CHAPTER
52
ENVIRONMENTAL
REGULATION
I.
OBJECTIVES:
This chapter is intended to provide students with an overview
of the
major environmental
laws
with which business is concerned. After reading the chapter and attending class, a student
should
be able
to:
1. Explain when an environmental impact statement must be prepared and what it must
contai
n
..
2. List and briefly discuss the major provisions in the Clean Air
Act.
3. Assess how government action to deal with greenhouse gas emissions and global
climate
change may affect
businesses.
4. List and briefly discuss the major provisions in the Clean Water
Act.
5. Explain why Congress passed the Oil Pollution Act of 1990 and list its major
provisions.
6. Recall the purpose of the Resource Conservation and Recovery
Act.
7. Discuss the purpose of the Comprehensive Environmental response, compensation
and
Liability Act
(
“Superfund”
).
8. Identify the two statutory authorities EPA has to protect the public against unreasonable
risks
presented by new and existing
chemical
s
..
II. ANSWER TO
INTRODUCTORY PROBLEM
A. The facility will have to meet emission limits for
S02,
NOx, and particulate
matter
establishe
d
by EPA for new industrial boilers. These standards, known as New
Source
Performance Standards (NSPS), will require the use of state of the art controls. In
addition
the company will also have to be sure it is in compliance with any emission limits
established
by the state as part of its State Implementation Plan (SIP) that the state has to produce
to
show that the total emissions in the state of the various pollutants do not exceed the
federally
established National Ambient Air Quality Standards. These requirements will
be
incorporated into a permit issued by the
state.
B. The facility will have to meet limits on the effluent it discharges to the river that are based
on
the best available water pollution control technology. These limits may be further
tightened
if necessary to meet the water quality standards that the state has issued that are designed
to
protect designated beneficial uses of the river (such as fishing, swimming, public
water
supply, industrial water use and/or agricultural water use). These limits will be
incorporated
into a permit that normally is issued by the
state.
C. The facility will have to comply with a number of regulatory requirements established in
the
Resource Conservation and Recovery Act concerning the management of hazardous
waste.
The
facility will have to comply with requirements concerning the identification,
proper
handling and storage of the wastes while in its possession and will also have to make sure
that
they are sent for further storage, treatment or disposal only to a permitted
facility,
accompanie
d
by a manifest that must remain with the wastes until they reach their
final
destination.
Chapter 52 – Environmental
Regulation
52-1
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McGraw-Hill
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manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or
part.
D. This problem poses the issue of whether there is a moral obligation to avoid harm to
another
when the legally prescribed standard is inadequate to do so. Failure to do so, while it may
be
legally defensible has the potential for a negative public reaction and possible legal liability
if
you knew about the problem, had an opportunity to do something about it, and failed to do
so.
It
also raises the question of whether the public living near the plant are one of the groups
in
society to which the company has some
responsibility.
III. SUGGESTIONS FOR LECTURE
PREPARATION:
A.
Introduction
1. Historical Perspective. Begin by indicating why pollution control laws have
been
enacted. Point out that pollution and pollution laws have existed for centuries,
although
the 1970’s saw an unprecedented amount of environmental legislation, due partly to
the
increased affluence of our nation at that time and the increasing concern about
the
long-term effects of pollutants. Note that the interest in environmental problems
has
taken on global dimensions in the late 1980s and early 1990s; note also
that
environmental laws and regulations significantly affect not only how companies can
do
business but also the cost of doing it. At the same time they can provide
business
opportunities and, in some cases,
advantages.
2. Environmental Protection Agency. Point out that EPA has the primary responsibility
at
the federal level for developing environmental regulations and enforcing
the
environmental
laws. List the major environmental statutes and briefly describe them
so
that the student has a sense of the breadth of the laws covered in this chapter. Note that
a
number of the statutes are implemented at the state level with EPA exercising
an
oversight
role. You should note that many states and local governments have
enacted
pollution
control laws; you might want to present examples of state and local
laws.
3. The National Environmental Policy Act. Emphasize that the rationale for NEPA, and
the
environmental impact statements required by NEPA, is to assure that the
environmental
consequences of particular projects or programs are considered before they
are
undertake
n
and that decision makers consider any less environmentally
disruptive
alternatives to those projects and programs and/or ways that the environmental
impact
can be mitigated. Note that many states and some local governments have enacted
laws
or ordinances that require mini-EISs to be prepared in connection as a prerequisite
to
obtaining various
permits.
Example:
Problem Case
#1.
B. Air
Pollution
1. List the major kinds of air pollution and their sources. Note that our air pollution
law
deals with both stationary and mobile sources of air pollution. Discuss the structure
and
scope of the Clean Air Act, pointing out the requirement that EPA set national
ambient
ai
r
quality standards and that states must develop implementation plans to assure that
the
standards are met. Note that the standards are designed to protect not only human
health
but also related welfare values such as vegetation and avoiding damage to
materials.
2. Note that the Clean Air Act contains technology requirements for both mobile
sources
such as automobiles and also new or modified stationary sources. New
sources,
essentially, must install the best available technology for reducing air
pollution.
