Appendix — Chrysler Corp. v. United States Environmental Protection Agency

Supreme Court brief1980

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80-378 WT pmoets

No. SEP8 1980

{ MAICHAEL RODAK, Ji.

IN THE '

Supreme Court of the United States

OCTOBER TERM, 1980

CHRYSLER CORPORATION,

Petitioner,

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

and DouGLAs M. COSTLE, Administrator,

Respondents.

APPENDIX TO

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE DISTRICT OF COLUMBIA CIRCUIT

JAMES A. HOURIHAN

GAIL STARLING MARSHALL

HOGAN & HARTSON

815 Connecticut Avenue, N.W.

Washington, D.C. 20006

(202) 331-4500

September 8, 1980 Attorneys for Petitioner

WILSON - EPES PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

INDEX TO APPENDIX

APPENDIX A

Opinion of the United States Court of Appeals for

the District of Columbia Circuit dated June 19,

1980, affirming the Decision and Order of the Ad-

ministrator of the United States Environmental

IIE TI ocak ccc cacidenshescsseasccondsseucbina ve vidaiindon

APPENDIX B

The Decision and Order of the Administrator

of the United States Environmental Protection

Agency dated November 20, 1978, affirming the

Administrative Law Judge’s Order requiring

Chrysler to submit a plan for remedying the car-

bon monoxide nonconformities in the recall class

WO Sie iiss fDi aed fC Re aM Ne PRR

APPENDIX C

The Initial Decision, Findings of Fact and Conclu-

sions of Law and Order of the Administrative Law

Judge of the United States Environmental Pro-

tection Agency dated February 10, 1978 ................

APPENDIX D

Judgment of the United States Court of Appeals

for the District of Columbia Circuit dated June 19,

1980, affirming the November 20, 1978 order of the

Administrator of the United States Environmental

Po | REE Se Rae Peer ne oat ec ee

APPENDIX E

Relevant Provisions of Title 42 of the United

States Code (Clean Air Act):

Clean Air Act §202, 42 U.S.C. § 1857f-1

CN acca pobccolier Uatinnaa sant sviscnkmbupkeebace dL 4

Clean Air Act § 203, 42 U.S.C. § 1857f-2

6, ERE De ay ERT ry ne Na 5d Tie a

Page

67a

125a

212a

INDEX TO APPENDIX—Continued

Clean Air Act §204, 42 U.S.C. § 1857f-3

| RRR NE MET U RCE bald te 52 Pis WA

Clean Air Act § 205, 42 U.S.C. § 1857f-4

GAIN iii jcicint:Lacininseahecnderanateianhinninceatagttbeniiadidioes

Clean Air Act § 206, 42 U.S.C. § 1857f-5

COD: saccinosisimdanapebiieasdtelendipsaiecanebiilammmdiaaadal

Clean Air Act § 207, 42 U.S.C. § 1857f-5a

CITED \xucisincnstshscsensttbattielchitatetedewieislnciaiadanill

Clean Air Act §210, 42 U.S.C. § 1857f-6b

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Page

APPENDIX A

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

No. 78-2273

CHRYSLER CORPORATION, PETITIONER

UNITED STATES ENVIRONMENTAL PROTECTION AGENCY

AND DOUGLAS M. COSTLE, ADMINISTRATOR, RESPONDENTS

Appeal from an Order of the Administrator of the

United States Environmental Protection Agency

Argued January 29, 1980

Decided June 19, 1980

James A. Hourihan, with whom Gail Starling Marshall

was on the brief, for petitioner.

Charlotte Uram, Attorney, Department of Justice, with

whom James W. Moorman, Assistant Attorney General,

Angus MacBeth, Attorney, Department of Justice, Joan

Z. Bernstein, General Counsel, Environmental Protection

Agency, and Gerald K. Gleason, Attorney, Environmental

Protection Agency, were on the brief, for respondents.

Kevin L. Bromberg, Attorney, Environmental Protection

Agency, also entered an appearance for respondents.

Before WRIGHT, Chief Judge, and MCGOWAN and

MIKVA, Circuit Judges.

Opinion for the court filed by Chief Judge WRIGHT.

WRIGHT, Chief Judge: Chrysler Corporation has pe-

titioned for review of a final order of the Administrator

of the Environmental Protection Agency (EPA), issued

on November 20, 1978, directing Chrysler to recall all

1975 vehicles equipped with 360 and 400 cubic inch dis-

placement (CID) engines having two-barrel carburetors

and catalytic converters.. The Administrator determined

that a substantial number of the vehicles in the recall

class fail to conform to the applicable carbon monoxide

emission standards when in actual use, even though they

have been “properly maintained and used.” Having found

this violation of Section 207(c) (1) of the Clean Air Act,

42 U.S.C. § 7541(c) (1) (Supp. II 1978),? the Adminis-

trator ordered Chrysler to submit a plan for remedying

the nonconformity. Jurisdiction of this court is pursuant

to Section 307(b) of the Act, 42 U.S.C. § 7607(b) (Supp.

II 1978).

1 We will denote these vehicles as the “recall class.” We

assume that the Administrator’s order does not include 1975

vehicles sold in California, equipped with air pumps.

2 The Clean Air Act as we know it, 42 U.S.C. §§ 7401 et

seq. (Supp. II 1978), is a composite of many acts passed by

Congress. See Clean Air Act of 1963, Pub. L. No. 88-206, 77

STAT. 392; Motor Vehicle Air Pollution Control Act, Pub. L.

No. 89-272, 79 STAT. 992; Clean Air Act Amendments of 1966,

Pub. L. No. 89-675, 80 STAT. 954; Air Quality Act of 1967,

Pub. L. No. 90-148, 81 STAT. 485; Clean Air Amendments of

1970, Pub. L. No. 91-604, 84 STaT. 1676; Comprehensive

Chrysler has sold approximately 208,000 vehicles in

the recall class, all equipped with catalytic converters

designed to reduce carbon monoxide emissions to within

federal standards. Not long after these vehicles had been

sold, however, EPA discovered that many of them were

failing to meet the standards. After extensive tests EPA

determined that excessive emissions were primarily

caused by misadjustment of the carburetor idle mixture

of the vehicles. The Agency gathered evidence that the

misadjustments were the inevitable result of certain de-

fects in the design of the emission control system of the

recall class, and later initiated an administrative proceed-

ing to require Chrysler to recall the vehicles and correct

this design. An initial hearing before an Administrative

Law Judge (ALJ) resulted in a recall order against

Chrysler, which the company appealed to the Adminis-

trator. The Administrator determined, first, that as a

matter of law a manufacturer must be held responsible

in a recall action for nonconformities primarily caused

by design defects, provided the manufacturer foresaw

or should have foreseen the consequences of the defects

but failed to take available steps to obviate them, and,

second, on the evidence, that Chrysler’s recall class must

be recalled under this standard. Chrysler disputes both

of these positions. On the legal issue Chrysler argues

that since the nonconforming vehicles in the recall class

were misadjusted, they were not “properly maintained”

within the meaning of the Act and thus should not be

recalled. On the factual issue Chrysler asserts that the

Administrator’s conclusions were not supported by sub-

Health Manpower Training Act of 1971, Pub. L. No. 92-157,

85 STAT. 431, 464; Energy Supply and Environmental Co-

ordination Act of 1974, Pub. L. No. 93-319, 88 STAT. 246;

Clean Air Act Amendments of 1977, Pub. L. No. 95-95, 91

STAT. 685; Safe Drinking Water Amendments of 1977, Pub.

L. No. 95-190, 91 STAT. 1393, 1399. The Act was formerly

codified at 42 U.S.C. §§ 1857 et seq. (1976).

stantial evidence in the record. Because we agree with

the Administrator’s interpretation of Section 207 (c) (1)

and determine that there was substantial evidence to

support his findings of a violation, we affirm.

I. STATUTORY FRAMEWORK

In 1970 Congress passed the Clean Air Amendments

of 1970, Pub. L. No. 91-604, 84 STaT. 1676, which re-

quired auto manufacturers to reduce carbon monoxide

emissions by 1975 to one-tenth of former levels: to 3.4

grams per mile. See 36 FED. REG. 12657 (1971). The

Administrator may, however, postpone implementation

of this statutory standard on grounds of technological

feasibility or other factors. See Section 202(b) (5) of the

Act, 42 U.S.C. § 7521(b) (5) (Supp. II 1978). In 1973

the Administrator postponed implementation of the 3.4

grams per mile standard and set an interim carbon

monoxide emission standard of 15 grams per mile.* This

15 grams per mile standard was in effect during the

1975 model year, with which we are concerned.

To comply with the Act manufacturers must design,

build, and equip each new vehicle to conform to emission

838 FED. REG. 10317 (1973). This postponement was in re-

sponse to this court’s decision in Internat’l Harvester Co. v.

Ruckelshaus, 478 F.2d 615 (D.C. Cir. 1973). It was the first

of many postponements. In 1974 Congress postponed the ef-

fective date to 1977. Energy Supply and Environmental Co-

ordination Act of 1974, Pub. L. No. 98-319, § 5, 88 Stat. 246,

258. In 1975 the Administrator suspended the rules for one

year, until 1978. 40 Fep. REG. 11900 (1975). In 1977 Congress

again postponed the effective date, to 1981. 1977 Amendments

to the Clean Air Act, Pub. L. No. 95-95, 91 STAT. 685, 751, see

42 U.S.C. § 7521(b) (1) (A). Most recently, the Administra-

tor granted a further reprieve from the 3.4 grams per mile

standard to Chrysler’s 1981 line of front-wheel-drive cars,

code-named “K-cars.” Washington Post, March 19, 1980, at

El, col. 1; see 45 FED. REG. 17914 (1980) (containing a list

of models exempt from the 3.4 grams per mile standard).

standards at the time of sale and to be free from defects

in material or workmanship that would cause the vehicle

to fall below the standards within a five-year or 50,000-

mile period after sale. Section 202(a) (1), (d) (1), 42

U.S.C. § 7541(a) (1), (d)(1) (Supp. II 1978). Manu-

facturers must provide a warranty to purchasers to this

effect. Id. § 207(a) (1), 42 U.S.C. § 7541(a) (1). If the

purchaser of a vehicle maintains and operates it in ac-

cordance with the written instructions of the manufac-

turer, see id. § 207(c) (83), 42 U.S.C. § 7541(c) (8), and

it fails to conform to emission standards during the war-

ranty period (thus subjecting the owner to penalty or

other sanction) the manufacturer must remedy the non-

conformity at its own expense. Id. § 207(b), 42 U.S.C.

§ 7541 (b).

To ensure compliance with the Act EPA conducts a

three-stage testing process. Under authority of Section

206(a), 42 U.S.C. § 7525(a), the Agency examines proto-

_ types of new vehicles or new vehicle engines to determine

whether they will conform to the emission standards and

issues a “certificate of conformity” to vehicles passing

this test. As a part of this examination the Agency in-

spects the written maintenance and use instructions pro-

vided to the purchasers. Until the 1977 amendments

went into effect the Agency determined whether such

instructions were “reasonable and necessary to assure

the proper functioning” of the emission control system.

Section 207(c) (3), 42 U.S.C. § 1857f-5a(c) (3) (1976) .*

‘Prior to the 1977 amendments § 207(c) (3), 42 U.S.C.

§ 1857f-5a(c) (3) (1976), provided, in relevant part:

The manufacturer shall furnish with each new motor

vehicle or motor vehicle engine such written instructions

for the maintenance and use of the vehicle or engine by

the ultimate purchaser as may be reasonable and neces-

The second stz ve of the testing process takes place after

vehicles come uff the assembly line. At this time the

Agency examines sample vehicles to ensure that they

conform to the requirements of the Act. Authority to

conduct this examination derives from Section 206(b),

42 U.S.C. § 7525(b) (Supp. II 1978). If the Adminis-

trator determines that some or all of the vehicles off the

assembly line fail to conform to the applicable regula-

tions, he must suspend the certificates of conformity

for those vehicles until the manufacturer corrects the

deficiency.

The third stage of the testing process takes place while

the vehicles are in actual use. EPA and related state

agencies test sample vehicles to determine whether they

continue to satisfy emission standards during the statu-

tory period. If a “substantial number” of the vehicles

in any class or category fail to conform to the emission

standards “although properly maintained and used” by

the owner, then the Administrator must notify the manu-

facturer and require it to submit a “plan for remedying

the nonconformity” at the manufacturer’s expense. Un-

like the discovery and cure of nonconformity of indi-

vidual vehicles under the warranty provisions, the remedy

at this stage is recall of the entire class of vehicles in

order to correct the design, material, or workmanship

defect causing the nonconformity. This provision—Sec-

tion 207(c)(1) of the Act, 42 U.S.C. § 7541(c) (1)

sary to assure the proper functioning of emission control

devices and systems. * * *

Section 207 (c) (3) (A), 42 U.S.C. § 7541 (c) (3) (A) (Supp. II

1978), now provides, in relevant part:

The manufacturer shall furnish with each new motor

vehicle or motor vehicle engine written instructions for

the proper maintenance and use of the vehicle or engine

by the ultimate purchaser and such instructions shall

correspond to regulations which the Administrator shall

promulgate. * * *

i |

(Supp. II 1978)*—is the statutory basis for the order

under review.

II. THE RECALL CLASS

A. Design of the Emission Control System

To reduce carbon monoxide emissions and bring its

vehicles into conformity with the interim federal stand-

ards Chrysler, like the other American auto manufac-

turers, installed catalytic converters in its 1975 model

year vehicles. A catalytic converter can reduce carbon

monoxide emissions by 60-80 percent by promoting a

chemical reaction among the carbon monoxide, hydro-

carbons, and oxygen. This reaction produces two harm-

less byproducts, carbon dioxide and water.*

5Section 207(c)(1), 42 U.S.C. §7541(c)(1) (Supp. Il

1978), provides, in relevant part:

If the Administrator determines that a substantial

number of any class or category of vehicles or engines,

although properly maintained and used, do not conform

to the regulations prescribed under section 7521 of this

title, when in actual use throughout their useful life (as

determined under section 7521(d) of this title), he shall

immediately notify the manufacturer thereof of such

nonconformity, and he shall require the manufacturer

to submit a plan for remedying the nonconformity of the

vehicles or engines with respect to which such notifica-

tion is given. The plan shall provide that the noncon-

formity of any such vehicles or engines which are prop-

erly used and maintained will be remedied at the expense

of the manufacturer. * * *

* Joint Appendix (JA) 1:357 (Gockel testimony) ; JA III:-

1217 (Decision and Order). This opinion will refer to the

testimony of the following EPA witnesses: Mr. Roy Reichlen,

an EPA environmental engineer; Mr. Charles Dietrick, an

EPA aerospace and mechanical engineer involved in investi-

gating emission nonconformities; Mr. John White, project

manager for large-scale emission testing programs; Mr.

Barry D. Nussbaum, an EPA data analyst; Professor Nozer

An adequate supply of oxygen in the exhaust stream is

essential to effective operation of the catalytic converter.

Unless there is enough oxygen to oxidize all the emis-

sions, the catalytic converter will begin to work poorly

and at some point cease to operate altogether.’ There

are two major methods of supplying enough oxygen: in-

stallation of an air pump to introduce additional oxygen

into the system, and precise adjustment of the car-

buretor idle to ensure that sufficient oxygen is mixed

with the fuel. The principal disadvantage of air pumps

is that they increase the cost of the system by about $50

per car *; they also decrease gasoline mileage® and may

Singpurwalla, an expert witness on statistics; Mr. Jack L.

Gockel, a pollution control consultant; Mr. John P. DeKany,

director of EPA’s Emission Control Technology Division; and

Mr. Peter E. Kohnken, team leader of EPA’s inspection unit

that certified the recall class. The opinion will also refer to

the testimony of the following Chrysler witnesses: Mr. Car-

los M. Heinen, Chrysler’s director of Emissions/Fuel Econ-

omy Certification and Materials Engineering; Mr. G. W.

Robertson, chief engineer of Emissions/Fuel Economy at

Chrysler; Mr. Forrest Cook, a mechanical engineer employed

by Carter Carburetor Company; Mr. Harry Sherwin, a car-

buretor design engineer for Holley Carburetor Division of

Colt Industry Operating Corporation; Mr. Miles Brubacher,

an independent consulting engineer; Mr. James Freers, a

mechanical engineer employed by Chrysler; Mr. Robert Har-

ris, product development supervisor in the Fuel Metering

Systems Laboratory of Chrysler; and Mr. Goodwillie, a

Chrysler engineer working with carburetors and emission

controls.

7 JA 1:356-857 (Gockel testimony) ; JA III:1217 (Decision

and Order).

8 JA 1:378 (Gockel testimony) ; JA III:1224 (Decision and

Order).

®JA III:1224 (Decision and Order). The Administrator

stated that air pumps cause “a slight reduction in fuel econ-

omy,” but that the precise amount of the reduction was not

established in the record. JA III:1224. A Chrysler engineer

in some cases inhibit proper oxidation of the seepage

On the other hand, Chrysler engineers r ized that

air pumps generally decrease emissions more \effectively

the carburetor adjustment method to ensure an \ ade-

quate supply of oxygen to the catalytic converter.

The company instructed owners to take their vehicles

to a mechanic for servicing at intervals of 15,000 miles

or whenever they detected a malfunction."* If all went

well, the mechanic would adjust the carburetor precisely

in accord with Chrysler’s instructions, as detailed in the

service manual ™ and summarized on a permanent label

affixed to the underside of the engine hood.” By means

of this adjustment enough oxygen would be mixed with

the fuel in the idle circuit to enable the catalytic con-

verter to oxidize most of the carbon monoxide in the

exhaust. A correct adjustment of the fuel-air mixture

stated that tests of California vehicles equipped with air

pumps revealed a reduction in fuel economy of approxi-

mately 5%. JA I1:732-733 (Goodwillie testimony).

