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    "ocrText": "The original documents are located in Box 3, folder \"Auto Emissions (1)\" of the James M.\nCannon Files at the Gerald R. Ford Presidential Library.\nCopyright Notice\nThe copyright law of the United States (Title 17, United States Code) governs the making of\nphotocopies or other reproductions of copyrighted material. Gerald Ford donated to the United\nStates of America his copyrights in all of his unpublished writings in National Archives collections.\nWorks prepared by U.S. Government employees as part of their official duties are in the public\ndomain. The copyrights to materials written by other individuals or organizations are presumed to\nremain with them. If you think any of the information displayed in the PDF is subject to a valid\ncopyright claim, please contact the Gerald R. Ford Presidential Library.\n[March 1975]\nFile\nDRAFT STATEMENT FOR RON NESSON\nOne subject which came up at the Cabinet\nMeeting yesterday which I did not mention because it\nis highly technical and I wanted to be fully briefed\non it, was the catalytic converter\nRussell Train, Chairman of the Environmental\nProtection Agency, reported to the Cabinet on the\nstandards\nlegislative background which set the which\nprompted some automobile companies to use catalytic\nconverters to meet auto emission standards. Train\nprovided the Cabinet Members with background on his\ndecision, because he has the responsibility to be\nindependent on this decision to maintain existing\nstandards.\nFORD LIBRARY if GERALD\nThe President pointed out this is an important\nlesson for all in government and that it shows what\ncan happen when the ultimate full cost of an important\ndecision is not known, and the American consumer pays\na very high price for such decisions which are made by\nCongress and the Executive Branch.\nThe President has asked for a full review of\nthe facts and implications involved. He has asked\nthe Energy Resourc Council, Economic Policy Board\nand the Domestic Council to undertake a review\nimmediately and report back to him within 10 days.\nDigitized from Box 3 of the James M. Cannon Files at the Gerald R. Ford Presidential Library\nGERALD FORD LIBRARY\nOne subject which came up at the Cabinet\nMeeting yesterday which I did not mention because it\nis highly technical and I wanted to be fully briefed\non it, was the catalytic converter.\nRussell Train, Chairman of the Environmental\nProtection Agency, reported to the Cabinet that the\ncatalytic muffler was selected by the majority of the\nautomobile industry as the most reasonable technical\nway to meet the legislated air quality standards.\nAfter an enormous investment in the catalytic system\nand installation on most 1975 models, EPA and other\nFederal agencies have documented a serious health\nhazard which I am sure all of you are familiar with.\nThe catalytic muffler produces a sulfuric acid midst\nwhich may have very adverse health implications.\nAs a result, Train announced his decisions\non the catalytic converter last week which may result\nin legislative and EPA action ultimately banning\nthe type of catalytic converter in use today.\nThe President pointed out this is an important\nlesson for all in government and that it shows what\ncan happen when the ultimate full cost of an important\ndecision is not know and the American consumer pays\na very high price for such regulatory decisions which\nare made by Congress and the Executive Branch.\n2\nThe President has asked for a full review of\nthe facts and implications of the EPA announcement\non the OUR public health, economic ince on consumer,\nTHE\nPROGRAM.\nand on energy progress: He has asked the Energy\nResource Council, Economic Policy Board, and the\nDomestic Council to undertake a review immediately\nand report back to him within 10 days.\nTHE WHITE HOUSE\nFab\nWASHINGTON\nMarch 4, 1975\nMEMORANDUM FOR THE VICE PRESIDENT\nFROM :\nCatalytic Sun Converters\nJIM CANNON\nSUBJECT :\nFORD i LIBRARY GERALD\nHere is a copy of the background paper for\nthe President before his meeting with\nRuss Train.\nAttachment\nForm lear 1008\nmin Blown Import\nTHE WHITE HOUSE\nWASHINGTON\nMarch 3, 1975\nMEETING WITH RUSSELL TRAIN\nMonday, March 3, 1975\n3:30 p.m. (30 minutes)\nOval Office\nThrough: Jim Cannon\nFrom: Mike Duval\nI. PURPOSE\nAt Russ Train's request, provide him an opportunity to\ntell you of the announcement that he plans to make on\nWednesday concerning:\nhis decision to extend or not extend 1975-76 auto\nemission standards to 1977 model cars. This is a\nregulatory decision authorized under 1974 amend-\nments to the Clean Air Act.\nhis recommendations for legislative changes with\nrespect to emission standards for 1978-81 model cars.\nThis is a policy decision.\nII. BACKGROUND, PARTICIPANTS AND PRESS PLAN\nA. Background: A copy of the decision paper and\nmemorandum from Jim Lynn which were sent to you on\nSaturday are enclosed at Tab A.\nRuss Train has been unwilling to discuss his decisions\nwith anyone on your staff. Briefly, he contends that\nthe regulatory decision is his alone to make and that\nthe policy decision on standards beyond 1977 is based\non the same facts and thus is inextricably tied with\nthe regulatory decision. Our best guess at this point,\nbased largely on press reports, is that he will\n(a) extend 1975-76 standards to 1977, (b) announce a\nmajor effort to study the sulfate issue, and (c) rec-\nommend standards for 1978-81 at some level near the\nCalifornia standards.\n- 2 -\nResolving the sulfate issue may require a change in\nyour energy related decision to recommend the modified\nCalifornia standards.\nB. Participants:\nRuss Train\nJim Lynn\nJim Cannon\nAlan Greenspan\nFrank Zarb\nStaff: Mike Duval\nC. Press Plan: No press coverage. Meeting will be announced.\nIII. TALKING POINTS\nWe strongly recommend that you simply hear Train out\nconcerning his one year extension decision (which is\nregulatory) and that you do not endorse at this time\nhis legislative recommendations on the 1978-81 standards.\n(We believe this approach is essential because members\nof the press and others already know his conclusions.\nYou may want to get additional information on the\nhealth dangers which arise from the sulphiric acid\nmist which is produced from the catalytic muffler.)