1. Slides developed by Les Wiletzky Wiletzky and Associates Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. PowerPoint Slides to Accompany CONTEMPORARY BUSINESS AND ONLINE COMMERCE LAW 5 th Edition by Henry R. Cheeseman Chapter 33 Consumer and Environmental Protection

2. 33 - 2Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Introduction Federal and state governments enact laws that regulate business administrative agencies The legislative and executive branches of government have created numerous administrative agencies to assist in implementing and enforcing these laws administrative law The operation of these administrative agencies is governed by a body of administrative law

3. 33 - 3Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Administrative Law Administrative Law Administrative Law – a body of law that governs the operation of administrative agencies substantiveprocedural Administrative Law is a combination of substantive and procedural law Each federal administrative agency is empowered to administer a particular statute or statutes substantive law These statutes are the substantive law that is enforced by the agency

4. 33 - 4Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Administrative Agencies Agencies that the legislative and executive branches of federal and state governments establish Rules and Regulations Rules and Regulations – adopted by administrative agencies to interpret the statutes that they are authorized to enforce General Government Regulation General Government Regulation Specific Government Regulation Specific Government Regulation

5. 33 - 5Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Delegation Doctrine When an administrative agency is created, it is delegated certain powers Legislative powers Executive powers Judicial powers If an administrative agency acts outside the scope of its delegated powers, it is an unconstitutional act

6. 33 - 6Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Administrative Procedure Act (APA) of 1946 (1 of 2) Establishes certain administrative procedures that federal administrative agencies must follow in conducting their affairs: e.g., notice and hearing requirements e.g., rules for conducting agency adjudicative actions e.g., procedures for rule making

7. 33 - 7Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Administrative Procedure Act (2 of 2) Most states have enacted administrative procedural acts that govern state administrative agencies Administrative Law Judges (ALJs) Administrative Law Judges (ALJs) – preside over administrative proceedings Decide questions of law and fact concerning the case. No jury The ALJ is an employee of the administrative agency

8. 33 - 8Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Federal Food, Drug, and Cosmetic Act (FDCA) of 1938 (as amended) Provides the basis for the regulation of much of the testing, manufacture, distribution, and sale of foods, drugs, cosmetics, and medicinal products and devices in the United States Food and Drug Administration (FDA) Administered by the Food and Drug Administration (FDA) The FDA is empowered to regulate food, food additives, drugs, cosmetics, and medicinal devices

9. 33 - 9Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Regulation of Food adulterated food The FDCA prohibits the shipment, distribution, or sale of adulterated food false and misleading labeling The FDCA prohibits false and misleading labeling of food products affirmative disclosure It mandates affirmative disclosure of information on food labels A manufacturer may be held liable for deceptive labeling or packaging

10. 33 - 10Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nutrition Labeling and Education Act A federal statute that requires food manufacturers and processors to provide nutritional information on most foods It prohibits them from making unscientifically unsubstantiated health claims FDA regulations require food processors to provide uniform information about serving sizes and nutrients on labels

11. 33 - 11Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Regulation of Drugs (1 of 2) The FDCA gives the FDA the authority to regulate the testing, manufacture, distribution, and sale of drugs Drug Amendment to the FDCA The Drug Amendment to the FDCA gives the FDA broad powers to license new drugs in the United States The manufacture, distribution, or sale of adulterated or misbranded drugs is prohibited

12. 33 - 12Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Regulation of Drugs (2 of 2) The law requires all users of prescription and nonprescription drugs to receive: Proper directions for use Including method and duration of use Adequate warnings about any related side effects

13. 33 - 13Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Regulation of Cosmetics (1 of 2) The FDA has issued regulations that require cosmetics: To be labeled To disclose ingredients To contain warnings if they are carcinogenic or otherwise dangerous to a person’s health

