Last December, General Motors agreed to voluntarily recall about 470,000 vehicles equipped with 4.9L V-8 engines to install new fueling calibrations in these vehicles to achieve lower emissions levels. This raised considerable questions regarding GM's environmental efforts, particularly given the federal government's public statements regarding this issue. first and foremost, these vehicles meet all applicable standards when tested according to the Federal Test Procedure and have valid certificates from the U.S. Environmental Protection Agency (EPA). In addition, they are safe to drive.

This complicated regulatory issue focuses on the emissions performance of these vehicles in test conditions not covered by the government emissions testing requirements (off-cycle), specifically when the air conditioning (AC) climate control is on. Current federal regulations do not require operation of the air conditioning climate control during the test. The EPA is drafting future regulations that would--cover the vehicle-emissions performance. when the air conditioning is on. In fact, GM is an active participant in helping to develop these new regulations. During the process, GM volunteered several vehicles to assist the EPA.

The EPA tests on the volunteered vehicles with the 4.9L engine noted an increase in emissions during Ac-on operations--the result of air conditioning-related fuel enrichment. In response to customer complaints about stalling when the air conditioning was on, GM modified the engines to allow for fuel enrichment when climate control was engaged.

While such enrichment is an accepted and widely used engineering practice in the industry, the emissions increase on the Cadillac was greater than for most vehicles. The government felt that the fuel enrichment should occur only when the air conditioning compressor was actually engaged, rather than when the climate control feature was used.

Once contacted by the U.S. Department of Justice (DOJ), GM took several steps. We developed new fueling calibrations for these engines. These new calibrations achieve lower emissions levels even when the air conditioning climate control is on. Because we can improve the emissions performance with the air conditioning on, we believe recalling the vehicles is the right thing to do. That's why we are voluntarily recalling them, at considerable cost. It was not a court-ordered recall.

Second, we engaged in a year-long dialogue with the EPA and the DOJ, providing them with detailed background on fuel enrichment and our overall emissions performance. The result was clearly a difference of opinion with the EPA and DOJ regarding interpretation of the regulations on off-cycle emissions. GM's focus was to work to resolve that difference in a collaborative way, as a more appropriate resolution of the issue than litigation. Given our strong environmental commitment, we believe a non-adversarial, collaborative approach is important for industry and government to achieve continued environmental progress.

Cadillac Motor Car Div. has informed owners by letter of the future recall, indicating that validated parts are anticipated in the summer of 1996. They've told owners that the division will do whatever it takes to make this inconvenience as minor as possible, from changing the part in an owner's driveway, to providing a loaner car.

Some additional facts regarding this issue are worth highlighting:

* The carbon monoxide (CO) impact of the 4.9L engine is too small to be measured at air quality monitoring stations arid would not have caused any area to exceed ambient CO standards.

* EPA data show that the average car on the road in the U.S. emits 23 grams per mile of CO; the vehicles equipped with the 4.9L engine, even with the air conditioning on, emit less than half of that, on average.

* EPA testing of a sample of recent model-year vehicles showed GM's vehicles as a group have lower emissions with Ac-on and Ac-off than non-gm vehicles.

* The total number of areas in the United States experiencing CO violations has dramatically decreased, from 44 in 1988 to nine in 1994.

Overall, GM has made a strong contribution to substantial emissions reductions in this country. We at GM can be proud of our initiatives to improve air quality. Our focus continues to be to ensure that the employees understand the importance of the environment to our business success. Issues such as these only serve to highlight that importance.