10 JA 11:664 (Heinen testimony).

11 JA 1:15 (Heinen testimony).

12 JA 1:15-16 (Heinen testimony); JA I1:732-733 (Good-

willie testimony).

18 JA V:1695-1696 (Chrysler Owner’s Manual).

14 JA V:1876-1879 (Chrysler Service Manual).

16 JA I1V:1505 (Chrysler underhood label).

10a

in the idle circuit is called a “lean” setting, meaning a

low proportion of fuel to air."* This setting is measured

by the percentage concentration of carbon monoxide in

the exhaust as detected upstream of the catalyst. Chrysler

calculated that a 0.5 percent carbon monoxide setting

would generally enable the catalytic converter to reduce

carbon monoxide emissions to about 12 grams per mile—

well within the interim standard. In order to provide a

greater margin of safety, Cnrysler decided to specify a

0.3 percent carbon monoxide setting.” When the car-

buretor idle is set to Chrysler’s specifications, most of

the vehicles pass the carbon monoxide emission stand-

ards; when the idle mixture is adjusted to “richer” levels,

most of the vehicles fail the standards.**

Unfortunately, the idle adjustment method has appar-

ently not worked as well in practice as in theory. EPA

researchers have linked the poor emission control per-

formance of the recall class in actual use to certain

characteristics of the carburetor idle adjustment process

that make precise adjustment difficult and undesirable to

owners and mechanics. To explain what EPA finds to be

wrong with the design of this process, we must describe

in some detail the way the idle mixture is adjusted and

the relation of such adjustment to driveabiilty of the

vehicles.

The adjustment process is cumbersome and time-

consuming, taking the mechanic approximately 30 to 40

16 JA 1:357-358 (Gockel testimony).

17JA II:721-722, 733 (Goodwillie testimony). See also

JA 1:13 (Heinen testimony).

18 JA 1:354-855 (Gockel testimony). Thus the primary

cause of nonconformity among the recall class was misad-

justment of the idle, as EPA found. JA IIT:1179 (Initial De-

cision, Findings of Fact Nos. 39-41) ; JA III:1217-1218 (De-

cision and Order). See also JA 1:354 (Gockel testimony).

lla

minutes, according to an EPA investigation.” The me-

chanic must first obtain a Chrysler Huntsville exhaust

emission analyzer or other approved infrared analyzer,

and must verify that it is warmed up and calibrated

according to the manufacturer’s instructions. He must

check to see that the sample lines and connections of the

sampling system for the analyzer are free of leaks, and

must also warm up the vehicle’s engine and allow it to

idle for no more than ten minutes. Then the mechanic

must remove the plug from the threaded catalyst tap on

the vehicle and install the sample line of the analyzer

in the tap upstream of the catalyst. This will generally

require the mechanic to crawl under the car or to use a

hoist. He must then start up the vehicle’s engine and

verify that the idle RPM and timing are within specifi-

cation. At this point he must measure the idle carbon

monoxide concentration. If it exceeds specified limits he

must adjust the mixture screws on the carburetor to

achieve a “leaner” mixture of fuel and air in the idle

circuit, checking back and forth between the analyzer

and the carburetor to monitor the effect of his adjust-

ment on the idle mixture. A clockwise turn of a screw

will decrease the amount of fuel discharged through the

idle port and into the idle circuit; a counterclockwise

turn will increase the amount of fuel, resulting in a

“richer” mixture. The adjustment screws are highly

sensitive and must be turned in small fractions of a

rotation in order to set the adjustment with sufficient

precision. After making the proper adjustment the me-

chanic must also balance the mixture screws on a two-

barrel carburetor for lowest level of hydrocarbons or

19 JA 1:402 (Gockel statement). A survey of 27 mechanics

at 25 dealerships found only one mechanic who could perform

the operation in less than 15 minutes. Eight took 15-20 min-

utes; 15 took 20-40 minutes; two took more than 40 minutes.

JA V:1979. Chrysler, however, introduced evidence that the

procedure takes about 14 minutes. Brief of petitioner at 80.

12a

smoothest idle within the prescribed specifications.” An

EPA expert who interviewed 27 Chrysler dealership me-

chanics and also performed the maintenance procedures

concluded that “the procedure is cumbersome, time con-

suming and most importantly will usually result in cus-

tomer dissatisfaction.” Joint Appendix (JA) 1:368

(Gockel testimony) .*4

The complex and time-consuming nature of the ad-

justment procedure is significant because the manufac-

turer did not allow enough time in its reimbursement

schedules for dealership mechanics to make carburetor

adjustments, according to a survey of Chrysler me-

chanics.” This meant that many mechanics had to com-

plete the specified adjustments without full compensation

for their time.** Moreover, Chrysler did not reimburse

mechanics for a second adjustment in the event a cus-

tomer was dissatisfied with the results of the first, as

frequently happened when the idle was set to so “lean”

a mixture.» Various alternative idle adjustment methods

20 JA 1:232-233, 249-250 (Dietrick testimony) ; JA V :1876-

1879 (Chrysler Service Manual). See also JA I1:582-583,

586-587, 589 (Gockel testimony).

21 Chrysler disputes EPA’s conclusion that the procedure is

cumbersome and difficult to perform. One Chrysler engineer

described the procedure as “relatively simple,” JA II:829

(Freers statement) ; another said that the procedure could

be “done by a normal guy with normal equipment,” JA 1:14

(Heinen testimony); a Chrysler consultant said that “it is

easy for a mechanic to make a quick and precise adjustment

of the idle mixture,” JA 1:88 (Brubacher testimony). Sig-

nificantly, none of the Chrysler experts testified that it is

easy to achieve satisfactory driveability when the idle is ad-

justed to Chrysler’s specifications.

22 JA V:1977; see JA 1:370, 401 (Gockel testimony).

23 JA 1:401 (Gockel testimony).

24 JA 1:870 (Gockel testimony).

25 See text and notes at notes 39-43 infra.

18a

employed by mechanics for many years are both less time-

consuming and less likely to displease the customer.” But

as both EPA” and Chrysler ** experts agree, alterna-

tive procedures are likely to produce mixtures “richer”

than those needed by the emission control system.

Several specific factors make the required procedures

more difficult to perform. First, the Administrator found

that precisely calibrated and fully operating infrared

analyzers are often unavailable, and that most dealers

were not attaching the analyzers to the upstream tap,

as specified by Chrysler.*® Evidence in the record shows

that 41 percent of nondealership service facilities lacked

such analyzers as of August 1975.% Moreover, in 1975

Chrysler undertook a survey of emission testing equip-

ment at 39 dealerships; that survey revealed that “[a]

significant number of analyzers had leaks in the sampling

systems large enough to cause incorrect readings.” JA

V:2001. One dealer in the survey had no analyzer at all;

one had a “totally inoperative” analyzer; one had an

analyzer so unstable that it could not be checked; one

had its analyzer at the shop for repairs. Eleven other

26 JA 1:370, 401 (Gockel testimony). See JA III:1223 (De-

cision and Order). This problem may be compounded by

the ignorance of many mechanics concerning the effect of the

idle adjustments on carbon monoxide emissions. Only six of

27 dealership mechanics surveyed realized that a “rich” idle

mixture will cause the catalytic converter not to work at

idle; 18 actually stated that a “rich” mixture would make the

catalyst work harder. JA V:1980.

27 JA 1I:870-371 (Gockel testimony); JA 1:484 (DeKany

testimony).

28 JA 1:86 (Brubacher testimony); JA 1:98-104 (Freers

testimony).

29 JA III :1222 (Decision and Order).

80 JA 1[:251 (Dietrick testimony) (citing a survey con-

ducted by Bendix Corporation under contract to EPA).

l4a

analyzers at the dealerships had major failings, such as

faulty calibration or a sticking carbon monoxide meter.”

The Chrysler engineer analyzing the results flatly stated

that “routine maintenance of the instruments is not per-

formed.” JA V:2001 (memorandum from A. T. Weibel

to W. S. Fagley). These results are corroborated by tests

undertaken by California and New Jersey.” Moreover,

a majority of mechanics at Chrysler dealerships did not

regularly use the exhaust analyzer at the catalyst probe,

as required by Chrysler’s instructions.”

A second special problem with the emission control

system adopted by Chrysler is that the carburetor ad-

justment screws are so sensitive that tiny rotations of the

screws will grossly affect the idle fuel-air mixture. A

mere 1/20 of a turn of the mixture screws above Chrys-

ler’s specified adjustment range will cause a substantial

increase in idle carbon monoxide.™ A full rotation of

the screw will produce an idle carbon monoxide level

about 23 times Chrysler’s specifications.” Chrysler at-

tempts to pass this problem off, saying that it merely

81 JA 1[:251-252 (Dietrick testimony) (summarizing data

from Chrysler survey, JA V:1997-2002). These results seem-

ingly conflict with Chrysler’s conclusion from the survey that

“most analyzers were in operating condition and working

with sufficient accuracy for the use for which they were in-

tended.” JA V:2001 (memorandum from A. T. Weibel to

W.S. Fagley).

82 The California report, JA V:1881, stated that “the emis-

sions analyzers in these facilities were in such poor condition

that [the Air Resources Board required] the repair and re-

calibration of 80% of the emissions analyzers.” JA V:1882.

See also JA V:1883 (New Jersey report).

88 JA V:1978 (EPA survey); JA V:2001 (Chrysler sur-

vey).

84 JA 1:372 (Gockel testimony).

85 JA 1:248 (Dietrick testimony).

15a

causes the adjustment procedure to “take slightly longer.”

Brief of petitioner at 65. But the sensitivity of the ad-

justment screws is more significant than Chrysler is

willing to admit. {n order for the emission control sys-

tem to work, the idle mixture must be set precisely,

within very narrow limits. The hypersensitivity of the

screws makes misadjustments far more likely, especially

if mechanics are inexperienced or pressed for time.

Chrysler attempted to alleviate the adjustment prob-

lem by installing plastic limiter caps on the idle adjust-

ment screws. Ideally, such caps would prevent the me-

chanic from turning the screws to a mixture “richer”

than specification. But the limiter caps are easily re-

moved or damaged **; indeed, the mechanic must remove

the caps in order to make certain repairs.” Moreover,

Chrysler’s limiter caps were such that even when in place

they permitted adjustment of the idle mixture to levels

many times “richer” than Chrysler’s specifications.**

Most important, the Chrysler procedure often disrupts

the vehicles’ smooth operation. Generally speaking, a

vehicle drives more smoothly and has a smoother idle

with a relatively “rich” fuel-to-air mixture. “Lean”

settings such as those specified by Chrysler often gene-

rate “driveability” problems and hence customer dissatis-

faction. The recall class vehicles are adjustable to any

setting between 0 and 8 percent carbon monoxide, as

86 JA 1:242 (Dietrick testimony).

87 JA III:1222 (Decision and Order) ; see also JA V:1978-

1979 (survey of dealership mechanics).

88 JA III:1190 (Initial Decision, Finding of Fact No. 102).

See JA 1:241-242 (Dietrick testimony) (with limiter cap in

place, idle mixture could be set to an idle carbon monoxide

level 10 times Chrysler’s specification).

16a

measured at the tailpipe, with “best idle” occurring be-

tween 5 and 8 percent. In contrast, the setting required

for effective operation of the catalytic converter is 0.3

percent idle carbon monoxide, as measured upstream of

the catalyst.” As a Chrysler engineer admitted, the

“lean” idle setting specified by Chrysler “certainly af-

fects idle quality.” JA II:875 (Harris testimony). He

stated that “rich adjustment towards the area of best

idle will produce better idle by definition than a leaner

setting.” JA II:877. In particular, he noted that at

leaner settings it becomes more important to balance the

carburetor precisely, so as to deliver the same fuel-air

mixture to all of the cylinders. At a “lean” mixture it

becomes “more likely that one cylinder or two cylinders

might not be receiving the proper fuel distribution.”

JA II:875. Thus the idle is more likely to be rough and

uneven. A large majority of dealership mechanics sur-

veyed by EPA stated that it is not possible to achieve

“acceptable engine smoothness and driveability” when

the idle mixture is adjusted to Chrysler’s specifications.”

The mechanics also said that customers complain of ‘ough

idle, hesitation, poor performance, or surge when the

8° JA III:1189 (Initial Decision, Findings of Fact Nos 95-

96). Although the former measure of carbon monoxide was

taken at the tailpipe and the latter was taken upstream of

the catalyst, the results are comparable. A 0.8% carbon mon-

oxide concentration upstream of the cataiyst should generally

result in close to « 0.0% reading at the tailpipe. See note 56

infra.

#° When asked “Is it possible to achieve acceptable engine

smoothness and driveability when you adjust according to

manufacturer’s procedures and specifications?” only two of

the 27 mechanics surveyed answered “yes.” Fifteen answered

“no”; six answered “not ail of the time”; and four answered

“most of the time.” JA V:1977.

17a

idle mixture is properly set.*' A significant majority

admitted that they do not use the specified Chrysler pro-

cedure for adjusting the idle mixture.“ More than two-

thirds of the mechanics said that they “often” or “al-

ways” remove the carburetor limiter caps in order to

make a good idle adjustment,** thereby indicating that

they must set the idle mixture far “richer” than opera-

tion of the emission control system would permit. As the

Administrator said, “Given customer dissatisfaction with

the idle quality and the fact that the best idle quality

is achieved at an idle setting far richer than Chrysler’s

specifications, mechancis are motivated to misadjust the

vehicles.” JA III:1219 (Decision and Order).

In comparison, most Ford vehicles in the 1975 model

year were equipped with air pumps,“ which obviate the

need for precise carburetor adjustments to extremely

“lean” idle mixtures. Since air pumps provide sufficient

oxygen to the catalytic converter, the idle can be set at a

“richer” mixture, as driveability seems to require, with-

out disabling the emission control system.** Other un-

desirable features of the Chrysler system were also ab-

sent from most of the systems made by Chrysler’s com-

petitors. A Chrysler expert admitted that most of the

41 All 27 mechanics said that customers complain when the

carburetor is adjusted to manufacturer’s specifications.

Twenty-three had received complaints of “rough” idle. Other

complaints were of “hesitation,” “poor performance,” and

“surge.” JA V:1977.

42 JA V:1978.

48 JA V:1978.

44 JA 11:541 (Dietrick testimony). EPA has incorrectly

stated that Ford “used air pumps on all of its 1975 cars.”

Brief of respondents at 23 n.31 (emphasis added). This over-

statement is contradicted by EPA’s own witness, Mr. Die-

trick.

45 JA III :1224 (Decision and Order).

18a

idle mixture screws used by other manufacturers were

“substantially” less sensitive than that used by Chrys-

ler.“* The limiter caps used by other manufacturers—

unlike those used by Chrysler—would not permit the

adjustment screws to be adjusted beyond the manufac-

turer’s specifications.*7 Moreover, Chrysler was the only

domestic auto manufacturer to install a system requir-

ing use of an exhaust analyzer at the upstream tap.*®

B. Performance and Testing of the Recall Class.

EPA approved the prototypes of recall class vehicles

submitted for initial examination and issued them a cer-

tificate of conformity.** However, at the second stage

of testing Chrysler and EPA received preliminary in-

dications that the emission control system of the recall

class might not perform as well as expected. Early in

1975 Chrysler submitted data to EPA from tests of the

vehicles as they came off the assembly line. These tests,

conducted in accordance with the “Federal Test Proce-

dure,” see 40 C.F.R. § 85.075-9 (1976),” involved a

simulated seven-mile driving cycle performed on a dyna-

46 JA I11:676 (Cook testimony) ; see also JA 1:253 (Dietrick

testimony). But Chrysler also presented testimony that the

angle of its idle mixture screw was within the “state of the

art.” JA 1:29-30 (Cook testimony); see also JA IV:1567-

1572 (charts showing idle adjustability of different carbure-

tor models).

47 JA III:1191 (Initial Decision, Finding of Fact No. 104).

*8Chrysler admits that no domestic manufacturers em-

ployed this procedure, but points out that several foreign

manufacturers did so. Reply brief of petitioner at 33.

49 JA III:1171 (Initial Decision, Findings of Fact Nos. 3-

4; see also JA 1:142-162 (Kohnken deposition concerning the

initial examination of the recall class prototypes).

50 Cf. 40 C.F.R. § 86.127-78 (1979) (current overview of

testing procedures).

19a

mometer.*! Examination of the exhaust emitted by the

vehicles during the simulation revealed that approxi-

mately 45 percent of the recall class vehicles coming off

the assembly line did not conform to the carbon monoxide

emission standard.” Chrysler attributed this high failure

rate to the newness of the vehicles, which the company

predicted would conform after being driven sufficiently

to be broken in.* In addition, EPA received reports

from four states which conducted “short” tests indicating

that a large percentage of 1975 Chrysler -vehicles in

actual use, including those in the recall class, greatly

exceeded the idle carbon monoxide concentration level

specified by Chrysler, and thus were highly likely to be

in violation of the federal standards.“ Chrysler at-

tributed these results to test conditions in the state pro-

grams and to carburetor misadjustments in the field.®

On the basis of these early reports EPA initiated an

investigation of the recall class.

