Court Opinion

ID: 2684773
Source: CourtListenerOpinion
Date Created: 2014-07-18 15:00:39.472979+00
Date Added: 2024-06-11T13:14:19.505839
License: Public Domain

United States Court of Appeals
         FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued December 11, 2013                 Decided July 18, 2014

                         No. 12-5234

                UNITED STATES OF AMERICA,
                        APPELLEE

                               v.

             VOLVO POWERTRAIN CORPORATION,
                      APPELLANT

            CALIFORNIA AIR RESOURCES BOARD,
                       APPELLEE

         Appeal from the United States District Court
                 for the District of Columbia
                     (No. 1:98-cv-02547)

     Aaron M. Streett argued the cause for appellant. With him
on the briefs were Lauren Tanner, William H. Jeffress, Jr., and
William M. Bumpers.

    Russell S. Frye was on the brief for amici curiae the
National Association of Manufacturers, et al. in support of
appellant.

     Brian C. Toth, Attorney, U.S. Department of Justice, argued
the cause for appellee the United States. With him on the brief
was Lori Jonas, Attorney.
                              2

    Kamala D. Harris, Attorney General, Office of the Attorney
General for the State of California, Robert W. Byrne, Senior
Assistant Attorney General, and Nicholas Stern, Deputy
Attorney General, were on the brief for appellee California Air
Resources Board.

   Before: GRIFFITH and SRINIVASAN, Circuit Judges, and
SENTELLE, Senior Circuit Judge.

    Opinion for the Court filed by Circuit Judge SRINIVASAN.

     SRINIVASAN, Circuit Judge: Under the Clean Air Act,
manufacturers of new motor vehicle engines need to obtain
certificates of conformity from the Environmental Protection
Agency before selling their engines in the United States. To
obtain the certificates, manufacturers must verify that their
engines comply with EPA emissions standards. In 1998, EPA
alleged that several major engine manufacturers had violated
federal law by equipping certain engines with “defeat devices”
designed to suppress emissions during EPA tests even though
emissions exceeded the legal limit in normal operating
conditions. The manufacturers settled the allegations, and each
entered into similarly worded consent decrees with the federal
government.

     The consent decrees required the manufacturers to satisfy
future EPA emissions standards ahead of schedule. In
particular, the decrees provided that certain model year 2005
engines for which the manufacturers sought certificates of
conformity would meet model year 2006 limits on emissions of
oxides of nitrogen (NOx). The decrees’ requirements apply to
engines “manufactured at any facility owned or operated by” the
settling companies.
                                 3

     Volvo Powertrain Corporation, a wholly owned subsidiary
of the Swedish conglomerate AB Volvo, is one of the companies
subject to such a decree. Volvo Powertrain owns and operates
a facility in Skövde, Sweden, where it and other Volvo
subsidiaries manufacture engines. Another wholly owned Volvo
subsidiary, AB Volvo Penta, sought certificates of conformity
from EPA for 8,354 model year 2005 engines manufactured at
the Skövde facility. Those engines did not comply with EPA’s
model year 2006 NOx emissions standard.

     Volvo Powertrain now argues that the consent decree has no
application to the Volvo Penta engines even though, under the
language of the decree, the engines were manufactured at a
“facility owned or operated by” a settling company. The district
court disagreed, and it held Volvo Powertrain liable for the
failure of the 2005 engines to satisfy the 2006 emissions
standard. As a remedy, the court ordered Volvo Powertrain to
pay approximately $72 million, an amount calculated in
accordance with the consent decree’s schedule of stipulated
penalties for violations of the decree’s requirements.

     We agree with the district court that the consent decree
applies to the 8,354 Volvo Penta engines manufactured at the
Volvo Powertrain plant. Although Volvo Penta, not Volvo
Powertrain, sought the certificates of conformity in question, we
read the terms of the consent decree to impose liability on Volvo
Powertrain for its affiliate’s engines manufactured at its facility.
We also conclude that the district court committed no abuse of
discretion when it ordered Volvo Powertrain to pay
approximately $72 million as a remedy for the violations of the
decree. We therefore affirm the judgment of the district court.
                               4

                               I.

                               A.

     The Clean Air Act requires the EPA Administrator to
prescribe standards for emissions of air pollutants from new
motor vehicles and motor vehicle engines if the emissions
“cause, or contribute to, air pollution which may reasonably be
anticipated to endanger public health or welfare.” Clean Air Act
§ 202(a)(1), 42 U.S.C. § 7521(a)(1). A manufacturer who
desires to sell new motor vehicle engines in the United States
must conduct tests to show that the engines meet emissions
standards prescribed under section 202. See id. § 206(a)(1), 42
U.S.C. § 7525(a)(1); see also 40 C.F.R. § 89.119(a)-(b). If the
engine meets EPA standards, the agency issues a “certificate of
conformity” allowing the manufacturer to sell the engines in the
United States for up to one year. See Clean Air Act § 206(a)(1),
42 U.S.C. § 7525(a)(1). It is unlawful to sell new motor vehicle
engines in the United States or to import new engines into the
country without a certificate of conformity. See id. § 203(a)(1),
42 U.S.C. § 7522(a)(1).

