Respondents Brief — United States v. Stauffer Chemical Co.

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

UNITED STATES OF AMERICA,

Petitioner,

Vv.

STAUFFER CHEMICAL COMPANY,

Respond nf,

On Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit

BRIEF FOR RESPONDENT

Of Counael: CHARLES F, LeTTtow

CLEARY, GOTTLIEB, STEEN (Counsel of record) :

& HAMILTON | KATHERINE L, RHYNE

1752 N Street, N. We JOHN A, MENKE

Washington, D.C, 20036 1752 N Street, N.W,

Waahington, D.C, 20036

(202) 728-2748

~ Rooer C, ZEHNTNER

Weatport, Connecticut 06880

. Counael for Reapondent

Stauffer Chemical Company

August 12, 1983 . ‘

Wiieon Eres Penrina Co ine 780.0006 . Wasninaton OC 20001

QUESTIONS PRESENTED *

1, Whether EPA is collaterally estopped from reliti-

gating in this case from the Sixth Circuit the identical

question of statutory interpretation which the Tenth Cir-

cuit had already resolved against EPA in earlier litiga-

tion involving the same parties and virtually identical

facts.

2. Whether EPA has power under Section 114(a) (2)

of the Clean Air Act to designate a private contractor as

its “authorized representative” for purposes of obtaining

and executing administrative search warrants.

* These questions have been restated from those set out in

puttiieger’s totes. ¥ “4

(i)

TABLE OF CONTENTS

QUESTIONS PRESENTED ..................-...s0-c-sssssessecsensees

TIT shacositeliteentesbceennbinvedoneenrsesertvaranenenncignctintn

STATEMENT OF THE CASE ..u..............0:sccc-ceccecsseeseesee

A. District Court Proceedings in Stauffer I ..........

B. District Court Proceedings in Stauffer II ........

C. The Tenth Circuit Decision in Stauffer I . .......

D. The Sixth Circuit Decision in Stauffer IT ........

EEE Seca eta ee

2. EPA’s “representatives” for purposes of

entry under Section 114(a) (2) 000000000000...

8. Denial of rehearing. —...0....0......2.20.:c200ccc0eee-e

SUMMARY OF ARGUMENT ....W0.0..0...2.---cc.--ccceccceeeceeeeees

a ER TO a ceieeccicencneeenesnienenrentnesns

B. EPA’s “Representatives” Under Section 114 (a)

Na es Oc saenaduubininadatinnss

I. DEFENSIVE USE OF COLLATERAL ESTOP-

PEL IS APPROPRIATE IN THIS CASE

WHERE THE PARTIES INVOLVED AND

THE RIGHT AT ISSUE ARE IDENTICAL

TO THOSE IN THE PRIOR LITIGATION,

AND THE CASE ARISES ON INDISTIN-

GUISHABLE FACTS

A. Defensive Use Of Collateral Estoppel Where

The Same Parties Were Subject To The Prior

Judgment Is The Most Compelling Case For

Invocation Of The Doctrine

(iii)

TABLE OF CONTENTS—Continued

Page

B. The Right Or Question At Issue Here Is In

All Legally Significant Respects The Same

SD FE IF ecicistttctenscitennathciiptpiieieictinem sien 20

C. Where Collateral Estoppel Is Invoked De-

fensively By A Party To The Prior Suit, The

Government May Be Precluded From Reliti-

gating A Potentially Recurring Question Of

. NN OE Dice icc tndssdatas pedi atadiindeaisntanitinkanie 25

1. Collateral estoppel applies where the gov-

ernment brings successive suits against

the party who prevailed in prior litiga-

SN ~ sdisicnansethatacsisen landers tpdesintcclgssebetigaabeoteen 25

2. Defensive use of collateral estoppel by a

party to the prior litigation fosters fair-

SII. cccnnissss ssensdapicindanbictaetienhtinic tpi itadalhes Sa ceaeesias soe 28

D. The Other Considerations Cited By EPA Do

Not Affect Application Of Collateral Estoppel

RRR Eeinorar nF SRLILS SPT Pa a 31

II. SECTION 114(a)(2) OF THE CLEAN AIR

ACT DOES NOT AUTHORIZE EPA TO DES-

IGNATE PRIVATE CONTRACTORS TO EN-

TER, SEARCH, AND INSPECT PLANTS ...... 32

A. Congress Used The Term “Authorized Repre-

sentative” Of EPA In Section 114(a) (2) To

Mean Only Specially Authorized Omer, Or :

| TR NE Nn LA — 33

1. The legislative history of the 1970 Amend-

ments to the Clean Air Act demonstrates ,

TABLE OF CONTENTS—Continued

Page

3. In the 1977 Amendme: ts to the Clean Air

Act, Congress continued to use the term

“representative” in the context of entry

to refer only to public employees. ............ 38

4. Sections 114(a) (2) and (d) share a stat-

utory context different from that of Sec-

a 39

B. EPA’s Current Arguments Regarding Sec-

tion.114(a) (2) Are Not Entitled To Any

Deference Whatsoever ............2......000..... Comeas 42

C. Strong Common Law Considerations Support

A Statutory Construction Denying Authority

For Contractors To Enter And Search Pri-

CREATE RRR SAR roe a 45

1. Explicit authority is necessary for

searches by contractors given the strong

common law tradition that only govern-

ment officers or employees can execute

searches on private premises. .................. 45

2. On the sole occasion when Congress has

granted authority to designate private

contractors to carry out searches, it did

RT ie ae ate ee 47

ITT casshlcinniuliaealoiincitatainiornitercnapmoritionsiaideetstonteh 50

TABLE OF AUTHORITIES

Cases: Page

Adamo Wrecking Co. Vv. United States, 434 U.S.

OE NE SE 43

Aluminum Co. of America Vv. EPA, 663 F.2d 499

EE 6

American Medical International, Inc. v. Secretary

of HEW, 677 F.2d 118 (D.C, Cir. 1981) .......... 27, 28, 29

American Ship Building Co, v. NLRB, 380 U.S

I csunesenbostocsoanh 42

Barlow Vv. Collins, 8397 U.S. 159 (1970) ................. 42

Bivens v. Siz Unknown Named Agents of Federal

Bureau of Narcotics, 403 U.S. 388 (1971) .......... 49

Blonder-Tongue Laboratories, Inc, v. University of

Illinois Foundation, 402 U.S. 318 (1971) .......... 20

Boyd v. United States, 116 U.S, 616 (1886) .......... 46, 47

Bunker Hill Co. v. EPA, 658 F.2d 1280 (9th Cir.

EAMES at 13, 30, 31, 32, 34

Chrysler Corp. Vv. Brown, 441 U.S. 281 (1979) ...... 49

Commissioner Vv, Sunnen, 333 U.S. 591 (1948) ...... 24

Consumer Product Safety Commission v. GTE

Sylvania, Inc., 447 U.S. 102 (1980) .................... 38

Continental Can Co. Vv. Marshall, 603 F.2d 590

RSA 10, 23, 28, 29, 32

Cromwell v, County of Sac, 94 U.S. 351 (1877) ...... 18

Divine v. Commissioner, 500 F.2d 1041 (2d Cir.

a cesiaemanenainnss 24

Ez Parte Endo, 323 U.S. 283 (1944) .0000....cceceeee 43

General Electric Co. v. Gilbert, 429 U.S. 125

Eo SC ee 43

Hicks Vv. Quaker Oats Co., 662 F.2d 1158 (5th Cir.

NEES AN ee Oe x

Iebrandtsen Co. v. Johnson, 343 U.S. 779 (1952).. 45

Montana Vv. United States, 440 U.S. 147 (1979)....passim

NLRB V. Amaz Coal Co., 453 U.S. 322 (1981)... 33

Parklane Hosiery Co. v. Shore, 439 U.S. 38

(W9T9) oc crvvreeeevvveeevecseervssereveevernssnrtllere-oone¥®, 20, 24

Rowan Companies, Inc. v. United States, 452 U.S.

247 (1981) . oe

Show v. Railroad Co., 101 U.S. 687 (1879) .. seppensseene 45

vil

TABLE OF AUTHORITIES—Continued

Page

Shell Oil Co. v. Department of Energy, 477 F. Supp.

418 (D. Del. 1979), aff'd, 631 F.2d 231 (8d Cir.

1980), cert. denied, 450 U.S, 1024 (1981) ............ 40, 49

Southern Pacific R.R. v. United States, 168 U.S. 1

(niet AER eae ee ee Ret AAO Re ee 18

Starker v, United States, 602 F.2d 1341 (9th Cir.

SERRA PRLS NEE ite ER Wee ee 23, 24, 28

In re Stauffer Chemical Co., 14 Env’t Rep. Cas.

(BNA) 1787 (D. Wyo. 1980), aff'd sub nom.

Stauffer Chemical Co. v. EPA, 647 F.2d 1075

RRS i cee irae Cee es oe passim

Union Carbide Corp. v. Commissioner, 671 F.2d 67

I 24, 28

United States v. Bailey, 444 U.S. 394 (1980) ........ 45

United States v. ITT Rayonier, Inc., 627 F.2d 996

I, ciated 24, 26, 28, 32

United States v. Mendoza, No. 82-849 .................. 20, 25, 26

United States v. Moser, 266 U.S. 236 (1924)....9, 14, 21,

23, 24, 30

Western Oil & Gas Ass'n Vv. EPA, 633 F.2d 808

SN I TU i ieinietretinaal 10, 26, 32

Zuber v. Allen, 396 U.S. 168 (1969) ...000 ee 43

Statutes, Regulations and Rules:

Act of Frauds of 1662, 14 Char. 2d 2000000. 46

Clean Air Act, as amended, 42 U.S.C. §§ 7401-

7642:

Section 108(a), 42 U.S.C. § 7408 (a) 0000000... 44

Section 108(b) (4), 42 U.S.C. § 7403 (b) (4)... 44

Section 114(a) (2), 42 U.S.C. § 7414(a) (2)....passim

Section 114(c), 42 U.S.C. § 7414(c) ....12, 17, 39, 40,

42, 43

Section 114(d), 42 U.S.C. § 7414(d) .......... 12, 16, 38,

89, 42

Section 206(c), 42 U.S.C. § 7625(c) ................ 35, 42

Section 208(a), 42 U.S.C. § 7542(a) ................ 35

Section 801 (a) (1), 42 U.S.C. § 7601 (a) (1)... 42

Consumer Product Safety Act, Section 16, 15 U.S.C.

§ 2065 (a) 48

vili

TABLE OF AUTHORITIES—Continued

Energy Supply and Environmental Coordination

Act of 1974, 15 U.S.C. § 796(d) ..............:cccseeeees

Environmental Response, Compensation, and Lia-

bility Act of 1980 (“Superfund”), 42 U.S.C.

OO GNIS osu cccacessekicctuinsenitssnnctensammsnisiaeigeaiines

Federal Coal Mine Health & Safety Act, 30 U.S.C.

1S RRS A ie er RRR I ES er BIS

Federal Insecticide, Fungicide and Rodenticide

Act (including the Federal Pesticide Act of

1978), as amended by the Federal Environmental

Pesticide Control Act:

F Sree 1h UE cncechatnsbvsncensinseesats csenseciinibenensngeonll

Federal Nonnuclear Energy Research and Develop-

ment Act of 1974, 42 U.S.C. § 5916 .00

Federal Reports Act, 44 U.S.C. §§ 3501-3512 ....17,

Federal Tort Claims Act, 28 U.S.C. § 1346(b) ......

Federal Water Pollution Control Act (Clean Water

Act), as amended, 33 U.S.C. §§ 1251-1376:

Section 308, 33 U.S.C. § 1318 ............. 16, 36, 37,

Flammable Fabrics Act, 15 U.S.C. § 1198 ..............

Food, Drug & Cosmetics Act, 21 U.S.C. § 872(a)....

Internal Revenue Code:

Oe Ws I ee

26 U.S.C. §§ 7601, 7602, 7606 000... cceccceceeees

Occupational Safety and Health Act:

Section 8, 29 U.S.C. § 657 (a) ..........cccceeceeseeeeees

Section 15, 29 U.S.C. § 664 00... ccccccecceeeeeneeee

Public Health Services Act: . ~

Oe BI decdecrtvtincrbenterciceninsaeniithinsiasamtind

PRET eee ee eee

Radiation Control for Health and Safety Act of

1968, Section 2(3) (e), 42 U.S.C. § 236i(e) ........

Solid Waste Disposal Act, as amended by Resources

Conservation and Recovery Act and other Acts,

42 U.B.C, $§ 6901-6987: ee

Section 3001 (b) (3) (B) (ii) (1), 42 US.C.

§ 6821 (b) (3) (B) (ii) (DT)...

Page

40, 49

41, 42

TABLE OF AUTHORITIES—Continued

Section 3001(b) (3) (B) (ii) (II), 42 U.S.C.

§ 6921 (b) (3) (B) (ii) (IT) ~..........--...-.-.--.-200--

Section 3007 (a), 42 U.S.C. § 6927(a) ~............

Section 3007, 42 U.S.C.A. § 6927 (West 1977

OM a ae eae

Solid Psa Disposal Act Amendments of 1980:

ES RS Eee

Toxic Substances Control Act, 15 U.S.C. §§ 2601-

2629:

Section 14, 15 U.S.C. § 2618 ..............................

Trade Act of 1974, 19 U.S.C. § 2155(g) —........0.......

Trade Secrets Act, 18 U.S.C. § 1905 2.000... 17,

a ERE SS EN

ETSI, ES EA ee ON a

18 U.S.C. § 923(g) -...... EE AUER ees ee

i cncnlancibsineihaicinliinis

ee OO

a cnssennocenliivbanalns

Miscellaneous:

J. Adams, Abstract of James Otis’ Argument

(RE ASE ES Ra SIS eal ea eR Re

Agriculture-Environmental and Consumer Protec-

tion Appropriations for 1973: Hearings Before

a House Subcomm. on Appropriations of the

Comm. on Appropriations, 92d Cong., 2d Sess.,

NE ET ge ee

King Charles II, Proclamation of 17 January 1661..

