text:
    GENERAL INSTRUMENT CORPORATION, Appellant, v. The UNITED STATES, Appellee.
    Customs Appeal No. 5480.
    United States Court of Customs and Patent Appeals.
    July 12, 1973.

      Eugene L. Stewart, Lincoln & Stewart, Washington, D. C., attys. of record, for appellant.
    Harlington Wood, Jr., Asst. Atty. Gen., Andrew P. Vance, Chief, Customs Section, James CaffentMs, New York City, for United States.
    Before MARKEY, Chief Judge, RICH, BALDWIN, and LANE, Associate Judges, and ALMOND, Senior Judge.
   LANE, Judge.

This is an appeal from the decision and judgment of the United States Customs Court, 67 Cust.Ct. 127, C.D. 4263 (1971) overruling the importer’s protest against the denial of an allowance under Itm 807.00 TSUS for certain products of the United States constituting parts of electrolytic capacitors imported from Taiwan. Allowance was made for certain other American-made parts, and there is no dispute as to them. The capacitors were classified under the provision for electrical capacitors in Item 685.80 TSUS, and that classification is not disputed. We reverse the decision of the Customs Court.

Item 807.00, as amended by Section 85, Tariff Schedules Technical Amendments Act of 1965 (Pub.L. 89-241) reads :

Articles assembled abroad in whole or in part of fabricated components, the product of the United States, which (a) were exported in condition ready for assembly without further fabrication, for the purpose of such assembly and return to the United States, (b) have not lost their physical identity in such articles by change in form, shape, or otherwise, and (c) have not been advanced in value or improved in condition abroad except by being assembled and except by operations incidental to the assembly process such as cleaning, lubricating, and painting ........_..........A duty upon the full value of the imported article, less the cost or value of such products of the United States * * *

Two general types of electrolytic capacitors are involved, a tubular 729 series capacitor and a subminiature 974 series capacitor. The following simplified description by appellant was incorporated in the Customs Court’s opinion:

The assembly of a capacitor is essentially a simple process in which a sandwich is made out of two metal foils with paper in between. This assembly is then rolled up and immersed in an electrolyte [chemical solution], and placed in a can with electrical connections.

More specifically, each electrolytic capacitor comprises a complete capacitor roll disposed in a cylindrical aluminum can with wire terminal leads at each end. Allowance was permitted for the aluminum can, a bakelite washer, an aluminum rivet and wire leads, all associated with the assembly of the capacitor roll into the can. The parts in dispute relate to the earlier operation of forming the capacitor roll.

Using the 729 series capacitor as representative and considering only operations involving disputed parts, the production of the capacitor roll in Taiwan involves (1) cutting the anode foil to a specified length from the roll as importer, (2) cutting an anode tab to length from a roll of material, (3) staking the anode tab to the cut anode foil at right angles thereto, (4) interleaving paper and cathode foil from rolls with the anode foil strip and winding them into a roll with the paper between the cathode and anode foils, (5) staking a previously cut cathode tab to the cathode foil at right angles thereto, (6) placing a length of plastic film under the anode tab, (7) adding two or three turns to the rolled-up assembly and then cutting the interleaved paper and cathode foil from the rolls, (8) securing the rolled-up paper and foil assembly against unwinding by applying cellophane tape from a dispenser, (9) immersing the rolled-up assembly in a liquid electrolyte solution, (10) removing the capacitor roll from the electrolyte and welding the cathode lead to the inside of the can, (11) attaching the anode tab to the inside of a previously made rivet and washer assembly and (12) inserting the rolled-up assembly in the can thus finishing the capacitor.

The articles in issue are the anode foil, the cathode foil, the paper, the metal tabs, the plastic insulating film and the cellophane tape. All of these are products of the United States and were exported to Taiwan in rolls. The rolls of the cathode foil, anode tab, cathode tab, paper, cellophane tape and plastic insulation were always exported in the width at which they were used in the capacitor. They only had to be cut to length during assembly of the capacitor in Taiwan. The anode foil was initially also exported in the width used. However, it was discovered that the edges were frequently damaged in handling before use due to the fragile characteristics of the material. The foil was then exported at a “master roll width” which was wider, and the edges were trimmed to bring it to the proper width in Taiwan.

The court held that the facts and issues in this case are essentially the same as in Amplifone Corp. v. United States, 65 Cust.Ct. 58, C.D. 4054 (1970), wherein the Customs Court construed the language “fabricated components * * * which * * * were exported in condition ready for assembly without further fabrication” appearing in item 807.00. In that case, the court espoused a theory respecting item 807.00 which distinguished a single assembly process wherein a given article would be directly incorporated or assembled into the ultimate merchandise from a dual assembly process wherein a given product of the United States would first be incorporated into a subassembly and the subassembly incorporated or assembled into the ultimate merchandise for exportation. In Amplifone, the court held, “[A]s we read item 807.00 it does not contemplate two or more assembly processes abroad with respect to American articles vis-avis the imported article.” The court’s conclusion in Amplifone was that a “fabricated component” had to be a “complete” unit itself and not subject to any assembly other than directly into the final product to be exported.

Applying the Amplifone reasoning to the facts of the present case, the court below treated the disputed articles as components of the capacitor roll, and the capacitor roll as a subassembly of the ultimate capacitor. The court concluded that the disputed articles were subject to dual assembly and, therefore, were not fabricated components within the meaning of item 807.00 of the exported products. The court specifically stated the following:

In this case the evidence as noted above clearly shows that the assembly of the imported capacitors in Taiwan awaits the creation there of a capacitor roll. And the capacitor roll is the component produced or created with the exported articles in dispute in the instant case. Therefore, since the capacitor roll component is made in Taiwan the materials of its composition are not, at the time of exportation from the United States, components of the imported capacitors, but rather are at that time materials with which a component of said capacitors, namely, the capacitor roll, is yet to be produced. Indeed, plaintiff’s own expert witness, while he did not identify a particular component as we do here, labeled the disputed articles as “component materials.”

OPINION

We reject the rationale of the Customs Court in this case and the Amplifone case. We think the artificial single assembly-dual assembly distinction as determinative of classification under item 807.00 is unreasonably restrictive and is not warranted, by the statute. The inquiry under item 807.00 should not focus on the identification of possible sub-units of the whole product and the relationship between the disputed element and such sub-units. Instead, classification under item 807.00 depends upon the relationship of the disputed element to the whole. The steps to which the disputed element is subjected are, of course, relevant to the issue, but we do not agree that initial assemblage into an artificially identified sub-unit is a step which necessarily precludes a finding of mere assembly.

The Government agrees with the reasoning of the Customs Court and argues that the disputed articles were not “fabricated components.” In our view, item 807.00 generally defines “fabricated components” as those components of the whole product which (a) were not subject to “further fabrication,” (b) did not lose their physical identity during assembly and (c) were not advanced in value. We do not think that the language “fabricated components” has the separate import for which the Government contends. The only reasonable interpretation of item 807.00 is that all elements that go into the imported final article which meet the conditions the item imposes on the fabricated components are subject to the exclusion it provides.

We find that all the articles in issue here meet those requirements. Concededly all are products of the United States and all went into the imported electrolytic capacitors. The meaning of “fabricated” is broad and without doubt applies to the rolls of foil, paper, cellophane tape and plastic insulating film which obviously were manufactured articles. The articles did not lose their physical identity in the capacitor “by change in form, shape or otherwise.” As stated in United States v. Baylis Brothers Co., 451 F.2d 643, 646, 59 CCPA 9, C.A.D. 1026 (1971):

The legislative history makes it equally apparent, however, that Congress did not intend to exclude articles from item 807.00 merely because the American components had undergone some change of form or shape. The test specified in item 807.00 is whether the components have been changed in form, shape, or otherwise to such an extent that they have lost their physical identity in the assembled article. The term “physical identity” was used to exclude from item 807.00 those assembled articles whose American components are “chemical products, food ingredients, liquids, gases, powders,” and the like. [Footnote omitted.]

Since the only changes in the exported articles were “by being assembled” or “by operations incidental to the assembly,” the items have not been “advanced in value” as prohibited by provision (C) of item 807.00.

, There remains the matter of whether the items were exported “in condition ready for assembly without further fabrication.” In General Instrument Corporation v. United States, 462 F.2d 1156, 59 CCPA 171, C.A.D. 1062 (1972), the court regarded that provision met by fine gold wire which was exported on spools and in assembly was bonded at the end to an aluminum strip on a semiconductor chip and then severed. The paper in the present case, and the cathode foil in one form of capacitor, were cut to length after being at least partly assembled into the capacitor roll and thus met the provision in question in the same manner as the gold wire in the cited case. Although the anode foil, the cathode foil in some cases, the metal tabs and the Mylar film were cut to length before assembly with the other articles, we find no reason for considering them subject to any different treatment than the articles cut after assembly. Trimming of the edges of the anode foil amounts to an operation incidental to the assembly process and not to “further fabrication” under item 807.00. See C. J. Tower & Sons of Buffalo v. United States, 62 Cust.Ct. 643, 304 F.Supp. 1187, C.D. 3840 (1969), wherein trimming the edges of a composite sheet assembled abroad was not found to bar treatment under item 807.-00.

