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technology that achieves the social purpose that doesn't give them any competitive advantage is not going to be pursued very vigorously. I think that is the reason why the Congress or the Government at some level simply has to set these standards in the public interest against which they all must compete to achieve.
Senator MuskIE. One of the critical elements in developing a solution to this problem is the attitude of the industry. If there was an evidence over the last 15 years that it had a real sense of urgency, real commitment, dedicating its resources, know-how and expertise to the solution of this problem, you and I would be faced with a different kind of decision.
Let me make this point: The time frame within which the industry had to operate didn't begin in December of 1970 when the Clean Air Act was signed into law. It began no later, surely, than November of 1969 when the White House laid down the policy which I have described earlier today. But beyond that I think it is relevant, since we are getting the record clear, to show the activities or lack of activities of the industry from 1953 to 1970.
There was placed in the Congressional Record on May 18, 1971, what was described as a confidential memorandum of the U.S. Department of Justice.? This memorandum recommended to the Attorney General that criminal charges be brought against the American auto manufacturers for conspiring to retard the development of a smogfree motor vehicle. This memorandum, which spells out in detail previously undisclosed evidence, was prepared before January 10, 1969, when the Department of Justice decided to proceed with a civil suit. That civil suit was settled on October 29, 1969, a month before the White House meeting I referred to earlier, by a consent decree entered in the U.S. District Court for the Central District of California.8
That consent decree enjoined and restrained each defendant, which included the Automobile Manufacturers Association, General Motors, Ford, Chrysler, and American Motors, enjoined them from conspiring to prevent, restrain or limit the development, manufacture, installation, distribution or sale of emission control devices.
That action was based in part upon a cross-licensing agreement that was entered into, by the industry on July 1, 1955, and which was described in the confidential memorandum to which I have referred in these words:
In sum, although various approaches to the motor vehicle pollutants emissions problems have shown considerable promise, the automobile companies apparently have done little with it. It seems likely that the reason for this attitude is the fact that the AMA cross-licensing agreement placed the automobile producers in a position where they did not have to fear that a competitor would develop an effective device or system for its exclusive use which might become required equipment and thus put the others at a competitive disadvantage.
That confidential memorandum discloses that:
In the late 1950s Ralph Heinz, inventor, developed and patented a stratified charge engine which reduced hydrocarbon, carbon monoxide and oxides of nitrogen emissions while at the same time effecting a savings in gasoline consumption.
Moreover, the stratified charged engine would replace the conventional engine with little or no additional cost to the consumer. The development of this engine was published generally so that the automobile manufacturers knew of the exist. ence and what it would do.
? The memorandum may be found at p. 445, appendix.
That is in the late 1950's. Is the argument credible that they did not have time after the Clean Air Act of 1970 when the evidence is that they had time beginning in the late 1950's, to begin developing the stratified charged engine which now Honda would put on the American market to meet the 1975 deadlines enacted by an American Congress?
I know that in the strict legal sense the question of good faith, I suppose, cannot go back to events of the 1950's or 1960's since the law became effective in 1970. But, nevertheless, in examining the attitude of the manufacturers, whether or not they really had the sense of urgency, isn't it relevant to look into that history?
Mr. RUCKELSHAUS. Senator, I think your recitation of the history points up two things in my mind. One is that because of the importance of initial cost of a motor vehicle emphasized by the automobile companies themselves, we are unlikely to see, over, technology developed that seems to give them no competitive advantage over another com
and that achieves a given social purpose, such as clean air. The only way we are ever going to achieve an impetus toward that kind of technology is precisely the way the Clean Air Act of 1970 has sought to achieve it. One might argue about whether that was the best way to do it or not. But the principle of setting performance standards against which all of them must compete it seems to me is unassailable in terms of giving the kind of impetus necessary for them to achieve these standards
, for them to develop new technology. Otherwise, there isn't anything in it for them on the basis of which they view their corporate purpose, to develop alternative technologies.
Secondly, I think probably the existence of the 1975 standards is going to do more to stimulate new technology in 1980 than anything else we have done. Instead of saying, "Well, if we had set that off until 1980 would we have had more technology,” in effect, probably the opposite is true. I believe it is because of this principle that unless as a society we say this is what must be done by a given industry to achieve acceptable levels of emission to protect public health, they are not going to do it on their own. Even if one of the companies was with the best of intention, and the corporate president said, "I think we ought to produce an engine that doesn't pollute as much in order to protect the public and not worry about profit," I don't think he could get away with it. They would say, "Our competitors will not do that. We may have a car that wouldn't drive as well, that would cost more." They wouldn't let him do it. The only way you can force him to do it is to set a standard that everybody must meet.
Senator Muskie. I think the combination of statutory mandates may work. I was interested in that aspect of your rationale in your decision in California. What is the market for Honda cars in California ? Do you have any figures on that?
Mr. RUCKELSHAUS. They said at the hearing that they intended to sell 250,000 out of 500,000 of their stratified charged engine in the United States in 1975.
Senator MUSKIE. I can just read those Honda advertisements in 1975. They will come into California saying: Well
, we are meeting the requirements of your law and your automobile companies are not. Buy a Honda. You don't have to worry about the future. It is clean. It meets the standards. Your cars do not.
I may be in California, where maybe the marketability of a Japanese car is greater than other parts of the country, that you have picked an interesting place for an interesting test. Certainly if I were Honda I would develop that pitch. I am sure they can do it better than I can. I am not an advertising specialist or a PR man. It seems to me that the American automobile industry in the face of this record-really, people who are interested should read the consent decree and the confidential memorandum in full. Here is a record of 14 years of foot-dragging by this industry on this problem, documented by a memorandum of the Department of Justice, and reflected in the consent decree.
