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

Heading: scope of the performance warranty

Text: 24 Section 207(b) requires the vehicle manufacturers to warrant the emission control device or system of each vehicle for its full useful life. 42 U.S.C. Sec. 7541(b). However, the Act limits the meaning of the term emission control device or system after the first 24 months or 24,000 miles. Id. Accordingly, the performance warranty regulations define the warranty's scope differently for the periods before and after 24 months or 24,000 miles.
25 EPA's emission performance warranty regulations provide that for the first 24 months or 24,000 miles: 26 (a) The manufacturer's obligation under the emission performance warranty shall be to make all adjustments, repairs or replacements necessary to assure that the vehicle complies with applicable emission standards of the U.S. Environmental Protection Agency, that it will continue to comply for the remainder of its useful life (if proper maintenance and operation are continued), and that it will operate in a safe manner. The manufacturer shall bear all costs incurred as a result of the above obligation   . 27 40 C.F.R. Sec. 85.2107(a) (1982). Petitioners claim that EPA exceeded the authority Congress granted it by requiring, in this regulation, that vehicle manufacturers warrant all components affecting emissions for the first 24 months or 24,000 miles. But we think EPA's regulation is a perfectly reasonable interpretation of the statute. 28 When EPA first proposed the warranty regulations, in March 1977, it suggested that the performance warranty cover any system, assembly, device, or other component thereof which can affect emissions. 42 Fed.Reg. 26761 (May 25, 1977), JA to No. 80-1829 at 20. The aftermarket parts industry reacted adversely to this suggestion because such broad warranty coverage might well leave vehicle manufacturers with a monopoly in the aftermarket parts market. 30 Congress agreed, but rather than uniformly reducing the warranty's scope, it responded by limiting the warranty's coverage after the first 24 months or 24,000 miles. 31 29 Petitioners offer a different interpretation of the statute than does EPA. They argue that Section 207(b) places the more limited burden on manufacturers to warrant only those components that are integral, as opposed to related, to emission control. Joint brief of petitioners and intervenor at 36. They derive this interpretation from Section 207(g), which provides that 30 the owner of any motor vehicle or motor vehicle engine warranted under this section is responsible in the proper maintenance of such vehicle or engine to replace and to maintain at his expense   , such items as spark plugs, points, condensers, and any other part, item, or device related to emission control (but not designed for emission control under the terms of the last three sentences of subsection (a)(1) 32 of this section, unless such part, item, or device is covered by any warranty not mandated by this Act. 31 42 U.S.C. Sec. 7541(g). According to petitioners, the Administrator's interpretation of the warranty provision would render Section 207(g) meaningless while their interpretation would not. 32 But petitioners read Section 207(g)'s scope and intended purpose too broadly. That section is designed to deal only with who is responsible for performing scheduled maintenance--that maintenance which the vehicle manufacturer designates as necessary for the proper performance of the vehicle. 33 If an owner does not maintain his vehicle properly, the manufacturer is free, under Section 207(g), to deny emission performance warranty coverage. But if the vehicle fails an I/M test for other reasons--for example, if components mentioned in Section 207(g) fail prior to the end of their standard design life--then the performance warranty properly covers them during the first 24 months or 24,000 miles. Section 207(g) addresses only the scope of the emission warranty coverage as it relates to scheduled maintenance, and not to services performed and parts replaced under a valid warranty claim. 33 Petitioners' proposed interpretation of Section 207(b) would read the 24-month/24,000-mile limitation right out of the statute. Under petitioners' reading the vehicle manufacturers are responsible only for components integral to emission control. But these are precisely the components that are specified in Section 207(b)(2) as covered for the period after 24 months or 24,000 miles. 34 Thus, if petitioners are correct, the performance warranty would cover the same components both before and after 24 months or 24,000 miles. Such a conclusion is incompatible with congressional intent. Congress intended for the warranty coverage to differ before and after the first 24 months or 24,000 miles. The Administrator's interpretation of the statute, not petitioners', properly implements that intention.
