Essentials of Business Law, 9th edition
INSTRUCTOR’S MANUAL
Chapter 36 Business and the Environment
LESSON OVERVIEW
While the previous chapters dealt with the role of international law in the global business scenario,
Chapter 36 deals with business and the environment. This chapter examines in detail the history of
federal statutes dealing with environmental protection. It also discusses how the federal government
regulates itself in the area of environmental protection, and how the government regulates business in
relation to the environment, the aims of some of the major federal legislations to reduce pollution.
Additionally, the chapter discusses in detail the theories of law under which private citizens may sue
persons and businesses that harm the environment, several types of pollution that are of great concern
to society, and various other factors and environmental issues that influence the changing global
climate and are of growing concern. Finally, students’ understanding of the topics is evaluated through
objective-type questions, discussion questions, and case scenarios. Students are encouraged to conduct
their own research through the use of the Internet and other sources.
CHAPTER OUTLINE
A. THE DEVELOPMENT OF ENVIRONMENTAL PROTECTION (p. 600)
B. GOVERNMENT’S REGULATION OVER ITSELF (p. 600-601)
C. GOVERNMENT REGULATION OF BUSINESS (p. 601)
D. MAJOR FEDERAL LEGISLATION PROTECTING THE ENVIRONMENT (pp. 601-603)
1. The Clean Air Act (p. 601)
2. The Clean Water Act (p. 602)
3. Superfund (p. 602-603)
E. LAWSUITS BY PRIVATE CITIZENS (pp. 603-604)
1. Negligence (p. 603)
2. Nuisance (p. 603)
3. Trespass (p. 604)
F. TYPES OF POLLUTION (pp. 604-605)
1. Noise Pollution (p. 604)
2. Pesticide Control (p. 604)
3. Solid Waste Disposal (p. 604)
4. Toxic Substance Disposal (p. 604-605)
5. Natural Resource Conservation (p. 605)
6. Acid Rain (p. 605)
G. A CHANGING GLOBAL ENVIRONMENT (p. 605-606)
1. The Greenhouse Effect (p. 606)
2. Destruction of the Rain Forests (p. 606)
3. Destruction of the Ozone Layer (p. 606)
H. OTHER ENVIRONMENTAL ISSUES (pp. 606-607)
1. Biodiversity (p. 606)
2. Ocean Pollution (p. 607)
3. Space Pollution (p. 607)
I. CHAPTER SUMMARY (p. 607-608)
J. CHAPTER ASSESSMENT (pp. 608-614)
1. Matching Key Terms (p. 608-609)
2. True/False Quiz (pp. 609)
3. Discussion Questions (p. 610)
4. Thinking Critically About the Law (pp. 610-611)
5. Case Questions (pp. 611-612)
6. Case Analysis (pp. 612-614)
7. Legal Research (p. 614)
KEY TERMS
Key terms are listed at the beginning of each chapter, posted in the student textbook margins, and
placed in bold in the copy. They are listed here for your quick reference.
§ National Environmental Policy Act of 1970 (NEPA) (p. 600)
§ environmental impact statement (EIS) (p. 600)
§ Environmental Protection Agency (EPA) (p. 601)
§ Clean Air Act of 1970 (p. 601)
§ Clean Water Act of 1972 (p. 602)
§ Superfund (pp. 602)
§ public nuisance (p. 603)
§ private nuisance (p. 603)
§ particle trespass (p. 604)
§ acid rain (p. 605)
§ greenhouse effect (p. 606)
LEARNING OUTCOMES
The chapter Learning Outcomes will help you and the students discover the concepts and information
that should be understood upon completion of the chapter. You may want to access the PowerPoint
(PPT) slides for Chapter 36 when you begin the study of the chapter and discuss each Learning
Outcome. Each Learning Outcome will be covered separately in the Instructor Notes, but they are
shown here in total as an overview of the sections being presented in Chapter 36. The corresponding
text page numbers and PPT slides are listed next to each outcome. These slides should be used to
reinforce the main points of the lecture.
After completing this chapter, the students will be able to:
1. Describe the history of federal statutes dealing with environmental protection. (p. 600, PPT slide
2)
2. Explain how the federal government regulates itself in the area of environmental protection. (p.
600, PPT slides 3-4)
3. Describe how the government regulates businesses in relation to the environment. (p. 601, PPT
slides 5-6)
4. Discuss how major federal legislation aims to reduce pollution. (pp. 601-603, PPT slides 7-12)
5. Describe the theories of law under which private citizens may sue persons and businesses that
harm the environment. (pp. 603-604, PPT slides 13-16)
6. Identify several types of pollution that are of great concern to society. (pp. 604-605, PPT slides
17-20)
7. Identify several factors that influence the changing global climate. (pp. 605-606, PPT slides
21-23)
8. Identify other environmental issues for which there is growing concern. (pp. 606-607, PPT slides
24-25)
LECTURE OUTLINE
A. THE DEVELOPMENT OF ENVIRONMENTAL PROTECTION
The United States has been blessed with an abundance of natural resources, including waterways,
wetlands, precious minerals, arable land, wildlife, coal, and forests. It was recognized early in the
country’s history that laws needed to be enacted that might afford some protection to our physical
environment.