14. 33 - 14Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Regulation of Cosmetics (2 of 2) The manufacture, distribution, or sale of adulterated or misbranded cosmetics is prohibited The FDA may remove from commerce cosmetics that contain unsubstantiated claims e.g., preserving youth e.g., growing hair

15. 33 - 15Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Regulation of Medicinal Devices Medicinal Device Amendment to the FDCA The Medicinal Device Amendment to the FDCA gives the FDA authority to regulate medicinal devices and equipment The mislabeling of medicinal devices is prohibited “quack” The FDA is empowered to remove “quack” devices from the market

16. 33 - 16Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. United Nations Biosafety Protocol for Genetically Altered Foods 138 countries agreed that all genetically engineered foods would be clearly labeled with the phrase: “May contain living organisms.” The boxes and containers in which such goods are shipped must also be clearly marked as containing genetically altered food products

17. 33 - 17Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Product Safety: Consumer Product Safety Act (CPSA) of 1972 Federal statute that regulates potentially dangerous consumer products Consumer Product Safety Commission (CPSC) Created the Consumer Product Safety Commission (CPSC) Independent federal regulatory agency empowered to: 1.Adopt rules and regulations to interpret and enforce the CPSA 2.Conduct research on safety 3.Collect data regarding injuries

18. 33 - 18Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Lemon Laws Provide a procedure for consumers to follow to correct recurring problems in vehicles Establish an administrative procedure that is less formal than a court proceeding Require that an arbitrator decide the dispute between a consumer and car dealer

19. 33 - 19Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Unfair and Deceptive Practices: Section 5 of the Federal Trade Commission Act Prohibits unfair and deceptive practices including: False and deceptive advertising Bait and switch Abusive sales tactics Consumer fraud

20. 33 - 20Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Door-to-Door Sales Many states have enacted statutes that permit consumers to rescind contracts made at home with door-to-door sales representatives within a three-day period after signing the contract

21. 33 - 21Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Unsolicited Merchandise Postal Reorganization Act Postal Reorganization Act – makes the mailing of unsolicited merchandise an unfair trade practice Persons who receive unsolicited merchandise through the mail may retain, use, discard, or otherwise dispose of the merchandise without incurring any obligation to pay for it or return it

22. 33 - 22Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Environmental Protection: Environmental Protection Agency An administrative agency created by Congress in 1970 to coordinate the implementation and enforcement of the federal environmental protection laws The EPA has broad rule-making powers The EPA has adjudicative powers The EPA can initiate judicial proceedings in court against suspected violators of federal environmental laws An administrative agency created by Congress in 1970 to coordinate the implementation and enforcement of the federal environmental protection laws The EPA has broad rule-making powers The EPA has adjudicative powers The EPA can initiate judicial proceedings in court against suspected violators of federal environmental laws

23. 33 - 23Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Environmental Protection: National Environmental Policy Act (NEPA) A federal statute enacted in 1969 that mandates that the federal government consider the adverse impact a federal government action would have on the environment before the action is implemented Council on Environmental Quality Created the Council on Environmental Quality Does not apply to action by state or local governments or private parties A federal statute enacted in 1969 that mandates that the federal government consider the adverse impact a federal government action would have on the environment before the action is implemented Council on Environmental Quality Created the Council on Environmental Quality Does not apply to action by state or local governments or private parties

24. 33 - 24Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Environmental Impact Statement (EIS) (1 of 2) environmental impact statement (EIS) The NEPA and rules adopted thereunder require that an environmental impact statement (EIS) must be prepared for all proposed legislation or major federal action that significantly affects the quality of the human environment The purpose of the EIS is to provide enough information about the environment to enable the federal government to determine the feasibility of the project

25. 33 - 25Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Environmental Impact Statement (EIS) (2 of 2) The EIS is also used as evidence in court whenever a federal action is challenged as violating the NEPA or other federal protection laws Once an EIS is prepared, it is subject to public review Most states and many local governments have enacted laws that require an EIS to be prepared regarding proposed state and local government action as well as private development