    The Clean Air Act also allows the State of California to
adopt and enforce emissions standards for new motor vehicles
and motor vehicle engines if California determines that its
standards “will be, in the aggregate, at least as protective of
public health and welfare as applicable Federal standards.” Id.
§ 209(b)(1), 42 U.S.C. § 7543(b)(1); see also Chamber of
Commerce of the U.S. v. EPA, 642 F.3d 192, 196 (D.C. Cir.
2011). A vehicle or engine generally cannot be sold in
California or imported into the state until the California Air
Resources Board certifies compliance with state emissions
standards. See Cal. Health & Safety Code §§ 43151-43153
(Deering 2014). Certificates issued by the California Air
Resources Board are called “executive orders.”
                                5

     The pollutants subject to emissions limits under the Clean
Air Act and California law include oxides of nitrogen, or NOx.
See Clean Air Act § 202(a)(3)(A)(i), 42 U.S.C.
§ 7521(a)(3)(A)(i); 40 C.F.R. § 89.112; Cal. Code Regs. tit. 13,
§ 2423. NOx emissions contribute to the formation of fine
particulate matter, also known as PM2.5, as well as ground-level
ozone, a primary component of smog. See North Carolina v.
EPA, 531 F.3d 896, 903 (D.C. Cir. 2008). Elevated levels of
fine particulate matter have been linked to “adverse human
health consequences such as premature death, lung and
cardiovascular disease, and asthma.” Catawba Cnty. v. EPA,
571 F.3d 20, 26 (D.C. Cir. 2009). And “even at very low
levels,” inhalation of ozone “can cause serious health problems
by damaging lung tissue and sensitizing lungs to other irritants.”
Ass’n of Irritated Residents v. EPA, 686 F.3d 668, 671 n.1 (9th
Cir. 2012).

     In 1998, the United States brought enforcement actions in
federal district court against seven major engine manufacturers,
alleging that they had been using “defeat devices” to meet EPA
standards for NOx emissions. The devices enabled the engines
to meet EPA emissions standards in laboratory testing even
though the engines produced NOx emissions far above the
applicable limit in ordinary use. See Crete Carrier Corp. v.
EPA, 363 F.3d 490, 491 (D.C. Cir. 2004). The manufacturers
collectively negotiated settlement terms with the federal
government. Most of the manufacturers agreed to be bound by
similarly worded consent decrees so that none would gain a
competitive advantage by negotiating a better deal. The
manufacturers did not admit to using defeat devices, but they
agreed to pay civil penalties exceeding $80 million collectively.

     To offset excess NOx emissions caused by the alleged
violations, the manufacturers also agreed to comply with certain
                               6

EPA emissions standards earlier than EPA regulations otherwise
required. Most significantly for purposes of this case, the
manufacturers agreed that their nonroad compression-ignition
(or diesel) engines with 300 to 750 horsepower would comply
with EPA’s model year 2006 emissions standards one year
ahead of schedule, starting with model year 2005. The parties
refer to that provision of the consent decree as the “nonroad
pull-ahead” requirement. The manufacturers agreed to pay
stipulated penalties to the United States under an established
formula if they certified nonroad compression-ignition engines
for model year 2005 that failed to comply with the nonroad pull-
ahead requirement.

     Volvo Truck Corporation (Volvo Truck, or VTC), a wholly
owned subsidiary of AB Volvo, was one of the manufacturers
covered by the standard form consent decree. Its decree states
that all heavy-duty diesel and nonroad compression-ignition
engines “manufactured at any facility owned or operated by
VTC on or after January 1, 1998, for which a Certificate of
Conformity is sought, must meet all applicable requirements of
this Decree, regardless of whether VTC still owned, owns,
operated, or operates that facility at the time the engine is
manufactured.” Consent Decree ¶ 110. Another wholly owned
subsidiary of AB Volvo, Volvo Construction Equipment
Components AB, filed a motion to intervene in the case. Volvo
Construction stated that it “is the Volvo Group company that
sells [nonroad] engines in the United States” and that it sought
to intervene “[t]o ensure that the proper Volvo Group company
is subject to the jurisdiction of the Court for purposes of the
Consent Decree requirements applicable to Nonroad CI
Engines.” Mot. to Intervene at 2 (June 11, 1999). The district
court granted Volvo Construction’s motion to intervene, and, on
July 1, 1999, approved the consent decree.
                               7

     Volvo Truck and Volvo Construction entered into a
similarly worded settlement agreement with the California Air
Resources Board. Like the consent decree with EPA, the
settlement agreement with the California Air Resources Board
includes a nonroad pull-ahead requirement, a schedule for
stipulated penalties, and a provision confirming that the
agreement applies to all heavy-duty diesel and nonroad
compression-ignition engines “manufactured at any facility
owned or operated by” Volvo Truck. The settlement agreement
with the California Air Resources Board was not incorporated
into a consent decree. See Smyth ex rel. Smyth v. Rivero, 282
F.3d 268, 280-81 (4th Cir. 2002) (consent decree is enforceable
as order of the court, whereas settlement agreement generally is
not).

                               B.

     At the time of the consent decree, Volvo Powertrain
Corporation, a subsidiary of Volvo Truck, owned a facility in
Skövde, Sweden. Volvo Truck produced engines at the site. In
2001, as part of a corporate reorganization, Volvo Powertrain
ceased to be a subsidiary of Volvo Truck and became a direct
subsidiary of AB Volvo. In 2002, Volvo Powertrain informed
the district court and the California Air Resources Board that it
would assume Volvo Truck’s responsibilities under the consent
decree and settlement agreement.

