DECISION OF THE ADMINISTRATOR

I. Introduction

Section 202 of the Clean Air Act, 42 U.S.C. 1857f-1, requires that emissions of carbon monoxide and hydrocarbons from automobiles sold in this country during the 1975 model year be reduced by at least ninety percent from their 1970 levels. The only authority which I as Administrator have been given to affect the application of these standards is set forth in Section 202 (b) (5) of the Act. That section allows me to suspend the effective date of these reductions for one year only, provided the following conditions are met: "The Administrator shall grant such suspension only if he determines that (i) such suspension is essential to the public interest or the public health and welfare of the United States; (ii) all good faith efforts have been made to meet the standards established by this subsection; (iii) the applicant has established that effective control technology, processes, operating methods, or other alternatives are not available or have not been available for a sufficient period of time to achieve compliance prior to the effective date of such standards, and (iv) the study and investigation of the National Academy of Sciences conducted pursuant to subsection (c) and other information available to him has not indicated that technology, processes, or other alternatives are available to meet such standards."

The first application for a suspension under this par was filed with EPA on March 13, 1972, by A. B. Volvo Ltd. of Sweden. Shortly thereafter, applications were also received from Chrysler, Ford, General Motors, and Internationa Harvester. After three weeks of public hearings, I denied all five applications in a decision issued May 12, 1972.

The four American applicants appealed this decision to the courts, and on February 10, 1973, the United States Court of Appeals for the District of Columbia Circuit, in a lengthy and detailed opinion, remanded the applications of the four appellants to me for reconsideration.

International Harvester Co.

v. Ruckelshaus, (Slip Opinion No. 72-1517; February 10, 1973).

Following this remand by the Court, over two weeks of public hearings were held commencing March 12, 1973, to consider both the remanded applications and the application of American Motors Corporation, which was filed on March 2, 1973. In the course of these remand proceedings, a great mass of oral and written material has been furnished, both voluntarily and in response to EPA subpoenas, by the applicants, other auto manufacturers, suppliers of catalysts and catalyst components, oil companies, and representatives of public interest groups.

Substantial testimony was taken both before and after the remand concerning emission and other characteristics of engines different from the conventional internal combustion engine. It remains clear that some alternate engine systems can achieve the reductions required by the Act, and certain alternate engine systems may well constitute preferred technology for the long term. However, no participant in the proceeding seriously contends that basic new car demand in 1975, as defined by the Court, can be met if the industry cannot continue to produce and use conventional internal combustion engines in numbers roughly equivalent to current production of these engines. Because catalysts are generally necessary to control emissions from conventional engines to levels approaching the statutory standards, the principal questions before me on this remand are whether conventional engines equipped with catalysts can meet applicable emission standards and can be produced in 1975 in sufficient numbers to satisfy basic demand in a manner consistent with the public interest.

Without exception, all automobile manufacturers contend that catalyst technology is not presently available and effective to achieve the emission reductions required by the Act. The manufacturers also contend that, even if prototype vehicles for sufficient numbers of models could be certified at the statutory levels in time for 1975 production, severe production problems are likely to occur the first year catalysts are used and will result in recurrent and widespread production stoppages. Chrysler and some other manufacturers further contend that, even if catalyst-equipped vehicles can be successfully certified and mass produced in 1975 without difficulty, a large percentage of these devices will fail in actual customer use, thereby subjecting the manufacturer to extraordinary liabilities under the Act's recall and warranty provisions. Most foreign manufacturers share Chrysler's reluctance to use catalysts on any 1975 models.

Ford and General Motors are decidedly less pessimistic about the effectiveness of presently available catalyst technology. As I understand the positions of these two manufacturers, as developed during these proceedings on remand, they believe that a limited introduction of catalyst-equipped cars in 1975 is feasible and desirable as an initial step toward nationwide use of catalysts on all models. Ford and General Motors have accordingly proposed interim standards for California vehicles which they contend will require the use of catalysts on all California models.

