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B-236148, Dec 28, 1989

B-236148 Dec 28, 1989
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Subcommittee on Oversight and Investigations: This is in response to your letter of June 27. The first issue concerns whether an EPA publication entitled "What You Should Know About Your Auto Emissions Warranty" is consistent with the Clean Air Act. Is accurate. The pamphlet clearly states that information on the performance warranty is available in a separate pamphlet. We conclude that the pamphlet is not misleading or. A copy of each pamphlet is enclosed with our response. We conclude that California's warranty regulations are properly a subject of waiver of federal preemption. You asked us to review the timing of EPA's determination that California's new emission standards for 1989 and subsequent model years were within the scope of previous waivers of federal preemption granted to California under the Clean Air Act.

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B-236148, Dec 28, 1989

MISCELLANEOUS TOPICS - Environment/Energy/Natural Resources - Environmental protection - Air quality - Standards - Enforcement DIGEST: 1. EPA pamphlet, describing defect warranty under Clean Air Act, correctly states that such warranty covers all defective emission control related parts for the first 5 years or 50,000 miles of vehicle use. Performance warranty, discussed in a separate pamphlet, limits coverage after 2 years and 24,000 miles. Clean Air Act, Sec. 207, 42 U.S.C. Sec. 7541. 2. Under Clean Air Act, Sec. 209(b), 42 U.S.C. Sec. 7543(b), EPA may waive federal preemption of California's emissions control standards. Under this authority, EPA may waive federal preemption for california's warranties and useful life regulations. See Motor and Equipment Manufacturers Association v. EPA, 627 F.2d 1095, 1107 (D.C. Cir. 1979).

Honorable John D. Dingell Chairman, Subcommittee on Oversight and Investigations:

This is in response to your letter of June 27, 1989, in which you asked us to comment on several issues related to the defect and performance warranty provisions of the Clean Air Act and to the Environmental Protection Agency's (EPA) waivers of federal preemption of California's emissions standards and warranty regulations under the act.

The first issue concerns whether an EPA publication entitled "What You Should Know About Your Auto Emissions Warranty" is consistent with the Clean Air Act. You expressed concern whether the pamphlet correctly differentiates between the defect and performance warranties under the act. The pamphlet's description of the defect warranty, in our opinion, is accurate. Furthermore, the pamphlet clearly states that information on the performance warranty is available in a separate pamphlet. We conclude that the pamphlet is not misleading or, for the reasons set forth in the enclosure, inconsistent with the Clean Air Act. A copy of each pamphlet is enclosed with our response.

You also asked us to review the legality of California's adoption of warranty provisions that differ from the federal requirements. Based on the language of the Clean Air Act and federal case law, we conclude that California's warranty regulations are properly a subject of waiver of federal preemption.

In addition, you asked us to review the timing of EPA's determination that California's new emission standards for 1989 and subsequent model years were within the scope of previous waivers of federal preemption granted to California under the Clean Air Act. You also asked whether the California Air Resources Board (CARB) may impose new requirements before EPA determines that they fall within the scope of previous waivers of federal preemption.

We conclude that the timing of EPA's announcement of its scope of waiver determination was not inconsistent with the Clean Air Act. In addition, California may rely on the existing waiver to proceed to adopt or enforce a standard or regulation that falls within the scope of previous waivers of federal preemption before EPA's scope of waiver determination is issued.

These questions are discussed in more detail in the enclosure.

We hope our comments are helpful to you. Under our usual agreement, this opinion will be available to the public 30 days from its date, unless you release it sooner.

ENCLOSURE

I. Defect and Performance Warranties

A. Background

Section 207 of the Clean Air Act, 42 U.S.C. Sec. 7541, establishes two warranty programs-- defect and performance.

The defect warranty program requires vehicle manufacturers to warrant their vehicles against design defects which cause the vehicle to fail to conform to applicable emissions standards for the vehicle's useful life of 5 years or 50,000 miles, whichever comes first. If an original equipment part or system fails because of a defect in materials or workmanship and causes the vehicle to exceed federal emissions standards, the manufacturer must repair or replace the defective part free of charge. The warranty covers any part which causes the vehicle to exceed emission standards. Clear Air Act, Sec. 207(a), 42 U.S.C. Sec. 7541(a).

The performance warranty program requires vehicle manufacturers to remedy, at no cost to the owner, a nonconformity in the emission control device or system which causes the vehicle to fail an emissions test during the vehicle's useful life of 5 years or 50,000 miles, whichever comes first. After 24 months or 24,000 miles, however, the act limits the meaning of the term "emission control device or system" to a catalytic converter, thermal reactor, or other component installed for the sole or primary purpose of reducing emissions. The scope of the performance warranty, therefore, differs for the periods before and after 24 months/24,000 miles. Clean Air Act, Sec. 207(b), 42 U.S.C. Sec. 7541(b).

