that, taking into consideration the
California date. That, in effect, would be six of one and
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611
half a dozen of the other.
What I am saying is that in the period of time
between California's promulgation, when they set "X" as the
requisite period of lead time and the time that EPA acts,
we are still given the opportunity to challenge that portion of
California's action which relates to lead time and seek to
have, if they are going to grant, EPA qualify its grant
insofar as what it deems to be the technological demonstration
of what is and isn't feasible within a certain period of time.
MR. STORK: Let's go to your words. I still don't
understand, because in simple words, as I understand your
statement, there must be requisite lead time for compliance
from the date of granting of the waiver, assuming work starts
on that day; is that right?
MR. ROSS: Yes.
MR. STORK: That's your view. Okay.
Now do you think that it was the Congress' intent
to impose on California the necessary loss of time inherent in
the federal hearing procedures as they have been carried out
all along?
MR. ROSS: Yes, I do.
MR. STORK: You do believe that the Congress wanted
it to be that way
MR. ROSS: Yes, I do.
MR. STORK: and not whether or not lead time
existed to do the work on the day on which California takes
the action?
MR. ROSS: I think, sir, that regardless of how we
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612
may feel about what that lead time does to cleaning up the
air, I believe that's the specific Congressional intent. It's
clear that Section 209 contemplated a review with those
particular standards and criteria being applied by the
Environmental Protection Agency. So as a result of my
interpretation of the full scheme, I would have to say yes,
they did, for better or for worse.
MR. STORK: Okay. Well
MR. ROSS: Because EPA could well have a different,
as my colleague points out, opinion on the lead time necessary.
I think the point you made earlier when you were
questioning Mr. Macomber was a point that I agreed with: what
happens if there is an intervening development?
MR. STORK: Well, there can be intervening
development after the waiver is granted, and clearly Mr.
Macomber feels, and I have no reason to argue, that the
subject can always be reopened with new information.
But the question of whether or not lead time
starts when California takes its action or when the federal
government finally acts is an important one, and it's one
on which I suspect we will hear more; possibly more from
California, too.
MR. ROSS: Sir, if I may, I think that California
is Let me put it this way, and I guess I've put it about
three different ways.
California is responsible when it makes its
decision not only for taking into account the technological
record before it, but the process, the legal process, by which
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613
it will ultimately secure the authority to enforce the
regulation it has just adopted.
MR. STORK: You may be right. I am learning a lot.
You say on Page 11 that you think the present
procedures are important because, among other things, they
spread the cost of the state's adoption and enforcement of
its own standard broadly among the people of California and
that in the context of who files the petition for the waiver.
MR. ROSS: Yes, sir. And I think Mr. Isley
expanded on that in connection with where the motorcycle
industry might find itself by virtue of being included in
such things as fill pipes.
MR. STORK: I find it hard to take that seriously,
because California's asking for a waiver consisting of a
letter to the Administrator which can't take more than 20
minutes to dictate, saying here on some attachments we want
to waiver. Yet we typically get extensive comments from the
industry against waivers. So I don't really see how adoption
of the new procedure would change anything and impose any
significant new costs on the industry.
MR. ROSS: Let me see if I can help you in that
respect.
I think that probably sitting out in the audience
today in connection with the waiver provision are several
thousand dollars worth of people who have had to come here and
testify in connection with it. If the burden were shifted
I am sure that my people do not desire to continue to get
bills from me in connection with appearances at waiver hearings
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In my view, if the general waiver were granted, it would
particularly fall hard on the motorcycle industry to continue
to have to develop legal and technological testimony to oppose
a general waiver grant. The costs attendant thereto, I
guess is really what I am saying, when we speak about spreading
the burden out.
MR. STORK: I don't understand, Mr. Ross. I am sure
you build your members for the testimony that you prepared
and gave on waivers relating to motorcycles. These were
hearings called by EPA.
How would it economically disadvantage your members
if you, on behalf of your members, petitioned EPA to hold a
hearing?
MR. ROSS: First of all, we don't want to be in a
position of having to do something we don't think the law
requires us to do. That is, file a petition when the ARB
acts.
Secondly, as Mr. Isley attempted to point out, the
industry that I represent could be involved in many things
which might be technologically feasible for the automobile
industry, such as the evaporative emission problems, and if
that was acceptable to them, the burden would fall on us if
we were unable to demonstrate that to turn around the
decision at the Environmental Protection Agency level.
I think Mr. Isley would like to comment.
MR. ISLEY: Mr. Stork, if I may speak a little bit
bluntly like you are, I think it might encourage the ARB to
undertake more arbitrary and capricious activities because
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their waiver is automatically granted and, therefore, the
burden on proving that a waiver is somehow not warranted would
fall upon the affected parties.
CHAIRMAN JACKSON: That's the case now.
MR. STORK: It certainly to a large degree is the
case now.
You made a great point, Mr. Ross, of the findings
that the Administrator must make and how hard does the
Administrator have to look. He even now gets a great deal
of help looking to make findings that waivers shall not be
granted. What would change?
MR. ROSS: What would I'm not following your line
of thinking, Mr. Stork.
MR. STORK: You say the Administrator may not grant
a waiver under the law unless he finds certain things. He
shall unless he finds certain things.
MR. ROSS: Yes.
MR. STORK: Seek and ye shall find. But how far
do ye have to seek? The industry provides a great deal of
help in seeking the causes for the findings even now. What
would change?
MR. ROSS: Well, I think the burden, the restraint
which would exist, as it exists now as a result of public
policy which the Congress adopted, which says that before
California goes forward with something, they must convince
the Environmental Protection Agency.
I think that if they know they have that process
confrontingthem that they will take into account the necessity
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MIC 516
of overcoming a burden and showing. I'd rather have the
burden where the Congress put it.
CHAIRMAN JACKSON: I don't think that's quite the
way we interpret our responsibility presently. We believe
the burden falls on the industry to prove to the contrary that
the findings cannot be made.
MR. ROSS: I'm sorry, I didn't catch the last part.
MR. JACKSON: We feel the burden falls on the
industry to prove the findings cannot be made. In absence of
their contention, we would assume that the findings exist
and a waiver would be granted as a general approach.
MR. ROSS: You mean the EPA in its consideration of
the California situation?
CHAIRMAN JACKSON: That's right.
In the case where there was no opposition with
regard to an action by the ARB, the EPA would not take the
burden of trying to prove
MR. ROSS: A negative.
CHAIRMAN JACKSON: that the finding cannot be
made.
MR. ROSS: I do not disagree with that, Mr. Jackson.
CHAIRMAN JACKSON: The burden is upon the industry
now and it would be on, in your words, the industry under the
other procedure. Let's make no mistake about it, it's on the
industry now.
MR. ROSS: Well, it's on the industry with specific,
defined standards by which you all conduct your review.
Now whether or not those standards were built into
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617
a new legislative program dealing with general waivers, I
think is another matter.
MR. STORK: I don't want to take more time on this
point, but if you desire to supplement the record with a
statement of how your members would be economically dis-
advantaged by having to take the initiative to call to the
attention of the EPA that California may not, for cause, be
entitled to waiver instead of the existing procedure by which
you don't get around to speaking on the subject until the
certainty that EPA will call a waiver hearing, I would be very
glad to read how the economic burden on the industry would be
different.
MR. ROSS: Mr. Stork, if I failed to satisfy you,
I certainly will attempt to do that.
CHAIRMAN JACKSON: Supplemental presentation to the
record; is that your offer?
MR. ROSS: I think it's my duty at this juncture.
CHAIRMAN JACKSON: Mr. Ross, thank you very much.
MR. ROSS: Thank you very much, Mr. Jackson.
CHAIRMAN JACKSON: We will take a five-minute
break.
(Short recess.)
MR. BARISH: Gentlemen, thank you for allowing us to
appear today.
My name is Howard C. Barish. I am President of the
Motor Car Dealers Association of Southern California and I
appear here today on behalf of our association.
We were unable to file copies of our testimony with
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MCDASC Di0
the EPA by May 1, 1977 because we did not know of this
hearing. I am informed the same was indexed in the Federal
Register as a pesticide proceeding. Even the National
Association of Automobile Dealers was ignorant of this until
indirect word of this hearing was received. Accordingly, it
is urged that our testimony and copies of our testimony should
be received today without objection.
CHAIRMAN JACKSON: We will not object.
MR. BARISH: Thank you.
We have in our context Section 209(a) and Section
209(b) which I won't read because I think it's been discussed
enough.
The Administrator now proposes to consider whether
to grant California a general waiver of federal preemption
of all standards and test procedures, including accompanying
enforcement procedures adopted by the California Air Resources
Board in the future, related to the control of emissions from
new motor vehicles and new motor vehicle engines. However,
the Administrator will provide notice and opportunity for
public hearing upon the submission of a bona fide request of
any interested party to consider whether California continued
to comply wi.th the conditions of such waiver in the light of
future standards and test procedures.
It is our position that the affirmative duty is
imposed upon the EPA to require the submission of changes in
California regulations to public hearings before authorizing
the same. All parts of the statute must be given effect.
When the state adopts or proposes to adopt some new standard,
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619
MCDASC
the Administrator is expressly required by statute to hold
a hearing, after notice, to determine whether such proposed
regulations meet the federal standards as previously stated.
To give an advance waiver subject only to a subsequent
objection would avoid the clear duty imposed by Section (b)
of Section 209 to hold the hearing as stated. The statute
provides for no general waiver and certainly requires a
hearing respecting each change by the California Air Resources
Board. The EPA acknowledges this in this very series of
hearings on proposed variations by the California Air Resources
Board. It is urged that the EPA continue its previous
practices in accordance with the provisions of the statute.
The vital nature of this requirement of prior hearing cannot
be overstated. The availability of automobiles for sale in
California depends upon compliance with pollution standards.
To the extent that the California Air Resources Board may
propose some standard which operates to the economic detriment
of the industry, because, as a practical matter, it is
impossible of achievement or because it creates so great an
expense as to increase the price of the vehicle unreasonably,
proposals of the California Air Resources Board should be
subject to the prior review of the EPA. It could be
extremely difficult, if not impossible, to have a hearing
before the EPA before a proposed change of the California Air
Resources Board became effective. The automobile industry in
California is suffering today, particularly because of the
uncertainties caused by the President's message on the subject
of automobiles, many facets of which are not resolved. We
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MCDASC
urge that this further burden of unsupervised decisions by the
California Air Resources Board not be placed on our industry.
I just want to quote from Section 209(b), the last
part of the law, "... giving appropriate consideration to
the cost of compliance."
As an automobile dealer I wish I were an
attorney. I listened to much of the talk, and I wish I could
explain myself better.
But as a layman and as a businessman I think that
the cost is not just in the emission controls that we have in
California but the cost that it creates to the whole industry
because of other things, the gas mileage, the fact that the
manufacturers do not build cars they build cars for 4 9
states, and they build cars for California. I don't know
whether you gentlemen are aware, but they can't cross-ship.
In other words, they purposely underbuild California every
year because of the fact that no one else wants our cars with
our particular smog devices. We can't ship them to Arizona or
to Illinois or to some other state.
So each year, especially when we have a car that's
pretty hot, the manufacturer, in trying to figure out how
many cars are needed in California, will purposely underbuild
those cars so they won't be stuck with any at the end of the
year that the dealers won't buy.
To give you an idea of the impact of the President's
speech, and which I think goes into this last paragraph of
the cost it is to dealers, I'd like you to hear a telegram that
I wrote to the President of the United States on May 16.
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"As President of the Motor Car Dealers Association
of Southern California, it is my duty to report to you
that your two energy conservation speeches have brought
the automobile business in California to a complete
stand still.
"Our Air Resource Board in California requires a
smog device on new cars that cut our mileage performance
as much as four to six miles per gallon. A mid sized
car selling In Kansas, Illinois or any other of the
forty-nine states has an EPA sticker showing an average
of eighteen miles per gallon. That same car in California
has an EPA sticker showing thirteen miles per gallon.
When I say mid sized car, that means our standard size
Plymouth, Chevrolet, and Ford. You can imagine the
effect your talk has had on Mercury, Buick, Oldsmobile,
Chyrsler, Cadillacs, Lincoln, etc.
"The cars we have in stock and the cars presently
being built can not just disappear. Our manufacturers are
cutting down the size of cars as fast as they can, but in
order to keep our economy whole, this has to be a
planned phasing out process. We cannot change overnight.
"The public misunderstands your entire plan. They
think that when the Presidentsuggests a plan, it is alread;
law. Most of the people think that if they buy a large
car, the tax will have to be paid every year. Many people
buying small cars are waiting to hear what the rebate will
be. Some of our dealers are doing well, especially some
of the import dealers with low priced, high mileage cars,
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MCDASC
but I represent all of the dealers. The American car
dealer's business has completely stopped. Even the used
car business is down because many people think you
indicated there would be a tax on large used cars too.