The Government quotes the following statement from the Tariff Classification Study, Seventh Supplemental Report, 1963, at page 103:

Item 807.00 — Imports assembled with U. S. components. Item 807.00 contemplates that, when a finished component of U. S. origin is sent abroad and there assembled — without otherwise changing its condition— with one or more other components, the cost or value of such U. S. component shall not be included in the dutiable value of the assembled article in which it has been incorporated. U. S. wire and tape, on spools, sent abroad where they are cut to length and then assembled with other components into a finished article are not finished components the cost of which may be deducted from the dutiable value of the imported article.

It advances this statement as showing legislative intent to exclude wire cut from spools, and the foils, tabs and tapes cut before assembly in this ease, from item 807.00 treatment. However, appellant points out the statement appears as part of a summarization, made after adoption of the provisions of the Tariff Schedules by Congress, of expressions of the Commission’s intentions with respect to such provisions. Appellant also points out that the statement was made prior to the Tariff Schedules Technical Amendment Act of 1965, Pub. L. 89-241 which amended original item 807.00 and that the Committee on Ways and Means explained that a purpose of the amendment, which introduced the term “fabricated components,” was to correct the situation in which “minor operations such as painting incidental to assembly abroad may be precluded.” Under the circumstances, we agree with appellant that the quoted statement is not a significant indication of the legislative intent as to the language of item 807.00 applicable here.

The Government also argues that the cited General Instrument and Baylis Brothers decisions of this court are not controlling because the articles in question were stipulated to be fabricated components. Nevertheless, we think the reasoning in those cases is applicable here and that the articles in dispute here clearly qualify as fabricated components under item 807.00.

The decision and judgment of the Customs Court is reversed.

Reversed.

      . TSUS Item 807.00 was further amended effective the 120th day after November 10, 1966, the date of enactment of Public Law 89-806, by deleting the italicized language set forth in the quoted text of TSUS Item 807.00. The merchandise in the case at bar was imported at New York, New York, on January 29, 1967, and it is therefore Item 807.00 as amended in 1965 which governs the present case.

      . This staking comprises piercing the tab and foil in assembled relationship by a series of pins which flare the material and then pressing to flatten the flared portion and cause the foil and tab to adhere to each other.

      . 35 Cust.Ct. at 64.

      . H.Rep. 342, 89th Cong., 1st Sess. (May 12, 1965), p. 48, U.S.Code Cong. & Admin.News 1965, p. 3416.


source: Caselaw Access Project

author: ADAMS, Circuit Judge.

license: Public Domain

text:
    DUQUESNE LIGHT COMPANY et al., Petitioners, v. ENVIRONMENTAL PROTECTION AGENCY. ST. JOE MINERALS CORPORATION, Petitioner, v. ENVIRONMENTAL PROTECTION AGENCY.
    Nos. 72-1542, 72-1543.
    United States Court of Appeals, Third Circuit.
    Argued April 2, 1973.
    Decided June 5, 1973.

      David McNeil Olds, John McN. Cramer, Reed Smith Shaw & McClay, Pittsburgh, Pa., for petitioners.
    Edmund B. Clark, Kent Frizzell, John E. Varnum, Bradford F. Whitman, U. S. Dept, of Justice, Land and Natural Resources Div., Pollution Control Section, Washington, D. C., for respondent.
    Before ADAMS, ROSENN and HUNTER, Circuit Judges.
   OPINION SUR RESPONDENT’S MOTION FOR CLARIFICATION

ADAMS, Circuit Judge.

Resolution of the motion presently'before the Court requires that we address difficult procedural problems arising from the recently enacted programs for the abatement of air pollution.

Duquesne Light Company (Duquesne), Pennsylvania Power Co. and Ohio Edison Co. are engaged in Western Pennsylvania in the generation of electric power by burning coal. St. Joe Minerals Corp. (St. Joe) produces electricity and zinc, also using coal as the fuel. Pursuant to the new clean air programs, Pennsylvania enacted a series of regulations, comporting with federal standards and federally enforceable. Duquesne, Pennsylvania Power, Ohio Edison and St. Joe (collectively, the companies), required by the Pennsylvania regulations to limit their emission into the air of polluting sulphur oxides, challenged the Federal Environmental Protection Agency’s (EPA) adoption and potential enforcement of these restrictions in the absence of hearings, inter alia, and petitioned this Court to remand the matter to the EPA for such a proceeding.

Although the remand motions requested several alternative forms of relief, the order of this Court, granting the motions, did not specify which among the several types of relief was to be afforded. The EPA, opposing the remand directive, filed the motion that we now consider. This motion styled a “Motion for Clarification, or in the Alternative Petition for Rehearing,” is responsive to the Court’s original order, which in all candor was somewhat enigmatic. This opinion will endeavor to dispel the uncertainty.

Unsnarling the rather intricate procedural knot presented by the motion currently before us requires a careful tracing of the several strands comprising it. This task, in turn, entails an examination of: (1) the Clean Air Act Amendments of 1970 (Act or Clean Air Act) 42 U.S.C. §§ 1857 — 1858a, (2) the division of authority between states and the EPA contemplated by the Act, (3) the bearing of the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq., on the Clean Air Act, (4) the implications of this Court’s decision in Getty Oil Co. v. Ruckelshaus, 467 F.2d 349 (3d Cir. 1972), cert. denied, 409 U.S. 1125, 93 S. Ct. 937, 35 L.Ed.2d 256 (1973), and (5) the requirements of due process as mandated by the Fifth Amendment.

I. THE LEGISLATIVE SCHEMA

In enacting the Clean Air Act Amendments of 1970, Congress attempted to foster a symbiosis between two perceived needs. First, Congress wanted to preserve the basic state and local control of the design and enforcement of air pollution regulations. Besides a deference to the states, such a state role permitted more awareness of individual and local problems to be considered in formulating pollution abatement plans.

Second, Congress sensed that there was a rising dissatisfaction with the results being attained by the states, operating under the then existing legislation. Therefore, there was a desire for federal standards and enforcement. Further, Congress, apprised of the public concern, manifested its insistence on expedition in cleaning the air.

The result of these two conflicting strains was that Congress in the 1970 Amendments, devised a system in which certain aspects of the pollution control effort were assigned exclusively to the EPA, other aspects being entrusted to the states under federal supervision.

An understanding of the EPA’s role in the bi-level program established by the Clean Air Act requires a brief exposition of the sections of the Act pertinent to the dispute here. Section 108 of the Act mandated that within thirty days after December 31, 1970, the Administrator of the EPA was to determine which emissions into the air were pollutants, adversely affecting public health or welfare. Section 109 dictated that roughly contemporaneously, he was to promulgate regulations establishing national primary and secondary ambient air quality standards. These standards defined the maximum concentration to be permitted in the air of any pollutant ascertained under section 108. Written comments by interested parties were to be submitted prior to the final promulgation of these standards, and following Kennecott Copper Corp. v. Environmental Protection Agency, 149 U.S.App.D.C. 231, 462 F.2d 846 (1972), the Agency was to provide statements in support of. its proposed regulations. Thus, pursuant to sections 108 and 109, the Administrator was to determine the minimum acceptable level in the air of any particular pollutant. Section 110 defined the procedures to be followed to achieve and then maintain these or higher standards of cleanliness. Because the attainment required that choices be made between different sources of pollutants, with some sources perhaps more severely restricted than others, the Act left to the states the drafting of plans for reaching these federally established standards. More specifically, § 110(a)(1) required that, within nine months of the Administrator’s promulgation of the ambient air standards, each state was to adopt and submit to the Administrator a plan that would bring the air quality within the state at a minimum, to the federally mandated levels. The “state implementation plan” was to be enacted only after reasonable notice and hearings were held by the state.

Section 110 then continues:
“The Administrator shall, within four months after the' date required for submission of a plan under paragraph (1), approve or disapprove such plan or each portion thereof. The Administrator shall approve such plan, or any portion thereof, if he determines that it was adopted after reasonable notice and hearing.”

The question of which procedures are required of the Administrator, if any, in determining whether to approve a state implementation plan as provided in § 110(a)(2), forms the core of this case.

After approval of a state implementation plan, the regulations contained therein, presumably already enforceable by the state, become enforceable by the federal government as well. Section 113 of the Act provides that, after permitting a period of thirty days to pass, perhaps to allow the state to initiate an action, the Administrator, having found a violation of the implementation plan, may impose civil and criminal sanctions upon the violator. This enforcement aspect of the statute is a final step in delineating the cooperating and supplementing roles that are prescribed for the states and the EPA.

