Opinion ID: 169642
Heading Depth: 3
Heading Rank: 3

Heading: Improper Consideration of Statutorily Enumerated Factors

Text: Pro Products next argues that to the extent the district court considered certain statutory factors set forth in 42 U.S.C. § 7413(e)(1), it erred as a matter of law in doing so. We agree. The limited analysis conducted by the district court regarding the economic benefit factor of § 7413(e)(1) resulted in its conclusion that Airosol will not continue to benefit from its violations, as it has voluntarily ceased manufacturing and selling Black Knight. Appx. at 543 (emphasis added). This conclusion is a misapplication of 42 U.S.C. § 7413(e)(1) because it requires a court to consider the economic benefit that the violator has received as a result of its violations of the CAA, not the economic benefit it will receive in the future. The district court's interpretation of the statute would permit any violator of the CAA to mitigate a potential penalty simply by ceasing to pollute. We reject this interpretation of the Act. Also, the district court's conclusion which negates the seriousness of Airosol's violations as a basis for mitigation is not supported by any findings of fact. Instead, the district court stated that it does not believe that Airosol's Clean Air Act violations were a serious threat to the environment or the public [because] the parties did not offer, and the court is not aware of, a single measurable injury to the environment or the public caused by Airosol's manufacture and sale of Black Knight. Id. While there is no statutory definition of seriousness of the violation, the effects of ozone pollution are well documented. [5] The issue then is whether a lack of evidence on the record linking Airosol's CAA violations to discrete damage to either the environment or the public necessarily justifies the conclusion that Airosol's violations were not serious. We conclude it does not. In Powell, the Third Circuit upheld the district court's finding that the defendant's violations of the CWA were serious, even absent a showing which directly linked defendant's discharges to actual harm to the environment or the public. See Powell, 913 F.2d at 79. In other words, Powell held that a court may still impose a penalty if it finds there is a risk or potential risk of environmental harm, even absent proof of actual deleterious effect. Considering the difficulty of measuring these types of harm, we find the logic of Powell persuasive. We therefore conclude that the mere absence of a measurable harm to the public or the environment stemming from a particular CAA violation does not necessarily indicate that a violation is not serious. Particularly important here is the fact that Congress had explicitly banned the substances contained in Airosol's noncompliant product, Black Knight. The statutory economic benefit factor requires the district court to apply a retrospective rather than a prospective analysis, but the court has discretion in deciding how to calculate the economic benefits received from the defendant due to its noncompliance with the CAA. The parties also disagree about how to measure the economic benefit of noncompliance factor set forth in § 7413(e)(1). Pro Products argues that any profits realized through the sale, or offer of sale, of a prohibited product ought to be included when assessing the economic benefit of a CAA violation, the rationale being that one ought not to profit from one's wrongful conduct. [6] Airosol, on the other hand, argues that the economic benefit of noncompliance is more properly measured by considering the costs that it would have incurred to comply with the CAA (i.e., the cost of reformulation). While the question is not easily resolved, we conclude that Pro Products has the better argument. While the economic benefits calculation ideally begins with the costs . . . that should have been spent, to achieve compliance, Ludlum, 366 F.3d at 178 (calculating economic benefit to polluter by the least costly method of compliance), precise economic benefit to a polluter may be difficult to prove, Powell, 913 F.2d at 80. Given this reality, we acknowledge that there are methods other than the delayed or avoided capital expenditure for ascertaining economic benefit, Municipal Authority of Union Township, 150 F.3d at 266 (analyzing economic benefit penalty provision set forth in CWA in terms of profits gained, rather than expenses avoided, from noncompliance due to unique circumstances), and we will accord the district court wide discretion in its calculation, see id. at 264. Thus, if, on remand, the district court is unable to determine the costs Airosol would have expended in order to become compliant with the CAA, then it is free to consider any reasonable alternative to determine Airosol's economic benefit of noncompliance  such as, the EPA's CAA Stationary Source Civil Penalty Policy [7] and/or some degree of profits gained  as long as its analysis is not in conflict with the CAA or basic economic principles. Last, Airosol claims that the record does not establish what costs it would have incurred to reformulate Black Knight and implies that, as a result, it should not be penalized for its violations of the CAA. As noted above, however, because Airosol's cost of reformulation is not the only possible measure of its economic benefit of noncompliance, whether a penalty will be imposed in this case will not rise or fall on a cost of reformulation calculation. And, even if we assume, arguendo, that there is no reasonable means to measure Airosol's economic benefit of noncompliance, it follows that there would be insufficient evidence to mitigate the imposition of a penalty on this basis, and not, as Airosol suggests, that it should not be penalized at all. See B & W Inv. Props., 38 F.3d at 368 (concluding that courts generally presume that the maximum penalty should be imposed, then mitigate the penalty in accord with the § 7413(e)(1) factors).