The May 1st retroactive bulletin has only added to the
confusion. The public has frozen and your auto dealers
and manufacturers are suffering as bad if not worse as
they did during the gasoline scare a few years ago.
"I don't know the status of the rest of the nation,
but I do know that California dealers with the low gas
mileage caused by our stricter emission standards are in
serious trouble. You may solve the gas crisis, but you
could bankrupt the automobile business which could affect
our entire economy. Our balance of trade could also be
greatly affected since the only business going is the
import business.
"The situation is urgent and I recommend that a
third talk be given to the public explaining that it will
take two, three or four years to completely revamp the
car industry and during that time, gasoline will be
available.
"Please give this telegram your immediate serious
cons ideration.
"Thank you.
"Howard c. Parish, President
"Motor Car Dealer Association of Southern California.
That is the true effect that the President's
speeches have had, and we in California are particularly
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MCDASC
623
disturbed because people come in and the first thing they
want to know is what is the mileage they can get on this
automobile. For this particular proposal to allow the ARB
to become even stricter without an overseeing body as the
EPA. concerns us, because we feel as though you are a regulatory
body. You do help to see that the law is correct, and I
can't see the reason why a waiver should be given and not
have you people still responsible for seeing that our laws are
competitive for the rest of the nation.
I'd like to introduce Mr. Estes, who has some
testimony.
MR. ESTES: Thank you, Howard.
I didn't know whether you had any questions of
Mr. Barish before I went ahead, or do you want to take us
together?
CHAIRMAN JACKSON: Go ahead. I'll remember my
questions.
MR. ESTES: I, too, appreciate the opportunity to
appear before you gentlemen.
My name is Robert Estes. I am Vice-President of
the Motor Car Dealers Association of Southern California and
I appear on its behalf. Our objection to the proposal whereby
general waiver of federal preemption would be granted to
California, subject to question only when some interested
party made a request for a hearing, is predicated primarily
upon economic grounds.
We are told that one out of every seven persons
in California depends on the motor vehicle business in some
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MCDASC
capacity for a livelihood. Therefore anything that affects
that business is of enormous importance to California's
economy.
The California Air Resources Board in the past
has repeatedly insisted on more stringent regulations for
California than the rest of the country endures.
Its standards have prevented many vehicle models
from qualifying for sale in California and have made the
gas mileage of California approved vehicles inferior to that
of vehicles approved elsewhere.
To grant a general exemption to California which
would require interested parties to file objections with
the EPA would give the California Air Resources Board the
opportunity to place in effect burdensome provisions without
enough time to obtain a hearing from the EPA. The infinitely
preferable course is for the California Air Resources Board
to be required to seek approval from the EPA for each
change. Then the change could not become effective before
the EPA hearing.
While admittedly it cannot be said with certainty
that the EPA would disapprove a particular proposal from the
California Air Resources Board, it certainly gives our industry
an experienced, technically skilled forum to reevaluate new
proposals of the Air Resources Board, especially in the light
of the economic effect on our industry.
Accordingly, it is urged that the proposal to grant
California a general waiver of federal preemption for all
standards and test procedures be denied and the practice remain
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MCDASC
625
as it now is.
I'd like to state that I have been a franchise
new car dealer in Southern California for just under 4 0 years,
all of it here in the State of California.
The hearings, the way that we have had it, have
certainly been more helpful to those of us in the retail
sales business. We are the ones that, you might say, are on
the firing line. We, of course, are working with the factory.
We are working with the California Air Resources Board and
with the EPA.
Each car that we deliver must be delivered under
the requirements as outlined to us. It's certainly the wish
of every dealer that I know and everybody connected with our
great industry in California that we meet the requirements.
However, when changes occur or could occur more
often than they have in the past where we don't have an
opportunity to truly study these changes and work with our
manufacturers, it truly could work a tremendous hardship on
us. Our technicians must be really specialty trained because
of our special requirements in California. For each of our
men that are working in these these technicians in these
capacities, this does take a great deal of time.
This responsibility falls upon the dealer. We are
the ones that are responsible when these cars- are delivered.
If there is something wrong, we are the ones that are subjected
to fines and even threatened with the loss of our rights and
our licenses to do business.
Actually, all we are trying to do is work with
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626
everybody concerned, with EPA, with Air Resources Board, with
the manufacturer, and with our customers.
I stated earlier that one out of seven in this
State of California depend one way or another upon our
industry, and when something happens to this industry, whether
it be energy crisis, labor problems or something that might
arise over some new rulings, this is going to affect this
economy.
I might add that right at the present time, which
goes along with Mr. Barish's reading of his message to
President Carter, that our industry I made a survey in the
last couple of days as to what was happening in Southern
California. It's really truly surprising the slowdown that
we have had.
There again, I would like for these reasons to
appeal to your gentlemen to leave our law in effect the way
we have it today in regards to the waiver for California
Air Resources Board in the State of California.
CHAIRMAN JACKSON: Thank you, Mr. Estes, Mr. Barish.
The past history of these proceedings has resulted in
our determination that we do not generally deal with public
policy issues with regard to the adoption by California of
emission standards, with the attendant fuel economy penalities
that go along with them.
Our deliberations focus primarily on lead time and
available technology, with appropriate consideration for
cost. However, we have in the past said that the balancing
of the cost versus the benefit of any of their actions is
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MCDASC
627
a matter of public responsibility vested in the authorities
in California, and that's the CARB and the governor and those
other officials who may be responsible to the state.
Clearly the message you have sent to the President
was the right place to send it. That's a public policy
issue for which these forums are not precisely established for.
I recognize that it's difficult for you to appreciate the
fact that we pretend to turn our head on things that affect
the people in California, but under the statute our considera-
tions with regard to the waiver issue are relatively narrow.
And it wouldn't change under the proposal that we are talking
about here. We would still determine that public policy
matters would be a matter that the CARB would have to deal
with in the context of the constituents in California.
However, the effects of the grant, the idea that
someway or another this procedure would prejudice the
interests of the various parties with regard to the kinds of
decisions that we have to make, are rightfully for us to
consider and is something that we would be willing to take
testimony on.
MR. BARISH: I'd like to just ask a question.
Under Section 209(b) and that last sentence or the
end of it that I read, do you not have any power that if you
see that the economic pressure that is put on through laws
passed by the ARB you have no control over, that that doesn't
apply?
Under the end of 209(b), if the California dealers
or the public is put at a tremendous price disadvantage, a
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MCDASC
competitive disadvantage, that you are not an overseer in
that respect?
CHAIRMAN JACKSON: The past practice that we have
had was to leave Our concern is to make sure that those
costs are accurately reflected in the action that is being
contemplated, and that's our consideration.
But the balancing of whether it's worthwhile for
California to impose those costs on its constituents is up to
California and should rightly be brought to the attention of
the CARB and the governor and those who make those kinds of
decisions.
We must presume that when it's brought to us, it's
a matter that in the interests of Californians, and the
Administrator does make that kind of a decision. We don't
believe that's what Congress had in mind.
MR. BARISH: Wouldn't the waiver, if you just let
the CARB go ahead and put it through And supposing that
the interests of the governor, with all due respects, and
the ARB is not in the interests of the people in California,
wouldn't you then be able to step in and say Isn't that
the whole purpose of our whole system of courts and laws,
that we have somebody that has a check over somebody?
CHAIRMAN JACKSON: Precisely. The courts.
MR. BARISH: Well, not your organization? As I
say, I am not an attorney and I am not familiar with how far
you can go with your regulations. As I interpreted it, I
would think that the whole reason that the EPA was put in
over the 50 states and why they should desert California and
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MCDASC
629
just let them go free and do what they want, I don't quite
understand. Why not just do it with the other 49 states and
say make your laws, and we can save a lot of money and not
have an EPA.
CHAIRMAN JACKSON: That may be true.
MR. STORK: I think it was stated best, Mr. Barish,
by a California Congressman in the debates on the waiver
amendment in 1967 when he said that the purpose of this
amendment is to avoid the possibility of some federal
bureaucrat telling the people California what's good for them.
MR. ESTES: May I cast a word here?
I certainly feel that you gentlemen, the EPA, the
California Air Resources Board want to work together. But
I think it's about time that we had the truth out to the
public. Men like Tom Quinn, and I have been in many meetings
with him and talked with him concerning our gasoline mileage
or one phase of it, alone coming out and making the statement
to the public that the 1977 model automobiles and the 1978
model automobiles are getting better gasoline mileage than
the manufacturers' models on a nationwide basis. This is out
and out mistruth. You can look at your EPA stickers and
see this.
Here's something at a . time when we need economy,
and our economy and mileage in these automobiles is getting
worse, no better. Our industry is doing everything possible
to correct this situation, but we can't do the impossible.
If you are out here on the firing line trying to
prove to the buying public why they are not getting this
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MCDASC
630
mileage, why this terribly poor performance, cold engines and
cold engine starts and warmups, it's a tough, tough job. I
just think that there must be some way that the CARB and you
gentlemen and manufacturers can really work together in some-
what more harmonious and yet truthful fashion as far as the
buying public are concerned.
I see it every day. We are, as I said before,
tied down as to what we can do. I have had an engineering
background. I have done a great deal of work in both economy
and performance, and certainly we can do things to improve
the operation of these cars right here in the State of
California and do it quite simply, those of us that know what
to do. But I'm certainly not going to do it, and I am not
going to allow any of my people to do it. First of all, it's
breaking the law, which I don't believe in.
I feel, as Mr. Barish does, in the first place I
don't see why California really should be granted any waivers
over what the rest of the country has.
When this first came up some three or four years
ago, I appeared back in Washington and talked to some of you
gentlemen. At that time, it was kind of a question of, as
I took anyway, let's see what happens in the State of
California and what they are going to do. To me, we certainly
have done a great deal to clean up the air, and all of us want
to do this. But in doing so, it's really getting down to
the place where it's costing the buying public. It's really
costing the taxpayer.
MR. STORK: I do have one specific question for
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631
MCDASC
Mr. Barish, but I would like to make a comment to you, Mr.
Estes, because I do appreciate your taking the time to come
here today and to share your views with us.
MR. ESTES: Thank you.
MR. STORK: I think I can understand your frustra-
tions, and you express yourself very clearly when you say you
don't see why the EPA can't do this thing like you think it
ought to do, bring sense to it as you see sense should be
brought to it.
While it's not really the purpose of this hearing
to debate, I do want to comment to you that you cannot look
to the EPA to take that role. It's unrealistic to do that.
The EPA as a government agency is constrained in the actions
it can take by the statute. The problem, as you see it as
a problem that you are talking about, is a political problem.
And I use the word "politics" not in any pejorative sense
but in its generic sense. I consider "politics" a very
good word. That's how we in our country govern ourselves.
Other parts of the world govern themselves in other ways.
We prefer our way.
Yet the process by which we govern ourselves has
resulted in the mechanism by which there is decentralized
decision making on this issue in California, an issue which
Californians can bring their views to bear primarily through
their own local political processes. As to substance, you
should not look to the EPA to give you substantive relief
because the Congress has told the EPA not to have federal
bureaucrats meddle with the substance of what California wants
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MCDASC
to do.
MR. ESTES: I understand what you are saying, and I
appreciate it.
All I am saying here is that I would like to see
things stand as they are now. Of course, it is difficult,
but how much more difficult would it be if, let's say, a
dealer as myself that is deeply interested in what's happening
both to the economy and to performance? We have to take our
time on a 30-day basis rather than on an annual or semi-
annual basis to study just what is going on or to object to
things that are happening.
I feel, and I'll be outspoken about it, that the
California Air Resources Board is asking for authority to do
things that they should not be asking for. I feel that you
legally and we have heard a lot of testimony, and I am
certainly not an attorney by any means, but I feel it is your
duty as a governing body to direct the California Air Resources
Board in the way that you feel that it should be directed.
I don't know what your decision is going to be, of
course, but I do hope that you will thoroughly consider the
things that we are talking about.
MR. STORK: Well, we also do not know what the
decision will be. That's why we are here, to learn. We
are learning.
I have one particular question for Mr. Barish.
You said, if I understood you correctly, that manufacturers
build a limited number of California cars because they can't
sell them anywhere else. That implies to me, I infer from
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MCDASC
that, that you suffer car shortages. You could sell more
than you actually sell, but you can't get them because the
manufacturers won't give them to you because they just build
enough.
Is my understanding or inference from what you said
correct?