126 Cong. Rec. H11,787 (daily ed. Dec. 3, 1980)...

126 Cong. Rec. $14,930, $14,988, $15,009 (daily ed.

Nov. 24, 1980)

T. Cooley, A Treatise on the Constitutional Limita-

tions Which Rest Upon the Legislative Power of

the States of the American Union (1868) _......

TABLE OF AUTHORITIES—Continued

Page

M. Hale, History of the Pleas of the Crown (1st

Ne ON - h n eh s s 5 45, 46

H.R. 17255, 91st Cong., 2d Sess. (1970), § 112(f).. 34

H.R. Rep. No. 1444, 96th Cong., 2d Sess. (1980).... 48, 49

H.R. Rep. No. 191, 96th Cong., 1st Sess. (1979)...... 49

H.R. Rep. No. 1783, 91st Cong., 2d Sess. (1970)...... 34

A Legislatwe History of the Clean Air Amend-

ments of 1970, prepared by the Environmental

Policy Division of the Congressional Research

Service of the Library of Congress for the Sen-

ate Comm. on Public Works, 93d Cong., 2d Sess.

CC, RG SUED enn decane. 34, 35, 36, 40

A Legislative History of the Water Pollution Con-

trol Act Amendments of 1972, prepared by the

Environmental Policy Division of the Congres-

sional Research Service of the Library of Con-

gress for the Senate Comm. on Public Works,

93d Cong., Ist Sess. (Comm. Print 1973) _........ 37

Office of Management and Budget Circular No.

A-76 (revision four, March 29, 1979) 000.0... 44

Restatement (Second) of Judgments (1982):

SS 5 ee Ce ee eR Se 18, 26

yg UE TD BPI cod cteciseccneckncedtccacionincenties 21, 24

a a Ee alaaaae 26

I ee 30, 32

Se i ne pte gas 21

a eC ae 21

§ 28, Reporter’s Note 000... 21, 24, 30

EN RR ES OL Cee te 26

Ck Oe nh og ~~’ 27 ‘

Oo 27

ay I GD ic ideeticeensensvoemenshinieetinnsinninsions 26

ES a eT! 26

RSLS RRR tro ger eee eS 4

S. 4358, 91st Cong., 2d Sess. (1970): nerd CO ED | 40

III sasticiiscnssisarinneenseriioenetntatbenibegiinnccsanincees 36

CIS STS ASR core 34

SII thesia incgenetitenesiapnecton’ 35

I-A iNddeenntnesccenensdeg) ddeieniniepnetensendneiecotnmnineainesiate 36°

TABLE OF AUTHORITIES—Continued

S. Rep. No. 848, 96th Cong., 2d Sess. (1980) .......... 38

S. Rep. No. 414, 92d Cong., Ist Sess. (1971) ...... 12, 13, 37

Letter from Senator Alan Simpson to Douglas

Costle (November 19, 1980) —.......2220.0...022eeeeeee 38

M. Smith, The Writs of Assistance Case (1978) ..45, 46, 47

C. Tiedemann, A Treatise on the Limitations of

the Police Power in the United States (1886)... 47

Wright, Miller & Cooper, Federal Practice & Pro-

cedure: Jurisdiction (1981) ...0.......2.....c.cccceceeeeeeeee 21

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

No. 82-1448

UNITED STATES OF AMERICA,

. Petitioner,

STAUFFER CHEMICAL COMPANY,

Respondent.

On Writ of Certiorari to the United States

Court of Appeals for the Sixth Circuit

BRIEF FOR RESPONDENT?

INTRODUCTION

This case concerns the Environmental Protection Agen-

cy’s (“EPA’s”) attempted use of private contractors to

carry out inspections of plants under Section 114(a) (2) of

the Clean Air Act (“the Act’), 42 U.S.C. § 7414(a)(2).?

The facts and circumstances of this case are virtually

identical to those of a contemporaneous, parallel case in-

1 In accordance with Rule 28.1 of the Rules of the Supreme Court,

respondent’s non-wholly owned subsidiaries and’ affiliates were set

volving the same parties. The precise issue of statutory

interpretation arising here was resolved against EPA in

this prior case.

In March and April of 1980, EPA sought to use con-

tractors as its “authorized representatives” to enter two

plants owned and operated by Stauffer Chemical Co.

(“Stauffer”). Each of the inspections by contractors was

to take place as part of the Agency’s “overview inspection

program,” instituted for the purpose of auditing state

enforcement and inspection procedures. See EPA’s Brief

at 2 n.l. In each instance, EPA officials and the con-

tractors first arrived without a warrant and sought to

enter and inspect the plants. Company officials then noted

that they had no objection to an inspection by EPA or

state officials, but that they wanted an agreement to pro-

tect trade secrets before private parties examined plant

premises. Although in both cases subsequent discussions

took place regarding such an agreement, EPA sought

and obtained from federal magistrates on an ex parte

basis administrative search warrants specifically au-

thorizing the contractors to enter the plants and inspect

the premises. Stauffer refused to honor the warrants

insofar as the contractors were concerned and sought

from the pertinent federal district courts orders quash-

ing the warrants and enjoining the inspections. In both

cases, by order or agreement, the warrants were stayed

pending a judicial ruling on the merits.

In the first decision (“Stauffer 7”),? the U.S. District

Court for the District of Wyoming quashed the warrant

and enjoined further inspections using contractors, rul-

ing that EPA had no authority under the Act to desig-

nate contractors as its “representatives” for purposes of

entry and inspection. The Tenth Circuit affirmed.

In the second and instant case (“Ctauffer /I”), the

U.S. District Court for the Middle District of Tennessee

2 Jn re Stauffer Chemical Co., 14 Env’'t Rep. Cas. (BNA) 1737

(D. Wyo. 1980), aff'd sub nom. Stauffer Chemical Co. v. BPA, 647

F.2d 10765 (10th Cir. 1981).

upheld EPA’s asserted authority to designate private

contractors as inspectors under the Clean Air Act. (511

F. Supp. 744, Pet. App. 44a-56a.) The Sixth Circuit,

however, reversed, holding (1) that EPA was collaterally

estopped by the decision in Stauffer I from designating

private contractors to conduct the inspection, and (2)

that the Act substantively does not authorize the Agency

to designate contractors to carry out that task. (684

F.2d 1174, Pet. App. la-4la.)

Because of the direct relevance of the decision in

Stauffer I to this case (Stauffer II), the statement of the

case which follows will address both actions, beginning

with the district court proceeding in Stauffer I.

STATEMENT OF THE CASE

EPA’s inspections of Stauffer’s plants using the Agen-

cy’s own designated employees have always proceeded

without incident and with Stauffer’s full cooperation. On

the few occasions prior to 1980 when EPA requested that

its private contractors visit a plant, Stauffer and EPA

negotiated an agreement signed by the contractor and

Stauffer to protect trade secrets. The visits by contrac-

tors then took place in due course. (Jt. App. Ct. Appls.

100, 103, 108, 111-112.)

A. District Court Proceedings in Stauffer 1

Region VIII of EPA is headquartered in Denver and

has responsibility for a six-state area encompassing

Colorado, Montana, North Dakota, South Dakota, Utah

and Wyoming. Beginning with calendar year 1980,

EPA’s Region VIII began using private contractors in

carrying out its overview inspection program. Stauffer I,

14 Env’t Rep. Cas. (BNA) at 1739 ("7 14-15). Inspec-

tions were to be handled primarily by the private con-

tractors, both with and without the presence and super-

vision of a full-time EPA employee. Jd. (* 15).

The contractor employed by EPA in Stauffer 1 was

GCA Corporation (“GCA”). The GCA engineers were to

inspect Stauffer’s phosphate ore processing plant located

at Leefe (near Sage), Wyoming. id. (f 11).

The inspection at the Leefe plant was first attempted

on April 10, 1980. An EPA employee, a Wyoming em-

ployee, and the two GCA employees arrived unannounced

at the plant. Jd. at 1738 (95). Stauffer’s employees told

the group that they had no objections to an inspection by

EPA and Wyoming officials, but that a written agree-

ment to protect trade secrets would have to be executed

by GCA and Stauffer before the contractor’s employees

would be allowed entry. Id. (76-8). The EPA and

Wyoming employees chose not to make the inspection.

Thereafter, discussions regarding a trade-secrets agree-

ment proceeded between EPA and Stauffer based on the

text of an agreement which had been used earlier when

an EPA contractor had visited a different Stauffer plant.

Id. (9 9).4

While the discussions were still underway, on May 8,

1980, EPA sought an administrative search warrant

from the U.S. Magistrate in Cheyenne, Wyoming. The

warrant was issued on an ex parte basis that same day.

Id. at 1738-39 (710). It authorized entry by “any duly

designated enforcement officers of the Environmental

Protection Agency, and authorized employees of EPA’s

contractor, GCA Corporation,” and empowered these per-

sons to inspect “facilities, processes, records, files and

papers associated with the processing of phosphate ore.”

Id.

On May 13, 1980, a group consisting of an EPA em-

ployee, an EPA lawyer, a Wyoming employee, and the

two GCA employees appeared unannounced at the plant

and sought to execute the warrant. Id, at 1739 (11).

Stauffer’s plant manager told the EPA and Wyoming

officials that they were welcome to conduct the inspection

4 Stauffer never sought to restrict in any way an inspection by

EPA’s own employees. 14 Env’t Rep. Cas. (BNA) at 1738-40 (*{ 6,

9, 11, 17-18). The contrary statement in EPA’s brief is in error.

EPA’s Brief at 3.

Correlatively, Stauffer did not propose to limit the contractor’s

access to parts of the plant that emitted pollutants. It did want to

control the contractor’s access to other areas of the plant. 14 Env’'t

Rep. Cas. (BNA) at 1739 ({ 9).

but refused entry to the GCA employees absent an agree-

ment to protect trade secrets. Jd. The EPA officials de-

cided not to conduct the inspection themselves, and the

EPA and GCA group departed. Stauffer immediately

moved in federa! district court to quash the warrant and

also sought a temporary restraining order enjoining

execution of the warrant. The court granted such an

order on the same day, May 13, 1980, /d. (" 12).

Thereafter, a two-day evidentiary hearing was held in

the district court, and on June 23, 1980, the court en-

tered judgment quashing the warrant and enjoining EPA

from causing its private contractors to enter Stauffer’s

plants in Wyoming to conduct inspections, The court’s

ruling was premised on alternative grounds: first, that

EPA had no authority under Section 114(a) (2) of the

Clean Air Act, 42 U.S.C, § 7414(a)(2), to designate

private contractors as its “authorized representatives”

for purposes of entry and inspection; and second, that in

the particular circumstances EPA’s use of an ex parte

procedure to obtain the administrative search warrant

from the federa] magistrate violated principles of funda-

mental fairness. 14 Env’t Rep. Cas. (BNA) at 1740-41.°

On August 19, 1980, EPA filed notice of its appeal to

the Tenth Circuit.

B. District Court Proceedings in Stauffer Il

The contractor employed by EPA in Stauffer I] was

PEDCo Environmental, Ine. (“PEDCo”). Two PEDCo

employees were to inspect Stauffer’s elemental phosphorous

plant located at Mt. Pleasant, Tennessee, (Jt. App. Ct.

Appls. 38.) An EPA official, a Tennessee official, and

6 In connection with the second ground of ita decision, the district

court observed that

EPA had Dr. O’Boyle and Mr. Gribb, both of whom were com-

petent to have performed the inspection and both of whom

were not denied entry, present, ready, and able to make the

two or three hour inspection, but instead of letting them do it

while the contract inspectors waited outside the plant, EPA's

counsel apparently wanted to make this a test case,

Id. at 1741 (8) (emphasis added).

6 ‘

these two PEDCo employees appeared unannounced at

the plant on March 27, 1980, Stauffer’s plant manager

welcomed the inspection by EPA and Tennessee officials *

but refused to allow the PEDCo employees to enter in

the absence of a written agreement with PEDCo to pro-

tect trade secrets, (Jt. App. Ct. Appls. 59.) The EPA

group left without making the inspection, and again dis-

cussions followed regarding a secrecy agreement. (/d.)

On August 7, 1980, approximately six weeks after the

Wyoming federal district court in Stauffer I had ruled

that EPA had no authority to employ private contractors

to make inspections, EPA sought from a federal magis-

trate in Nashville, Tennessee, an administrative search

warrant for PEDCo’s employees to enter and inspect

Stauffer’s Mt. Pleasant plant. (Jt. App. Ct. Appls. 5-48.)7

The warrant was issued on an ez parte basis the same

day. It authorized entry at and inspection of the Mt.

Pleasant plant by “duly authorized full-time employees

(of EPA], and accompanying, authorized representatives

under contract to EPA.” (Jt. App. Ct. Appls. 49.) On

that same day, an EPA official, an EPA attorney, and

the two PEDCo employees arrived at the plant to make

the inspection. A Tennessee official accompanied them.

Again, Stauffer’s plant staff welcomed inspection by the

EPA and Tennessee officials but refused to allow entry

by PEDCo’s employees absent a written agreement with

PEDCo to protect trade secrets. (Jt. App. Ct. Appls. 64,

120.) No inspection was made. On the following day,

*Five months earlier, on October 17, 1979, EPA officials had

conducted an oversight inspection at the plant. A Tennessee official

was also present. (Jt. App. Ct. Appls. 37.)

* The prior ruling adverse to EPA in Stauffer ] was disclosed in

a footnote in a Memorandum of Law accompanying EPA's applica-

tion for the warrant. (Jt. App. Ct. Appls. 47.) In support of its

position, EPA cited dicta in a decision by a federal magistrate in

North Carolina. In the cited case, the magistrate had held that

Alcoa had waived its right to contest a similar warrant and that the

dispute was moot because the warrant had been executed. See

Aluminum Co. of America Vv. EPA, 663 F.2d 499, 500 (4th Cir.

1981). Compare EPA's Brief at 4 n.2.

EPA filed in federal district court a petition for an order

to show cause why Stauffer should not be held in con-

tempt. Stauffer simultaneously filed a motion to quash

the warrant and an application for a temporary restrain-

ing order barring execution of the warrant. Stauffer’s

application for a temporary restraining order was mooted

by EPA’s agreement not to seek to execute the warrant

pending the court’s decision on the cross-motions.