     Although Volvo Powertrain owns the Skövde facility,
another wholly owned subsidiary of AB Volvo, AB Volvo
Penta, also manufactures engines there. Volvo Penta has
produced nonroad engines at Skövde since before 1995 and has
obtained certificates of conformity from EPA (and executive
orders from the California Air Resources Board) for those
engines every year since 1997. In late 2004, Volvo Penta sought
certificates of conformity from EPA and executive orders from
                               8

the California Air Resources Board for 8,354 model year 2005
nonroad compression-ignition engines produced at Skövde.
Volvo Penta did not certify that those engines comply with the
model year 2006 emissions standards, as would be required if
the nonroad pull-ahead provision applied to the engines.

     In an October 2004 e-mail, a California Air Resources
Board official asked a Volvo Penta certification engineer if
Volvo Penta is part of Volvo Construction and, “[i]f so,”
whether Volvo Penta is “aware of the provisions of the consent
decree.” The certification engineer responded that “Volvo Penta
is an independent company and we are not a part of the consent
decree.” According to a Volvo Penta executive’s affidavit, no
one on the certification staffs of EPA or the California Air
Resources Board advised Volvo Penta that the 8,354 engines
were subject to the nonroad pull-ahead requirement. EPA issued
certificates of conformity covering the engines, and the
California Air Resources Board issued corresponding executive
orders.

     In September 2005, a tip from Caterpillar Inc., a competing
engine manufacturer subject to a similarly worded consent
decree, prompted federal officials to seek additional information
about Volvo Penta’s model year 2005 engines. Volvo
Powertrain acknowledged that the model year 2005 Volvo Penta
engines failed to comply with the nonroad pull-ahead
requirement, but asserted that those engines “are not subject to”
the consent decree. Federal officials maintained that the decree
by its terms encompassed the Volvo Penta engines because they
were “manufactured at [a] facility owned or operated by” Volvo
Powertrain. In July 2008, the United States sent a demand letter
to Volvo Powertrain seeking $72,006,337 in stipulated penalties
and interest. Volvo Powertrain invoked the consent decree’s
dispute resolution mechanism, which provides for the district
court to adjudicate disputes between the parties if informal
                                9

negotiations fail. The California Air Resources Board
intervened in the action to enforce parallel provisions of the
settlement agreement.

     In April 2012, the district court concluded that all 8,354
Volvo Penta engines in question are subject to the nonroad pull-
ahead requirement in the consent decree and settlement
agreement. But the court also concluded that the stipulated
penalty provisions in the consent decree and the settlement
agreement “do not clearly apply” when Volvo Penta, rather than
Volvo Powertrain, certifies the noncompliant engines. United
States v. Volvo Powertrain Corp., 854 F. Supp. 2d 60, 65, 75
(D.D.C. 2012). The court explained that, if the consent decree
were an “ordinary contract,” the court would find the stipulated
penalty provision to be ambiguous and “would proceed to
examine extrinsic evidence of the parties’ intent.” Id. at 72. But
because the agreement between Volvo Truck and EPA had been
embodied in a consent decree, the court held that it had
discretion to “fashion an equitable remedy for the violation that
it has found.” Id. It then looked for “guidance” to the formula
established by the stipulated penalty provision. Id. at 73. The
court calculated that Volvo Powertrain would owe $65,759,212
in stipulated penalties under that formula, plus $6,247,125 in
interest, for a total of $72,006,337. The court ordered Volvo
Powertrain to pay that amount to the United States. The court
decided to conduct further proceedings to determine Volvo
Powertrain’s liability to the State of California. Id. at 75.

     After the district court’s decision, the parties jointly
stipulated that their intent throughout had been that any award
for violations of the consent decree and settlement agreement
would be divided such that the United States would receive 80%
and the California Air Resources Board would receive 20%.
The parties further agreed that the interest award should be
revised downward to $5,866,428, bringing the total amount of
                               10

the judgment to $71,625,640. In June 2012, the district court
entered final judgment against Volvo Powertrain in line with the
parties’ proposal. Volvo Powertrain appeals.

                               II.

     Because the district court’s judgment against Volvo
Powertrain was based on violations of the consent decree with
the United States, and because the parties stipulated that further
proceedings to determine Volvo Powertrain’s liability to the
California Air Resources Board are “unnecessary,” we review
the district court’s construction of the consent decree but not of
the settlement agreement. Our review is de novo. See Nix v.
Billington, 448 F.3d 411, 414 (D.C. Cir. 2006).

                               A.

     As an initial matter, Volvo Powertrain contends that the
district court should have interpreted and enforced the consent
decree according to the standards governing a motion to find a
party in contempt for violating a consent decree’s provisions.
“A party seeking to hold another in contempt faces a heavy
burden, needing to show by ‘clear and convincing evidence’ that
the alleged contemnor has violated a ‘clear and unambiguous’
provision of the consent decree.” United States v. Microsoft
Corp., 147 F.3d 935, 940 (D.C. Cir. 1998) (quoting Armstrong
v. Exec. Office of the President, 1 F.3d 1274, 1289 (D.C. Cir.
1993)). We decline to apply those standards here. As for the
“clear and convincing evidence” aspect of that framework,
Volvo Powertrain affirmatively waived the argument in the
district court and the standard would have no discernible effect
on our disposition in any event. As for the requirement to show
that the language of the decree is “clear and unambiguous,”
Volvo Powertrain forfeited the argument by failing to raise it in
the district court.
                               11

      Volvo Powertrain directs us only to two points in the record
at which it even remotely referenced contempt principles. First,
in its brief to the district court, Volvo Powertrain cited Stewart
v. O’Neill, 225 F. Supp. 2d 6 (D.D.C. 2002), for the proposition
that “a movant seeking enforcement of a court order through
civil contempt must prove ‘a violation of the Court’s Order by
clear and convincing evidence.’” Mem. in Supp. of Mot. for
Judicial Review 13, ECF No. 40 (alteration omitted) (quoting
Stewart, 225 F. Supp. 2d at 10). Second, at a motions hearing in
the district court in January 2012, counsel for Volvo Powertrain
stated:

     [T]here are a couple of principles, Your Honor, on
     which the parties do agree. One is that in interpreting
     a consent decree the Court applies ordinary principles
     of contract interpretation. The second on which we
     agree is that the government has the burden. You will
     see mentioned in our brief that we contend that it is
     clear and convincing evidence that’s required. The
     government says that’s not true, it’s preponderance.
     Frankly, when you’re not really finding facts, I’m not
     sure there’s much difference, and we’re satisfied with
     the preponderance standard.

