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CHAPTER 9 ENVIRONMENTAL REGULATION AND SUSTAINABILITY LECTURE OUTLINE 9-1 Common Law Remedies and the Environment (See PowerPoint Slide 9-1) 9-1a

Nuisances • •

9-1b

Interference With Use and Enjoyment Damages and Injunction Possible

Data Barns and Nuisances • • •

Issues With Noise Issues With Interference Issues With Energy Costs and Pollutants

CASE BRIEF 9.1 Spur Industries, Inc. v. Del E. Webb Dev. Co. 494 P.2d 700 (Ariz. 1972) FACTS: Spur Industries operated a cattle feedlot near Youngtown and Sun City (communities 14 to 15 miles west of Phoenix). Spur had been operating the feedlot since 1956, and the area had been agricultural since 1911. In 1959, Del E. Webb began development of the Sun City area, a retirement community. Webb purchased the 20,000 acres of land for about $750 per acre. In 1960, Spur began an expansion program in which it grew from an operation of five acres to 115 acres. Webb began to experience sales resistance on the lots nearest Spur’s business because of strong odors. Nearly 1,300 lots could not be sold. Webb then filed suit alleging Spur’s operation was a nuisance because of flies and odors constantly drifting over Sun City. At the time of the suit, Spur was feeding between 20,000 and 30,000 head of cattle, which produced 35 to 40 pounds of wet manure per head per day, or over one million pounds per day. DECISION BELOW: The trial court enjoined Spur’s operations and Spur appealed.

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ISSUE ON APPEAL: Could Spur be enjoined from operating on the grounds of being a nuisance? Did Webb owe compensation? DECISION: The court held that the cattle operations created a public nuisance that needed to be enjoined. However, the court also noted that Del Webb had moved to the nuisance and Spur had begun operations in a remote area before the city had grown and that it could not anticipate that it would have caused a nuisance in that remote area at the time of its creation. Therefore, Del Webb was required to compensate Spur – an amount of $11 million was later agreed upon by the parties. Answers to Case Questions 1. The court found that the flies and smell were a public nuisance that required an injunction. Too many people were affected by the smell and flies and the result was rendering the surrounding land unusable. 2. The court finds that equity requires taking note of the fact that Spur was there first and could not have anticipated that, in that remote area, it would ever create a nuisance. However, the city moved out its way. The court must balance first-come rights with the resulting condemnation of surrounding property that occurs when growth occurs. 3. Spur must be compensated – it must recoup the costs of moving to a more remote location. Webb gets to use the land free of the nuisance but it must compensate those who were there first.

9-1c

NIMBYs and Nuisances • • •

Not In My Back Yard BANANAs – Build Absolutely Nothing Anywhere Near Anything Businesses Must Learn to Work With Them and Their Objections

ETHICAL ISSUES (The Ethics of Green Companies): Green companies still have electricity needs and the greater those needs, the more electricity we need to keep the internet going. These tech firms have the same issues as manufacturers because of the significant power requirements for production and storage of computer files.

9-2 Statutory Environmental Laws 9-2a

Air Pollution Regulation (See PowerPoint Slide 9-2) •

Early Legislation ▪

Air Pollution Control Act – 1955

© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license distributed with a certain product or service or otherwise on a password-protected website for classroom use.

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 Study by Surgeon General  Responsibility of states ▪

Clean Air Act of 1963  HEW given authority to conduct conferences  Recommend settlements for interstate pollution problems

▪

Air Quality Act of 1967  States to adopt plans  HEW to approve  No state had come up with a plan

•

1970 Amendments to the Clean Air Act: New Standards (See PowerPoint Slide 9-3) ▪

Clean Air Act Amendments of 1970    

•

EPA authorized to establish standards States required to adopt implementation plans (SIPs) EPA approval required for plans Economic and technological issues – legislation intended to force compliance

1977 and 1990 Amendments ▪

Clean Air Act Amendments of 1977 (See PowerPoint Slide 9-4)  Regulation of business growth  Nonattainment areas  Emissions offset – Economic Approach • •

Bubble concept followed For new plant to begin operations, its pollution had to be offset by reduction in the area

 Prevention of significant deterioration (See PowerPoint Slide 9-5) • EPA has right to review proposed plant construction • Plant has to show that there will not be significant deterioration

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1990 Amendments to Clean Air Act (See PowerPoint Slides 9-6 and 9-7)         

First comprehensive amendments since 1977 Focuses on smog, alternative fuels, toxic emissions, and acid rain Ozone goals for 101 cities 3-4 percent per year reduction in smog Regulations on tailpipe emissions/warranties on card Special nozzles to reduce gasoline fumes at the pumps Targeted industries include coal, chemical, printing, and electric Plants must use maximum achievable control technology (MACT) Acid rain covered • •

