Amoco Oil Company v. Environmental Protection Agency

No. 74-2131 (D.C. Cir. July 6, 1976)

ELR Digest

The court invalidates EPA regulations imposing strict vicarious liability on petroleum refiners for negligent acts of retailers that cause contamination of lead-free gasoline by leaded gasoline. Under § 211(c)(1)(B) of the Clean Air Act, 42 U.S.C. § 1857f-6c(c)(1)(B), ELR 41201, which allows the EPA Administrator to prohibit fuel additives that will impair the performance of automotive emission control devices, the Administrator promulgated regulations, 38 Fed. Reg. 1254 (Jan. 10, 1973), that would have imposed an irrebuttable presumption of refiner fault for any contamination at the retailer stage. These regulations were previously invalidated by this court. Amoco Oil Co. v. EPA, 501 F.2d 722, 4 ELR 20397 (D.C. Cir. 1974) (Amoco I). EPA's redrafting of the regulations, 40 C.F.R. § 80.23(b)(2)(iv), allows a refiner to escape liability for contamination only if the retailer does not lease his facility from the refiner or for the limited exceptions of deliberate contamination by vandals or service station employees.

Retailer negligence cannot be imputed to the refiner in all cases. Thus, the regulations arbitrarily create refiner liability even where the refiner his imposed a strict contractual obligation on the retailer to avoid contamination and has made every human effort possible to achieve compliance with it. The EPA has no authority under the Clean Air Act to alter the settled law of vicarious liability between lessor and lessee. The mere fact of a lease does not furnish a legal basis for imposing blanket responsibility upon the lessor for tortious acts committed by the lessee. Absent congressional inten to create a new tort, common law rules of vicarious liability apply. Isbrandtsen Co. v. Johnson, 343 U.S. 779 (1953).

Generally, vicarious liability may be imposed on a non-negligent person because of a closely-integrated relationship between him and the negligent party. W. Prosser, Law of Torts 458 (4th ed. 1971). The person to whom the negligence is imputed must have sufficient control over the acts of the negligent party to be responsible for those acts. Traditionally, a landlord is not vicariously liable for accidents caused by a lessee unless he has retained control over the premises. Prosser, supra, § 63. While the court is not willing to raise the traditional rule as a bar against all refiner liability, EPA cannot impose liability on all refiners for all negligent combinations occurring regardless of the degree of control exercised by the refiner over the retailer-lessee. Not all oil company leases necessarily retain control over retailers. Absent a demonstrated link between the lease and the degree of actual refiner control over retailers, EPA cannot impose blanket vicarious liability on refiners for negligent acts of their lessees. This rule is not an attempt to define the relationship that will justify imposition of vicarious liability. Indeed, the record contains no support for EPA's conclusion that refiners retain sufficient control over retailers to prevent contamination. The court merely holds this conclusion to be arbitrary.

The court's prior decision in Amoco I merely states when a refiner may not be held liable. It does not address the sufficiency of EPA's showing of when the refiner may be held liable.

Counsel for Petitioner
James F. Davis
Howrey, Simon, Baker & Murchison
1730 Pennsylvania Ave., NW
Washington DC 20006
(202) 872-8800

Counsel for Respondent
Edmund B. Clark
Raymond N. Zagone
Edward J. Shawaker
Department of Justice
Washington DC 20530
(202) 739-2956

Leslie A. Carothers
Environmental Protection Agency
Washington DC 20460
(202) 755-0766

MacKinnon, J., joined by Robb, J.; Wright, J., dissents.

[OPINION OMITTED BY PUBLISHER IN ORIGINAL SOURCE]

[6 ELR 20689]

Wright, J., dissenting:

The only issue in this case is whether refiners can be held vicariously liable for contamination of unleaded gasoline negligently caused by their lessee-retailers; it can be dispatched in one sentence. EPA was required by Amoco I only to give the refiners the ability to demonstrate freedom from fault; the regulations perform this task. Petitioners should have raised their current objections in a petition for rehearing of Amoco I.

EPA's new regulations are unquestionably valid. Lessees have precious few opportunities to cause negligent contamination, since the gasoline distribution system remains essentially in the retailers' control. The majority never indicates why it insists on a high degree of control by refiners over retailers in order to impose vicarious liability. Vicarious liability is imposed not because such control exists but because the government has determined that such an allocation of responsibility will serve society. It is hardly irrational to attempt to reduce contamination by making refiners liable for lessee negligence. Moreover, EPA's regulations do not impose vicarious liability of all lessee negligent torts, but only for the specific evil of gasoline contamination.

The regulations attempt to deter a new tort — negligent contamination or negligent impairment of an emission control device. There is no settled law regarding this narrow class of injuries. Indeed, experience with products liability issues indicates that the majority's rigid stance is suspect. There, as should occur in the present case, changing technology and social perceptions affected the growth of law more than did old doctrines.

EPA is the proper authority to determine the liability standards best able to meet the objectives of the Clean Air Act. This court should not second-guess EPA's decision. The record furnishes adequate support for EPA's position that refiners exert sufficient control over lessees to prevent gasoline contamination.

The full text of this decision is available from ELR (32 pp. $4.00, ELR Order No. C-1077).