Its Legal, Ethical & Global Environment 6 th Ed. Its Legal, Ethical & Global Environment 6 th Ed. B U S I N E S S MARIANNE M. JENNINGS Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. Chapter 12 Environmental Regulation

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 2 Common Law Remedies and the Environment  Nuisance Interference with use and enjoyment Damages and injunction possible Balancing test employed  Case 12.1 T & E Industries, Inc. v. Safety Light Corp. (1991) How did the original owner feel about handling radium What made disposal an abnormally dangerous activity  Nuisance Interference with use and enjoyment Damages and injunction possible Balancing test employed  Case 12.1 T & E Industries, Inc. v. Safety Light Corp. (1991) How did the original owner feel about handling radium What made disposal an abnormally dangerous activity

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 3 Statutory Environmental Laws  Air Pollution Regulation Air Pollution Control Act (1955) Clean Air Act (1963) Air Quality Act (1967)  Air Pollution Regulation Air Pollution Control Act (1955) Clean Air Act (1963) Air Quality Act (1967)

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 4 Statutory Environmental Laws  Clean Air Act Amendments of 1970 EPA authorized to establish standards States required to adopt implementation plans (SIPs) EPA approval required for plans Economic and technological issues Legislation intended to force compliance  Clean Air Act Amendments of 1977 Non-attainment areas Prevention of significant deterioration (PSD) areas  Clean Air Act Amendments of 1970 EPA authorized to establish standards States required to adopt implementation plans (SIPs) EPA approval required for plans Economic and technological issues Legislation intended to force compliance  Clean Air Act Amendments of 1977 Non-attainment areas Prevention of significant deterioration (PSD) areas

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 5 Statutory Environmental Laws  Economic controls for non-attainment areas New Plants must have greatest possible emission control All other operations must be in compliance New plant emissions must be offset with reduction elsewhere Follows bubble concept For new plant to begin operations, its pollution must be offset by reduction in the area  Economic controls for non-attainment areas New Plants must have greatest possible emission control All other operations must be in compliance New plant emissions must be offset with reduction elsewhere Follows bubble concept For new plant to begin operations, its pollution must be offset by reduction in the area

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 6 Statutory Environmental Laws  Control in PSD areas Prevention of significant deterioration EPA has right to review proposed plant construction Plant has to show that there will not be significant deterioration  Control in PSD areas Prevention of significant deterioration EPA has right to review proposed plant construction Plant has to show that there will not be significant deterioration

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 7 Statutory Environmental Laws  1990 Amendments to Clean Air Act Focuses on smog, alternative fuels, toxic emissions, and acid rain Federal implementation plan (FIP). EPA Plan to reduce pollution in cities failing to submit adequate SIP Plans must use maximum achievable control technology (MACT)  1990 Amendments to Clean Air Act Focuses on smog, alternative fuels, toxic emissions, and acid rain Federal implementation plan (FIP). EPA Plan to reduce pollution in cities failing to submit adequate SIP Plans must use maximum achievable control technology (MACT)

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 8 Statutory Environmental Laws  1990 Amendments to Clean Air Act Acid rain covered Sulfur dioxide pollution from factories and coal-fired generating plants Established market for excess sulfur dioxide emissions Affected small businesses such as dry cleaners, paint shops, and bakeries  1990 Amendments to Clean Air Act Acid rain covered Sulfur dioxide pollution from factories and coal-fired generating plants Established market for excess sulfur dioxide emissions Affected small businesses such as dry cleaners, paint shops, and bakeries

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 9  Water Pollution Regulation Rivers and Harbors Act of 1855 Prohibited discharges into navigable waters Used for enforcement since other laws had no teeth Most industries got around the act quickly by obtaining the permits required under the act Water Quality Act of 1965 Created Federal Water Pollution Control Administration (FWPCA) States required to establish water quality standards No enforcement procedures—states did little  Water Pollution Regulation Rivers and Harbors Act of 1855 Prohibited discharges into navigable waters Used for enforcement since other laws had no teeth Most industries got around the act quickly by obtaining the permits required under the act Water Quality Act of 1965 Created Federal Water Pollution Control Administration (FWPCA) States required to establish water quality standards No enforcement procedures—states did little Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 10 Statutory Environmental Laws  Water Pollution Regulation Federal Water Pollution Control Act of 1972 Federal government responsible for standards and control Emissions controlled by industrial groups Ranges for groups referred to as effluent guidelines National Pollution Discharge Elimination Permit (NPDES) Renamed Clean Water Act in 1977  Water Pollution Regulation Federal Water Pollution Control Act of 1972 Federal government responsible for standards and control Emissions controlled by industrial groups Ranges for groups referred to as effluent guidelines National Pollution Discharge Elimination Permit (NPDES) Renamed Clean Water Act in 1977