Sulfur dioxide pollution from factories and coal-fired generating plants Proposed controls are now before Congress

 Affected small businesses such as dry cleaners, paint shops, and bakeries  Transport Rule – upheld by the U.S. Supreme Court – requires upwind states to do more for clean-up if their pollutants affect downwind states •

New Forms of Control: EPA Expansion Through Administrative Procedures (See PowerPoint Slide 9-8) ▪ ▪ ▪

•

New Forms of Control: EPA and Global Warming ▪

•

In Massachusetts v. EPA, the U.S. Supreme Court granted authority for increased regulation

New Forms of Control: EPA and Small Businesses (See PowerPoint Slide 9-9) ▪

•

EPA uses economic forces: EPA decided to rely on markets and economics to mold behaviors Review with students the fact that clean air is now a bought and sold commodity EPA has authority to apply toughest emissions standards to modifications of plants and emissions (Duke case noted in text)

EPA has additional authority under 1990 amendments for controlling

New Forms of Control: EPA and Economic Forces ▪

Selling emissions permits

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Water Pollution Regulation •

Early Legislation (See PowerPoint Slide 9-10) ▪

Rivers and Harbors Act of 1899 – prohibited release of refuse without permission  Prohibited discharges into navigable waters  Used for enforcement since other laws had no teeth  Most industries got around the act quickly by obtaining the permits required under the act

▪

Water Quality Act of 1965  Created Federal Water Pollution Control Administration (FWPCA)  States required to establish water quality standards  No enforcement procedures – states did little

•

Present Legislation (See PowerPoint Slide 9-11) ▪

Federal Water Pollution Control Act of 1972    

Federal government responsible for standards and control Emissions controlled by industrial groups Ranges for groups referred to as effluent guidelines Permit required to discharge into waters: National Pollution Discharge Elimination Permit (NPDES) • • • •

Required for direct discharges – point source Permit requires EPA and state approval Releases controlled according to their conventional, nonconventional, or toxic standards Pretreatment required under permit with best conventional treatment (BCT) or best available treatment (BAT)

 Renamed in 1977 to Clean Water Act •

Other Water Legislation ▪

Safe Drinking Water Act (See PowerPoint Slide 9-12)  Passed in 1986  States responsible for enforcement but must have minimum federal standards for drinking water systems

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Oil Pollution Act of 1990  Passed in response to huge spills like Exxon Valdez  Companies must either clean up spill or pay federal government its costs for the clean-up  Applies to all navigable waters up to 200 miles offshore  Penalties of $25,000/day or $1,000/barrel • • •

9-2c

Failure to report spill – $250,000/5 years $500,000 penalty for corporation Based on the 2010 spill caused by the explosion of its Deepwater Horizon rig in the Gulf of Mexico, BP established a $20 billion recovery fund for businesses harmed or closed by the spill and also paid a $4 billion criminal penalty for the spill

Solid Waste Disposal Regulation •

Early Regulation ▪

Toxic Substances Control Act of 1976 (See PowerPoint Slide 9-13)  Response to chemical dumping  EPA controls manufacture and disposal of toxic substances

▪

Resource Conservation and Recovery Act of 1976  Regulates methods of disposal through a permit system  Discourages dumping

•

CERCLA, the Superfund, and Liability Issues ▪

Comprehensive Environmental Response, Compensation, and Liability Act (See PowerPoint Slides 9-14, 9-15, and 9-16)  “Superfund”  President authorized to issue funds for clean-up of dumping areas  Suit can be brought to recover funds expended from company responsible for the dumping  1986 amendments to act by Superfund Amendment and Reauthorization Act  EPA can now sue to recover clean-up funds from those who are responsible  700 hazardous substances are now covered  CERCLA Lender Liability •

Originally the Fleet Factors case imposed liability

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Congress passed the Asset Conservation, Lender Liability and Deposit Insurance Act of 1996 Lenders are excluded so long as their role is as a holder of a security interest ▪ ▪ ▪ ▪ ▪

Cannot participate in running the business Can monitor and enforce mortgage Can foreclose and sell Can lease Activities limited if they wish to avoid CERCLA liability

 CERCLA – Four Classes of Liability Rules • • • •

Owners Operators Transporters Those who arrange for transportation

See PowerPoint Slide 9-17.