     Insofar as its district court brief invoked the rule that
violations of a consent decree must be proven by “clear and
convincing evidence,” Volvo Powertrain waived that argument
at the January 2012 hearing by embracing a preponderance
standard. See Barone v. Williams, 199 F.2d 189, 191 (D.C. Cir.
1952). In any event, as Volvo Powertrain’s counsel explained,
the evidentiary standard makes little difference in this case
because there is no dispute that the 8,354 engines certified by
Volvo Penta were manufactured at Powertrain’s facility in
Skövde, Sweden, or that those engines failed to comply with the
                                12

nonroad pull-ahead requirement. As for any argument that
liability should be limited to violations of “clear and
unambiguous” provisions of the consent decree, it is likewise
unclear whether that standard would make any difference: we
find below that the nonroad pull-ahead requirement
unambiguously applies to the Volvo Penta engines at issue.
Volvo Powertrain, at any rate, made no mention in the district
court of the “clear and unambiguous” standard and gives us no
reason to disregard our ordinary practice of refusing to
“entertain an argument made for the first time on appeal.”
Meijer, Inc. v. Biovail Corp., 533 F.3d 857, 867 (D.C. Cir.
2008).

     Volvo Powertrain contends that contempt standards should
govern regardless of whether it raised the issue in the district
court, but the two decisions on which it relies fail to support that
proposition. In Reynolds v. Roberts, 207 F.3d 1288 (11th Cir.
2000), the district court acted sua sponte in enforcing the
consent decree and the appellants had only a limited opportunity
to present their objections. Id. at 1296-97 & n.13. Volvo
Powertrain, by contrast, had a full opportunity in the district
court to argue in favor of applying the contempt framework.
And in Reynolds v. McInnes, 338 F.3d 1201 (11th Cir. 2003),
the court reaffirmed the “general principle of appellate review”
that “an appellate court will not consider issues not presented to
the trial court,” id. at 1209 (internal quotation marks omitted),
and declined to consider whether the district court should have
applied contempt principles because the argument “was not
raised in the district court,” id. at 1204. We adhere to the same
practice here.
                               13

                               B.

     Having rejected Volvo Powertrain’s argument to apply the
contempt framework, we review the district court’s
interpretation of the decree according to general principles of
contract law. See Segar v. Mukasey, 508 F.3d 16, 21 (D.C. Cir.
2007) (consent decree is “essentially a contract,” and
“construction of a consent decree is essentially a matter of
contract law”) (internal quotation marks omitted). “[U]ltimately
the question for the lower court, when it interprets a consent
decree incorporating a settlement agreement, is what a
reasonable person in the position of the parties would have
thought the language meant.” Richardson v. Edwards, 127 F.3d
97, 101 (D.C. Cir. 1997).

     Here, the key language appears in paragraph 110 of the
consent decree. That paragraph states that “[a]ll” nonroad
compression-ignition engines “manufactured at any facility
owned or operated by VTC on or after January 1, 1998, for
which a Certificate of Conformity is sought, must meet all
applicable requirements of this Decree, regardless of whether
VTC still owned, owns, operated, or operates that facility at the
time the engine is manufactured.” One of the “requirements” of
“this Decree” is the nonroad pull-ahead. See Consent Decree
¶ 60. Volvo Powertrain is the successor to Volvo Truck under
the decree, and the 8,354 Volvo Penta engines in question were
manufactured at a “facility owned [and] operated by” Volvo
Powertrain. Thus, when a “Certificate of Conformity [was]
sought” for each of those engines, the engines were required to
“meet all applicable requirements of [the] Decree,” including the
nonroad pull-ahead.

    Volvo Powertrain’s contentions to the contrary are
unavailing. Volvo Powertrain argues that paragraph 110 intends
only to ensure that, if a manufacturer were to sell one of its
                               14

factories, the acquiring company would inherit the
manufacturer’s obligations under the consent decree. Under that
reading, paragraph 110 would take effect only if Volvo
Powertrain no longer owns or operates one of its former
facilities. But paragraph 110 by its terms applies to all engines
manufactured at a Volvo Powertrain facility “regardless of
whether” Volvo Powertrain still owns or operates the facility.
Volvo Powertrain’s interpretation ignores the import and plain
meaning of the word “regardless.” Volvo Powertrain also
contends that paragraph 110 mandates only that engines
manufactured at its facilities comply with the “applicable
requirements” of the consent decree, and the nonroad pull-ahead
provision on its face does not apply to engines manufactured by
Volvo Penta. See Consent Decree ¶ 60 (“Nonroad CI Engines
manufactured by VTC or its affiliate, [Volvo Construction], on
or after January 1, 2005” are subject to model year 2006
requirements) (emphasis added). That is, Volvo Powertrain
reads the phrase “applicable requirements” in paragraph 110 to
refer only to any requirements that already apply to the engines
in question by virtue of another provision of the consent decree,
i.e., if paragraph 110 never existed. We reject that reading
because it would render the operative terms of paragraph 110
entirely superfluous. See Rumpke of Ind., Inc. v. Cummins
Engine Co., 107 F.3d 1235, 1243 (7th Cir. 1997) (consent
decrees, like contracts, should be interpreted so that no
provisions are superfluous).