The EPA investigators used data from a variety of

testing programs conducted by Chrysler, four states, and

EPA itself. In addition to the Federal Test Procedure

51 The Federal Test Procedure takes about 12 hours to com-

plete, and measures the mass of carbon monoxide in the ex-

haust emissions, expressed in grams per mile. An alterna-

tive “short” test, used by many states, takes about one minute

to complete, and measures the concentration of carbon mon-

oxide in the emissions, expressed in percentage carbon mon-

oxide. The “short” test has been determined to correlate

with the Federal test. JA 1I:194-195 (Dietrick testimony).

52 JA 1:195 (Dietrick testimony) (summarizing Chrysler

test data).

53 JA 1:196 (Dietrick testimony).

54 JA 1:195-196 (Dietrick testimony).

55 JA 1:196 (Dietrick testimony).

20a

results discussed above, Chrysler submitted the results

of “short” tests conducted at the assembly line, at its

new car preparation center in Chicago, and at five rep-

resentative dealerships in Chicago. In each instance

Chrysler discovered that many of the vehicles in the re-

call class exceeded Chrysler’s specified idle carbon mon-

oxide adjustment. Significantly, many of the vehicles

registered a carbon monoxide concentration in the ex-

haust of 1.0 percent or higher—a strong indication that

the vehicles were in violation of the 15 grams per mile

federal standard.®*® The results of these tests may be

summarized in tabular form:

56 Chrysler specifies that the idle mixture should be ad-

justed to register 0.3% carbon monoxide concentration in

the exhaust, as measured upstream of the catalyst. See text

at note 17 supra. This translates roughly into a 0.0 carbon

monoxide concentration, as measured at the tailpipe, JA I1:188

(Reichlen testimony), and a carbon monoxide emission of less

than 12 grams per mile, JA II:721-722 (Goodwillie testi-

mony). An idle mixture setting that registers 1.0% or more

carbon monoxide concentration as measured at the tailpipe

is highly like!y to cause a violation of the standards, accord-

ing to an EPA analysis. JA 1:430, 4839 (DeKany testimony) ;

cf. JA 11:722 (Goodwillie testimony). The ALJ found that

1.0% carbon monoxide tailpipe concentration is equivalent to

approximately 17 grams per mile of carbon monoxide emis-

sions. JA III:1176 (Initial Decision, Finding of Fact No. 28).

Chrysler witnesses claimed that the point at which federal

standards would be clearly violated is somewhere between

1.5 and 2.0% carbon monoxide. JA III:1228-1229 (Decision

and Order). For purposes of reaching his decision, the Ad-

ministrator opted for the higher figure. Jd. The Chrysler

idle test results, however, use the lower figure. We observe

that every vehicle exceeding 1.0% carbon monoxide under

the “short” test that was also tested under the “Federa!” pro-

cedure exceeded the 15 grams per mile standard. JA III:1229

n.55 (Decision and Order).

21a

Chrysler “Short” Test Results *”

Percentage Percentage

Number and Type of Vehicle Misadjusted Over 1.0% CO

Off Assembly Line:

67 360 CID vehicles 46% 27%

78 400 CID vehicles 27% 17%

At New Car Preparation:

48 360 CID vehicles 33% 27%

88 400 CID vehicles 18% 18%

At Dealers:

14 3860 CID vehicles 29% 29%

15 400 CID vehicles 83% 27%

These results tend te indicate that many vehicles in the

recall class were in violation of federal emission stand-

ards even before passing into the hands of purchasers.**

57 These data are derived from JA V:1812-1858 (Chrysler

Idle Test Data) ; JA JII:1182-1183 (Initial Decision, Findings

of Fact Nos. 59-62); JA 1:211-213 (Dietrick testimony).

Since the tests were performed by Chrysler personnel, some-

times after giving warning to the dealers or preparation

centers, the results might well understate the severity of the

misadjustments. See JA 1:213 (Dietrick testimony).

58 We note that the Administrator expressly declined to rely

on this evidence of misadjustment prior to delivery of the

vehicles to the ultimate purchasers:

The presiding officer also relied upon short-test data

to support conclusions that the recall class vehicles are

misadjusted on the assembly line or otherwise before

delivery to the purchaser. However, these conclusions

are based on idle CO concentration levels averaging less

than 1.0%, only a small percentage of which exceed

1.0%. As previously indicated, idle CO measurements

at levels below 1.5-2.0% have not been adequately shown

by the limited evidence in the record to reliably predict

an FTP failure when employed outside the laboratory.

Consequently, I decline to accept these data as a basis

for concluding that misadjustments are occurring on the

assembly line, at new car prep centers, or at Chrysler

22a

In the Washington, D.C. area EPA conducted a “short”

test of recently purchased recall class vehicles. The test

revealed misadjustments even more prevalent than those

indicated by the Chrysler test results. Of 18 vehicles

tested, 10 had received no maintenance from their owners

that might affect the idle mixture, while 8 had received

such maintenance. Ninety percent of the vehicles in the

former category were found to be misadjusted; the aver-

age idle carbon monoxide concentration of the vehicles,

as measured at the tailpipe, was 3.2 percent. Half of the

vehicles that had received relevant maintenance were

found to be misadjusted; the average carbon monoxide

concentration was 1.8 percent.”

“Short” tests performed by state personnel and EPA

contractors in Oregon, Ohio, Illinvis, and New Jersey re-

vealed that more than 64 percent of the tested 360 CID

vehicles in the recall class, and more than 50 percent of

the 400 CID vehicles, registered over 1.6 percent carbon

monoxide concentration, as measured at the tailpipe.”

EPA conducted two major tests of the recall class, on

which the ALJ and the Administrator primarily relied

in reaching their decisions: the Emission Factor Pro-

gram and the Olson Program. The Emission Factor

Program tested randomly selected vehicles by various

dealerships before delivery of the vehicle to the pur-

chaser. As noted by Mr. John P. DeKany, then Director

of EPA’s Emission Control Technology Division, “. .

definitive proof [of correlation at the 1.0% CO level]

must await completion of ... [another] program.”

JA III:1282-1233 (Decision dak Order) (footnotes omitted ;

elipses and brackets in original).

59 JA V:1693-1694 (new car survey); see JA 1:218-215

(Dietrick testimony); JA 1:186-189 (Reichlen testimony).

60 JA III:1176 (Initial Decision, Findings of Fact Nos. 28-

29).

23a

manufacturers in actual use in four different cities,

without regard to their histories of maintenance or use.™

It was conducted by independent testing laboratories un-

der contract to EPA, with some participation by EPA

personnel.“ The investigators tested vehicles under the

“Federal” procedure and other procedures, including the

“short” test.“ Eighty-five percent of the recall class

vehicles registered carbon monoxide emissions in excess

of the 15 grams per mile standard, under the “Federal”

procedure. The average emission of all recall class ve-

hicles tested was over 48 grams per mile. Under the

“short” test 77 percent of the recall class vehicles regis-

tered excessive carbon monoxide concentration.”

Unlike the Emission Factor Program, the Olson Pro- .

gram was specifically designed to test whether vehicles in

the recall class, although properly maintained and used,

were in violation of the carbon monoxide emission stand-

ards.” EPA contracted with Olson Laboratories of

Livonia, Michigan to conduct the test. Olson personnel

obtained a randomly-ordered list of owners of all recall

class vehicles in Wayne County, Michigan, and contacted

these owners by letter and telephone in an attempt to

61 JA 1:261-265 (White testimony). The random selection

process broke down in several instances, notably in Chicago

and St. Louis, where the investigators had to resort to media

publicity and other methods to procure sample vehicles. JA

IT :522-528, 528-529 (White testimony). Although vehicles

were not excluded from the test because of improper main-

tenance, EPA required owners to fill out a questionnaire con-

cerning maintenance both before and after the test.

62 JA 1:260 (White testimony).

68 JA 1:196-197 (Dietrick testimony).

* JA III:1175 (Initial Decision, Findings of Fact Nos. 22-

23) ; JA 1:197 (Dietrick testimony).

* JA 1:197 (Dietrick testimony).

24a

persuade them to participate. On the basis of ques-

tionnaires and inspections EPA personne! eliminated all

vehicles that failed certain criteria, including some main-

tenance requirements.” Vehicles not falling within these

exclusionary criteria were tested by Olson, EPA, and

Chrysler personnel. If these investigators found any dis-

ablement of the emission control system or other tamper-

ing, they eliminated the tampered vehicle from the test."

The distinctive feature of the Olson Program was that

the investigators tested vehicles in the condition in which

they were received, then performed extensive mainte-

nance, including adjustments of the idle mixture in ac-

cordance with Chrysler’s specifications, and finally tested

them a second time. In this way EPA could determine

the effect of maintenance and idle adjustment on carbon

monoxide emissions. Before receiving maintenance 90

percent of the vehicles tested in the Olson Program ex-

66 These procedures are described in detail by Mr. Dietrick,

who conducted EPA’s investigation of the recall class, JA I:

224-227, and by Mr. Nussbaum, who designed the procedures,

JA 1:297-811.

87 Vehicles were rejected from the sample if: (1) they had

not been operated in accordance with Chrysler’s instructions,

for example, if they had been run on leaded gasoline or had

been improperly used to tow trailers; (2) they had been

rented or leased; (3) their emission control systems had been

damaged by accident; (4) they had been driven over dirt

roads more than half of the time; (5) they had been operated

in a competitive speed race; (6) they had not been taken in

for oil changes or tuneups at the recommended intervals; (7)

their engines had received major damage or a major over-

haul; (8) they had not been purchased new from a dealer;

(9) they had been driven less than 1,000 or more than 50,000

miles; or (10) their emission control systems were disabled.

JA 1:229-230 (Dietrick testimony).

68 JA [:230-231 (Dietrick testimony).

25a

ceeded carbon monoxide emission standards.” After

maintenance only 25 percent of the tested vehicles failed

to satisfy the standards.” The results may be sum-

marized in tabular form:

Olson Testing Program ™

Percentage Average

Number and Type of Vehicle in Violation CO Emissions

As Received:

10 360 CID vehicles 100% 69.02 grams/mile

10 400 CID vehicles 80% 33.61 grams/mile

After Maintenance:

10 360 CID vehicles 20% 11.35 grams/mile

10 400 CID vehicles 80% 15.45 grams/mile

The Administrator has called the Olson test results

“(t]he most decisive and objective evidence establishing

the high number of misadjustments * * *.” JA III:1225.

Of the 46 vehicles tested in the Emission Factor and

Olson Programs, 37 had logged fewer than 15,000 miles.”

Since the 15,000-mile point is the first occasion when

owners are instructed to readjust the idle mixture,”

6 JA 1:197 (Detrick testimony) ; JA III:1174 (Initial De-

cision, Finding of Fact No. 20). Eighteen of the 20 vehicles

were set to idle mixtures “richer” than Chrysler’s specifica-

tions; all of these vehicles exceeded federal carbon monoxide

emission standards. Of the two vehicles set to Chrysler’s

specifications, one met the standards and one exceeded the

standards by a small amount (15.61 grams per mile as com-

pared with the 15 grams per mile standard). JA 1:359-360

(Gockel testimony). For statistical purposes, the latter ve-

hicle is counted as meeting the standards.

70 JA 1:360 (Gockel testimony).

71 The data are derived from the Administrator’s decision,

JA III :1226.

72 JA 1:204 (Dietrick testimony).

73 JA V:1695-1696 (Chrysler Owner’s Manual).

26a

vehicles logging fewer than 15,000 miles might be viewed

as “properly maintained.” Moreover, all nine of the

vehicles logging more than 15,000 miles had been taken

to service facilities for a tune-up, in accordance with

Chrysler instructions—seven of them to Chrysler dealer-

ships.* A large percentage of the tested vehicles—65

percent of the Olson vehicles and 38 percent of the Emis-

sion Factor vehicles—had received unscheduled mainte-

nance relating to the carburetor or tuning because of

owner complaints concerning such driveability problems

as hesitation, rough idle, stalls, hard starting, pinging,

and poor fuel economy.”

Evidence suggests that the misadjustments occurred

to some degree on the assembly line, and that they tended

to become statistically more severe as mileage accumu-

lated. A compilation of Chrysler, state, and EPA test

results, correlated according to vehicle mileage, may be

summarized in tabular form:

Test Summary 7°

No.of Average Percentage Percentage

Mileage Vehicles IdleCO Misadjusted Over1% CO

0-1,000 17 1.9% 65 % 65%

1,000-5,000 37 2.2% 73% 68%

5,000-10,000 25 2.9% 12% 72%

10,000-15,000 20 8.1% 76% 75%

Over 15,000 10 4.3% 90% 90%

Evidence in the record indicates that these results are

representative of cities all across the nation.”

™ JA 1:204 (Dietrick testimony).

™ JA 1:207-208 (Dietrick testimony).

76 The data are compiled at JA I:216 (Dietrick testimony),

and derive from studies reported at JA V:1685-1694; see also

JA III:1112 (Initial Decision).

7 JA 1:216-217 (Dietrick testimony); see JA III:1112

(Initial Decision).

27a

EPA performed a statistical analysis of the resuits of

the Emission Factor and Olson Programs. This analysis

revealed, with 95 percent confidence, that no fewer than

79 percent of all 360 CID vehicles in the recall class, and

no fewer than 62 percent of all 400 CID vehicles in the

recall class, violate the carbon ‘monoxid¢ emission stand-

ards when in actual use. Using only the Olson Program

results, EPA was able to project with 95 percent confi-

dence that no fewer than 79 percent of the 360 CID, and

no fewer than 49 percent of the 400 CID, vehicles in the

recall class violate the standards in actual use.”

III. THE ORDER UNDER REVIEW

A. The Notice of Noncomformity

Relying on the results of state tests, the Emission

Factor Program, and the Olson Program, the EPA Ad-

ministrator, then Russell E. Train, issued a letter on

December 8, 1976 instructing Chrysler to submit a plan

for remedying the nonconformity of the recall class. The

Administrator said that the test results showed “that a

substantial number of vehicles in [the recall class] are

exceeding the 1975 Federal carbon monoxide standard in

actual use,” and that “carburetor idle CO misadjustment

is the primary cause of the nonconformity of these ve-

hicles.” JA III:912. He noted that misadjustment of

the vehicles might be taken as proof that they had not

been “properly maintained” under the statute, but he

stated that Chrysler must nevertheless be considered

liable to a recall action. He reasoned:

Chrysler is responsible for these misadjustments be-

cause Chrysler as an automobile manufacturer should

have foreseen that its carburetor design and adjust-

ment procedures would cause widespread misadjust-

78 JA III:1175 (Initial Decision, Findings of Fact Nos. 25-

26) ; see JA 1:319-347 (Singpurwalla testimony).

28a

ments and because of the agency relationship which

exists between Chrysler and its authorized dealer-

ships.

JA III:912-913.

Chrysler took issue with the Administrator’s determi-

nation and demanded a public hearing before an ALJ,

as provided in Section 207(c) (1) of the Act, 42 U.S.C.

§ 7541(c) (1) (Supp. II 1978), and EPA regulations, 40

C.F.R. § 85.1807 (1979).

B. The Initial Decision

The case was assigned to ALJ Edward B. Finch. Both

parties undertook extensive discovery, over which several

disputes arose. Most important, Chrysler was not per-

mitted to obtain some 20 EPA documents or to depose

Mr. Eric Stork, head of the EPA team that certified the

recall class.’* After four prehearing conferences and a

lengthy public hearing in which Chrysler and EPA were

thé only parties, the ALJ issued an Initial Decision in

favor of EPA ordering Chrysler to submit a recall plan

in accordance with Section 207(c) (1). JA III:1090-1196.

The ALJ delineated two major disputed issues: first,

whether the test vehicles that served as the basis for ihe

Administrator’s notice. of nonconformity were “properly

maintained” within the meaning of Section 207(c) (1),

and second, assuming that those vehicles had been “prop-

erly maintained,’ whether there was sufficient evidence

to support the Administrator’s decision that there were

“a substantial number” of vehicles in the recall class that

7 See JA III:923 (Chrysler’s motion to compel production

of documents); JA III:985, 1002 (ALJ’s orders granting

Chrysler’s motion in part and denying it in part). Chrysler

applied to the Administrator for an interlocutory appeal,

which was denied. JA III:1086.

29a

“do not conform” to the federa! carbon monoxide emis-

sion standards.*°

EPA urged the ALJ to adopt a definition of “properly

maintained” that would refer solely to the actions of the

vehicle owner in taking his car to a bona fide service

station for Chrysler’s recommended maintenance at the

recommended time intervals without regard for whether

the maintenance was performed properly or not. The

ALJ rejected this argument, holding that “it is the actual

maintenance performed on the vehicle which is the de-

termining factor.” JA III:1102. He concluded that “the

phrase ‘properly maintained’ has a technical meaning

within the automobile industry and, when used within

that industry, means ‘maintained in accordance with the

manufacturer’s [instructions or] specifications.’” JA

III:1101 (brackets in original).** However, the ALJ

ruled in effect that vehicles logging less than 15,000 miles

should automatically be considered “properiy maintained”

because Chrysler does not require readjustment of the

idle setting within the first 15,000 miles of operation.”

Using this definition of “properly maintained,” the

ALJ found substantial evidence supporting the conclusion

80 JA II1:1092-1093 (Initial Decision). The ALJ also dis-

cussed a third issue: whether Chrysler’s maintenance in-

structions to the ultimate purchaser were “reasonable and

necessary to assure the proper functioning of emission con-

trol devices and systems” within the meaning of § 207(c) (3).

He stated that this issue was not in dispute: that both parties

agree that Chrysler’s maintenance instructions were “rea-

sonable and necessary.” JA III:1092-1093 (Initial Decision).