\nConcerning the 1978-81 standards and sulfate issue, we\nrecommend that you ask Cannon, Lynn and Zarb to review\nthe EPA position in coordination with other interested\nagencies. They should report to you by Tuesday of\nnext week SO that you can decide on an Administration\nposition prior to Congressional Hearings which may\nstart around the middle of March.\nIf Train asks you how he should answer a question at\nhis Wednesday press conference concerning your views\non his decision, we recommend:\n1. You state that the one year extension is a regulatory\ndecision and he has obviously made up his mind on his\nown.\n2. Your mind is open on the sulfate and 1978-81 standards\nissues. You will decide on an Administration position\nafter you receive the report from Cannon, Lynn and\nZarb.\nDECISION\nTHE WHITE HOUSE\nWASHINGTON\nMarch 1, 1975\nMEMORANDUM FOR:\nTHE PRESIDENT\nTHROUGH:\nJIM CAVANAUGH\nFROM:\nMIKE DUVAL\nSUBJECT:\nTRAIN'S AUTO EMISSION ANNOUNCEMENT\nNext Wednesday Russ Train will announce his regulatory\ndecision on the one year extension of emission standards\nand EPA's recommendation to Congress for the standards\nfrom 1977 through 1981. See attached memorandum from\nJim Lynn covering the substance of this issue (TAB A).\nWhile Train has refused to discuss his position on these\nissues with White House or OMB staff, EPA officials have\nfully briefed (not for attribution) selected members of\nthe press. This is reflected in the attached Los Angeles\nTimes article which appeared Friday (TAB B) and I under-\nstand other reporters have been given even more detailed\nbriefings for their use early next week.\nTrain has apparently decided to delay for one year imposi-\ntion the strict 1977 statutory standards. He will also\npresent Congress with specific recommendations to back\noff the statutory standards through 1981 and he will peg\nthis decision on the sulfate problem. The catalytic\nmuffler emits sulfuric acid. He will announce a major\nstudy to determine how to improve the catalytic system or\ndevelop alternative technologies to prevent the creation\nof sulfuric acid.\nIf our understanding of the Train decision is accurate, he\nmay be making a proper decision considering the options\navailable to him. Imposing the California standards which\nyou proposed as a part of your energy plan would require\nuse of catalytic mufflers that emit twice as much sulfuric\n2\nacid as the catalyst that is used to meet the 1975-76\nstandards applicable outside California which Train\ncan (and apparently will) extend to 1977. Furthermore,\nthe emergence of the sulfate issue as well as the\ncontinued disagreement over both facts and judgments\nas to the best balance among fuel economy, automobile\ncost, air quality and public health objectives justifies\nreconsideration of your position.\nIt is my understanding that Train has asked to meet with\nyou on Tuesday to inform you of the announcement that he\nwill make on Wednesday.\nI do not believe you or your staff should change the sub-\nstance of Train's announcement even though it apparently\nwill go beyond the 1977 regulatory decision that he must\nmake. First, some of the press has already been informed\nfully of the EPA decision and any change will be attributed\nto the White House. Second, we would at this late date be\nforced to rely on the EPA data concerning sulfates and your\noptions for considering data from outside EPA should be\nleft open. Third, Train has tied the regulatory decision\nfor 1977 and the longer range policy issue so closely\ntogether that a review of his position on the longer\nrange issue could be perceived as an attempt to influence\nhis regulatory decision.\nAlternatives, Recommendation, and Decision\n1. Meet with Train per his request. This\nmay result in press speculation (with\nhelp from the EPA staff) that you have\nendorsed Train's recommendations.\nPleant\n2. Have Train meet jointly with you and your\nstaff (Zarb, Lynn, Domestic Council, etc.)\n3. Have Train meet with your staff.\n4. Avoid any meeting with Train prior to his\nWednesday announcement. Direct your staff\nto prepare immediately a decision paper\nfor you on the entire auto emissions stand-\nards issue.\nI recommend alternative 4.\nEXECUTIVE OFFICE OF THE PRESIDENT\nOFFICE OF MANAGEMENT AND BUDGET\nINFORMATION\nWASHINGTON, D.C. 20503\nMAR 1 1975\nMEMORANDUM FOR THE PRESIDENT\nFROM:\nJAMES T. LYNN\nSUBJECT:\nPending EPA Announcement on Auto Emission Standards\n(An Energy Independence Act Item)\nISSUE: Russ Train will announce the emission standards for 1977\nmodel year cars by Wednesday, March 5. This is a regulatory\ndecision. On March 5, Russ also plans to announce his recommenda-\ntions for auto emission limitations for the five model years 1977\nthru 1981. This is a policy recommendation he was asked to make\nby the Energy Resources Council.\nRuss has indicated that he plans to discuss his decisions with\nyou before making his announcement but neither he nor his staff\nnave indicated what decisions are likely. He should not engage\nin off the record discussion with anyone on his planned regulatory\ndecision before it is made. However, Russ also states that he\nshould not discuss his recommendation in respect to five-year\nauto emissions levels with other agencies prior to making a\npublic announcement. He argues that the two issues cannot be\nseparated since both decisions are in part affected by the same\nconsiderations.\nThis memorandum:\nSummarizes recent information which shows that cars\nFORD is 9ERALD LIBRARY\nequipped with catalytic converters could pose a\nserious threat to public health.\nConcludes that your objective of improving automobile\nfuel economy by 40% is at least jeopardized, if not\nimpossible, if catalytic coverters are not used on\nautomobiles, and the California Standards dre maintained.\n2\nBACKGROUND: In return for automobile manufacturers' commitment to\nincrease fuel economy 40 percent by 1980, you proposed in your Energy\nIndependence Act nationwide adoption of the current \"California\"\nemission standards by hydrocarbons and carbon monoxide in 1977.\nAuto emission standards by model year are displayed in the last page\nof the attachment.