Since the early 1960's the State of California has been the leader in automobile emission control. In general, federal standards have followed California standards by at least one full model year. This historical pattern of regulation has permitted manufacturers to scale up their production processes as improved emission control technology is developed and employed. Initial introduction of new emission control technology in California, followed by nationwide use in a later model year, has been made possible by provisions in the Act for waiver of federal preemption of California requirements for controlling emissions of new vehicles.

Acting under these provisions of the Act, I have waived federal preemption with respect to emission standards prescribed by California for vehicles built and sold during the 1974 model year. While California's 1974 standards for hydrocarbons and carbon monoxide are only marginally more stringent than federal standards applicable to 1974 automobiles, California's 1974 standard for nitrogen oxide emissions is substantially stricter than the federal standard. In addition, under California law 90 percent of production vehicles are required to meet applicable certification standards, a requirement which makes a California certification standard significantly more stringent than an equivalent federal standard. California has requested waiver of federal preemption for a new set of standards applicable to 1975 automobiles which requires a substantial further reduction in emissions of all three pollutants.

decision.

This request is now pending before me for

The following table compares these various standards and proposals for California and indicates the approximate degree

Bearing in mind the additional stringency created by the California requirement that 90 percent of production vehicles meet the certification standard and by the requirement that California vehicles control nitrogen oxide emissions to levels substantially below federal standards, the proposed California 1975 standard for hydrocarbons of .9 grams per mile approaches in stringency the Congressionally mandated standard which these applicants seek to have suspended.

The National Academy of Sciences has prepared and submitted three reports that are pertinent to this matter. The first two reports, issued in January and April of 1972, respectively, predated my earlier decision. The third report, dated February 15, 1973, was submitted five days after the Court issued its opinion and order remanding the proceeding to me.

In remanding this matter to me for reconsideration, the Court of Appeals weighed the "grave economic consequences" that might result from denial of a suspension against the environmental costs that might result from granting of a suspension. The Court concluded that "the risk of an 'erroneous' denial of suspension outweigh [s] the risk of an 'erroneous' grant of suspension," even if no interim standard for

General Motors' proposed California standards for the three pollutants are .76, 5.7 and 3.1, respectively. However, General Motors has premised this proposal on a significant relaxation of the federal certification procedure. Hence, it is difficult to compare the General Motors' proposal with other proposals. (Footnote continued)

1975 is prescribed. As I read the Court's opinion, the Court believes that these risk-balancing considerations should be taken into account in determining whether effective control technology will be available in 1975. On that basis, the Court has required a high degree of confidence that 1975 standards can be achieved and has cautioned that a decision to deny suspension, to the extent it is based on predictions of technological availability as opposed to direct evidence of such availability, must be supported by a detailed showing that the methodology underlying the prediction is reasonable

and reliable.

The Court's discussion of factors pertinent to this decision includes a broad range of "public interest" considerations, including "the impact on jobs and the economy" from any decision resulting in decreased levels of production during 1975. In my view, the Court's opinion correctly emphasizes that my decision should be designed to bring about ultimate achievement of the statutory standards by 1976. The Court has also emphasized that the statutory authority to suspend the standards and to set interim standards during 1975 should be used as a "safety valve" to minimize the risk of serious economic consequences when the necessary technology is first introduced.

II. Summary of Decision

As I view this decision, the issue before me is essentially the most reasonable method by which necessary technology will be installed on automobiles to meet the statutory standards. In resolving this issue, on this record, I believe that I have three basic choices.

First, by denying these applications or by establishing national interim standards similar to those proposed for 1975 by California, I can in effect require the automobile industry to install catalytic converters on all conventional 1975 automobiles. Second, by establishing interim standards which do not require use of catalysts, I can allow the industry an additional year to further test and improve catalyst or other technology, while requiring substantial additional reductions

(footnote continued)

All standards for HC and CO are expressed in terms of the 1975 Federal CVS test procedure. The 1975 federal NOx standard has been prescribed pursuant to Section 202 (a) of the Act.