B. GOVERNMENT’S REGULATION OVER ITSELF
In an effort to ensure that the federal government itself does not contribute to the destruction of the
environment, Congress passed the National Environmental Policy Act of 1970 (NEPA). This law
requires that any project with significant federal involvement must have an approved environmental
impact statement (EIS) prior to the commencement of any work on the project.
C. GOVERNMENT REGULATION OF BUSINESS
In 1970, Congress created the Environmental Protection Agency (EPA), which has the responsibility
of regulating business activities as these relate to the environment. The EPA conducts environmental
research, assists states and municipalities with grants and technical advice, and administers the federal
pollution laws that cover businesses.
D. MAJOR FEDERAL LEGISLATION PROTECTING THE ENVIRONMENT
Important federal legislation aimed at protecting the environment includes the Clean Air Act, the Clean
Water Act, and the Comprehensive Environmental Response, Compensation, and Liability Act, also
known as Superfund.
1. The Clean Air Act
The Clean Air Act of 1970 was created with recognition of the fact that pollution
sometimes crosses the boundary lines of local jurisdictions and extends into two or more
states.
2. The Clean Water Act
The Clean Water Act of 1972 set minimum standards for water purity in a manner
similar to the Clean Air Act described previously. Included in such standards is “fishable
and swimmable,” an intermediate standard of water quality that allows the navigable
waterways to be used for the propagation of fish, shellfish, and wildlife, and also allows
such waterways to be used for recreational purposes.
3. Superfund
In 1980, Congress passed the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA). More popularly referred to as Superfund, this law
regulates the dumping of waste onto land.
E. LAWSUITS BY PRIVATE CITIZENS
In the event a business firm creates pollution or damages the environment, in addition to being required
to pay a fine, it may be held liable to private persons as well. There are several theories of law under
which a private individual may bring a lawsuit against a business for creating pollution.
1. Negligence
Negligence is a tort that allows a plaintiff to bring a lawsuit against a defendant under
state law for causing personal injury or property damage. Businesses that create
pollution frequently cause injury to people or damage to their property, and these
businesses may be found liable by a court for the tort of negligence.
2. Nuisance
Most states have laws prohibiting the creation of a nuisance, a condition that affects a
person’s health, causes property damage, or interferes with a person’s well-being.
Businesses that cause pollutants to enter the air or water are in fact creating a nuisance.
3. Trespass
Trespass is the unauthorized entry onto another person’s property. Businesses that cause
pollution are, in effect, sending pollutants onto another person’s land or water. Most
states recognize a cause of action for particle trespass, accepting the theory that
businesses are trespassing on another person’s property with their pollution particles.
F. TYPES OF POLLUTION
The most widely discussed forms of pollution are those that affect air, water, and land, discussed in
some detail earlier in this chapter. However, there are numerous other types of pollution and
environmental issues that are of great concern to society and are the subject of federal statutes.
1. Noise Pollution
Excess noise (as measured in decibels) can affect the health and well-being of persons.
Exposure to loud noise for extended periods of time can affect an individual’s ability to
hear, can cause mood swings, and is even alleged to cause injury to fetuses.
2. Pesticide Control
There are currently over 1,000 chemicals used in the preparation of over 20,000
pesticides. The continued use of a pesticide often causes insects to become immune to
the chemical compounds, and as a result the pesticide becomes ineffective. Stronger
pesticides must then be created.
3. Solid Waste Disposal
Most products are packaged in containers and wrappers that require disposal. The sheer
volume of this waste material makes it extremely difficult to manage its disposal.
Accordingly, numerous municipalities require that businesses and homeowners recycle
paper, plastic, glass, and metal products.
4. Toxic Substance Disposal
Of great concern is the quantity of waste materials that can cause great harm to humans
who are exposed to them. These toxic substances include medical waste and chemicals.
Pursuant to the Toxic Substance Control Act of 1976, manufacturers are required to test
chemicals thoroughly prior to introducing them into commerce.
5. Natural Resource Conservation
The United States has extraordinary forests and wetlands that have great aesthetic and
economic value. Often, policymakers struggle with designing laws and regulations that
can protect these resources without disturbing the natural ecological order.
6. Acid Rain
Sulfur emissions, created primarily by manufacturing plants located in the central
portion of the United States, cause pollutants to be discharged into the atmosphere and
result in so-called acid rain.
G. A CHANGING GLOBAL ENVIRONMENT
There are several factors that influence the changing global climate, including the release of carbon
dioxide into the atmosphere, the destruction of the rain forest, and the destruction of the ozone layer.
1. The Greenhouse Effect
There has been a concern that global temperatures are increasing over time. Many
scientists believe that the increased burning of fossil fuels (coal, gas, and oil) has loaded
the atmosphere with heat-trapping carbon dioxide (CO2), creating global warming, a
condition known as the greenhouse effect.
