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Chapter 19 - Environmental Regulation
19-1
Chapter 19
Environmental Regulation
Learning Objectives
The purpose of this chapter is to introduce the student to basic environmental regulation,
Aldrich, James R., Pollution Prevention Economics: Financial Impacts on Business and
Baumol, William J., The Theory of Environmental Policy, 2d ed. New York: Cambridge U.
Press (1988).
Environmental Law Handbook, 18th ed. Government Institute (2005).
Mandelker, D.R., NEPA Law and Litigation. Callaghan (1984).
Miller, Jeffrey G., Citizen Suits: Private Enforcement of Federal Pollution Control Laws.
New York: Wiley Law Pub. (1987).
Sands, Philippe, Principles of International Environmental Law, 2d Cambridge U. Pr.
(2003).
Sidebar 19.1—“Categories of Environmental and Pollution-Control Laws”
Chapter 19 - Environmental Regulation
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Additional Matters for Discussion:
More companies are grappling with environmental issues. According to Steve Liesman,
“Texaco Appears to Moderate Stance on Global Warming,” WSJ, 5/15/00: “Big energy
companies, auto makers and utilities are increasingly wrestling with global-warming issues
as they strive to respond to growing public concern and react to changing environmental
regulations.”
According to an international Gallop poll of over 22,000 people in 22 countries, the
majority of citizens in 16 of the 22 countries expressed a willingness to pay higher
products prices in exchange for increased environmental protection.
At the 1990 annual meeting of the World Economic Forum, 650 international industry and
government leaders ranked the environment as the number one challenge facing business.
On the complicated nature of the relationships between the environment, jobs, and
regulation, see “Tree-Huggers vs. Jobs: It’s Not That Simple,” Business Week, 10/19/92, p.
108.
II. Government’s Regulation of Itself
A. The National Environmental Policy Act (LO 19-1)
Emphasize:
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The criticisms of the EIS process. Mainly the economic injury caused by abandoning or
delaying projects, as well as the lack of consideration of economic reasonableness.
That environmental factors are often so complex that the EIS process may amount to
little more than guesswork.
Figure 19.1—“Components of the environmental impact statement”
Case 19.1—“Sierra Forest Legacy v. Sherman”
NEPA Trends
Discuss:
How currently, NEPA is being applied to some of the most significant issues of the
day.
The application of NEPA to greenhouse gases’ emissions.
Why NEPA remains a potentially powerful tool for administrative agency action
concerning environmental concerns.
Cases for Discussion
1. Petitioners brought this action against the Federal Energy Regulatory Commission
contending that the Commission violated NEPA by failing to prepare an EIS before it
issued a preliminary permit for the Clavey-Wards Ferry hydroelectric project.
2. The Sierra Club sued to enjoin the Department of Interior from issuing mining leases
on federal lands in the “Northern Great Plains” region until the department had
prepared an EIS on the entire region.
Several preliminary studies of individual states in the region did not constitute a
“plan” that would require the preparation of an EIS. Kleppe v. Sierra Club, 427 U.S.
390 (1976).
3. According to the Ninth Circuit, the U.S. Forest Service decision not to prepare an
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occupied by a herd of desert bighorn sheep protected under state and federal law.
Foundation for North American Wild Sheep v. Dept. of Agriculture, 12 ELR 20968
(1982).
III. Government’s Regulation of Business (LO 19-2)
Explain:
That more and more companies are hiring environmental managers to deal with
Sidebar 19.2—“Responsibilities of the EPA”
Additional Matters for Discussion:
According to the EPA, polluters in 2002 spent $3.9 billion on new controls and cleanups.
The EPA and other governmental agencies are experimenting with new environmental
remedies. One controversial remedy levies fines according to contingent valuation in
which a cross section of individuals is asked how much it values particular resources. In
other developments, companies are increasingly being required to pay for restoring the
environment to the way it was before being damaged.
B. Air Pollution
Discuss:
The role played by clean air in medieval times in relation to modern times.
The in the United States the key federal legislation for controlling air pollution is the
Clean Air Act.
Clean Air Act and Amendments
Explain:
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That the Clean Air Act directs the EPA administrator to establish air quality
Additional Matters for Discussion:
According to Scott Segal, director of the Electric Reliability Coordinating Council,
as of 2003 “the Clean Air Act is the single most expensive environmental statute.”
In 1998, the seven biggest manufacturers of heavy diesel engines agreed to pay over
$1 billion to cover fines, investments in cleaner engines, and other corrective actions
to settle Clean Air Act violations.
In 2003, Alcoa and Archer Daniels Midland agreed to settle federal air pollution
complaints by upgrading smelters at an estimated cost of $700 million.
Clean Air Act Enforcement
Explain:
That criminal sanctions include fines of individuals up to $250,000 and up to 15
years’ imprisonment.
Corporations can be fined up to $1 million for knowingly endangering people with
emissions and up to $500,000 per incident of negligent emissions.
Air Pollution Sources
Emphasize:
On examples where the Clean Air Act did not try to promote efficient pollution.
The concept of point source within an industrial area or complex.
The importance of the bubble concept. Note that it is an attempt to make environmental
regulation more economically efficient.
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Explain:
That a number of states have developed EPA-approved plans for emissions reduction
banking.