Chapter 52 – Environmental
Regulation
United States v. Ohio Edison Company (page 1451): The construction
projects
undertaken by Ohio Edison were correctly characterized by the government
as
modifications” which required the company to comply with the standards for new
or
modified
facilities-rather
than “routine repairs or
maintenance-which
did not
require
meeting more stringent standards than the company was currently required to
meet.
Points for Discussion: Note the elements that the court indicated usually
characterize
‘routine repair and maintenance’ as opposed to the elements that characterize
a
“modification.”
3. Indicate that the Act requires EPA to set standards to control hazardous air pollutants
and
that much of the enforcement of the Act is carried out by state
governments.
Example: Problem Cases #2 and
3.
4. Cyberlaw in Action: Online Permitting (page 1453): Note that developments in
e
Government now often provide for various permitting and reporting requirements to
be
carried out on-line and that information about permits, monitoring and
enforcement
activities may also be accessible to the
public.
5. The Global Business Environment: International Air Problems (page 1454): Note
and
discuss the two major international air problems: stratospheric ozone depletion and
the
buildup of greenhouse gasses/ human induced global warming. Focus on the
challenges
that various sectors of the
economy-such
as the chemical industry and those that
use
chlorine-based compounds in the case of stratospheric ozone depletion and the fossil
fuel
industry in the case of greenhouse
gasses-face
in dealing with these issues. How
should
they play in the political policy making processes nationally and
internationally-and
what
business strategy should they adopt to deal with the
threats-and opportunities
posed by regulation of these
concerns?
Massachusetts v. EPA (page 1455). The Supreme Court rejected EPA’s arguments
for
refusing to regulate automobile emission of greenhouse gases under the Clean Air Act
on
the grounds that (1) the clean air Act did not authorize such regulation or (2) that even
if
it did, that it would not be wise to do so. The court concluded that EPA has the
statutory
authority to regulate the emission of such gasses from new motor vehicles and that
EPA
had to ground its reasons for action or inaction in the statute and not rely on
extraneous
policy reasons outside
it.
6. Ethics in Action:
If
Its Legal, Is It Ethical? (page 1454): This question poses the issue
of
whether there is a moral obligation to avoid harm to another when the legally
prescribed
standard is inadequate to do so. Failure to do so, while it may be legally defensible
has
the potential for a negative public reaction and possible legal liability if you knew
about
the problem, had an opportunity to do something about it, and failed to do
so.
7. Note that problems of indoor air pollution in the workplace, as well as products
that
contribute to such pollution in the home may well be of increased concern in the
future
and offers significant problems as well as opportunities for
business.
8. Briefly describe some of the problems of radiation in the environment and the nature
of
the federal laws to deal with those
problems.
C. Water
Pollution
1. Note the special importance to modern civilization of curbing water
pollution:
preventing widespread disease. Emphasize the provisions of the Clean Water Act
of
1972, which established specific actions to be taken by certain dates, and also set
some
unrealistic goals such as an end to the discharge of pollutants into water by 1985.
Point
out that industries that discharge waste are required to obtain permits and to adopt
the
best available technology. Note that the Act deals with both discharges from
industrial
facilities and with those from municipal sewage treatment
plants.
United States v. Hopkins (page 1459). A corporate officer who was responsible
for
submitting-under
oath–reports of his company’s wastewater discharges to the state
and
who directed improper sampling and testing as well as false reporting of the
discharges
was held criminally liable. The court held that it was not necessary for the government
to
prove that he knew he was acting in violation of the Clean Water Act or of the
permit
issued to the company by the
state.
Points for discussion: Discuss why the “knowledge” requirement for criminal
acts
involving violations of laws designed to protect public health and safety differs from
the
way the knowledge requirement is applied generally in criminal prosecutions.
How
should Hopkins have conducted
himself?
Should the employees have acted
differently
in this
situation?
Example: Problem Case
#4.
2. Indicate that some of the provisions of the Clean Water Act have the potential to
affect
businesses as well as individual property owners are the provisions concerning
wetlands.
A permit may be required from the Army Corps of Engineers before wetlands can
be
drained or filled and this may limit the use to which a landowner can put his
property.
Example: Problem Case
#5.
3. Indicate that special legislation deals with the protection of oceans, particularly
with
respect to dumping of materials into the oceans. Recently the issue of
possible incineratio
n
of hazardous wastes at sea has been a controversial issue addressed under
the
ocean
dumping statute. And the dumping of sludge and medical wastes off the
Atlantic
coast was
a matter of visible public concern in the late 1980s and early
1990s.
4. Discuss the reasons that Congress enacted the Oil Pollution Prevention,
Response,
Liability and Compensation Act of 1990 and lay out its major
provisions.
Exxon Shipping Co. v. Baker (page 1463) In reviewing a punitive damage award
against
Exxon for its actions in the 1989 oil spill in Prince William Sound, the Supreme
Court:
(1) on a 4-4 vote, left undisturbed the Ninth Circuit’s affirmation of trial
court
instructions concerning corporate derivative liability for punitive damages; (2)
rejected
Exxon’s contention that the Clean Water Act preempted any common law damages;
and
(3) held that punitive damages were limited to a 1:1 ration of punitive damages
to
compensatory
damages.