     The district court therefore correctly concluded that
paragraph 110 “means what it says”: all nonroad compression-
ignition engines manufactured at Volvo Powertrain facilities for
which certificates of conformity are sought must meet the
requirements of the consent decree, including the nonroad pull-
ahead. Volvo Powertrain, 854 F. Supp. 2d at 66. Volvo
Powertrain contends that paragraph 110, if read in that fashion,
would amount to “an elephant in the mousehole.” Appellant’s
                               15

Br. 32; cf. Whitman v. Am. Trucking Ass’ns, 531 U.S. 457, 468
(2001) (“Congress . . . does not alter the fundamental details of
a regulatory scheme in vague terms or ancillary provisions—it
does not, one might say, hide elephants in mouseholes.”). We
disagree. For one thing, paragraph 110 is not a “vague”
provision: it broadly applies on its face to “all” nonroad engines
“manufactured at any” Volvo Powertrain facility. Nor do we
think it “implausible” that the parties would have intended to
apply the consent decree’s applicable requirements to the Volvo
Penta engines at issue. Cf. Whitman, 531 U.S. at 468 (applying
the elephants-in-mouseholes principle where it is “implausible”
that Congress would delegate vast powers through such “modest
words”). Indeed, Volvo Powertrain’s interpretation is the more
implausible one. It would leave a sizable loophole in the
consent decree, allowing Volvo to manufacture nonroad
compression-ignition engines at the Skövde facility entirely
without regard to the decree’s requirements as long as some
wholly owned Volvo subsidiary other than Volvo Powertrain or
Volvo Construction could identify itself as the manufacturer.
EPA presumably would have sought to avoid that result, and did
so through paragraph 110.

                               C.

     Volvo Powertrain argues that the circumstances
surrounding the negotiation of the decree and the parties’ post-
decree actions support the conclusion that the nonroad pull-
ahead requirement is inapplicable to the 8,354 Volvo Penta
engines. In interpreting a consent decree, however, “a court
may not look to extrinsic evidence of the parties’ subjective
intent unless the document itself is ambiguous.” Segar, 508
F.3d at 22; see also Microsoft, 147 F.3d at 945 n.7. Because we
believe that the nonroad pull-ahead requirement unambiguously
applies to the Volvo Penta engines, we have no occasion to
consider the circumstances surrounding the decree’s negotiation
                                16

or the parties’ post-decree actions. Those considerations, in any
event, would not alter our understanding of the decree’s
provisions.

     Volvo Powertrain says that officials with EPA and the
California Air Resources Board “knew that Penta manufactured
nonroad engines at the time of the negotiations, but they
nevertheless omitted Penta from the Decree.” Appellant’s Br.
35. In Volvo Powertrain’s view, the fact that the United States
asked Volvo Construction—but not Volvo Penta—to intervene
in the enforcement action “speaks volumes about the meaning
of the Decree.” Id. at 36. We are unpersuaded. In 1998, Volvo
Penta sought certificates of conformity for only 150 nonroad
engines manufactured at the Skövde facility, fewer than 100 of
which were imported into the United States.                Volvo
Construction, by contrast, sold more than 2,300 nonroad engines
in the United States that year. Volvo Powertrain points to no
evidence indicating that the federal negotiators involved with
drafting the consent decree knew of the Volvo Penta engines.
By contrast, Volvo officials presumably did know of the Volvo
Penta engines, but evidently made no effort to exclude those
engines from a provision whose terms encompass them. Indeed,
Volvo Construction’s motion to intervene, filed by Volvo
Truck’s attorneys, represented that Volvo Construction “is the
Volvo Group company that sells these engines in the United
States.” Mot. to Intervene at 2 (emphasis added). Volvo
Powertrain asserts that the misleading language in the motion
was initially drafted by a lawyer for the United States. But if so,
that would only further undercut any suggestion that the
government officials who negotiated the consent decree knew
that Volvo Penta manufactured nonroad engines for the U.S.
market and intended to exclude Volvo Penta from the decree’s
scope.

    As for the parties’ post-decree actions, Volvo Powertrain
                               17

emphasizes that its sister company Volvo Penta “openly
applied” for certificates of conformity under EPA’s general
regulations for model year 2005 vehicles rather than under the
consent decree’s nonroad pull-ahead requirement. Appellant’s
Br. 37. Volvo Powertrain supplies an affidavit from a Volvo
Penta executive stating that Volvo Penta would have acted
differently if it believed that the consent decree applied to its
engines. And Volvo Powertrain notes that both EPA and the
California Air Resources Board “certified the very Penta engine
families for which they now seek penalties.” Id. But even
assuming Volvo executives believed they were complying with
the consent decree, and even if certain EPA officials knew of
Volvo Penta’s conduct, the United States could still assert
violations of the consent decree. See United States v. Huebner,
752 F.2d 1235, 1245 (7th Cir. 1985) (federal government not
estopped from seeking enforcement of consent decree despite
evidence that some federal officials were “cognizant” of
defendants’ conduct and failed to inform the defendants that
they were violating the decree); cf. Heckler v. Cmty. Health
Servs., 467 U.S. 51, 63 (1984) (“general rule” is “that those who
deal with the Government are expected to know the law and may
not rely on the conduct of Government agents contrary to law”).
And as the EPA official responsible for managing the agency’s
engine certification program explains in an affidavit, EPA issues
certificates of conformity after determining that the applicant
has submitted the required information and that the emissions
performance data included in the application is consistent with
the regulatory standard for the engine type, size, and model year.
A certificate of conformity does not reflect a conclusion that the
engine satisfies other applicable requirements, such as those
imposed by consent decrees and settlement agreements. Rather,
EPA relies on applicants to include the information necessary to
meet all applicable requirements and to assure the information’s
accuracy.
                                18

                                D.