CASE BRIEF 9.2 Burlington Northern Railway/Shell Oil Co. v. U.S. 556 U.S. 599 (2009) FACTS: In 1960, Brown & Bryant, Inc. (B & B), began operating an agricultural chemical distribution business. Using its own equipment, B & B applied its products to customers’ farms. B & B opened its business on a 3.8 acre parcel of former farmland in Arvin, California, and in 1975, expanded operations onto an adjacent 0.9 acre parcel of land owned jointly by the Atchison, Topeka & Santa Fe Railway Company and the Southern Pacific Transportation Company (Railroads). Waste water and chemical runoff from the facility was allowed to seep into the ground water below. During its years of operation, B & B stored and distributed various hazardous chemicals on its property sold by Shell Oil Company (Shell). When B & B purchased chemicals from Shell, Shell would arrange for delivery by common carrier, f.o.b. destination. When the product arrived, it was transferred from tanker trucks to a bulk storage tank located on B & B’s primary parcel. During each of these transfers, leaks and spills could – and often did – occur. Although the common carrier and B & B used buckets to catch spills from hoses and gaskets connecting the tanker trucks to its bulk storage tank, the buckets sometimes overflowed or were knocked over, causing chemical spills onto the ground during the transfer process.

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In the late 1970’s Shell took several steps to encourage the safe handling of its products. Shell provided distributors with detailed safety manuals and instituted a voluntary discount program for distributors that made improvements in their bulk handling and safety facilities. Later, Shell required distributors to obtain an inspection by a qualified engineer and provide self-certification of compliance with applicable laws and regulations. B & B’s Arvin facility was inspected twice and told Shell that it had made a number of recommended improvements to its facilities. Despite these improvements, B & B remained a “‘[s]loppy’ [o]perator.” The EPA soon discovered significant contamination of soil and ground water. By 1989, B & B was insolvent and ceased all operations. That same year, the Arvin facility was designated as a Superfund site. By 1998, the Governments had spent more than $8 million in cleanup costs. In 1991, EPA (Governments) ordered the Railroads to conduct certain cleanup processes. The Railroads did so, incurring expenses of more than $3 million in the process. Seeking to recover at least a portion of these costs, the Railroads brought suit against B & B. DECISIONS BELOW: The state and local governments appealed the District Court’s apportionment, and Shell cross-appealed the court’s finding of liability. Applying a theory of arranger liability, the Ninth Circuit held that Shell arranged for the disposal of a hazardous substance. The Court of Appeals held Shell and the Railroads jointly and severally liable for the Governments’ cost of responding to the contamination of the Arvin facility. ISSUE ON APPEAL: Is someone who arranged for delivery of a product responsible when the buyer does not take proper precautions in disposing of that product or using or transferring it? DECISION: The court held that Shell was not liable under CERCLA. The primary pollution at the Arvin facility was contained in the southeastern portion of the facility most distant from the Railroads’ parcel and that the spills of hazardous chemicals that occurred on the Railroad parcel contributed to no more than 10% of the total site contamination, some of which did not require remediation. The court reversed the Court of Appeals’ conclusion that the Railroads are subject to joint and several liability for all costs arising out of the contamination of the Arvin facility. The court held that Shell should not be held liable as an arranger under CERCLA because it did not arrange for disposal and it ran responsible programs to get distributors to comply with its standards. However, there was not intent on the part of Shell to dump the chemicals by arranging for their delivery. The court also held that the Railroads’ share of the site remediation costs was reasonably apportioned at 9% and that the parties were not joint and severally liable. Answers to Case Questions 1. Arranger is not a slam-dunk on liability. There are some who may be held liable. In this case, Shell had worked to prevent problems, but was unsuccessful. The court is unwilling to extend liability to all arrangers – there will need to be some form of control, some knowledge and inaction in order for CERCLA liability to kick in for arrangers.

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2. One of the worries of the justices was that this allocation would be no clean-up. However, the other side is that someone is always responsible for the clean-up – in this case it was an issue of who paid how much, not whether the funds would be available for clean-up. The complexity will perhaps string out the litigation. 3. Government agencies will not have the ease of turning to one source for reimbursement. There will be more negotiations over allocation of liability.