Review by federal courts of actions taken by the Administrator is circumscribed by section 307(b)(1). It provides that petitions for review of the Administrator’s actions approving implementation plans are to be filed in the United States Court of Appeals for the appropriate Circuit, within thirty days of the date of the Administrator’s approval. Subsection (2) of 307(b) forecloses later litigation in enforcement proceedings of issues for which review could have been had under section 307(b)(1).

II. THE PENNSYLVANIA PLAN’S ADOPTION

The Administrator, in August, 1971, published guidelines for the preparation, adoption and submission of state plans, and required that state implementation plans be submitted by January 31, 1972. Following the statute’s instructions, the Commonwealth of Pennsylvania gave notice that hearings were to be held regarding its proposed plans. Four hearings, focusing on controlling sulphur oxide emission, a pollutant designated under section 108 and quantitatively described under section 109, were held in Philadelphia, Harrisburg and Pittsburgh, from December 1-4, 1971. At the Pittsburgh session of the hearings, Duquesne, through Mr. L. R. Love, General Superintendent of the Power Stations Department, Pennsylvania Power by Mr. C. B. Shell, Vice-President, and St. Joe, through Mr. Charles P. Henderson, Manager of the Zinc Smelting Division, appeared. Each presented evidence to the members of the Environmental Quality Board, in the form of oral testimony and written statements.

After the hearings terminated, a plan including sulphur oxide restrictions was adopted and submitted by Pennsylvania, on January 27, 1972. The Administrator, in late May, 1972, without further proceedings, approved the plan in part and disapproved it in part. Within the thirty days required by Section 307(b)(1), Duquesne and St. Joe filed petitions in this Court challenging the Administrator’s actions regarding the approved portions of the Pennsylvania plan. The companies, arguing that the approved plan included unreasonable requirements, sought to have the matter remanded to the EPA. They asked that the reconsideration of the Pennsylvania Implementation Plan be conducted as either an adjudicative-type hearing, pursuant to Section 5 of the Administrative Procedure Act, (APA), or a rule-making hearing, following Section 4 of the APA. The companies further sought to have this Court require that the EPA, prior to approving the plan, file a detailed environmental impact statement as described in Sections 102(2) (C) and (D) of the National Environmental Policy Act. On January 22, 1973, this Court granted a motion for remand without specifying the type of procedure to be followed by the EPA. The EPA’s motion, asking this Court to clarify the order or to rehear the matter, requires an examination of the various types of relief sought by Duquesne and St. Joe.

III. ADJUDICATIVE HEARINGS

Duquesne and St. Joe contend that due process demands that they be afforded some form of hearing by the EPA prior to the federal adoption of the state implementation plan. Central to a viable concept of due process is the principle that “[ejonsideration of what procedures due process may require under any given set of circumstances must begin with a determination of the precise nature of the government function involved as well as of the private interest that has been affected by governmental action.”

Moving from this fundament, the Court must proceed to consider the companies’ requests for adjudicative or legislative hearings, bearing in mind that the “government function involved” is the protection of the health of the citizenry, and that a degree of flexibility in responding to the companies’ requests is essential.

An attempt to draw a bright line between situations requiring adjudicative hearings and those calling for rule-making is a task often unresponsive to the actual problems presented in a given case. Rather, a growing body of case law and scholarly discussion has indicated that hybrid proceedings, tailored to the types of issues contested, appear to be a salutary alternative to efforts to sketch a rigid demarcation. Determination of this case, required, however, that the Court examine both adjudicative and legislative type hearings in fashioning an appropriate order.

Although we do not at this time have to decide whether the EPA is bound to follow the APA, reference to the APA facilitates distinguishing adjudicative hearings from legislative, rule-making proceedings. This Court recently made such a comparison in Virgin Islands Hotel Ass’n v. Virgin Islands Water & Power Authority, 476 F.2d 1263 at 1267 No. 72-1996 (3d Cir., filed April 12, 1973). The Court explicated the difference as follows:

“ ■>:• * -x- Rule-making proceedings are controlled by § 553, [of the APA, 5 U.S.C. § 551 et seq.] which requires only that interested parties be given adequate notice of the proposed rule, see § 553(b), and ‘an opportunity to participate in the rule making through submission of written data, views or arguments with or without opportunity for oral presentátion,’ § 553(c). The procedure for adjudication is set out in §§ 554 and 556, under which ‘[a] party is entitled to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts.’ § 556(d).”

The Supreme Court has recently enumerated the occasions in which an adjudicative hearing is required before agency promulgation of a rule. In United States v. Allegheny-Ludlum, 406 U.S. 742, 92 S.Ct. 1941, 32 L.Ed.2d 453 (1972), and United States v. Florida East Coast Railway Co., 410 U.S. 224, 93 S.Ct. 810, 35 L.Ed.2d 223 (1973), the Supreme Court made clear that unless the statute providing for agency action prescribes “hearings on the record,” either in those exact words or in similar phrases, an adjudicative hearing need not be held. Section 110(a)(2) of the Clean Air Act does not speak in terms of hearings prior to EPA approval of the state implementation plans. Therefore, if the APA were applicable there is nonetheless an absence of the language which the Supreme Court has indicated is necessary to trigger the requirement of an adversary hearing.

In International Harvester Co. v. Ruckelshaus, 478 F.2d 615 No. 72-1517 (D.C. Cir. filed February 10, 1973), the District of Columbia Circuit remanded proceedings to the EPA. The question to be -decided on remand concerned certain aspects of the automobile emission control program, a subject entrusted by the Clean Air Act directly to the Administrator, without involvement or hearings at the state level. Moreover, the section itself contemplates that the EPA would hold hearings on issues raised in this section. Given these two factors, present in International Harvester, but wanting in this case, the modified adjudicatory hearing required by the District of Columbia Court is not apposite nor will it be required here.

Duquesne and St. Joe further contend that a failure to accord them an adjudicative hearing in the face of the federal sanctions possible under the Clean Air Act would deprive them of due process. Florida East Coast Railway, supra, and Virgin Islands Hotel Ass’n, supra, appear dispositive of the due process claims. In both cases, increased rates were being imposed on a general segment of the population. In Florida East Coast Railway the increase was an added per diem charge for box cars assessed against railroads, in Virgin Islands Hotel Ass’n the increase was a raising of electric rates. The protestants claimed in each case that the higher rates fell more harshly upon them or were more injurious to them than to others. Nonetheless, each Court emphasized the general nature of the rule, not its effect on any particular party, in determining whether an adjudicatory hearing was required by due process. In each case, the Court concluded that because of the general applicability of the statute, and its prospective effects, adjudicative hearings were not required. Bound by both the Supreme Court and the recent decision of this Court, we hold that- on remand, there is no need for adjudicative hearings.

IV. LEGISLATIVE HEARINGS

A. The Getty Oil Dilemma

At oral argument, the EPA asserted that redress through the state administrative process was the proper course for Duquesne and St. Joe to pursue. The companies applied for variances permitting deviation from the plan’s requirements. Petitions seeking variances have, according to counsel, been filed with the appropriate state authority and are wending their way through the state administrative process. Presumably, the final state administrative determination will be subject to judicial review, pursuant to the Pennsylvania Administrative Agency Law, 71 P.S. § 1710.41. Such recourse to the state procedure for correction of alleged imperfections in the Pennsylvania Implementation Plan is the path advocated by the EPA, but an undoubtedly time-consuming course of action. However, it does appear to serve the bi-level design of section 110 of the Clean Air Act.

Getty Oil Co. v. Ruckelshaus illustrates one of the problems created by the bi-level arrangement of the Clean Air Act. Delaware, in accordance with section 110, had promulgated an implementation plan. One item in the plan provided that the fuel to be furnished by-Getty to an associated power station was to be of a low sulphur content. In August, 1971, the Administrator approved and adopted the portion of the Delaware Plan in question. Getty did not file any petition in the appropriate Circuit Court within the thirty days prescribed by section 307. Getty did, however, launch state administrative and judicial challenges against the plan, questioning the action of the state agency whose responsibility the promulgation of the plan had been. The variance Getty sought from the administrative agency was denied. Getty then instituted an action in the Delaware state court. That court granted Getty’s request for injunctive relief and stayed enforcement by the state of the objectionable provisions of the Delaware Plan. The Federal EPA, however, not bound by the state court injunction, commenced enforcement proceedings, and Getty then sought injunctive relief in the federal court. Both the district court and this Court denied Getty’s claim for relief. Thus Getty found itself in a difficult position. It was liable to federal sanctions, imposed because Getty was violating a state regulation adopted by the Federal Government, but in effect, repudiated by the state. The present case presents the Court with the specter of a recurrence of the Getty paradox. Here the plan has been adopted by, and is enforceable by, the EPA during the time state proceedings that might alter the plan are underway. A proper decision of this ease requires a resolution of this predicament. However, such resolution will be considered in the concluding section of this opinion.