\nEPA held public hearings on the 1977 regulatory decision and\nalternative emission levels for 1977-81 model years. Information\ngathered during the hearings highlighted a major potential health\nproblem -- that automobiles equipped with catalytic converters emit\nsulfuric acid mist. Since catalysts improve fuel economy by allowing\nthe removal of pollution control equipment from engines, their\ndiscontinuance will result in a near term drop in auto fuel economy\nand the 40 percent improvement in fuel economy by 1980 will be\njeopardized.\nTrain's policy conclusion on five-year emission levels may not agree\nwith the legislative position you have taken on auto emission\nstandards for 1977 thru 1981.\nINTERAGENCY REVIEW: In response to this emerging problem, OMB\nconducted an interagency review of this problem based on EPA's public\nhearing record and other published data. The results of this review\nare summarized in the following. Additional information is provided\nin the attachment.\nAreas of Agreement:\nThere is unanimous scientific agreement that emissions of\nsulfuric acid mist are detrimental to public health, resulting\nin increased deaths, aggravation of asthma, heart disease, lung\ndisease, eye irritations and discomforts.\nThere is also agreement that the adoption of the California\nstandards nationwide will force the manufacturers to employ the\ntype of catalyst currently used in California, and that these\nemit nearly twice as much sulfuric acid as the ones used to\nmeet the 1975 Federal interim standards under current law.\nAreas of Disagreement: The areas of disagreement lie in the\nconcentration levels needed to pose a health problem and the\nnumber of years before concentrations reach that level.\nThe data summarized in the attachment shows that under worst\nconditions and using \"California\" catalysts, serious health\nproblems could occur in 1977. With current catalysts, serious\nhealth problems could occur between 1979 and 1981 depending on\nweather. However, there is strong disagreement on the\nprobability that problems will actually occur on those dates\nbecause of scarcity of data and because of other assumptions\nused to derive them.\n3\nDr. Ted Cooper, Acting Assistant Secretary for Health in HEW, has\nwritten to Train and stated, \"I am obligated to observe that these\ncatalytic systems pose a significant public health hazard and that\nthe hazard substantially outweighs the potential health benefits\nbased on the projected control of hydrocarbons, nitrogen oxides\nand carbon monoxide by the catalytic system.\"\nFEA and Commerce staff believe that it is necessary to study the\nissue further (about two more model years) before significant action\ncan be taken.\nDOT staff believe from continued reductions in CO through the use\nof the catalyst will continue to outweigh risks associated with\nemissions of sulfuric acid.\nEPA staff monitored the interagency review but reserved their advice\nfor the Administrator's decision process. - Therefore EPA staff\nviews, as well as the conclusion of the Administrator, are unknown\nat this time.\nOptions: In the short run (pre-1980), there are several options\navailable to significantly reduce emissions of sulfuric acid, but\nall have serious drawbacks (see attachment). Primarily the options\nare:\nto re-blond gasoline to achieve low sulfur content\nto force refiners to remove the sulfur from gasoline at the\nGERALD FORD\nrefinery stage\nto retain the 1975 interim standards\nto ban the use of catalysts\nThe re-blending of gasoline will impose a large allocation problem\non refiners, and desulfurization will impose heavy capital requirements\nat the expense of expanding domestic refining capacity. The retention\nof the 1975 standards will postpone the problem, but only for a\ncouple of years and require a change in proposed legislation. A\nban on catalysts would increase fuel consumption by 10% over the\nnext few years and undermine several billions of dollars invested\nby the auto industry.\nIn the long run (1980-1985), the development of engines which do not\nrequire a catalytic converter is probable, if incentives are given\nto the manufacturers to drop the catalyst as a control technology.\nATTACHMENT\nBackground\nGasoline contains sulfur which, after combustion, is released as sulfur\ndioxide. In the process of removing other pollutants, the catalytic\nconverter changes some of the sulfur dioxide into sulfuric acid mist.\nThe system generally used to meet the 1975 interim national standards\nproduces less sulfuric acid than the system generally used to meet the\nmore stringent 1975 California emission standards, since the system\nused to meet the California standards utilizes more oxygen. There are\nseveral non-catalyst technologies which meet either set of emission\nstandards but produce no sulfuric acid. However, there is limited\nproduction potential for using these non-catalytic systems by the\n1977 model year, and the companies are very reluctant to commit them-\nselves to such technologies until uncertainties about the NOx standard\nare resolved.\nScope of Problem\nThe data presented in the table below répresent the best estimates that\ncan be made based upon available information. There is no agreement on\nthe probability that problems will actually occur in a specific year\nbecause of uncertainties in the data.\nModel Year in which Sulfuric Acid\ncould pose a serious health problem\nAverage Meteorological Adverse Meteorological\nStandard\nConditions\nConditions 2/\n1975 Interim Standards\n1981\n1979\n1975 California Standards\nIn 49 States\n1979\n1977\nIn California 3/\n1978\n1977\nGERALD FORD LIBRARY\n1/ The data also assume that there are no emissions of sulfates from\nstationary sources, and that 70 percent and 90 percent of the fleet\nin 1975 and 1976 respectively will utilize catalysts.\n2/ Adverse meteorological conditions would occur in large metropolitan\nareas on an average of 6-7 days a year.\n3/ The dates for reaching a critical problem are earlier in California\nthan the remaining 49 States because California utilizes higher\nsulfur gasoline.\nOptions\nThe following short-term actions are available to minimize the sulfate\nproblem:\n1. Gasoline Blending -- Catalyst equipped vehicles could be\nprovided with lead-free and low-sulfur fuel, which would\nreduce emissions of sulfuric acid. However, both EPA\nand the refiners have indicated that this could not be\ndone in sufficient quantities to meet the needs of all\ncatalyst equipped vehicles beyond 1977 or 1978. EPA is\nexploring this option with FEA.