On April 17, 1981, the Tennessee federal district court

denied Stauffer’s motion to quash and also denied EPA’s

contempt petition on the ground that “Stauffer legiti-

mately believed that private contractors were not author-

ized representatives under the Clean Air Act” to perform

inspections. (511 F. Supp. 750; Pet. App. 56a.) Stauffer

promptly appealed, and after the district court refused

to stay its decision and execution of the warrant pending

appeal, Stauffer obtained a stay to that effect from the

Sixth Circuit.

C. The Tenth Circuit Decision in Stauffer J

On May 8, 1981, three weeks after the Tennessee fed-

eral district court’s decision in Stauffer I/, the Tenth Cir-

cuit affirmed the Wyoming federal district court’s deci-

sion in Stauffer | quashing the warrant there at issue

and enjoining EPA from using contractors to make in-

spections at Stauffer’s plants in Wyoming. Stauffer

Chemical Co, vy. EPA, 647 F.2d 1075 (10th Cir, 1981).

The Tenth Circuit’s decision rested squarely and solely

on the ground that private contractors were not “author-

ized representatives” of EPA for purposes of Section

114(a)/2), Jd, at 1079. EPA unsuccessfully sought re-

hearing.

D. The Sixth Circuit Decision in Stauffer I/

Because of the Tenth Circuit’s explicit ruling in Stauf-

fer I that EPA had no right to designate private con-

tractors to enter and inspect plants, the appeal to the

Sixth Circuit from the Tennessee federal district court's

decision focused both on whether EPA was collaterally

estopped from claiming such a right and on whether such

a right existed."

On July 7, 1982, the Sixth Circuit reversed the Ten-

nessee federa) district court, adopting two alternative

grounds for its decision that the warrant should have

been quashed. Each of the three judges wrote separately.

Judge Weick, joined by Judge Jones, concluded that EPA

was collaterally estopped from obtaining a warrant au-

thorizing a private contractor to make the inspection, be-

cause of the prior decision in Stauffer I as affirmed by

the Tenth Circuit, (684 F.2d 1179-81, 1190-92; Pet. App.

8a-18a, 34a-38a.) District Judge Siler, sitting by designa-

tion, did not agree that the doctrine of collateral estoppel

applied. (684 F.2d 1192-93; Pet. App. 39a-4la.) Judge

Siler joined Judge Weick, however, in concluding that

Section 114/a) (2) of the Act does not permit EPA to

designate contractors as its representatives for purposes

of entry and inspection. (684 F.2d 1192; Pet. App. 39a.)

Judge Jones did not reach this issue. (684 F.2d 1190;

Pet. App. 34a.) Each judge thus joined in the result, and

Judge Weick’s opinion spoke for a majority of the court

on each of the two alternative holdings.’

1. Collateral estoppel.

Judge Weick observed that “[t)he facts in Stauffer J

were identical to those in the instant case except they

* The Wyoming federal district court in Stauffer J based its hold-

ing on alternative grounds, and for purposes of collateral estoppel

its judgment initially was not necessarily conclusive as to either

of the grounds standing alone. See Hicks v. Quaker Oats Co., 662

F.2d 1158, 1168-73 (5th Cir. 1981); Restatement (Second) of

Judgments § 27, comment i (1982). However, when the Tenth Cir-

cult upheld the Wyoming federal district court's interpretation of

the Clean Air Act, the judgment definitely became conclusive as to

that ground. See Hicks v. Quaker Oats Co., supra; Restatement,

supra, comment o.

°In view of its disposition of the case on the two cited grounds,

the court did not reach Stauffer’s further claim that EPA could not

obtain administrative search warrants on the basis of ez parte

proceedings absent a showing of goed cause for such proceedings.

See EPA's Brief at 4 n.3.

arose in a plant of Stauffer’s at a different location.”

(684 F.2d 1179, Pet. App. 9a.) In the circumstances,

based on the principles of collateral estoppel set out in

Montana v. United States, 440 U.S. 147 (1979), Judge

Weick concluded that “there is no valid reason why they

[i.e., the questions decided in Stauffer I) should be reliti-

gated a second time in the present case.” (684 F.2d 1180,

Pet. App. 12a.) He specifically considered whether the

case fell within the exception for “ ‘unmixed questions of

law’ in successive actions involving substantially unre-

lated claims.” Montana, 440 U.S. at 162, quoting United

States v. Moser, 266 U.S. 236, 242 (1924). Judge Weick

noted that in applying the exception this Court in Mon-

tana had focused on the relative similarity of the actions

in terms of subject matter, context and time. (684 F.2d

1181, Pet. App. 12a-13a.) Because the claims involved

were so closely related as to be virtually identical, he

accordingly did not apply the Moser exception. /d.

Judge Jones concurred, agreeing that “it is undisputed

that the issue resolved by the litigation in Stauffer J is

identical to the question raised in this appeal.” (684 F.2d

1190, Pet. App. 34a.) He also focused on answering the

following two questions posed in Montana, 440 U.S. at

155:

(1) “whether controlling facts or legal principles

have changed significantly” since the judgment in

the prior suit; and (2) “whether other special cir-

cumstances warrant an exception to the normal rules

of preclusion.”

(684 F.2d 1190, Pet. App. 35a.)

Judge Jones found neither factor to be present. He con-

sidered specifically whether any injustice would result

from precluding EPA from using contractors to enter

Stauffer’s plants, while not estopping EPA as to competi-

tors’ plants. He concluded that a greater injustice would

arise as a result of according different treatment to

Stauffer plants in different locations. (684 F.2d 1191,

Pet. App. 36a.)*° Fe also observed that the other two

members of the panel had reached the merits and had

resolved the statutory question against EPA, so all plants

in the Sixth Circuit stood on the same footing in any

event. (684 F.2d 1191, Pet. App. 37a.) In addition, while

Judge Jones approved generally of the practice of agency

relitigation of legal issues, he concluded that in cases of

defensive use of estoppel where mutuality was present,

ie., where the parties to the cases were the same, this

factor should not be controlling. (684 F.2d 1191-92, Pet.

App. 38a.) As he said:

While I do not favor precluding a federal agency's

ability to test its policy decisions in more than a

single circuit, in circumstances where the same de-

fendant is sued in seriatim without the agency at-

tempting to exhaust its appeals on the previous

judgment, the equities favor application of collateral

estoppel and not its abdication.

(684 F.2d 1192; Pet. App. 38a.)

Judge Siler would not have applied collateral estoppel.

He would have given controlling weight to permitting

agencies to relitigate legal issues,’’ and he also consid-

ered that an injustice may arise if EPA were precluded

from using contractors to inspect Stauffer’s plants but

10 Judge Jones explained (id.):

In my opinion, the injustice, if any, is suffered by Stauffer

whose plants and trade secrets in one area will be protected,

while in another, private individuals will be able to enter and

inspect its facilities. To prevent such an anomaly, collateral

estoppel should be applied.

Judge Jones explicitly drew an analogy between this case and

Continental Can Co. Vv. Marshall, 603 F.2d 590 (7th Cir. 1979), a

case involving alleged violations of OSHA's noise regulations.

The manufacturer had prevailed in a prior proceeding involving

alleged violations of the same regulation at different plants. The

Seventh Circuit approved defensive use of collateral estoppel by

the manufacturer to block the subsequent proceedings by OSHA.

See 684 F.2d 1191 n.2, Pet. App. 36a n.2.

11 In this connection, Judge Siler relied particularly on Western

Oil & Gas Ass'n V. EPA, 633 F.2d 808, 808 (9th Cir. 1980). But

see the discussion infra at 26 & n.23.

not those of its competitors. (684 F.2d 1192, Pet. App.

40a-41a.)

2. EPA's “representatives” for purposes of entry under

Section 114(a)(2).

Judge Siler nonetheless concurred with Judge Weick

that on the merits EPA had no authority to designate

contractors as its “representatives” to enter and inspect

plants under Section 114(a) (2). He emphasized the lack

of express authority for such a radical departure from

the common-law principle that only governmental officers

could conduct searches:

Where the federal government has embarked upon

a policy so radically divergent from its standard

policy, that is, having only government officers or

employees executing search warrants and inspecting

plants, it seems that authority for such conduct

should be clear from the Act itself or from legisla-

tive history.

(684 F.2d 1192-93, Pet. App. 41a.)

Judge Weick meticulously parsed the statutory lan-

guage and the legislative history. He noted that the stat-

ute did not define “representative” and rejected EPA’s

plain-meaning argument. Jd. He explored the background

for the fact that the language “authorized representa-

tive” enacted in the 1970 Amendments to the Clean Air

Act came from the Senate version in place of a refer-

ence to “officers or employees” in the corresponding House

bill. He pointed out that the Conference Report described

the competing phrases in equivalent terms, referring to

“DHEW personnel” and “DHEW investigative person-

nel,” respectively. (684 F.2d 1183-84, Pet. App. 18a-

20a.) *?

Judge Weick also drew assistance from the statutory

context. He noted that one other part of Section 114

uses the term “representatives” in connection with EPA’s

12 The Department of Health, Education and Welfare was then

responsible for administering the Clean Air Act. These duties were

transferred to EPA upon its creation.

entry and search powers. Section 114(d), added by the

1977 Amendments to the Act, requires “the Administra-

tor ‘or his representatives)” to give notice to the ap-

plicable state pollution control agency before making an

inspection under Section 114(a) (2). Given the sensitive

nature of the intergovernmental communication involved,

he considered that this function “necessarily envisions

EPA employees.” (684 F.2d 1184, Pet. App. 2la.) He

concluded that the term “representative” should be given

the same meaning in both Sections 114/a) (2) and (d).

Id.

Judge Weick distinguished Section 114(c), which refers

to “representatives of the United States” rather than of

the Administrator. That provision allows EPA to dis-

close confidential information to ‘other officers, employ-

ees, or authorized representatives of the United States’’

where necessary to carry out their duties. He considered

that a broader category of persons could receive confi-

dential information as “representatives of the United

States” for purposes of Section 114(c) than could exer-

cise entry and search authority as a “representative” of

the Administrator under Sections 114(a)(2) and (d).

(684 F.2d 1185, Pet. App. 22a.) Judge Weick also opined

that if the term “representative” in Section 114(a) (2)

meant persons other than EPA employees, the ‘absurd

result” would arise that only the Administrator and pri-

vate contractors could make inspections, but EPA em-

ployees could not. Jd.

As the Tenth Circuit had done in Stauffer 1, Judge

Weick also gave weight to the legislative history of the

adoption in 1972 of a provision in the Federal Water

Pollution Control Act (now “Clean Water Act’) provid-

ing for entry and inspection by EPA in terms virtually

identical to those of Section 114(a) (2) of the Clean Air

Act. The Senate Report of the bill which was the basis

of final enactment of the provision states:

It should also be noted that the authority to enter,

as under the Clean Air Act, is reserved to the Ad-

ministrator and his authorized representatives which

such representatives must he full time employees of

the Environmental Protection Agency. The authority

to enter is not extended to contractors with the EPA

in pursuit of research and development.

(684 F.2d 1187, Pet. App. 27a, quoting S. Rep. No.

414, 92d Cong., lst Sess. 63 (1971), reprinted in

1972 U.S. Code Cong. & Ad. News 3668, 3729 (em-

phasis added).

Judge Weick noted that the court in Bunker Hill Co. v.

EPA, 658 F.2d 1280 (9th Cir. 1981), had dismissed this

statement, but he considered that this was an exceptional

case where post-enactment legislative history was useful.

He observed that the statement provided an authoritative

construction of the nearly identical provision in the Clean

Water Act, and that the provision was explicitly modeled

by Congress after Section 114/a)(2) of the Clean Air

Act. The provisions in the two Acts were in pari materia

with one another and should be given a congruent con-

struction. In addition, he pointed out that the statement

regarding the provision in the Clean Water Act was made

by the same committee and came “a scant ten months”

after enactment of the 1970 Amendments to the Clean

Air Act. (684 F.2d 1187, Pet. App. 28a.)

Judge Weick also rejected claims by EPA that Con-

gress had ratified use of contractors for searches by fail-

ing to amend Section 114/a) (2) and by making appro-

priations that included funds for use of contractors. (684

F.2d 1189, Pet. App. 3la-33a. )

Finally, like Judge Siler, Judge Weick observed that

“the execution of search warrants is a traditionally gov-

ernmental function.” (684 F.2d 1189, Pet. App. 33a.)

He pointed out that Congress had amended the entry

and inspection provisions of the Solid Waste Disposal

Act, 42 U.S.C. §6927(a), to expand the persons who

could make searches, and that the legislative history

of that amendment expressly referred to private contrac-

tors as being among those who were newly eligible to

conduct inspections. (684 F.2d 1188, Pet. App. 29a-30a.)

In his view, given the strong tradition of conducting

searches only by governmental officials, the absence of any

similar expression of congressional intent regarding the

Clean Air Act was instructive.

3. Denial of rehearing.

A petition by EPA for rehearing and rehearing en

banc was denied. (684 F.2d 1193, Pet. App. 42a-43a.) In

denying rehearing, the court commented that “a private

contractor ... may have an axe to grind and may be in-

terested in obtaining trade secrets of Stauffer.” Jd.

SUMMARY OF ARGUMENT

A. Collateral Estoppel

This case concerns “defensive” use of collateral estop-

pel by a private party faced with successive, contem-

porary, virtually identical demands by a governmental

agency. In this case from the Sixth Circuit, each judge

separately, and properly, concluded that the case arose

on facts and circumstances nearly the same as those be-

fore the federal district court in Wyoming and the Tenth

Circuit in Stauffer I. There EPA had fully and fairly

litigated the legal question whether it had authority to

use a private contractor as its “representative” to enter

and search plant premises—and it had lost. Under the

principles of collateral estoppel set out in Montana vy.

United States, 440 U.S. 147 (1979), EPA cannot reliti-

gate this same question in this parallel case.