MR. BARISH: Yes. If I were a manufacturer and I
had a car that would get three or four miles less per gallon
and the dealers weren't buying you know, according to the
laws we can buy the number of cars that we want. If we get
backlogged and stockpiled up, then we can't buy them because
the bank stops us on flooring and we can't afford to carry
the automobiles.
Now many manufacturers put cars in what they call
a bank. They prebuild the cars and they put them in a bank
and then they try to sell them to the dealers, not on an
ordered car basis but based on the way that they got to keep
their manufacturing going and their labor going. Now in that
bank, they try very hard not to build California cars because
they are not sure that California is going to buy.
Now our market could change. In two months, we
could have an upsurge and all of a sudden business gets good.
We can't buy the cars out of the pool because they built those
cars for the other 49 states. So we suffer. All of a
sudden, we run out of cars and they haven't got any with our
smog devices on it and we can't get the automobiles. This
has been going on for years.
It would mean so much to us if we could be like the
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MCDASC
rest of the states in the country and do it, but I feel as
though the manufacturers, if they haven't done it yet, I
sometimes feel as though they have abandoned us. Let's face
it, we are only one out of 50 states and they can't predicate
their projection and their supply based on just what happens
with California laws. As our emission controls get more and
more stringent, they have to be more and more careful,
because who in the world What state would buy a car with
one of our smog devices? Nobody.
MR. STORK: I understand that from a theoretical
standpoint, and I am well aware of the fact that in the other
states at times people can't get the cars they want because
there is a sudden rush for them, be they large cars as it is
now or small cars in 1973-74.
I am wondering, is there a clear statistically valid
pattern by which California dealers more frequently in all
sizes of cars are unable to sell them because they can't get
them from the factory, a pattern that differs from other
states?
MR. BARISH: I want to speak as a dealer, my
personal opinion, and from the many dealers that I've talked
to. And the answer is yes.
Now we have manufacturers here today, and I don't
think they are picking on California. I think that they
are interested in this market. This market used to be
ten percent of the automobile business. I don't know what it
is today, but I realize their frustration and I think it's
very clear that if you are going to build a bunch of cars,
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MCDASC
before you sell them and you are not sure 1/50th of the country
is going to buy them, you are going to build them for the
49/50ths of the country and not take a chance. I am not
accusing our manufacturers of picking on us, but I think they
are businessmen and they must be practical. They must sell
their merchandise.
You know, it takes the manufacturers three or four
or five years to change a car. They've got their pattern
set. They have their engineers. Somehow or other, we
get the feeling that both the ARB and the EPA don't seem to
understand that it takes quite a while for something like an
automobile to change its pattern. They feel as though you
can change a law in one month and everybody will conform.
The public will conform, but what in the world is our economy
going to do with those automobiles until we solve the problem?
It's a very serious problem. We went through it
once before in the gasoline crisis when lines We just
couldn't sell. Cars that came in trade were half of book.
This is a real problem, especially for California because of
our poor gasoline mileage.
MR. ESTES: May I add a little bit to that, too.
Something else that affects the dealers drastically
is the fact that we do not have many of the models and
combinations, transmissions and engines, as you gentlemen
must be aware of, that are available in 49 states and not
available in California. A great many of these are the
combinations that are the most economical.
Even today, although it's against the law, there are
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MCDASC/FORD
636
lots of automobiles being purchased out of the State of
California and brought in here on a bootleg basis with the
hopes of buyers being able to get away with it. They are
looking for the kind of transporation they want. A man
that may have had a particular model three years ago that he
enjoyed and had good success and good economy with today
goes out to buy that same model and he finds that he can't
get that engine, he's got to have something else if he wants
that pickup truck or whatever it might be.
These are all phases of the industry that we are
faced with in sales that affect our economy.
CHAIRMAN JACKSON: Gentlemen, thank you very much.
Appreciate you taking the time.
MR. BARISH: Thank you for allowing us to testify.
MR. ESTES: Thank you for allowing us to be here.
MR. EPPEL: If we are ready, for the record, I am
John Eppel, Associate Counsel for Ford Motor Company, with me
is Helen Petrauskas, Staff Attorney for Ford. We are appear-
ing here today to present Ford's objections to the so-called
general waiver of federal preemption proposed by the
Environmental Protection Agency. On April 13, EPA, in connec-
tion with hearings on a number of waivers requested by
California, also announced that the Agency had notified
California that EPA would consider". . . whether to grant
California a general waiver of federal preemption for all
standards and test procedures (including accompanying
enforcement procedures) adopted by the CARB in the future."
As Ford understands the proposal, if it is adopted by
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FORD
637'
EPA, California's new motor vehicle emission laws and regula-
tions would automatically be enforceable upon adoption, not-
withstanding the preemption provisions of Section 209 of
the Clean Air Act. After the California law or regulation is
adopted, interested parties could, apparently, seek considera-
tion of whether the automatic waiver should be withdrawn for
a particular standard or procedures. If such a request were
bona fide, and apparently EPA will be the sole judge of this
incredibly vague requirement, then, and only then would the
waiver consideration begin.
On behalf of Ford we submit that the general waiver
scheme is not authorized by the Clean Air Act, would violate
the due process guarantees of the Fifth Amendment and, in
fact, would produce more waiver hearings that would be held
more often than is the case today.
In point of fact, however, there is a threshold
question that must be dealt with before these issues should
even be addressed.
This is my first point: Under Section 209 EPA
cannot institute a waiver proceeding on its own motion, absent
a request from California.
I believe both California and Mr. Stork have
concurred in the proposition that indeed that's what has
happened here. This is EPA's proposal, not California's.
Section 209(b) of the Clean Air Act does not, on its
face, establish procedures governing the institution of the
hearing which must be held before a waiver of preemption can
be granted to California by EPA. It is clear from the
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FORD
638
legislative history, however, that a 209(b) hearing was to be
held only after California had requested it. During the
consideration of the waiver provision in the House, the
California delegation's position on the measure supported by
California and eventually enacted as Section 209(b) was
characterized as follows:
. . what California is saying is: 'We want
something different from any other state. We want a
right that nobody else will have, to do something in an
orderly procedure by filing a petition with the
Administrator of the program.'"
Moreover, past EPA practice and procedures for con-
ducting waiver hearings under Section 209 have been without
exception fully consistent with this Congressional direction.
An examination of past waiver proceedings reveals that they
have all been based upon specific requests by California which
were carefully set forth and identified in the notices of the
hearings and the waiver decisions themselves. Of course, under
general rules of administrative practice EPA could on its own
motion or at the request of an interested party reconsider or
reexamine the validity of a particular waiver once it had been
granted, but where there has been no request for a waiver or
where there is no waiver to reconsider, there is absolutely no
predicate for EPA action.
In this instance, California has not filed any
petition or request that EPA consider its eligibility for a
general waiver for unspecified future actions that may be taken
by the CARB nor, indeed, as we will demonstrate, could they
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FORD
639
properly have such a request considered by EPA.
Ford would submit therefore that this entire pro-
ceeding is at best premature and in fact contrary to the
notice aid hearing procedures contemplated by Congress at
the time Section 209(b) was adopted.
Notwithstanding the impropriety of a waiver hearing
without any waiver request, Ford believes it important to
comment on the concept of a general waiver in the hope that
this subject can be properly put to rest. We are all here in
San Francisco, what the heck.
Our second substantive point: The "General Waiver"
and after the fact particularized notice and hearing are in fla:
contravention of the express terms of Section 209 (b).
Section 209(b) provides for a waiver of the pre-
emptive application of Section 209(a) to enable California to
enforce unique standards only "after notice and opportunity
for public hearing" and only if (i) California standards are
more stringent than applicable federal standards and are
required to meet compelling and extraordinary conditions, and
(ii) the standards and accompanying enforcement procedures are
consistent with Section 202(a).
Clearly, there can be no waiver of federal pre-
emption absent an express order of the Administrator. Notice
and hearing aside, for the moment, before issuing such an
order, the Administrator must consider whether he must make
one or both of the two findings set forth in Section 209(b).
And Mr. Stork, I hope that satisfies you. An adequate
consideration of whether to make either or both of those
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findings must entail consideration of the details and impact
of a specific California standard and a comparison with a
specific federal standard known to be applicable to the same
class of vehicles during the same period of time. Certainly,
manufacturers cannot be expected to address, forever more,
at this so-called general waiver hearing either of the two
statutory findings. Stringency, need and consistency are
all dependent upon an analysis of a particular requirement
and its relationship to those concepts. Indeed, it is only
by such a particularized comparison that there can be answers
to the subsidiary questions which underlie the two general
findings.
These subsidiary questions may be stated in a variety
of ways. Mr. Ross stated them one way this morning. I've
set forth in my printed statement what we think they are. I
don't plan to read them here again. You have all seen them.
But I would note that although EPA has disagreed
in the past with respect to the degree of emphasis to be placed
on some of these subsidiary questions, the Agency has conceded
its special, federal responsibility to determine the feasi-
bility of California standards. For example, in his opinion
of May 20, 1975, Administrator Train analyzed the legislative
history of Section 209 and found that there are two areas
"reserved for federal judgment by this legislation the
existence of compelling and extraordinary conditions and
whether the standards are technologically feasible."
Because ultimate findings in these areas reserved
for federal judgment rest upon questions which cannot be
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answered in the abstract, it seems clear that Section 209(b)
authorizes EPA to consider waiving preemption only for
specific California standards and accompanying enforcement
procedures not for a general regulatory concept.
Moreover, the legislative history of Section 209(b)
supports this position. According to the Senate Committee
Report, accompanying the waiver provision, it was limited to
California because:
"... only the State of California has demonstrated
compelling and extraordinary circumstances sufficiently
different from the nation as a whole to justify standards
on automobile emissions which may, from time to time,
need be more stringent than national standards."
The Senate Report obviously contemplated a waiver
only for those standards which "from time to time" were needed
to meet California's special circumstances. Moreover, in
urging the House of Representatives to adopt the Senate
approach, Representative Moss, who has already been
quoted here by Mr. Storkand ARB, stated, and I would emphasize:
"California is not, however, given a blank check
by this amendment. First, the Secretary must give notice
and an opportunity for a hearing, and then he must waiver
the preemption of California laws unless he finds," and
then he goes on to make the same statements as the
findings. That's a later quote from Congressman Moss
than that used by the ARB.
Congressman Moss, relied upon by the CARB as the
source of legislative intent and indeed the leading proponent
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FORD
642
of this provision, did not tell his Congressional colleagues
that after a meaningless general waiver hearing where the
issues required to be considered can by definition not be
considered, EPA will grant a general waiver so that from
thereon first, the waiver will be granted and then there may be
a notice and hearing.
The third major point: Questions under 209(b)
aside, an after the fact hearing to exercise the "federal
judgment" entrusted to EPA with respect to a particular stan-
dard or procedure would violate the due process clause of the
Fifth Amendment.
Recent opinions of the United States Supreme Court
have reinforced, and some would say expanded, the concept
that procedural due process, in most instances, requires a
hearing before, government can command that a person or
corporation expend funds or give up other property rights.
And I might add here that this morning the ARB and
I think some of the questioning from the panel indicated that
there will be a hearing before manufacturers must comply.
That is, before the date by which the standard must be met.
But at the same time they indicate that the manufacturers
lead time will begin before the hearing. That is, manu-
facturers will have to spend money, take steps in order to
comply before the hearing.
Returning to the printed statement.
In Fuentes v. Shevin, the Supreme Court observed
that:
"For more than a century the central meaning of
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procedural due process has been clear: 'Parties whose
rights are to be affected are entitled to be heard
and in order that they may enjoy that right they must
first be notified.1"
"It is equally fundamental that the right to notice
and an opportunity to be heard must be granted at a
meaningful time and in a meaningful manner."
"If the right to notice and a hearing is to serve its
full purpose, then, it is clear that it must be granted
at a time when the deprivation can still be prevented. . .
not later hearing and no damage award can undo the fact
that the arbitrary taking that was subject to the right
of procedural due process has already occurred". We've
already spent the money to try to start to comply.
Returning to the quote, "'This Court has not. . .
embraced the general proposition that a wrong may be
done if it can be undone.'"
"Although the Court has held that due process
tolerates variances in the form of a hearing 'appropriate
to the nature of the case. . . and 'depending upon the
importance of the interests involved and the nature of
the subsequent proceedings, if any,' the Court has
traditionally insisted that, whatever its form, oppor-
tunity for that hearing must be provided before the
deprivation at issue takes effect." And that's 407 U.S.
67 and the quoted material is Pages 80 and 82.