It was entered into by the parties, the defendants, and they wouldn't have entered into it if there weren't substance to the charge.
With that record, Honda could make a great sales pitch in California. It will be interesting to see whether they do. Maybe Honda can do more to get the American automobile industry in line than the U.S. Congress can. It will be interesting to see.
We have gone 10 minutes over our deadline. I suspect tomorrow we will get into some of these questions even more deeply and thoroughly. We will meet at 9:30 instead of 10 to give us more time.
[Whereupon, at 12:40 p.m., the hearing was recessed, to reconvene Tuesday, April 17, 1973, at 9:30 a.m.]
DECISION OF THE ADMINISTRATOR OF THE ENVIRONMENTAL PROTECTION AGENCY REGARDING SUSPENSION OF THE 1975 AUTO EMISSION STANDARDS
TUESDAY, APRIL 17, 1973
Present : Senators Muskie, Randolph, Buckley, and Domenici. Senator Muskie. The subcommittee will be in order. I thought I might begin this morning's hearings by reading a few excerpts from a commentary by an expert in this field by the name of Russell Baker.
It is a column entitled “The Can't-Do Guys.” It reads in part as follows:
WASHINGTON, APRIL 16.—Those of us who were brought up with absolute faith in the absolute superiority of American mechanical skills cannot help feeling embarrassed about Detroit's performance in this matter of exhaust pollution standards.
It isn't that the engineering failure is so humilitating, although it is bad enough when we read that Japanese industry can already meet standards Detroit says it will still be unable to measure up to by 1975. The Japanese! To anyone whose psyche is rooted in the 1930's, finishing behind the Japanese in a manufacturing exercise is like John Wayne being beaten up by Smiley Burnett.
Still, that could be tolerated. We are older now than we were in 1939, and we have learned that nobody can win them all. What is insufferable, however, is that Detroit should not even be ashamed of itself-indeed, that far from being ashamed of itself. Detroit should mount a loud lobbying operation in Washington to call world attention to its defeat.
I thought that might be a good morale booster for the automobile industry on this second meeting of these hearings. [The article referred to follows:]
(From the New York Times, April 17, 1973]
THE CAN'T-Do GUYS
(By Russell Baker) WASHINGTON, April 16_Those of us who were brought up with absolute faith in the absolute superiority of American mechanical skills cannot help feeling embarrassed about Detroit's performance in this matter of exhaust pollution standards.
It isn't that the engineering failure is so humiliating, although it is bad enough when we read that Japanese industry can already meet standards Detroit says it
will still be unable to measure up to by 1975. The Japanese! To anyone whose psyche is rooted in the 1930's, finishing behind the Japanese in a manufacturing exercise is like John Wayne being beaten up by Smiley Burnett.
Still, that could be tolerated. We are older now than we were in 1939, and we have learned that nobody can win them all. What is insufferable, however, is that Detroit should not even be ashamed of itself-indeed, that far from being ashamed of itself, Detroit should mount a loud lobbying operation in Washington to call world attention to its defeat.
For months it has been declaring that the American car industry absolutely cannot under any conceivable circumstances solve the hard engineering problem put to it by the Government. What it wanted, and what it got last week, was Government permission to be excused from having to solve that problem for a long time--forever, some people suspect.
What's wrong out there in Detroit? They seem to have lost the good old American know-how, forgotten how to cut the mustard, misplaced the moxie.
This, at any rate, is what they keep saying in Washington while trying to persuade the Government to make it easier for them. At times the force of their lobbying campaign suggests that Detroit may even be proud of its inadequacy.
What a falling off is this. We hear it and think of the Seabees in World War II. The difficult they did immediately. Remember? The impossible took a little longer.
There were can-do guys in those days, and there used to be can-do guys in Detroit, too. America was full of can-do guys not so long ago.
Nowadays we have can't-do guys. Washington is perpetually filled with them, all looking for a Government handout, or a back-door appointment at the Justice Department, all leaning on the Congress and Pentagon and White House while their superb lobbying machines boast that they can't build an airplane, can't run a railroad, ('an't stop dumping their garbage in their own life's air.
Inability to get results back at the plant doesn't seem to matter anymore. Nowadays, to get results you go to Washington.
Can't-do guys do all right in Washington, perhaps because lobbying is one thing the can't-do guys almost always can do, and magnificently. Detroit may not be able to dispose of exhaust very neatly, but it can build a beautifully lobbying machine for selling Government the story of its own inadequacy.
What is it in the Washington air that restores the energies of these once (lynamic American manufacturers? Something there is that brings out all the old latent, half-forgotten ingenuity that seems to have abandoned them back in the home plant.
Back in Burbank everything may seem hopeless. Engineers weeping and test pilots refusing to take the thing off the deck. But bring them to Washington and, suddenly, hopeless, half-dead men are leaping on the cocktail tables in $650à-day penthouse suites shouting, "I don't care how impossible it looks, boss! Our lobby can lick this problem !"
Production, of course, counts for little in Washington. Here salesmanship, not production, has become the ultimate virtue. This is why companies that can't produce at the plant do it so well in Washington. The test here is seldom whether it will work. but whether you can sell it. And so long as you can sell it, who (a res whether it works or not? Salesmanship—that's the stuff. In Washington, even corporate failure sells is boasted about loudly enough.
To get results in Washington, as Pentagon contractors have known for years, you have to have good old American don't-know-how.
Senator MUSKIE. Mr. Ruckelshaus, I think yesterday's hearing was a useful and helpful one. I understand that you would like to begin this morning's with a statement on the NOx problem and if you will proceed in your own way.