\n2. Desulfurization of Oil -- Though technically possible at this\ntime, this process would require a capital investment of\n$2 to $4 billion at a time when refiners are attempting to\nexpand domestic capacity. It would also create an increase\nin the price of gasoline by 1 to 2 cents per gallon and\nimpose an increase in crude oil consumption due to\nadditional refining by .5 percent.\n3. Retention of the 1975 National Interim Standards -- A\nretention of the 1975 Interim Standards would allow the\ncontinued use of the catalytic system employed on 1975\ncars and would produce 50 percent less sulfuric acid than\ncars meeting the California standards. However, as an\nincreasingly larger number of cars become equipped with\ncatalysts, even remaining at the 1975 Interim Standards\nwill eventually create a threat to public health unless\nother corrective actions are taken.\n4. Prohibit the Catalyst -- EPA could prohibit the catalyst\nbased upon health concerns. This could increase fuel\nconsumption for the next 2 to 4 years by 10 percent if the\n1975 Interim Standards are to be met with a non-catalytic\ntechnology.\n5. Take No Action -- This would leave the decision to the Congress.\nThey are committed to addressing the relationship between auto\nemissions and fuel economy in the current session. If they\nchoose to adopt your proposed emission standards, or continue\nthe implementation of the standards currently set forth in the\nClean Air Act, then they may be counting on the use of new\ntechnologies after 1980 to solve the sulfuric acid problem,\nparticularly if the statutory NOx limit is relaxed.\nIn the long run, the most promising methods for eliminating sulfuric\nacid emission from automobiles are the use of engines which meet\nemission standards without the use of a catalyst (e.g., the lean-burn\nor stratified charge engines) or fuel desulfurization. The broad\nutilization of non-catalytic systems for mass production could be\nachieved between 1980 and 1985, if incentives (such as relaxing the\nNOx standard or setting a sulfate emission limit for 1980) are given\nto the manufacturers to drop the catalyst as a control technology.\nAuto Emission Standards\nClean Air Act amendments signed in June 1974, set auto emission\nstandards for 1976 model year cars and authorized the EPA Administrator\nto extend those levels for one additional model year (1977) or to\nset some level between those authorized for 1976 and the statutory\nlevels for 1977.\nIn December, the Energy Resources Council recommended and you approved\nan Administration position calling for standards of .9 (hydrocarbons),\n9.0 (carbon monoxide), and 3.1 (nitrogen oxides) for model years\n1977-81 -- as part of an agreement with major auto makers that they\nachieve a 40 percent increase in average fuel economy by the model\nyear.\nAuto Emission Standards\n(Grams per mile)\nHC\nCO\nNO\n1975 (Interim) & 1976\n1.5\n15.0\n3.1\n1977 statutory\n.41\n3.4\n2.0\n1975 California\n.9\n9.0\n2.0\n1977-81 Administration\nRecommendation (Energy\nIndependence Act)\n.9\n9.0\n3.1\nSome items in this folder were not digitized because it contains copyrighted\nmaterials. Please contact the Gerald R. Ford Presidential Library for access to\nthese materials.\n3.FORD\n&\n&\n\\\nGERALD\n1817\nLIBRARY\n&\n/\n/\n/\n,\nLOS ANGELES TIMES\nFriday Morning, February 28, 1975\nAuto Makers to Be Given\nYear's Delay on Emissions\nBY DAN FISHER\nFORD is LIBRARY GERALD\nTimes Auto Writer\nRussell Train, administrator of the\nUltimately, it is Congress which\nurging that he endorse regulations\nU.S. Environmental Protection Agen-\nmust act on any longer-range (1978\neven less stringent than the current\ncy, will announce Monday- that he\nand beyond) changes in auto emission\nCalifornia requirements.\nwill grant auto makers an additional\nstandards. But Train's recommenda-\n\"It's a tough decision with enormous\nyear to meet antismog standards now\ntions are expected to carry considera-\nimplications,\" one high ranking agen-\nscheduled to go into effect on 1977\nble weight with liberal congressmen\ncy official said.\nmodel cars, it was learned Thursday.\nwho might not be SO moved by Mr.\nA major question involves the cata-\nHe will also, either then or at con-\nFord's proposals\nlytic. converters which the auto in-\ngressional hearings within the next\ndustry uses on most 1975 model cars\nTrain's decisions could also put Gov.\nthree weeks, endorse legislation to\nsold nationally and on all cars sold in\nBrown's Administration in the posi-\nslow down the existing schedule for\nCalifornia. The catalysts cause those\ntion of either contradicting EPA's as-\neven more stringent auto emission\nsessment of, the health situation or\ncars to emit more sulfates than they\nstandards during the following sever-\notherwise would.\nordering the first rollback of Califor-\n------ d to cournos close to\nSome EPA researchers contend\n70\nEPA\nRUSS TRAIN'S ANNOUNCEMENTS ON AUTO EMISSION\nST ANDARDS ( 2PM, Wednesday, March 5)\nQuestion\nFORD i LIBRARY GERALD\n15 expected to\nRuss Train has announced his decisions and recommendations to\nCongress on auto emission standards which amount to significant\ndelays in current requirements. We understand that he met with the\nPresident on this subject on Monday. Do these delays in effect reflect\nwhat the President told Mr. Train to do?\nAnswer\nEPA\nhis\nMr. Train asked for a meeting with the President on Monday for the\npurpose of informing the President of announcement on auto emission\nstandards that Mr. Train planned to make on Wednesday. The request\nwas\ngranted. During the meeting, Mr. Train informed the President\ntoday\nof the decisions that he had made and would will announce concerning\nAuto emission standards for 1977 model cars which he is authorized\nto set under 1974 amendments to the Clean Air Act. This is a\nregulatory decision.\nAuto emission standards that he recommends for 1978-81 model\nyear cars. This is a policy recommendation and, to become\neffective, would require Congressional action to amend the\nclean Air Act.\nMr. Train merely informed the President of his decisions did not\nask for approval of his decisions and, certainly, no attempt was made to\ninfluence either his regulatory decision or his legislative recommendations.