543 F.2d 270 | D.C. Cir. | 1976
Lead Opinion
We here review for the second time regulations promulgated by the Administrator of the Environmental Protection Agency (EPA) for the protection of catalytic converter emission control devices pursuant to section 211(c)(1)(B) of the Clean Air Act of 1970, which provides:
(c)(1) The Administrator may, from time to time on the basis of information obtained under subsection (b) of this section or other information available to him, by regulation, control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of any fuel or fuel additive for use in a motor vehicle or motor vehicle engine .
(B) if emission products of such fuel or fuel additive will impair to a significant degree the performance of any emission control device or system which is in general use, or which the Administrator finds has been developed to a point where in a reasonable time it would be in general use were such regulation to be promulgated.
42 U.S.C. § 1857f-6c(c)(l)(B) (1970). Because lead emissions interfere with the operation of the catalytic converters now installed on most new cars,
Following the decision in Amoco I, the Administrator redrafted the liability section of the regulations and reissued it.
(iv) That the violation was caused by the action of a retailer who is supplied directly by the refiner (and not by a reseller), and whose assets or facilities are not substantially owned, leased, or controlled by the refiner, in violation of a contractual undertaking imposed by the refiner on such retailer designed to prevent such action, and despite reasohable efforts by the refiner (such as periodic sampling) to insure compliance with such contractual obligation .
(Emphasis added). See note 7 supra. The provision to which petitioners object is the phrase which allows the refiner to escape liability only if it can show that the guilty retailer is one “whose assets or facilities are not substantially owned, leased, or controlled by the refiner.” Under this provision, the refiner would always be liable for the actions of a retailer who leases his station from a refiner, unless one of the special exceptions in the regulations applied.
Initially, it should be made clear that we are concerned here only with the liability for negligent contamination, since the refiner is able to escape liability for deliberate acts of contamination on the part of the retailer under the provisions of 40 C.F.R. §§ 80.23(b)(2)(ii) or 80.23(e) (1975).
(1) that the violation was not caused by an employee or agent; and
(2) that the violation was caused by the action of an independent (non-lessee) retailer; and
(3) that the retailer’s action was in violation of a contractual undertaking imposed by the refiner upon the retailer and designed to prevent such action; and
(4) that the refiner had made reasonable efforts to insure compliance with that contractual obligation.
Our objection to this new regulation is that, even assuming the fault of the lessee can be proved, we do not believe that the lessee’s negligence can be imputed to the refiner in all cases. The second element which must be proved under section (b)(2) in order for the refiner to escape liability is that the violation was caused by an independent (non-lessee) retailer. Thus, if condition (2) is not met because the retailer’s facilities are leased to him by the refiner, the escape provisions of subsection (b)(2)(iv) can never apply even if the refiner has imposed upon the retailer a strict contractual undertaking to avoid contamination and made every human effort possible to insure compliance with it. Such result is arbitrary.
In defense of the capricious results
As a starting point, it should be noted that the EPA is not “properly authorized” to impose a blanket vicarious liability. There is nothing in the statutory grant of power to the Administrator “by regulation [to] control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of any fuel or fuel additive for use in a motor vehicle or motor vehicle engine . . . ,” 42 U.S.C. § 1857f-6c(c)(1), that expressly or impliedly authorizes him to alter the settled law between lessor and lessee as to their respective responsibilities in tort
Generally, vicarious liability may be imposed upon a non-negligent person by reason of some closely integrated relationship existing between him and the negligent party.
The case now before us presents a question of whether vicarious liability can be imposed on a lessor for the negligent acts of his lessee who sells the lessor’s products. Traditionally, the rule has been that once control of the premises passes to the lessee, the landlord is not vicariously liable for accidents which occur thereon unless he has retained control over the premises.
The dissenting opinion attempts to characterize our position on this point as requiring a “high degree” of control by the refiner over his lessee before negligence may be imputed. Dissent 177 U.S.App.D.C. at -, 543 F.2d at 280. That is an incorrect interpretation of our holding. We are not now attempting to define the nature of the relationship which will justify the imposition of vicarious liability.
No contrary result is required by our prior opinion in this case. In striking down the liability provisions of the previous regulations in Amoco I, we held that
[rjefiners and distributors must have the opportunity to demonstrate freedom from fault. ... A refiner which can show that its employees, agents, or lessees did not cause the contamination at issue, and that the contamination could not have been prevented by a reasonable program of contractual oversight, may not be held liable .