Under the post-waiver hearing procedure that would
follow a general waiver, a significant deprivation of property
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would occur whenever new regulations and/or test procedures are
promulgated by California. Those wishing to contest such
requirements and entitled by law to seek the federal judgment
assigned to EPA by the Clean Air Act would be obligated to
expend resources in an effort to comply prior to the after
the fact hearing and decision.
Certainly it may be, and indeed it has, been sug-
gested that the rule in Fuentes and some of its predecessors
deals only with the application of due process protection to
helpless individuals or consumers in danger of losing their
income or household goods. The Supreme Court, however, dealt
with precisely this assertion in a case named Di-Chem, Inc.
Quoting from the Court:
"It may be that consumers deprived of household
appliances will more likely suffer irreparably than
corporations deprived of bank accounts, but ... we are
more inclined now than we have been in the past to dis-
tinguish among different kinds of property in applying
the Due Process Clause."
Nor can it be suggested in the face of a statutory
direction to first have the hearing and then decide upon the
waiver request, that a California waiver proceeding presents
the type of emergency which would justify a hearing after the
fact. According to the Fuentes opinion, "There are
'extraordinary situations' that justify postponing notice and
opportunity for a hearing. These situations, however, must be
truly unusual." A California waiver proceeding can in no
sense qualify under the criteria set forth in Fuentes.
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We'd like to depart here from our printed statement
and then return to it. My colleague has a few other comments
on the United States Constitution and its bearing on these
proceedings.
MS. PETRAUSKAS: The grant of a general waiver would
be constitutionally infirm on grounds other than grounds of
due process.
First, and I'm quoting here_for an opinion in the
Ninth Circuit in California versus EPA, "Waivers of
exclusive federal jurisdiction, like waivers of soveriegn
impunity, are to be strictly construed. We must find that
the claimed waiver of exclusive federal jurisdiction is clear
and unambiguous and also that it is not unduly broad or
irrevocable."
As you probably know, the Supreme Court reversed the
Ninth Circuit in this case, and in a companion case under the
Clean Air Act as well, Hancock v. Train, and in doing so held
that EPA in those cases was right in its position; namely,
that EPA does not have the prerogative to delegate certain
federal authority to the states.
Second, "Because a waiver of federal preemption
is nothing more than a delegation of regulatory authority from
the federal government to the states, the criteria governing
proper delegation between the Legislative and Executive
Branches are applicable here."
Drawing now from the recent case of Amalgamated
Meat Cutters vs. Connally, delegation of authority is found
only if it is accompanied by concepts of "control and
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accountability." A general waiver is a relinquishment of
control and dereliction of accountability.
Next, delegation of authority is sound only if it is
accompanied by precise statutory limitations under which
authority will be exercised. A grant of general waiver is
designed to avoid the need to make any specific findings.
Next, the delegation of authority is sound only if
it is circumscribed and defined by ongoing administrative
rules which will serve to limit the latitude of executive
action.
As explained by Judge Leventhal in Amalgamated Meat
Cutters, the guarantees and notice and opportunity for a
hearing as well as a requirement that an agency follow its
own rules adopted after notice and opportunity for a hearing
will clarify the extent of any delegation. A grant of
general waiver is designed to deny opportunity for meaningful
notice and hearing.
I might point out that this kind of approach is
particularly relevant in view of some of the testimony we
heard this morning. For example, as I quote from the ARB
statement, "California will have adopted enforceable regula-
tions under its own sovereign powers, which regulations will
automatically be relieved of federal preemption."
That, in my judgment, is delegation.
MR. EPPEL: Returning to the statement and our fourth
point: In practical application, the general waiver scheme
will result in more not fewer waiver hearings and more not less
confusion with respect to California's regulation of new motor
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vehicle emissions.
Putting all questions of authority aside, the
general waiver and after the fact hearing procedure will force
manufacturers, as interested parties, to submit hearing
requests immediately following the adoption by California of
any law or regulation which raises any of the questions
committed to federal judgment by the Clean Air Act. By law,
EPA must respond to these requests within a reasonable time
and the end result will be that consolidated hearings, such
as the one we are holding today, to consider a number of CARB
actions taken over a period of months will no longer be
possible.
I might add parenthetically at this point that I
must have misunderstood California's statement, but as I
understood the material on Pages 6 and 7, they propose to have
the notice of Board hearing act as the notice to start their
30-day period. And I quote, "We see no reason why this
form of notice should not be adequate for the purpose of
commencing the aforedescribed 30-day statute of limitations
to run."
Now if I am right in my reading of that, it's the
ultimate Catch 22, because our time for asking for a general
waiver review expires the day California acts on the proposal.
Now giving them the benefit of the doubt and
reading it in a little more rational fashion, I would still
suggest that the notice of the proposed action couldn't
possibly serve to be the notice of time in which to file for
a general waiver review, since more than half the time the notic i
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of proposed action has little or nothing to do with what the
Board finally does.
Going back to the statement
CHAIRMAN JACKSON: We didn't embrace that notion
anymore than we are embracing anything else.
MR. EPPEL: I didn't suggest you did. I just thought
I ought to comment on it.
CHAIRMAN JACKSON: Okay.
MR. EPPEL: More important, the valuable opportunity
which currently exists for California to reconsider and modify
Board actions and for EPA to modify its requirements to
accommodate California during the months before a waiver
hearing will be lost. It is no secret to EPA, CARB or the
manufacturers, that the pace of CARB action has in the past
resulted in the need to modify California's standards and
procedures after their final adoption. Heavy-duty SHED, vapor
recovery and medium-duty truck regulations are but a few
examples. Traditionally, some of the required modifications
are made before the waiver hearing but most are made as a
result of matters brought out at the waiver hearing. At the
conclusion of my statement, I have a couple of remarks on this
matter, by the way.
There can be no question that the waiver hearings
have been the unique and sole forum for consideration of
federal and California requirements in their totality. It
has, as Congress intended, forced all of the participants
EPA, CARB, manufacturers and others to strive to reconcile
federal and California regulatory programs so as to assure
the most orderly and effective emissions control program.
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Unlawful abandonment of this procedure is nothing
more than a denial of the facts of the regulatory process or
an effort to deny manufacturers the right to participate
meaningfully in this process. Neither EPA nor CARB can deny
the fact that the pattern of regulations during the last
several years has been, first, an EPA proposal, followed by a
CARB proposal and adoption of a variation of the EPA proposal
in advance of federal action by CAR3, followed by EPA
adoption of a regulation different from both its proposal and
California's regulation, with the waiver hearing serving as
the sole opportunity for all of the parties to participate in
and reconcile these diverse regulations.
If EPA adopts the general waiver scheme, the timing
of hearings will be such that all of these changes and
accommodations, which, by the way, are generally required in
order to qualify for a favorable EPA judgment on technological
feasibility, will have to be brought forth and developed at
what may well become monthly EPA post-waiver hearings.
The only difference will be that manufacturers will
be compelled to comply with possibly defective California
standards and procedures possibly defective in the sense
that procedural details render the standard technologically
infeasible as was the case with the heavy-duty truck exhaust
regulations. In any event, that situation is directly
contrary to what Congress intended in Section 209 (b) and in
conflict with the constitutional requirements of procedural
due process.
Judge Leventhal, no stranger to EPA, when confronted
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with another agency that did not have time and was too busy to
hold a hearing before taking an action vacated the rule making
in question and stated that an agency may not:
"... take precipitate action without a hearing on
the ground that it can always cancel out and reconstruct
if so advised after hearing. To act in haste, repent at
leisure, is not a sound motto for an administrative
agency." Pennsylvania Gas and Water Co. v. Federal Power
Commission, 427 F2d.
I cannot believe that Judge Leventhal would approve
of EPA's general waiver and after the fact hearing scheme as a
motto or course of action to be adopted by EPA. The Agency
should reject this concept and get on with the business of
exercising the special federal judgment with which it has
been entrusted by the Act.
CHAIRMAN JACKSON: I thought you said you had some
additional comments you wanted to make.
MR. EPPEL: Yes. I had a comment on the question of
whether or not manufacturers lean on waiver hearings to avoid
making a full record before a Board.
Quite frankly, I am a bit surprised. I don't know
whether Ford was included in that or not. I don't think we
belong there if that's the case.
One excellent example is the heavy-duty truck
exhaust rule making. The ARB adopted a procedure which they
admitted several months later in the waiver hearing they had
never tried, they didn't know anybody else who tried it, and
they had no idea whether the instrumentation was available to
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FORD
carry it out.
At that hearing, we presented a witness who detailed,
and I mean detailed, what was wrong with that procedure. Both
California and EPA, despite the fact that we had submitted
that very same detail to EPA in response to an NPRM and to
California at a hearing, both agencies were shocked and
amazed that there were these problems and that we hadn't
brought them out before. We tried. The only place we could
get both agencies to listen to it was by forcing everybody to
sit down at a waiver hearinq and Duttinq on a witness for the
better Dart of 45 minutes to read it.
Those are mv comments.
CHAIRMAN JACKSON: How did you force a waiver
hearinq?
MR. EPPEL: I am sorry, we didn't force a waiver
hearinq. We forced people to listen to it.
CHAIRMAN JACKSON: I see. You made a very
compellinq argument for a course of action which I have never
really looked forward to embracing before, and that's the
superimposition of EPA judgment on anything.
MR. EPPEL: Well, I guess it's to consider the
alternative is the problem.
MR. STORK: Mr. Eppel, I said to another witness
this morning that I flew all night last night to come out
here and learn something, and you know I always learn from
you, and I appreciate it. Your statement reflects an awful
lot of thought and, presumably, work. And it helps me
understand the issues.
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The one issue that you did not cover in your
statement and you touched on for a moment in an aside is one
I would like to ask you to elaborate on, because it is
obviously a very key issue in this, and that is: where does
lead time start running from?
As you have pointed out persuasively, if not
conclusively, we might see each other more often in California
and no time would be saved.
Yet, the lead time issue is rather critical in this
whole concept, and your views on that, sir?
MR. EPPEL: Well, I am somewhat at a loss to respond
directly, but I'll try.
As far as we are concerned, as far as I read the
statute, California does not have an enforceable regulation
until a waiver has been granted, be it a general waiver or a
specific waiver. There is no law that can be enforced.
Now that is not to say that a reasonably prudent
manufacturer doesn't start to do something; not as Mr. Steinway
commented, perhaps when faced with a totally irresponsible
regulation such as the original heavy-duty truck exhaust test
procedure. But under normal circumstances a manufacturer
who is reasonably prudent is going to start to do something.
The EPA has an obligation, however, I believe to
review the state of the record that is brought to it at the
time it holds the hearing. I don't care when lead time
starts to run. EPA has got to assess the lead time as the
time it makes the waiver decision.
As a matter of law, you can argue, and many
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653
manufacturers have, that they don't feel obligated to do
anything until there is an enforceable law. I would agree
with that. I think you've really got to look at the facts
of the way this procedure operates. And that is, some
manufacturers, maybe all, will do something and EPA is
entitled to consider what they have done. But it must review
the record as it's brought to it at the waiver hearing.
MR. STORK: That doesn't help me as much as you
usually help me.
MR. EPPEL: Well, try again, then.
MR. STORK: The question of whether lead time is
adequate is never crystal clear.
MR. EPPEL: Obviously.
MR. STORK: But let's assume a case in which it is
crystal clear, and let's assume a case in which lead time to
do something, maybe a particularly simple thing, maybe
involving sheetmetal or something. Let's say lead time
clearly exists if it's 18 months and clearly does not exist if
it's 12 months. And let us assume that because of the
administrative delays inherent in the waiver process there is
no way in which the decision is going to be made for six
months from the time California acts.
The Administrator, considering whether adequate
lead time exists, is he faced with making that judgment on
18 months or 12 months, which under my postulated situation is
the soonest he can take action.
MR. EPPEL: Let me try again.
First of all, I think it is a hypothetical. In all
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FORD 034
of the waiver hearings we have been through, I'm hard pressed
to remember very many anyway where the lead time question was
so crystal clear that you could postulate the 18 versus 12
months.
MR. STORK: I agree with that.
MR. EPPEL: Okay. Secondly, what I said before
is that the Administrator is not free to hypothesize what
could have been or what might have been or perhaps even what
should have been. The Administrator has to look at the
record that is brought to it.
Let's take your hypothetical. At 18 months, there's
clearly time to do it. In 12 months, there isn't lead time
to do it. The Administrator, again hypothetically, is review-
ing a record where one or two manufacturers took whatever steps
they felt was necessary so as to be able to do it at the end
of the 18-month period; other manufacturers didn't for whatever
reason, and often those reasons are good and sound business
financial reasons. There are other companies in the industry
that aren't as wealthy as some of the others and don't have
the resources to try to protect themselves against governmental
action.