\nFollow-up Question\nMr. Train's decisions on emission standards for 1977 and 1978-81 are\ndifferent from those recommended by the President to the Congress in his\nproposed Energy Independence Act. Do they replace the President's\nrecommendations to Congress?\nAnswer\n- EPA's public hearings and were\nNot necessarily. The decisions and legislative recommendations announced\nby Mr. Train were.not reviewed or discussed with other agencies that have\nan interest in inatter prior to Mr. Train's decisions and announcement. The\nPresident has indicated that he would like to have the views of other agencies\nbefore he decides how he might modify his legislative proposal.\nALL OTHER QUESTIONS ON MEANING OR IMPLICATION OF TRAIN'S\nDECISION SHOULD BE REFERRED TO EPA.\nDRAFT\nM. Duval (3/11/75)\nTALKING POINTS - CABINET MEETING DISCUSSION ON THE CATALYTIC CONVERTER\nI think that the most important lesson for all of us, from\nthe experience we have had with the catalytic converter, is\nthat we should exercise far greater care when we propose\nlegislation and take regulatory and Executive action. It is\nobvious that the American public will pay a very high price\nfor the decisions made by the Congress and by the Executive\nFORD LIBRARY H 0 There\nBranch concerning these automobile polution regulations. I\nthink it is fair to say that if we had known the full cost\nwhich ultimately will flow from these actions prior to making\nthe regulatory decisions which locked us onto this course,\nthe specific legislation and regulatory action might have been\nvery different.\nI have a very basic philosophy concerning my approach to these\nkinds of regulatory actions and to legislation which sets them\nin motion. It can be summed up by the phrase: \"Truth in Govern-\nment.\" By this, I mean that we should level with the American\npeople and tell them the true price of government actions and\nwho's going to pay for it. This is the principle that I\nfollowed with my Fiscal 1976 Budget and in my State of the\nUnion Address and subsequent legislation. I believe in laying\nout the true costs of my actions. For example, the price tag\nof my energy proposals is right out there for everyone to see.\nIt's $30 billion a year and this will result in a one-time\n2% increase in the CPI. Contrast this clearly-defined price\ntag with the Democrats' so-called Pastore-Wright plan. Although\nmy energy and economic advisers think that the total price tag\nof their plan will equal or exceed mine, this will show up in\nhidden costs which will ultimately result from quotas and\nallocation and further government intrusion into the market-\nplace. In short, while their proposal is politically attractive\nbecause it doesn't appear that anyone will have to pay the bill,\nI don't think government decisions should be made this way. I\nthink the people should know the true cost of the programs\nproposed here in Washington and, importantly, who's going to\npay the bill and when.\nI have taken some steps myself to implement this \"Truth in\nGovernment\" philosophy. In addition to the State of the Union\nand Budget Messages, I have signed an Executive Order requiring\nthat an Inflation Impact Statement be prepared for every govern-\nment action under my control. If an honest Inflation Impact\nStatement had been done when the initial decisions were made\nconcerning the catalytic converter, I suspect we would not be\nfaced with the problem confronting us today. Of course, it's\nnot just the environmental regulations which raise this issue.\nThere are literally thousands of examples, but I recall speci-\nfically the problem we had with the truck brake regulation\nissued by the Department of Transportation before you, Bill\n(Coleman), came on board. I had to make a decision on\nNew Year's Eve out in Vail to let that regulation go forward\nbecause we were so far down the road that, to hold it up\nwould have imposed economic hardship on the industries which\nhad geared up to implement the Federal rule. As a result,\nwe are increasing the cost of trucks and trailers 5-7% and,\nI now understand, this regulation may force many little\ncompanies out of business. I have no doubt that many of\nthe energy regulations create the same kind of dislocations.\nThe point here is that each one of you must control the\nactions of your departments and agencies to insure that the\nfull cost of every proposal and regulatory action you take\nis laid out clearly. I think it is also important that this\nbe done in time so that a real choice can be made between\ngoing forward or not. Too often, the economic consequences\nof the regulation only come to light so late in the process\nthat there really isn't any opportunity to pull back. The\npressures to go forward come from the legislation itself,\nfrom law suits which have been brought by proponents on one\nside or the other, from industry who will be benefitted or\nhurt by the proposed rule and, often from within the agency\nitself when the Federal officials in charge of implementation\nbecome advocates for one course of action or another.\nAs each of you makes the day-to-day regulatory and policy\ndecisions, I want you to think through very carefully the\nimpact of those decisions a year from now, five years from\nnow, ten years from now. Think through what will happen if\nthose policies and programs are to be implemented by some\nfuture administration which might not be as conscious as we\nare of preserving the freedom of individual choice and the\nmarket mechanism. One discipline that should assist you is\nto ask three questions each time you face an important govern-\nmental decision:\n1. What is the problem -- specifically -- that I am being\nasked to solve?\n2. Does the proposed solution in fact solve the problem?\n3. What additional problems will this government \"solution\"\ncreate? It is this last step that we so very often fail\nto take.\nOf course, concerning the catalytic converter, we need to\nmake a decision concerning my proposed legislation which is\nnow pending before Congress recommending that we adopt a\nmodified California standard. I submitted this legislation\nbecause it was part of the compromise worked out whereby the\nautomobile manufacturers could achieve a 40% increase in auto\nefficiency by 1979, without a large increase in the cost of\ncars and with reasonable environmental standards still intact.\nFORD LIERARY\nIt is clear from the decisions and conclusions reached by\nRuss Train, that we must reconsider my legislative proposal.