163 U.S.App.D.C. at 189, 501 F.2d at 749 (footnote omitted, emphasis added). Curiously, the dissent reads this passage to “plainly” mean that a refiner can be held responsible when contamination results from the negligent act of a lessee, dissent 177 U.S.App.D.C. at -, 543 F.2d at 280, and in its footnotes goes even further
Therefore, to validate the existing regulations, the phrase “whose assets or facilities are not substantially owned, leased, or controlled by the refiner” must be stricken from 40 C.F.R. § 80.23(b)(2)(iv) (1975). This will then permit refiners to escape liability if they can prove that the contamination was caused by the action of a directly-supplied lessee. Otherwise, the regulation exceeds the authority conferred on the Administrator by the statute, 42 U.S.C. § 1857f-6c(c)(l), and is “arbitrary . . [and] not in accordance with law.” 5 U.S.C. § 706(2). As we view the law the refiner cannot be held liable for the negligence of every retailer merely because he owns and leases the premises where his products are sold.
Judgment accordingly.
. See Amoco Oil Co. v. EPA, 163 U.S.App.D.C. 162, 166 & n.3, 501 F.2d 722, 726 & n.3 (1974).
. 38 Fed.Reg. 1254-56 (Jan. 10, 1973). The proposed regulations had been published on February 23, 1972, 37 Fed.Reg. 3882-84, at
The regulations at issue here must be distinguished from those which the EPA has issued under section 211(c)(1)(A) of the Clean Air Act, 42 U.S.C. § 1857f-6c(c)( 1 )(A) (1970), to protect the public health. 38 Fed.Reg. 33741 (Dec. 6, 1973). The latter regulations, which limit the lead content of all gasoline, have elsewhere been upheld by this court in a divided vote. Ethyl Corp. v. EPA, 176 U.S.App.D.C. 373, 541 F.2d 1 (1976).
. 163 U.S.App.D.C. 162, 501 F.2d 722 (1974). The regulations which were there under review are set out as an addendum to that opinion. Id at 193-97, 501 F.2d at 753-57.
. 40 C.F.R. §§ 80.23(a)(1), (a)(2) (1973).
. 163 U.S.App.D.C. at 188, 501 F.2d at 748.
. 39 Fed.Reg. 42360 (Dec. 5, 1974); 39 Fed.Reg. 43284 (Dec. 12, 1974). The new regulation appears in 40 C.F.R. § 80.23 (1975). The revised liability section was first proposed a month before our decision in Amoco I, see 39 Fed.Reg. 13174 (April 11, 1974), because the “EPA has concluded that certain of petitioners’ objections [in Amoco I] are valid and should be recognized in the provision for apportionment of liability.” Id. The Amoco I court took note of the proposed revisions, but observed that they were “not before us in this litigation.” 163 U.S.App.D.C. at 189 n.3, 501 F.2d at 749 n.3.
. § 80.23 Liability for violations.
Liability for violations of paragraph (a) of § 80.22 shall be determined as follows:
(a)(1) Where the corporate, trade, or brand name of a gasoline refiner or any of its marketing subsidiaries appears on the pump stand or is displayed at the retail outlet or wholesale purchaser-consumer facility from which the gasoline was sold, dispensed, or offered for sale, the retailer or wholesale purchaser-consumer, the reseller (if any), and such gasoline refiner shall be deemed in violation. Except as provided in paragraph (b)(2) of this section, the refiner shall be deemed in violation irrespective of whether any other refiner, distributor, retailer, or wholesale purchaser-consumer or the employee or agent of any refiner, distributor, retailer, or wholesale purchaser-consumer may have caused or permitted the violation.
(2) Where the corporate, trade, or brand name of a gasoline refiner or any of its marketing subsidiaries does not appear on the pump stand and is not displayed at the retail outlet or wholesale purchaser-consumer facility from which the gasoline was sold, dispensed, or offered for sale, the retailer or wholesale purchaser-consumer and any distributor who sold that person gasoline contained in the storage tank which supplied that pump at the time of the violation shall be deemed in violation.
(b)(1) In any case in which a retailer or wholesale purchaser-consumer and any gasoline refiner or distributor would be in violation under paragraphs (a)(1) or (2) of this section, the retailer or wholesale purchaser-consumer shall not be liable if he can demonstrate that the violation was not caused by him or his employee or agent.