81 The ALJ thus construed the recall provision of § 207(c)

(1) to accord with the warranty provision of § 207(b). See

JA III:1099-1100. However, the ALJ held that the burden

of proof on EPA, as a third party, is lower in a recall action

than that on a vehicle owner in a warranty action. He held

that EPA “need only show by documentation or other relevant

evidence, substantial compliance with the manufacturer’s

instructions.” JA III:1101.

82 JA III:1103-1105.

80a

that a substantial number of vehicles in the recall class

do not conform to federal carbon monoxide emission

standards. Relying on tests of low-mileage vehicles in the

recall class conducted by four states and Chrysler, the

ALJ determined that vehicles that “may be considered

to have been properly maintained” under his definition

—that is, vehicles logging less than 15,000 miles—demon-

strated “gross conditions of idle misadjustment.” JA

III:1107.% Then, relying solely on the Olson and Emis-

sion Factor Programs, as analyzed in accordance with

standard statistical techniques, he concluded that a “sub-

stantial number” of vehicles in the recall class failed to

conform to the emission standards.“ For this purpose

he disregarded the state and Chrysler investigations that

used the tailpipe exhaust, or “short,” method because he

did not believe that the 1.0 percent carbon monoxide con-

centration cutoff point used by those tests was sufficiently

reliable evidence of failure to meet the federal emission

standards.* The ALJ rejected all challenges to the vali-

88 Chrysler argued that many of the low mileage vehicles

tested had received unscheduled maintenance, sée text at note

75 supra, that this maintenance was often conducted im-

properly, and thus that such vehicles should not be considered

“properly maintained” for purposes of a recall. The ALJ re-

jected this argument, saying that “[w]hile the unscheduled

maintenance may have been incorrect maintenance, Chrysler

has not shown by any affirmative evidence that this fact is

true. It would seem that in order to satisfy the customer it

was the only maintenance under the circumstances when

carburetor design, etc., are considered.” JA III:1118-1114.

* JA III:1146-1148. The ALJ rejected Chrysler’s argu-

ment that EPA must demonstrate that 50% or more of the

recall class are in violation of the standards. JA III:1140-

1145.

85 See note 56 supra. Although the ALJ found the “short”

tests ‘sufficient to indicate that an emission problem exists,’

he held that “they are not sufficient to enable these numbers of

vehicles to be used in support of the ‘substantial number’ cri-

terion of Sec. 207 (c) (1).” JA III:1124.

3la

dity of the Emission Factor * and Olson ®™ Programs.

86 Chrysler criticized the sampling technique, testing pro-

cedure, and inclusion of improperly maintained vehicles in

the Emission Factor Program. The ALJ concluded, however,

that there was no pre-selection of vehicles for the test, and

therefore that the sampling technique was accurate for its

purposes. JA III:1127. The ALJ also concluded that the

slight deviations from the “Federal” test procedure either

had no impact on the Emission Factor results or were more

stringent than the usual procedure. Finally, he concluded that

owner questionnaires and Chrysler’s maintenance and war-

ranty records were sufficient to determine that the recall class

vehicles tested in the program were “properly maintained.”

JA IIT:1129.

87 In its attack on the validity of the Olson Program Chrys-

ler argued, first, that the use of a single test site made the

test geographically unrepresentative, JA III:1132. But the

ALJ observed that evidence from other tests indicated that

nonconformities exist to a large extent all over the country,

and thus concluded that the Olson test site was representative.

JA III:1133. He appeared tc agree with Chrysler in theory

concerning this apparent flaw in the testing procedures, but

stated:

I would agree with Chrysler if the test results of the

recall class vehicles had not so conclusively shown that a

substantial number of vehicles in this program were in

nonconformity. It is doubtful if Wayne County resi-

dents and vehicle owners would be so completely irre-

sponsible in the care of their vehicles so as to allow the

conclusion that they are that different from the rest of

the country. * * *

Id. Chrysler argued, second, that the large number of non-

respondents invalidated the results of the Olson Program.

It produced evidence that the characteristics of nonrespond-

ents to a survey offer differ significantly from those of re-

spondents. JA III:1134. The ALJ stated that “precision in

details is not required so long as the general, broad picture

of the emission problem is accurately portrayed.” JA III:

1136. He found that “EPA did everything humanly possible

to obtain a random sample for its Olson testing program”

and that “‘[t] here has been no purposeful bias shown to exist

32a

Thus he reached a two-step conclusion: first, that idle

misadjustments are characteristics of “properly main-

tained” vehicles, and second, that idle misadjustments

have caused “a substantial number” of vehicles in the re-

call class to violate the carbon monoxide emission stand-

ards. Therefore, he found Chrysler liable to a recall ac-

tion under the Act.

In addition, the ALJ held that Chrysler should be held

responsible for nonconformities caused by idle misadjust-

ments by owners and mechanics in the field. Relying

primarily on precedents in the products liability area,

he held:

The Clean Air Act imposes a statutory obligation

upon the manufacturer to design and produce a

vehicle emission system which will, its useful life,

conform to the applicable emission standards. Any

failure to do so is noncompliance with the Act. The

standards set forth in the Act are intended for the

purpose of cleaning up the nation’s air quality for

the benefit of man and the environment. Any failure

to accomplish such purpose by any means, including

a “defect in design” carburetor, as here, constitutes

a violation of the intended purposes of the Act for

which liability attaches. * * *

JA III:1157-1158. EPA argued that Chrysler’s emission

control system design was faulty because it contained no

mechanism to limit idle mixture, was overly sensitive to

small turns of the adjustment screw and to temperature

and idling time, and contained no alternative means of

providing excess air to the catalyst in the event of mis-

adjustment.** Because of these alleged design defects,

which would invalidate the randomness of the sample ob-

tained.” Jd. Moreover, EPA produced expert evidence that

the sample vehicles in the Olson Program were representa-

tive of the recall class. 7d.

88 JA IIT :1148.

33a

and tests showing that a substantia! number of the recall

class vehicles were in a state of misadjustment, the ALJ

concluded “that the design of the emission control system,

including the carburetor, encourages or fosters the gross

misadjustments which have been shown to exist and

therefore should have been foreseen.” JA III:1158.*

The ALJ also concluded that Chrysler may be held

responsible for misadjustments made by dealership me-

chanics because Chrysler dealers are agents of Chrysler

in the performance of pre-delivery and warranty services

and all emissions-related services.” He stated that Chrys-

ler has the “right to control” dealership performance of

these services,** and that members of the public reason-

ably rely on the dealers’ skill and Chrysler’s representa-

tions in servicing Chrysler cars.”

On the basis of these findings and conclusions the ALJ

ordered Chrysler to submit a plan for remedying the

nonconformity of the recall class, under Section 207

(ec) (1).

C. The Administrator’s Decision and Order

Chrysler appealed the Initial Decision of the ALJ to

the EPA Administrator, Douglas M. Costle, on February

14, 1978. On the basis of appellate and supplemental

briefs, but without hearing oral argument, the Adminis-

trator issued the order under review on November 20,

1978."

8° The ALJ also placed “great weight” on the evidence that

the infrared gas analyzer required for idle adjustment was

not in widespread use as !ate as September 1975. JA III:1158.

9 JA III:1159-1170.

* JA III:1166.

#2 JA 111:1169.

% The Administrator’s Decision and Order appears at JA

III :1199-1260.

34a

The Administrator acknowledged that the key issue in

the proceeding was whether the vehicles in the recal!

class were “properly maintained” within the meaning of

Section 207(c) (1).% He reviewed the interpretations of

“properly maintained” urged by EPA and Chrysler,*’

and also that adopted by the ALJ,” but he found that

“(t]he problem with all of these interpretations of the

‘properly maintained’ criterion is that they place undue

emphasis on the text of the words ‘properly maintained’

without examining the purpose or function of the ‘pron-

erly maintained’ criterion in the overall statutory scheme.”

JA III:1211-1212.% He reasoned that the purpose of the

* JA III:1200.

%* EPA argued, as it had before the ALJ, that the phrase

“properly maintained” refers solely to the owners’ actions

in taking the vehicle to a bona fide service facility, and does

not refer to the nature of the maintenance actually performed.

Chrysler argued, as it had before the ALJ, that if a vehicle

is misadjusted ‘hen it is not “properly maintained.” JA

III :1209-1211.

%6 JA IIT :1207-1208.

%7 We are puzzled, therefore, by EPA’s arguments in its

brief at 60-63. It argues that the “properly maintained”

criterion refers to proper maintenance only in relation to the

instructions to the owners in the Owner’s Manual, and not to

maintenance by mechanics. See brief of respondents at 61-63.

To the extent that the criterion relates to mechanics’ actions,

EPA asserts that it is satisfied when the “mechanics per-

formed the repairs as reasonably as could be expected under

the circumstances.” /d. at 61. EPA presented these argu-

ments to the ALJ; they were rejected. EPA presented these

arguments again to the Administrator; again they were re-

jected. EPA is not free to present these arguments a third

time to this court: the duty of the Agency attorneys is to

defend the Decision and Order of the Administrator on the

basis of his findings and legal conclusions. This court could

not affirm the Decision and Order on the basis of EPA attor-

neys’ twice-rejected theories of the case, even if we agreed

with them.

85a

“properly maintained” criterion of Section 207(c) (1)

was “to allocate responsibility for emission nonconformi-

ties among the manufacturer, the vehicle owner and the

mechanic.” JA III:1212. The manufacturer should not

have to bear the expense of a recall if the fault properly

lies with the vehicle operator; on the other hand, if it is

principally responsible for the nonconformity the manu-

facturer should be held accountable, even if the non-

conformity relates to maintenance of the vehicle. Other-

wise, the manufacturer would be able to avoid its duty

to make vehicles that would conform to the emission

standards during their useful life, and could frustrate

the purpose of the Act.** Thus the Administrator inter-

preted Section 207(c) (1) as imposing recall liability on

the manufacturer for maintenance-related nonconformi-

ties only if EPA could establish that the vehicles would

have been maintained properly “but for the actions of

the manufacturer.” JA II1:1215 (emphasis in original).

He described EPA’s burden of proof as the presentation

of “affirmative evidence” that the manufacturer is “pri-

marily responsible for the condition of improper mainte-

ance.” Id. In the case at bar the Administrator found

that such affirmative evidence had been presented. He

concluded, on the basis of the record, that “[wJhile that

evidence also shows that the service industry does indeed

contribute to the condition of improper maintenance * * *,

it is clear that the service industry’s contribution is the

inevitable byproduct of Chrysler’s emission system de-

sign and service procedures.” Id.

In reaching this conclusion the Administrator pains-

takingly reviewed the evidence in the record concerning

the alleged design defects in the Chrysler emission con-

trol system, including the length and difficulty of the

idle adjustment procedure, the inadequacy of the plastic

limiter caps, the lack of reliable infrared exhaust

8 JA III:1212-1214, 1216.

—

36a

analyzers, the sensitivity of the adjustment screws, and

the failure to install an air pump.” Focusing on the

difficulty of sufficiently precise adjustment and resulting

customer dissatisfaction, the Administrator found that

these factors, “inherent in the recall class vehicles,”’ made

the like ‘hood of proper adjustment “exceedingly small’

for vehicles in actual use. JA III:1218.’”

Having attributed responsibility for idle misadjust-

ments to Chrysler, the Administrator easily found suf-

ficient evidence in the record to support a finding that a

substantial number ' of vehicles in the recall class were

in violation of the emission standards as a result of such

misadjustment. He relied primarily on the Olson Pro-

gram to support his conclusion,’ but found that other

testing programs, including those using the “short” test,

could be used to corroborate the Olson Program result:

namely, “that a high number of the recall class vehicles

in the field are in a condition of misadjustment.” JA

III:1231. The Administrator found, on the basis of the

evidence from these tests, that the misadjustments were

uniformly prevalent throughout the country,’ and that

* JA III :1218-1224; see Part II-A supra.

1° The Administrator expressly declined to accept the

ALJ’s conclusion that misadjustments had occurred on the

assembly line, at new car preparation centers, or at Chrysler

dealerships prior to delivery to the ultimate purchasers, be-

cause this conclusion was based on data from “short” tests

using a 1.0% carbon monoxide concentration level as a bench-

mark. JA III:1283.

1! The Administrator found it unnecessary to define a “‘sub-

stantial number” in this case, JA III:1250, but said that it

“may vary from case to case” and that the “primary con-

sideration is whether the number is sufficient to demonstrate

the existence of an ‘emissions related problem.’” JA III:

1251.

102 JA IIT:1225.

108 JA IIT:1232.

87a

they increase in frequency and severity as the mileage

of the vehicles increases.’

Chrysler argued that the results of the Olson Program

tests performed on vehicles after maintenance in accord-

ance with Chrysler instructions supported its contention

that most vehicles in the recall class pass the emission

standards when properly maintained. As we have noted,

after maintenance about three-quarters of the recall class

vehicles satisfied the standards.*° The Administrator,

however, concluded that the maintenance performed on

the vehicles during the Olson Program was not the type

of maintenance contemplated by Section 207(c) (1) of

the Act. He said that

the recall determination must be based upon a finding

that a substantial number of vehicles exceed the

applicable emission standard when “in actual use,”

although properly maintained and used. * * * Mainte-

nance in actual use is where all of the factors that

have been previously identified as contributing to

the cause of misadjustments will combine and rep-

resent the true state of maintenance being performed

on the recall class vehicles. The sensitivity of the

adjustment screws, the inconvenience involved in at-

taching the exhaust gas analyzer at the tap in front

of the catalyst, the pressure to satisfy the customer,

and the incentives to complete the task in an expedi-

tious manner all interact in a way that is totally

104 JA III:1231. The Administrator rejected Chrysler’s

arguments that the Olson and Emission Factor Programs

used too small and unrepresentative a sample to support

EPA’s conclusions, for much the same reasons given by the

ALJ. JA III:1245-1250; see notes 86-87 supra.

105 See table at note 71 supra. Applying standard statistical

analysis to these data, Chrysler computed that it can be pro-

jected with 95% confidence that approximately 3.7% of the

360 CID and 8.8% of the 400 CID vehicles in the recall class

would fail the standards. See JA III :1242.

88a

unlike the maintenance performed in the Olson Pro-

gram.

JA III:1244. Thus the Administrator relied on the ‘as

received” portion of the Olson tests in reaching his de-

termination.

The Administrator analyzed at length the expert testi-

mony by Chrysler and EPA witnesses concerning the

foreseeability of misadjustments of the idle mixture,

given the design of the recall class."°° He discounted the

testimony of three main Chrysler witnesses and credited

the testimony of EPA witnesses that the carburetor

design necessarily encouraged or fostered misadjustment

and should have been known by Chrysler to do so. He

stated :

* * * The evidence presented by EPA in the form

of expert opinion and other proof convinces me that

Chrysler should have foreseen the possibility of wide-

spread misadjustments occurring in the recall class

vehicles due to the combined effects of the various

factors described above and further that such mis-

adjustments would result in a substantial number of

the recall class vehicles exceeding the Federal emis-

sion standard for carbon monoxide. * * *

JA II1:1238.

Chrysler also argued that requiring a recall in this

case is tantamount to retroactive rulemaking because

EPA has issued new regulations that require manufac-

turers to construct all vehicles to meet emission standards

even when misadjusted. 44 FED. REG. 2960 (1979).

Chrysler suggested that the order now under review is,

in effect, an application of this prospective rule to a past

model year. The Administrator rejected this argument,

saying, “The recall order is based on the fact that the

defective design and service procedures induced misad-

106 JA III :1233-1239.

39a

justments, not on the fact that the design merely allowed

misadjustments.” JA III:1257 (emphasis in original).

He also rejected Chrysler’s allegations of material evi-

dentiary and discovery errors on the part of the ALJ,’

and declined to rule on EPA’s theory—adopted by the

ALJ—that Chrysler was responsible for the misadjust-

ments made by Chrysler dealers because such dealers are

agents of Chrysler for the purpose of maintaining emis-

sion equipment.’

The Administrator therefore affirmed the ALJ’s order

and required Chrysler to submit a plan for correcting the

nonconformities of the recall class.'*®

D. The Denial of Chrysler's Motion for Reconsideration

On December 17, 1978, about one month after the Ad-

ministrator released his Decision and Order in this case,

EPA published a study entitled “Motor Vehicle Tamper-

ing Survey” concerning the problem of tampering with

emission control systems of vehicles made by all major

manufacturers."° Claiming that the survey introduced

new evidence relevant to this case, Chrysler petitioned

the Administrator for reconsideration of his Decision and

Order. Chrysler contended that the survey showed that

tampering with emission control systems was an industry-

wide phenomenon, in no way encouraged or caused by

defects in Chrysler’s carburetor design.’

107 JA II :1258-1259.

108 JA III :1256-1257.

109 JA III :1259-1260. The Administrator adopted the ALJ’s

findings and conclusions insofar as they were consistent with

the Decision and Order.

110 The survey is reprinted at JA IV :1575-1684.

11 See JA III:1263-1264 (Denial of Motion for Recon-

sideration). Chrysler also made other arguments pertaining

to matters already addressed by the Administrator. JA

III :1263,

40a

The Administrator denied Chrysler’s motion for re-

consideration. He analyzed the underlying raw data of

the “Motor Vehicle Tampering Survey” and found that

Chrysler vehicles of the 1975 model year averaged 3.87

percent carbon monoxide at idle. In contrast, 1975 Gen-

eral Motors vehicles averaged 1.72 percent and Ford

vehicles averaged 0.88 percent.'? He therefore found no

reason to depart from his earlier findings and con-

clusions.

This petition for review followed.