Let's take the hypothetical and say two of the
manufacturers did. So now you are faced with the situation
where, as to a part of the industry, it's clear that if they
keep moving along the way they have been moving, there will
be lead time. As to the other part, it's clear they are
going to be out of the market for a certain period of time.
I think then you face very directly the same kinds of problems
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that Judge Leventhal talked about in International Harvester.
You've got to make a decision, not on what could have been
or should have been, but are there going to be enough cars
available in that model year meeting that standard so as to
satisfy basic new car demand. Now I don't want to get into
a big discussion about what "basic new car demand" is, because
that's a difficult concept. But it's one that the agency is
going to have to face up to one of these days.
MR. STORK: Okay. If I understand your answer
correctly, your view is lead time starts on the day the
Administrator makes his decision in terms of can effective
demand for new cars be met; is that your answer?
MR. EPPEL: Yes, that's my answer.
MR. STORK: Thank you.
CHAIRMAN JACKSON; Can we go to lunch now?
MR. EPPEL: Pine with me. Are we all done?
CHAIRMAN JACKSON: I think so.
Thanks very much.
MR. EPPEL: Do you have anything else you want to
add?
MS. PETRAUSKAS: Yes, this example.
MR. EPPEL: Can we take just about five more minutes
to go through an example? There was a lot of question this
morning about what's the practical impact, why are you guys
all out here screaming.
We did Helen actually did a chronology of how we
got to the end of the line on SHED, and I think it might take
about Well, let me say this: will you stipulate that as to
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SHED we would have had numerous requests for petitions for
general waiver recisions before we got to the end of the line
on that one, and then I won't read this?
CHAIRMAN JACKSON: Under no circumstances.
MR. EPPEL: Huh?
CHAIRMAN JACKSON: Under no circumstances.
MR. EPPEL: Well, then, can we read it?
CHAIRMAN JACKSON: Certainly.
MR. EPPEL: Okay.
MS. PETRAUSKAS: I think the series of SHED
decisions are particularly appropriate because of the many
fits and starts we had. Let me just run through it quickly.
On April 16th, 1975, California adopts requirements
for 1977 model and subsequent years an evaporative requirement
determined by the SHED test procedure. Assuming we are
operating under a general waiver and perhaps assuming further
that we were operating under the kind of proposal that
California suggested this morning, we would have had 30 days
in which to ask for a hearing. With respect to that par-
ticular requirement, Ford has substantial lead time problems,
and we would have had no choice but to request such a waiver.
Presumably at the same time, we would have tried to
petition the ARB to amend its requirements. So we would be
proceeding on both a federal and a state level contemporane-
ously.
While the waiver hearing was being scheduled
following our request, which followed the April 16th action,
California acted on May 14, 1975, to again amend the SHED
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regulations.
The SHED regulations, as amended, still created
substantial problems with Ford. Presumably at that point,
we would again apply to EPA for a waiver hearing with respect
to this action within 30 days, at the same time proceed on the
California administrative level to have them change their
procedure. We would now have four proceedings in one, pending
at some point or another.
On March 31st, 1976, California again amended the
SHED procedure, this time applicable to 1978 and subsequent
model years.
Again, we had substantial problems with this
procedure as adopted. We would have requested a waiver and,
at the same time, proceeded to petition California on the
state level.
It's not clear what other Obviously, I can't
speak for other manufacturers. I don't know what they would
have done. I don't know if the prior four proceedings are
completed by the time we initiate this fifth and sixth
proceeding.
On October 5th, 1976, California adopts yet another
requirement for 1978 and subsequent model year vehicles with
respect to SHED requirements. Again, we have two more pro-
ceedings, one federal and one state. I don't know how many of
the other ones would still be hanging around at this point,
but I think we are now up to eight different proceedings for
Ford Motor Company alone.
On May 3rd, 1977, California has noticed other
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amendments of the light-duty vehicle and medium-duty vehicle
SHED procedures. So, presumably, we are now up to ten
hearings, five on the federal level and five on the state
level, and that's for Ford Motor Company alone.
I submit that's not good use of our resources or
the agency's resources.
CHAIRMAN JACKSON: Thank you very much.
We will take a lunch break now and return at
1:15 o'clock.
(Noon recess.)
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GM 659
THURSDAY, MAY 19, 1977 1:15 O'CLOCK P.M.
oOo
CHAIRMAN JACKSON: Mr. Petersen, are you ready to
go?
MR. PETERSEN: Yes. Mr. Stork, Mr. Jackson, Mr.
McNab, ray name is Richard I. Petersen. I am the attorney for
General Motors Corporation. I appreciate the opportunity
to submit comments on the issue of granting a general waiver
of federal preemption to the State of California.
I apologize for not having a written statement
available today, however, before the record closes I will
submit a legal brief with supporting case law demonstrating
the impropriety of granting a general waiver of federal
preemption to the State of California.
Before I begin my comments on this issue I would
like to respond to a few points made this morning by the
California Air Resources Board.
Mr. Macomber's position, as I understand it, is
based on the argument that delays in the administrative
process have been prejudicial to the CARB's emission control
program. This is a fine argument, but really a philosophical
one which was not supported by any specific examples, and,
therefore, it certainly is unpersuasive.
Although the panel did its usual fine job of question-
ing the witness, I was disappointed that the panel did not
require Mr. Macomber to support his arguments with specific
examples.
The delays or the alleged delays have not been caused
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GM 66 0
by the interested parties which are entitled to due process
rights to participate in this type of regulatory action.
These precious constitutional rights should not be compromised
in order to eliminate an alleged problem caused by regulatory
inefficiency.
I was totally confused by the EPA/CARB exchange
on presenting new evidence, and whether or not a manufacturer
would be required to petition EPA or CARB or both after the
tolling of Mr. Macomber's proposed, quote, "statute of
limitations," unquote.
A basic issue we are dealing with here today is
federal preemption in the supremacy clause in the United
States Constitution. Under the general waiver theory, the
supremacy clause of the United States Constitution would be
destroyed insofar as it applies to vehicle emissions in the
State of California. I hope the panel understood California's
position on this question, because as I said, I certainly do
not.
It is certainly questionable whether or not Senator
Muskie would agree with Mr. Macomber's statements that it was
the clear Congressional intent for California to occupy a
role of national leadership in the control of vehicle
emissions, especially subsequent to the Clean Air Amendments
of 1970.
In requiring the 90 percent reduction in emissions,
the U.S. Congress set the first emissions standards forcing
emission control technology. By the Clean Air Amendments of
1970 I believe it is safe to say that the U.S. Congress
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clearly took over the role of national leadership in the
control of vehicular emissions.
The legislative history quoted on Page 3 of Mr.
Macomber's statement from the 1967 amendments to the Air
Quality Act are really irrelevant to the concept of a general
waiver. This legislative history clearly does not support
the concept. Moreover, I believe that the legislative history
of the Clean Air Amendments of 1970 are probably more relevant.
Mr. Eppel quoted from this history this morning, I believe.
So far as the legislative history regarding
California's ability to be the unique laboratory of emission
control technology, certainly that does not compromise EPA's
waiver responsibilities.
Parties who are interested in California regulatory
action are often parties located in all areas of the country.
I would clearly question the adequacy of notice to interested
parties by way of Mr. Macomber's proposal stated on Pages 6
and 7, that the California regulatory process would provide
these people with adequate notice and opportunity to be heard
on these issues, because the issue is really national
preemption. I think certainly national notice by way of the
Federal Register, even though it does have its shortcomings
sometimes, is more appropriate.
I would disagree also with Mr. Macomber's assumption
that there would be fewer waiver hearings and that the
administrative process would necessary speed up. Take these
hearings, for example. General Motors raised significant
questions on all six waiver issues, and certainly we would
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have requested a waiver hearing on each individual issue
had the general waiver concept been in effect.
I also have to take exception to the statement on
Page 8, and I would like to read it. "Presently, EPA's
reaction time to California's waiver request constitutes a
significant constraint in some cases upon what California
desires to accomplish. We do not believe that Congress
intended for procedural obstacles to impede California's
efforts."
Perhaps it is true that EPA's reaction time is not
as quick as California would like that reaction time to be,
however, again, I think that is an EPA problem, and due process
rights of interested parties should not be compromised in
order to alleviate that problem.
But what I strongly disagree with is that federal
preemption, the principle of federal preemption in the
supremacy clause of the United States Constitution should be
characterized as a "procedural obstacle."
Lastly, on Mr. Macomber's statement, Page 10,he
stated that public hearings have been held on issues which have
essentially been non-controversial in nature and at which the
manufacturers have made only token or proforma appearances.
That is unsubstantiated. I think that is purely speculation
on Mr. Macomber's part. 1 can assure that General Motors takes
these hearings very seriously and that we do not make token
or proforma appearances.
This hearing is being held pursuant to Section 209
of the Clean Air Act as amended, and in part that section
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states, "No state shall require certification, inspection or
any other approval relating to the control of emissions
from any new motor vehicle or new motor vehicle engine as
condition precedent to the initial retail sale, titling if any,
or registration of such motor vehicle, motor vehicle engine,
or equipment. The Administrator shall after notice and
opportunity for public hearing, waive application of this
section to any state which has adopted standards other than
crankcase emission standards for the control of emissions from
new motor vehicles or new motor vehicle engines prior to
March 30, 1966, unless he finds that such state does not
require standards more stringent than applicable federal
standards to meet compelling and extraordinary conditions
or that such state standards and accompanying enforcement
procedures are not consistent with Section 202 (a) of this
part."
Thus, Section 209 of the Clean Air Act establishes
federal preemption in regard to the control of mobile source
emissions. One state, California, is allowed to petition EPA
for a waiver of federal preemption in this regard. Section
209 clearly states that a waiver can only be granted for
specific emission requirements which have been adopted by
California and that this waiver can only be granted after the
Administrator has provided notice and an opportunity for a
public hearing and considered certain issues in relation to
the specific California requirements.
Nothing in Section 209 authorizes EPA to grant a
waiver of federal preemption unless a waiver has been
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specifically requested,, and nothing in Section 209 authorizes
EPA to consider a waiver for anything other than specified
California requirements. Since neither of these criteria
have been met, the issue of granting a general waiver to
California is not properly before this hearing.
Put differently, EPA is not authorized by the Clean
Air Act to hold hearings and grant waivers upon its own
motion and, therefore, the hearing on this issue is being
held outside the scope of Section 209 of the Clean Air Act.
As evidence that this hearing is being held upon
EPA's motion and not pursuant to a California request, I
would ask the Hearing Officer to enter into the record, if
not already in the record, the letter of February 14, 1977,
from Dr. Norman D. Shutler,. Deputy Assistant Administrator
for Mobile Source and Noise Enforcement, to Mr. William H.
Lewis, Jr., Executive Officer, California Air Resources Board,
stating that EPA was considering the granting of a general
waiver to the State of California.
Assuming that it could legally do so, if EPA desires
to take action of this type, then the agency is required to
do so by the rule making process. Failure to do so denies
interested parties due process rights guaranteed by the U.S.
Constitution. Of course, an agency is precluded from doing
something by regulation which is expressly prohibited by the
applicable enabling legislation, and, therefore, EPA could
not adopt a regulation granting California a general waiver.
To summarize this particular comment, this hearing
on the issue of granting a general waiver of federal
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preemption is not within the scope of Section 209 of the Clean
Air Act, and, therefore, no action can be taken by the agency
based upon the record of this hearing without violating both
the intent of Congress clearly expressed in Section 209, and
the due process requirements of the United States
Constitution.
EPA does not have the legal authority to grant a
waiver of federal preemption to the State of California until
after notice is given and a hearing is held on a request by
California to enforce specified emission standards and
accompanying enforcement procedures. Any attempt by EPA to
grant a general waiver of federal preemption to California
violates the Clean Air Act. In this regard, the language
of Section 209 is very clear. It states, "The Administrator
shall,after notice and opportunity for a public hearing,
waive application of this section."
The Administrator is authorized to waive federal
preemption only to the extent of specific requirements for
which California has requested a waiver, and only if those
requirements are more stringent than applicable federal
requirements are necessary to meet compelling and extraordinary
conditions and are consistent with the applicable federal
requirements and with Section 202 (a) of the Clean Air Act.
These issues vary from requirement to requirement and, there-
fore, it is impossible for EPA to make such findings on a
general basis applicable to all future requirements which
California may choose to adopt.