     Although Volvo Powertrain principally contends that none
of the 8,354 Volvo Penta engines falls within the terms of the
consent decree, it argues in the alternative that it should—at
most—face liability only for engines actually imported into the
United States and used in a non-stationary capacity. The
consent decree defines nonroad compression-ignition engine to
“mean[] a compression-ignition engine subject to the regulations
in 40 C.F.R. Part 89.” Consent Decree ¶ 3. The 8,354 engines
in question undisputedly qualify as “compression-ignition
engines.” The only question is whether those engines qualify as
“subject to the regulations in 40 C.F.R. Part 89” regardless of
ultimate importation into the United States or ultimate use in a
non-stationary capacity. We conclude they do.

     While a certificate of conformity permits importing an
engine into the United States, certain provisions of Part 89 apply
only to engines in fact imported into the United States. See, e.g.,
40 C.F.R. § 89.1003(a)(1)(ii) (“importation into the United
States of any new nonroad engine” is prohibited “unless such
engine is covered by a certificate of conformity”). But other
regulations in Part 89 apply to all engines for which a
manufacturer seeks a certificate of conformity, regardless of
whether the engines ultimately are sold into the United States.
See, e.g., id. § 89.115(d) (required content of application for
certificate of conformity); id. § 89.117 (procedures for selecting
test fleet for certificate of conformity application). Still other
provisions of Part 89 apply to all engines for which a
manufacturer obtains a certificate of conformity—again, without
regard to whether the engines are imported into the United
States. See, e.g., id. § 89.123(a) (manufacturer must notify EPA
of changes to certain information for engines covered by
certificate of conformity); id. § 89.124(b) (emission test data
must be retained for one year after certificate of conformity is
                                19

issued). The Volvo Penta engines thus would be “subject to the
regulations in 40 C.F.R. Part 89” even if they remained outside
the United States. Volvo Powertrain seeks to rely on the canon
of statutory interpretation under which federal laws are
presumed “‘to apply only within the territorial jurisdiction of the
United States.’” EEOC v. Arabian Am. Oil Co., 499 U.S. 244,
248 (1991) (quoting Foley Bros., Inc. v. Filardo, 336 U.S. 281,
285 (1949)). But because a manufacturer brings itself within the
jurisdiction of the United States when it affirmatively asks EPA
to issue certificates of conformity, there is no issue of
extraterritoriality here.

     We are likewise unpersuaded by Volvo Powertrain’s
argument that an engine ultimately put to final use in a
stationary capacity is not “subject to the regulations in 40 C.F.R.
Part 89.” Part 89 states that it “applies for all compression-
ignition nonroad engines,” 40 C.F.R. § 89.1(a), and the
certificates of conformity sought by Volvo Penta allowed its
engines to be used in the United States in non-stationary
applications. It is true that the definition of “nonroad engine”
excludes engines that “remain[] or will remain at a location for
more than 12 consecutive months.” Id. § 89.2. But as we have
explained, certain Part 89 provisions apply to engines at the time
of seeking a certificate of conformity, regardless of the engines’
eventual use. See, e.g., id. §§ 89.115(d), 89.117. Moreover,
EPA’s regulatory scheme enables manufacturers to identify their
engines as either mobile or stationary. See, e.g., U.S. Envt’l
Prot. Agency, Technical Highlights: Emission Regulations for
Stationary and Mobile Engines 2 (Sept. 2002). Indeed, even
after Volvo Penta chose to identify its engines as nonroad
engines for purposes of obtaining certificates of conformity, it
had an additional opportunity to designate some of the engines
as stationary when importing them into the United States, but
did not do so. See EPA Form 3520-21, Engine Declaration
Form (OMB No. 2060-0320) (allowing importers to check a box
                               20

in order to designate engines as stationary). Volvo Powertrain’s
understanding of the consent decree also would raise serious
workability concerns, calling for constant and long-term
monitoring of each engine to identify its use as stationary or
non-stationary. But when asked by EPA in 2008 for information
concerning the current whereabouts of the 8,354 Volvo Penta
engines, Volvo Powertrain estimated that it and other Volvo
entities would have that sort of information for less than 10% of
their engines. For those reasons, the engines in question qualify
as “nonroad engines” subject to the consent decree regardless of
their eventual use in a stationary or non-stationary application.

                              III.

      Having concluded that the consent decree’s nonroad pull-
ahead requirement applies to the 8,354 Volvo Penta engines, we
turn to the district court’s choice of remedy. The parties agree
that our review of the remedy is for abuse of discretion. See,
e.g., Shy v. Navistar Int’l Corp., 701 F.3d 523, 532-33 (6th Cir.
2012); Stone v. City & Cnty. of San Francisco, 968 F.2d 850,
861 (9th Cir. 1992). We note that, under our precedent, “it is
unclear whether such deferential review is appropriate”
when—as here—“the trial judge’s decision was based on an
interpretation of orders drafted by a different judge.” Nix, 448
F.3d at 414. But we need not resolve that issue in light of the
parties’ agreement on the standard of review.