IV. THE MEANING OF THE “PROPERLY MAINTAINED”

CRITERION IN SECTION 207(C) (1)

A. Scope of Review

This case is the first contested recall action under Sec-

tion 207(c) (1) to reach the courts, and we have little

precedent to guide us in deciding it. The only authorita-

tive interpretation of the relevant portions of the Act

is that adopted by the Administrator in the order under

review. We must accord his interpretation “important but

not controlling signficance.” Batterton v. Francis, 432

U.S. 416, 424 (1977) ; see also Griggs v. Duke Power Co.,

401 U.S. 424, 483-434 (1971). As the Supreme Court

has said, “It is the settled rule that the practical inter-

pretation of an ambiguous or doubtful statute that has

been acted upon by officials charged with its administra-

tion will not be disturbed except for weighty reasons.”

Brewster v. Gage, 280 U.S. 327, 336 (1930). Although

this court has the duty under the Administrative Proce-

dure Act, 5 U.S.C. § 706 (1976), to “decide all relevant

questions of law,” we recognize that the special expertise

of EPA in interpreting the legislation which it is called

upon to administer requires that we defer to the judg-

ment of the Agency where that judgment is reasonable

112 JA IIT:1264.

4la

and is consistent with the language and purpose of the

legislation. See generally Wilderness Society v. Morton,

479 F.2d 842, 864-870 (D.C. Cir.) (en banc), cert.

denied, 411 U.S. 917 (1973).

B. The Statute

Chrysler argues that the language of Section 207

this court should reject the Administrator’s interpreta-

tion even without; resort to interpretive aids such as

legislative history."* We cannot agree. Section 207

in relevant part:

If the Administrator determines that a substan-

tial number of any class or category of vehicles or

engines, although properly maintained and used, do

not conform to the [emission standards], when in

actual use throughout their useful life * * * he shall

require the manufacturer to submit a plan for

remedying the nonconformity * * *. * * *

Chrysler argues—and the ALJ agreed '*—that the phrase

“properly maintained and used” must be interpreted in

accordance with Section 207(b) (2) (A), 42 U.S.C. § 7541

(b) (2) (A) (Supp. II 1978), the warranty provision of

the Act.'* That provision requires the manufacturer to

118 Brief of petitioner at 19-22.

114 JA III:1099-1100. But see note 119 infra.

115 Section 207(b) (2), 42 U.S.C. § 7541(b) (2) (Supp. II

1978), provides in relevant part:

{The Administrator] shall prescribe regulations which

shall require manufacturers to warrant the emission con-

trol device or system of each new motor vehicle or new

motor vehicle engine * * *. The warranty under such

regulations shall run to the ultimate purchaser and each

subsequent purchaser and shall provide that if—

42a

repair or replace the emission control systems of its

vehicles under certain conditions. One of those conditions

is that the vehicles must have been “maintained and

operated in accordance with instructions under subsec-

tion (c) (8) of this section.” Id. Subsection (c) (3) re-

quires manufacturers to furnish vehicle purchasers with

“written instructions for the proper maintenance and

use of the vehicle” in accordance with EPA regulations.

42 U.S.C. § 7541(c) (3) (A) (Supp. IT 1978)."° Thus

Chrysler concludes that “proper maintenance” for the

purpose of a recall action under Section 207(c) (1) must

be defined as maintenance strictly in accordance with the

written instructions provided to vehicle purchasers as

required by Section 207(c) (3).

We agree that Chrysler has propounded one plausible

interpretation of the Act, but we cannot agree that no

other interpretation is possible. First, Chrysler’s inter-

pretation does not account for the difference in language

between Section 207(c) (1), which limits a recall! to

classes of vehicles that had been “properly maintained

and used,” and Section 207(b) (2) (A), which limits war-

ranty claims to vehicles that had been “maintained and

operated in accordance with [the manufactvrer’s writ-

ten] instructions[.]” “Properly” in this context may

(A) the vehicle or engine is maintained and op-

erated in accordance with instructions under sub-

section (c) (3) of this section,

(B) it fails to conform at any time during its

useful life * * * to the [federal emission standards],

and

purchaser having to bear any penalty or other sanc-

tion * * *,

then such manufacturer shall remedy such nonconformity

under such warranty with the cost thereof to be borne

by the manufacturer. * * *

116 For the text of § 207(c) (3) (A), see note 4 supra.

48a

mean the same thing as “in accordance with [the manu-

facturer’s written] instructions,” as Chrysler says. On

the other hand, the difference in language may indicate

a subtle difference in meaning. In a warranty action the

individual vehicle owner seeks to shift his cost of repair-

ing the emission control system to the manufacturer; he

has every incentive to produce documentation to prove

that he had maintained his vehicle in accordance with

the manufacturer’s instructions. In a recall action, how-

ever, the Administrator seeks to require a remedy for

an entire class of vehicles; he may not be able to obtain

precise documentation of the maintenance that was per-

formed."** His emphasis must be on systemic, class-wide

defects in the design or construction of the emission con-

trols, rather than on individual breaches of the war-

ranty."'* Such systemic defects may be revealed in ve-

hicles deviating somewhat from the precise specifications

of the manufacturer. It is possible, therefore, that Con-

gress intended the “properly maintained” requirement

of Section 207(c) (1) to be more flexibly interpreted than

the “maintained and operated in accordance with [the

manufacturer’s written] instructions” requirement of

Section 207 (b) (2) (A).™°

17 See JA III:1101 (Initial Decision).

118 See 1 UNITED STATES ENVIRONMENTAL PROTECTION

AGENCY, GENERAL COUNSEL OPINIONS, AIR POLLUTION 105,

111-112 (1979).

119 Chrysler seems to misunderstand the Administrator’s

Decision and Order on this point; it says in its reply brief

that the Administrator agreed with the ALJ that the main-

tenance clauses of subsections (b) (2) (A) and (c) (1) have

the same meaning. Reply brief of petitioner at 7-8. However,

the pages of the Decision and Order cited by Chrysler on

this point, JA III:1207-1208, merely summarized the inter-

pretation suggested by the parties and the ALJ. Several

pages later the Administrator plainly rejected the interpreta-

tions offered by the ALJ and the parties, saying that they

44a

Second, Chrysler’s proposed interpretation fails to give

full effect to the phrase “when in actual use” in Section

207(c) (1). This language might be taken to indicate

that Congress was concerned with everyday conditions,

not with an ideal world in which the technical instruc-

tions of the manufacturer are obeyed to the letter. If—

as the Administrator found—the design of Chrysler’s

emission control system and maintenance procedures en-

couraged or fostered improper maintenance by ordinary

owners and mechanics, we cannot say that Section 207

(b) (2) (A) or any other section of the Act would pre-

clude the Administrator from requiring a recall.

We therefore must look to the legislative history of

the Act and to the function and purpose of the “properly

maintained” language in the statutory scheme to see

whether the Administrator’s interpretation can be sus-

tained.

C. Legislative History

Prior to the Clean Air Amendments of 1970, Pub. L.

No. 91-604, 84 STAT. 1676, there was no system of in-use

“place undue emphasis on the text of the words ‘properly

maintained’ without examining the purpose or function of

the ‘properly maintained’ criterion in the overall statutory

scheme.” JA III:1211-1212.

Although the Administrator never thereafter discussed the

relationship between subsections (b) (2) (A) and (c) (1), ae

obviously rejected the theory that they are in pari materia,

since he did not hold that maintenance in accordance with

Chrysler’s specifications is the only “proper” maintenance

for purposes of § 207(c) (1). This is not to say, of course,

that the Administrator found “proper maintenance” to have

-no relation to obedience to the manufacturer’s instructions.

Rather, “proper maintenance” for purposes of § 207(c) (1)

is maintenance in accordance with the manufacturer’s in-

structions, taking into account the effect of design defects

and other factors caused by the manufacturer that affect

the true state of maintenance in actual use. JA III:1244.

45a

testing of vehicles. Thus Section 207 represented “a

significant departure from prior provisions for control

of vehicle emissions.” S. Rep. No. 1196, 91st Cong., 2d

Sess. 29 (1970), reprinted in LIBRARY OF CONGRESS CON-

GRESSIONAL RESEARCH SERVICE, ENVIRONMENTAL POLICY

DIVISION, 93D CONG., 2D SEss., 1 A LEGISLATIVE HISTORY

OF THE CLEAN AIR AMENDMENTS OF 1970 at 429 (Com-

mittee Print 1974) (hereinafter cited as Leg. Hist.).

Under the earlier scheme compliance with national emis-

sion standards was judged by tests of prototype models

and samples of production-line vehicles.’ If a class of

vehicles satisfied this test, then emission standards were

presumed met. As data became available on the perform-

ance of these certified vehicles in actual use, however,

federal officials found that emission control performance

seriously deteriorated after sale. A study by the National

Air Pollution Control Administration concluded that more

than half of the previously-certified vehicles in actual use

in the spring of 1968 failed to satisfy either the hydro-

carbon or the carbon monoxide standard. One model

registered an 80 percent failure rate.’

Faced with this problem, Congress resolved to require

manufacturers to construct vehicles that would satisfy

performance tests as well as design and production tests.

Senator Muskie, principal spokesman for the bill, said,

“So what we are concerned about is not only the tests or

the standards that the cars meet while they are in the

1200S. Rep. No. 1196, 91st Cong., 2d Sess. 29, reprinted in

LIBRARY OF CONGRESS CONGRESSIONAL RESEARCH SERVICE, EN-

VIRONMENTAL POLICY DIVISION, 93D CONG., 2D SEss., 1 A

LEGISLATIVE HISTORY OF THE CLEAN AIR AMENDMENTS OF

1970 at 429 (Comm. Print 1974) (hereinafter cited as Leg.

Hist.).

121 Air Pollution—1970: Hearings on S. 3229, 3466, 3546

Before the Subcommittee on Air and Water Pollution of the

Senate Committee on Public Works, 91st Cong., 2d Sess. 1072

(1970), reprinted in Leg. Hist. at 1072.

46a

factory, but also whether or not they continue to meet

these standards afterward.” 116 CONG. REc. 33093

(1970), reprinted at Leg. Hist. 330. As we have already

noted,’ the performance requirements were to be en-

forced in two ways: through warranty provisions and

recall actions. Congress recognized, however, that some

responsibility for deterioration of emission control equip-

ment in actual use must be borne by the vehicle owners,

whose negligence or abuse in maintenance and operation

ean frustrate or disable the emission controls. Thus the

warranty and recall provisions of the Act included a

requirement that owners maintain and operate their

vehicles properly. As Senator Muskie explained:

We understand that it is not presently possible to

build a maintenance-proof, clean car, but that it is

possible—with the use of a system that is built with

some durability in it and some reponsibility imposed

upon the operator—to assure reasonably clean op-

eration of such an automobile. We have to have the

two. One without the other is like a one-legged man.

Id. at 33094-33095, Leg. Hist. at 332. To promote better

maintenance Congress required manufacturers to provide

vehicle purchasers with written instructions on proper

maintenance. These instructions should be “reasonable

and uncomplicated,” S. Rep. 1196, supra, at 30, Leg.

Hist. at 430, so that they can be understood and followed

by vehicle owners. In order to take advantage of the

warranty protection owners must do their part to keep

the emission system in good working order. Both the

explicit language of the statute'* and the legislative

history '* make clear that owners facing sanctions for

122 See Part I supra.

128 Section 207(b)(2)(A), 42 U.S.C. § 7541(b) (2) (A)

(Supp. II 1978). See note 115 supra.

124 Senator Muskie said that “unless the individual opera-

tor meets the manufacturer’s instructions with respect to

47a

emission control failures cannot shift the expense of

remedying the noneonformity to the manufacturer unless

they can prove that they maintained the system in ac-

cordance with the written instructions of the manu-

facturer.

Chrysler contends that this clear language and legisla-

tive history with respect to the warranty provisions must

apply with equal force to the recail provisions. However,

the legislative history does not support this view. Rather,

that history indicates that Congress realized that vehicle

. owners are often unable to find mechanics to service their

vehicles competently, and that Congress therefore placed

the burden on the auto manufacturers to design an

emission control system that would effectively reduce

auto emissions despite the poor performance of the main-

tenance industry. This is evident from a colloquy between

Senators Allott and Muskie.

Senator Allott complained that poor maintenance fa-

cilities represented a “weak spot” in the bill. He said

that “to secure competent maintenance on a car at the

present time in any respect is almost an impossibility.”

116 ConG. REc. 33095, Leg. Hist. 332-333. Senator

Muskie agreed with Senator Allott that the “greatest

problem the industry faces is the shortage of mechanics

across this country,” but stated that “[wle cannot by

legislation remake the automobile industry.” Jd., Leg.

Hist. 334. He attributed the maintenance problems to

the manufacturers’ insistence on using the internal com-

bustion engine and said, “We cannot solve the problem

of whatever technology the industry chooses to put its

bets on. All we can do is set the standards. The auto-

mobile industry has created all of the problems from the

top to the bottom.” Jd., Leg. Hist. 335. He concluded:

maintaining the car as it relates to the clean air provisions

of the automobile, the warranty will not be available to the

owner.” 116 CONG. REC. 33094 (1970), Leg. Hist. at 332.

48a

So, if the bill is weak in not providing for the

solution of the maintenance problem, I would welcome

an amendment that would cure that weakness. But I

do not think there is any way of writing a law that

will create maintenance capability all across the

country. Only the automobile industry can do that.

Id. at 33096, Leg. Hist. at 335.

If Congress thus believed that “only the automobile

industry” could solve the maintenance problem, it was

logical to pass an Act placing primary responsibility on

the design capability of the manufacturers rather than

on the maintenance capability of mechanics and owners.

Thus, despite Senator Allott’s objections, Section 207 was

left unchanged. The primary responsibility for emission

control was left with the manufacturers; they were ex-

pected to solve the maintenance problem by designing

a system that would be less susceptible to faulty mainte-

nance. Admittedly, Congress did not intend liability to

rest on the manufacturer if the condition of poor mainte-

nance could be attributed to owners or mechanics. If,

however, design defects of the manufacturer proved to be

responsible for the condition of poor maintenance, the

legislative history would indicate that Congress did in-

deed intend responsibility for remedy to rest on the

manufacturers.

D. Function of the “Properly Maintained” Criterion

in Achieving the Purposes of the Act

We cannot interpret Section 207 “in a manner which

runs counter to the broad goals which Congress intended

it to effectuate.” See FTC v. Fred Meyer, Inc., 390 U.S.

841, 849 (1968). The Administrator warned that

Chrysler’s interpretation was in “evident disregard for

the goals of the Clean Air Act.” JA III:1218. The broad

purpose of the Clean Air Amendments of 1970 is plain:

“to protect and enhance the quality of the Nation’s air

49a

resources so as to promote the public health and welfare

and the productive capacity of its population[.]” Section

101(b) (1) of the Act, 42 U.S.C. § 7401(b) (1) (Supp.

II 1978). The purpose of the recall provisions seems

equally plain: to give auto manufacturers an incentive

to design and construct their emission control systems to

meet standards in actual use for the estimated life of

the vehicle. The theory underlying the provisions is that

the manufacturers are better equipped than Congress or

EPA to design a system that would meet federal emis-

sion standards. By setting standards, and leaving the

auto manufacturers free to design and construct vehicles

that would satisfy them, EPA can harness the forces of

American industrial ingenuity to solving the serious na-

tional problem of vehicle-produced air pollution.

From this perspective, it would make little sense to

impose liability on the manufacturers for conditions of

nonconformity caused by the actions of vehicle owners or

mechanics. Unless the cause of the nonconformity is

within the manufacturer’s control, an imposition of li-

ability would be an unwarranted financial burden on the

manufacturers, unrelated to the strategy of forcing tech-

nological progress. Thus the “properly maintained and

used” criterion in Section 207(c) (1) is best understood

as an acknowledgement of the limited ability of manu-

facturers to prevent those nonconformities primarily

caused by intentional or negligent faulty maintenance by

owners and mechanics.

Chrysler’s contention—that manufacturers have no re-

sponsibility for nonconformities if the owners failed

to attain maintenance in accordance with the manu-

facturer’s precise written specifications—would far ex-

ceed the purpose of the “properly maintained” criterion

and would undermine the broad objectives of the Act.

Such an interpretation would strip the manufacturers of

a large part of the incentive to design emission systems

50a

that would operate effectively while in actual use. The

manufacturer could prescribe maintenance that is dif-

ficult to perform or incompatible with smooth operation of

the vehicle, but bear no responsibility for the natural con-

sequence of such design—so long as the vehicles passed the

initial certification tests. We could expect little or no

progress in development of better, more maintenance-free

emission controls.

The Administrator’s construction—making the manu-

facturer responsible for nonconformities primarily at-

tributable to design defects knowingly produced by the

manufacturer—would better serve to promote the pur-

poses of the Act. At the same time it would retain pro-

tection for those manufacturers striving, within the limits

of technology, to produce effective emission controls. We

agree with the Administrator that if a manufacturer

knowingly used an emission control system resulting in

large numbers of misadjustments, instead of a less sensi-

tive and more durable system available to it, it should

be held responsible under the Act for the consequences

and be subject to a recall.

We reject Chrysler’s suggestion that the responsibility

of the manufacturer must be judged by maintenance per-

formed in a laboratory setting, rather than by that typicai

of a mechanic’s shop or a dealership. It does the public

little good to pay higher costs for cleaner automobiles,

only to find that they fail emission standards except when

specially adjusted by trained mechanics operating under

laboratory conditions. If design defects make “proper

maintenance” so difficult that even Chrysler dealers do

not perform it, then such “proper maintenance” is be-

yond the reach of the average car’ owner. Use of a

laboratory-pure standard of “proper maintenance” is con-

trary to the “actual use” standard of the Act.