ANSWER TO CONSIDER 9.1: The analysis of all “Considers” are at the end of the chapter in the textbook. In the Burlington case, the court refused to hold Shell liable for the “sloppy” conduct of a customer in receiving goods purchased from Shell because Shell had made legitimate sales to customers and had provided information on the proper transport of its goods. Shell was not involved in the spills, and mere knowledge was not enough to result in its liability under CERCLA. The situation in the GE case is slightly different. This was a situation where GE had contaminated materials and had made arrangements with Fletcher to buy the materials from it. The goods being transferred were the contaminants and there was a need for disposal. A company cannot isolate itself from responsibility for disposal simply by hiring a contractor. There is a requirement to follow through with the reliability and responsibility of that contractor. In this case, GE, in one of the longest lasting EPA cases in history, was held liable. GE had a duty to follow through on the conduct of the party with whom it had contracted for disposing of its PCB materials. [U.S. v. General Elec. Co., 670 F.3d 377 (1st Cir. 2012).]  CERCLA and Corporate Liability  CERCLA and Buying Land Liability •

Role of due diligence (See PowerPoint Slides 9-18 and 9-19) ▪ ▪ ▪ ▪

Phase One – check to see if designated as a site Phase Two – soil testing Phase Three – clean-up As of late 2007, EPA is following what legal counsel are calling the “AAI” standard or “all appropriate inquiries made” prior to purchasing the land or building (see supplemental readings for more information) to be codified at 40 C.F.R. § 312.10

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New Developments Under CERCLA  CERCLA Challenges • • •

Causation Danger – is it real? Arbitrary and capricious challenges

 Insurers and CERCLA •

Coverage issues

 CERCLA and the Self-Audit (See PowerPoint Slides 9-20 and 9-21) • • • •

Companies can self-report Reduced fines for doing so Helps in accurate financial reports disclosure Check guidelines ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪ ▪

The violations were uncovered as part of a self-audit or due diligence done on property The violations were uncovered voluntarily The violations were reported to the EPA within 10 days The violations were discovered independently and disclosed independently, not because someone else was reporting or threatening to report There is correction of the violations within 60 days There is a written agreement that the conduct will not recur There can be no repeat violations or patterns of violations There is no serious harm to anyone as a result of the violation The company cooperates completely with the EPA

 CERCLA and Brownfields (See PowerPoint Slide 9-22) • •

9-2d

So many sites with many unused Small Business Liability Relief and Brownfields Revitalization Act provides funding for proposals to clean up and use land without full liability

Environmental Quality Regulation (See PowerPoint Slide 9-23) •

National Environmental Policy Act of 1969 ▪

Requires federal agencies to file environmental impact statements for their major actions (EISs)

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▪

Content of EIS:     

▪ ▪

9-2e

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Environmental impact Adverse effects Alternatives New effects – short term versus long term Irreversible effects

Can delay real estate developments where government serves as guarantor A June 1993 federal court ruling found that the NAFTA treaty could not be implemented without an EIS. The U.S. Trade Representative appealed the order and NAFTA was permitted to take effect without an EIS.

Other Federal Environmental Regulations (See PowerPoint Slides 9-24 and 9-25) • •

Surface Mining The Fracking Issue ▪ ▪

•

Noise Control ▪

•

Noise Control Act of 1972

Pesticide Control ▪ ▪ ▪

•

Emotional issue Several federal agencies working to develop regulations in this area, including disclosures by companies about fracking

Federal Environmental Pesticide Control Act Must register with EPA to ship Must label all pesticides

Asbestos ▪

Asbestos Hazard Emergency Response Act (AHERA)  Schools must inspect for asbestos and take action  Asbestos is a toxic pollutant and community right-to-know substance  Duty to disclose presence of asbestos

•

Endangered Species ▪

Endangered Species Act  Powerful tool for environmentalists  Habitats cannot be disturbed

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 Spotted owl and logging

See PowerPoint Slide 9-26.

CASE BRIEF 9.3 Babbitt v. Sweet Home Chapter of Communities for a Great Oregon 515 U.S. 687 (1995) FACTS: Two federal agencies halted logging in the Pacific Northwest because such logging endangers the habitats of the Northern Spotted Owl and the Red Cockaded Woodpecker. Landowners, logging companies and loggers and their families sued challenging the authority of the government to include “habitat modification” as protected under the ESA. DECISION BELOW: The district court found for the federal government. The court of appeals affirmed. ISSUE ON APPEAL: Does the ESA allow federal agencies to enjoin activity that “modifies” a habitat? DECISION: The term “harm” in the ESA can be used liberally but it does not require proof of “kill,” “harass,” or “pursue.” Harm encompasses harm to the habitat, not just harm to the endangered species. Answers to Case Questions 1. Yes, the Supreme Court holds that legislative intent should include this form of harm. The court notes that violations can occur in different ways and Congress intended flexibility in the acts enforcement. 2. Congressional override has permitted logging to continue. 3. Balancing the needs of wage earners and eco systems.

ANSWER TO CONSIDER 9.2: Have the students review the problem and then see discussion at the end of the chapter. The conclusion in the Bennett case was that those who sought to protect the species as well as those who were harmed by the protection had the right to challenge the agency’s determination. Chapter 5 described the basis for challenging administrative agency actions, including the fact that the action taken was not based on study and information but was arbitrary and capricious.

