Chapter 19 – Environmental Regulation
19-18
nuisance so as to require its abatement must also indemnify the party enjoined. Spur
Industries, Inc. v. Del E. Webb Development Co., 494 P.2d 700 (1972).
V. Trends in Environmental Regulation
Emphasize:
great complexity.
That the key controversy at the heart of environmental regulation is “How much
certainty of harm is required to justify regulatory intervention?”
Loss of Natural Ecosystems
Discuss:
A report signed by 1,575 scientists, including 100 Nobel Prize winners, warned of
the effects of worldwide destruction to natural ecosystems, the cutting of rainforests
being the most widely publicized destruction.
Ozone
Emphasize:
That in 1990, 59 countries agreed to stop producing certain chemicals that destroy
the Earth’s protective ozone layer of the atmosphere.
On the agreement that required participating countries to stop production of certain
chlorofluorocarbons and halons by the year 2000.
Greenhouse Effect
Carbon dioxide in the atmosphere has reached its highest concentration in the
Chapter 19 – Environmental Regulation
19-19
atmosphere in the last 650,000 years.
Fifteen percent of the world’s population uses more than half of its polluting energy.
Sidebar 19.4—“Mass Extinction and Its Concequences”
Population Growth
Describe:
The rate of growth of the human population.
The result of population explosion, by the year 2025.
Additional Matters for Discussion:
The Kyoto global warming treaty has not been ratified worldwide. With the U.S. not
participating, treaty supporters needed Russia to ratify the treaty, which takes effect
when countries accounting for 55% of the pre-1990 greenhouse gas emission levels
have signed it, but Russia, who had planned to sell its extra emissions to the U.S.
under the treaty’s trading program, is in no hurry to sign the treaty with the U.S. not
participating.
In 2000 the National Research Council concluded that in the last 20 years the earth
has warmed a half-degree.
In 2000 a 118 page overview of a major federal report on the possible effects of
warming on the U.S. was released. The four-year effort involved 5,000 people.
According to Andrew Dlugolecki, director of general insurance development at
CGNU, global losses from natural disasters have been expanding at the rate of 10
1997) (suggesting environmental concerns are overblown, more population will
improve, rather than degrade, the environment, and that economic activity will
improve environmental quality) and “No Middle Way on the Environment,” Paul R.
Erlich, et al, AM (December 1997) (disagreeing with Sagoff in every particular).
19-20
© 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.
northern Europe by an average of 9 degrees.
An interesting article on business efforts to cash in on climate change is Steve
Liesman, “The Race to Profit from Global Warming,” WSJ, 10/19/99, p. B1.
In November 1992 more than 85 nations responsible for 95 percent of the world’s
consumption of chlorofluorocarbons, coolants thought to reduce atmospheric ozone,
agreed under the Montreal Protocols to phase out these substances over the next 30
years.
A study by Gene Grossman and Alan Krueger of Princeton University, released in
1994, argues that the increased pollution associated with growth in many poor
countries is followed by improved environmental conditions once national income
reaches a critical level ($8,000 per capita GNP in 1985 dollars). They contend that
Mexico, Chile, and Venezuela, as well as many Pacific Rim nations, have achieved
income levels that should start to foster an improving environment. However, 70
percent of nations are yet to reach that income level.
B. Corporate Governance and the Environment
Emphasize:
How some shareholders are using the governance process of the annual meeting to bring
environmental concerns to the attention of management, boards, and shareholders.
That up to a third of the shareholders vote for environmentally-targeted resolutions.
Corporate governance concerns have also led to increasing awareness of businesses on
the environmental impacts they have; for instance, in annual summaries frequently
referred to as sustainability reporting.
Sidebar 19.5—“Sustainability Reporting”
C. Private Property and the Environment (LO 19-4)
Emphasize:
The “tragedy of the commons.”
That although private property may protect the environment in some instances, in other
cases it may not.
That “property” includes both the concept of the equal rights of others.
Answers to Review Questions and Problems
Government’s Regulations of Itself
1. The National Environmental Policy Act
Chapter 19 – Environmental Regulation
19-21
a) The firm’s EIS must be a detailed statement estimating the environmental impact of
the proposed action. The discussion must include information on adverse
acres of timber is a “major” action.
2. Evaluation of Environmental Impact Statements
Critics of the EIS process argue that it fails to consider the economic injury caused by
abandoning or delaying projects. Other critics maintain that most impact statements are not
sufficiently analytical. Also, the environment is often so complex that projections
Government’s Regulation of Business
3. The Environmental Protection Agency
The EPA coordinates the major federal efforts to regulate business and the environment.
4. Air Pollution
Where air pollution exceeds primary air quality standards, the EPA does not permit new
5. Clean Air Act Today
a) The individual point-source approach requires that each point-source be licensed to
6. Water Pollution
Chapter 19 – Environmental Regulation
19-22
empty eventually into a larger flow over which vessels can go.
7. Endangered Species Act
8. Pesticide Control
The company must follow the EPA’s required registration process.
9. Solid Waste
a) The states and local communities have the primary responsibility for nontoxic solid
10. Toxic and Hazardous Substances
a) If the byproducts qualify as “hazardous” under the Natural Resource Conservation and
11. Citizen Enforcement
12. Tort Theories
Chapter 19 – Environmental Regulation
19-23
Possible tort causes of action include negligence (unreasonable behavior), ultra-hazardous
activity (strict liability), and nuisance (unreasonable use of one’s property).
Trends in Environmental Regulation
13. Areas of Environmental Concern
All of the areas of concern discussed in this section—the greenhouse effect, global warming,
14. Corporate Governance and the Environment
15. Private Property and the Environment
This quoted phrase means that private parties have been recognized by the state as being
owners of a right to pollute a certain amount and that these parties may use, trade, or
exchange the pollution “resources” established by this right.
Business Discussion #1
1. What environmental laws will apply to the new plant construction?
A full range of the environmental laws will apply, especially the Clean Air Act for smoke
2. What environmental law will have to be followed as you seek to get the national forest
lease?
3. What steps should you take to maintain good community relations?
Chapter 19 – Environmental Regulation
19-24
© 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.
Primarily, all one can do is to show that one appreciates the impact one will have on the
natural environment and explain through public forums and private meetings what one will
do to ameliorate it.
Business Discussion #2
1. Why might you need to know the environmental condition of the land?
One needs to know the environmental condition of the land, specifically whether or not there
2. What steps might you want to take before buying the land?