Despite being well aware of the dangers of PCBs, the Environmental Protection Agency (EPA) and the New York State Department of Environmental Conservation (DEC) issued permits under the Clean Water Act which allowed GE to discharge up to thirty pounds of PCBs per day into the Hudson.

The New York Environmental Conservation Law, however, forbids the discharge of pollutants in quantities that violate applicable standards of water quality. In 1976, the DEC brought an administrative enforcement proceeding against GE. An outside judge, Abraham Sofaer, presided over several months of hearings on the issue, which included testimony from both the DEC and GE.

Judge Sofaer issued an interim opinion and order laying the blame for PCBs on "corporate abuse and regulatory failure: corporate abuse in that GE caused PCBs to be discharged without exercising sufficient precaution and concern; regulatory failure in that GE informed the responsible federal and state agencies of its activities and they, too, exercised insufficient caution and concern."

In the wake of the decision faulting both parties, GE and the state agreed to create a $7 million PCB research and clean-up fund — $3 million each from the state and GE and $1 million of in-kind research from GE alone. Additionally, GE would construct pollution abatement facilities at its Fort Edward and Hudson Falls plants and phase out the use of PCBs statewide by July 1977.