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The cattle growers here are the equivalent of Mr. Bennett in that case and therefore have standing to challenge the determination of endangered species status and the resulting impact on grazing lands. If the ACGA can show that the species are not endangered and challenge the factual findings of the agency, the rule can be set aside. The federal district court found that the Fish and Wildlife Service’s issuance of an ITS (incidental taking statement) for both the razorback sucker and the pygmy-owl was arbitrary and capricious, reasoning that the Fish and Wildlife Service “failed to provide sufficient reason to believe that listed species exist in the allotments in question.” [Arizona Cattle Growers’ Ass’n v. U.S. Fish and Wildlife, Bureau of Land Management, 273 F.3d 1229 (9th Cir. 2001).]

9-2f

State Environmental Laws (See PowerPoint Slide 9-27) • State EPA • Carpooling

9-3 Enforcement of Environmental Laws 9-3a

Parties Responsible for Enforcement (See PowerPoint Slides 9-28 and 9-29) • Environmental Protection Agency – EPA • Council on Environmental Quality – CEQ ▪ ▪ •

Part of executive branch Sets national policies and makes recommendations

Other Agencies ▪ ▪ ▪ ▪ ▪ ▪ ▪

Atomic Energy Commission Federal Power Commission HUD Department of Interior Forest Service Bureau of Land Management Department of Commerce

9-3b

Criminal Sanctions for Violations (see Exhibit 9.1 and PowerPoint Slides 9-30 and 9-31)

9-3c

Enforcement Through Group Suits: The Effect of Environmentalists • For Authority to Bring Suit (see Exhibit 9.1) • Injunctive Relief ▪

Can be sought by EPA

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Can be sought by private citizens

Environmental Groups Can Bring Suits ▪ ▪ ▪

Sierra Club Environmental Defense Fund League of Conservation Voters

9-4 International Environmental Issues (See PowerPoint Slides 9-32, 9-33, and 9-34) 9-4a

The EU and Environmentalism • Has 200 Regulations • Clearinghouse for Information • Eco-Audit Stickers Show company's level of • Eco-Labels environmental commitment • Germany's Blue Angel on its products

9-4b

ISO 14000 • • •

9-4c

International Organization for Standardization Companies Become ISO Certified Emphasizes Self-Audits and Self-Correction

LEED Certification • Leadership in Energy and Environmental Design • Third-Party Verification of Green Qualities of Buildings • Certification and Award Programs Conducted Internationally

9-4d

Kyoto Protocol • • •

9-4e

Emissions Controls by Nation Failed to Pass at Copenhagen Summit U.S. Is Not a Party

The Precautionary Principle • • •

New Governance Theory (EU origins) Must Take Precautions Even Before Harm Is Clear Burden of Proof Is on Those Who Oppose Regulations to Show No Harm, Not on Regulators to Show Harm

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ANSWERS TO CHAPTER QUESTIONS AND PROBLEMS 1. In the case, Manufacturer’s National Bank was not held liable because it was not an owner or operator, it did not foreclose and take possession of the property, and its involvement with the lender was no more than any ordinary creditor. [Z&Z Leasing, Inc. v. Graying Reel, Inc., 873 F. Supp. 51 (E.D. Mich. 1995).] 2. The court held that the plaintiff was not required to prove that the defendant released a certain amount of toxic waste in order to be held liable because the statute did to spell out such a requirement. The following is an excerpt from the court on this issue: We have strong reservations about interpreting the statute’s causation element to require that a defendant be responsible for a minimum quantity of hazardous waste before liability may be imposed. The text of the statute does not support such a construction – CERCLA itself does not expressly distinguish between releases (or threats of releases) by the quantity of hazardous waste attributable to a particular party. At least on its face; any reasonable danger of release, however insignificant, would seem to give rise to liability. On this point the courts of appeals are in unison. To read a quantitative threshold into the language “causes the incurrence of response costs” would cast the plaintiff in the impossible role of tracing chemical waste to particular sources in particular amounts, a task that is often technologically infeasible due to the fluctuating quantity and varied nature of the pollution at a site over the course of many years. Moreover, it would be extremely difficult, if not impossible, to articulate a workable numerical threshold in defining causation. How low would a polluter’s contribution to the mix have to be before a judge could find, with equanimity, that the polluter was not a but-for “cause” of the clean up efforts? Less than 0.5 percent or 1 percent? We do not see how much a line, based on the quantity or concentration of the hazardous substance at issue, can be drawn on a principled basis in defining causation. To even begin down that path, we feel, is to invite endless confusion. However, the court held that not requiring such proofs does not mean, however, that the de minimis polluter must necessarily be held liable for all response costs. The court held that a defendant may avoid joint and several liability for response costs in a contribution if it demonstrates that its share of hazardous waste deposited at the site constitutes no more than background amounts of such substances in the environment and cannot concentrate with other wastes to produce higher amounts. The ultimate failure of a contribution claim because someone did only a negligible amount of harm does not impede enforcement by the EPA or frustrate any of CERCLA’s objectives. The small polluter can be held liable, but not necessarily on an equal basis with others. [Acushnet Company v. Mohasco, 191 F.3d 69 (1st Cir. 1999).]