In interpreting statutes, the Administrator of EPA
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GM 666
must comply with the intent of Congress. If a statute
provides for a particular procedure/ the procedure must be
followed. The statutory language of the Clean Air Act is
unequivocal. It permits a waiver to be granted only after
notice and an opportunity for a public hearing. Besides having
the protection of the Clean Air Act, interested parties are
entitled to the procedure protections for rule making under
the Administrative Erocedures Act. Section 535 of the
Administrative Procedures Act provides interested parties
with the right to participate in the rule making process by
assuring them notice and an opportunity to present written
evidence prior to rule making.
In the notice for this hearing, EPA stated that
if California is granted a general waiver, then, and I quote,
"The Administrator will provide notice and an opportunity for
a public hearing upon submission of a bona fide request by
any interested party to consider whether California continued
to comply with the conditions of such a waiver in light of
any such future standards and test procedures."
This language raises many questions, such as what
is the meaning of a bona fide request, and what showings
and by whom would have to be made in order for EPA to revoke
the general waiver as it applies to specific standards and
test procedures. Moreover, although a hearing may be
relevant under some circumstances to determine, . quote, "whether
California continues to comply with the conditions of the
waiver," close quote, the purpose of the hearing provision
of Section 209 is to provide a hearing allowing interested
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parties to participate in the granting of waivers on a case-
by-case basis.
Apparently the language I quoted would be EPA's
intended method of complying with the notice and opportunity
to comment on requirements in the Administrative Procedure Act
and the specific provisions of Section 209 of the Clean Air
Act.
This procedure circumvents the statutory requirements
and, therefore, would be invalid. This proposition was
clearly stated by the court in Wagner Electric Corporation
versus Volvo. In that case,the court reviewed an order of
the National Highway Traffic and Safety Association amending
the motor vehicle safety standards. The court vacated the
order because the notice of proposed rule making was
inadequate. The Administrator had contended that interested
parties had the opportunity to petition for amendment or repeal
In rejecting this argument, the court stated, quote, "The
short answer to this contention is that Section 4 (b)"
that is Section 55 3 which I referred to "of the
Administrative Procedure Act requires notice before rule
making, not after. The right of interested persons to
petition for the issuance, amendment or repeal of a rule granted
in Section 4 (e) of that act is neither a substitute for nor
an alternative to compliance with the mandatory notice require-
ments of Section 4 (b)
Wagner clearly illustrates judicial reaction to
attempts by administrative agencies to circumvent or amend
statutory procedural requirements.
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GM 668
The effect of granting a waiver subject to
reconsideration is to shift the burden of proof from the
proponent of the regulation to the vehicle manufacturers or
other interested parties in violation of Section 556 (d) of
the Administrative Procedure Act. Regardless of the question-
able rationale expressed in this most recent waiver decision,
the Clean Air Act requires the State of California as the
proponent of the waiver request to present evidence that
specified standards are more stringent than applicable
federal standards, that there is a need to meet compelling
and extraordinary conditions, and that the California standards
and accompanying enforcement procedures are consistent with
Section 202 (a) of the Clean Air Act.
Besides failing to comply with specific statutory
mandates, the proposal to grant a general waiver is contrary
to the fairness doctrine of procedural due process required
by the Fifth Amendment of the United States Constitution.
Administrative agencies must observe constitutional protection.
In Morgan versus United States, the U.S. Supreme
Court voided an order of the Secretary of Agriculture fixing
the maximum rates to be charged by market agencies in stock-
yards . The court based this action upon the failure of the
Secretary to comply with the full hearing requirement of the
relevant statutes.
In reaching its decision, the court stated, quote,
"The vast expansion of this field of administrative regulation
in response to the pressure of social needs is made possible
under our system of adherence to the basic principles that the
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legislature shall appropriately determine the standards of
administrative action, and that in administrative proceedings
of quasi-judicial character, the liberty and property of
the citizen shall be protected by the rudimentary requirements
of fair play. These demand a fair and open hearing, essential
alike to the legal validity of the administrative regulations
and to the maintenance of public confidence and the value and
soundness of this important governmental process."
Under the fairness doctrine, General Motors is
entitled to an opportunity to present evidence and to respond
to California's arguments prior to EPA's decision.
In Thompson versus Washington, the court held
that a public housing tenant is entitled to be heard under
the National Housing Act prior to approval of rent increases
by the U.S. Capitol Housing Authority. In interpreting the
statute as implying a right to be heard, the court summarized
the relevant factors in determining procedural due process.
I would like to quote:
"Under the Supreme Court doctrine, the existence and
extent of due process procedural requirements turn upon a
consideration of three factors which may but need not be
interrelated:
"No. 1, the nature of the forum through which the
government acts.
"No. 2, the source of the interest of the citizen
upon which government action impinges.
"No. 3, the extent and fact of the depravation which
the government action occasions."
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The court found that the principle of procedural
due process is applicable to an administrative forum entrusted
with determining significant rights. Protected interests
include personal liberty and property. When government
machinery is used, any depravation not diminimus likely
requires some forum of notice and hearing.
In the context of the current issue, the EPA waiver
hearings is the administrative forum. A general waiver to
California will result in a depravation of property because
of additional expenses required for compliance with the
regulations the state will adopt. The depravation of property
is more than diminimus. Consequently, General Motors is
entitled to notice and an opportunity to participate in the
waiver decision-making process on a case-by-case basis.
In conclusion, this hearing is outside the scope of
the Clean Air Act, because EPA has no authority to consider
the issuance of an unspecified waiver upon its own motion.
Moreover, EPA lacks the authority to grant a general waiver
of federal preemption to the State of California. In the
Clean Air Act, the Congress, duly elected by the people of
all 50 states, impose certain obligations upon both motor
N
vehicle manufacturers and the Environmental Protection
Agency. One duty imposed upon EPA was the protection of the
principle of the federal preemption. Congress gave EPA very
explicit instructions regarding this duty, and clearly stated
that a waiver of federal preemption was appropriate only after
a request by California in order to enforce specified standards
and test procedures and only after giving proper notice and an
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opportunity for a public hearing.
EPA cannot allow manufacturers to avoid their
obligations under the Clean Air Act and, likewise, EPA cannot
circumvent the expressed intent of Congress by avoiding its
own obligations under the Act.
Thank you.
CHAIRMAN JACKSON: Mr. Petersen, did I understand
you correctly to say that you were going to submit a written
brief subsequent . . .
MR. PETERSEN: Yes.
CHAIRMAN JACKSON: Would you in that brief address
when, in your opinion, lead time starts, under either the
scenario of the way things are now versus what it would be
like under a general waiver?
MR. PETERSEN: I will be more than glad to address
that issue. I would be happy to discuss it right now if you
care.
There have been a lot of statements made to the
effect that lead time is a problem, and California has been
caused great harm by the slowness of the administrative
process, although, as I stated, no examples were given of that
harm.
California knows what the requirements are. The
delays are not caused by the manufacturers or other interested
parties. I will be glad to address the lead time issue more
in a subsequent statement or more now if you care to question
me.
MR. STORKs One question, Mr. Petersen. You pointed
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GM/CHRYSLER 672
out that California made but failed to support the assertion
that the existing procedure caused damage to the California
program because of the delays.
That may be a valid criticism. In your testimony
you predicated one argument on the statement, as I recall it
I obviously cannot cite the page that the rationale in
a recent waiver decision was highly questionable. Yet you
did not share with us what you had in mind. I would like to
know what you are talking about.
MR. PETERSEN: There was rationale in the most
recent EPA waiver decision, to the effect that the manufactur
had failed to carry their burden of demonstrating that a
six gram, six gram per test California evaporative emission
standard was not more stringent than a six gram federal
evaporative emission standard. I disagree with that, the
placement of that burden.
I think California carries the burden of proving
that the standards and test procedures for which they desire
a waiver of federal preemption, they carry the burden of
establishing that those standards and test procedures are
more stringent than the applicable federal standards.
MR. STORK: Thank you.
CHAIRMAN JACKSON: Thank you, Mr. Petersen.
MR. GRICE: Mr. Jackson, members of the panel.
I am Mike Grice. I am an attorney with Chrysler Corporation.
I do not have a formal statement. However, I have
a number of comments that I would like to make on the topic
at hand, the proposal of a general waiver to the State of
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CHRYSLER
673
California.
Initially, I would like to comment that I think we
support the arguments which have previously been made by
GM and Ford. And I will try not to repeat too much of what
they have already said.
The notice for this set of waiver hearings suggested
that California should be granted a general waiver. This
represented something of a dilemna, curiosity I do not
know exactly the right word to anyone analyzing it.
The notice failed to suggest what the purpose of
a general waiver would be or, for that matter, to cite
authority for the proposition that a general waiver was
proper.
I saw yesterday the letter from Dr. Shuttler to Bill
Lewis discussing very, very briefly the concept of the general
waiver. It would appear, that perhaps it is being considered
as a means of resolving a lead time issue, possibly reducing
the number of hearings; possibly eliminating a number of due
process arguments which have been raised by a number of
manufacturers in previous waiver hearings, including Chrysler.
I think basically the same types of arguments have
been made by California today.
As has been indicated previously, and as I will
indicate later, we do not believe that these purposes have
merit. We do not think there is any need for a general waiver.
We think it is improper for two rather basic reasons.
First of all, we question the authority of EPA to
grant a general waiver. And, secondly, we find the concept of
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CHRYSLER 674
a general waiver to be totally impractical.
Turning first to the question of the authority of
EPA in this area, this is fairly well governed by Section 209
of the Clean Air Act. Section 209 (a), as has been stated
previously, preempts state action in the control of vehicle
emissions from new motor vehicles. It was a very flat
preemption provision. State and local units of government
do not have any authority to act in this area.
In Section 209 (b), Congress created what could be
described as a grandfather clause, which provides that after
notice, public hearing, and certain required findings,
California can obtain a waiver of preemption. Absent such a
waiver, it, too, has no ; authority to act in this field.
The legislative history has been previously covered
I think by Mr. Eppel. I think one significant point which I
would emphasize is that Congress in its 1970 amendments to
the Clean. Air Act, reviewed the situation of the California
waiver, and apparently found it to be entirely satisfactory
and serving the purposes of Congress, that Congress intended,
because it made no substantive changes in the preemption
provisions.
I would also note that there is a ten-year history
of an interpretation which, in effect, would indicate that a
general waiver is inappropriate.
I think one thing that bothers us in this type of
situation is EPA, I do not believe,could make the proper
findings for a waiver request if California were to request
a general waiver. Under these cirexamstances, I submit to you
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CHRYSLER 675
that it is improper for EPA on its own motion to grant
California a general waiver. I submit that EPA has no
authority to delete the requirements of Section 209 from the
Clean Air Act.
Turning to the question of practicality of a
general waiver provision, a number of matters come to mind.
First of all, I must question whether in fact a general waiver
will reduce the number of waiver hearings or the frequency
of waiver hearings. I suspect that it will substantially
increase the number of waiver hearings.
Looking at the situation as a lawyer for an auto-
mobile company, I would certainly recommend that requests
be filed for a waiver hearing on virtually everything that
was done by the State of California, often simply as a matter
of timing, to protect our interests against what may happen
in the future.
I think, secondly, a general waiver would raise
a very serious cloud as to the validity under Section 209 of
any future California standard.
A third problem which has been mentioned by Mr.
Petersen is the total lack of any direction, suggestion,
proposal, for criteria in, number one, granting a general
waiver, and, number two, in determining what a bona fide
request for reviewing the general waiver would be.
I submit to you that this fundamentally denies due
process.
I think most importantly that this approach would
deny the ARB, EPA, and the manufacturer of what I see today as
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CHRYSLER 676
the benefit of the waiver hearing. I think there are really
two. First, I think the waiver hearing is something which
is considered by the ARB in their action and serves as a
mild restraint on their action, because they know at some
future date they will have to justify that action within the
meaning of 209. A general waiver, I think, would soften the
impact considerably.
Secondly, and I think we have had in this series
of hearings a number of examples, the waiver hearing provides
a forum where all of the interested parties EPA, the ARB,
the vehicle manufacturers can sit down and resolve what
may be the outstanding problems, the outstanding remaining
problems in a compromise which, while it may not be satisfactory
to all concerned, oftentimes makes the standards workable.
For example, in these hearings we have seen, I think, two
significant interpretations, concessions, by the ARB, one on
Monday on Title 13 testing, one on the following day involving
the SHED procedures.
Finally, and I think perhaps most important, I
have to question the need for a general waiver. A number of
reasons have been cited. One is delay. I thought it was
very interesting in Mr. Macomber's statement this morning
that there is often a nine- to twelve-month delay between
their action and an EPA waiver hearing. This delay is not
caused by the action on the part of the manufacturers. There
are two elements, two major elements. One is an inherent
delay in noticing the hearing, and, secondly, a delay after
the hearing in rendering the decision.