(2) In any case in which a retailer or wholesale purchaser-consumer, a reseller (if any), and any gasoline refiner would be in violation under paragraph (a)(1) of this section, the refiner shall not be deemed in violation if he can demonstrate:
(i) That the violation was not caused by him or his employee or agent; and
(ii) That the violation was caused by an act in violation of law (other than the Act or this part), or an act of sabotage, vandalism, or deliberate commingling of leaded and unleaded gasoline, whether or not such acts are violations of law in the jurisdiction where the violation of the requirements of this part occurred, or
(iii) That the violation was caused by the action of a reseller or a retailer supplied by such reseller, in violation of a contractual undertaking imposed by the refiner on such reseller designed to prevent such action, and*273 despite reasonable efforts by the refiner (such as periodic sampling) to insure compliance with such contractual obligation, or
(iv) That the violation was caused by the action of a retailer who is supplied directly by the refiner (and not by a reseller), and whose assets or facilities are not substantially owned, leased, or controlled by the refiner, in violation of a contractual undertaking imposed by the refiner on such retailer designed to prevent such action, and despite reasonable efforts by the refiner (such as periodic sampling) to insure compliance with such contractual obligation, or
(v) That the violation was caused by the action of a distributor subject to a contract with the refiner for transportation of gasoline from a terminal to a distributor, retailer or wholesale purchaser-consumer, in violation of a contractual undertaking imposed by the refiner on such distributor designed to prevent such action, and despite reasonable efforts by the refiner (such as periodic sampling) to insure compliance with such contractual obligation, or
(vi) That the violation was caused by a distributor (such as a common carrier) not subject to a contract with the refiner but engaged by him for transportation of gasoline from a terminal to a distributor, retailer or wholesale purchaser-consumer, despite reasonable efforts by the refiner (such as specification or inspection of equipment) to prevent such action, or
(vii) That the violation occurred at a wholesale purchaser-consumer facility: Provided, however, That if such wholesale purchaser-consumer was supplied by a reseller, the refiner must demonstrate that the violation could not have been prevented by such reseller’s compliance with a contractual undertaking imposed by the refiner on such reseller as provided in paragraph (b)(2)(iii) of this section.
(c) In any case in which a retailer or wholesale purchaser-consumer, a reseller, and any gasoline refiner would be in violation under paragraph (a)(1) of § 80.23, the reseller shall not be deemed in violation if he can demonstrate that the violation was not caused by him or his employee or agent.
(d) In any case in which a retailer or wholesale purchaser-consumer and any gasoline distributor would be in violation under paragraph (a)(2) of this section, the distributor will not be deemed in violation if he can demonstrate that the violation was not caused by him or his employee or agent.
(e)(1) In any case in which a retailer or his employee or agent or a wholesale purchaser-consumer or his employee or agent introduced leaded gasoline from a pump from which leaded gasoline is sold, dispensed, or offered for sale, into a motor vehicle which is equipped with a gasoline tank filler inlet designed for the introduction of unleaded gasoline, only the retailer or wholesale purchaser-consumer shall be deemed in violation.
(2) If a retailer or a wholesale purchaser-consumer establishes that the conduct referred to in paragraph (e)(1) of this section was in response to the requirements of a bona fide emergency (such as when the gasoline tank of a vehicle is almost empty and no unleaded gasoline is available within a several mile radius), the retailer or wholesale purchaser-consumer will not be deemed in violation: Provided, however, That the amount of leaded gasoline which was introduced into the vehicle was limited to no more than was reasonably required to alleviate the circumstances of the particular emergency situation.
. Petitioners objected to provisions in the new regulations which required a refiner, in order to avoid strict liability, to prove affirmatively that the violation “was caused” by another party. See 40 C.F.R. § 80.23(b) (2) (ii) — (vii), supra note 7. Because the Clean Air Act provides that “violators” are to be held liable, 42 U.S.C. § 1857f-6c(d) (1970), it was argued that the statute does not allow the Administrator to impose absolute liability on one who fails to prove that he is not a “non-violator.” Therefore, petitioners maintained that the regulations should be revised to make it clear that the burden of proof lies with the Administrator.
At the suggestion of this court, the parties met following oral argument and drafted the following additional subsection which they agree disposes of the “burden of proof’ issue in a manner satisfactory to both sides:
(viii) In subparagraphs (ii) through (vi) hereof, the term “was caused” means that the refiner must demonstrate by reasonably specific showings by direct or circumstantial evidence that the violation was caused or must have been caused by another.
The new subsection will appear in 40 C.F.R. § 80.23(b)(2)(viii).
. See 40 C.F.R. §§ 80.23(b)(2)(ii), 80.23(e) (1975), supra note 7.
. The dissent argues that “the lessee has precious few opportunities to cause non-deliberate —negligent—contamination. The refiner both controls deliveries of gasoline to the station by tank truck . and maintains substantial control over the equipment that will handle the gasoline at the station^ . . Dissent 177 U.S.App.D.C. at -, 543 F.2d at 28Ó. This", of course, assumes the very point at issue here: who actually controls the retailer’s facilities? The fact that the refiner initially installed the equipment is certainly not dispositive, and whether the refiner “remains the owner of it, charged with its continuing care” will depend upon the terms of the individual lease agreement.
. Under the Administrative Procedure Act, 5 U.S.C. § 706(2) (1970), we are to “hold unlawful and set aside agency actions found to be (A) arbitrary, capricious, an abuse
. Generally, the landlord is not responsible for injuries or harm caused by conditions which develop or are created by the tenant after possession (and thus control over the premises) has been transferred; nor is the landlord responsible for activities which the tenant carries on upon the land after the transfer. W. Prosser, Law of Torts § 63 (4th ed. 1971). See also 2 Restatement (Second) of Torts §§ 355-56 (1965). Control over the premises is often a decisive factor. 2 Restatement, supra, at § 360; Steffen, Independent Contractor and the Good Life, 2 U.Chi.L.Rev. 501, 520 (1935).