There is no basis for EPA’s contention that this case

falls within the exception for “ ‘unmixed questions of

law’ in successive actions involving substantially unre-

lated claims.”’ Montana, 440 U.S. at 162, quoting United

States v. Moser, 266 U.S. 236, 242 (1924). As explained

in Montana, the Moser exception turns on whether a legal

issue arises in comparable circumstances, considering sub-

ject matter, context and time. As the court of appeals

determined, this case is strikingly parallel to Stauffer I

in all respects, not just the parties and the issue as EPA

claims. The differences relate only to location (the plants

were in different states) and the identity of the contrac-

tors. Neither detail has any legal significance whatsoever.

Moreover, as the maker of the successive demands,

EPA controlled the forums involved and the timing.

EPA’s brief attributes the remarkable congruence of the

cases to “pure coincidence.” EPA’s Brief at 18. How-

ever, in Stauffer I the Wyoming federal district court

concluded that EPA had chosen to develop a “test case,”

and in this case Judge Jones believed that EPA wanted

to “test its policy decisions” and to do so “the same de-

fendant [wa]s sued in seriatim.” (684 F.2d 1192, Pet.

App. 38a.) Particularly in these circumstances, EPA has

no grounds to complain about being collaterally estopped

by the judgment in Stauffer I.

The crux of EPA’s argument is that the principles an-

nounced in Montana should be limited so as not to apply

to “recurring questions of public law.’ EPA’s Brief at

22-31. This proposed exception sweeps so broadly that it

would virtually swallow the entire Montana doctrine.

The government’s special role in enforcing federal laws

is beyond question, but that role does not exempt an

agency such as EPA from any application of collateral!

stoppel whatsoever. Instead, a court faced with succes-

sive suits on the same question or right should consider

the government’s role simply as one of the factors used

in making the balancing calculus explained in Montana.

Where, as here, collateral estoppel is being used defen-

sively by a party to the prior litigation, the goverment

should be estopped in its successive suit. The govern-

ment’s special role is outweighed by the countervailing

considerations of conclusive resolution of disputes, con-

servation of judicial resources, and protection of a pre-

vailing defendant against expensive and vexatious multi-

ple actions. Since Montana was decided, the courts of

appeals have uniformly concluded that collateral estoppel

may appropriately be invoked defensively by a party

faced with successive government suits. Where the gov-

ernment’s successive demand is comparable in all signifi-

cant respects, defensive use of estoppel fosters fairness

and equal treatment.

B. EPA’s “Representatives” Under Section 114(a)(2)

Section 114(a)(2) of the Clean Air Act does not au-

thorize EPA to designate private contractors as its rep-

resentatives for purposes of obtaining and executing ad-

ministrative search warrants. The Section was enacted

as part of the Clean Air Act Amendments of 1970.

Every indication of legislative intent points toward an

interpretation of Section 114(a)(2) that would require

EPA to use only its own employees to enter, search and

inspect private premises, The Senate and House versions

of the provision were described in the conference report

as authorizing entry and searches by “DHEW personnel”

and “DHEW investigative personne],” respectively. (The

Department of Health, Education, and Welfare was

EPA’s predecessor.) Moreover, the Senate bill from

which the language of Section 114(a)(2) was drawn

uniformly and consistently used the term “representa-

tive” to refer to designated EPA employees.

Shortly after the enactment of the 1970 Amendments

to the Clean Air Act, Congress expressly used Section

114(a)(2) as a model in adding an entry and search

provision to the Clean Water Act. That provision, Sec-

tion 308(a!'(B) of the Clean Water Act, added by the

Federal Water Pollution Control] Act Amendments of

1972, is virtually identical to Section 114(a‘!‘2). The

legislative history of the provision in the Clean Water

Act states explicitly that “authority to enter, as under

the Clean Air Act, is reserved to the Administrator and

. . » full time employees of [EPA].” The provisions in

the two Acts thus are in pari materia and should be con-

strued in the same manner.

The statutory context also supports construing the

term “representative” in Section 114(a)(2) to mean

designated EPA employees. The same term is used in

Section 114(d) to designate the persons who are to give

notice to state officials of an entry and inspection under

Section 114(a) (2). The court of appeals correctly con-

cluded Congress necessarily envisioned that this sensitive

intergovernmental communication would be made by

EPA officials, not private contractors,

A different provision, Section 114(c), relates to han-

dling of confidential information and refers to “author-

ized representatives of the United States,” not of EPA.

(Emphasis added.) The use of the term “authorized rep-

resentatives” in Section 114/c) serves an entirely differ-

ent purpose than does the usage in Sections 114/a) (2)

and 114(d). The broader reference in Section 114/c)

allows EPA to pass confidential information to personnel

of other federal agencies, to federal courts, and to state

officials exercising transferred federal authority, notwith-

standing restrictions which otherwise would be imposed

by the Trade Secrets Act and the Federal Reports Act.

EPA’s argument that the broader usage in Section 114

(ce) should be imported into the entry and inspection pro-

visions was properly rejected by the court of appeals.

No other federal agency has attempted to use private

contractors to enter private premises and conduct

searches and inspections. Based on centuries of experi-

ence, the English and American common law specifi-

cally has barred private persons from making govern-

mental searches. These well-established usages and un-

derstandings necessarily formed the basis of Congress’

legislative consideration of Section 114/a)(2). As Judge

Siler wrote in the court of appeals, EPA’s use of private

contractors is “radically divergent” from past govern-

ment usage and common-law principles, and to be valid

“authority for such conduct should be clear from the Act

itself or from legislative history.” (684 F.2d 1192-1193,

Pet. App. 41a.) There is no such authority.

ARGUMENT

IL DEFENSIVE USE OF COLLATERAL ESTOPPEL

IS APPROPRIATE IN THIS CASE WHERE THE

PARTIES INVOLVED AND THE RIGHT AT ISSUE

ARE IDENTICAL TO THOSE IN THE PRIOR LITI.-

GATION, AND THE CASE ARISES ON INDIS-

TINGUISHABLE FACTS

The court of appeals properly considered this case to

be controlled by the principles of collateral estoppel set

out in Montana vy, United States, supra, 440 U.S. at 153-

154.3 Like Montana, this case concerns “defensive” use

of collateral estoppel regarding a legal question which

is “in substance the same as [in the prior litigation].”

Montana, 440 U.S. at 155. Moreover, in Montana the

parties to the prior and subsequent litigation were in

practical effect the same. /d. at 154-155, In this case,

they are identical. Also, the Court in Montana made a

careful analysis of whether the controlling facts or law

had changed significantly from the prior litigation. Id.

at 155, 158-62. Here, the court of appeals undertook a

comparable analysis and concluded that no such differ-

ences existed.

This case thus boils down to the question whether the

Montana principles should be limited, so as not to apply

in cases involving “recurring questions of public law.”

13 In Montana, this Court outlined the general policies underlying

collateral estoppel as follows:

To preclude parties from contesting matters that they have had

a full and fair opportunity to litigate protects their adversaries

from the expense and vexation attending multiple lawsuits,

conserves judicial resources, and fosters reliance on judicial

action by minimizing the possibility of inconsistent decisions.

Montana, 440 U.S, at 153-154.

The Restatement (Second) of Judgments § 27 (1982) defines the

doctrine in terms that reflect these policies:

When an issue of fact or law is actually litigeted and deter-

mined by a valid and final judgment, and the determination is

essential to the judgment, the determination is conclusive in a

subsequent action between the parties, whether on the same or

a different claim.

See also Southern Pacific R.R. ¥. United States, 168 U.S. 1, 48-49

(1897); Cromwell v. County of Sac, 94 U.S, 351, 352-53 (1877).

No question has been raised here or in the Sixth Circuit concern-

ing (1) EPA’s full and fair opportunity to litigate in the Wyoming

federal district court and the Tenth Circuit, (2) the actual litiga-

tion of the statutory contractor-search question in those courts,

(3) the determination of the question in a valid and final judgment

by those courts, and (4) the essentiality of such determination to

the judgment of the Wyoming federal district court as affirmed by

the Tenth Circuit.

EPA’s Brief at 22-31..* The government’s invitation so

to limit Montana should be rejected, at least in the cir-

cumstances of this case. This Court’s precedents, a uni-

form line of cases in the courts of appeals, and the Re-

statement (Second) of Judgments (‘Restatement’) all

demonstrate that there is no basis for such a broad ex-

ception to the Montana principles, where collateral estop-

pel is invoked defensively by a party to the prior suit.

One party should not be subjected to successive suits by

another party regarding the same question or right, even

if the persistent plaintiff is a federal agency.

A. Defensive Use Of Collateral Estoppel Where The

Same Parties Were Subject To The Prior Judgment

Is The Most Compelling Case For Invocation Of

The Doctrine

Montana was a case in which this Court approved the

defensive use of collateral estoppel against the govern-

ment by a party to the prior litigation." Contemporane-

ously, the Court decided Parklane Hosiery Co. v. Shore,

439 U.S. 322 (1979), a case in which the Court approved

offensive use of collateral estoppel by a non-party to the

prior litigation. In so doing, the Court explored the dif-

ferences between offensive and defensive use of the doc-

trine,’’ and noted that offensive use of collateral estoppel

is not so readily applied as defensive use. As the Court

‘4 The government acknowledges that it is seeking a significant

reassessment of Montana. See EPA’s Brief at 30-31.

18 Montana thus is a direct precedent for the decision in the

instant case, as the court of appeals determined. See supra, at 9.

16 The Court defined the two uses as follows:

In this context, offensive use of collateral estoppel occurs when

the plaintiff seeks to foreclose the defendant from litigating an

issue the defendant has previously litigated unsuccessfully in

an action with another party. Defensive use occurs when a

defendant seeks to prevent a plaintiff from asserting a claim

the plaintiff has previously litigated and lost against another

defendant.

Parklane, 439 U.S. at 326 n.4.

observed, “offensive use of collateral estoppel does not

promote judicial economy in the same manner as defen-

sive use does’ (id, at 329), and offensive use has a

greater likelihood of being unfair to the party against

whom the doctrine is being invoked. See id. at 330-31.

In short, reservations applicable to offensive use of col-

lateral estoppel do not pertain to defensive use, especially

where the parties are the same. This Court, like other

courts, accordingly has been more willing to apply col-

lateral estoppel defensively.’”

B. The Right Or Question At Issue Here Is In All

Legally Significant Respects The Same As In

Stauffer I

Each judge of the court of appeals separately con-

cluded that the issue presented in this case was identical

to that resolved in Stauffer I..* The government nonethe-

less argues that “this case is governed by the exception

to the rule of collateral estoppel applicable to pure ques-

tions of law arising in successive actions on substantially

unrelated claims.” EPA’s Brief at 15 (emphasis added).

The few differences which exist, however, have no legal

significance whatsoever. EPA’s “demands” that private

contractors be admitted to the plants to carry out inspec-

17 An earlier decision, Blonder-Tongue Laboratories, Inc. v. Uni-

versity of Illinois Foundation, 402 U.S. 313 (1971), involved defen-

sive use of collateral estoppel where the parties to the subsequent

litigation were not the same as those in the earlier litigation, i.e.,

mutuality was not present. See Parklane, 439 U.S. at 327-29.

For a discussion of the sharp distinction drawn by courts of

appeals between the two uses in the context of regulatory litigation

involving the government, see infra at 26-28 & nn.23-26.

Notably, the question of collateral estoppel posed in United States

Vv. Mendoza, No, 82-849, concerns offensive use of collateral estoppel

where mutuality of the parties is not present.

18 As Judge Jones commented, “[i]n the instant case, it is undis-

puted that the issue resolved by the litigation in Stauffer J is

identical to the question raised in this appeal.” (684 F.2d 1190,

Pet. App. 34a.)

tions were strikingly congruent in time, subject matter,

anc factual context, as the court of appeals determined.

The exception at issue stems from United States v.

Moser, 266 U.S. 236, 242 (1924), where it was formu-

lated as follows:

Where, for example, a court in deciding a case has

enunciated a rule of law, the parties in a subsequent

action upon a different demand are not estopped

from insisting that the law is otherwise, merely be-

cause the parties are the same in both cases. But a

fact, question or right distinctly adjudged in the

original action cannot be disputed in a subsequent

action, even though the determination was reached

upon an erroneous view or by an erroneous applica-

tion of the law.

Id, (emphasis as supplied by the Court in Montana,

440 U.S. at 162).

The Court in Montana remarked that the scope of this

exception “may be difficult to delineate.” 440 U.S. at

163. It generally observed that preclusion may be inap-

propriate “when issues of law arise in successive actions

involving unrelated subject matter” (id. at 162), and

also looked to the alignment in time of the successive

claims, Jd. at 163. See also Restatement, § 27 at 264-65

(Reporter’s Note); id. § 28, comments b and c; and

id. at 285-86 ( Reporter’s Note).

Here, the events giving rise to the legal issue were

parallel in both time and subject matter. As Judge

Weick pointed out, “[t]he facts in Stauffer I were iden-

tical to those in the instant case except they arose in a

‘® The Reporter’s Note to Section 27, at 264-65, states as a general

proposition that—

issue preclusion may apply even though the events involved in

the two proceedings took place at different times (or the ques-

tion was one of status or condition at different time periods)

if the facts are sufficiently similar or identical for purposes of

the applicable rule of law. See Wright, Miller & Cooper, Fed-

eral Practice and Procedure: Jurisdiction § 4417.

plant of Stauffer’s at a different location.” (684 F.2d

1179, Pet. App. 9a.) Both cases occurred early in 1980,

at the advent of EPA’s “overview inspection program”

designed to audit state enforcement efforts. See supra,

at 3, 6. Both inspections by contractors were planned

in conjunction with that program. EPA had designated

each of the contractors as its “representative” for pur-

poses of entry under Section 114(a)(2) of the Act.

In each instance, the contractors were accompanied by

EPA and state officials who were themselves capable of

conducting such inspections and who had actually con-

ducted such inspections previously.” Stauffer each time

welcomed inspection by the EPA and state officials. In

each case, Stauffer attempted to negotiate an agreement to

protect trade secrets, but in each case an administrative

search warrant was issued on an ex parte basis before

the negotiations had been resolved.