B. The Requirements of the APA

Duquesne and St. Joe argue that the action of the Administrator is rule-making as defined by section one of the APA and, as such, requires at least a legislative-type hearing pursuant to section 4. Recently, the Court of Appeals for the Fourth Circuit was called upon to review a similar contention. That court, considering the existence of state hearings, the alacrity stipulated by Congress, the purposeful omission of language requiring a hearing at the federal level after the state adopts its plan, and the presumably duplicative testimony that would be elicited by a federal hearing, concluded that Congress had in effect found that:

“ * * * a hearing at the Administrator’s level was both ‘impractical’ and ‘unnecessary.’ That finding met the requirements of section 553(b) (B), 5 U.S.C., exempting certain rule-making proceedings from any requirement of a hearing, if, as the petitioners argue, that Act is applicable to the Administrator’s action.”

We find this reasoning persuasive.

Although we have held that the Administrator is not bound to comply with the requirements of the APA, that does not conclude the consideration of the necessity for some sort of hearing at the federal level. This Court stated, in Getty Oil, that the “Constitution requires an opportunity at a meaningful time and in a meaningful manner for a hearing appropriate to the nature of the case.” A review of the proceedings conducted by the Pennsylvania Environmental Quality Board does not convince us that a truly meaningful hearing was afforded Duquesne and St. Joe. Moreover, the Pennsylvania proceedings occurred over sixteen months ago, before the general concern about the energy crisis and before certain problems with sulphur oxide control equipment had been fully documented. Therefore, it appears that an order remanding the matter to the EPA, with instructions to conduct a limited legislative-type hearing, might be appropriate. Again we defer further discussion of such matter until the latter portion of this opinion.

V. REQUEST FOR ENVIRONMENTAL IMPACT STATEMENT

Duquesne and St. Joe have requested that this Court order the EPA to prepare an environmental impact statement in connection with their administrative action, conforming with sections 102(C) and (D) of the National Environmental Policy Act (NEPA). Several courts have examined the question of NEPA’s applicability to the EPA. All have concluded that to require an agency charged with protecting the environment with the obligation to file a statement explaining the environmental impact of its decisions would be redundant.

The Court of Appeals for the District of Columbia stated in International Harvester:

“Although we do not reach the question whether EPA is automatically and completely exempt from NEPA we see little need in requiring a NEPA statement from an agency whose raison d’etre is the protection of the environment: . . . ”

The EPA, on the remand in International Harvester, was required, inter alia, to produce a decision setting forth its reasoning for granting or denying relief, the same material from which a NEPA statement would be composed. As the Court of Appeals for the District of Columbia noted, the requirement of an impact statement in the circumstances would be a “hollow formalism.”

In Getty Oil it is clear that this Court was deciding that if a NEPA statement were required, Getty had not commenced the appropriate proceeding to force one: “Even if we were to agree that EPA is subject to the NEPA requirement, such an issue is properly raised in a section 307 proceeding.” Basically, the same conclusion was reached by the district court in Getty Oil

Appalachian Power, however, relying on the opinion in Getty Oil, squarely held that NEPA was not applicable to the action of the Administrator in approving a state implementation plan.

Presented with the square holding of the Fourth Circuit, and the logically appealing pronouncements of this Court, the District of Columbia Circuit Court, and the District Court in Delaware, we hold that, in approving the state implementation plans, the Administrator is not required to meet the impact statement requirements of the NEPA — certainly in the context of this case.

VI. CONCLUSION

In attempting to unravel the problems concerning the procedures on remand, if remand there be, this Court has addressed several issues. We have examined the requests for adjudicative hearings and for an order requiring a NEPA impact statement. These requests the Court refuses to grant. We have also scrutinized the problem created by the Getty Oil case and the request for a legislative hearing. These issues do affect the rights of Duquesne and St. Joe and require resolution. In resolving them, however, the Court is mindful of the desire for rapid action expressed by Congress in enacting the Clean Air Act, and the role the Act plays in protecting the nation’s health by requiring clean air. Moreover, we are cognizant of the circumscribed opportunity for review provided by Congress, again manifesting an insistence on expedition. In view of the limited review proceeding, this Court holds that, except as it applies to Duquesne, Pennsylvania Power, Ohio Edison and St. Joe Mineral, whose petitions for review were timely filed under section 307(b)(1), the Pennsylvania implementation plan remains in effect.

The basic problem presented by the Getty Oil dilemma and the legislative hearing request is that the petitioning companies are liable to sanctions before they have had an opportunity either to complete their state administrative and judicial remedies or to be heard at the federal level. The Court finds that to expose the companies to the risk of punishment without affording them full occasion to express their objections to the state implementation plan is fundamentally unfair. Therefore, this Court instructs the EPA that it must either (a) refrain from imposing any penalties on these companies during the pendency of their state administrative and judicial actions, so long as such actions are pursued by the companies in good faith and with due diligence, or (b) afford the companies a limited legislative hearing.

Accordingly, within thirty days of the date of this Court’s order, the EPA shall elect, in writing, the course it plans to pursue. If the election is to afford the companies a limited legislative hearing, such a hearing would consist of: (1) permitting the companies to file written comments pertaining to the economic or technological infeasibility of the Pennsylvania Implementation Plan, within 20 days of the EPA’s election; (2) within 20 days of the filing of the comments, Pennsylvania shall submit comments in support of its plan; (3) upon receipt of the comments of the state, the EPA shall, if either the state or the companies request, hear further oral statements by both sides, which hearing need not include cross-examination; (4) no later than 30 days after the date of the receipt of the last comments, or after the conclusion of the oral hearing, whichever is later, the Administrator shall file with this Court the record compiled on remand, his decision approving or disapproving the Pennsylvania implementation plan as it applies to the companies, and a statement of his reasons for taking such action, considering both the material submitted and oral presentations by the state and the companies.

Requiring the EPA, the agency that has considerable expertise, to choose one of these two courses of action may appear to some to be a deviation from the type of relief traditionally granted by courts. However, only through change can continuity with the spirit of experimentation that characterizes our system of government be maintained. Moreover, the propriety of this relief is, in our judgment, further confirmed by a recognition of the distance from the usual that is represented by the problem before the Court. A proper balancing of the rights of the petitioning companies and the critical public interest in a healthy environment requires no less.

An order will be entered, remanding the matter to the Environmental Protection Agency for proceedings in conformity with this opinion.

      . The motion filed by the Environmental Protection Agency is a “motion for clarification.” It seeks clarification or reeonsideration of a motion for remand to the EPA granted by this Court.

      . See, Note, Clean Air Ac:t Amendments of 1970: A Congressional Cosmetic, 61 Geo. L.J. 153, 154-9 (1972).

      . 42 U.S.C. § 1857C-3.

      . 42 U.S.C. § 1857c-4.

      . The primary standards were to be designed to insure that the amount of any pollutant allowed would be consistent with protecting the public health. The secondary standards were to be addressed to safeguarding the public welfare.

      . The D.C. Circuit held that without these statements, that court could not properly conduct a judicial review of the Agency actions. 462 F.2d at 850.

      . 42 U.S.C. § 1857c-5.

      . 42 U.S.C. § 1857c-5 (a)(1).

      . Section 110(a)(2), 42 U.S.C. § 1857c-5(a)(2). Subsections (A) through (H) of section 110(a) (2) enumerate certain elements which a state implementation plan must include to be approved by the Administrator.

      . See 35 P.S. §§ 4004(3) & (4.1).

      . 42 U.S.C. § 1857c-8.

      . Section 113(c)(1), 42 U.S.C. § 1857c-S(c) (1) authorizes fines not more than $25,000. a day and/or imprisonment of not more than one year for first violations of an applicable implementation plan.

      . 42 U.S.C. § 1857h-5 (b) (1).

      . There is no dispute that this Court is the appropriate Circuit to consider this question. However, in cases involving metropolitan areas encompassing two or more states, there may be several appropriate circuits. See Natural Resources Defense Council, Inc. v. Environmental Protection Agency, 475 F.2d 968 at 969 (D.C.Cir. filed February 10, 1973).

      . 42 U.S.C. § 1857h-5 (b)(2).

      . 36 Fed.Reg. 15486 et seq.

      . A second series of hearings, dealing with monitoring and reporting techniques, was held in January, 1972.

      . 37 Fed.Reg. 10842, 10889-91.

      . 5 U.S.C. § 554.

      . 5 U.S.C. § 553.

      . 42 U.S.C. §§ 4332(C) and (D).

      . Cafeteria & Restaurant Workers Union v. McElroy, 367 U.S. 886, 895, 81 S.Ct. 1743, 1748, 6 L.Ed.2d 1230 (1961).

      . See International Harvester v. Environmental Protection Agency, 478 F.2d 615 No. 72-1517 (D.C. Cir. filed February 10, 1973) ; Kennecott Copper Corp. v. Environmental Protection Agency, 149 U.S.App.D.C. 231, 462 F.2d 846 (1972). Accord Drown v. Portsmouth School Dist., 435 F.2d 1182 (1st Cir. 1970), cert. denied, 402 U.S. 972, 91 S.Ct. 1659, 29 L.Ed. 2d (1972).