. Our dissenting colleague speaks of a “new tort” but what he really attempts to bring about is a new liability for an old tort, i. e., negligent contamination. There is nothing new about that tort. It is as old as merchandising— and from time to time it appears in new forms. That the dissenting opinion would radically and lightly change long established law is implicitly admitted 177 U.S.App.D.C. at---•, 543 F.2d at 281-282, infra. The change is massive and legislative in character and if Congress wants to impose such liability without fault it can be authorized in a proper way; but Congress has not done so in the existing act. How imposing liability for another’s tort on one who is without fault may operate to serve “society’s ends,” dissent 177 U.S.App.D.C. at -, 543 F.2d at 281, is not explained. Actually, the real objective is to strengthen the arbitrary hand of the agency and ease its burden of collecting its penalties.
. See W. Prosser, supra note 12, at 458.
. See Douglas, Vicarious Liability and Assumption of Risk, 38 Yale L.J. 584, 594 (1929); Harper, The Basis of the Immunity of an Employer of an Independent Contractor, 10 Ind. L.J. 494 (1935); Morris, The Torts of an Independent Contractor, 29 Ill.L.Rev. 339, 343 (1935); Steffen, Independent Contractor and the Good Life, 2 U.Chi.L.Rev. 501 (1935).
. See generally W. Prosser, supra note 12, at §§ 70-71.
. See W. Prosser, supra note 12, at 467; W. Seavey, Law of Agency, 138, 142 (1964).
. See note 12 supra.
. See, e. g., Simpson v. Union Oil Co. of California, 377 U.S. 13, 20, 84 S.Ct. 1051, 1056, 12 L.Ed.2d 98 (1964); FTC v. Sinclair Refining Co., 261 U.S. 463, 473-75, 43 S.Ct. 450, 453-54, 67 L.Ed. 746 (1923); Gray v. Shell Oil Co., 469 F.2d 742 (9th Cir. 1972); Site Oil Co. of Mo. v. NLRB, 319 F.2d 86 (8th Cir. 1963); Peter v. Union Oil Co. of California, 328 F.Supp. 998 (N.D.Cal.1971); United States v. Richfield Oil Co., 99 F.Supp. 280, 288-89 (S.D.Cal.), affd, 343 U.S. 922, 72 S.Ct. 665, 96 L.Ed. 1334 (1951).
The dissent criticizes our use of these antitrust cases as saying “nothing whatever about imposition of vicarious liability.” Dissent 177 U.S.App.D.C. at -, 543 F.2d at 283 (footnote eliminated). But we cite them only for the proposition that some, if not many, retail dealers “have all or most of the indicia of entrepreneurs.” Simpson, supra, 377 U.S. at 20, 84 S.Ct. at 1056. The Supreme Court in these cases examined individual refiner-lessee relationships and found that the lessee was an independent businessman. This, although certainly not dispositive of the issue in the present case, does cast doubt upon the EPA’s finding that all lessees are mere appendages of the refiner.
. In using the term “closely integrated” to characterize the relationship which must be shown to exist between the employer and his “employee,” text 177 U.S.App.D.C. at --, 543 F.2d at 276 supra, we only signify "that their relationship must meet the traditional legal tests. By defending the imposition of blanket vicarious liability upon refiners for the acts of their retailer-lessees, the dissent demonstrates that it is unfamiliar with the factors and elements which establish the employment relationship or its equivalent. The statutes and decisions in the unemployment compensation area furnish a good example.
Many states have incorporated into their unemployment insurance statutes a three-fold test of what constitutes an employer-employee relationship. See, e. g., 11 Del.Code Ann. § 19-3302(9)(A) (1975); 16 Code Ga.Ann. § 54-657(h)(6) (1975 Supp.); Bums Ind.Stat.Ann. § 22-4-8-l(a) (1974); 23 La.Rev.Stat. § 1472(12)(E) (1950); 8A Ann.Code Md.1957, Art. 95A, § 20(6) (1975 Supp.); 48 Neb.Rev. Stat. § 604(5) (1971 Supp.); 9 Va.Code Ann. § 60.1-14(b) (1973); 11 Rev.Code Wash. § 50.-04.140 (1958); 17 Wis.Stat.Ann. § 108.02(3)(b) (1974). Under this test, the employer can prove that no employment relationship exists by showing that (1) the worker is free from control or direction in the performance of his work under his contract of service and in fact, and (2) the service is outside the usual course of the business for which it is performed, or it is performed outside of all the places of business of the enterprise for which such service is performed, and (3) the worker is customarily engaged in an independently established trade, occupation, profession or business. It is extremely likely that a great many service station lessees would meet this test and thus be held not to be employees of the refiner-lessor. In fact, lessees have been found to be independent contractors under these statutes where the necessary elements of control and direction were lacking. Compare Huiet v. Great A&P Tea Co., 66 Ga.App. 602, 18 S.E.2d 693 (1942), with Johnson v. Huiet, 67 Ga.App. 638, 21 S.E.2d 437 (1942), and Young v. Bureau of Unemployment Comp., 63 Ga.App. 130, 10 S.E.2d 412 (1940); and compare Wolff Co. v. Riley, 24 Wash.2d 62, 163 P.2d 179 (1945), with State v. Goessman, 13 Wash.2d 598, 126 P.2d 201 (1938), and McDermott v. State, 196 Wash. 261, 82 P.2d 568 (1938).