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3. The court held that Georgia Power was not an arranger under either CERCLA or the Burlington case because it was not making arrangements for disposal of waste, but was selling used equipment – a resale of equipment is not disposal of hazardous waste and it was not responsible for the leaked oil contamination. [Carolina Power & Light Co. v. Alcan Aluminum Corp., 921 F. Supp. 2d 488 (E.D. N.C. 2013).] 4. The court held that the mine was the community. It had been there first and the community developed around it. Absent any negligent operations, the mine was not a nuisance. Ask the students if this 1954 case would be decided differently today. [Patterson v. Peabody Coal Co., 122 N.E.2d 48 (Ill. 1954).] 5. Westin has found a loophole in the law to afford guests more water, but the question is whether it is ethical. No one anticipated Westin’s taking advantage of a loophole and circumventing the law’s purpose. 6. The EIS should have discussed the problem. Many interpret the Endangered Species Act as prohibiting all development but it is a question of balance and accommodation, which was what was done in this case. The project continued but used the least obtrusive means. The same controversy arose more recently when the University of Arizona proposed construction of a new observatory on Mt. Graham in southern Arizona, which is home to the endangered red squirrel. The telescopes are placed there but have been built on a staggered schedule that permits further study of the impact of the construction on the red squirrel population. The first such study indicates the red squirrel population has increased. [Tennessee Valley Authority v. Hill, 437 U.S. 153 (1978).]

INTERACTIVE/COOPERATIVE LEARNING EXERCISES Have students read the following case and discuss the scope of the EPA’s powers and remedies.

Center for Auto Safety v. Ruckelshaus 747 F.2d 1 (D.C. 1984) SCALIA, Circuit Judge. Section 207 of the Clean Air Act, 42 U.S.C. sec.7541 (1982) provides that if the Administrator of the Environmental Protection Agency (EPA) determines that a substantial number of any class or category of vehicles or engines fail during their statutorily defined useful life to conform to the regulations establishing maximum emission levels, the Administrator shall require the manufacturer to submit a plan for remedying the nonconformity at the manufacturer’s expense. The EPA has hitherto implemented this provision by requiring and approving plans that commit the manufacturer to recall and repair the nonconforming vehicles or engines. This case presents the question whether the EPA may implement it instead by approving a plan that commits the manufacturer to “offset” the excessive pollution emitted from nonconforming vehicles or engines by meeting lower than currently permitted emission standards for vehicles or engines to be built in future model years.