Under the performance warranty, for the period before 24 months/24,000 miles, EPA's regulations provide that the manufacturers' obligations are to make all adjustments, repairs, or replacements necessary to all components affecting emissions to assure that the vehicle complies with applicable emission standards. For the period after 24 months/24,000 miles, EPA's regulations provide that the manufacturers are only responsible for those nonconformities resulting from the failure of components which have been installed for the sole or primary purpose of reducing vehicle emissions, such as the catalytic converter and thermal reactor. In addition, in defining the remedy that would make this warranty effective, EPA regulations provide that the manufacturer is also responsible for other components that must be repaired or replaced in order to enable a covered component to perform properly. (40 C.F.R. Sec. 85.2107(a)(2).) (The regulations were upheld by the United States Court of Appeals for the District of Columbia Circuit in Automotive Parts Rebuilders Association v. EPA, 720 F.2d 142 (D.C. Cir. 1983).

B. Issue and Analysis

Question

Is the EPA publication entitled "What You Should Know About Your Auto Emissions Warranty" consistent with the Clean Air Act, section 207?

Answer

Yes. The publication specifically states that there are two warranties-- defect and performance-- and that it deals only with the defect warranty. The pamphlet states that the defect warranty, described therein, covers repair of defective emission control related parts (an original equipment part or system fails because of a defect in materials or workmanship) during the first 5 years or 50,000 miles of vehicle use. In so doing, it correctly lists many components as being subject to the act's 5 year/50,000 mile defect warranty.

The pamphlet also states that the other warranty, the performance warranty, covers repairs which are required because the vehicle failed an emission test. It refers the reader to EPA's pamphlet "If Your Car Just Failed An Emission Test ... You May Be Entitled To Free Repairs," which describes the performance warranty in detail. The performance warranty pamphlet specifically states that the coverage is limited after 2 years and 24,000 miles.

There is, of course, some overlap between the two warranties. After the 2 year/24,000 mile period has been exceeded, however, a consumer would be covered for a defective nonprimary emissions part, but not for a nondefective part that is nonetheless needed to pass an emissions test.

II. California Emissions Warranty Coverage

A. Background

The California legislature recently changed its emissions warranty coverage applicable to 1990 model year and later vehicles. This coverage, which extends to 7 years/70,000 miles, differs from the more limited federal warranty described above. In addition, the California Air Resources Board (CARB) has proposed to extend the useful life of a vehicle to 100,000 miles, as compared to the Clean Air Act definition of useful life as 5 years/50,000 miles.

B. Issue and Analysis

Question

May California legally adopt emissions warranty and useful life provisions that differ from the federal provisions under the Clean Air Act?

Answer

Yes. California's regulations ordinarily would be preempted by the Clean Air Act. Section 209(a) of the act prohibits states from adopting or attempting to enforce standards relating to control of emissions from new motor vehicles or new motor vehicle engines or from requiring any approval relating to the control of emissions from such vehicles or engines as a condition precedent to the initial retail sale, titling, or registration of a new motor vehicle. /1/ However, section 209(b) of the act, in effect, requires EPA to waive application of the prohibitions of section 209(a) for California to adopt standards for emission control if the state determines that the state standards will be, in the aggregate, at least as protective of public health and welfare as applicable federal standards. EPA must grant a waiver unless the agency makes certain findings that a waiver is inappropriate. /2/

EPA has, in the past, determined that California's warranty regulations are properly a subject of waiver of federal preemption. See, e.g., 44 Fed.Reg. 61096 (1979). We agree with EPA.

Compliance with California's warranty and useful life regulations is a condition precedent to the initial retail sale of motor vehicles in California. As such, the regulations fall within the scope of federal preemption under section 209(a). However, subsection (b) authorizes EPA to waive application of "this section" to California. As interpreted by EPA, the phrase "this section" refers to the prohibitions contained in subsection (a). /3/ The Court of Appeals for the District of Columbia Circuit ruled, in a case concerning a related California regulation, that the "phrase 'this section' has no conceivable meaning other than to refer to subsection (a)." Motor and Equipment Manufacturers Association v. Environmental Protection Agency, 627 F.2d 1095, 1107 (D.C. Cir. 1979). Thus, whatever is preempted under subsection (a) is subject to waiver under subsection (b). Accordingly, EPA is authorized to waive federal preemptions for California's warranty and useful life regulations unless EPA finds, in accordance with section 209(b), that a waiver is inappropriate.