Although we admit that the language of Section 207

(ce) (1) is open to more than one interpretation, we con-

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elude that the legislative history and the purpose of the

“properly maintained” criterion require that we affirm

the interpretation adopted by the Administrator.

E. Retroactive Rulemaking

Chrysler charges that the Administrator’s interpreta-

tion of the statute is tantamount to retroactive rule-

making.” It points out that the Administrator promul-

gated new regulations on January 12, 1979, requiring

prototype and production-line vehicles starting with the

1981 model year to pass federal emission standards no

matter how their engines are adjusted within the physic-

ally adjustable range. The vehicles thus must satisfy

federal standards even when misadjusted. See Control

of Air Pollution From New Motor Vehicles and New

Motor Vehicle Engines: Certification and Test Procedures,

44 FED. REG. 2960 et seg. (1979) .'*° Chrysler claims that

the order under review applies this new requirement—

prospectively announced for model years starting with

1981—to Chrysler’s 1975 model year vehicles. It claims

that no one in 1975 knew that a manufacturer could be

held responsible for misadjustments, and that this addi-

tional responsibility could lawfully be imposed only by a

prospective rulemaking, like that of January 12, 1979,

and not by a retrospective adjudication.

We cannot agree with this argument. The recall order

recognizes no duty of Chrysler other than that imposed by

the Act: to design and construct vehicles that would

satisfy emission standards in actual use, when properly

maintained, for five years or 50,000 miles. Chrysler was

aware of this statutory duty, and of the consequences

125 See brief +1 petitioner at 37-41.

126 The new rules were proposed on October 21, 1977, about

10 months after the Administrator initially notified Chrysler

of the nonconformities in the recall class. 42 FED. Rc.

56298 et seq. (1977).

52a

that would attach in the event of its failure to comply.

According to the order under review, Chrysler chose to

employ cheaper and less effective emission control equip-

ment, in the face of evidence that misadjustments seri-

ous enough to cause widespread nonconformities were

likely. Chrysler thus took a gamble that the idle ad-

justment method of providing sufficient oxygen to the cat-

alytic converter would work, or that EPA would be unable

to prove “ case for a recall. The statute demands that

Chrysler Bear the consequences of its decision.

In any event, the new regulations are quite different

from the statutory duty enforced against Chrysler in

this case. Under the new regulations manufacturers must

take active steps to prevent idle misadjustments by owners

and mechanics. But under the Decision and Order Chrys-

ler was merely required to design an emission control

system that would not instigate such misadjustments.

According to the Administrator, the misadjustments now

attributed to Chrysler were primarily caused by Chrys-

ler’s choice of design; the misadjustments to be pre-

vented by the new regulations are those caused by owners

and mechanics as well. Thus, Chrysler cannot logically

claim that its 1975 vehicles are being judged by 1981

standards. Nor may Chrysler argue that the existence

of new regulations governing the 1981 model year should

relieve it of the consequences of violating the regulations

in effect for the 1975 model year.

V. SUBSTANTIAL EVIDENCE ISSUES

Chrysler also challenges the adequacy of the factual

basis for the Administrator’s conclusions. On this issue

we apply the familiar “substantial evidence” test. 5 U.S.C.

§ 706(2)(E) (1976). “Substantial evidence,” as Chief

Justice Hughes said, is “more than a mere scintilla. It

means such relevant evidence as a reasonable mind might

accept as adequate to support a conclusion.” Consolidated

53a

Edison Co. v. NLRB, 305 U.S. 197, 229 (1938). This

court may not displace the Administrator’s “choice be-

tween two fairly conflicting views,” even if we “would

justifiably have made a different choice had the matter

been before [us] de novo.” Universal Camera Corp. v.

NLRB, 340 U.S. 474, 488 (1951).

The administrative record in this case is voluminous.

It contains Chrysler and EPA documents, statements and

depositions of EPA and Chrysler officials and experts,

results of tests of Chrysler vehicles, and other materials.

The evidence at hand is conflicting and contradictory on

many points. Nevertheless, after examining with care

those portions of the administrative record cited by the

parties to support their factual arguments, we conclude

that substantial evidence was presented that:

(1) Substantial numbers of recall class vehicles

failed to satisfy federal carbon monoxide emission

standards when in actual use;

(2) the principal cause of the nonconformities was

misadjustment of the idle mixture;

(3) the idle misadjustments were caused, fostered,

or encouraged by design defects in the Chrysler sys-

tem; and

(4) the nonconformities were, or should have been,

foreseen by Chrysler.

We have already described the characteristics of the re-

call class emission system design and maintenance pro-

cedures and the results of the Chrysler, state, and EPA

tests that underlie the Administrator’s conclusions.'** We

need not repeat that discussion here. Here we shall

simply identify the major factual disputes, refer to the

more important evidence concerning them, and address

Chrysler’s specific attacks on the sufficiency of that evi-

dence.

127 See Part II supra.

54a

A. Substantial Numbers of Recall Class Vehicles Failed

to Satisfy Federal Carbon Monoxide Emission

Standards When in Actual Use

Evidence in the record overwhelmingly shows that a

large majority of the recall class vehicles in actual use

failed the carbon monoxide emission tests, and badly.

The Emission Factor Program found that 85 percent of

the tested vehicles in the recall class exceeded the emis-

sion standards, with an average carbon monoxide emis-

sion level of over 48 grams per mile—more than three

times the permissible level.* The Olson Program found

90 percent of its tested vehicles to exceed the standard,

with an average emission level two to four times that

permitted by the regulations.’ All other relevant data

in the record corroborate this conclusion. Indeed, Chrys-

ler apparently does not seriously dispute that a sub-

stantial number of vehicles in the recall class in actual

use emit more carbon monoxide than federal regulations

permit.’

Chrysler does, however, criticize the testing program

used to generate the evidence in the record. First, Chrys-

ler points out that the Olson test data, considered alone

without the Emission Factor Program results, establish

that only 49 percent of the 400 CID vehicles in the re-

call class can be predicted with 95 percent accuracy to

be in violation of the standards.’** This does not, how-

128 JA III:1175 (Initial Decision, Findings of Fact Nos.

22-28).

129 See table at note 71 supra.

18 Chrysler’s argument that misadjustment of emission

control systems is “an industry-wide problem, not limited to

Chrysler vehicles,” brief of petitioner at 9, in effect admits

that many of the recall class vehicles are in violation of the

emission standards.

181 Brief of petitioner at 88; see JA III:1241 (Decision and

Order).

55a

ever, convince us to reject the Administrator’s findings.

This selective use of part of one study barely brings the

proportion of nonconforming vehicles below half. And

taking into consideration the results of the Emission

Factor Program as well as the Olson Program, the per-

centage of 400 CID vehicles in violation rises to 79 per-

cent.’** The evidence taken as a whole shows that by any

standard a “substantial number’ of the vehicles were in

nonconformity."**

Chrysler also argues that the Administrator should

have considered only the after-maintenance portion of

the Olson Program when he decided whether a “substan-

tial number” of vehicles in the recall class were in non-

conformity.*** Chrysler points out that “[e]stimated CO

failure rates for the 360’s and the 400’s based on Olson

data, are 3.7% and 8.3% respectively,” after maintenance

in precise accordance with Chrysler’s specifications is

performed. Brief of petitioner at 90. This argument,

however, relies on Chrysler’s legal theory—rejected by

the Administrator and this court—that the manufacturer

is not accountable for nonconformities caused by misad-

justment. For purposes of this recall action, we agree

with the Administrator that the relevant data are those

concerning recall class vehicles in actual use, not those

subjected to elaborate maintenance.

Finally, Chrysler argues that the Olson test sample

was not representative of recall class vehicles nationwide,

182 JA III :1241 (Decision and Order).

188 We see no reason why a “substantial number” in this

context must necessarily mean more than half. On this record

we need not decide precisely where the dividing line is, but

we agree with the Administrator that a “substantial number”

of nonconforming vehicles is any number large enough to

show that a “systematic or pervasive problem in a particular

class or category of vehicles” exists. See JA III:1261.

1% Brief of petitioner at 90.

56a

for three reasons. First, all vehicles in the Olson test

were from a single metropolitan area, Wayne County,

Michigan. Second, many vehicle owners refused to par-

ticipate in the tests. Third, sample size was small—only

20 vehicles.*** The Administrator acknowledged these de-

fects in the test sample, but stated: ‘The small errors

pointed to by Chrysler are really nothing more than

minor deviations from the type of perfection one might

expect in a textbook on sampling procedures, but not in

the real world.” JA III:1234.,'* Without disparaging

Chrysler’s legitimate concern for the niceties of sampling

technique, we conclude that the evidence is so unam-

biguous, and so amply supported by other tests conducted

under a variety of conditions in many states, that the

Administrator was justified in concluding “that the Ol-

son and Emission Factor results are representative of

the entire class of recall vehicles.” JA III:1246."*

Chrysler lodges several similar complaints about the

procedures used in the Emission Factor Program. How-

ever, it says:

The Emissions Factors Program was no doubt

valid for the purpose for which it was designed and

conducted, namely, measuring emissions of vehicles

in whatever condition of use and maintenance they

185 Brief of petitioner at 91-94, 96.

186 See note 87 supra.

187 Chrysler also says that vehicles with removed or dam-

aged “limiter caps” shovld not have been included in the

test. Brief of petitioner at 95. However, since the faulty

design of the “limiter caps” was found to be one cause of the

nonconformities, the inclusion of such vehicles was entirely

appropriate. We also see no reversible error in the use of

EPA employees to conduct telephone interviews of test par-

ticipants. See id. Other than an appearance of some slight

impropriety, Chrysler has not shown that any bias might

have resulted from this practice.

57a

happen to be. The data is however totally invalid

for recall purposes which requires results only from

properly maintained vehicles.

Brief of petitioner at 98. This objection to the Emission

Factor Program is without merit. Nowhere in the Act

or in the regulations appears any requirement that ve-

hicles tested for in-use nonconformities must be pre-

screened to eliminate those improperly maintained. The

Emission Factor Program confirms the results of the

Olson Program: that large numbers of recall class ve-

hicles in actual use emit more carbon monoxide than the

regulations permit. Admittedly, the Emission Factor

Program provides little evidence of why the vehicles fail

to conform, but it was not used for that purpose. For

the use to which it was put by the Administrator, the

Emission Factor Program was probative.'**

B. The Principal Cause of the Nonconformities Was

Misadjustment of the Idle Mixture

The record leaves little doubt that the cause of the

widespread nonconformities in the recall class was that

their carburetor idle mixtures were not set to sufficiently

“lean” fuel-to-air ratios. The Olson Program showed that

the large majority of vehicles in the class could be

brought into conformity by precise adjustment of the

188 Chrysler also argues that the Administrator improperly

considered evidence based on the “short” test rather than the

“Federal” test procedure. Reply brief for petitioner at 34-37.

We find no error on this point. We agree with the Adminis-

trator that most evidence in the record indicates that ve-

hicles with a 1.5% to 2.0% carbon monoxide concentration in

the exhaust, as measured by the “short” test, generally fail

the “Federal” test as well. JA III:1249. Moreover, the Ad-

ministrator primarily relied on the Olson and Emission

Factor Programs, which used the “Federal” test procedure.

The “short” test results were merely used for corroborative

purposes. JA III:1249.

58a

idle in accordance with Chrysler’s specifications.“ Chrys-

ler agrees with this factual conclusion, quoting in its

brief the Administrator’s conclusion that

the record in this proceeding conclusively establishes

that the cause of excessive carbon monoxide emissions

in the Chrysler recall class vehicles is attributable to

misadjustments of the carburetor idle mixture ad-

justment and that such misadjustments were per-

formed in a manner inconsistent with or contrary

to the manufacturer’s written specifications. [J.A.

III:1206-07 (emphasis added).]

Brief of petitioner at 15.

C. The Idle Mixture Misadjustments Were Caused,

Fostered, or Encouraged by Design Defects in the

Chrysler System

We need not repeat our lengthy description of the

Chrysler emission control system: its reliance on nice

adjustments of the idle mixture screws rather than in-

stallation of $50 air pumps, its sensitive adjustment

screws, its inadequate limiting system, its reliance on

equipment that frequently is unavailable or out of order,

its cumbersome procedure. Nor need we describe again

the baneful effects of so “lean” an air-fuel ratio on the

- driveability of the automobiles. Chrysler has placed

the mechanic in a serious dilemma. The mechanic is

put to a choice between adjusting the idle setting for

pollution ccntrol purposes and satisfying the customer.

Generally, though not always, these prove to be con-

flicting goals. We find the record especially revealing

with respect to Chrysler dealership mechanics. When

surveyed a large majority of such mechanics stated that

it is not usually possible to achieve “acceptable engine

smoothness and driveability” when the idle mixture is

189 See text and notes at notes 18, 65-71 supra.

59a

set to Chrysler’s specifications. They said that proper

adjustment generates customer complaints of rough idle,

hesitation, and other forms of poor performance.’ This

evidence strongly indicates that Chrysler failed to design

and construct a vehicle that could meet emission stand-

ards in everyday circumstances and still satisfy the legiti-

mate demands of its customers for cars that run smoothly

and well.’*! We find that there was substantial evidence

in the record to support the Administrator’s conclusion

that misadjustments “were encouraged or fostered by the

design of Chrysler’s emission control system and its

carburetor adjustment procedures,” JA III:1207, and

that “the service industry’s contribution is the inevitable

byproduct of Chrysler’s emission system design and serv-

ice procedures.” JA III:1215.

Chrysler argues:

The “defects” to which the Administrator points are

not defects at all, but are at most alternative designs.

All of the evidence admitted below shows that the

design of the carburetor and emission control system

on the recall vehicles was within the state-of-the-art

at the time these vehicles were designed and manu-

factured and will meet the emissions standards when

properly maintained. There is no substantial evi-

140 JA V :1977-1978.

141 Chrysler objects to the Administrator’s reliance on evi-

dence of “driveability” problems in the recall class. Brief of

petitioner at 49-54. It argues that, in the absence of “an

official definition or test for driveability,” id. at 49, such

reliance violated the requirement of § 207(c) (1) that a recall

be based on objective standards. We reject this reasoning.

EPA employed “objective standards” for determining that a

“substantial number” of vehicles in the recall class were in

violation of the emission standards. It used the concept of

“driveability” solely to show a causal connection between

the observed misadjustments and the defects in the design

of Chrysler’s emission controls.

60a

dence in the record to the contrary and none which

shows that this design and the associated maintenance

procedures were in any way “defective.”

Brief of petitioner at 11. Many a Chrysler witness tes-

tified that Chrysler’s system was within the “state of

the art.” *** On this issue of automotive engineering

judgment, however, we must defer to the technical ex-

pertise of the Administrator. And it is impossible to say

that his contrary conclusion was without substantial sup-

port in the record, given his extensive analysis of each

of the deficiencies in the design of the Chrysler system.

Moreover, we find it suggestive that Chrysler’s recall

class vehicles, supposedly within the “state of the art,”

performed so poorly in comparison with their competi-

tors. Data underlying the Motor Vehicle Tampering

Survey ***—added to the record after the close of the

proceeding at Chrysler’s insistence—indicated that the

average carbon monoxide concentration in the emission

of 1975 Chrysler vehicles was 3.87 percent, as contrasted

to an average of 1.72 percent for General Motors and

0.88 percent for Ford.’*

When Chrysler states that the recall class vehicles

“will meet the emissions standards when properly main-

tained,” brief of petitioner at 11, it apparently means

that they will do so if adjusted by experts under labora-

tory conditions precisely in accordance with Chrysler’s

specifications. There is no evidence in the record that

ordinary mechanics performing ordinary maintenance of-

ten succeed in adjusting the recall class vehicles to Chrys-

ler’s specifications while achieving satisfactory drive-

142 F.g., JA 1:29-86 (Cook testimony) ; JA 1:37-40 (Sher-

win testimony) ; JA I1:635-638, 656-657 (Heinen testimony).

143 Reprinted at JA IV :1575-1684.

14 JA III:1264 (Denial of Motion for Reconsideration).

6la

ability.“° As the Administrator said. the maintenance

actually available to owners of recall class vehicles is

“totally unlike” the precise maintenance to which Chrys-

ler refers.

D. The Nonconformities Were, or Should Have Been,

Foreseen by Chrysler

Evidence in the record indicates that automotive en-

gineers in the late 1960’s and early 1970’s—including

Chrysler engineers—recognized the problem of idle mis-

adjustments in the field and its relation to excessive car-

bon monoxide emissions. EPA placed some 14 reports,

speeches, and articles written between August 1966 and

February 1974 in the record to show that the problem

was generally understood in the industry.“* In May

1973 Chrysler itself cited several surveys showing wide-

spread misadjustment of the idle mixture of vehicles in

the field, in a petition for suspension of the 1976 emis-

sion standards.'** That petition indicates that Chrysler

understood the problem and was aware that a solution

would be necessary in order to meet federal emission

standards.

145 Chrysler points to the testimony of an EPA investigator,

Mr. Gockel, to prove that the average mechanic is capable

of performing Chrysler’s adjustment procedures. Reply brief

of petitioner at 28. Mr. Gockel had said, “A high percentage

of the mechanics had adequate knowledge, skills and equip-

ment to perform carburetor adjustments according to manu-

facturer’s procedures and specifications if they were moti-

vated to do so.” JA V:1972. The problem identified by EPA

is not mechanics’ lack of skill or training, but rather the

Chrysler design, which induces mechanics to save time and

solve driveability problems at the expense of pollution control.

146 EPA Exhibits 28-44, see JA 1:236-237 (Dietrick testi-

mony).

47 EPA Exhibit 42, see JA 1:383-884 (Gockel testimony).

62a

In late 1978 Chrysler undertook a field study of the

emission control system to be used in the recall class.

