Opinion ID: 426343
Heading Depth: 4
Heading Rank: 1

Heading: Establishment of a Dispute Resolution Mechanism

Text: 65 One of the major complaints advanced by the vehicle manufacturers is the absence of any mechanism for resolving disputes between parts and vehicle manufacturers over the liability for and amount of reimbursement owed in a particular case. There is no forum for resolving such disputes and no remedy available to the vehicle manufacturers to enforce the obligations that the regulations impose upon manufacturers of certified parts. EPA contends that the parties can go into district court to resolve any reimbursement disputes and that no other forum is required. Moreover, the agency contends that the threat of decertification is a sufficient incentive for parts manufacturers to honor their reimbursement obligations. See 40 C.F.R. Sec. 85.2121(a)(1) (1982). 66 EPA's position is unconvincing. Resort to district court is costly and time-consuming; in many cases it will be cheaper for the vehicle manufacturer to bear the full cost of the performance warranty than to engage in litigation over reimbursement for a particular repair. EPA concedes that the cost of litigating in federal court may be prohibitive, but concludes that the industry can create alternative remedies as it sees fit. We disagree. If reimbursement is to be a mandatory element of the certification program, then EPA must provide some forum for resolution of reimbursement disputes. EPA suggested before this court that arbitration might be one alternative mechanism for determining and enforcing reimbursement obligations. Establishing an arbitration procedure or similar forum for resolving disputes might be a reasonable implementation of the certification program. But it is for the agency to devise the precise contours of a dispute resolution mechanism subject to judicial review. Without some such mechanism, the reimbursement scheme, along with those portions of the performance warranty regulations that require vehicle manufacturers to honor a warranty claim caused by the failure of a defective certified part, cannot be sustained. 67