2. Destruction of the Rain Forests
In recent years, there has been a growing recognition that economic interests are causing
the gradual destruction of the world’s rain forests found in tropical climates. This
deforestation alters the distribution and circulation of water, which in turn can lead to
drought, flooding, soil erosion, and changes in wind and ocean currents and in rainfall
distribution.
3. Destruction of the Ozone Layer
It is now recognized that the release of chlorofluorocarbons into the air has created
damage to the ozone layer in the atmosphere. A hole in the ozone layer is most manifest
over the South Pole and is causing concern over its potential impact on human health.
Chlorofluorocarbons are present primarily in aerosol cans and in Freon, a cooling
substance historically found in refrigerators and air conditioners.
H. OTHER ENVIRONMENTAL ISSUES
As our knowledge of our universe increases, so does our recognition of environmental problems. There
is growing concern about biodiversity and ocean and space pollution.
1. Biodiversity
Of concern to environmentalists is the notion that thousands of species are becoming
extinct at an alarming rate. Numerous federal statutes have been passed protecting some
of these endangered species, but many individuals argue that not enough is being done
and that not all species are being protected adequately.
2. Ocean Pollution
A developing environmental problem is that of ocean dumping, in which waste material
is illegally deposited into the waters far off coastal areas. Currently, ocean dumping is
allowed under limited circumstances. The EPA is charged with the responsibility of
selecting appropriate sites and types of waste that may be discarded into the oceans by
U.S. organizations.
3. Space Pollution
Environmentalists have recently turned their attention to the increased amount of “space
junk” that is orbiting the planet. Satellites no longer in use or in disrepair continue to
circle the earth.
4. Over-Population
Due to longer life spans and declining death rates, the world’s population continues to
grow at an increasing, and some would add, alarming rate. There are approximately
seven billion people alive in the world today, which is seven times the population of only
about two hundred years ago.
INSTRUCTOR NOTES
A resulting answer or explanation is provided below for each Learning Outcome in Chapter 34. Every
outcome is also mapped to corresponding text page numbers, PPT slides, and relevant chapter
assessment exercises and activities for ease of reference and use.
LO1. Describe the history of federal statutes dealing with environmental protection.
Early federal statutes dealing with environmental issues concerned themselves primarily with
conservation of forests and wildlife. In the 1960s, citizens of the United States began to insist that strict
environmental laws be enacted to maintain purity of air and water. Today, environmental regulation is a
distinct area of the law, and firms strive to comply with myriad statutes, regulations, and ordinances
that cover the relationship between businesses and the environment.
Text Pages: 600
PowerPoint: Slide 2
Thinking Critically About the Law: 31
LO2. Explain how the federal government regulates itself in the area of environmental protection.
Government regulates itself in the area of environmental protection through the National
Environmental Policy Act, which requires that any project with significant federal involvement have an
approved environmental impact statement prior to the commencement of any work on the project.
Text Pages: 600-601
PowerPoint: Slides 3-4
Discussion Questions: 21
Case Analysis: 27, 37
LO3. Describe how the government regulates businesses in relation to the environment.
The Environmental Protection Agency regulates business activities as these relate to the environment.
The EPA conducts environmental research, assists states and municipalities with grants and technical
advice, and administers the federal pollution laws that cover businesses.
Text Pages: 601
PowerPoint: Slides 5-6
LO4. Discuss how major federal legislation aims to reduce pollution.
Pursuant to the Clean Air Act, all states are required to develop air quality standards that are at least as
rigorous as the federal standards. The Clean Water Act sets minimum standards for water purity in a
manner similar to the Clean Air Act. Superfund states that business firms that illegally dump waste
material can be held responsible for three times the actual cost of the cleanup. In addition, Superfund
designates specific sites, mandating that these locations be cleaned up by their owners.
Text Pages: 601-603
PowerPoint: Slides 7-12
Discussion Questions: 22-23
Thinking Critically About the Law: 28-29
Case Questions: 32
Case Analysis: 35
LO5. Describe the theories of law under which private citizens may sue persons and businesses
that harm the environment.
Theories of law under which a private individual may bring a lawsuit against a business for creating
pollution include negligence, public nuisance, private nuisance, and trespass.
Text Pages: 603-604
PowerPoint: Slides 13-16
Discussion Questions: 24
Case Questions: 33, 36
LO6. Identify several types of pollution that are of great concern to society.
Types of pollution that are of great concern to society include air pollution, water pollution, illegal
dumping of waste onto land, noise pollution, pesticide control, solid waste disposal, toxic substance
disposal, natural resource conservation, and acid rain.
Text Pages: 604-605
PowerPoint: Slides 17-20
Discussion Questions: 26
Thinking Critically About the Law: 30
Case Questions: 34
LO7. Identify several factors that influence the changing global climate.
Several factors that influence the changing global climate include the greenhouse effect, destruction of
the rain forests, and destruction of the ozone layer.
Text Pages: 605-606
PowerPoint: Slides 20-23
Discussion Questions: 25
LO8. Identify other environmental issues for which there is growing concern.
Other environmental issues for which there is growing concern include biodiversity, ocean pollution,
and space pollution.
Text Pages: 606-607
PowerPoint: Slides 24-25