Under the federal unemployment insurance statute, 26 U.S.C. §§ 3121(d)(2), 3306(i) (1970), common law rules are used to determine if the relationship between the worker and the person for whom he performs the services is the legal relationship of employer and employee. Generally, such relationships have been found to exist when the person for whom the services are performed has the right to control and direct the worker, not only as to the result to be accomplished by the work but also as to the details and means by which such result is accomplished. Treas.Reg. § 31.3121(d)-l(c) (1956). A wide range of factors and elements that bear on a finding of control are discussed in Social Security Handbook, DHEW No. (SSA) 73-10135, §§ 804-24 (5th ed. 1974). Under the federal statute, the Internal Revenue Service has found several service station lessees to be “employees” of the lessor oil company, but has also found others not to be employees. Compare, e. g., Rev.Rul. 70-443, 1970-2 Cum.Bull. 212, with Rev.Rule. 69-305, 1969-1 Cum.Bull. 259. See also United States v. Wholesale Oil Co., 154 F.2d 745 (10th Cir. 1946). It is thus arbitrary action to decree that all refiners are liable for the negligent acts of their lessees.
. 39 Fed.Reg. 13177 (April 11, 1974) [J. App. 11]. The EPA explained the bases for its conclusions about control as follows:
In its determination that branded refiners control or have the ability to control the distribution of branded product to the consumer, EPA relied upon (1) the branded refiners’ legal obligation as marketers of a trademarked and nationally advertised product to protect the quality of the trademarked product, (2) the extensive quality control system already operated by the branded oil compa*278 nies to meet this obligation and to protect business good will, and (3) the success of the American Oil Company in developing and implementing quality control procedures for distribution of unleaded gasoline.
39 Fed.Reg. 13175 (April 11, 1974) [J. App. 9], Thus the EPA’s decision that the refiners have “sufficient control” over their lessees to prevent contamination was made in the abstract, without descent to the particulars of the individual contractual relationships. The EPA also appears to have interpreted a willingness on the part of a refiner to stand behind the quality of its branded product as evidence that the refiner controls the actions of its retailers. 39 Fed.Reg. 13177 (April 11, 1974) [J. App. 11], While that may indicate a commitment toward providing the best distribution system possible, it does not demonstrate day-to-day control of operations. In contrast to these speculations by the agency, we note the general disclaimer of responsibility for the actions of retailers issued by all refiners, id., and the EPA’s own comments regarding its amendments to the proposed new liability section:
The amendments proposed qualified the liability of branded refiners for violations caused by illegal acts and for certain violations occurring in the jobber distribution chain. This proposal was in response to the objections of branded refiners that they lacked sufficient control of the branded distribution chain to prevent affirmative misconduct by retailers or distributors resulting in a violation.
39 Fed.Reg. 42357 (December 5, 1974) [J. App. 2]. It is interesting that the EPA could accept the refiners’ argument that they do not have sufficient control over their retailers to be held responsible for affirmative misconduct and yet still determine that there is sufficient control to hold the refiners liable for the negligent actions of their lessees.
The dissent argues that the EPA relied on an FTC Report on Anticompetitive Practices in the Marketing of Gasoline as demonstrating the “coercive power which the short-term lease gives to refiners to control marketing practices.” Dissent 177 U.S.App.D.C. at-n.11,
543 F.2d at 282 n.11. When read, however, the report makes only one point of significance: retail dealers operate pursuant to leases that can be cancelled at the option of the lessor-refiner. We seriously doubt whether such a lease provision could be relied upon to the exclusion of other provisions which may detail the division of responsibility for the station’s operations; and we note that the statement quoted by the dissent from the report deals with price-fixing rather than with control over equipment maintenance and station procedures. The sort of possible control over the otherwise independent retail dealer which the FTC Report condemns, and which the dissent relies upon, has been held illegal. See, e. g., Simpson v. Union Oil of California, 377 U.S. 13, 84 S.Ct. 105, 12 L,Ed.2d 98 (1964). Since oil refiners are likely to be wary of engaging in the future in conduct which has been held to violate the antitrust laws, the EPA’s total reliance on this Report is not justified. In any case, we do not think a generalized statement such as this would justify imposing vicarious liability on all retail-lessees; the facts and circumstances of the individual relationship must be examined.