\nWe can't dillydally around on this one because I want the\nCongress to move quickly on my entire energy plan, but now\none part of it may no longer be valid. Accordingly, I want\nto be able to review my decision on the long-range automobile\npolution standards and submit new legislation, if necessary,\nprior to the Easter recess. I understand that Frank Zarb\nand Russ Train already have studies underway and that they\nare coordinating this with the Department of Transportation.\nI'd like the Domestic Council to follow up on this so that\nI can have the views of all the interested agencies and\ndepartments and final recommendations very quickly.\nGERALD R.FORD JERANY\nfile\nTHE WHITE HOUSE\nWASHINGTON\nMarch 19, 1975\nTO:\nJIM CANNON\nJIM CAVANAUGH\nDICK DUNHAM\nMIKE DUVAL\nFROM:\nGlenn Mlsm Schleede\nGERALD FORD LIBRARY\nSUBJECT:\nAuto Emissions - Fuel Economy - Catalyst\nThis is just to give you an update on activities that are underway or\nbeing planned by others on the auto emission issue:\n1.\nOMB held its first interagency meeting yesterday with the objective\nof developing a new Administration legislative proposal on auto\nemissions. Agenda at Tab A.\n-\nAgencies represented included EPA, FEA, HEW, Commerce,\nTreasury, DOT, CEQ and Science Adviser.\n-\nPapers are due by the next meeting (April 1) which look at the\nproblem from four viewpoints: air quality, health, fuel economy\nand economic impact.\n-\nThis effort is the best thing going at present to try to bring out the\ndata needed for an intelligent decision. Problems with it are:\nAgency representatives are somewhat skeptical of its legitimacy.\nThere has been no formal communication to the heads of the\nagencies. The meeting was merely called by an OMB staffer\nafter Jim Lynn okayed the idea.\nIt's a part time activity for the agency staff people involved.\nThe group will have to rely for balance only on two OMB\nstaffers and one part-timer from the Science Adviser's office.\n2.\nEPA Assistant Administrator Strelow, FEA's Sant and DOT Assistant\nSecretary Stoney decided yesterday to call public hearings to get\nadditional fuel economy data from the auto companies. Further\nchecking indicates that: (a) no hearings have been set, (b) FEA and\nDOT are proceeding with \"technical meetings\" with all the auto\ncompanies today and tomorrow to get fuel economy information\n(assuming alternative emissions standards and the possibility of\na 1979 sulfate standard). The plan is to have public hearings later\nto get any new information on the record. This FEA-DOT effort\nis now supposed to feed into the OMB effort as well as to the Zarb\neffort discussed below.\n- 2 -\n3.\nFrank Zarb supposedly is committed to having a meeting with auto\ncompanies within ten days of the last Cabinet meeting to try to\ncome up with a new fuel economy agreement. This is an unrealistic\ntarget since there can't be a fuel economy agreement independent\nof a position of emission standards. Whether Zarb agrees with this\nis unclear.\nFORD\nTALKING POINTS - MEETING WITH SECRETARY COLEMAN\nThe Depart LIBRAR,\nDOT Regulatory and Administrative Philosophy.\nment exercises tremendous power over State and sub-State\ngovernments, as well as the private sector.\nEXAMPLE: EPA's catalytic converter\nMany of DOT's regulations impose tremendous costs on con-\nsumers and can have major impacts on the profitability of\nbusinesses.\nEXAMPLE: DOT's truck anti-skid brake regulations will\nraise the cost of trucks and trailers 5-7%. (This is\nunder review in coordination with the Council on Wage\nand Price Stability, but the rule was adopted on\nJanuary 1. The Domestic Council staff is monitoring\nthe review.)\nI have attempted to do something about this problem,\ngovernment-wide, by requiring an Inflation Impact State-\nment be prepared before any Federal regulation is issued.\nI am quite serious about this, and I want the analysis to\nbe honest and done in time so that we can make a decision\nnot to go forward if the economic costs outweigh the benefits.\nAnother area in which your Department directly affects the\nlives of countless people concerns the decisions which you\nare required by statute to make concerning whether to go\nforward with various public works projects. This ranges\nfrom approval of highways and bridge replacement to the\nbuilding of airports and transit systems.\nI believe that we need to strike a far better balance\nbetween various national objectives, including developing\nenergy facilities and other job-producing activities, versus\nour desire to protect the environment. Although many of the\nenvironmental laws which passed in the early '70s contain\ngoals and objectives which I strongly endorse, I think the\ndeck has become stacked against the forces for progress\nand development. It is far easier to stop a project than\nto build it.\nCOMMENT: We recommend that you do not specifically\nrefer to I-66 in your discussion of the growth/no-\ngrowth issue.\nBankruptcies. One of the major problems that your Depart-\nment faces is the bankruptcy and pending bankruptcy of\nseveral major transportation companies. I understand you\nare reviewing the progress of the United States Railway\nAssociation and its Preliminary System Plan to provide\n2\nrail service in the 17 States of the Northeast and\nMidwest. The saga of the Penn Central bankruptcy is\nproviding an excellent example of what happens when\ngovernment neglect and over-regulation forces a major\nindustry out of business. There is no doubt that the\nFederal taxpayer is going to pay a heavy price.\nWe have received, here at the White House, over 300\ncalls requesting financial assistance for the Rock Island\nRailroad, which I understand has just filed for bankruptcy.\nI support your position of declining to support direct\nFederal financial help but offering to work with the\nICC and others to continue to provide rail service and\ndo everything else possible to aid the employees of the\ncompany.\nThat same kind of sensitivity will be needed as we con-\ntinue to work on the problems of Pan American and other\nairlines that are in trouble. I want to be certain that\nwe show sympathy and compassion for the owners and employees\nof these companies in financial difficulty, but at the same\ntime, do everything possible to limit Federal financial\nexposure except in the most extreme cases.