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Until 1970, the EPA enforced motor vehicle pollution restrictions exclusively by testing engine prototypes for compliance with emission standards. The experience of the 1960s showed that many vehicles in actual use emitted pollutants at levels far in excess of the tested prototypes and that the discrepancy grew as the vehicles’ mileage increased. Proponents of stricter clean air requirements concluded it was essential to “require that new cars meet not only the standards on the production line but also the standards in performance. Unless they do, the whole exercise is useless . . . .” The Clean Air Act Amendments of 1970, addressed this problem by adding sec.207, which requires the manufacturer to warrant continuing compliance with emission standards during the vehicle’s or engine’s useful life, directs the EPA to test for such compliance (if technologically feasible), and provides for the remedying of noncompliance as described above. As part of its in-use surveillance program, the EPA tested 1979 General Motors (GM) cars with GM engine family 920S2E. All ten test vehicles exceeded the NOx emission standard of 2.0 grams per mile, for reasons which neither the EPA nor GM was able to determine. In December 1980, the EPA ordered GM to submit a plan for remedying the nonconformity. In February 1981, GM submitted a proposed remedial plan that called for recall and repair of the nonconforming vehicles. After some discussions with EPA, GM submitted in May 1981 an alternate plan covering both the 920S2E engine family and the similar 920S4 family which also showed a 100 percent noncompliance rate for NOx. (The latter was under consideration for a noncompliance order by the EPA, though no formal determination of noncompliance had yet been made.) The new plan proposed not recalling and repairing the nonconforming 1979 vehicles but engineering 1982 and 1983 engine families to meet a target lower than mandatory NOx standards. The lower emissions from the 1982-83 vehicles would offset the excessive emissions from the 1979 vehicles. GM asserted that this plan would achieve environmental NOx benefits at least equal to the gain that could theoretically be achieved by a recall if all owners brought in their 1979 vehicles for repair, and far greater than what could realistically be expected given the large number of owners who would in fact not do so. GM claims that the offset plan would save the company $11.8 million and would save 1979 vehicle owners $25.8 million in fuel costs, since the repair remedy originally proposed would have caused increased fuel consumption. After negotiations with the EPA, GM submitted a final revised offset plan on July 2, 1982. The EPA accepted it on July 29, and published a Federal Register notice of this decision on August 30. On September 3, 1982, the Center for Auto Safety and others petitioned this court for review of the EPA’s decision under 42 U.S.C. sec.7607(b)(1)(1982). Petitioners challenge the EPA’s action as unlawful on the ground that the offset plan does not remedy the nonconformity of the 1979 vehicles within the meaning of Section 207(c). Nothing but recall and repair of the nonconforming vehicles themselves, they say, is an acceptable remedy under the statute. As in every case involving statutory construction, “our starting point must be the language employed by Congress.” Section 207(c) provides in relevant part as follows: Effective with respect to vehicles and engines manufactured during model years beginning more than 60 days after December 31, 1970 – (1) If the Administrator determines that a substantial number of any class or category of vehicles or engines, although properly

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maintained and used, do not conform to the regulations prescribed under section 7521 of this title, when in actual use throughout their useful life (as determined under section 7521(d) of this title), he shall immediately notify the manufacturer thereof of such nonconformity and he shall require the manufacturer to submit a plan for remedying the nonconformity of the vehicles or engines with respect to which such notification is given. The plan shall provide that the nonconformity of any such vehicles or engines which are properly used and maintained will be remedied at the expense of the manufacturer. If the manufacturer disagrees with such determination of nonconformity and so advises the Administrator, the Administrator shall afford the manufacturer and other interested persons an opportunity to present their views and evidence in support thereof at a public hearing. Unless, as a result of such hearing the Administrator withdraws such determination of nonconformity, he shall, within 60 days after the completion of such hearing, order the manufacturer to provide prompt notification of such nonconformity in accordance with paragraph (2). (2) Any notification required by paragraph (1) with respect to any class or category of vehicles or engines shall be given to dealers, ultimate purchasers, and subsequent purchasers (if known) in such manner and containing such information as the Administrator may by regulations require. Respondents Ruckelshaus and EPA, as well as Intervenor GM, argue that the variants of the word “remedy” in this provision should be understood in what they assert is the word’s “common law” sense, denoting the means by which a right is enforced or the violation of a right is prevented, redressed or compensated. At common law, they argue, substitutionary relief such as compensation is a basic principle of remedies; and absent evidence of a contrary intent, statutory terms with well defined common law content should be given that meaning. It seems to us that this argument overlooks the basic principle that, in statutes as elsewhere, a word cannot be construed in isolation from its context. If the common-law meaning that a word has acquired is a specialized one, and if the context of the statute is not the context for which that specialized meaning has been assigned, it would distort rather than effectuate legislative intent to disregard ordinary usage. That is the case here. The “substitutionary” connotation of the term “remedy” for which respondents argue is a specialized one. (When speaking of remedying the problem of international terrorism, for example, one would hardly have in mind the provision of adequate monetary compensation for its victims.) And the common-law context of the specialized meaning is judicial relief for private injury. Since the present statute involves executive rather than judicial action, and is addressed to public needs rather than private entitlements, we think the specialized meaning utterly inapt. Absent evidence of contrary intent, the words in the statute must be presumed to bear their normal meaning of eliminating, rather than merely providing compensation for the effects of, the condition that is to be “remedied.” Here that means eliminating the nonconformity of the GM vehicles or engines. Far from contradicting this ordinary meaning, both the surrounding text of the statute and its legislative history tend to confirm it. Paragraph 207(c)(2) requires that notification of nonconformity be provided by the manufacturer to dealers, ultimate purchasers, and (if known) subsequent purchasers. This expensive procedure is categorically required in all cases – yet it would serve no purpose whatever in those cases (if they existed) where offset was to be the relief. There is no point in notifying owners of a nonconformity that will be “remedied” by making changes in a future model. GM evidently realizes this, so its plan did not envision compliance with