      . See 1 ICC. Davis, Administrative Law Treatise, § 5.01 (1958) ; Clagett, Informal Action-Adjudication-Rule-Making: Some Recent Developments in Federal Administrative Law, 1971 Duke L.J. 51; Robinson, The Making of Administrative Policy: Another Look at Rule Making and Adjudication and Administrative Procedure Reform, 118 U.Pa.L.Rev. 485 (1970).

      . Virgin Islands Hotel Ass’n did not directly involve proceedings controlled by the APA. Rather, in shaping the type of hearing required of the Virgin Islands Water & Power Authority in rate-making, the Court looked to the APA as a guide.

      . Both Allegheny-Ludlum and Florida East Goast Railway dealt with actions taken by the Interstate Commerce Commission. The Court held that the APA does apiily to ICC actions but that rule-making procedures were proper, absent the thaumaturgic language.

      . Other sections of the Clean Air Act do contain requirements that the Administrator act only after hearing. See Section 110(f)(2)(A), 42 U.S.C, §§ 1857c-5(f)(2)(A) and Sections 206(b)(2)(A) & (B), 42 U.S.C. §§ 1857f-5 (b) (2) (A) & (B).

      . Section 202, 52 U.S.C. § 1857f-l(b) (5) (B).

      . Section 202(b)(5)(D), 42 U.S.C. § 1857f-l(b) (5) (D).

      . International Harvester Co. v. Ruckelshaus, supra, at 649. No. 72-1517 (D.O. Cir. filed February 10, 1973).

      . Each decision evoked critical comment from other members of each Court.

      . In Florida East Coast Railway and Virgin Islands Hotel Ass’n, as .here, there were allegations that the administrative action was a taking of property. In each case the Court nevertheless did not mandate adjudicative hearings. Moreover, in each case there existed the possibility of harsher sanctions for failure to comply with the new regulation, yet trial-type hearings were not mandated.

      . 467 F.2d 349 (3d Cir. 1972), cert. denied, 409 U.S. 1125, 93 S.Ct. 937, 35 L. Ed.2d 256.

      . Getty Oil specifically dealt with the availability or means of challenging the Administrator’s actions alternative to section 307(b)(1) proceedings. Since this is an action brought pursuant to section 307 (b) (1), that problem is not in this case.

      . This Court and the district court differed on the basis for denying relief. The district court held that pre-enforcement relief might be available in a proceeding other than under section 307(b)(1), but found that the equitable requirements necessary for granting relief were not present. Getty Oil Co. v. Ruckelshaus, 342 F.Supp. 1006, 1023-1025 (D.Del. 1972). This Court, as stated earlier, see Note 34 supra, held that section 307 was controlling.

      . 5 U.S.O. § 551.

      . 5 TJ.S.C. § 553.

      . Appalachian Power Co. v. Environmental Protection Agency, 477 F.2d 495 No. 72-1733 (4th Cir., filed April 11, 1973).

      . Id. at 502-503.

      . 467 F.2d at 356.

      . For a discussion of the requirements of this hearing, see the concluding section of this opinion, infra.

      . 42 Ü.S.C. §§ 4332(C) and (D).

      . See International Harvester v. Environmental Protection Agency, supra, 478 F.2d at 650, n. 130; Appalachian Power Co. v. Environmental Protection Agency, supra 477 F.2d at 508; Getty Oil Co. v. Ruckelshaus, 467 F.2d 349, 359 (3 Cir. 1972) ; Getty Oil Co. v. Ruckelshaus, 342 F.Supp. 1006, 1020-1022 (D.Del.1972).

      . International Harvester, supra, 478 F. 2d at 650, n. 130.

      . 467 F.2d at 359.

      . 342 F.Supp. at 1021.

      . 477 F.2d at 508.

      . See Natural Resources Defense Council v. Environmental Protection Agency, 475 F.2d 968 (D.C. Cir., filed January 31, 1973) and Kennecott Copper Corp. v. Environmental Protection Agency, 149 U.S.App.D.C. 231, 462 F.2d 846 (1972).

      . It may be contended by some that this remedy is not perfect. Eor example, if certain options are selected and certain conclusions reached, the effect of this decisión may merely postpone placing the companies in the Getty dilemma. Moreover, certain questions presented but not decided at this time may reappear at a later date. However, as frequently happens in the implementation of new statutes, and especially enactments which present a unique approach to a difficult legislative problem, the courts must search out procedural solutions. Nonetheless, this Court is of the considered opinion that the remedy prescribed by this decision is the most responsive to the conflicting claims, first, that the entire matter be expedited, and second, that valuable rights not be diminished. We recognize that in this situation we are operating on the frontiers of legal thought, and any advance post that we take up is liable to the dangers of heavy ground assault. But it is only by such expeditions that knowledge of the terrain ahead may be gained.


author: ALDRICH, Senior Circuit Judge.

text:
    UNITED STATES of America, Appellee, v. Joseph E. FLYNN, Defendant, Appellant.
    No. 71-1350.
    United States Court of Appeals, First Circuit.
    Argued March 5, 1973.
    Decided May 30, 1973.
    Certiorari Denied Oct. 9, 1973.
    See 94 S.Ct. 154.

      John M. Doukas, Boston, Mass., with whom Robert W. Harrington, Boston, . Mass., was on brief, for appellant.
    Wayne B. Hollingsworth, Asst. U. S. Atty., with whom James N. Gabriel, U. S. Atty., was on brief, for appellee.
    Before COFFIN, Chief Judge, ALD-RICH and CAMPBELL, Circuit Judges.
   ALDRICH, Senior Circuit Judge.

In this appeal from convictions under a three-count indictment charging the filing of fraudulent income tax returns for the years 1962-64, 26 U.S.C. § 7201, we are faced at the outset with a question of procedure — whether to discuss points having a possibility of merit and omit the rest, or to write more fully. The conspicuous falsity of defendant’s testimony, coupled with the briefing of many worthless matters requiring extensive checking, leads us to comment.

Defendant’s initial complaint is to the court’s failure to charge that there was no unreported income. The government established that defendant received, or was credited with, some ten times the amount of savings bank interest he specifically reported. Defendant claimed that the balance was mistakenly reported as an unitemized figure included in his professional income under Schedule C. He introduced in support, as an exhibit, a sheet of paper that he testified was the original, as distinguished from other papers of which he had only copies, of work notes showing the makeup of that figure for the year 1962. In response, the government produced the manufacturer of the paper, who testified that it was made in 1971. Defendant then testified that the original “was pretty well used up and I thought it was neater to do it on this.” Why, after tax charges had been brought, he had thought it neater to dispose of the original, let alone to misrepresent, was not explained. We note, in passing, that the same procedure was repeated in another area.

In addition, defendant took the position that the bank interest did not have to be reported in any event, citing (admittedly as to the first two years only), Internal Revenue Service regulations that interest accruing on certain types of restricted cooperative shares did not have to be currently reported. While defendant showed that he had owned cooperative bank shares, he did not show that any were restricted. Indeed, the only possibly relevant testimony on the point suggested they were not. On this record defendant objects to the court’s refusal to charge that there was no basis for the jury to find any unreported income. This, what we can best call inexcusable nonsense, sets the stage for much that we are asked to deal with on this appeal.

The principal charges against defendant related to improper deductions. Defendant was a practicing surgeon. Financially successful, he maintained a stable of horses. By one manner or another he sought to charge some of the expense to the government after the stable had been disallowed as a business. Under the guise of deductions in connection with his, medical practice, he claimed as “medical assistance” bills which, upon investigation by the IRS, proved to be for veterinarians, a blacksmith, and a horse-van driver and stable-helper. “Medical supplies” proved to be riding clothes for his family; also jewelry, furs, rugs, flowers, liquor, and other extraneous matters. A photograph of a home refrigerator with the door open, introduced to show medicines in support of his claim that he practiced from his home, proved, upon examination with a magnifying glass, to show, veterinary medicines.

Another device was to claim the same expense twice. Thus defendant’s working papers showed that substantial payments for gas, oil, and repairs were taken once under “Auto Repairs,” and then again under “Fuel, Light and Power.”

Confronted with multiple examples, defendant’s trial strategy was, (1) to deny willfulness; (2) to claim that the deductions were legitimate, and merely improperly labelled. For this latter he asserted at one point that his horse and farm expenses were charitable deductions because his horses participated in charitable shows, and later that he had been in the business of “improving” horses, despite the fact that he had in three years, made only one sale, on which he showed no profit. Other “charitable” deductions included support money to an indigent friend, manifestly not allowable. Tressler v. Commissioner, 4 Cir., 1953, 206 F.2d 538, 542; Tilles v. Commissioner, 1938, 38 B.T.A. 545, 549-551, aff’d 8 Cir., 1940, 113 F.2d 907, cert. denied 311 U.S. 703, 61 S.Ct. 143, 85 L.Ed. 456. In addition, he sought to claim at trial casualty losses to his horses, largely due to illness or disease, clearly not allowable. See Appleman v. United States, 7 Cir., 1964, 338 F.2d 729, 731-732, cert. denied 380 U.S. 956, 85 S.Ct. 1090, 13 L.Ed.2d 972; Rev. Rul. 61-216, 1961-2 Cum.Bull. 134. On this appeal defendant criticizes the instruction on casualty losses given the jury. There was no error.