III. EPA Waiver of California's 1989 Emission Standards

A. Background

On September 20, 1988, shortly before the beginning of the new model year, EPA issued a Federal Register notice of its determination that amendments to the California Air Resources Board emissions standards for 1989 and subsequent model year vehicles were within the scope of previous waivers of federal preemption granted to California.

B. Issues and Analysis

Question 1

Was the timing of EPA's announcement of its scope of waiver determination consistent with section 209 of the Clean Air Act?

Answer

The Clean Air Act does not address the issue of how far in advance of the effective date of California's motor vehicle emissions regulations EPA must make its waiver determinations. Rather, without setting a specific deadline, the Clean Air Act requires EPA to waive federal preemption for California to adopt and enforce motor vehicle emission control regulations unless EPA makes certain findings that a waiver is inappropriate. Clean Air Act, Sec. 209(b), 42 U.S.C. Sec. 7543(b).

The Federal Register notice announcing EPA's determination states that the California amendments at issue, a decision document containing an explanation of EPA's determination, and documents used in arriving at the determination, are available in the public docket. These documents, as well as the Federal Register announcement itself, establish a record of the basis for EPA's determination that the new standards fall within the scope of previous waivers of federal preemption.

We have reviewed the docket relating to the Federal Register notice. The following chronology of events might be helpful to you. CARB proposed the amended regulations on March 7, containing an initial statement of reasons for the proposed rulemaking. A public hearing was held in California on April 24, 1986. A technical support document form the hearing is in the EPA docket. Also on April 24, 1986, CARB resolved to adopt the regulations. On February 26, 1987, the Executive Officer of CARB wrote a letter to EPA requesting EPA's confirmation of the Board's determination that the amendments fall within the scope of previous Clean Air Act section 209(b) waivers. EPA issued its determination in a decision document on September 12, 1988. EPA's decision document contains its analysis and conclusion that the amendments are included within the scope of the previous waivers for California's exhaust emissions standards and test procedures. On September 29, 1988, EPA published a notice of its determination, confirming that California's regulations fall within the scope of previous waivers of federal preemption.

We cannot conclude that, based solely on the timing of the published notice, EPA failed to properly consider the requirements of section 209(b). In addition, we conclude that the timing of EPA's announcement of its scope of waiver determination was not inconsistent with the Clean Air Act.

Question 2

May CARB legally enforce or apply amended state emission standards prior to EPA's determination that they are within the scope of a previous waiver of federal preemption under section 209?

Answer

Yes. The Clean Air Act does not specifically prohibit California from relying on its determination that an amended standard falls within the scope of previous waivers to proceed to apply that standard before EPA confirms CARB's determination. When, as in this case, California's regulations amend an existing standard for which a waiver has been granted, California need not receive a new waiver from EPA. Rather, EPA issues a determination that the regulations fall within the scope of previous waivers of preemption. EPA's scope of waiver determination does not provide new authority, but instead confirms that authority already exists. Therefore, is a new standard or regulation falls within the scope of previous waivers of preemption, California may rely on the existing waiver to proceed to adopt or enforce the standard or regulation before EPA's scope of waiver determination is issued.

By following this course of action, however, CARB runs the risk that EPA will disagree with CARB's scope of waiver determination. Consequently, applying or enforcing a standard before EPA issues its determination has the potential to put California in a position of noncompliance with section 209.

/1/ Section 209(a) of the Clean Air Act reads as follows:

"No State ... 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. 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." 42 U.S.C. Sec. 7543(a).

/2/ Section 209(b) reads as follows:

"The Administrator shall, after notice and opportunity for public hearing, waive application of this section to any State which has adopted standards ... for the control of emissions from new motor vehicles or new motor vehicle engines prior to March 30, 1966, if the State determines that the State standards will be, in the aggregate, at least as protective of public healthand welfare as applicable Federal standards. No such waiver shall be granted if the Administrator finds that--

"(A) the determination of the State is arbitrary and capricious,

"(B) such State does not need such State standards to meet compelling and extraordinary conditions, or

"(C) such State standards and accompanying enforcement procedures are not consistent with section 202(a) of this title." 42 U.S.C. Sec. 7543(b).

California is the only state which meets section 209(b) eligibility criteria for receiving waivers.

/3/ Section 209 also contains two additional subsections, neither of which are applicable. Subsection (c) preempts states from certifying automotive parts and, by its own terms, does not apply to California. Subsection (d) clarifies that the preemption provision is not intended to preempt state regulations other than as expressed in subsection (a). See Motor and Equipment Mfrs. Ass'n. v. EPA, 627 F.2d 1095 at 1107, n.19 (D.C. Cir. 1979).

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