                               A.

     Volvo Powertrain argues that the monetary penalties
allowed under the consent decree are confined to those set forth
in the stipulated penalty provision. That provision states, with
respect to the nonroad pull-ahead requirement, that if Volvo
Truck (or its successor, Volvo Powertrain) “seeks certificates of
conformity for any affected HDDEs [(Heavy-Duty Diesel
                               21

Engines)], but cannot certify compliance with . . . the Nonroad
CI Engine standard pull-ahead requirements,” then penalties
“shall be calculated in accordance with the . . . procedures,
equations, and values found in 40 CFR Part 86, Subpart L.”
Consent Decree ¶ 116(a). Volvo Powertrain contends that the
stipulated penalty provision does not apply when an entity not
specifically named in its terms, such as Volvo Penta, “seeks
certificates of conformity.”

     As the district court observed, however, the “poorly
drafted” stipulated penalty provision, if read literally, amounts
to “nonsense.” Volvo Powertrain, 854 F. Supp. 2d at 72. The
provision’s terms apply only to heavy-duty diesel engines. But
heavy-duty diesel engines are on-road engines, see 40 C.F.R. §
86.082-2, and thus by definition could never be subject to the
nonroad pull-ahead requirement. If the district court could only
impose monetary penalties where the stipulated penalty
provision squarely applied, the court would be barred from
imposing any monetary penalties even if Volvo Powertrain itself
sought a certificate of conformity for model year 2005 nonroad
compression-ignition engines that it knew to be out of
compliance with the nonroad pull-ahead requirement.

    Where, as here, a consent decree “does not specify the
consequences of a breach,” the district court has “equitable
discretion” to fashion a remedy for violations of the decree.
Cook v. City of Chicago, 192 F.3d 693, 698 (7th Cir. 1999);
accord Shy, 701 F.3d at 532-33; United States v. Virgin Islands,
363 F.3d 276, 290-91 (3d Cir. 2004); United States v. Local 359,
United Seafood Workers, 55 F.3d 64, 69 (2d Cir. 1995). Of
course, “if parties to a consent decree wish to cabin the district
court’s equitable discretion by stipulating the remedies for
breach, they are free to do so,” and “the stipulation will fix the
measure of relief to which the victim of a breach is entitled.”
Cook, 192 F.3d at 698. But we cannot read the ambiguous and
                                22

self-defeating provision for stipulated penalties here as
embodying an intention to “cabin the district court’s equitable
discretion” in the circumstances of this case. Nothing in the
decree expressly or impliedly precludes the district court from
exercising its equitable discretion to fashion an alternative
remedy. Rather, the consent decree fails to specify the
consequences of the breach that occurred. See id. The district
court therefore retained equitable discretion to craft a remedy for
Volvo Powertrain’s violations.

                                B.

     When a district court exercises its equitable discretion to
impose monetary penalties for violations of a consent decree,
“the court must explain why it chose the calculation method it
did and how the record supports its calculations.” FTC v.
Trudeau, 579 F.3d 754, 773 (7th Cir. 2009). The penalty figure
must be “a reasonable approximation of losses, gains, or some
other measure the court finds appropriate.” Id.; see also Leman
v. Krentler-Arnold Hinge Last Co., 284 U.S. 448, 455-57 (1932)
(when court exercises equitable discretion to impose monetary
penalty for violation of its own order, penalty not limited to “the
pecuniary injury or damage which the act of disobedience
caused the complaining party”) (internal quotation marks
omitted).

     The district court adequately explained its calculation
method here. As the court noted, paragraph 129 of the consent
decree provides that, when reviewing any dispute under the
decree, the court “should consider the effect of the resolution”
on the other manufacturers who settled under comparable terms.
Consent Decree ¶ 129. The consent decrees covering the other
manufacturers contain similar stipulated penalty provisions.
And one of the other manufacturers, Caterpillar, has already
paid penalties for consent decree violations in line with the
                               23

stipulated penalty formula. See United States v. Caterpillar,
Inc., 227 F. Supp. 2d 73, 86-89 (D.D.C. 2002). The district
court explained that, “[t]o allow Volvo Powertrain to pay a
lesser penalty here might place it at a competitive advantage
relative to the settling manufacturers who either complied with
the emissions standards in their consent decrees or else paid the
stipulated penalties.” Volvo Powertrain, 854 F. Supp. 2d at 73.
Accordingly, the court followed the formula specifying
stipulated penalties for violations of the nonroad pull-ahead,
resulting in a penalty of $65,759,212 before interest.

     Volvo Powertrain seeks to distinguish the Caterpillar case
on the ground that Caterpillar made a “conscious decision” to
certify engines in violation of the consent decree, while Volvo
Powertrain had no opportunity to make an “informed, ex ante
choice” between complying with the decree and paying a
penalty. Appellant’s Br. 58-59. Volvo Powertrain did,
however, have an opportunity to seek clarification from the
district court of its obligations concerning the Penta engines. As
a general rule, “a party may ask the district court to issue an
order clarifying . . . a [consent] decree.” Nehmer v. U.S. Dep’t
of Veterans Affairs, 494 F.3d 846, 860 (9th Cir. 2007) (emphasis
omitted); see, e.g., SEC v. Am. Int’l Grp., 712 F.3d 1, 3 (D.C.
Cir. 2013); Microsoft, 147 F.3d at 942; see also United States v.
Philip Morris USA, Inc., 793 F. Supp. 2d 164, 168-69 (D.D.C.
2011) (collecting cases in which parties filed successful motions
for clarification “ask[ing] the Court to construe the scope of its
Order by applying it in a concrete context or particular factual
situation”). And the decree in this case specifically states that
the district court “retains jurisdiction . . . for the purpose of
enabling any of the Parties to apply to the Court at any time for
such further order, direction, and relief as may be necessary or
appropriate for the construction . . . of this Consent Decree.”
Consent Decree ¶ 151. That option was available to Volvo
Powertrain, for instance, when the California Air Resources
                               24

Board official asked in late 2004 whether the Volvo Penta
engines were subject to the consent decree.