Emissions reduction banking as a step toward a property approach to pollution
control.
Prevention of Significant Deterioration
Discuss:
That another important policy of the Clean Air Act is the prevention of significant
deterioration.
The Permitting Process
Explain:
The complexities of obtaining permits under the Clean Air Act.
The various factors that contribute to inordinate delays in obtaining permits.
The concept of smart permits.
Sidebar 19.3—“Beyond the Clean Air Act”
Indoor Pollution
Explain:
The problem of indoor air pollution.
Factors contributing to indoor pollution.
Table 19.1—“World’s Worst Air Pollution by City”
Additional Matters for Discussion:
percent below 1988 cars.
The General Accounting Office estimated in 1999 that emissions trading saves utility
companies $3 billion annually over previous air pollution approaches. Electric utility
companies emitted in 1999 25% fewer tons of sulfur dioxide while producing 41%
more electricity.
Chapter 19 - Environmental Regulation
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© 2016 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
a small fraction of automobiles, as low as 8 percent, account for over half of all
automobile pollution.
Conclusion
Discuss:
Evidence that indicates that the overall air quality in the United States is steadily
improving.
The leadership role of the United States in regulating global pollution control
measures.
Case 19.2—“Environmental Protection Agency v. EME Homer City Generation
L.P.”
Cases for Discussion:
1. The EPA lacks the power to condition approval of a state implementation plan on
California adopting a vehicle emission control program. Virginia v. EPA, 65 LW
2609 (CA DC 1997).
2. The Fifth Circuit held that the language of Section 307(f) of the Clean Air Act and its
legislative history support the award of attorney’s fees to a prevailing corporate
litigant. Moreover, the court found no indication in the statute or its legislative
history that Congress intended to limit attorneys’ fees to public interest groups or to
deny them to solvent organizations that have an economic interest in the outcome of
the litigation. Florida Power and Light Co. v. Costle, 12 ELR 21071 (1982).
D. Water Pollution
Explain:
That almost one-half of all water used in this country is for cooling and condensing
purposes in connection with industrial activities.
The resulting discharge into our rivers and lakes sometimes takes the form of heated
water, called thermal effluents.
That the Clean Water Act applies only to the pollution of “navigable” waterways,
intrastate as well as interstate.
Goals and Enforcement
Explain:
That the Clean Water Act is also administered by the states in accordance with EPA
Chapter 19 - Environmental Regulation
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standards.
What constitutes a point source?
The two-step sequence for cleanup of industrial waste discharged into rivers and
streams.
Cases for Discussion:
1. The Supreme Court has ruled that the EPA’s interpretation of the Clean Water Act
must be given deference. The Court held that neither statutory language nor
2. Riverside Bayview Homes, Inc. began placing fill materials on its property near the
shores of Lake St. Clair, Michigan. The Army Corps of Engineers filed suit to enjoin
this placement without a permit.
Additional Matters for Discussion:
In May, 2003, the EPA’s inspector general released a report asserting that the EPA’s
85 percent of the 29 million gallons of oil pollution in North American coastal
pollution comes from run off—mostly street run off—rather than from marine oil
spills.
E. Endangered Species Act
Emphasize:
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That every entire day species of animals and plants die off.
That the ESA is, perhaps, the nation’s most controversial environmental standard.
The meaning of “endangered.”
Application of the ESA
Describe:
The definition of “taking.”
The definition of “harm.”
The recovery plans of the ESA to protect species it protects.
Additional Matter for Discussion:
In 1998 a 20-year research effort concluded that over one-tenth of the planet’s plant
species were threatened with extinction. In the United States some 29 percent of
plants (16,000 species) were threatened. The study maintained that loss of habitat and
competition from human introduction of non-native species were the two main
reasons for the threats.
F. Pesticide Control (19-3)
Emphasize:
Pests, especially insects and mice, destroy over 10 percent of all crops grown in the
United States, causing several billion dollars of damage annually.
The widespread, continual application of pesticides creates environmental problems.
The Federal Pesticide Acts
Emphasize:
Enforcement
Emphasize:
That the regulation of pesticides takes place at the federal level. Regulation consists
of a regulation process backed up by the power to ban and limit the use of pesticides.
That pesticide control has been attacked by both affected businesses and the
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environmental movement itself.
Additional Matters for Discussion:
According to the Food and Agricultural Organization, a UN agency, over 550,000
tons of obsolete and unused pesticides threaten people and the environment.
In 1997 Congress passed the Food Quality Protection Act that the EPA must set
The EPA has issued rules requiring employers to train agricultural workers in
pesticide safety and place warning signs on freshly sprayed fields. As many as 1,000
agricultural workers die annually from pesticide poisoning.
G. Solid Waste
Emphasize
The problems associated with solid waste disposal.
Federal environmental regulation comes into play for most types of solid waste when
they are burned into the air or dumped into the water.
How solid waste pollution problems during the last 25 years have grown as pollution
has risen and the country has become more affluent and productive.
The various approaches undertaken by local and state government bodies.
How tax breaks can encourage recycling of solid wastes.
Figure 19.2—“Composition of a typical landfill by volume”
Additional Matters for Discussion:
Many companies are becoming “green conscious.” For instance, Coke and Pepsi