It equipped a fleet of about 100 1974 vehicles with the

emission control equipment planned for the 1975 model

year. Half of these vehicles contained air pumps; half

relied on idle mixture adjustments. The test showed

that vehicles equipped with air pumps were able to

conform to federal and California emission standards,

but that widespread misadjustments of the idle mixture

in the remaining vehicles caused emissions in excess of

the standards.’** In an intra-company memorandum Mr.

J. E. Stoyack of the emission development testing di-

vision of Chrysler stated that “[t]he effect of idle CO

level on 1975 emission levels was not detectable on Cali-

fornia vehicles [those equipped with air pumps]”; he

also stated that “1975 emission levels on Federal ve-

hicles [those relying on idle adjustments] were signifi-

cantly affected by changes in idle CO level.” JA V:2005.

In conclusion Mr. Stoyack said: |

Without an air pump, oxygen for catalytic oxida-

tion in the Federal system is limited and increased

idle and off-idle richness readily produces higher

emissions due to the decrease in available oxygen.

JA V:2007. There was also expert testimony in the

record that Chrysler foresaw, or should have foreseen, the

misadjustment problems of the recall class, but failed to

take availabe steps to solve them.* For example, EPA

witness Mr. Gockel stated:

I have studied information and “state-of-the-arv”

technology available to Chrysler and the auto indus-

try at the time the recall class vehicles were being

designed and it is my opinion that Chrysler did

foresee that the subject vehicles would be misad-

148 JA 1:288-240 (Dietrick testimony).

149 See, e.g., JA 1:288-235 (Dietrick testimony) ; JA 1:482-

483 (DeKany testimony).

68a

justed. It is also my opinion that they should have

foreseen that this misadjustment would cause wide-

spread nonconformity with the Federal emission

standards in actual use and that they had knowledge

of available technology needed to prevent this prob-

lem.

r JA 1:383.

On this record the Administrator concluded:

* * * The evidence presented by EPA in the form

of expert opinion and other proof convinces me that

Chrysler should have foreseen the possibility of wide-

spread misadjustments occurring in the recall class

vehicles due to the combined effects of the various

factors described above and further that such mis-

adjustments would result in a substantial number of

the recall class vehicles exceeding the Federal emis-

sion standard for carbon monoxide. * * *

JA III:1233.

In response Chrysler rightly points to expert opinion

given by Chrysler witnesses indicating that the company

did not foresee the problem of widespread idle misadjust-

ments,’ and to testimony of one EPA engineer involved

in certifying the recall class that he was not aware of

the problem at that time.’*' However, Chrysler fails to

come to grips with the totality of the design defects that

made precise adjustment so difficult and unlikely, or to

explain how the manufacturer could reasonably have

thought, on the basis of evidence then available, that the

recall class vehicles would continue to pass federal emis-

sion standards when in actual use, away from the tender

care of Chrysler laboratory engineers. Moreover, there

can be no doubt that Chrysler was aware that installa-

tion of air pumps would improve the performance of the

180 See, e.g., JA 1:11 (Heinen testimony).

151 See JA 1:162 (Kohnken testimony).

64a

emission control system, since it installed air pumps in

vehicles sold in California, which had stricter emission

standards.'** The Administrator carefully considered the

evidence presented on Chrysler’s behalf and found it un-

convincing.**? We believe that substantial evidence sup-

ports his conclusion.

Chrysler also argues that EPA may not now require

correction of design defects, since such defects were not

identified by EPA inspectors during the pre-sale certi-

fication testing. Chrysler submitted its carburetor design

and maintenance procedures to EPA for testing and

EPA approved them.'** Chrysler reasons that EPA may

152 See text at notes 7-11 supra.

153 JA IIT :1234-1239.

154 See JA IV:1503 (Chrysler’s preliminary application for

model year 1975 certification) ; JA IV:1516-1517 (certificate

of conformity) ; JA 1:23-25 (Robertson testimony). In its

brief EPA argues strenuously that the Agency “does not

review and approve the service procedures as to reasonable-

ness for purposes of certification.” Brief of respondents at

74. So far as we have been able to determine, this assertion

is not accurate. The regulation in effect at the time of the

certification of the recall class provided, in relevant part:

The manufacturer shall provide to the Administrator

* * * a copy of the maintenance instructions which the

manufacturer proposes to supply to the ultimate pur-

chaser * * *. The Administrator will review such in-

structions to determine whether they are reasonable and

necessary to assure the proper functioning of the ve-

hicle’s emission control system. * * *

40 C.F.R. § 85.075-39(a) (1976). These written instructions

include the owner’s manual maintenance schedule and the

underhood label explaining the idle adjustment procedure,

according to the Administrator. JA III:1210. The only sup-

port EPA offers for its assertion is a citation to the testi-

mony of Mr. Kohnken, who was the leader of the certifica-

tion team that tested the recall class. But Mr. Kohnken stated

that his team performed the maintenance prescribed by Chrys-

65a _

not now require it to recall the vehicles to correct subse-

quently discovered defects.‘ We cannot agree with this

argument. Admittedly, EPA failed to recognize the de-

fects that have proven to plague the design of the emis-

sion controls of the recall class, with the unfortunate re-

sult that the vehicles, instead of being corrected at the

time, have been foisted upon the environment in violation

of the emission standards. This does not mean, however,

that EPA is powerless to correct its mistake, or to re-

quire Chrysler to correct its violation. The entire pur-

pose of the in-use testing program is to identify classes

of vehicles that—despite inspection for emission control

and durability at the time of certification—fail to con-

form to emission standards when in actual use. When

such nonconformity is discovered, and when its cause is

traced to a defect in design, material, or workmanship,

then the recall remedy is required. Original certification

ler and determined that it was “reasonable.” JA 1:147-149,

156-157.

Q Is the idle set procedure one of the procedures which

is called for in the part one of the application?

Yes.

Is that something else though which would be re-

viewed by your people in analyzing the part one?

Yes.

Is the same standard used there as you mentioned

earlier in reviewing the shop manuals, that this was

reasonable engineering judgment as to what you

would say is proper or improper?

Oo PrP 6 pP

A Yes, I would imagine so, yes.

JA 1:150 (Kohnken deposition). Mr. Kohnken also supplied

ean example of an instance in which EPA denied certification

because the maintenance procedures were unreasonable. JA

1:151-152. See also JA 1:21-28 (Robertson testimony).

155 Reply brief of petitioner at 13-16.

66a

does not relieve the manufacturer of its obligations under

the Act.'°°

VI. CONCLUSION

In sum, we agree with the Administrator’s interpre-

tation of Section 207(c) (1) of the Clean Air Act, 42

U.S.C. § 7541(c) (1) (Supp. II 1978), that a manufac-

turer may be held responsible in a recall action for non-

conformities resulting from misadjustments, if such mis-

adjustments were principally caused by the design of the

emission control system and maintenance procedures, and

if the manufacturer foresaw or should have foreseen the

problem and failed to take available steps to obviate it.

We find substantial evidence in the record to support

the Administrator’s conclusion that Chrysler vehicles in

the recall class fail to conform to federal carbon monoxide

emission standards when in actual use, although properly

maintained and used, and thus that Chrysler must submit

a plan for remedying the nonconformity, in accordance

with the Act. The Decision and Order is

Affirmed.

186 Chrysler also raises objections based on alleged evi-

dentiary and discovery errors by the ALJ. See text at notes

79 and 107 supra. These objections were rejected by the Ad-

ministrator, JA III:1258-1259, and we agree with his conclu-

sion. Certain documents were withheld from Chrysler on the

basis of the attorney-client privilege, work product doctrine,

or executive privilege. The ALJ examined these documents

in camera and verified that all relevant factual materials

therein were disclosed to Chrysler in other form. In addition,

Chrysler was denied the right to depose a certain EPA official,

but was permitted instead to depose another official of equal

familiarity with the subject. Although Chrysler raises these

evidentiary rulings on appeal, it does not make a credible

showing that it was prejudiced by them, and we decline to

reverse on account of them. Nor do we find reversible legal

error in the other evidentiary rulings of the ALJ.

67a

APPENDIX B

BEFORE THE ADMINISTRATOR

U.S. ENVIRONMENTAL PROTECTION AGENCY

WASHINGTON, D.C.

CAA (207) Docket No. 1

In the Matter of:

CHRYSLER CORPORATION

Respondent

DECISION AND ORDER

This appeal concerns the validity of an order issued

by the Administrator of the U.S. Environmental Protec-

tion Agency (EPA) on December 8, 1976, directing

Chrysler Corporation to “recall” all 1975 vehicles equip-

ped with 360 and 400 cubic inch displacement (CID)

engines having two barrel carburetors and catalytic con-

verters. The recall order was issued pursuant to section

207(c) (1) of the Clean Air Act, as amended, and alleged

that a substantial number of vehicles in the recall class

exceeded the 1975 Federal standard for carbon monoxide

(CO) emissions. EPA investigations indicated that the

excessive emissions were primarily the result of carbure-

tor idle misadjustments.

Chrysler, at its request, was granted an opportunity

to contest the recall order in an adjudicatory hearing

conducted pursuant to 40 C.F.R. 85.1807 (1977).' At

the conclusion of the hearing, Administrative Law Judge

Edward B. Finch issued his initial decision affirming the

1The hearing request was made by Chrysler in a letter

dated January 19, 1977. A notice announcing the hearing

was published in the Federal Register on February 8, 1977

(42 Fed. Reg. 7983).

68a

recall order.? It is that decision which is the subject of

the present appeal.

The principal source of controversy centers on the fact

that the recall class vehicles must be “properly main-

tained” within the meaning of section 207(c) (1) in order

for the automobile manufacturer to be held responsible

for the emission nonconformity. The presiding officer

found as a matter of law that “properly maintained” is

a term of art in the automobile industry which means

maintained in accordance with the manufacturer’s in-

structions or specifications. Applying this definition,

Chrysler contends that the idle mixture screws in the

test vehicles were misadjusted contrary to the manufac-

turer’s specifications, and hence, the vehicles were not

“properly maintained.” As discussed below, the record

does establish that the test vehicles were in a condition

of misadjustment, contrary to the idle mixture specifi-

cations of the manufacturer; however, at the same time,

the record also establishes that Chrysler is responsible

for the condition of misadjustment because of defects in

the design of its emission system and service procedures.

A. Statutory Framework

General. The problem of automobile emissions first

received Congressional attention in the 1950’s, but it was

not until enactment of the Clean Air Act of 1965 that

Federal standards for automobile emissions were auth-

orized.* Under that Act, emission standards were set by

2 Prehearing conferences were held on March 81, 1977,

April 21, 1977, May 10, 1977, and July 15, 1977. The hear-

ing commenced on September 19, 1977, and terminated with

the close of evidence on November 10, 1977. The initial de-

cision was issued on February 10, 1978.

8 Clean Air Act (42 U.S.C. 7401 et seq., formerly 42 U.S.C.

1857 et seq.) includes the Clean Air Act of 1963—P.L. 88-

206, and amendments made by the Motor Vehicle Air Pollu-

69a

the Department of Health, Education and Welfare, based

on technological feasibility. Congress amended the Clean

Air Act in 1970 and eliminated administratively estab-

lished emission standards. Instead, it set fixed statutory

standards for required reductions in levels of hydro-

carbons and carbon monoxide (CO) which had to be

achieved for passenger cars in the 1975 model year. In

particular, section 202(b) of the amended Act required

that 1975 exhaust emissions of hydrocarbons and carbon

monoxide had to be reduced at least 90 percent from the

permissible emission levels for the 1970 model year.

Senator Muskie, the principal sponsor of the 1970

amendments, summed up the need for legislation as fol-

lows:

“In 1968, moving sources were responsible for

more than 42 percent of the total emissions of the

five major pollutants—including 64 percent of the

carbon monoxide and 50 percent of the hydrocarbons.

In health effects, these pollutants mean cancer, head-

aches, dizziness, nausea, metabolic and respiratory

diseases, and the impairment of mental processes.

Clearly, solving the air pollution problem depends on

the achievement of significant reductions in the

emissions from automobiles. Clearly protection of

the public health requires quick and drastic reduc-

tions. * * + *

tion Control Act—P.L. 89-272 (October 20, 1965), the Clean

Air Act Amendments of 1966—P.L. 89-675 (October 15,

1966), the Air Quality Act of 1967—P.L. 90-148 (November

21, 1967), the Clean Air Amendments of 1970—P.L. 91-604

(December 31, 1970), the Comprehensive Health Manpower

Training Act of 1971—P.L. 92-157 (November 18, 1971), the

Energy Supply and Environmental Coordination Act of

1974—P.L. 93-319 (June 22, 1974), Clean Air Act Amend-

ments of 1977—P.L. 95-95 (August 7, 1977), and Safe Drink-

ing Water Act of 1977—P.L. 95-190 (November 16, 1977).

70a

“Detroit has told the Nation that Americans can-

not live without the automobile.

“This legislation would tell Detroit that if that is

the case, they must make an automobile with which

Americans can live.” *

Carbon monoxide was singled out in the legislation be-

cause of its effects on human health. The first annual

report of the President’s Council on Environmental

Quality was placed in the record of the Senate debates

on the 1970 amendments and contains the following short

description of carbon monoxide and its effects on health:

“Carbon Monoxide (CO) is a colorless, odorless,

poisonous gas, slightly lighter than air, that is pro-

duced by the incomplete burning of the carbon in

fuels. Carbon monoxide emissions can be prevented

by supplying enough air to insure complete combus-

tion. When this occurs, carbon dioxide, a natural

constituent of the atmosphere, is produced instead of

carbon monoxide.

“Almost two-thirds of the carbon monoxide emitted

comes from internal combustion engines, and the

overwhelming bulk of that comes from gasoline pow-

ered motor vehicles.

“When carbon monoxide is inhaled, it displaces

the oxygen in the blood and reduces the amount

carried to the body tissue. At levels commonly found

in city air, it can slow the reactions of even the

healthiest persons, making them more prone to acci-

dents. Moreover, it is believed to impose an extra

burden on those already suffering from anemia,

41 Leg. Hist. 228-29. (The legislative history of the 1970

Amendments is collected and reprinted in A Legislative His-

tory of the Clean Air Amendments of 1970 (2 volumes) 93d

Cong., 2d Sess., Ser. No. 93-18 (1974), and will be cited

as “——— Leg. Hist. ——’”’.)

Tla

diseases of the heart and blood vessels, chronic lung

disease, overactive thyroid, or even simple fever.

Cigarette smokers, who are already inhaling sig-

nificant amounts of CO in tobacco smoke, take in

an additional burden from polluted air.

“Studies have shown that exposure to 10 parts

per million of CO for approximately 8 hours may

dull mental performance. Such levels of carbon

monoxide are commonly found in cities throughout

the world. In heavy traffic situations, levels of 70,

80 or 100 parts per million are not uncommon for

short periods.” °

Acting in accordance with the Congressional directive

to reduce emissions by 90 percent, EPA issued regula-

tions in 1971 for the 1975 model year limiting hydro-

carbon and carbon monoxide emissions to .41 and 3.4

grams per mile, respectively. However, the major auto-

mobile manufacturers, including Chrysler, petitioned the

Agency in 1972 to suspend the 1975 standards for carbon

monoxide and hydrocarbons for one year pursuant to sec-

tion 202(b)(5) of the Act. This section allows the

Agency to suspend the effective date of the standards for

one year if the technology available to meet the standards

is not available and other conditions are satisfied. The

manufacturers’ petitions were at first denied. However,

as a result of court appeals,® the denial was remanded

for reconsideration, and based on further evidence and

court-established guidelines, the 1975 standards for car-

bon monoxide and hydrocarbons were suspended for one

year.’ Interim standards for the two categories were

established instead: 15 grams per mile for carbon mono-

51 Leg. Hist. 244-246.

6 International Harvester v. Ruckelshaus, 478 F.2d 615

(J.C. Cir. 1973).

7 38 Fed. Reg. 10317 et seq. (April 26, 1976).

72a

xide, in lieu of the 3.4 standard, and 1.5 grams per mile

for hydrocarbons, in lieu of the 0.41 standard.*®

It is this relaxed interim standard for carbon monoxide

which governs the instant recall proceeding.

Recall. Authority to require an automobile manu-

facturer to recall a class or category of automobiles for

failure to meet applicable emission standards while in

actual use, and to require the manufacturer to remedy

the failure at its own expense, is provided in section

207(c) (1) of the Act: :

“If the Administrator determines that a substan-

tial number of any class or category of vehicles or

engines, although properly maintained and used, do

not conform to the [emission standard] regulations

. . . » when in actual use throughout their useful

life... , he shall immediately notify the manufac-

turer thereof of such nonconformity, and he shall

require the manufacturer to submit a plan for

remedying the nonconformity of the vehicles or

engines with respect to which such notification is

given ....”

It is clear from the legislative history that Congress

fully intended the automobile manufacturer to bear the

lion’s share of responsibility for in-use emission noncon-

formities. As stated in the Report of the Senate Com-

mittee on Public Works:

“Substantial deterioration from the emission stand-

ard would mean that the manufacturer was not

designing emission control systems which meet the

intent of this legislation. It would mean that air

quality standards in regions throughout the Nation

would not be effectively maintained, and it would

8J7d. at 10824. See also 40 CFR § 85.0751(A) (1) (ii)

(1975). Lower interim standards were set for California.

