Opinion ID: 426344
Heading Depth: 3
Heading Rank: 1

Heading: Uncertified parts

Text: 52 Petitioners first challenge that aspect of the replacement parts regulations that makes the vehicle manufacturers responsible for warranty claims in which uncertified parts were used in the maintenance or repair of the vehicle. This portion of the regulations effectively shifts the parts manufacturers' burden of demonstrating equivalency--a prerequisite to certification--to the vehicle manufacturers when an uncertified part is alleged to have been relevant to the vehicle's failure to comply with the emission standards. 57 Petitioners claim that EPA reaches beyond its statutory authority in forcing them to carry this burden of proof before they may deny a warranty claim. We agree. 53 On its face, Section 207(b) prohibits vehicle manufacturers from denying warranty claims if certified parts were used in a vehicle's repair. 42 U.S.C. Sec. 7541(b). The statute says nothing about requiring vehicle manufacturers to accept warranty claims where uncertified parts were used, or of requiring vehicle manufacturers to demonstrate that uncertified parts were defective or not equivalent to original equipment parts before a claim can be denied. Indeed, the fairest implication from the language of the statute is that if an uncertified part is relevant to the failure to comply with the emission standards, then the manufacturer may deny the warranty claim. 54 When Congress was considering Section 207(b), it obviously was aware of existing law that governed the vehicle manufacturers' responsibilities to consumers. 58 That law--the Magnuson-Moss Act, 15 U.S.C. Sec. 2301 et seq. (1982)--specifically prohibits manufacturers from conditioning their warranties on the consumers' use of articles identified by brand, trade, or corporate name. Id. Sec. 2302(c). But that law did not prohibit manufacturers from conditioning their warranties on the use of the equivalent of original equipment parts because Congress recognized that the manufacturers' reputation and customer goodwill were at stake in warranty work and that manufacturers should be able to protect their interests by requiring reputable and effective repairs. Cf. id. Sec. 2307 (manufacturer can designate facilities for performing warranty repairs). 55 Congress faced this same concern when it addressed the performance warranty issue under the Clean Air Act. It recognized that the performance warranty exposed vehicle manufacturers to 56 such vast liability that these companies have a legitimate interest in limiting the scope of their liability by conditioning the validity of their performance warranties on the proper care and maintenance of the vehicle.    [T]his interest carries with it the ability to establish criteria to protect the vehicle manufacturer from liability which it, in no way, caused, but which resulted solely from the owner's negligence or the installation of independently produced inferior parts or improper nonfranchised service. 57 [Congress further recognized] the legal and economic considerations[,] as well as the inability to establish effective quality control measures [, which] prohibit the vehicle manufacturer from publicly identifying non-OEM equivalent parts and nonfranchised service outlets.    58 H.R.Rep. No. 93-1628, supra, at 30, JA 547 (emphasis added). 59 Thus Congress enacted a scheme whereby EPA was to shoulder responsibility for establishing the criteria for equivalency--the parts certification scheme. Congress was concerned that vehicle owners, because of the duration of the warranty, would use only original equipment parts in maintenance or repair of their motor vehicle emission systems in order to avoid disputes about the equivalence of their parts. Congress feared that these psychological and financial incentives would adversely affect the competitive position of aftermarket parts manufacturers. 59 It therefore directed EPA to establish a system whereby all parts manufacturers could, through a relatively simple and inexpensive procedure, 60 certify that their parts were equivalent to those of the vehicle manufacturer. 61 See 42 U.S.C. Sec. 7541(a)(2). This system was to become effective within two years. Id. Thus, if a vehicle owner had installed a certified aftermarket part, the vehicle manufacturer could no longer assert that the part was not equivalent and so refuse to honor the owner's warranty repair claim. But at no time did Congress indicate it wanted vehicle manufacturers to bear the burden of proving nonequivalence for parts not so certified. 62 60 To the contrary, Congress understood what a delicate task it had assumed in balancing the needs of vehicle manufacturers, parts manufacturers, and consumers. It clearly wanted to mitigate the potential anticompetitive impact of the performance warranty on parts manufacturers and, to that end, directed EPA to establish a certification scheme that would minimize the warranty's anticompetitive impacts. But this scheme also sought to provide certain quality control assurances to both vehicle manufacturers and consumers about the equivalency of independent manufacturers' parts. Thus EPA had to establish a scheme whereby parts manufacturers could establish such equivalency. 40 C.F.R. Sec. 85.2105(a)(2) (1982) undermines this balance by shifting to the vehicle manufacturers the responsibility for establishing nonequivalency, thereby making them potentially liable for aftermarket parts that have not been processed and checked through EPA's certification scheme. The regulation clearly exceeds EPA's statutory grant of authority and must be invalidated. 63