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 11  Water Pollution Regulation Safe Drinking Water Act Passed in 1986 States responsible for enforcement but must have minimum federal standards for drinking water systems Oil Pollution Act of 1990 Passed in response to huge spills like Exxon Valdez Companies must either clean up spill or pay federal government its costs for the clean-up Applies to all navigable waters up to 200 miles offshore  Water Pollution Regulation Safe Drinking Water Act Passed in 1986 States responsible for enforcement but must have minimum federal standards for drinking water systems Oil Pollution Act of 1990 Passed in response to huge spills like Exxon Valdez Companies must either clean up spill or pay federal government its costs for the clean-up Applies to all navigable waters up to 200 miles offshore Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 12  Solid Waste Disposal Regulation Toxic Substances Control Act of 1976 Response to chemical dumping EPA controls manufacture and disposal of toxic substances Resource Conservation and Recovery Act of 1976 Regulates methods of disposal through a permit system Discourages dumping  Solid Waste Disposal Regulation Toxic Substances Control Act of 1976 Response to chemical dumping EPA controls manufacture and disposal of toxic substances Resource Conservation and Recovery Act of 1976 Regulates methods of disposal through a permit system Discourages dumping Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 13 Statutory Environmental Laws  Solid Waste Disposal Regulation “SUPERFUND”: Comprehensive Environmental Response, Compensation, & Liability Act (CERCLA) President authorized to issue funds for clean-up of dumping areas Suit can be brought to recover funds expended from company responsible for the dumping 1986 amendments Superfund Amendment and Reauthorization Act –EPA can now sue to recover clean-up funds from those who are responsible  Solid Waste Disposal Regulation “SUPERFUND”: Comprehensive Environmental Response, Compensation, & Liability Act (CERCLA) President authorized to issue funds for clean-up of dumping areas Suit can be brought to recover funds expended from company responsible for the dumping 1986 amendments Superfund Amendment and Reauthorization Act –EPA can now sue to recover clean-up funds from those who are responsible

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 14  SUPERFUND Liability for clean-up cost may extend to lenders. Under the Asset Conservation, Lenders Liability, and Deposit Insurance Protection Act of 1966, lenders are protected from liability so long as they do not participate in the management of the property  SUPERFUND Liability for clean-up cost may extend to lenders. Under the Asset Conservation, Lenders Liability, and Deposit Insurance Protection Act of 1966, lenders are protected from liability so long as they do not participate in the management of the property Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 15  SUPERFUND. Four cases of responsible parties: owners and operates at the time of contamination current owners and operators - whether they were responsible for the contamination or not Transporters of the hazardous material Those who arranged for transport of the hazardous materials  SUPERFUND. Four cases of responsible parties: owners and operates at the time of contamination current owners and operators - whether they were responsible for the contamination or not Transporters of the hazardous material Those who arranged for transport of the hazardous materials Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 16  Environmental Quality Regulation National Environmental Policy Act of 1969 Requires federal agencies to file environmental impact statements for all major actions (EISs) Content of EIS: Environmental impact Adverse effects Alternatives New effects - short term versus long term Irreversible effects  Environmental Quality Regulation National Environmental Policy Act of 1969 Requires federal agencies to file environmental impact statements for all major actions (EISs) Content of EIS: Environmental impact Adverse effects Alternatives New effects - short term versus long term Irreversible effects Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 17 Statutory Environmental Laws  Case 12.2 Sierra Club v. United States Department of Transportation (1985) What is the basis for the appeal? What has the FAA allowed? Is another EIS ordered?  Case 12.2 Sierra Club v. United States Department of Transportation (1985) What is the basis for the appeal? What has the FAA allowed? Is another EIS ordered?