73a

mean that potentially billions of dollars of consumer

investment would be to no purpose.” ®

At the same time, however, the roles of the automo-

bile operator and the service industry did not go un-

recognized; the realities of the interrelationship between

manufacturer, operator and mechanic were fully debated

before Congress allocated to each his own respective share

of the overall responsibility for ensuring that the emis-

sion standards were met. Senator Muskie noted the

relationship between the manufacturer and the operator:

“We understand that it is not presently possible

to build a maintenance-proof, clean car, but that it

is possible—with the use of a system that is built

with some durability in it and some responsibility

imposed upon the operator—to assure reasonably

clean operation of such an automobile. We have to

have the two. One without the other is like a one-

legged man.” *°

Senator Allott observed, however, that the service in-

dustry was a “weak spot” in the proposed legislation.

“First, where is an operator going to get the

maintenance necessary to keep his car operating at

the supposed level as when he purchased it?

“My experience with various cars, and I am sure

it is no different from anyone else’s in the Senate, is

that, to secure competent maintenance on a car at

the present time in any respect is almost an im-

possibility. In fact, even for rather simple opera-

tions, it is nothing unusual to have to take back the

car two or three times.

“So that is a weak spot in the bill. Whether we

can do anything about it, I do not know, but it cer-

‘tainly is a weak spot in the bill.” ™

®1 Leg. Hist. 430.

10 Td. at 382.

11 Jd, at 333.

T4a

Senator Muskie acknowledged the maintenance prob-

lem, but nevertheless insisted that the automobile industry

would have to shoulder primary responsibility for emis-

sion failures.

“The industry recognizes that the American

motorist is not a good maintenance engineer. There-

fore the industry has worked to make the car main-

tenance proof.

“T think the greatest problem the industry faces

is the shortage of mechanics across this country....

“We cannot solve the problem of whatever tech-

nology the industry chooses to put its bets on. All

we can do is to set the standards.

“The automobile industry has created all of the

problems from the top to the bottom. The corner

service station is related to the fact that Detroit

built an automobile with an internal combustion

system.

“The key to controlling the situation is in De-

troit....

“So if the bill is weak in not providing for the

maintenance problems, I would welcome an amend-

ment that would cure that weakness. But I do not

think there is any way of writing a law that will

create maintenance capability all across the country.

Only the automobile industry can do that.”

The resulting legislation substantially reflects Senator

Muskie’s views on allocating responsibility for noncom-

pliance with the emission standards.

B. The Properly Maintained Requirement

The terms of section 207(c) (1) of the Act provide that

the reea!l determination must relate to vehicles which are

12 Id. at 334-335.

75a

“properly maintained.” As discussed in detail later on

in this decision, the record in this proceeding conclusively

establishes that the cause of excessive carbon monoxide

emissions in the Chrysler recall class vehicles is attribut-

able to misadjustments of the carburetor idle mixture

adjustment and that such misadjustments were performed

in a manner inconsistent with or contrary to the manu-

facturer’s written specifications. Based in part on Chrys-

ler’s own admissions, the record also establishes that such

misadjustments were encouraged or fostered by the de-

sign of Chrysler’s emission control system and its car-

buretor adjustment procedures. Furthermore, the record

convinces me that Chrysler should have foreseen the possi-

bility of widespread misadjustments occurring in the

recall class vehicles as a consequence of its emission

system design and adjustment procedures and that such

misadjustments would result in a substantial number of

the recall class vehicles exceeding the Federal emission

standard for carbon monoxide. Whether the recall order

can be sustained as a matter of law under these circum-

stances is the pivotal issue in this proceeding.

The term “properly maintained” is not defined in the

Act, but the parties and the presiding officer agree that

its meaning is found by reference to section 207(c) (3)

of the Act, which provides in relevant part as follows:

(3) The manufacturer shall furnish with each

new motor vehicle or motor vehicle engine such writ-

ten instructions for the maintenance and use of the

vehicle or engine by the ultimate purchaser as may

be reasonable and necessary to assure proper func-

tioning of emission contro! devices and systems.

Thus, a vehicle is properly maintained if it is maintained

in accordance with “written instructions for the mainte-

nance and use of the vehicle or engine by the ultimate

purchaser.” * This interpretation is reinforced by the

18 [Initial Decision at 6.

76a

fact that it is consistent with the related warranty pro-

visions of section 207 of the Act. Section 207(b) requires

the manufacturer to warrant that if a given vehicle does

not conform to applicable emission standards at any

time during its useful life, then the manufacturer will

remedy such nonconformity at its own expense. Section

207(b) (2) (A) goes on to provide, however, that such

warranty is only effective if “the vehicle or engine is

maintained and operated in accordance with instructions

under subsection (c) (3),” «ie, if it is maintained in

accordance with the written maintenance instructions

which the manufacturer is required to furnish to the

ultimate purchaser. The presiding officer also found that

the phrase “properly maintained” has a technical mean-

ing within the automobile industry, and when used within

the industry, means “maintained in accordance with the

manufacturer’s [instructions or] specifications.” [brack-

ets in original].

14 [Initial Decision at 12. The basis for this finding is doubt-

ful if it is intended to suggest that the manufacturer’s specifi-

cations can dictate the standard for proper maintenance in

lieu of or contrary to reasonable and necessary written in-

structions furnished to the vehi..'!. owner as required by sec-

tion 207(c) (3). However, it correctly describes the con-

trolling facts in this instance because Chrysler affixed a

label under the hood of each recall class vehicle setting forth

the manufacturer’s specification for idle CO adjustment and

a brief description of the required service procedure. EPA

Ex. 48 at 25.9 (sample label). The owner’s manual contains

the only other written instructions furnished to the owner,

but they are no more than a maintenance schedule which

simply directs the owner to “check and adjust [the idle mix-

ture] as required” at 15,000 mile intervals and to have the

vehicle inspected and serviced “anytime a malfunction is ob-

served or suspected.” EPA Ex. 7 at 35. The more detailed

service procedures needed to make the correct adjustment

are described in a separate publication that is not part of the

written instructions furnished to the owner. EPA Ex. 48

77a

{n order to support a recall action, EPA, as the pro-

ponent of the recall order, has the burden of proving

that the requirements of section 207(c) (1) of the Act

are satisfied, which includes proving that a substantial

number of in-use vehicles of the recall class exceed the

applicable Federal emission standard although properly

maintained and used.» EPA contends that its burden of

proof is met by looking at the actions of the owner in

bringing the vehicle to « bona fide service establishment

at the intervals specified by the manufacturer and that

the manufacturer can rebut evidence to that effect by

showing that the service and maintenance operations per-

formed on the vehicle were done incorrectly and that such

incorrect performance was not reasonably foreseeable.**

The presiding officer rejected EPA’s formulation of the

standard for burden of proof. Instead he observed that

“The action of the vehicle owner in bringing the vehicle

to a service organization is certainly the key as to

whether a given vehicle is properly maintained and used,

but it is actual maintenance performed on the vehicle

which is the determining factor.”** (Emphasis added.)

He also concluded that “The ‘properly maintained’ pro-

visions relate solely to the condition of the vehicle and not

(“Chassis Service Manual 1975”). The parties agreed that

the written instructions furnished by Chrysler for the proper

maintenance of the recall class vehicles satisfied the require-

ments of section 207(c) (3) of the Act. This agreement does

not extend, however, to the service procedures, which EPA

argues are complex and time consuming and have been a sig-

nificant issue throughout the proceeding. EPA Appeal Brief

at 21, n. 2.

18 Chrysler does not contest the presiding officer’s finding

that the vehicles were “properly used” and that such use is

not an issue in the proceeding. See Initial Decision at 26.

16 EPA Appeal Brief at 25.

17 Initial Decision at 138.

78a

simply to the actions of the vehicle owner in seeking

maintenance at the proper intervals.”'* (Emphasis

added.) In essence, this further refinement on the mean-

ing of “properly maintained” represents Chrysler’s posi-

tion. The significance of this for Chrysler is apparent.

The Chrysler written instructions, 7.¢., the owner’s

manual maintenance schedule and, in particular, the

underhood label,’® require the idle mixture to be adjusted

to a precise specification at 15,000 mile intervals, but

EPA’s recall action is premised on the idle adjustment

being misadjusted, 7.e., not set to Chrysler’s specifications.

Thus, if one looks “solely to the condition of the vehicle,”

as the presiding officer says, in order to determine

whether the vehicle is properly maintained, it is apparent

that under this definition the recall class vehicles are

not “properly maintained” for purposes of section 207

nition which had the effect of changing this conclusion.

In accordance with instructions in the owner’s manual

which direct the owner to have the vehicle inspected and

serviced “anytime a malfunction is observed or sus-

pected,” *° a number of the vehicles examined by EPA

were returned for unscheduled maintenance before reach-

ing the 15,000 mile interval. The presiding officer found

that indications of misadjustments in these vehicles indi-

cated that the unscheduled maintenance involved adjust-

ment of the idle mixture based upon a complaint of

driveability problems by the vehicle owner.” After noting

that the unscheduled maintenance may have been “incor-

rect” maintenance, he observed that, “It would seem that

18 Td, at 11-12.

19 See note 15, supra.

2» EPA Ex. 7 at 35.

21 Initial Decision at 24.

79a

in order to satisfy the customer it was the only mainte-

nance under the circumstances when carburetor design,

etc., are considered.” *? Consequently, he adopted the fol-

lowing additional interpretation of the “properly main-

tained” requirement:

“I find that for purposes of meeting the “properly

maintained” criterion of Sec. 207(c) (1) a vehicle

has been properly maintained in accordance with the

Owner’s Manual maintenance instructions, as far as

the emission system is concerned, when the vehicle

has not reached 15,000 miles and has not otherwise

been returned for any relevant or scheduled service

to such emission system.” *

Chrysler argues against this interpretation, contending

that it is inconsistent with the presiding officer’s earlier

interpretation which states that it is the actual mainte-

nance performed on the vehicle which is the determining

factor. Chrysler also points out that even if this inter-

pretation is only intended to operate as a rebuttable

presumption, the evidence actually shows that many of

the vehicles under 15,000 miles had been misadjusted

and therefore they were not in fact properly maintained.

The problem with all of these interpretations of the

“properly maintained” criterion is that they place undue

emphasis on the text of the words “properly maintained”

without examining the purpose or function of the “prop-

erly maintained” criterion in the overall statutory scheme.

As a consequence, the original intent of the legislation

becomes obscured. An inquiry into the text alone is not

sufficient for purposes of determining the extent of the

Agency’s recall authority under section 207(c) (1) of the

Act.

22 Td. at 25.

23 Td. at 25.

80a

As noted earlier, the statutory scheme of the Clean Air

Act, and section 207(c) (1) in particular, is the deiiberate

result of an effort by Congress to allocate responsibility

for emission nonconformities among the manufacturer,

the vehicle owner and the mechanic. Congress intended

the automobile manufacturer to bear primary responsi-

bility for in-use emission nonconformities; however, at

the same time, it did not intend to impose a duty on the

manufacturer to produce a mairtenance free automobile.

Had Congress intended the manufacturer to build a main-

tenance free automobile, the phrase “although properly

maintained and used” would not have been needed in

section 207(c) (1) of the Act. Instead, Congress fully

recognized that the vehicle owner was under a duty to

exercise some responsibility for the maintenance of the

vehicle if the purposes of the Act were to be achieved.

Thus, in allocating these responsibilities for purposes of

recall pursuant to section 207(c) (1), Congress included

the “properly maintained” language to ensure that the

manufactirer would not have to bear the responsibility

for an in-use emission nonconformity when the fault

properly belonged with the vehicle operator. In other

words, the purpose of that language must be viewed as

a method of providing the manufacturer with a defense

to a recall action if some other person is primarily re-

sponsible for the nonconformity. It is included to ensure

that the Congressional scheme for allocating responsi-

bility for in-use emission nonconformities is preserved.

It has no other operative effect in terms of either defining

or limiting the manufacturer’s or anyone else’s responsi-

bilities for emission nonconformities.™

24 As used here, the term “defense” is not intended to be

used in the conventional legal sense of the term, where the

party seeking to avail itself of the defense has the burden

of raising it and proving its elements. Instead, it merely

describes the practical operation of the phrase “properly

maintained” as it relates to the statutory scheme for allo-

cating responsibility for in-use emission nonconformities.

8la

By thus recognizing the function of the “properly

maintained” language in section 207(c) (1) as a form

of defense to a recall action, it becomes apparent that

Congress did not intend the manfacturer to escape re-

sponsibility for in-use emission nonconformities if the

manufacturer itself brought about the condition of mis-

adjustment. Such evident disregard for the goals of the

Clean Air Act and the care which Congress exercised in

allocating responsibilities for emission nonconformities

defies any reasonable reading of section 207(c) (1). It

would permit an automobile manufacturer to sell vehicles

to the ultimate purchaser in a condition of misadjust-

ment. The manufacturer could then produce evidence

of the absence of quality control measures in its assembly

line as proof that the vehicles were not properly main-

tained and therefore not subject to a recall order. Such

a result is possible, of course, if the significance of the

“properly maintained” criterion is narrowly limited to

the text of the words and not to the function they were

intended to serve in the overall statutory scheme. Such

a result is unwarranted, however, when the “properly

maintained” language is viewed as a limited defense

which the manufacturer may rely upon whenever the

responsibility for an emission nonconformity lies else-

where.

Chrysler argues that “there is no support whatever in

the legislative history for distinctions between improper

maintenance attributable to the owner and that which

may be imputable to the manufacturer, and the unquali-

fied language of that section [207(c) (1)] plainly indi-

cates that no such distinction was drawn by Congress.” *

This position totally ignores the wealth of legislative his-

tory where Congress, in Chrysler’s words, “sought to

apportion the responsibility for achievement of cleaner

25 Chrysler Trial Brief (Reply) at 9.

82a

automobile performance.” ** It attributes to Congress the

absurd intention of allowing a manufacturer to escape

liability for recall whenever it, not the owner, is re-

sponsible for the emission nonconformities.

Chrysler also contends that “the scheme designed by

Congress to promote the common good of Clean Air was

not a scheme which, when the owner had acted reasonably

and in good faith, pointed solely to the manufacturer for

every other responsibility. The players are far more

numerous, the responsibilities more dispersed. ... It is

far more likely in this case that it is the service industry

—and not the owner or the manufacturer—who is failing

to do all that can reasonably be expected to carry its

burden to bring about the goal of Clean Air.” *’

I agree with Chrysler that the statutory scheme does

not envision recall if primary responsibility for the in-use

emission nonconformity is attributable to someone other

than the manufacturer. AsI interpret section 207(c) (1),

EPA must establish that the vehicles would be main-

tained in accordance with the manufacturer’s written

instructions but for the actions of the manufacturer.

EPA’s burden of proof is not satisfied by merely showing

that the owner or mechanic is not primarily responsible

for the condition of improper maintenance; instead, af-

firmative evidence must be presented which establishes

the manufacturer’s responsibility. In this proceeding,

affirmative evidence was presented to that effect. While

that evidence also shows that the service industry does

indeed contribute to the condition of improper main-

tenance (as explained in more detail in Part B), it is

clear that the service industry’s contribution is the in-

evitable byproduct of Chrysler’s emission system design

and service procedures. Consequently, this case is not

26 Jd. at 7.

27 Td. at 2.

83a

one where responsibility is placed on the manufacturer

simply because there is nowhere else to place it. On the

contrary, primary responsibility clearly belongs with

Chrysler, not the owner or the mechanic. Therefore, the

recall class vehicles are “properly maintained” for pur-

poses of section 207(c) (1) of the Act.

Chrysler’s position also fails to give appropriate weight

to the fact that the manufacturer’s liability under sec-

tion 207(c) (1) *. virtually absolute. The Clean Air Act

does not limit the scope of the manufacturer’s liability

by prescribing a standard of care which the manufac-

turer must exercise in producing vehicles and thereafter

attach liability on the basis of whether the standard of

care has been met. Instead, the Act imposes a duty on

the manufacturer to produce vehicles that will meet the

emission standards regardiess of the care exercised in

the manufacturing process. The only exception to the

manufacturer’s liability under section 207(c) (1) is that

which is embodied in the phrase “although properly

maintained and used.” However, the legislative history

makes it abundantly clear that this exception (to an

otherwise absolute standard of liability) was included in

contemplation of the situation where the vehicle owner

or the mechanic failed to carry out his share of the total

responsibility for ensuring that the goals of the Clean

Air Act were met. In other words, the exception con-

templates a situation where the cause of the emission

nonconformity is beyond the practical limits of the manu-

facturer’s control. There is no indication that Congress

intended this exception to include a situation where the

cause is within the manufacturer’s control. Indeed, even

to suggest that such an exception was ever contemplated

by Congress makes the mind swirl. It is inconceivable

that Congress would first define the limits of the manu-

facturer’s liability so broadly, next carve out a reasonable

exception to that liability for circumstances beyond the

84a

manufacturer’s control, and then finally, without a hint

of what it planned, topple this logical statutory scheme

by immunizing the manufacturer from liability where

the cause of the emission failure is within the practical

limits of its control.

The specific reasons for concluding that Chrysler is

responsible for the misadjustments and the resulting

emission nonconformities in a substantial number of the

recall class vehicles are discussed below.

C. Chrysler’s Responsibility for the Misadjustments

In order to meet the 1975 emission standard for carbon

monoxide in the recall class vehicles, Chrysler installed

catalytic converters. These converters reduce emissions

by about 60 to 80% when supplied with adequate oxygen

in the exhaust stream. The catalyst causes the carbon

monoxide (CO) and hydrocarbons coming from the engine

to combine with oxygen in the exhaust stream to form

water and carbon dioxide, two harmless substances. The

presence of enough oxygen in the exhaust stream to

oxidize all the emission is essential to making the catalyst

effective. If the supply of

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