We do not pause over defendant’s objections to the introduction of his 1961 return and certain other evidence on the subject of willfulness. Again, there was no error. Hamman v. United States, 9 Cir., 1965, 340 F.2d 145, 149-150, cert. denied 380 U.S. 977, 85 S.Ct. 1339, 14 L.Ed.2d 271; Marienfeld v. United States, 8 Cir., 1954, 214 F.2d 632, 638-639, cert. denied 348 U.S. 865, 75 S.Ct. 87, 99 L.Ed. 681. However, an objection of some initial merit concerns charts offered by defendant to show that in fact he had not underpaid his tax— a defense regardless of willful misstatements in the returns. See United States v. Moody, 6 Cir., 1964, 339 F.2d 161. Compare 26 U.S.C. § 7206. Careful analysis shows the charts to have been fallacious, as containing items not supported by the evidence even viewed most favorably to the defendant. See McGarry v. United States, 1 Cir., 1967, 388 F.2d 862, 868, cert. denied 394 U.S. 921, 89 S.Ct. 1178, 22 L.Ed.2d 455; Flemister v. United States, 5 Cir., 1958, 260 F.2d 513, 517. In part the preparer drew on cancelled checks which in many instances were not linked to particular goods or services received. In at least one instance the full amount was claimed when only part was deductible. Quite apart from this, we find the charts sufficiently difficult to interpret that the court, in its discretion, might well have found them more troublesome to the jury than helpful. See McGarry, ante; United States v. Ellenbogen, 2 Cir., 1966, 365 F.2d 982, 988, cert. denied 386 U.S. 923, 87 S.Ct. 892, 17 L.Ed.2d 795.

There was an error in connection with charitable deductions. Most of defendant’s contributions were to Catholic organizations, and at one point the court allowed a contribution to a Catholic school without any evidence supporting the charitable status of the school. At another place, however, the court did indicate that, to be qualified, a charity must hold an exemption certificate. This was not so. We agree with the government, however, that on the basis on which it tried its case this error could affect only a relatively small amount of the charitable deductions, and viewed in the large, the error was de minimis. The Court's recent reaffirmation, that a defendant “is entitled to a fair trial, but not a perfect one,” Brown v. United States, 1973, 411 U.S. 223, 93 S.Ct. 1565, 36 L.Ed.2d 208, is appropriate.

Finally, defendant complains that the court, by its comments, deprived him of a fair trial. A number of the comments, made in the course of the testimony, related to actions which defendant himself conceded. Even though fair, some were unnecessary, and we may agree that overemphasis could have been prejudicial. Also, on occasion, the court indicated skepticism of defendant’s testimony. Again, this was highly understandable, but unnecessary. Having in mind that the trial lasted sixteen days, however, the number of these comments was not so large as to be prejudicial. Cf. Glasser v. United States, 1942, 315 U.S. 60, 83, 62 S.Ct. 457, 86 L.Ed. 680; Gordon v. United States, 5 Cir., 1971, 438 F.2d 858, 862-865, cert. denied 404 U.S. 828, 92 S.Ct. 63, 30 L.Ed.2d 56. Under the federal practice a court need not be as inscrutable as the Sphinx. See United States v. Gaines, 3 Cir., 1971, 450 F.2d 186, 188-190.

Defendant’s several remaining points have been fully considered. They are meritless.

Affirmed.

      . Confronted with this, defendant responded that he gave veterinary medicines to his human patients. It is some fifty years since the writer saw advertising for universal elixirs, “Good for Man and Beast.” See G. Allen Foster, Advertising, Ancient Market Place to Television (1967).

      . Extensive argument at trial and in the brief revolved around certain “civil” charges to which defendant objected. We have reviewed this at length and find no prejudicial error. Much of the claimed confusion was attributable to defendant himself.


author: ALDRICH, Senior Judge.

text:
    Joseph A. D’AMBRA et al., Plaintiffs, Appellees, v. UNITED STATES of America, Defendant, Appellant.
    No. 72-1205.
    United States Court of Appeals, First Circuit.
    Argued Oct. 5, 1972 and Jan. 3, 1973.
    Decided June 7, 1973.

      Joseph C. Johnston, Jr., Asst. U. S. Atty., with whom Lincoln C. Almond, U. S. Atty., was on briefs, for defendant, appellant.
    Leonard Decof, Providence, R. I., with whom Tobin, Decof, LeRoy & Silver-stein, Girard R. Visconti, and Max Wis-tow, Providence, R. I., were on briefs, for plaintiffs, appellees.
    Before COFFIN, Chief Judge, ALD-RICH and MeENTEE, Circuit Judges.
   ALDRICH, Senior Judge.

The United States appealed from a decision of the district court for Rhode Island awarding plaintiffs $118,800. in an action under the Federal Tort Claims Act (FTCA) for the death of their four-year-old son, run over and instantly killed by a mail truck in June 1970. On conflicting evidence the government disputed its liability and challenged the application of the Rhode Island Wrongful Death Act, amended since the accident, as the measure of damages. After the original hearing we concluded that we were satisfied that the finding of liability was supported and that, as the court had ruled, application of the latest amendment was not an instance of impermissible retroactivity, Freeborn v. Smith, 1864, 69 U.S. (2 Wall.) 160, 174-175, 17 L.Ed. 922; Langdeau v. Narragansett Ins. Co., 1963, 96 R.I. 276, 191 A.2d 28, 30-31. We were particuIarly concerned, however, whether the application of the Rhode Island Act in this case violated the immunity of the United States from liability for punitive damages which was preserved by 28 U. S.C. § 2674, and on this issue set the case down for reargument.

Our question, prompted by its history and consideration of the Act as a whole, is whether Congress intended in a wrongful death case to accept liability over and above compensating the survivors to the extent of their loss; viz., if a state statute so provided, to pay an additional sum computed on some concept of the ultimate value of the estate, which, demonstrably, the survivors would never have received.

Many state statutes, although they may differ in form as to the method of computation and distribution, are, like Lord Campbell’s Act, 9 & 10 Viet., c. 93 (1846), the Federal Employers’ Liability Act, 45 U.S.C. § 51 et seq., and the Death on the High Seas Act, 46 U.S.C. § 761 et seq., survivors’ acts. Others, of which the Rhode Island act is an example, in varying degrees think of the death in terms of an economic loss to the decedent, and distribute the additional sum so computed as, in effect, a windfall to the selected beneficiaries. “Windfall” may be a crude term, but it is illustrated by the fact that the award will go by escheat to the state under the intestacy laws — in North Carolina to the state university, see Warner v. Western N. C. R. R., 1886, 94 N.C. 250 — if there are no surviving next of kin. Following the statute, R.I.G.L. § 10-7-1.1, the court, on the basis of tables and expert testimony, determined the deceased child’s gross earnings over his lifetime, deducted estimated personal expenses, and discounted the total to a present figure. The deductible expenses, in accordance with the Rhode Island Act, did not include expenses the child would have incurred on account of his anticipated dependents. This was explained by plaintiffs during oral argument on the basis that had decedent survived, his dependents would, in fact, have received these payments, so that they should not be deducted. But quite apart from the fact that the present plaintiffs, his parents, would not have been the hypothesized wife and children to receive such earnings, this analysis points up the fact that what plaintiffs call an estate statute does not substitute, for the benefits provided by survivors’ statutes, the value of the decedent’s estate which might be expected to be accumulated, but results in the receipt of both.

The Rhode Island legislature is free to be generous if it wishes at the expense of individuals negligent enough to cause a death in that state, for in terrorem or other purposes. Our question is whether Congress, in relaxing governmental immunity, accepted such liability.

The FTCA had two parents. The first was the growing conscience of Congress respecting the defense of sovereign immunity. The second was dissatisfaction with the private bill remedy, unfair because of its randomness, and burdensome because of the inappropriateness of the forum. See Report of the Joint Committee on the Organization of Congress to accompany S. 2177, Sen. Rep.No.1400, 79th Cong., 2d Sess. See generally Gottlieb, The Federal Tort Claims Act — A Statutory Interpretation, 35 Geo.L.J. 1 (1946); Note, The Federal Tort Claims Act, 56 Yale L.J. 534 (1947). The solution was a statute which transferred to the courts the duty of determining whether the negligent act was one for which Congress was willing to recompense, and, if so, to determine the damages, again to the extent that Congress was willing to pay. As to acts, there were many exceptions. See, in general, 28 U.S.C. § 2680. These included governmental-type acts, even though there was negligence, 28 U.S.C. § 2680(a); Coastwise Packet Co. v. United States, 1 Cir., 1968, 398 F.2d 77, cert. denied, 393 U.S. 937, 89 S.Ct. 300, 21 L. Ed.2d 274; and, conversely, any act where there was no negligence, even though an individual would have been liable without fault, Laird v. Nelms, 1972, 406 U.S. 797, 92 S.Ct. 1899, 32 L.Ed.2d 499. As to damages, the plaintiff was not to have the right to a trial by jury, 28 U.S.C. § 2402, or to pre-judgment interest or a punitive award. 28 U.S.C. § 2674.