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 18  Other Regulations Noise Control Act of 1972 EPA and FAA regulate noise pollution for Aircraft Surface mining and Reclamation Act of 1977 requires mining company to restore land Pesticide Control Act Must register with EPA to ship Must label all pesticides Occupational Safety and Health Administration Responsible for work place environment and safety issues  Other Regulations Noise Control Act of 1972 EPA and FAA regulate noise pollution for Aircraft Surface mining and Reclamation Act of 1977 requires mining company to restore land Pesticide Control Act Must register with EPA to ship Must label all pesticides Occupational Safety and Health Administration Responsible for work place environment and safety issues Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 19  Other Regulations Asbestos Hazard Emergency Response Act (AHERA) Schools must inspect for asbestos and take action Asbestos is a toxic pollutant and community right- to-know substance Duty to disclose presence of asbestos Endangered Species Act Powerful tool for environmentalists Habitats cannot be disturbed  Other Regulations Asbestos Hazard Emergency Response Act (AHERA) Schools must inspect for asbestos and take action Asbestos is a toxic pollutant and community right- to-know substance Duty to disclose presence of asbestos Endangered Species Act Powerful tool for environmentalists Habitats cannot be disturbed Statutory Environmental Laws

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 20 Statutory Environmental Laws  Case 12.3 Babbitt v. Sweet Home Chapter of Communities for a Great Oregon (1995) Did Congress intend to give the secretary authority to shut down an industry?  Case 12.4 Bennett v. Spear (1997) Do the ranchers have standing to challenge the endangered species protection under the ESA?  Case 12.3 Babbitt v. Sweet Home Chapter of Communities for a Great Oregon (1995) Did Congress intend to give the secretary authority to shut down an industry?  Case 12.4 Bennett v. Spear (1997) Do the ranchers have standing to challenge the endangered species protection under the ESA?

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 21 State Environmental Laws  State EPA Regulation of fuel used Incentives for carpooling  State EPA Regulation of fuel used Incentives for carpooling

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 22 Enforcement of Environmental Laws  Parties Environmental Protection Agency—EPA Council on Environmental Quality— CEQ Part of executive branch Sets national policies and makes recommendations  Parties Environmental Protection Agency—EPA Council on Environmental Quality— CEQ Part of executive branch Sets national policies and makes recommendations

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 23 Enforcement of Environmental Laws  Parties Other agencies Atomic Energy Commission Federal Power Commission HUD Department of Interior Forest Service Bureau of Land Management Department of Commerce  Parties Other agencies Atomic Energy Commission Federal Power Commission HUD Department of Interior Forest Service Bureau of Land Management Department of Commerce

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 24 Enforcement of Environmental Laws  Criminal Sanctions Clean Air Act $25,000 per day, up to one year in prison, or both Five years/$1million for knowing violations $50,000 for field citations $10,000 rewards for reporting violations Clean Water Act $25,000 per day, up to one year in prison, or both Resource Conservation and Recovery Act $25,000 per day, up to one year in prison, or both  Criminal Sanctions Clean Air Act $25,000 per day, up to one year in prison, or both Five years/$1million for knowing violations $50,000 for field citations $10,000 rewards for reporting violations Clean Water Act $25,000 per day, up to one year in prison, or both Resource Conservation and Recovery Act $25,000 per day, up to one year in prison, or both

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 25 Enforcement of Environmental Laws  Criminal Sanctions Oil Pollution Act $125,000 per day or $1,000 per barrel $3,000 per barrel if willfully $250,000 and/or 5 years for failure to report  Civil Liability Environmental groups can bring suits Sierra Club Environmental Defense Fund League of Conservation Voters  Criminal Sanctions Oil Pollution Act $125,000 per day or $1,000 per barrel $3,000 per barrel if willfully $250,000 and/or 5 years for failure to report  Civil Liability Environmental groups can bring suits Sierra Club Environmental Defense Fund League of Conservation Voters

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 26 Enforcement of Environmental Laws  Case 12.5 United States v. Johnson & Towers, Inc. (1984) Did Congress intend to prosecute corporate employees? What proof is required to show violations by the “persons” involved?  Case 12.5 United States v. Johnson & Towers, Inc. (1984) Did Congress intend to prosecute corporate employees? What proof is required to show violations by the “persons” involved?

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 27 International Environmental Issues  EU Has European Environment Agency Has 200 regulations Clearinghouse for information  EU Has European Environment Agency Has 200 regulations Clearinghouse for information

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 28 International Environmental Issues  Eco-Audit Stickers Shows products environmental impact International Organization for Standardization (ISO) developed ISO 14000, a series of environmental standards. Companies seek ISO certification  Eco-Audit Stickers Shows products environmental impact International Organization for Standardization (ISO) developed ISO 14000, a series of environmental standards. Companies seek ISO certification

Copyright ©2003 by West Legal Studies in Business, a division of Thomson Learning. All rights reserved. 29 International Environmental Issues  United Nations Framework Convention for Climate Change (UNFCC) A group of governmental and environmental leaders concern with the issue of global warning  The Precautionary Principle in regulation.  United Nations Framework Convention for Climate Change (UNFCC) A group of governmental and environmental leaders concern with the issue of global warning  The Precautionary Principle in regulation.