The differences concern only location (the two plants

are in different states and thus in different EPA regions

and different federal judicial districts) and the identity

of the contractors involved.*: Neither in Stauffer J nor

in this case did the courts attach any legal significance

whatsoever to these differences. There is, in short, a

remarkable identicality to Stauffer ] and this case, in

time, subject matter, and factual setting. In sum, EPA

has utterly no basis for its assertion that “the court of

appeals . . . appears to have relied entirely upon the

identity of parties and the common legal question.”

(EPA’s Brief at 17.) To the contrary, after a detailed

and careful comparative evaluation of the circumstances

in the two cases, the court of appeals properly concluded

® This circumstance, coupled with the others, led the courts in

both Stauffer J and this case to believe that EPA was seeking a

“test case.” See supra, at 5 n.5 & 10, and infra, next page.

21 EPA itself attached little importance to the identity of the

contractors. In each instance, it provided no information regarding

the nature of the contracting company, and very little material

respecting the specific employees of the contractor who were in-

volved. See Jt. App. Ct. Appls. 18-20, 37-38.

that EPA’s demands were not “substantially unrelated”

for purposes of the Moser exception. See supra, at 9.

Moreover, in this case of defensive use of collateral

estoppel, EPA made the successive demands and had

complete control over the forums and timing. EPA’s

brief refers to “coincidence,” stating that “the fact that

both inspections involve plants operated by respondent is

pure coincidence’ (EPA’s Brief at 18), and also that

“the government made no such tactical decision to en-

gage in duplicative litigation.” Jd. at 20. The fact is,

however, that in Stauffer I the Wyoming federal district

court determined that “EPA’s counsel apparently wanted

to make this a test case.” 14 Env’t Rep. Cas. (BNA) at

1741 (3). And similarly in Stauffer IJ, as EPA in its

brief protests, Judge Jones suggested “that EPA has de

liberately embroiled respondent |Stauffer] in multiple lit-

igation in order to ‘test its policy decisions in more than a

single circuit, in circumstances where the same defend-

ant is used in seriatim without the agency attempting

to exhaust its appeals on the previous judgment.’”

EPA’s Brief at 21 n.11, quoting 684 F.2d 1192, Pet. App.

38a. Amazingly, at one point in EPA’s brief it tries to

shift the onus for the remarkable “coincidence” to Stauffer

by saying that its efforts to defend itself by filing motions

to quash the warrants gave rise to the successive disputes.

EPA’s Brief at 20.

The Sixth Circuit’s analysis in this case is consistent

with the manner in which other courts of appeals have

applied the Moser exception, as explained in Montana.

For example, in Continental Can Co. v. Marshall, 603

F.2d 590 (7th Cir. 1979), the court had before it suc-

cessive prosecutions by OSHA of citations against Con-

tinental Can for alleged violations of the agency’s noise

regulations. The court had no difficulty in determining

that the same issue was in dispute and that the circum-

stances were sufficiently related to apply collateral estop-

pel defensively, even though different plants were in-

volved. See id. at 595-96. Similarly, in Starker v. United

States, 602 F.2d 1341 (9th Cir. 1979), the government

was collaterally estopped from assessing tax deficiencies

because of its loss of a prior case against the taxpayer's

son involving different transactions based on the same

contract. See id. at 1344-1350. See also Union Carbide

Corp. v. Commissioner, 671 F.2d 67 (2d Cir. 1982) (IRS

estopped from asserting a deficiency for 1971 tax year

by prior judgment in case concerning 1967 tax year);

United States v. ITT Rayonier, Inc., 627 F.2d 996 (9th

Cir. 1980). (EPA collaterally estopped in enforcement

action against pulp mill by prior judgment in state en-

forcement action) .**

These recent cases, all decided after Montana and

Parklane Hosiery, involve defensive use of collateral

estoppel against the government. They thus deal with

situations where, as here, the government controls the

successive litigation. See also Montana, 440 U.S. at 163

(government chose forum and claims in both cases). In

each case, the events at issue in the subsequent litigation

were somewhat different from those in the prior case.

In applying Moser as explained in Montana, the courts

focused on the legal significance of the similarities and

differences between the successive cases. See Restatement,

$28 at 286 (Reporter’s Note), quoted infra, at 30 n.28.

Like the other courts of appeals in Continental Can,

Starker, Union Carbide and ITT Rayonier, the Sixth

Circuit in this case properly concluded that the exception

formulated in Moser has no application where the same

22 In Starker, the court characterized the case as involving offen-

sive rather than defensive use of collateral estoppel, presumably

because the party urging estoppel was the plaintiff. The govern-

ment, however, had initiated the case by assessing the tax deficiency.

Starker and Union Carbide are arguably inconsistent with Divine

v. Commissioner, 500 F.2d 1041 (2d Cir. 1974), but Divine did not

turn on any lack of relationship in the demands involved. Instead,

Divine (decided before Montana and Parklane Hosiery) turned on

“special factors relating to tax litigation.” Jd. at 1057 (Friendly,

J., concurring and dissenting). See the discussion of Commissioner

v. Sunnen, 333 U.S. 591 (1948), in Restatement, § 27 at 265 (Re-

porter’s Note).

question or right arises in successive litigation on re

lated facts that differ in no legally significant respect.

C. Where Collateral Estoppel Is Invoked Defensively

By A Party To The Prior Suit, The Government

May Be Precluded From Relitigating A Potentially

Recurring Question Of Public Law

Collateral estoppel may not be invoked where “special

circumstances warrant an exception to the normal rules

of preclusion.”” Montana, 440 U.S. at 155. The govern-

ment argues strenuously here and in United States v.

Mendoza, No. 82-849, that such special circumstances do

exist—specifically, that “collateral estoppel should not be

applied against the government to preclude [re] determi-

nation of recurring questions of public law.” EPA’s

Brief at 22 ‘heading; capitals omitted). The govern-

ment points to its unique functions in enforcing pub-

lic laws, and argues that application of collateral estop-

pel to it “would freeze the development of the law.” 7d.

at 24. This characterization and argument sweeps much

too broadly. The government's special role in enforcing

federal laws is beyond question, but that role does not

exempt EPA or any other federal agency from applica-

tion of collateral estoppel in any and all circumstances

whatsoever. Instead, the court before which the succes-

sive litigation is pending should carry out its balancing

calculus by including the government’s role as simply one

of the factors being evaluated. In the particular circum-

stances of this case, where collateral estoppel is being

used defensively by a party to the prior suit, the govern-

ment’s role is outweighed by other factors, as the court

of appeals found.

1. Collateral estoppel applies where the government

brings successive suits against the party who

prevailed in prior litigation.

It is instructive that the government’s argument on

this point proceeds largely on the basis of considerations

and authorities pertinent to offensive use of collateral

estoppel, often by a non-party to the prior litigation.

See EPA’s Brief at 26, 32 & n.18.2 Where, as here, col-

lateral estoppel is being used defensively by a party to

the prior litigation, courts of appeals have upheld its use

notwithstanding the government’s reliance on its special

role as a countervailing factor.**

*3 Those considerations apply to United States v. Mendoza, No. 82-

849, but not to this case.

The Restatement, §§ 27-29, mentions but does not develop the

distinctions between offensive and defensive use of collateral

estoppel. See id. § 29, comments d and e, at 293-94. Instead, it

iterates considerations which bear generally on applying the doc-

trine in both usages.

The leading decision by a court of appeals denying offensive use

of collateral estoppel in a regulatory context is Western Oil & Gas

Ass'n V. EPA, 633 F.2d 808 (9th Cir. 1980). Oil and gas companies

and their trade association sought review of an EPA regulation

designating certain areas of California as not meeting federal air

quality standards. Judge Sneed’s opinion for the court recognized

specifically that “offensive” use of collateral estoppel was at issue

(id. at 808-09) and that the government’s interest in relitigation

was a strong countervailing consideration insofar as that use was

concerned. Jd. The court considered that United States v. ITT

Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980), discussed supra, at

24, was “not inconsistent” with Western Oil & Gas because /TT

Rayonier involved defensive use of estoppel by a party to the prior

case. 633 F.2d at 810 n.8. In this very same context, the court

observed that “[w]e do not hold that an agency may never be bound

by a prior determination.” /d.

All of the decisions cited in EPA’s Brief at 32 n.18 involve cir-

cumstances comparable to Western Oil & Gas, as EPA itself

acknowledges in that footnote.

** The government acknowledges that the identity of the parties

in the successive suits is a valid consideration in applying the

doctrine. EPA’s Brief at 26.

The Restatement continues to separate principles relating to

relitigation “between the parties” (§§ 27, 28) from those concern-

ing “Issue Preclusion in Subsequent Litigation with Others”) (§ 29,

heading). In effect, Section 29 of the Restatement sets out addi-

tional considerations that should be addressed before non-parties

to the prior litigation may be allowed to invoke collateral estoppel.

Much of the argument reflecting the Restatement in EPA’s Brief

rests on Section 29, and thus concerns the further considerations

applied when non-parties seek to invoke the doctrine. See EPA's

The decision in American Medical International, Inc.

v. Secretary of HEW, 677 F.2d 118 (D.C. Cir. 1981),

illustrates these distinctions. There, the Health Care

Financing Administration had denied reimbursement of

certain costs that American Medical and some of its

subsidiaries and affiliates had allegedly absorbed while

furnishing health care to beneficiaries of the Medicare

program. In a prior litigation in the Court of Claims,

the reimbursability of one category of costs had been

resolved against the government. The D.C. Circuit first

addressed the question whether “federal relitigation of

questions of national law with new parties in new cir-

cuits should be permitted.”” Jd. at 122 (emphasis added).

It concluded that in those circumstances, collateral

estoppel should not be applied. However, the court then

turned to the circumstances where a party to the prior

suit was seeking to invoke collateral estoppel against the

governmental party to the first suit. In that situation,

the court opined that it ordinarily would apply the

doctrine:

The foregoing analysis [concluding collateral estop-

pel should not apply] intercepts only parties who

did not participate in the initial suit. Jf the gov-

ernment is litigating with the same adversary in

both cases, an estoppel will petrify the law only as

to that one party—obviously not an unjust result—

and accordingly will work no preclusion generating

national shockwaves.

Id, at 124 (emphasis added).

The court then evaluated whether other special circum-

stances should affect application of the doctrine.*®

Brief at 26, citing the Restatement at §29(7) and comment i.

The commentary to the Restatement explicitly cautions that the ex-

ceptions to application of the doctrine are more rigorously applied

in the case of non-parties. See Restatement, § 29, comment b, at

292-93.

*It happened that the prevailing party in the initial suit had

been a subsidiary which was later merged into American Medical.

In this unusual setting the court found that it would be unfair to

apply one rule of decision to American Medical as successor com-

The analysis in American Medical of the general

propriety of defensive use of collateral estoppel by parties

to the prior litigation is in accord with the decision in

the present case and with the decisions of other courts

of appeals in Continental Can Co. V. Marshall, 603 F.2d

590 (7th Cir. 1979) (successive suits by OSHA alleging

violations of its noise regulations’, and United States v.

ITT Rayonier, Inc., 627 F.2d 996 (9th Cir. 1980) (suc-

cessive suits alleging violation of water pollution require-

ments).2* In each case, a governmental agency had

brought successive suits against the same private party

regarding the same issue. In these situations, courts have

considered that the government’s valid interest in re-

litigating issues was outweighed by the private party’s

interest in not having to defend itself in successive suits

regarding an issue previously resolved in its favor. As

Judge Jones succinctly put the matter:

While I do not favor precluding a federal agency’s

ability to test its policy decisions in more than a

single circuit, in circumstances where the same de-

fendant is sued in seriatim without the agency at-

tempting to exhaust its appeals on the previous

judgment, the equities favor application of collateral

estoppel and not its abdication. Thus, in my opin-

ion, application of the rule is proper.

(684 F.2d 1192, Pet. App. 38a.)

2. Defensive use of collateral estoppel by a party

to the prior litigation fosters fairness,

The court of appeals correctly concluded that it would

be fairer in this case to apply collateral estoppel than not

to do so. See supra, at 9. The government argues here,

as it did in the court of appeals, that applying collateral

estoppel would be unfair because Stauffer would con-

sequently enjoy a more advantageous position than other

pany and another rule to the subsidiaries who had not been party

to the initial case. 677 F.2d at 124.

2 See also supra, at 23-24, discussing Union Carbide Corp. v.

Commissioner, 671 F.2d 67 (2d Cir. 1982), and Starker v. United

States, 602 F.2d 1341 (9th Cir. 1979).

persons. EPA’s Brief at 27. This argument proceeds

from the implication that Stauffer fortuitously “happened

to be involved in the prior case decided against the gov-

ernment” (id.), and ignores the uncontested facts (1)

that EPA initiated both the first and the second cases

against Stauffer, (2) that in the prior case EPA fully

and fairly litigated the question at issue, and (3) that

EPA lost. EPA in effect wants a second bite at the same

apple, in a forum and setting of its own choosing. In con-

trast, under the approach adopted by the court of appeals,

Stauffer is no more favored than any other party subject

to regulation under the Act—all have an opportunity

equivalent to that Stauffer had, to defend themselves in

litigation on the question with EPA, fully and fairly.*”

In these circumstances, the strong judicial interest in

“conclusive resolution of disputes within their jurisdic-

tions” (Montana, 440 U.S. at 153) comes most directly

to bear. Conservation of judicial resources and protection

against the expense and vexation of multiple lawsuits are

weighty factors which do not just evaporate because the

government is the plaintiff bringing the successive suits.

See id.

Moreover, as Judge Jones correctly pointed out in the

court of appeals, as a practica] matter Stauffer’s position

is indistinguishable insofar as administration of the law

is concerned from that of any other potentially affected

party in the Sixth and Tenth Circuits. As he said, while

EPA “technically retain({s] the power” to assert it has a

“7 These same considerations were addressed by the District of

Columbia and Seventh Circuits in American Medical, 677 F.2d at

124, and Continental Can, 603 F.2d at 595, with results which

accord with the decision by the court of appeals in the present case.

EPA's citation of the American Medical decision as supporting its

position ignores the analysis by that court, quoted supra, at 27, and

the fact that a corporate merger affected the result there.