. The fact that these petitioners were given a chance in Amoco I to attack the agency record for the regulations at issue there, which were struck down, cannot be thought to deprive them of a right to attack the evidentiary basis of the new regulations. After Amoco I, the agency was well aware of petitioners’ objections that the imposition of vicarious liability was not sufficiently supported by the record. See Amoco I, 163 U.S.App.D.C. at 171, 501 F.2d at 731. Our opinion cannot fairly be read otherwise. To allow petitioners to again raise the question after the EPA has had an opportunity to correct the record is no “ambush.”
Dissenting Opinion
(dissenting):
The only issue left in this case is whether refiners may be held vicariously liable for contamination of unleaded gasoline negligently caused by their lessee-retailers. It ought to be dispatched in one sentence. This court has already ruled on it in favor of EPA, and all the current petitioners were parties to that lawsuit. Amoco Oil Co. v. EPA, 163 U.S.App.D.C. 162, 501 F.2d 722 (1974) (Amoco I). In Amoco I we passed on the original liability provisions— which were too strict — and we set forth carefully the limits any new provisions would have to meet: ■
Refiners and distributors must have the opportunity to demonstrate freedom from fault. A distributor which can show that its employees and agents did not cause the contamination at issue may not be held liable * * *. A refiner which can show that its employees, agents, or lessees did not cause the contamination at issue, and that the contamination could not have been prevented by a reasonable program of contractual oversight, may not be held liable * * *.
163 U.S.App.D.C. at 189, 501 F.2d at 749 (footnote omitted; emphasis added).
Petitioners, eleven refining companies who were among the petitioners in Amoco 1, now challenge the new regulations and assert that we meant something other than what we plainly said in the earlier case. Even if their assertion had any merit, it cannot be pressed in this fashion. It should have been raised on a petition for rehearing in Amoco I. The petitioners never filed such a petition, nor did they seek further review of bur decision there. That judgment is final, and it controls this case.
Assuming, as the majority has, that we are to consider the matter anew, I still find that EPA’s regulations are unquestionably valid. In the first place, the dispute rages over a very small class of contamination incidents — those caused by lessee negligence. If the lessee deliberately brings about contamination, the refiner escapes liability under 40 C.F.R. § 80.23(b)(2)(H) or § 80.23(e) (1975).
More importantly, the majority overstates the showing required before society may validly impose vicarious liability, and then relies on speculation that finds no support in the record in order to conclude that its overblown requirements have not been met. I take issue on both points.
The majority indicates that there must be “some closely integrated relationship”
The majority does express some shock at the notion that vicarious liability may occasionally result in loss to a refiner that has “made every human effort possible” to avoid contamination. Majority op. 177 U.S. App.D.C. at -, 543 F.2d at 274. But this, in itself, is no ground for striking down the regulation. Employers — to use the most common example of vicarious liability — are held responsible every day for torts of employees even where they have taken all possible steps to avoid the injury. Dean Prosser, in the very passage of his treatise cited by the majority, makes this unsurprising proposition entirely clear.
Vicarious liability — like other forms of strict liability — is imposed not because there is “compelling evidence of control,” but rather because some properly authorized agency of government — court, legislature, or administrative body — has determined that such an allocation of responsibility will serve society’s ends. The determination may rest on the judgment that it is more just to impose liability on the party who entered the business knowing of the general hazards, rather than risk leaving the entire loss on the innocent injured party.
The majority acts as though the tests for vicarious liability have been cast in concrete, as though liability must always turn upon the familiar dichotomy between employee and independent contractor.
EPA’s regulations are designed to deter what amounts to a “new tort” — call it negligent contamination or negligent impairment of an emission control device.
The experience of recent years in the products liability field ought to prompt caution before one adopts a stance as rigid as the majority’s. In that field, strict liability has been found, in an avalanche of recent cases, to serve society’s ends better than the old doctrines of warranty and privity that seemed solidly entrenched only a few years ago.
EPA is, beyond doubt, the properly authorized body to choose the liability standards that will best achieve the purposes of the Clean Air Act. This court is not to second-guess EPA’s decision.
EPA explicitly found that refiners have “sufficient control of facilities owned or leased by them to prevent contamination of unleaded gasoline * * 39 Fed.Reg. 13177 (April 11, 1974), JA 11. As support for its position EPA noted that at lessee-operated stations it is the refiner-owners who make “basic decisions respecting the conditions of sale of unleaded gasoline,” particularly decisions about equipment. Id. EPA also observed that a refiner “has sufficient control to limit his exposure to liability in such cases and may, of course, seek indemnity.” Id. at 13178, JA 12.