That Congress was concerned with compensating for the negligence of governmental employees is demonstrated by the case of wrongful death in the two states where civil recovery is measured exclusively by the degree of fault, and hence clearly punitive. In such event Congress undertook to compensate the survivors for their pecuniary loss even though the amount grossly exceeds the recovery permitted by the state against individuals. Massachusetts Bonding & Ins. Co. v. United States, 1956, 352 U.S. 128, 77 S.Ct. 186, 1 L.Ed.2d 189. Did Congress, conversely, intend to do more than compensate the survivors when the state statute so required ?

Although by no means conclusive, we look to the Committee Report, and other references, cited in Massachusetts Bonding, 352 U.S. at 131, 77 S.Ct. at 188, making provision for the two states having only punitive statutes,

“Since in those two states compensatory damages are not allowed, all that is required is to amend the Federal Tort Claims Act to say that in such states compensatory damages shall be allowed . . . It is believed that that suggestion would eliminate the discrepancy and would make the settlement of claims in those two states to be exactly in accord with the general rules followed in the other 46 states . . .”

Concededly “exactly” cannot mean “exact,” since some states do allow punitive damages, excluded by the previous paragraph of the Act.

With this background we turn to consider what was meant by the term “punitive” in the principal section of the Act, ante n. 5. Punitive damages, whether viewed as “smart money” or as a deterrent, is that part of the award that is not compensatory; the terms are mutually exclusive. See McCormick, Damages § 77 (1935). Thus the Georgia court in Atlantic, Valdosta & W. Ry. Co. v. McDilda, 1906, 125 Ga. 468, 54 S. E. 140, speaking directly to the point, said that its wrongful death statute “is penal in that the measure of the recovery is the full value of the life of the deceased, irrespective of its real value to the person in whom the cause of action is vested.” The court went on to hold that the statute was also civil, since this figure included fair compensation to the survivor, and held that the civil, rather than the shorter penal statute of limitations governed. Following this appraisal, the court in Hartz v. United States, 5 Cir., 1969, 415 F.2d 259, refused to apply the Georgia statute in an FTCA case.

Plaintiffs make a number of counter arguments. Their attempted distinction that the state court had declared its statute partially penal cannot be sound. The statute must be judged not by its language, nor the state court’s characterization, but by its consequences. The application of the FTCA is a federal question. Laird v. Helms, ante; Richards v. United States, 1962, 369 U.S. 1, 82 S.Ct. 585, 7 L.Ed.2d 492. Secondly, plaintiffs criticize the Hartz court for failure to realize that under Georgia law a surviving widow is entitled to take in trust for the children. If the court did this, it is of no present relevance. Finally, plaintiffs state that the Rhode Island deductions are larger, and more rational than is the Georgia computation. That is true. It does not, however, change the principle.

Plaintiffs point out that a number of state statutes are, to a considerable degree, similar to the Rhode Island Act, and that no previous court, other then Hartz, has raised this question. It is true that a few courts have applied these statutes, although without apparent consideration, in cases where the decedent was an unmarried miiior. However, in the vast majority of cases, where the decedent had a wife and children the difference, in dollars, to the beneficiaries of so-called estate statutes and straight survivor statutes might not loom so large as to be conspicuous. Even in the case of an unmarried minor, a survivor statute has been held to allow the parents to recover more than what the decedent would have been legally obliged to give them. See, e. g., Louisville & N. R. Co. v. Thomas’ Adm’r, 1916, 170 Ky. 145, 185 S.W. 840 (FELA). It must be however, that it is difficult, without engaging in pure speculation, to make an appreciable finding in this respect when the child is so young that no pattern of filial generosity has been established. And it also must be borne in mind that even generous children, after attaining adulthood, may marry and incur substantial obligations that must take precedence. In the present case, even taking the most liberal look at the practicabilities of life and common experience, it is inconceivable that compensatory damages to the parents of a four-year-old child might approach $118,000.

In remanding for recompensation it is desirable that we express some guidance. Compensatory damages in terms of monetary loss are computable with a reasonable degree of accuracy in the case of an individual who has lived long enough to present a pattern of earnings, See, e. g., Stanley v. United States, D.Me., 1972, 347 F.Supp. 1088, or at least long enough to show the characteristics from which his earnings may be anticipated. Williams v. United States, 1 Cir., 1970, 435 F.2d 804. A small child, however, presents a special problem — absent some extraordinary demonstrations there is nothing individual to go on. In the absence of evidence, how does one compute earnings, or what part of those earnings might be thought to accrue to parents? A further difficulty arises in such cases from the fact that under contemporary conditions the expenses of rearing a child may be expected to exceed any earnings during the period of minority when they would legally belong to the parent. Yet it would seem a crass position for the government to take that by killing the child it had conferred an offsetting financial benefit upon the parents.

Various solutions have been suggested for this special type of case where no affirmative evidence exists to permit computation of monetary loss. In many, perhaps most, cases, courts or juries make more than nominal awards even though “the cost of rearing the child will far exceed any conceivable pecuniary benefits that might ever be optimistically expected of him; and damages honestly calculated on this basis could never be anything but a minus quantity.” Prosser, The Law of Torts, 4th ed., § 1257 pp. 908-909. In Hoyt v. United States, 5th Cir., 1961, 286 F.2d 356, 361-362, the court resorted to the expedient of refusing to deduct from the anticipated contributions to the parents the costs of upbringing so as to enable the parents to obtain some recovery. The majority of this court, facing a statutory void resulting from our holding the Rhode Island statute inapplicable as being partly punitive, prefers to fill it by a judge-made rule, hereinafter explained. The court is not altogether happy with its solution, but chooses it as the most reasonable of the available alternatives.

This court, having declared the Rhode Island statute inapplicable to this tort claims suit against the government, must choose one of three courses for the district court to follow on remand. Any one of these is in a sense legislation to fill a void. The first is to leave the district court to the task of strictly applying a pecuniary benefits-less-eost analysis — which would, if rigorously applied to the death of a very young child, yield a zero result. This outcome effectively nullifies not only the Rhode Island statute but also the federal legislation, which aimed only to shield the federal government from punitive recoveries, not from any recovery where negligence results in the death of an infant. The second course is to allow the district court, by blinking at costs of uprearing and speculating on earnings and contributions decades hence, to come up with a recovery satisfying an unarticulated sense of justice while paying lip service to the old common law calculus. This would be, in our view legislation thinly concealed under the guise of traditionalism and internally inconsistent as well. The final course, which we prefer, is to set a standard which will both respond to the reality and contain such limitations as we are able to devise, recognizing that the best solution can be provided only by the Congress with the more precise tools at its command.

We start with the proposition that while the measure of recovery must be compensatory to the supervisors of a deceased child, it need not be only a measure of pecuniary loss. But if the traditional standard of pecuniary loss is not to be followed, how can courts, operating in a legislative vacuum, avoid a standardless, open-ended, unreviewable approach? Even though in fact the grief of parents over the bereavement of their child is most real, this element seems to us to be so limitless, so capable of spurious claims, that it, if recognized, is best left to legislatures, which can impose both floors and ceilings. We make the same observation with reference to the “lost investment” theory.

An equally realistic but more limited element of compensation for the loss of a minor child, capable of responsible judicial application, seems to us to lie in the loss of society and companionship of the child. Courts which have refused to award damages for grief and suffering have, sometimes under the same statute, recognized loss of companionship. While conscious grief may diminish over time, the loss of a child’s presence in the family, particularly during the minority years,.is a real one. There is, moreover, a built-in factor which tends to be self limiting. In the case of the death of a very young child, estimates of future earnings and contributions are bound to be most speculative. All that is certain is that a substantial period of companionship during the child’s minority has been lost. As the child approaches majority, the likelihood of a substantial further period of intimate association lessens at the same time as it becomes more possible to predict a pattern of earnings and contributions. A court, therefore, would tend to awárd greater damages for loss of society for the death of a younger child, and less for one nearer his majority. But in the latter case the court would be on surer ground in identifying the extent of pecuniary loss.