Of course, other parties in litigation with EPA on the issue in

the Sixth and Tenth Circuits would now have the advantage of

being able to contend that stare decisis binds the court in determin-

ing the question.

right to use private contractors to conduct a search in those

circuits, stare decisis in effect binds the courts in those

areas to apply the law as announced in Stauffer I and

Stauffer 11, (684 F.2d 1191, Pet. App. 37a (emphasis in

original).) Realistically, there is no “special private law”

for Stauffer. EPA’s Brief at 28. Instead, the law as in-

terpreted in Stauffer I and Stauffer II applies to all per-

sons in the Sixth and Tenth Circuits.

Whether Stauffer may invoke collateral] estoppel when

faced with a demand by EPA that private contractors

carry out an inspection at a plant in another circuit would

depend upon the degree of similarity of the new demand

with the circumstances involved in Stauffer I and Stauf-

fer 11% The case before the Court now is Stauffer II,

however, and the determination regarding application

of collateral estoppel depends on the circumstances at

hand, not those that speculatively might arise in still

further successive litigation between the same parties.”

28 Section 28 of the Restatement states the relevant exception in

terms of the relationship of the successive demands (EPA's Brief

at 27 sets out a partial quote of Section 28(2)):

[Rlelitigation of the issue in a subsequent action between the

parties is not precluded in the following circumstances:

(2) The issue is one of law and (a) the two actions involve

claims that are substantially unrelated, or (b) a new determi-

nation is warranted in order to take account of an intervening

change in the applicable legal context or otherwise to avoid

inequitable administration of the laws... .

The Reporter’s Note to Section 28(2) observes that the resolution

of a legal question “in a proceeding between two litigants is not

binding on them for all time with respect to all claims that may

arise between them.” Jd. at 286. Instead, the considerations of

relationship that pertain to the Moser exception should be addressed

in the subsequent case. /d.

2 E.g., the decision in this case need not necessarily resolve the

hypothetical question posed by EPA’s Brief at 29 n.14 regarding

whether Stauffer could collaterally estop EPA from using private

contractors to enter and inspect its plants within the Ninth Circuit,

notwithstanding that Circuit’s contrary decision in Bunker Hill

Co. v. EPA, 658 F.2d 1280 (9th Cir. 1981). The setting in which

Finally, it is sophistic to argue as EPA does that “(bly

engaging in a regulated business within the various judi-

cial circuits, . . . respondent subjected itself to the pos-

sibility that it would become engaged in parallel litigation

presenting a common legal question... .” EPA’s Brief

at 29. In establishing its business enterprise, Stauffer did

not consciously consider that it would be subjecting itself

to “test cases” initiated in seriatim by EPA. See supra,

at 23. Despite the reference to “coincidence” in EPA’s

brief, the striking similarities in these cases and the cir-

cumstance that EPA on each occasion refused to conduct

the inspection with its own qualified officials at least sug-

gest that here, as in Montana, there was “a deliberate

effort to pursue parallel litigation on indistinguishable

claims.” EPA’s Brief at 30.

D. The Other Considerations Cited By EPA Do Not

Affect Application Of Collateral Estoppel In This

Case

EPA’s Brief cites three other considerations as weigh-

ing against application of collateral estoppel: (1) the

Solicitor General’s discriminating selection of cases to

bring to this Court for review, (2) the existence of the

conflicting decision of the Ninth Circuit in Bunker Hill

Co. v. EPA, supra, and (8) the fact that the question at

issue in these cases arises under “our complex environ-

mental laws.” EPA’s Brief at 24-25, 30-32. None of these

factors affects application of collateral estoppel in this

case.

Regarding the Solicitor General’s commendable selec-

tivity in bringing cases to this Court for review, the

government proffers the observation that the Solicitor

General typically cannot predict the nature of future

litigation and thus cannot know the risk that an adverse

judgment may be binding in future cases:

At the time when the Solicitor General decides

whether to authorize an appeal, or whether to seek

EPA brought such a further successive demand would be deter-

minative.

review in this Court of an adverse judgment, it

typically is impossible to determine whether future

litigation will arise in a case involving the same

party or a different party.

EPA’s Brief at 30 (emphasis added).

This is not a typical case, however. At the time EPA’s

petition for rehearing was denied by the Tenth Circuit in

Stauffer I, and further review could be had only in this

Court, Stauffer II had not only already been brought,

it was already pending on appeal in the Sixth Circuit.

The Solicitor General had to know in this particular case

of the actual existence, not just the future prospect, of

litigation between the same two parties.”

Similarly, the existence of the conflicting decision in

Bunker Hill should not affect Stauffer’s ability to invoke

Stauffer I in this successive litigation. In Stauffer I both

EPA and Stauffer already had a full and fair oppor-

tunity to litigate the question involved directly against

each other in a virtually identical context. The Bunker

Hill decision itself neither added any new element to this

context nor worked any other intervening change in it.

See Restatement, § 28/2).

Finally, there is no principled basis for carving out en-

vironmental statutes from the application of normal prin-

ciples of collateral estoppel. Compare Continental Can;

ITT Rayonier; and Western Oil & Gas Ass’n V. EPA,

with EPA’s Brief at 31-32 & n.18,

Il. SECTION 114(a)(2) OF THE CLEAN AIR ACT DOES

NOT AUTHORIZE EPA TO DESIGNATE PRIVATE

CONTRACTORS TO ENTER, SEARCH, AND IN-

SPECT PLANTS

Section 114/a)(2) of the Clean Air Act authorizes

entry and inspection of premises subject to regulation

under the Act, in the following terms ‘emphasis added) :

* Generally, the Solicitor General's circumspection in seeking re-

view might have a bearing on whether a non-party, to the prior

litigation could make offensive use of collateral estoppel, but for the

reasons set out supra, at 25-28, it should not affect defensive use of

collateral estoppel by the prevailing party to the earlier case.

[T]he Administrator or his authorized representa-

tive, upon presentation of his credentials—(A) shall

have a right of entry to, upon, or through any

premises of such person [who owns or operates an

emission source] or in which any records required to

be maintained under paragraph (1) of this section

are located....

The question of statutory construction presented by

this case is whether EPA may designate a private con-

tractor as its “authorized representative” for purposes of

entering. searching, and inspecting a plant.

A. Congress Used The Term “Authorized Representa-

tive” Of EPA In Section 114(a)(2) To Mean Only

Specially Authorized Officers Or Employees

1. The legislative history of the 1970 Amendments

to the Clean Air Act demonstrates Congress’

intent to accord entry authority only to desig-

nated government employees.

The term “authorized representative” is not expressly

defined in the Clean Air Act.” The legislative history of

Section 114/a) (2), however, amply demonstrates Con-

gress’ intention that searches of private premises be per-

formed only by properly authorized EPA employees.

"| EPA’s argument that a “plain meaning” of the term includes

private contractors is without foundation. An equally acceptable

“plain meaning” of the terms would be that authorized representa-

tives are a limited class of employees of EPA, i.e., those employees

authorized hy the Administrator to conduct inspections. This alter-

native “plain meaning” better comports with the common law under-

standing of the persons capable of carrying out the governmental

function of searches and inspections, and it has the advantage of

being amply supported by explicit legislative history. See infra.

Notably, in NLRB v. Amaz Coal Co., 453 U.S. 322 (1981), this

Court rejected a definition of the term “representative” identical to

that proffered by EPA here, based on an analysis of congressional

intent and the context in which the term was used. Cf. EPA’s

Brief at 34 n.20. Also, EPA ignores the statutory context when it

says the term “representative” as used in Section 114(a) (2) “does

not carry any implication of an employment relationship.” Jd. at 34.

The entry provision in Section 114 was adopted as part

of the Clean Air Act Amendments of 1970. The House

and Senate versions of the provision used different terms

to describe who had entry authority. The House bill con-

sistently used the phrase “officers or employees.” See

H.R. 17255, 91st Cong., 2d Sess. $112(f) (1970), re-

printed in A Legislative History of The Clean Air

Amendments of 1970 (“Air Leg. Hist.”) 923 (1974).

The Senate bill, from which the final version of Section

114(a) was substantially taken, used the term “author-

ized representative.” See S. 4358, 91st Cong., 2d Sess.

$116/a)(3) (1970), reprinted in Air Leg. Hist. at 570.

The Conference Report shows unequivocally that no

difference in meaning was intended. The Report notes

that the House bill “authorized entry into and inspection

of suspected polluters’ facilities by DHEW investigative

personnel.” H.R. (Conf.) Rep. 1788, 91st Cong., 2d Sess.

47 (1970), reprinted in Air Leg. Hist. at 151, 197 (em-

phasis added). It describes the Senate version in identi-

cal terms, stating that “the Senate authorized entry and

inspection by DHEW personnel.” Id. (emphasis added) .*

The entry provisions of the Senate bill were adopted by

the Conference Committee as part of a package adoption

of the Senate’s more detailed and stringent federal en-

forcement mechanism. See Air Leg. Hist. at 197-98."

2 EPA’s suggestion that the term “personnel” could itself in-

clude private contractors (EPA’s Brief at 41 n.28) was properly

rejected by the Tenth Circuit in Stauffer J]. Employees of private

contractors are not EPA’s personnel; they are the private contrac-

tor’s personnel. See 647 F.2d at 1078.

% EPA argues that the use of the Senate version evidences Con-

gress’ intent to grant broader entry rights than the House version

would have allowed. EPA’s Brief at 40. That conjecture is put to

rest by the legislative history which refers to “DHEW personnel”

in describing both versions. As the court of appeals concluded,

“Tallthough it is ordinarily presumed that a difference in language

reflects a difference in meaning, when the legislative history shows

that no difference was in fact intended, that presumption is re-

butted.” (684 F.2d 1184, Pet. App. 20a.) The Ninth Circuit’s

contrary ruling in Bunker Hill acknowledges but then dismisses the

foregoing legislative history. See 658 F.2d at 1283-84.

There was no perceived substantive difference in the lan-

guage used to describe the persons entitled to enter pri-

vate premises. Thus, Congress had in mind only desig-

nated federal employees when it used the words “ap-

thorized representative” in Section 114/a) (2).

Because Section 114 was drawn largely from the Sen-

ate bill, the Senate’s understanding of the term “author-

ized representative” is particularly relevant to deter-

mining its meaning in the final version of the 1970

Amendments to the Clean Air Act. The Senate used the

term in a number of provisions besides Section 114

(a) (2). In each usage the Senate consistently meant only

selected employees chosen from the larger class of EPA

officers and employees.

The clearest example appears in Section 209(a) of

S, 4358, regarding the right of access to documents con-

cerning motor vehicle manufacturing operations. The bill

provided that auto manufacturers must, “upon request

of an authorized representative of the Secretary, permit

such officer or employee” to have access to certain rec-

ords, reports and information. Air Leg. Hist. at 598

(emphasis added) .™

% Under the Act as amended in 1970, authority to enter automobile

plants was established in Section 206(c), 42 U.S.C. § 7525(c), and

access to records of auto manufacturers was provided in Section

208(a), 42 U.S.C. § 7542(a). Both sections give the necessary au-

thority solely to officers or employees of EPA who are “duly desig-

nated by the Administrator.” The enacted language was from the

House bill (which used the term “officers and employees”), rather

than the Senate bill (which used the term “authorized representa-

tive’). See Air Leg. Hist. at 200-01. EPA argues that Congress

specifically selected the language in Sections 206 and 208 to give

EPA narrower authority vis-a-vis auto manufacturers, compared to

the more general entry authority conferred in Section 114(a) (2).

EPA’s Brief at 41-42 n.29. However, the use of different terms

merely reflects their different antecedents. The Conference Report

indicates that the House and Senate provisions regarding entry of

auto manufacturers’ plants were “essentially the same,” and that

the House bill was chosen because of differences in the extent of

compliance testing and disclosure. Air Leg. Hist. at 200-202,

507, 923.

In the same vein, Section 116(a)(2) of the Senate

bill * provided that whenever “the Secretary or an au-

thorized representative of the Secretary” found that a

standard under the Act was being violated, he should

promptly issue an order requiring abatement of the vio-

lation. Air Leg. Hist. at 497. It is utterly inconceivable

that the Senate intended private parties to have power

as “authorized representative[s]” to issue abatement

orders, the violation of which would expose the violator to

substantial criminal penalties. Certainly nothing in the

bill or the Senate report indicates that this was the Sen-

ate’s intent. See id. at 421-22.

Finally, the Senate bill provided in Section 304 that

private individuals could bring suit to enforce the Clean

Air Act. Among the requirements for using Section 304

was that the Secretary and the “authorized representa-

tive of the Secretary, if any, in the field office responsible

for the area in which the alleged violation occurs” be

notified. Jd. at 523. As with the other sections, the con-

clusion is inescapable that the Senate, when it used the

term “authorized representative,” was referring to an

employee of EPA, specifically appointed by the Adminis-

trator.

2. Congress reconfirmed its intent to limit entry

power to public employees in enacting the Water

Pollution Control Act Amendments of 1972.

Shortly after the Clean Air Act Amendments of 1970

were enacted into law, Congress explicitly reconfirmed its

intention to preclude forced entry by EPA contractors

under both the Clean Air Act and the Clean Water Act.

In 1972, Congress substantially amended the Clean Water

Act, adding among other things, Section 308, 33 U.S.C.

: 1318. This section is, for all relevant purposes, identical

*5 This paragraph is particularly relevant because the language

of Section 114(a) (2) of the Act at issue in this case was taken from

the immediately following subsection of the Senate bill, Section

116(a) (3). See id. at 497.

to Section 114 of the Clean Air Act.** The report of the

Senate Public Works Committee, in discussing Section

308, states:

It should also be noted that the authority to enter,

as under the Clean Air Act, is reserved to the Ad-

ministrator and his authorized representatives which

such representatives must be full time employees of

the Environmental Protection Agency. The author-

ity to enter is not extended to contractors with the

EPA in pursuit of research and development.

Water Leg. Hist. at 1481 (emphasis added).

The Committee also stated that the designated EPA em-

ployees were expected to use the power to force entry

“judiciously.” Jd.