The record supplies adequate support for EPA’s determinations.
The cases cited by the majority furnish no better support for its position. They all arose in drastically different contexts. To the extent they relate to the issue of lessee independence at all, they decide only that lessees are sufficiently independent to justify particular applications of the antitrust laws, e. g. Simpson v. Union Oil Co., 377 U.S. 13, 20, 84 S.Ct. 1051, 12 L.Ed.2d 98 (1964); Peter v. Union Oil Co., 328 F.Supp. 998, 1001 (C.D. Cal. 1971); United States v. Richfield Oil Corp., 99 F.Supp. 280, 293-294 (S.D. Cal.), affirmed, 343 U.S. 922, 72 S.Ct. 665, 96 L.Ed. 1334 (1951), or that lessees are sufficiently independent that their employees will not be considered employees of the refiner under the labor laws. Site Oil Co. v. NLRB, 319 F.2d 86, 93 (8th Cir. 1963). The cases say nothing whatever about imposition of vicarious liability.
EPA properly found “sufficient control” to justify holding refiners liable for negligent contamination at lessee-operated stations. Applying the proper standard of review, this court has no basis whatever for finding EPA’s action irrational or arbitrary or capricious. See Bowman Transportation, Inc. v. Arkansas-Best Freight System, Inc., supra.
I respectfully dissent.
. The majority makes much of the fact that this passage from Amoco I is phrased negatively: “We * * * can find no language in [Amoco I] addressed * * * to the question of when a refiner can be held liable for the actions of his lesseej.] * * * The passage ‘plainly’ addresses only * * * the circumstances under which a refiner may not be held liable. It goes no further.” Majority op. 177 U.S.App. D.C. at -, 543 F.2d at 279 (emphasis in original; footnote omitted).
For the majority to read the passage in this fashion is mechanical to say the least. Of course the passage does go further. Though phrased in the negative, it plainly imports an affirmative holding. The Amoco I court was presented with the question of what statutory and constitutional limits liability regulations must meet. The court found that the original regulations exceeded the limits, but it did not stop with that bare holding; it went on, in accordance with sound principles of judicial economy, to state with some precision the out
. The regulations are set out in full in footnote 7 of the majority opinion.
. The majority cites Dean Prosser for this requirement, but Prosser speaks only of “some relation” and breathes no hint of a requirement that the relation be closely integrated. W. Prosser, Law of Torts 458 (4th ed. 1971).
. A is negligent, B is not. “Imputed negligence” means that, by reason of some relation existing between A and B, the negligence of A is to be charged against B, although B has played no part in it, has done nothing whatever to aid or encourage it, or indeed has done all that he possibly can to prevent jf * * *
. See id at 459; Smith, Frolic and Detour, 23 Colum.L.Rev. 444, 452-457 & n.34 (1923).
. See Calabresi, The Decision for Accidents: An Approach to Nonfault Allocation of Costs, 78 Harv.L.Rev. 713, 727-728 (1965); Seavey, Speculations as to “Respondeat Superior”, quoted in H. Shulman & F. James, Cases and Materials on Torts 116-118 (2d ed. 1952).
. The traditional vicarious liability rules are of course relevant in deciding whether EPA’s action here accords with the Constitution and the Administrative Procedure Act, but they are by no means dispositive.
. Perhaps it is not entirely accurate to consider EPA’s regulations under the “tort” rubric. EPA does not purport to alter the standards that would govern in a private suit brought, for example, by someone whose catalytic converter was fouled by contaminated gasoline. It appears that such suits will still be governed by the traditional common law rules which the majority tirelessly invokes, depending, of course, upon the law of the state where the injury occurs. Rather, EPA’s regulations impose vicarious liability only for the civil penalties which Congress authorized under § 211(d) of the Clean Air Act, 42 U.S.C. § 1857f-6c(d) (1970). This is all the more reason to refrain from importing wholesale into the administrative scheme the common law distinction between employees and independent contractors.
. See W. Prosser, supra note 3, at 654-658; Restatement (Second) of Torts § 402A (1965); Prosser, The Assault Upon the Citadel, 69 Yale L.J. 1099 (1960); Prosser, The Fall of the Citadel, 50 Minn.L.Rev. 791 (1966).
. I would observe that where no responsible government agency is authorized to act, this court has in the past itself imposed on lessors a high standard of responsibility to lessees and to the public. See Javins v. First National Realty Corp., 138 U.S.App.D.C. 369, 428 F.2d 1071, cert. denied, 400 U.S. 925, 91 S.Ct. 186, 27 L.Ed.2d 185 (1970).