34 Because Congress was also deeply concerned with the anticompetitive effects such broad warranty coverage might have on the aftermarket parts industry, 35 it substantially contracted the vehicle manufacturers' responsibility after the first 24 months or 24,000 miles to cover the catalytic converter, thermal reactor, or other component installed    for the sole or primary purpose of reducing vehicle emissions. 42 U.S.C. Sec. 7541(b). EPA's regulations similarly limit the manufacturers' responsibilities after the first 24 months or 24,000 miles to cover only those nonconformities resulting from the failure of components which have been installed in or on the vehicle for the sole or primary purpose of reducing vehicle emissions   . 40 C.F.R. Sec. 85.2103(a)(3) (1982). But in defining the remedy that would make this warranty effective, EPA also makes the manufacturer responsible for: 35 All other components which must be adjusted, repaired or replaced to enable a component repaired or replaced under paragraph (a)(1) of this section to perform properly. 36 40 C.F.R. Sec. 85.2107(a)(2) (1982). 36 Petitioners claim that this remedy goes beyond the remedial power Congress has authorized and assert that the net result will be to reduce, not increase, competition in sales of aftermarket repair parts. 37 We think EPA's interpretation is consistent with the statute, and therefore should be upheld. If the warranty is to mean anything, it must cover secondary parts which fail because of a failed primary part. 37 Similarly, 38 [i]t makes no sense to replace a failed part, such as a catalyst, which fails as a result of a second component, such as a spark plug, and not to replace the second component to prevent the replaced part from failing promptly for the same reason its predecessor did. 39 45 Fed.Reg. 34837 (May 22, 1980), JA 417. 38 No emission control device operates in a vacuum, and often mere replacement of a device or system will not be enough to prevent a vehicle from polluting. 39 Congress previously confronted this dilemma and left it to EPA to determine what repairs would be necessary to make the performance warranty an effective component of its comprehensive pollution control program. 40 0] While Congress wanted EPA to reduce the anticompetitive effects of the warranty after 24 months or 24,000 miles, 41 it did not intend for EPA to render the warranty obligation completely meaningless. Congress understood the distinction between the scope of the warranty and the scope of necessary repairs, 42 and EPA has properly implemented this congressional understanding by requiring all repairs necessary to make parts installed primarily for emission control work effectively. 43 40 Furthermore, EPA has responded--and we think adequately--to criticisms that this expansive repair obligation is inconsistent with the goal of reducing the anticompetitive potential of the performance warranty. First, EPA quite reasonably indicated that the lack of warranty coverage, in all likelihood, would not benefit the independent aftermarket parts industry. 44 45 Fed.Reg. 34838 (May 22, 1980), JA 418. Second, it indicated that the provision could be procompetitive if it discouraged warranty outlets from performing unnecessary repairs, and thus fraudulently increasing their sales. Id. Both responses are theoretically plausible ones, and they indicate that EPA has properly considered and responded to claims that its regulation is inconsistent with the thrust of the 1977 amendments. We therefore affirm. 45
41 At the time EPA published the performance warranty regulations, it also published, as an appendix, a list advising the public of which parts it believed were installed in or on a vehicle solely or primarily for the purpose of reducing vehicle emissions, except those components which were in general use prior to the model year 1968. 46 45 Fed.Reg. 34842, 34843 (May 22, 1980), JA 422-423. The list was explicitly advisory, 47 and neither expanded nor narrowed the legal obligations of any party. The list was merely EPA's attempt to be responsive to industry's request for guidance in the area. 48 42 Petitioners complain that EPA issued its parts list without giving prior notice and opportunity for comments to the public; accordingly, they suggest that this court vacate the parts list and remand it to EPA for a full rulemaking proceeding. But rulemaking procedures are not required here. Section 307(d)(1)(N) of the Clean Air Act states that rulemaking procedures are not necessary for rules or circumstances qualifying for exemption under Section 553(b) of the Administrative Procedure Act. 49 That section specifically exempts general statements of agency policy--like this nonbinding parts list--from normal rulemaking procedures. 50 Hence, petitioners' procedural complaint is groundless. 43 Petitioners also make general challenges to the substance and length of the parts list. But they do not assert any specific grievances, nor do they indicate how this advisory parts list burdens them in any way. 51 Since 40 C.F.R. Sec. 85.2103 (1982) continues to be the exclusive source for all warranty obligations, we can find no legal basis upon which to upset the parts list. Vehicle manufacturer obligations derive from the Act and its implementing regulations, not from this advisory list.