Because Section 308 of the Water Act was explicitly

modeled after Section 114 of the Clean Air Act, the Sen-

ate Report provides a particularly pertinent aid to inter-

pretation of Section 114 of the Clean Air Act. As the

court of appeals concluded:

{Ojrdinarily, “[a] mere statement in a conference

report ... as to what the Committee believes an

earlier statute meant” is entitled to little weight

However, this is an exceptional case. The

understanding of a later Congress, while not bind-

ing, is entitled to deference... . The Clean Air and

Clean Water Acts are in pari materia with one an-

other. . This is especially true when the Clean

Water Act’s section 308(a) was explicitly modeled

after section 114(a) (2) of the Clean Air Act.

Moreover, the Senate report on the Clean Water

Act Amendments was authored a scant ten months

after passage of the Clean Air Act, by the same

Committee (Public Works) which considered the

%@ The Report of the Senate Committee on Public Works states

that, with one irrelevant exception, “Section 308 establishes au-

thority identical to the authority for such purposes contained in the

Clean Air Act Amendments of 1970... .” S. Rep. No. 414, 92d

Cong., 1st Sess. 62 (1971), reprinted in A Legislative History of the

Water Pollution Control Act Amendments of 1972 (‘Water Leg.

Hist.”) 1480 (1978).

Clean Air Act. Thus, in the circumstances of this

case, it is proper to give the quoted statement great

weight, even though a similar statement [made]

years later might be of little value.

(684 F.2d 1187, Pet. App. 27a-28a, quoting Con-

sumer Product Safety Commission Vv. GTE Sylvania,

Inc., 447 U.S. 102, 118 n.13 (1980).)*

3. In the 1977 Amendments to the Clean Air Act,

Congress continued to use the term “representa-

tive’ in the context of entry to refer only to

public employees.

In the 1977 Amendments to the Clean Air Act, Con-

gress added Section 114(/d), 42 U.S.C. § 7414(d), as a

3 To show the “hazards” of relying upon post-enactment legisla-

tive history, EPA’s brief quotes the Report of the Senate Public

Works Committee regarding S. 1480, 96th Cong., lst Sess. (1979).

EPA’s brief fails to mention that that bill was never enacted.

Instead, a materially different compromise bill was passed by the

Senate as a substitute, and ultimately became the Comprehensive

Environmental Response, Compensation, and Liability Act of 1980

(“Superfund”), 42 U.S.C. §§ 9601-9657. See 126 Cong. Rec. H

11,787 (daily ed. Dec. 3, 1980); 126 Cong. Rec. S 14,930, 14,988,

15,009 (daily ed. Nov. 24, 1980). Compare EPA’s Brief at 42 n.30.

Moreover, that statute’s entry provisions were not modeled after

the Clean Air Act in any respect whatsoever, and the report quoted

in EPA’s Brief was written ten years rather than months after the

Clean Air Act Amendments of 1970. Finally, after the Report was

issued but before the Senate passed the different substitute bill,

senators serving on the Committee on Environment and Public

Works recognized that the statement in the Report quoted by EPA

was erroneous and brought that circumstance to the attention of

EPA. Senator Alan K. Simpson wrote to then-Administrator Doug-

las M. Costle, stating:

[T]he 8.1480 Report is in error regarding Congressional intent

with respect to the use of private contractors for inspection

purposes under the Clean Air Act and Clean Water Act and,

therefore, should not be relied upon by EPA in its internal

administration and most certainly should not be cited as author-

ity to federal courts.

Letter from Senator Alan K. Simpson to Douglas M. Costle

(November 19, 1980) (Attachment B to Stauffer’s Reply Brief

in the court of appeals).

companion provision to Section 114/a) (2). Section 114

(d) requires “the Administrator (or his representa-

tives)” to give notice to state pollution control agencies

of any federal “entry, inspection, or monitoring under

paragraph (2) of subsection ‘a'.” Judge Weick noted

that the purpose of the notice “is to foster cooperation

and consultation between the EPA and the states” and

concluded that “Congress could not have intended to en-

trust this kind of sensitive intergovernmental communica-

tion to employees of private contractors.” (684 F.2d 1184,

Pet. App. 20a-21a.)** To the contrary, the term “repre-

sentatives” in Section 114/d) “necessarily envisions EPA

employees.” Jd.

Sections 114/a) (2) and 114/d) are sister provisions.

Both deal with inspections, and Section 114/d) contains

an explicit cross-reference to Section 114/a) (2). Fur-

thermore, both refer to representatives of the EPA Ad-

ministrator. Such a close relationship between the sec-

tions strongly supports the conclusion, reached by Judge

Weick, that they be read consistently with each other,

giving the term “representative” the same meaning in

each.

4. Sections 114(a)(2) and (d) share a statutory

context different from that of Section 114(c).

Section 1l4ic) of the Act provides that the Adminis-

trator of EPA may disclose confidential information to

“other officers, employees, or authorized representatives

of the United States’ when necessary to carry out the

provisions of the Clean Air Act. Seizing upon the dis-

junctive “or” in that phrase, EPA theorizes that as used

in Section 114(c) the term “authorized representatives”

must cover private contractors, because officers and em-

ployees are separately enumerated. Reading that analysis

38 EPA responds by claiming that “it is more reasonable to

assume” that Congress intended to rely on EPA’s “prudence” in

using its employees rather than contractors to provide the intergov-

ernmenta! notice required by Section 114(d). EPA’s Brief at 36-37

(emphasis added). There is no legislative basis for such an

assumption.

into the “representative” phrase in Section 114/a) (2),

EPA argues that Section 114(a) (2) must likewise cover

private contractors. EPA’s Brief at 35. The argument is

flawed, however, because it overlooks the differences both

in context and in language between the two sections.

Unlike other usages of “authorized representative” or

“representative” in the Clean Air Act, Section 1l4ic)

refers to a representative of someone other than EPA’s

Administrator. Section 114(c) expressly, and broadly,

denotes “authorized representatives of the United States.”

(Emphasis added.) Congress had good reason to employ

this different usage in Section 114/c), given the statu-

tory context.”

In enacting Section 114(c), Congress was concerned

that there would be occasions on which it should not be

a criminal act for the Administrator to disclose confiden-

tial information to government officials and agents out-

side EPA—for example, to other federal] officials such as

Department of Justice attorneys, staff at agencies such

as the Occupational Safety and Health Administration

or the Consumer Products Safety Commission, or even

federal judges. In addition, state officials exercising dele-

gated or transferred functions under the Act would be

“concerned with carrying out this Act” and thus persons

to whom confidential information could be disclosed. Ab-

sent a specific statutory authorization for EPA to divulge

confidential information to state officials or federal offi-

cials outside EPA, the constraints imposed by the Trade

Secrets Act, 18 U.S.C. $1905, and by the Federal Re

ports Act, 44 U.S.C. § 8508, would apply. See Shel! Oil

Co. v. Department of Energy, 477 F. Supp. 418, 432-36

(D. Del. 1979), aff'd, 681 F.2d 231 (3d Cir. 1980), cert.

denied, 450 U.S. 1024 (1981).

39 Compared to Section 114(a) (2), Section 114(c) has entirely

different antecedents in the Senate bill which produced the 1970

Amendments. Section 114(c) was originally Section 114(e) of the,

Senate bill, whereas Section 114(a)(2) and other provisions were

derived from Section 116 of that bill. See Air. Leg. Hist. at 197,

562-63, 570.

Against this background, Congress in drafting the

Clean Air Act used the term “authorized representatives

of the United States’ to describe the other officials to

whom EPA could disclose confidential] information. It was

merely adopting the terminology which it had used in

earlier enactments with respect to disclosure of confiden-

tial information.” Instructively, language virtually iden-

tical to that of the Clean Air Act appears in Section 308

of the Clean Water Act, 33 U.S.C. § 1818, where Section

308\a)‘B) provides that the Administrator’s “repre

sentative” ‘i.e., a designated employee—see supra, at 37)

may enter and search a plant, while Section 308(b) pro-

vides that confidential information may be disclosed to

other “representatives of the United States.” Later stat-

utes have continued to use this terminology respecting

disclosure.’

See, ¢.g., 15 U.S.C. $1198(c) (under the Flammable Fabrics

Act, confidential information may be obtained by “the Secretary or

his representative’’ and may be disclosed to “other officers or em-

ployees” concerned with carrying out the Act); 43 U.S.C. § 236i(e)

(Radiation Control for Health and Safety Act of 1968: same lan-

guage) ; 29 U.S.C. § 664 (Occupational Safety and Health Act: same

language).

4: For example, in the Energy Supply and Environmental Coordi-

nation Act of 1974, Congress provided for the release of confidential

information to any “delegate” of the Federal Energy Administrator

or to other agencies when necessary to carry out their statutory

duties. 15 U.S.C. § 796(d). See also Trade Act of 1974, 19 U.S.C.

§2155(g)(1)(A)(i) (disclosure to “officers and employees...

designated by the United States Trade Representative’) ; Federal

Nonnuclear Energy Research and Development Act of 1974, 42

U.S.C. $5916 (disclosure to any “delegate” of the Administrator

or to heads of other federal agencies). The use of the term “dele-

gate” is instructive in that it further illustrates the traditional

congressiona] understanding that the terms “representative” and

“delegate” are synonymous and refer to designated public employees.

Only recently has Congress provided for release of confidential

information to private contractors. In Section 14 of the Toxic

Substances Control Act (“TSCA”), 15 U.S.C. § 2618, and Section 15

of the Federal Pesticide Act of 1978, 7 U.S.C. §186h, Congress

explicitly authorized EPA to give contractors access to confidential

information. In both instances, Congress also imposed criminal

In sum, it is crucial that Section 114(c) broadly refers

to “authorized representatives of the United States,” and

not to authorized representatives of EPA as do the other

references to representatives in the Clean Air Act. There

is no reason whatsoever to assume that the Administra-

tor’s “representative” in Sections 114/a) (2) and (d) is

to be functionally equivalent to the other “representatives

of the United States” in Section 114/¢).*

B. EPA’s Current Arguments Regarding Section

1l4(a)(2) Are Not Entitled To Any Deference

Whatsoever

In interpreting Section 114(a) (2), this Court is deal-

ing with a subject which is within its own special area of

competence, Deference to EPA's views is not appropriate.

EPA has no congressionally conferred authority to deter-

mine those persons entitled to enter and search plants.

The question presented is a legal one involving the extent

of EPA’s statutory authority, and no technical or scien-

tific expertise is involved.“ Also, the expressly contrary

sanctions for improper release of confidential information by such

private parties. See 15 U.S.C. § 2613(d) (2); 7 U.S.C. §186h(f).

«2 In the preamble to its confidentiality rules, EPA, in discussing

the relationship between Section 114(c) and the entry provisions

of Section 308(a) of the Clean Water Act (which is identical to

and modeled after Section 114(a)), noted that “the term ‘author-

ized representatives’ is used in a different context and in a seman-

tically different manner” in the two sections. 41 Fed. Reg. 36,923

at "69 (1976).

In rejecting EPA’s argument, Judge Weick observed that “[t]o

apply the same meaning to ‘representative’ in those sections would

lead to the absurd result that only the Administrator and employees

of private contractors could make pollution inspections, and EPA

employees [since they are not separately enumerated in Section

114(a)) could not.” (684 F.2d 1185, Pet. App. 229.)

EPA's mention of the delegation authority in Section 301(a) of

the Act (EPA's Brief at 36 n.22) is unavailing because such dele-

gation may be made by the Administrator only “to any officer or

employee of [EPA)]”. See also supra, at 35 n.34 (authority in Sec-

tion 206(c) for officers and employees to enter automobile plants).

43 See, e.g., Barlow Vv. Collins, 897 U.S. 159, 166 (1970); American

Ship Building Co. v. NLRB, 380 U.S. 300, 318 (1965).

legislative history shows that deference is particularly

inappropriate here.“

Moreover, the statutory construction urged by EPA in

this litigation is not a long-standing, publicly-documented

agency position which would be entitled to weight.** The

Agency’s position on Section 114(a) (2) plainly has been

inconsistent; the most contemporaneous construction of

the statute contradicts the interpretation now proposed

by EPA.

The court of appeals correctly concluded that there is

no foundation to EPA’s suggestion that Congress has

somehow ratified EPA’s practice of using private con-

tractors to force entry and inspect plant premises. EPA’s

Brief at 44-45 & n.32. At the time it amended the Act

in 1977, Congress was not, and could not have been,

aware of EPA’s use of contractors to force entry by

warrant. EPA had not yet adopted the practice. See

supra, at 3. For Congress to ratify agency actions

through appropriation acts, “the appropriation must

plainly show a purpose to bestow the precise authority

which is claimed.” Ex Parte Endo, 323 U.S. 283, 303

4 See, e.g., Rowan Companies, Inc. v. United States, 452 U.S. 247

(1981) (Treasury regulations invalid as improperly interpreting

statute); Zuber Vv. Allen, 396 U.S. 168, 192-193 (1969).

5 See General Electric Co. Vv. Gilbert, 429 U.S. 125, 140-145

(1976) (administrative interpretation rejected because it was not

contemporaneous with passage of the relevant legislation and it con-

flicted with earlier interpretations by EEOC and other indicia of

the proper interpretation of the statute).

* The earliest interpretation by EPA of Section 114(a) (2) is an

internal memorandum which concludes that “the term ‘authorized

representative’ is used synonymously with officers and employees of

EPA for purposes of ntering only, and cannot be delegated to

contractors ....” (Jt. App. Ct. Appls. 124, 128 (emphasis added ).)

Two later EPA memoranda (Jt. App. Ct. Appls. 160, 164) reached

an opposite conclusion by failing to consider the legislative history

of the Clean Air Act and by relying erroneously on the trade-secret

disclosure language of Section 114(c). These later internal agency

statements lack any reasoned analysis which would entitle them to

deference. See Adamo Wrecking Co. v. United States, 434 U.S. 275,

287-89 & n.5 (1978).

n.24 (1944). EPA’s budget requests, cited in EPA’s

Brief at 45 n.32, for “field sampling of atmospheric emis-

sions,” contained in a 35-page list of Agency contracts,

hardly alerted Congress to any use of private contractors

for entry, search, and inspection purposes under admin-

istrative search warrants.*’ These requests could have

(and presumably did) relate to research and develop-

ment functions for which EPA is authorized to award

contracts.*®

** Agriculture-Environmental and Consumer Protection Appro-

priations for 1978: Hearings Before a House Subcomm. on Ap-

propriations of the Comm. on Appropriations, 92d Cong., 2d Sess.,

Pt. 5, at 471-506 (1972).