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CHRYSLER 677
I think in both cases steps could be taken to
expedite the process, but I do not think that that delay is,
of and by itself, justification for a general waiver.
The second reason which is cited is the lead time
acting as a restraint on ARB action. To the best of my knowl-
edge, this just is not the case. Considering the position
that they have taken in their statement when I first received
it last night, I gave the subject a little bit of thought,
and 1 am hard pressed to recall a situation where lead time
has been a serious impairment to their obtaining a waiver for
a standard.
I think in conclusion I would simply say that I
question the authority of the EPA to act in this matter,
and, secondly, I question whether it is going to be a solution
to the problems which are allegedly motivating this proposal.
I will be happy to answer any questions you have.
CHAIRMAN JACKSON: Your testimony is sort of taking
on a pattern.
MR. GRICE: You have noticed that?
CHAIRMAN JACKSON: Mr. Grice, as you know, we have
asked others to comment on the point of which lead time you
begin to run under the two cases, in the mode we are in now
and the mode where
FROM THE FLOOR: We cannot hear you at all back
here. Please speak up.
CHAIRMAN JACKSON: In the two cases, one where we
have the present situation, the other where the general
waiver would be granted. Do you have amy views on that?
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MR. GRICE: Well, I guess one view, since I have
to question seriously the authority of EPA to act in this
matter, I guess I do not know what the situation would be
under a general waiver. I suspect the general waiver in and
of itself would be one more reason it could be used in
challenging the California standard.
I think in the existing situation, I think the law
is quite clear that the lead time runs from the point in time
the standard becomes enforceable, which is at the point and
time of a waiver. I would, however, go back to some comments
Mr. Eppel was making. I think as a practical matter, a
manufacturer looking at a proposed standard that is subject
to a waiver hearing is, in a good many cases, going to begin
work when it is promulgated by the State of California simply
as a defensive measure.
Certainly the track record of the vehicle
manufacturers' opposition to waivers has not been particularly
good. I think that it would be a very, very unusual situation
where In fact, I actually cannot think of one I cannot
think of an example where I would feel totally confident
in telling my clients, "Well, you can totally ignore it,
because they never can get a waiver. And if EPA grants a
waiver, you can get it overturned."
So I think as a practical matter, manufacturers
are going to at the same time they are contesting the waiver
and its appropriateness, are going to have to be doing some
work towards developing whatever is required for compliance.
CHAIRMAN JACKSON: Thank you, Mr. Grice. We
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appreciate it very much.
MR. JONES: Since I think I-have already been intro-
duced to the record, I will start right in with our prepared
statement, which is a short statement. But, before I do, I
would like to say that American Motors supports the Ford,
GM and Chrysler statements.
American Motors strongly objects to consideration
of granting California a general waiver of federal preemption
for all future standards and test procedures as proposed in
the hearing notice published in the Federal Register. The
authority to even conduct a hearing on this issue is ques-
tioned because the waiver candidate, the State of California,
has not requested a general waiver; and under Section 209 of
the Clean Air Act, the EPA would have no authority to consider
a waiver issue unless requested to do so by an eligible
state.
Because the item is on the hearing agenda, however,
we shall present our position. We oppose the proposal.
Section 209 (a) of the Clean Air Act preempts state standards
or enforcement thereof, and Section 209 (b) permits waiver
of preemption "after notice and opportunity for public hear-
ing" unless the Administrator finds that the state does: not
require more stringent standards to meet compelling and extra-
ordinary conditions or that the state standards and accompany-
ing enforcing procedures are not consistent with Section 202 (a
of the Clean Air Act. Therefore, the EPA must consider the
criteria specifically relevant to the standard under considera-
tion for waiver. The EPA cannot delegate away its
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AMC 680
responsibility prescribed by Congress to hold a hearing and
make the findings required for each waiver decision.
Under Section 209 it is clear that a hearing is
required in each instance before a waiver may be granted.
A general waiver in advance would alter the burden of proof
requirement contemplated and prescribed in the statute. It
is the state's responsibility initially to present evidence
that its adopted standard, requiring waiver, meets the
statutory criteria. It is the Administrator's responsibility
to determine whether the state's request falls within Section
209 (b) so that a hearing on the matter is appropriate. The
hearing, one purpose of which is to give interested parties
a chance to rebut the state's showing, provides an
indispensable part of the Administrator's decision. It seems
clear that a failure to provide a prior hearing or an
alteration in the statutory scheme for the burdens of proof
violates the due process provisions legislated by Congress
in Section 209.
An advance waiver would give solely to California
the full authority to decide whether a standard or enforcement
procedure meets the criteria of the statute and would place
the burden of seeking a hearing to rebut the state's
determination on manufacturers or other parties. This would
be an improper delegation by the EPA of its; assigned role.
That concludes our formal comment.
I am not a lawyer, but I will try to answer any
questions you might have.
CHAIRMAN JACKSON: I am going to ask you a non-legal
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AMC 6 81
question.
Upon the adoption of what American Motors thinks
is a reasonably certain standard, compliance procedure,
whatever, by the California Air Resources Board, would
that be signal for American Motors to start work towards
compliance with that standard or procedure?
MR. JONES: That adoption by California would
certainly cause us to do some things I do not know if
they could be formally defined as starting the lead time
clock.
CHAIRMAN JACKSONi Forgetting about the lead time
for the moment, would you start reacting to what you felt
was a reasonably certain standard or compliance procedure?
MR. JONES: I still'interpret that as a lead time
question.
CHAIRMAN JACKSON: How about just a "yes" or "no"?
Would you start any work at that time or would you not?
MR. JONES: Could you explain what kind of work
The work I am thinking it would not necessarily be an
engineering effort; it might be another facet. It, would not
have any direct product application.
CHAIRMAN JACKSON: Setting forth a program which
would lead to compliance with the adopted standard or
procedure.
MR. JONES: The rate at which recent California
legislation has been issuing forth has caused vis considerable
problem in an answering this particular question. In the
past, we ~ I think that we still have to consider our resources
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AMC/YAMAHA 682
in each new waiver or each new regulation that comes from
California as a, requires us to reconsider. So I am afraid
I cannot give you an emphatic "yes" or "no."
CHAIRMAN JACKSON: Thank you, Mr. Jones.
MR. JURA: Good afternoon. My name is Russell Jura.
I am Technical Staff Counsel for Yamaha Motor Corporation, USA.
It has been a rather long day and long week. Rather
than read my entire statement, I would like to enter it into
the record and simply, summarize on particular points, if
that is all right,
CHAIRMAN JACKSON: That is perfect.
MR. JURA: As way of introduction, I would like to
say that Yamaha objects to the granting of a general waiver
to the State of California. We do so on two grounds.
First, that the Clean Air Act not allow such a
grant and not such a waiver, and, secondly, that such a
waiver would put the manufacturer in possibly an untenable
position.
In terms of legal objections, I think that these
have been rather adequately covered previously today. I
would like to make one additional point, that the Section 209
does prohibit waivers under certain circumstances, and it
is possible under a general waiver that California would
adopt the standard that is prohibited the Clean Air Act, but
under a general waiver this standard could become effective
law until revoked.
I do not think that Congress intended that in any
way that there should be a standard that is effective law
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YAMAHA
683
which Congress has specifically intended not to be effective
law.
In terms of placing the manufacturer in an
untenable position, we feel that since the California standard
under general waiver, once adopted by the CARB, would take
effect immediately we would be forced to immediately begin
actions to meet the California standard. If later on the
California standard is ruled invalid and this "later on"
could be a period of six months, it could be a period of eight
months, it could be a period of five months but it is a
period in which time we would have to make commitments in
terms of capital expenditures, in terms of design, in terms
possibly of orders to suppliers we would be forced to make
particularly financial expenditures which we would be stuck
with and which are not reimbursable to us, which are not
recoverable to us.
We feel that this is not proper and was not intended
under the Clean Air Act. We do not feel that Yamaha or any
other manufacturer should be exposed to financial expenditures
at the whim of the California Air Resources Board when the
California Air Resources Board standard may indeed simply,
even blantly violate Section 209 of the Act.
Our second objection or our second reason why we
may be in an untenable position is that we may be in a
situation where we act to meet the California standard, and
if the California standard is voided, we may have insufficient
supplies of motorcycles or will be able to supply insufficient
supply of motorcycles to meet the general demand in the entire
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YAMAHA 684
country.
An example of this would be if the California Air
Resources Board standard would require an experimental type
carburetor. That type of carburetor simply does not work;
it does not meet the California standard; it does not meet
the EPA standard, either. It simply falls apart. And we may
have only ordered sufficient carburetors to meet the 49 state
standard, and tried the experimental carburetor for the
California standard, and we would be left, perhaps, with
insufficient time to order more carburetors to meet both
the 4 9 state demand and the California demand. And we do not
feel we should be in that position of taking the risk of our
product.
I would like to add several comments to what was
discussed today.
First of all, Yamaha, and I believe all
manufacturers, take the California Air Resources hearings
very seriously. Unfortunately, the California Air Resources
board does not always take us seriously.
For example, on the July 15th, 1975 hearing in San
Francisco, where the CARB established motorcycle exhaust
emission standards, Yamaha had fully prepared a statement, and
we were very prepared to give a very lengthy dissertation on
that. However, we were the last manufacturer to testify that
day, and Mr. Tom Quinn felt that rather than listen to us
and to our entire comments, he would restrict our comments
to a ten-minute period. It is very hard within that period
to try to give a complete and comprehensive statement,
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YAMAHA 685
particularly to a board which was in the process of adopting
a ten gram standard for 1978 and a five gram' standard for
1980, which has not been noticed to us.
Another thing I would like to add that we feel
that in anticipation of your question, that lead time runs
from the date that EPA approves the waiver rather than the
date the CARB promulgates the standard. We tend to feel that
EPA seems to have adopted this position, at least in regards
to the revocation . or possible revocation-of current
California motorcycle exhaust emissions standards. Th£ EPA
has adopted the philosophy in that case that the California
exhaust emissions waiver is in effect until revoked, even
though California has modified its standard, and even though
there are serious questions, as we discussed on Monday of
this week as to whether the standards meets the conditions
of Section 209 or not.
Since the EPA has adopted in that case the situation
that a waiver in effect is not revoked until EPA acts to
revoke, we feel that this indicates that a waiver on a standard
which EPA is considering is:not-in effect until EPA promulgates
the waiver.
The next comment I would like to state is in regards
to expenses to the manufacturer to petition EPA as opposed
to requiring California to request a waiver. There are
expenses involved in terms of analyzing the standards
particularly in the case of if the CARB promulgates a standard
which wasn't noticed to us.
Once again, I will make reference to the 1978 and
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1980 motorcycle exhaust emissions standard that were adopted
by the California Air Resources Board on July 15th, 1975.
The California Air Resources Board had not noticed these
to these manufacturers; we have not had an opportunity to
prepare comments or to analyze whether we could or could
not accept, meet these standards.
If we are to have a 30-day period, this would
require quite a quick analysis on our part, and particularly
since we are a foreign company, it is difficult and time
consuming to get comments or get news of the developments
over to the factory, have the factory look at that, have
the factory prepare their comments, and then have the factory
send their comments over here, and then have us try and
translate them from what the factory has sent to a more
acceptable form in the form of a petition. And in the case
of new standards which were not noticed, this would be an
extremely serious problem for us.
We also, of course, have to prepare a formal
petition, and there may be expenses involved here. We may
have to hire outside counsel. We may have somebody inside
the company do it, but, as I say, time is money, and even if
somebody inside the company does it, it ends up costing us
money, which we believe should be better would really be
the responsibility of the State of California.
The third problem is that we may have accelerated
preparation of a case in order to meet the 30-day deadline.
And, acceleration, as Mr. Tom Austin of the Air Resources
Board mentioned this morning, acceleration of preparation' can
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'.YAMAHA 687
be expensive. This, once again, would increase our costs
over the present procedure.
Another comment I would like to make with regard to
a general waiver is that the California Air Resources Board
does not always decide what it wants to do at one time.
In regards to fuel fill pipes for motorcycles, as
an example, we were told at the waiver hearing on the fuel
fill pipes last year that Executive Order G 70-3 would apply
to motorcycles. We have since been informed that Executive
Order G 70-3 will not be applied to motorcycles, that, indeed,
there will be an Executive Order G 70-4 . to . apply to motor-
cycles .
For the last two months when I've asked when
Executive Order G 70-4 will be available, I have always been
told that it would be available within three weeks. The last
time I commented, it is still three weeks off. We are left
dangling here, and this, the fuel pipe situation is very
analogous to a general waiver.