. For example, The Federal Trade Commission’s Report on Anticompetitive Practices in the Marketing of Gasoline was made a part of the record before EPA. JA 130-204. The FTC noted the coercive power which the short-term lease gives to refiners to control marketing practices. JA 158-164. It wrote:
There Eire approximately two hundred thousand lessee dealers operating in today’s gasoline market. Their individual investments in their businesses range from a few hundred dollars to several thousand. These dealers operate stations pursuant to leases which may be cancelled at the option of the lessor. In the great majority of cases, the duration of the lease is one year.
A dealer whose lease is terminated at his supplier’s option frequently finds himself faced with a severe financial set-back. He may have a considerable sum of money invested in equipment for which he cannot obtain what he considers the true market value or which he cannot use in whatever new location he may be able to secure. The customer good-will and employee relationships he has built up over the years are completely lost unless he can obtain a new location within the same marketing area. And, the complainants allege, dealers terminated for failure to follow supplier “suggestions” [as to retail price] frequently are unable to obtain leases from other suppliers because of “bad reputation.”
JA 160-161. The FTC concluded;
As a result of marketing practices on the part of suppliers, the retail dealer’s position is*283 largely that of an economic serf rather than that of an independent businessman. * *
JA 172. The FTC report is dated June 30, 1967, but nothing in the record suggests that the situation has changed in relevant respects in the intervening years.
The majority criticizes EPA for what it regards as deficiencies in the record, and especially for EPA’s failure to descend to the particulars of individual lease agreements used by each refiner. Perhaps if EPA were writing on a blank slate, there would be grounds for demanding a more complete record — although I by no means concede that even in that case the record here would be inadequate. But the point is that EPA did not write on a blank slate. It had already presented a very substantial record to this court in Amoco I, and the court held there that, based on the Amoco I record, EPA was justified in imposing vicarious liability on refiners for contamination caused by lessees. 163 U.S.App.D.C. at 189, 501 F.2d at 749. EPA was certainly entitled to conclude that the question was resolved, that it had judicial approval for imposing vicarious liability on refiners for lessee-caused contamination, and that it did not again have to compile a massive record to resolve a question that was already settled.
The majority here gives petitioners an entirely undeserved gift. They were parties to the Amoco I litigation. They permitted that judgment to become final without a murmur against the vicarious liability holding. EPA expressly relied on that holding in promulgating the new regulations, and no doubt that reliance helped shape EPA’s decisions about what kind of information to seek and to place in the record. We surely would be faced with a different record had EPA been considering the matter de novo. For petitioners now to ambush EPA with an attack on the adequacy of the record on this very point is entirely unwarranted- For the majority to let them get away with it is deeply distressing.
. Petitioners have also invoked cases wherein courts declined to impose liability on refiners for personal injuries caused by the tortious behavior of lessees. But these cases likewise are beside the point. This is clear upon examination of Smith v. Cities Service Oil Co., 346 F.2d 349 (7th Cir. 1965), the case which receives principal reliance in petitioners’ brief. A young boy was burned as a result of a Michigan station operator’s negligence while he repaired the boy’s family’s car. The family sued the refiner which owned the station and whose products were sold there. Under Michigan law the refiner-lessor would not be liable unless the station operator could be considered the refiner’s agent in performing the activities that led to the injuries. The court undertook a careful factual inquiry and decided that, under the circumstances, Cities Service did not come within the Michigan requirements. Id. at 352.
Perhaps the key to the majority’s misapprehension of the real issues in this case lies in its failure to appreciate this distinction between applying given standards and establishing new ones. It repeatedly acts as though Congress had directed EPA to apply — lock, stock, and barrel — the traditional standards of vicarious liability. I do not know what else to make of the majority’s repeated invocation of such phrases as “settled law,” “traditional vicarious liability,” and “ancient rule,” see majority op. 177 U.S.App.D.C. at -, -, and footnotes 12 & 20, 543 F.2d at 275, 276 and footnotes 12 & 20, nor can I otherwise understand its apparent insistence that EPA must find “the employment relationship or its equivalent” before imposing vicarious liability. Id. at footnote 20.
One may scan the Clean Air Act in vain for any hint that Congress meant EPA to take such a crabbed view of its role. Instead, Congress gave EPA broad authority to “control or prohibit the manufacture, introduction into commerce, offering for sale, or sale of any fuel or fuel additive” found to impair emission control devices. 42 U.S.C. § 1857f-6c(c)(1) (1970). The liability regulations are merely a part — a logical and necessary part — of EPA’s control strategy. Moreover, Congress authorized EPA to control such additives “by regulation.” Id. Rulemaking hardly provides EPA the opportunity to perform the impossible task the majority would apparently require: “EPA must examine the indicia of control in each refiner-lessee relationship.” Majority op. 177 U.S.App.D.C. at -, 543 F.2d at 277 (emphasis added). (There are approximately 200,000 lessee-operated stations in the country. JA 160.) Plainly Congress did entrust EPA with a quasi-legislative task. By treating EPA’s role as one of mere application, the majority takes far too narrow a view.