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the notification procedures. How those statutory requirements could simply be ignored has not been explained. As for the legislative history: The Senate bill that eventually became the Clean Air Act Amendments of 1970 contained a provision substantially the same as what is before us, requiring the manufacturer to “remedy [the] nonconformity.” The Senate Committee reporting the bill described this provision as one imposing an obligation “to recall that model or class for the purpose of correcting any nonconformity.” In the floor debate, Senator McIntyre described the bill as “authorizing the Secretary Of Health, Education and Welfare to have cars road tested and recall those produced if they do not meet standards.” The House bill did not contain in-use testing provisions. The conference committee “adopt[ed] substantially . . . the provisions of the Senate amendment relating to compliance after sale and warranty.” Moreover, a summary of the conference agreement inserted in the Congressional Record by Senator Muskie, leader of the Senate conferees, stated that “the Administrator can test cars on the road, and can require recall if a representative sample fails the test.” It is true, as GM forcefully argues in its brief, that all of the statements we have just cited purport to describe merely what the Administrator may require and not what he must require. But the point is (as GM might more readily appreciate if it were contesting the Administrator’s imposition of a “substitutionary” remedy when it would prefer recall) there is nothing to suggest that he may impose offset. The mere fact that he has discretion in imposing the only remedy discussed that is authorized by the statute in no way implies that he has discretion to impose other remedies as well. Neither GM nor the EPA has been able to refer us to a single passage in the legislative history indicating that Congress had in mind any remedy other than recall when it enacted sec. 207(c). GM and EPA argue that in construing statutes courts must accord deference to the interpretation given by the implementing agency. That is true, but the degree of deference is not uniform. A high degree is appropriate, for example, when the agency’s expertise can help in assessing the effects of competing interpretations upon the policies of the statute (and hence assessing the interpretation which a wise Congress should be presumed to have intended). That is not the case here; the difference between both the nature and the consequences of recall on the one hand and offset on the other is readily apparent to the uninitiate. A high degree of deference is also called for when the text to be interpreted is a statutory provision that directs an agency to apply “a standard of such inherent imprecision (‘closely related to banking’) that a discretion of almost legislative scope was necessarily contemplated.” Such a standard is not at issue here. Finally, the degree of deference is also high when the agency presses upon us an administrative construction that is both “contemporaneous” with the statute’s enactment (presumably because that is unlikely to have been either informed or coerced by the enacting legislature’s genuine intent) and “longstanding” (presumably because, as a matter of stable government even a minor error regarding the enacting legislature’s genuine intent acquires a certain prescriptive right if not corrected by subsequent legislatures). Neither of those conditions is present here. From 1970 until this case, the EPA consistently required recall as the remedy for nonconformity under sec.207(c). The regulations issued to implement the section continue to be entitled “Recall Regulations,” and nowhere suggest that any remedy other than recall might be appropriate. Recall has been assumed to be the exclusive remedy even in litigation before this court involving EPA implementation of sec. 207(c).

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The degree of deference appropriate here, therefore, is modest – no more than that thoughtful respect we should give to the views of the officers of another branch who have been officially presented with the issue and who, like us, have taken an oath to apply the law that Congress enacted. That is not enough to overcome what seems to us the clarity of the statutory analysis set forth above. We conclude, therefore, that sec. 207(c) requires recall and repair as the only statutory remedy for nonconformity. Since that is so, the EPA acted unlawfully in proceeding under sec. 207(c) to accept GM’s offset plan as a remedy for the nonconformity – just as it would have acted unlawfully to require it. We emphasize that this is the only issue presented and decided. Specifically, we do not consider the agency’s ability to take account of an offset commitment in the exercise of its enforcement discretion, should it decide in a particular case that such a course is “best calculated to achieve the ends contemplated by Congress and to allocate its available funds and personnel in such a way as to execute its policy efficiently and economically.”

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Walsh, William J., Mark A. Erman, and Jane C. Luxton, “Reporter Industry Cries Foul to EPA's Attempt to Regulate GHG Emissions Using the Clean Air Act,” 10 SUSTAINABLE DEV. L. & POL'Y 39 (Winter 2010). Weiler, Michelle, “The Environmental Protection Agency’s New Standard for CERCLA All Appropriate Inquiry: More Time and Money for Compliance, But Well Worth the Cost to Avoid CERCLA Liability,” 14 U. BALT. J. ENVTL. L. 159 (2007). Winters, Nicholle, “Carbon Dioxide: A Pollutant in the Air, But is the EPA Correct That It is Not an ‘Air Pollutant’?” 104 COLUM. L. REV. 1996 (November, 2004).