\nLegislation. On Monday, I transmitted to the Congress the\naviation legislation, which is a good package. I appreciate\nyour memo on this subject and the compromises you were able\nto work out with the Congress.\nI understand that the Rail Transportation Improvement Act\nwill be ready for transmission, probably by Friday of this\nweek. This is the first piece of my overall program to\nseek fundamental reform of the regulatory practices which\ngovern the economics of the entire transportation industry.\nI hope you will move quickly on other legislative proposals\nconcerning motor carriers and aviation.\nThe Highway bill is also nearly ready for submission.\nThe Governors I have recently conferred with are anxious\nto support our proposal of allowing the States to pick up\n1¢ of the gas tax. However, the proposal to extend the\nTrust Fund only for the Interstate System will be very\ncontroversial. You will need to work closely with Bob\nJones and Bill Harsha on the House Public Works Committee\nand Jennings Randolph and Howard Baker in the Senate.\nConcerning mass transit, I know that there will be pressure\nfor new legislation, especially in light of the energy prob-\nlem. I worked very hard in the closing days of the 93rd\nCongress to get the Mass Transit Act passed. That Act will\nFORDPROVIDE $11.8 billion over the next six years for mass\n&\nSERVICE\nLIBRARY\n3\ntransit, and this represents a major increase in Federal\nfunding. I do not believe we need more funds but, rather,\nthat Act must be administered vigorously, but carefully,\nby your Department. We must not get into another situa-\ntion like the Washington Metro system which results in\nmassive overruns and a commitment of more taxpayer\ndollars to one city than we possibly can afford.\nEXAMPLE: Metro was originally expected to cost\n$2.3 billion and the current estimate is $4.5\nbillion to complete the entire system.\nFORD LIBRARY & GERALD\nTHE WHITE HOUSE\nWASHINGTON\nApril 3, 1975\nMEMORANDUM FOR:\nJim Cannon\nFORD i LIBRARY 078835\nFROM:\nDick Dunham\nJim Cavanaugh\nL\nSUBJECT:\nPossible Approach for Dealing with\nAuto Emission-Fuel Economy Legislation\nThe intent of Glenn Schleede's proposal appears\nto have been generated by the Senate Public Works\nCommittee staff. I suspect that their motives are to\ndelay resolution of the issue for a year or two.\nIt is our recommendation that, since one of the\nelements of the decision relating to the catalytic\nconverter has been resolved and there are several\npending studies, including OMB's study and Dr. Marks'\nstudy, we do not encourage the Senate Public Works\nstaff people at this stage. Therefore, we recommend\nthat you disapprove Glenn Schleede's recommendation.\nDich and the\nI are with your\nrecomedation.\nPlease inform Auke\nand Glen\nRiach\nJenn\nDOMESTIC COUNCIL CLEARANCE SHEET\nDATE: April 2, 1975\nJMC action required by: Before leaving\nfor Calif.\nTO:\nJIM CANNON\nVIA:\nDICK DUNHAM\nFORD & LIBRARY GERALD\nJIM CAVANAUGH\nFROM:\nJenn Glenn Schleede\nSUBJECT:\nPossible Approach for dealing with auto\nemission-fuel economy legislation\nCOMMENTS:\nI discussed this with Mike Duval by phone. He supports\nthe idea of continuing the discussions with Barry Meyer\nand specifically supports my proposals to (a) review\nthis with Jack Marsh's staff as soon as possible, and\n(b) have me meet as soon as possible with Barry Meyer,\nBill Kendall or Pat O'Donnell and Public Works Committee\nminority staffer Bailey Guard. I' dhike to set that up\nfor Tomorrow or Friday.\nRETURN TO:\nMaterial has been:\nSigned and forwarded\nChanged and signed (copy attached)\nReturned per our conversation\nNoted\nJim Cannon\nTHE WHITE HOUSE\nWASHINGTON\nApril 2, 1975\nMEMORANDUM FOR:\nJIM CANNON\nFROM:\nCLEMN SCHLEEDE\nSUBJECT:\nPossible Approach for Dealing with\nAuto Emission and Fuel Economy\nLegislation\nLast night, a good acquaintance of mine (Dick Grundy) who works\nfor Senate Public Works Committee Chairman Jennings Randolph\nput forth informally (on behalf of Committee Counsel Barry\nMeyer) the outlines of a possible plan for Administration-\nSenate Public Works Committee cooperation that would lead to\nlegislation by early August on the auto emission-fuel economy\nissue. I believe the plan approach has enough merit to warrant\nfurther exploration -- along the lines outlined below.\nThis memorandum is to:\n- Describe the situation on the hill as seen by Grundy.\n- Outline the basic approach he and Meyer are suggesting.\n- Bring you up to date on the status of executive branch\ndeliberations and schedule on auto emissions.\n- Suggest next steps for your consideration.\nIf we are to pursue the approach, we would have to proceed\nquickly.\nThe Congressional Situation\nTiming for Congressional Action. Contrary to earlier\nassessments, the committees responsible for the Clean Air\nAct (House Commerce, Senate Public Works) are counting on\nfinal Congressional action on auto emissions legislation by\nearly August. This apparently will be in time for auto\ncompanies to make decisions on 1977 models.\nHouse Commerce Committee. Rogers' and Dingell's subcommittees\nare marking up Clean Air Act and fuel economy bills and\ncurrently plan to report something out -- at least on Clean\nAir by next Wednesday (April 9). Apparently the objective\nis to have final House action on a bill before the Senate\nPublic Works Committee begins detailed hearings on auto\nemissions.\n- 2 -\nSenate Commerce-Fuel Economy. A bill probably will be\nreported in the next few weeks establishing some kind of\nmandatory fuel economy standards. Public Works has an\nagreement that any such bill will be referred to them\nbefore going to the floor. Public Works intends to make\nsure that the auto emissions and fuel economy requirements\nare consistent and believes it still has the clout to do SO.\nSenate Public Works. According to Grundy:\nHearings on Clean Air legislation will begin about\nApril 17, first covering all issues and then zeroing\nin on auto emissions in early May.\nAll members are very conscious of the whole automobile\ndilemma -- made critical by the catalytic converter\nproblem -- and recognized that they must act quickly,\nperhaps even to avoid losing jurisdiction.\nSenator Muskie, who has dominated all previous Senate\nactions on Clean Air:\nWill be amenable to an approach which avoid public\nconfrontation with the Administration or with\nother critics of his tough stand on auto emissions.