The difficulty of assessing this element of damages is not intrinsically greater than that of putting a figure on the loss of nurture, intellectual, moral and physical training which a child suffers with the loss of a parent. United States v. Harue Hayashi, 9th Cir., 1960, 282 F.2d 599, 605; Norfolk & Western Ry. v. Holbrook, 1915, 235 U.S. 625, 629, 35 S.Ct. 143, 59 L.Ed. 392. We grant that any such award will seem too high or too low to the respective parties for the very reason that monetary compensation for pain, disability, distress, and other elements of human injury, though properly awardable, St. Louis, Iron Mtn. & Southern Ry. v. Craft, 1915, 237 U.S. 648, 35 S.Ct. 704, 59 L.Ed. 1160, is inescapably difficult of precise measurement. But not only does the concept of companionship generally carry with it the prospect of diminution with maturity ; it would also, we have confidence, be applied by judges, just because of the large component of inexactitude, with an eye to judicial precedent in similar cases. Finally, recognizing the absence of statutory restraints, we would on review not hesitate, as indeed we do not hesitate in this case, to set aside a verdict which we feel exceeds that which we deem supportable. We are not, in other words, remanding this case with the thought that our proposed rule is a road to reach the present figure.

On remand, therefore, the district court will, on the basis of such factors as the remaining period of minority and likely intimate association with the family, had the child lived, the cohesiveness of the family unit, and recoveries realized in similar eases, attempt to measure compensation by the loss of the companionship and society of the infant victim.

We reiterate that our recognition of damages for the loss of companionship and society of a deceased child applies only where, because a state’s wrongful death statute is partially punitive, a statutory void is created under the FTCA. While the applicability of our approach is thus limited, we are all in agreement that the FTCA, in the light of the questions raised by this and other cases, needs Congressional attention to establish a clearly defined, and, since it is a federal act recognizing federal policy, possibly a uniform standard or measure of damages. In the present case, the finding of liability is affirmed; the award of damages vacated, and the court instructed to recompute compensatory damages consistently with this opinion.

      . 28 U.S.C. § 1346(b); 28 U.S.C. § 2674.

      . Plaintiffs argue in tlieir brief that this is not novel, and that in feudal times this is precisely what happened, exeept that the crown was the inevitable beneficiary whether there were next of kin or not. Nee Smedley, Wrongful Death — Bases of the Common Law Rule, 13 Vand.L.Rev. 005 (1900). If this is relevant, we would answer that it was perhaps because of this that payment for wrongful death became unpopular and ceased, and, when revived by Lord Campbell’s Act was in the form of recompensing the actual loss of the survivors and natural beneficiaries.

      . The court did not determine the life expectancy of the parents, as it would in a survivors’ statute, see, e. g., United States v. Boykin, 5 Cir., 1931, 49 F.2d 762 (Jones Act, incorporating FELA) ; cf. Van Beeck v. Sabine Towing Co., 1937, 300 U.S. 342, 347, 57 S.Ct. 452, 81 L.Ed. 685; but manifestly it was less than the life, perhaps even of the projected earning period, of the deceased child.

      . That it is euphemistic to call it an estate statute at all is revealed by the fact that the award is not subject to the debts of the estate. Thus the survivors, whoever they may happen to be, get the best of both worlds.

      . The first paragraph of § 2674 reads: “Tlie United States shall be liable, respecting the provision of this title relating to tort claims, in the same manner and to the same extent as a private individual under like circumstances, but shall not be liable for interest prior to judgment or for punitive damages. . . ”

      . The second paragraph of § 2674, applicable where a state statute provided only punitive damages, specified the federal measure of recovery as “[ajctual or compensatory damages, measured by the pecuniary injuries resulting from such death to the persons respectively, for whose benefit the action was brought.”

      . The only significance we attach to the circumstance that the Georgia court described its statute as partially penal is that state courts do not normally have occasion to consider the distinction, which, in turn, might result in the federal court not being alerted to the issue.

      . See, e. g., United States v. Brooks, 4 Cir., 1949, 170 F.2d 482; Cronenberg v. United States, E.D.N.C., 1954, 123 F.Supp. 693.

      . This expedient is contrary to the traditional and strictly logical analysis employed elsewhere. See, e. g., Dugas v. National Aircraft Corp., 3d Cir., 1971, 438 F.2d 1386, 1396 n. 24.

      . The designated writer would prefer simply to play down strictures against speculative damages and permit the court to draw on its general knowledge and on such statistics as may be available as to normal expectancy. It is thus appropriate to say that the balance of the opinion, except the last paragraph, was primarily written by Chief Judge Coffin — with contributions from the rest of the panel — but it is equally fair to say that if a special rule is to be applied, this one seems the best to all of us, the majority of the panel having somewhat allayed the writer’s fears by agreeing that their proposed rule is, until hopefully Congress gives further consideration, not an attempt to indicate new principles applicable to other situations.

      . In an attempt to fill the statutory void we are aided by analogy to Moragne v. States Marine Lines, 1970, 398 U.S. 375, 408, 90 S.Ct. 1772, 1792, 26 L.Ed.2d 339, where, in commenting upon allowable recoveries under the newly-recognized wrongful death cause of action in admiralty, the Supreme Court said that as to “particular questions of the measure of damages, the courts will not be without persuasive analogy for guidance. Botli the Death on the High Seas Act [not helpful here, for tire reasons stated post] and the numerous state wrongful-death acts have been implemented with success for decades.” While we recognize that admiralty may be a unique source of special dispensation, we look upon Morayne as not too remote a source of guidance in the situation before us.

      . Were Rhode Island’s statute wholly punitive, the second sentence of § 2674, specifying compensation measured by pecuniary loss, would apply. But this provision has been held to apply only to the statutes of Massachusetts and Alabama, linking recovery to degree of culpability. Van Dusen v. Barrack, 1964, 376 U.S. 612, 627 n. 21, 84 S.Ct. 805, 11 L.Ed.2d 945. Were pecuniary loss to be the measure of recovery in all Federal Tort Claims Act cases, Congress could have said so in one sentence.
      Additionally, the fact that compensation under the FELA, 45 U.S.C. § 51 et seq., the Jones Act, 46 U.S.C. § 688, and the Death on the High Seas Act, 46 U.S.C. § 761 et seq. is limited to pecuniary loss does not dictate a similar result here. In Michigan Central R.R. v. Vreeland, 1913, 227 U.S. 59, 33 S.Ct. 192, 57 L.Ed. 417, the Supreme Court noted that the FELA was patterned after Lord Campbell’s Act, which, though not containing the word “pecuniary”, had been continuously interpreted as providing only for that limited type of compensation. The Jones Act, merely incorporating the FELA, utilizes the same standard. And the Death on the High Seas Act specifically refers to “fair and just compensation for the pecuniary loss.” 46 U.S.C. § 762.

      . The dangers of recognizing grief as compensable are stated in Note, The Value of a Child, 1972, 24 S.C.L.Rev. 86, and include the unusually high amounts which juries may award.

      . One of the early attempts to award more than nominal damages, yet still label the recovery as somewhat pecuniary in nature, occurred in Wycko v. Gnodtke, 1960, 361 Mich. 331, 105 N.W.2d 118, where the court adopted the “lost investment” theory, under which expenses incurred in the child’s upbringing prior to his death were awarded to the parents. flee also Comment, A Modern View of Wrongful Death Recoveries: Herein of tlio Infant and the Aged, 1959, 54 N.W.L. Rev. 254; Note, The Value of a Child, n. 13 ante. While this approach has the merit of supplying some degree of measurability and some inherent upper limit, we think it fails to recognize the true loss to the parents as the destruction of the parent-child relationship with its attendant society and companionship Wyoko lias not been followed, to our knowledge, in other jurisdictions as to the “lost investment” theory; in fact, the emphasis in Michigan has been more on the loss of society and companionship, sec Smith v. City of Detroit, 1972, 388 Mich. 637, 202 N.W.2d 300, which we adopt herein. Moreover, to the extent that a proper balance might be struck by a minimum recovery (to assure a recovery for the loss of a very young child) supplemented by proof of “lost investment” such a resolution is particularly within the province of the legislature.

      . E. g., Wardlow v. City of Keokuk, Iowa, 1971, 190 N.W.2d 439 ; Lockhart v. Besel, 1967, 71 Wash 2d 112, 426 P.2d 605; Fuentes v. Tucker, 1947, 31 Cal.2d 1, 187 P.2d 752; Gabriel v. Margah, 1947, 37 Haw. 571. In other states where damages are limited to those “pecuniary” in nature, statutes have been interpreted so as to include loss of society and companionship within that term. See, e. g., Fussner v. Andert, 1962, 261 Minn. 347, 113 N.W.2d 355; Hall v. Gillins, 1958, 13 Ill.2d 26, 147 N.E.2d 352. But whether by judicial decision or express statutory authority, it seems that a substantial number, if not a majority, of the states allow awards for the death of a child based on factors other than the traditional concept of pecuniary loss of the value of services and contemplated contribution. See In re Sincere Navigation Corp., E.D. La., 1971, 329 F.Supp. 652, 656; Graf v. Taggert, 1964, 43 N.J. 303, 204 A.2d 140, 143 n. 1.

      . An example of a court analyzing in a responsible and discriminating manner the loss occasioned by the destruction, through death, of family relationships is found in In re Sincere Navigation Corp., ante, cited with apxjroval in Gaudet v. Sea-Land Services, Inc., 5th Cir., 1972, 463 F.2d 1331, 1333.