48In fact, EPA has no evident authority in the Clean Air Act

to retain and pay contractors for anything other than research and

development programs. A general enabling statute, 5 U.S.C.

§3109(b), authorizes federal agencies to employ contractors, if

the agency has specific statutory authorization to do so. The only

authorization for use of contractors under the Clean Air Act is

Section 103, which allows the Administrator to “establish a national

research and development program for the prevention and control

of air pollution,” and to “contract with public or private agencies,

institutions, and organizations, and with individuals” to carry out

that program. 42 U.S.C. § 7403(a), (b) (4). Thus, “research and

development” are the only purposes for which employment of con-

tractors is authorized under the Clean Air Act.

This limitation on the use of contractors is understandable.

Since 1955, the Executive Branch has recognized that private con-

tractors should be used to provide commercial or industrial products

and services, but not to carry out any inherently governmental func-

tions. See Office of Management and Budget (“OMB”) Circular

ment A to Stauffer’s Brief in the court of appeals). In Circular

No. A-76, OMB states that “[clertain functions are inherently

governmental in nature, being so intimately related to the public

interest as to mandate performance by Federal employees.” J/d. at

€ 4.b. Among those “governmental functions” are “regulation of the

use of space, oceans, navigable rivers and other natural resources,”

and “regulation of industry and commerce, including food and

in 1966. When Congress added Section 114 to the Clean Air Act

in 1970, it certainly was aware of the Circular and of earlier

Bureau of the Budget Bulletins issued in 1955, 1957, and 1960

which also addressed the government’s private-contractor policy.

C. Strong Common Law Considerations Support A

Statutory Construction Denying Authority For

Contractors To Enter And Search Private Premises

Exercise by private parties of governmental power to

enter, search, and inspect private premises would be an

extraordinary break with a strong and consistent com-

mon law tradition to the contrary. In the court of ap-

peals, both Judge Weick and Judge Siler considered that

an interpretation of the statute which sanctioned such

an authority should be accepted only if Congress has pro-

vided an explicit mandate for such a result in clear and

unambiguous language. (684 F.2d 1189, Pet. App. 33a

(Judge Weick) ; 684 F.2d 1192-93, Pet. App. 4la (Judge

Siler).)*

1. Explicit authority is necessary for searches by

contractors given the strong common law tradi-

tion that only government officers or employees

can execute searches on private premises.

The long-standing common law tradition is that

searches should be carried out only by public officials;

private citizens are precluded from obtaining warrants

and entering private premises.

This common law understanding was well established

by 1661, when a Proclamation issued by King Charles II

specified that “warrants be always directed to some Con-

stable, or other known Legal Officer... .” King Charles

II, Proclamation of 17 January 1661, reprinted in M.

Smith, The Writs of Assistance Case 24 (1978). Writ-

ing at about the same time, Sir Matthew Hale, a promi-

nent English jurist, noted that search warrants were

infringements on the rights of the citizens which had to

be tolerated in certain circumstances, and observed that

“{t)hey ought to be directed to constables and other pub-

lic officers, whereof the law takes notice, and not to pri-

49 See also United States v. Bailey, 444 U.S. 394, 415-16 n.11

(1980); Isbrandtsen Co. Vv. Johnson, 343 U.S. 779, 783 (1952);

Shaw V. Railroad Co., 101 U.S. 557, 565 (1879).

“The Proclamation, issued shortly after the Restoration, ad-

dressed the need to search for arms held by insurrectionists.

vate persons... .” 2 M. Hale, History of the Pleas

of the Crown 150 (1st American ed. 1847) (originally

published in 1678). The notable exception to this Eng-

lish common law tradition arose in connection with Writs

of Assistance, and the American colonists had great diffi-

culty with this exception.”

A Writ of Assistance did not exist in common law: it

was established by the British Act of Frauds of 1662.

That Act authorized any person designated by the Ex-

chequer, whether public official or private citizen, to un-

dertake searches and to seize goods, but it also required

public officials to accompany the private individuals un-

dertaking searches.™

The American colonies reacted sharply to attempts to

use such Writs of Assistance.” Based on John Adams’

Abstract of a 1761 argument before the Superior Court

of Massachusetts Bay,” it is evident that one of the

51 See Dickerson, Writs of Assistance as a Caus- of the Revolu-

tion, in The Era of the American Revolution 45 (R. Morris ed.

1939).

52 Section 5(2) of that Act provided:

And it shall be lawful to or for any Person or Persons, author-

ized by Writ of Assistance under the Seal of His Majesty's

Court of Exchequer, to take a Constable, Headborough or other

Publick Officer inhabiting near unto the Place, and in the Day-

time to enter, and go into any House, Shop, Cellar, Warehouse

or Room... there to seize, and from thence to bring, any Kind

of Goods or Merchandize whatsoever, prohibited and uncus-

tomed....

Act of Frauds of 1662, 14 Char. 2d, reprinted in M. Smith,

supra, at 25 (emphasis added).

The Writ was used to enforce customs laws. In 1661, Charles II

had “made over future [customs] duty receipts to private con-

tractors in return for advances of ready cash.” M. Smith, supra,

at 27.

5§ “American histories without exception list writs of assistance

as one of the active causes of the American revolution.” Dickerson,

supra, at 40. Furthermore, it is recognized that the colonial experi-

ence with the writs of assistance was the predominant reason for

the enactment of the Fourth Amendment. See id. at 49.

* This Court has recognized the significance of this Massachu-

setts Bay case, noting that “[this]} famous debate ... was perhaps

major objections to the writ was the broad class of per-

sons that could be authorized to conduct searches:

[T)he writ is UNIVERSAL, being directed “to all

and singular justices, sheriffs, constables and all

other officers and subjects etc.”’ so that in short it is

directed to every subject in the king’s dominions;

every one with this writ may be a tyrant....

John Adams’ Abstract of James Otis’ Argument,

reprinted in M. Smith, supra, at 553-54.

With the demise of English rule in the American colonies,

the use of this writ also died. Correlatively, nineteenth

century American treatises continued to acknowledge the

common law understanding that private citizens did not

have the authority to conduct searches.”

In sum, the construction urged by EPA is in derogation

of hundreds of years of common law. Had Congress de-

sired to depart from centuries of precedent to authorize

inspections by private parties, it would have done so in

unmistakable terms.

2. On the sole occasion when Congress has granted

authority to designate private contractors to

carry out searches, it did so explicitly.

To our knowledge, no regulatory bodies other than

EPA use, or have even attempted to use, private parties

in carrying out administrative inspections. For example,

the Mine Safety and Health Administration uses only

government employees in conducting mine inspections,”

the most prominent event which inaugurated the resistance of the

colonies to the oppressions of the mother country.” Boyd v. United

States, 116 U.S. 616, 625 (1886).

5 See, e.g.,T. Cooley, A Treatise on the Constitutional Limitations

Which Rest Upon the Legislative Power of the States of the Ameri-

can Union 305 (1868) (search warrant should be directed “to the

sheriff or other proper officer, and not to private persons”) ;

C. Tiedemann, A Treatise on the Limitations of the Police Power

in the United States $127 at 461-462 (1886) (search warrant

“must be issued to an officer of the law, and never to the com-

plainant”).

% Telephone conversation with Ronald Schell, Chief, Office of

Technical Compliance & Investigation.

although its underlying Act provides that entry may be

made by “authorized representatives” of the Secretary.

30 U.S.C. § 813(a)i. The Public Health Services Act uses

the term “officers or employees duly designated by the

Secretary,” 42 U.S.C. §263i(a), in authorizing entry,

and in a subsequent provision on prohibited acts refers

to failure to permit access “by the Secretary or any of

his duly authorized representatives.” 42 U.S.C. § 263)

(a) (3).

The only instance in which Congress has extended

power to private contractors to force entry is the Re-

sources Conservation and Recovery Act. As amended by

the Solid Waste Disposal Act Amendments of 1980, entry

authority is extended to “officers, employees or repre-

sentatives” of EPA as well as state officials. 42 U.S.C.

§ 6927.* Congress added the term “representatives” for

the specific purpose of encompassing private contractors.

The Conference Report on the 1980 Amendments, H.R.

Rep. No. 1444, 96th Cong., 2d Sess. 35 (1980), states

57 Other statutory grants of entry power to agencies refer spe-

cifically to governmental officers and employees. E.g., Occupational

Safety and Health Administration—29 U.S.C. §657(a) (“Secre-

tary” of Labor authorized to enter); Consumer Product Safety

Commission—15 U.S.C. §2065/a) (“officers or employees duly

designated by the Commission”) ; Food and Drug Administration—

21 U.S.C. §372(a) (“officers and employees” or “health, food, or

drug officer or employee of any State, Territory, or political sub-

division thereof, duly commissioned by the Secretary as an officer

of the Department”); Treasury Department—18 U.S.C. § 923/g)

(“Secretary” regarding firearms), 26 U.S.C. § 5741 (“internal reve-

nue officer” regarding tobacco products), 26 U.S.C. $§ 7601, 7602,

7606 (“Secretary” regarding taxes and taxable items); Interstate

Commerce Commission—49 U.S.C. § 11144 (“Commission, or an

employee designated by the Commission”) ; Coast Guard—14 U.S.C.

§89(a) (“commissioned, warrant, and petty officers’).

5§ Prior to the 1980 Amendments, the Act had provided power to

force entry for inspection purposes only to an “officer or employee

of the Environmental Protection Agency, duly designated by the

Administrator” or a “duly designated officer for) employee” of a

similar state agency. 42 U.S.C.A. § 6927 (West 1977 ed.). The 1980

Amendments also added language creating a similar right of entry

for purposes of conducting certain studies. See 42 U.S.C. § 6921

(b) (8) (B) (ii) (1).

that “the Conferees believe that the expanded authority

to use private contractors or representatives for inspec-

tion purposes must be used judiciously, avoiding the use

of contractors who have conflicts of interest.” See also

H.R. Rep. No. 191, 96th Cong., lst Sess. 9-10 (1979).

In passing the 1980 Solid Waste Disposal Act Amend-

ments, Congress did not abrogate the common law with-

out providing special safeguards. Congress imposed

criminal penalties on private contractors who improperly

disclose confidential information.” See 42 U.S.C. § 6921

(b) (3) (B) (ii) (II). The criminal penalties are equiva-

lent to those enforced against EPA employees under the

Trade Secrets Act, 18 U.S.C. § 1905. In contrast, no-

where in the Clean Air Act are private parties subjected

to any criminal penalties for disclosure of confidential

or trade secret information.

Seeking to fill this void regarding the Clean Air Act,

EPA points to EPA’s contract with PEDCo employees

as well as to EPA and general governmental confiden-

tiality regulations. EPA’s Brief at 46-47.” EPA claims

that those provisions are “sufficient protection against

5° As a legal matter, outside contractors, who are not employees

of EPA, are not subject to the criminal sanctions of the Trade

Secrets Act, 18 U.S.C.A. § 1905, which bars unauthorized disclosure

of trade secrets and other proprietary information in the hands of

officers and employees of the United States. See Chrysler Corp. v.

Brown, 441 U.S. 281 (1979). Nor are private contractors restricted

by the Federal Reports Act, 44 U.S.C. §§ 3501-3512, which governs

interagency transfers of confidential information. See Shell Oil,

supra. Independent contractors are not government employees for

purposes of civil suits under the Federal Tort Claims Act, 28 U.S.C.

§ 1346(b), or for purposes of a direct constitutional claim. See

Bivens v. Siz Unknown Named Agents of Federal Bureau of Nar-

cotics, 403 U.S. 388 (1971).

® EPA’s confidentiality regulations, 40 C.F.R. § 2.301 (1982), are

not a suitable substitute for statutory safeguards because they

(1) allow the release of “emission data” under a definition broader

than the statutory mandate, (2) contain insufficient limitations

upon the passing of information to second contractors or sub-

contractors, (3) raise problems of third party enforcement, (4)

cannot be enforced by criminal sanctions, and (5) generally do not

disclosure.” Id. at 47. However, the action of Con-

gress in specifically providing criminal sanctions under

the Solid Waste Disposal Act Amendments disproves any

such hypothesis.*

CONCLUSION

The judgment of the court of appeals should be af-

firmed.

Respectfully submitted,

Of Counsel: CHARLEs F. LETTOW

CLEARY, GOTTLIEB, STEEN (Counsel of record)

& HAMILTON KATHERINE L. RHYNE

1752 N Street, N.W. JOHN A. MENKE

Washington, D.C. 20036 1752 N Street, N.W.

Washington, D.C. 20036

(202) 728-2748

RocER C. ZEHNTNER

Westport, Connecticut 06880

Counsel for Respondent

August 12, 1983 Stauffer Chemical Company

offer the protection that can be obtained from a properly drafted

non-disclosure agreement or from criminal sanctions.

#: Of course the best possible protection against disclosure is not

to divulge the proprietary information in the first place. After the

contractor has the information, a plant owner such as Stauffer

would have difficulty subsequently determining whether the infor-

mation had been disclosed or used for the contractor’s own gain.

Opportunities for inadvertent misuse definitely are present. During

the hearing in this case, the district court remarked “([t)hat

‘PEDCo’s concurrent engineering design and construction work]

concerned me more than anything else. The fact that PEDCo in

addition to being a contractor that does examinations and compli-

ance inspections appears to be a design engineer and available for

working for some of your competitors.” Jt. App. Ct. Appls. 310.

Indeed, PEDCo has been a consultant to a number of Stauffer’s com-

petitors. See Jt. App. Ct. Appls. 133, 137, 152-155. The court of

appeals thus properly concluded that PEDCo “may have an axe to

grind.” Compare 684 F.2d 1193, Pet. App. 43a, with EPA's Brief at

46 n.33.

tions against the misuse of confidential information. The criminal

sanctions under these statutes apply in addition to requirements

contained in regulations governing the release of information to

contractors.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.