5. Mention the Safe Drinking Water Act of 1974 as reflecting our nation’s
continuing
concern with avoiding unreasonable risks to public health. Note that it can apply
to
private suppliers of drinking water to the public as well as to publicly owned
water
supply
systems.
D. Hazardous Waste
Disposal
1. Discuss the nature of the hazardous waste disposal problem we face in this country
and
note how some of these problems are connected to our other pollution
control
problems–i.e. to the extent we remove pollutants before they can be released into the
air
or water, we must dispose of them on land. Look for local examples of hazardous
waste
problems-such
as abandoned sites, existing disposal
facilities, or
proposals to
license
new sites–to use as illustrations for class
discussion.
2. Outline the approach taken in the Resource Conservation and Recovery Act (RCRA)
for
dealing with existing hazardous waste generation, treatment, storage or disposal.
Note
that it prescribes extensive regulation and a significant role for
states.
United States v. Southern Union (page 1466). This illustrates a criminal action
pursued
by a company that failed to get the required permit to store a hazardous
waste
(contaminated mercury) without complying with the requirements under
RCRA,
including the required
permit.
Points for Discussion. Contrast the way the company managed the mercury
containing
MSRs in 2000 and early 2001 with the way that it managed it beginning in late
2001.
Additional Example: Problem Case
#6.
The Global Business Environment: International Voluntary Consensus Standards
and
Certification: ISO Environmental Management Standards (page 1360): For
companies
that have business operations around the world or are engaged in international trade,
the
ISO voluntary standards for manufacturing, trade, communications, and
the
environmental management are important considerations that can affect where, how
and
with whom they can do business
abroad-and
even in the United
States.
3. Note the increasingly concern about the generation and disposal of solid waste,
including
the transport and disposal of waste to states other than where it was generated, and
the
related concerns about recycling and excess packaging–topics of considerable interest
to
business.
The Global Business Environment Extended Producer Requirements (page
1467):
Students need to be aware that in many of the highly developed countries outside of
the
United States, particularly in Europe, the burden of dealing with the packaging in
which
products come as well as for certain products that have come to the end of their
useful
life is imposed on the seller or manufacturer of the
product.
5. Superfund. Note the problem that Superfund was passed to address and outline
the
approach taken in the law. Review the general rules from the chapter on
non-intentional
torts and compare them to the liability provisions of
Superfund.
United States v. Domenic Lombardi Realty (page 1469): The current owner
of
contaminated property was liable for the response costs incurred by the United
States
in cleaning it up and was not able to escape liability on the grounds that it was an
“innocent purchaser” who had been unaware of the problems on the property and
who
itself had not contributed to the
contamination.
Points for Discussion: Note the requirements that must be established in order to
qualify
as an “innocent purchaser.” What are the policy considerations that led EPA
and
Congress to be fairly demanding as to the requirements that have to be met in order
to
avoid liability for cleanup
costs?
Example: Problem Case
#7.
4. Cyberlaw in Action: The Toxic Release Inventory is Available Online (page 1474):
The
Emergency Planning and Community Right to Know Act enacted in 1986
requires,
among other things, that facilities releasing listed toxic chemicals must file annual
reports
detailing the amounts of those chemicals estimated to have been released during
the
preceding year. This information is now made available online by the
federal
government and state agencies and has the potential to create citizen concerns,
questions
and pressure to reduce those releases. The Online Research Question at the end of
this
chapter asks students to go to the web site for their state and determine from the
latest
Toxic Release Inventory report who are the major releasers of toxic chemicals in
their
communities. The disclosure of this information has motivated some businesses
to
voluntarily reduce the amount of their
releases.
5. Ethics in Action: Environmental Standards for International Operations (page
14
72)
:
This is a dilemma faced by many companies today with different answers coming
from
different companies. A number of progressive U.S. based companies have taken
the
approach they will employ substantially equivalent standards when they do business
in
other countries that are less protective. This may be done for a variety of
reasons,
including: avoiding exposure to liability; public relations; a belief that it is the
ethically
appropriate route to take. Other companies take a different view, arguing that the
host
country makes a balancing judgment as to what is
required, that
their obligation
is
simply to meet that standard, and that they might be at a competitive disadvantage if
they
acted
otherwise.
6. Discuss the regulation of agricultural chemical, particularly pesticides, under the
Federal
Insecticide, Fungicide and Rodenticide Act (FIFRA) and of potentially toxic
chemicals
that may present unreasonable risks pursuant to the Toxic Substances Act (TSCA).
Note
that other countries, particularly the European Union, have restrictions in place
that
affect
producers of chemicals for export as well as products containing such
chemicals.
IV. RECOMMENDED
REFERENCES:
A. Environmental
Law
Handbook, Washington, Government Institutes, Inc., 21st ed., 2011.
A
complete yet concise exposition of all aspects of environmental
law.
B. Steven Ferry, Environmental Law: Explanations and Examples
(5th
edition), Aspen
(2010).