March 31, 2015

　　Last month, ACA filed an amicus brief in a case before the U.S. Supreme Court, Volvo Powertrain Corporation v. United States of America, California Air Resources Board. The case, on petition for writ of certiorari via the U.S. Court of Appeals for the D.C. Circuit, relates to a consent decree that was voluntarily entered into by a Swedish engine manufacturer to comply with Clean Air Act emission requirements applicable to diesel engines, and which the U.S. Environmental Protection Agency (EPA) utilized to expand its domestic regulatory authority.

　　A subsidiary not involved in the consent decree sought and received EPA approval to import diesel engines. A few years later, EPA sued that company, claiming the 7,262 engines — most of which were never imported into the United States — violated the consent decree. The trial judge decided to impose a $72 million sanction that was not explicitly excluded from the consent decree and was beyond what the law requires. On appeal, the D.C. Circuit affirmed, ruling that the consent decree applied to engines made at a plant owned by Volvo Powertrain, and that the amount of the fine was not an abuse of the court’s discretion.

　　The March 9-filed amicus brief, authored by Professor Laurence Tribe of Harvard University, supports review of the case by the nation’s highest court. The brief presents the following questions: 1) Whether EPA exceeds its regulatory authority under the Clean Air Act by imposing more than $72 million in penalties for foreign engine emissions based on a consent decree that limits EPA’s enforcement power to the territorial reach of the act; and 2) Whether a court violates its obligation to ensure that a consent decree furthers the objectives of the statute being enforced by construing consent decree provisions contrary to incorporated statutory language.

　　The amicus brief, jointly filed by ACA, the National Association of Manufacturers, the American Petroleum Institute, the Organization for International Investment, and the Metals Service Center Institute, maintains that the case presents an important question of whether an agency may reinterpret a consent decree to expand its authority beyond its statutory limits and beyond the territorial jurisdiction of the United States. Consent decrees are a common settlement tool for businesses to achieve a clear and final resolution to enforcement actions the outcome of which is uncertain for both the government and the regulated entity. They sometimes incorporate requirements that go beyond what the law requires or what the court could order without the agreement of the parties. Federal agencies are parties to thousands of consent decrees, and because of uncertain liability and draconian potential penalties, regulated parties often have little choice but to resolve a matter this way rather than to contest it on the merits. Consequently, settlements must provide a clear and reliable understanding of what will be required, and courts must be careful to construe the agreements as written. The brief argues that agencies like EPA should not be allowed to operate beyond statutory limits imposed by Congress.

　　ACA and its fellow amici argue that EPA should not be able to broaden the terms of the settlement to impose penalties beyond those in the consent decree for actions not subject to the EPA regulations at issue. Moreover, EPA’s authority is even more questionable because the engines were not made by the company but by an affiliate, and the requirements alleged to have been violated involved accelerated compliance deadlines that did not apply to other companies.

　　Through its Amicus and Legal Tracking System program, ACA chooses select prominent cases each year in which it files an amicus, or “friend of the court,” brief as a show of support for issues that can adversely impact the industry. Specifically, the Amicus Program seeks to prevent court decisions that establish bad precedent, to overturn such precedent where it currently exists, and to advance the legal protection of property due process and liberties that rightfully belong to good faith corporate interests and behavior. Since the program’s 2007 inception, ACA has filed more than 40 amicus briefs.

　　Contact ACA’s Tom Graves for more information.