\nIs concerned about the impact of this issue on his\nreelection chances in 1976.\nNow can command no more than 5 or 6 votes on the\nCommittee.\nSenator Baker will be anxious to find a political way\nout of the current situation.\nMost members recognize that:\nAuto emissions, fuel economy, auto sales, auto\nindustry employment, etc., are inextricably tied\ntogether.\nNeither the Committee nor the Administration will\nhave much public credibility on the auto emissions\nissue.\nThere is a strong need to get alternatives and\nimpacts of each laid out in a way that they can be\nunderstood.\nPossible Administration-Committee Cooperation\nBasic Approach. The basic approach outlined by Grundy is\nquite simple though not flawless. It calls for:\nAdministration-Public Works Committee leadership\n(Randolph, Baker, Muskie and Buckley) agreement that:\nNeither side will take a public position on the\nauto emissions standards at this time.\n- 3 -\nHearings held by the Committee would focus on\nidentification of realistic alternatives and\ncollecting information on the implication of\neach.\nTurning information over to the National Academy\nof Sciences for compilation of a single \"white\npaper\" which lays out the facts that are available\nbut does not make recommendations. *\nOnce the Academy reported, all parties could take\npositions on the answer they thought best and the\nmatter would be resolved in the normal legislative\nprocess.\nReaching Committee-Administration Agreement on Approach.\nSeveral steps are envisioned, including:\nAn early meeting with Barry Meyer to round out the\nproposal.\nA broader meeting involving other staff from the\nCommittee and key agencies (EPA, FEA, DOT).\nSERAED\nIf it appears desirable, a meeting between Zarb and\nTrain with Randolph and other leaders.\nA meeting of the Committee leaders with the President\nand issuance of a public statement describing the\napproach that will be followed. (This step would be\ndesired by the Committee but may prove either\nunnecessary or undesirable to the Administration.)\nAdvantages of the Approach. If it can be worked out, I\nbelieve this approach would have the distinct advantage\nof keeping open some auto emission standards options (e.g.,\nmaintaining 1975-76 standards for the next five years) which\n*\nThe justification for Academy involvement would be: (a) lack\nof credibility by either the Congress or the Administration\non the issue, (b) the Academy has done several detailed\nstudies in this area over the past 18 months, and (c) there\nis no one else to turn to. There are problems with the\nAcademy proposal that we would need to address since it,\ntoo, has weaknesses and lacks credibility in some quarters\non this issue. It has little capability to deal with the\neconomics of the situation or prepare a paper that will be\nunderstandable by the Congress and the public. One solution\nmight be to supplement the Academy's involvement with help\nfrom other sources.\n- 4 -\nmake great sense from a cost benefit point of view but\nGERALD FORD LIBRARY\nwhich could become lost as the Administration or the\nCommittee try to outdo each other in the political arena\nbefore the facts are laid out.\nDisadvantages of the Approach. On the other hand, it\nsounds pretty clear that the Committee is looking for a\npolitically acceptably way out on the auto emissions issue\nand the Committee might find it to their advantage to\nabrogate any kind of agreement that was worked out.\nStatus of Executive Branch Activities\nInteragency Review. The OMB-led interagency review is\nproceeding on schedule with a draft OMB staff option\npaper expected on Friday, April 4 and a final paper on\nMonday, April 7. This paper should lay out the air\nquality, public health, fuel economy, technological\noptions and economic impact of six alternative sets of\nauto emissions standards. OMB expects to zero in on\nthe issue of:\nThe 1977 NOX standards -- 3.1 VS. 2.0 grams per mile.\nThe 1978-81 standards for HC, CO, NOX and sulfates --\nthe last of which could determine the future of the\ncatalyst.\nYesterday's meeting of the group demonstrated the lack of\nboth facts and agreement on the best option.\nERC Review. Current plans for the OMB-prepared option\npaper to go to the Executive Committee of the ERC for\nreview and recommendation to the President by April 11.\nSuggested Next Steps\nFor your consideration, I suggest that we proceed as follows:\nDiscuss the matter promptly with Jack Marsh's staff and\nFrank Zarb.\nSet up a meeting with Barry Meyer and the Senior Minority\nCommittee staffer and Bill Kendall or Pat O'Donnell to\n(a) make sure that the proposal from Grundy is genuine,\n(b) round out the basic approach, and (c) make sure that\nMeyer can deliver the Committee leadership's support for\nthe approach if we can agree at the staff level.\nImmediately thereafter bring in Russ Train and others\nconcerned on the discussion.\nApril 7, 1975\nMEMORANDUM\nSubject: NSF Study for the Domestic Council of Auto Emission Standards\nWe understand that the Domestic Council has commissioned the National\nScience Foundation to perform a study of automobile emission standards.\nIn addition to apparently ignoring the existing, objective sources of\ninformation and expertise within the government on this subject, such as\nthe Bartlesville Energy Research Center of the Energy Research and Development\nAdministration, any study by the National Science Foundation will undoubtedly\nsuffer from biases engendered by an excessively theoretical and academic\norientation; i.e. the people involved are unlikely to have any practical\nexperience in the problems of trying to implement from an engineering and\nbusiness point-of-view the various solutions to be considered. Since there\nare good reasons for not having the study done by industry, we suggest\nthat an Advisory Committee to the Domestic Council be appointed with\nrepresentatives from the academic, automotive and refining areas. To\nsome extent such a Committee would have a parallel in the \"Blue Ribbon\nPanels\" of the Magruder Study of Technological Opportunities.\nWe can suggest some possible members of such a Committee, if desired.\nHenry Bellmon\nFORD LIBRARY & GERALD"
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