     Volvo Powertrain also argues that EPA has presented no
“specific evidence” that Volvo entities obtained a competitive
advantage by certifying the noncompliant Penta engines.
Appellant’s Br. 59. We acknowledge that the district court
could have chosen to deviate downward from the consent
decree’s formula for stipulated penalties based on that
consideration. But the “abuse of discretion” standard “means
‘that the [district] court has a range of choice, and that its
decision will not be disturbed as long as it stays within that
range and is not influenced by any mistake of law.’” United
States v. Dockery, 955 F.2d 50, 54 (D.C. Cir. 1992) (emphasis
omitted) (quoting Kern v. TXO Prod. Corp., 738 F.2d 968, 970
(8th Cir. 1984)). We believe the district court’s decision to
follow the stipulated penalty formula lies comfortably within
that range of choice.

      Volvo Powertrain further contends that the district court
should have considered the statutory factors enumerated in
section 205(c) of the Clean Air Act for civil penalties in EPA
administrative actions. See Clean Air Act § 205(c), 42 U.S.C.
§ 7524(c) (EPA Administrator may assess civil penalty for
violations of Clean Air Act certificate-of-conformity
requirements, taking into account “gravity of the violation,”
“economic benefit or savings,” “size of the violator’s business,”
“violator’s history of compliance,” “action taken to remedy the
violation,” “effect of the penalty on the violator’s ability to
continue in business,” and “such other matters as justice may
require”); accord 40 C.F.R. § 89.1006(c)(2) (restating same
seven statutory factors). But Volvo Powertrain is charged with
violations of the consent decree, not with violations of the Clean
Air Act. See Microsoft, 147 F.3d at 944 (“As the settlement of
a litigation, the decree may require less than the statute under
                               25

which the suit was brought, or more, so the violation of one is
not necessarily a violation of the other.”) (citations omitted).
And while the consent decree provides that Volvo Truck (and its
successor Volvo Powertrain) “shall be subject to and comply
with all requirements of 40 C.F.R. Part 89 and of the Act,”
Consent Decree ¶ 61, it does not say that the district court shall
be bound by the factors set forth in the Clean Air Act and Part
89 with respect to the assessment of penalties.

     None of this is intended to suggest that the district court
could not consider the statutory factors in section 205 when
crafting an equitable remedy. Those factors reflect traditional
equitable principles, which of course guide the district court in
its exercise of equitable discretion. See Leman, 284 U.S. at 456-
57; Connolly v. J.T. Ventures, 851 F.2d 930, 932-34 (7th Cir.
1988). But the district court was not required expressly to
address each of those factors one by one. And we cannot say
that the district court’s ultimate decision to impose a monetary
penalty of $65,759,212 plus interest was inequitable.

                               C.

     Finally, Volvo Powertrain contests the district court’s
calculation of its liability for interest. Volvo Powertrain argues
that it should not be held liable for interest that accrued before
the date of the United States’ written demand. The United
States acknowledges that interest ordinarily should not accrue
before the written demand, but contends that the assessment of
pre-demand interest should be upheld because another settling
manufacturer paid pre-demand interest on stipulated penalties
for violation of a parallel consent decree.

    We need not resolve the merits of the issue because Volvo
Powertrain failed to preserve its challenge to the assessment of
pre-demand interest. Under the dispute resolution provisions of
                               26

the consent decree, the parties must first seek to resolve any
dispute through informal negotiations, see Consent Decree
¶ 132; if those negotiations fail, “the position advanced by the
United States shall be considered binding, unless, within 30 days
after the conclusion of the informal negotiation period,” Volvo
Truck (or its successor Volvo Powertrain) “invokes the formal
dispute resolution procedures of this Section by serving on the
United States a written Statement of Position on the matter in
dispute.” Id. ¶ 133. The parties agreed that the prescribed
procedure would be the “exclusive mechanism” to resolve
disputes related to the decree. Id. ¶ 129. And while Volvo
Powertrain invoked the formal dispute resolution procedures by
serving a written statement of position on the United States, that
statement contained no challenge to the inclusion of interest
accruing before the United States’ written demand.

     Volvo Powertrain argues that it preserved its challenge to
the award of pre-demand interest by raising the matter in district
court. Ordinarily, that would suffice to preserve an issue for
appellate review. Here, however, the parties assented to a
different dispute resolution procedure, and agreed that the
United States’s position would prevail on any matter unless
Volvo Powertrain contests the matter promptly. Volvo
Powertrain does not dispute that its statement of position
omitted any mention of pre-demand interest, and it identifies no
other document that might qualify as “a written Statement of
Position on the matter” within the 30 days allotted. Volvo
Powertrain thus forfeited its challenge to the award of pre-
demand interest.

                           * * * * *

    The judgment of the district court is affirmed.

                                                      So ordered.