I do not think that the Clean Air Act intended
that the manufacturer be left dangling while the California Air
Resources decides, "Well, maybe we mean this; maybe we mean
that. We're not going to give you any explicit guidance for
three weeks." I do not think that was meant or what the
Clean Air Act is intended for.
Finally, I would like to request that if the general
waiver is indeed granted by the EPA, that a ruling on the
current motorcycle exhaust emission waiver, which we had a
hearing on on May 16th, be made, and that we don't have to have
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YAMAHA/AIA 688
another hearing on this because of other circumstances come
up, the general waiver. This is already the second hearing
we have had on the motorcycle exhaust emissions standard,
and I don't know that it is necessary to have an additional
hearing, an additional waiver hearing if the general waiver
is granted.
Thank you. And I will be happy to answer any ques-
tions .
CHAIRMAN JACKSON: What would you do if we granted
the waiver?
MR. JURA: The general waiver?
CHAIRMAN JACKSON: Yes.
MR. JURA: I think that there would be a good
possibility that we would well, I wouldn't say there is a
good possibility but there's a certain possibility that
we would consider initiating legal action.
CHAIRMAN JACKSON: Against who?
MR. JURA: Against the Environmental Protection
Agency.
CHAIRMAN JACKSON: Thank you, Mr. Jura.
MR. SCHWENTKER: My name is Don Schwentker. I am
with a Washington law firm who is counsel to the Automobile
Importers of America.
I am not going to waste a great deal of time by
going over things that have been hashed over again and again,
but I would like you to know and would like the record to
reflect the fact that I do support the position taken by the
vehicle manufacturers that preceded me on the subject of
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AIA
689
general waiver.
A few very brief comments. One thing that I have
not heard here today is what criteria would EPA intend to
apply to the request by an interested party for a public
hearing under the general waiver to the making of a determina-
tion as to the need for such a hearing?
I have yet to get any indication as to how EPA would
react to the filing of such a request.
Could you throw any light on that at all? Because
it has a great deal of bearing on how I feel about the whole
subject. In other words, would it take more than a letter
from a vehicle manufacturer after the promulgation of a
California standard or regulation that says, "Dear'Mr.
Administrator, I hereby request a public hearing on the
California waiver'.'? Would it take something more than that
or wouldn't it?
CHAIRMAN JACKSONs Our position on that has been
that it would have to be something that would reflect a
reason to cast doubt upon the basis upon which the waiver was
granted. In other words, a reason to believe that the
conditions under which it was granted no longer exist with
regard to the action at issue, and that in some fashion, in
some level of detail, it be incumbent upon the petitioner to
show that.
MR. SCHWENTKER: All right. Of course, as has been
said here over and over today, the statute places upon EPA a
burden of holding a public hearing and giving interested
persons an opportunity to testify before granting a waiver of
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690
preemption, federal preemption to California --
CHAIRMAN JACKSON: Correction. Offer opportunity for
a hearing. There is no mandatory hearing.
MR. SCHWENTKER: All right. Offer an opportunity.
I do recall one case in the past nine years I believe it
was on heavy-duty, where it was an uncontroversial item, and
notice was published in the Federal Register that no hearing
was contemplated unless a manufacturer requested it. And I
do believe that nobody requested it, and the hearing was
not held. But that is one time in nine years that I recall.
At any rate, this certainly is not the hearing
relative as to yet unpromulgated standards, test procedures,
regulations, enforcement policies and the like.
California's assertion to the contrary I think is
preposterous, and is a shock to one's sense of legal
propriety to think that this hearing today covers all of
those future rule making actions.
To short-cut legal procedure, to avoid long
bureaucractic delay is not the way to solve the problem. Just
because EPA, and then as of this morning at this hearing,
California also joins them, doesn't want to "waste its time"
on waiver hearings, interested parties cannot be denied an
opportunity to be heard.
With respect to the lead time assertions, I cannot
recall a single instance when the difference between the lead
time remaining at the date of promulgation of a California
standard and that remaining at the date of the public waiver
hearing had a bearing on the outcome of the case. I have been
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involved in California and HEW and EPA rule making for nine
years, and I think I have followed it all, and I cannot
recall a single instance where that was a determining factor.
As to the time limit for the request for a hearing
as suggested by California, there are several things that
could change there are several things that could change
after California's promulgation of a standard. There could
be a new federal standard where there wasn't one before.
There could be a more stringent federal standard. There
could be a significant change in the federal test procedure
that would affect the position of a manufacturer with respect
to the California versus the federal standard.
So I think that a 30-day time limit is just totally
unworkable.
Finally, as I understand California's position on
the general waiver, they support it only if EPA adopts the
California interpretation with respect to lead time. I would
like to know what California's position is with respect to the
general waiver if EPA does not support that interpretation, the
one that lead time begins at the moment of California's
promulgation of the rule. Does that mean that California
would not support the general waiver in that case?
MR. STORK: Since California is not testifying at
the moment that is a difficult question to deal with. We
will let the question stand.
MR. MACOMBER: Would you please restate the question?
MR. SCHWENTKER: Yes. As I understand California's
position on the general waiver, California supports it only
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AIA/CARB 69 2
if EPA adopts the California lead time interpretation to the
effect that lead time is measured from the date of promulgation
of the California standard and not from the date that EPA
decides the waiver issue. So my question is, what is
California's position with respect to the general waiver if
EPA disagrees with the California interpretation?
MR. MACOMBER: I think in that case we wouldn't
see any real purpose in going ahead with the general waiver.
As it states in our written statement, it is critical to us
that the lead time issue be interpreted to begin when
California acts as a result of the general waiver. And there
is an outline of our logic in the written statement that I
won't go through again. But to us, that is very important
to support EPA's proposal today.
I might add that we think there is adequate
justification under the last for lead time commencing when
California acts under the existing procedure, even if the
general waiver that is proposed today is not granted.
MR. SCHWENTKER: I take your comment,which is to
the effect that it is critical,to mean you would not support
the general waiver were that interpretation not agreed to by
EPA.
MR. MACOMBER: Essentially that is correct. We see
that as being the main effect of this general waiver being
proposed today, and that is the main reason behind our
support.
MR. SCHWENTKER: It would seem that if manufacturers
are to be given the opportunity interested parties generally
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they need not always be manufacturers but they usually
seem to be, or dealers, or associations if they are to be
given the opportunity to be heard in each case, then I really
do not see what is accomplished by a general waiver. It
just gets everybody mad at everybody, and I do not think it
accomplishes a damned thing.
CHAIRMAN JACKSON: Sometimes we don't need a general
waiver to do that.
MR. SCHWENTKER: That is for sure.
That is really all I have to say.
CHAIRMAN JACKSON: Mr. Schwentker, thank you very
much.
MR. SCHWENTKER: Thank you for listening.
CHAIRMAN JACKSON: Is there anyone else that has
anything to say with regard to the issues under consideration
in this proceeding? If not
MR. PETERSEN: Mr. Chairman?
CHAIRMAN JACKSON: Mr. Petersen, did you have some-
thing you wanted to say?
MR. PETERSEN: Mr. Jackson, I would like to clarify
one item for the record it does not deal with the general
waiver issue, but deals with the I believe it was.the
first issue during this series of hearings on the new vehicle
inspection and compliance test procedures for 1978 and
subsequent model year motor vehicles and engines.
There is some confusion as to whether or not that
waiver request went beyond the words in the California statement
in specific, "new vehicle compliance test procedures adopted
THOMAS R. WILSON
CERTIFIED SHORTHAND REPORTERS
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CARB/GM 694
June 24, 1976." I would like for Mr. Macomber, if possible,
to clarify this question for the record.
MR. MACOMBER: I do not understand the question.
Could you restate it?
MR. PETERSEN: There was some question on Monday as
to the scope of the California request for a waiver to enforce
new vehicle inspection and compliance test procedures for
1978 and subsequent model year motor vehicles and motor vehicle
engines.
I assume that the requested waiver would cover the
California new vehicle compliance test procedures adopted
by the board on June 24th, 1976. It is these procedures
which the prepared California Air Resources Board's statements
apply to. And I would just like to ask Mr. Macomber to
agree or disagree with that for the record.
MR. MACOMBER: I really do not see what the confusion
is. The waiver that we are asking for pertains to the
document, the procedures set forth in the document entitled
"California New Vehicle Compliance Test Procedures Adopted
June 24, 1976."
MR. PETERSEN: That is the only question I had.
MR. MACOMBER: And the inspection procedures, which
I believe are referenced in the regulations, which adopt
this particular document. So we are talking about compliance
test procedures which are the statistical selection techniques
and evaluation techniques for so-called Title 13, testing of
vehicles in our lab, and also our ability to conduct inspection
of vehicles as was outlined by Mr. Austin, I believe, several
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CERTIFIED SHORTHAND REPORTERS
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CARB/GM 695
days ago. So both of those are encompassed in our request.
MR. PETERSEN: I think there, may be some problem
there with proper notice. I believe that the California new
vehicle compliance test procedures I am not disputing
that those were properly covered by the waiver request; I do
not know what these unspecified inspection procedures are.
There was one statement made in the record by Mr. Rubeinstein
that this covered any kind of inspection program which
California desired to conduct to determine whether or not
vehicles, new or used, complied with California emission
standards. That was a very broad statement, and I do not
think that waiver requested by the State of California covered
anything as broad as that, and certainly we did not testify
on anything that broad. If the waiver requested by
California was that broad I believe that we were denied
adequate notice and opportunity to comment.
MR. MACOMBER: I would like to disagree with that
characterization. My recollection is that the regulations
we submitted for the waiver, which were referenced in the
waiver notice, contained these test procedures and the
actual regulation in the California Administrative Code which
references the so-called inspection test procedure which we
apply to new vehicles. My recollection from the first day's
testimony is that Mr. Austin, in response to questions from
the panel, explained I think in quite frank detail what that
program consisted of. To repeat briefly, essentially it's
a program to check to make sure that all the parts are on the
vehicle, that they are the proper parts, that they are
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CARB/GM 6 96
installed correctly, functioning properly and so on. It is
more of a physical inspection. It does not involve any
emissions testing. I think that that has been abundantly
clear to everyone.
MR. PETERSEN: Where does this inspection occur?
MR. MACOMBER: The inspection occurs at the Air
Resources Board laboratory I believe Mr. Austin also made
reference to inspections at dealerships. But it is limited
to :new vehicles in this case.
MR. PETERSEN: And it is limited strictly to an
inspection of emission control components and parts, with
no emissions testing whatsoever?
MR. MACOMBER: That is what inspection testing means,
yes.
CHAIRMAN JACKSON: That is the way we understand it,
Mr. Petersen.
MR. PETERSEN: Thank you very much.
Any further comments we have on this we will submit
for the record.
CHAIRMAN JACKSON: Very well. Does that clear that
matter up?
MR. PETERSEN: Yes, it does.
CHAIRMAN JACKSON: If there is nothing else to be
added to the record, the record of this proceeding will remain
open for comments until June the 10th, 1977. This hearing is
adjourned.
(Whereupon, at the hour of 2:45 o'clock p.m. the
proceedings adjourned.)
---oOo
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STATE OF CALIFORNIA ) 697
o ss.
City and County of Sam. Francisco )
We, THOMAS R. WILSON, RICHARD S. ADAMS and JERRY R.
SMYTHE, hereby certify that the proceedings in the Public Hear-
ing on California Waiver Request, May 16-19, 1977, at the
Offices of the U. S. Environmental Protection Agency, Region IX,
100 California Street, San Francisco, California 94111, were
taken down in shorthand by us, Certified Shorthand Reporters
and disinterested persons, at the time and place therein
stated, and that the proceedings were thereafter reduced to
typewriting under our supervision and direction.
We further certify that we are not of counsel or
attorney for either or any of the parties to the said proceed-
ings, nor in any way interested in the event of this cause, and
that we are not related to any of the parties thereto.
IN WITNESS WHEREOF, we have hereunto set our hand and
affixed our seal of office this 23rd day of May, 1977.
d.
NOTARY PUBLIC in and for the
City and County of San Francisco,
State of California
County of Marin
State of California
/id- .
NOTARY PUBLIC xn Tad for the
County of Contra Costa
State of California
OFFICIAL SEAL
THOMAS R. WILSON
NOTAp"l^C ' CAUFaRNIA
PRINC.PAL OFFICE IN
SAN FRANCISCO COUNTY
My Commission Expires February 28 197R
L.: :HJ
o;- litAL
J A RiCllAiO S. ADAMS
tJO'.V.T.' pysuc - CALIFORNIA
VJ.-.>7.s,.iV PRIfiO.PAL OFFICE IN
My Conmissicn Expir:v February 17, 1979
i R. WILSON
SHORTHANO REPORTERS
(418) S43-3194/461-30M
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