26. 33 - 26Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Air Pollution: Clean Air Act air pollution A federal statute enacted in 1963 to assist states in dealing with air pollution Pollution caused by factories, homes, vehicles, and the like that affects the air Clean Air Act The Clean Air Act, as amended (1970, 1977, 1990), provides comprehensive regulation of air quality in the United States

27. 33 - 27Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. National Ambient Air Quality Standards national ambient air quality standards (NAAQS) The Clean Air Act directs the EPA to establish national ambient air quality standards (NAAQS) for certain pollutants Standards are set at two levels: Primary Primary – to protect human beings Secondary Secondary – to protect vegetation, matter, climate, visibility, and economic values

28. 33 - 28Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Water Pollution (1 of 6) River and Harbor Act of 1886 National Discharge Pollutant Discharge Elimination System (NPDES) of 1972 Federal Water Pollution Control Act (FWPCA) of 1948 (as amended): Clean Water Act of 1972 Clean Water Act of 1977 Clean Water Quality Act of 1987

29. 33 - 29Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Water Pollution (2 of 6) Water pollution Water pollution Pollution of lakes, rivers, oceans, and other bodies of water Point sources of water pollution Point sources of water pollution Sources of water pollution such as paper mills, manufacturing plants, electric utility plants, and sewage plants

30. 33 - 30Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Water Pollution (3 of 6) Thermal pollution Thermal pollution Heated water or material discharged into waterways that upsets the ecological balance and decreases the oxygen content Wetlands Wetlands Areas that are inundated or saturated by surface water or ground water that support vegetation typically adapted for life in such conditions

31. 33 - 31Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Water Pollution (4 of 6) Safe Drinking Water Act of 1972, 1986 Safe Drinking Water Act of 1972, 1986 Authorizes the EPA to establish national primary drinking water standards Prohibits the dumping of wastes into wells used for drinking water The states are primarily responsible for enforcing the act

32. 33 - 32Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Water Pollution (5 of 6) Marine Protection, Research, and Sanctuaries Act of 1972 Marine Protection, Research, and Sanctuaries Act of 1972 Extended environmental protection to the oceans Requires a permit for dumping wastes and other foreign materials into ocean waters Establishes marine sanctuaries in ocean waters and in the Great Lakes and their connecting waters

33. 33 - 33Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Water Pollution (6 of 6) Ocean Dumping Ocean Dumping Marine Protection, Research, and Sanctuaries Act (1972) Marine Protection, Research, and Sanctuaries Act (1972) – extends environmental protection to the oceans Clean Water Act The Clean Water Act authorizes the U.S. government to clean up oil spills and spills of other hazardous substances in ocean waters within 12 miles of the shore and on the continental shelf and to recover the cleanup costs from responsible parties

34. 33 - 34Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Toxic Substances Chemicals used for agricultural, industrial, and mining uses that cause injury to humans, birds, animals, fish, and vegetation Key federal laws: Toxic Substances Control Act of 1976 Toxic Substances Control Act of 1976 Insecticide, Fungicide, and Rodenticide Act of 1947 Insecticide, Fungicide, and Rodenticide Act of 1947 (as amended in 1972)

35. 33 - 35Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Toxic Substances Control Act of 1976 Requires manufacturers and processors to test new chemicals to determine their effect on human health and the environment before the EPA will allow them to be marketed The EPA may limit or prohibit the manufacture and sale of toxic substances, or remove them from commerce, if it finds they pose an imminent hazard or an unreasonable risk of injury to human health or the environment Requires manufacturers and processors to test new chemicals to determine their effect on human health and the environment before the EPA will allow them to be marketed The EPA may limit or prohibit the manufacture and sale of toxic substances, or remove them from commerce, if it finds they pose an imminent hazard or an unreasonable risk of injury to human health or the environment

36. 33 - 36Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Insecticide, Fungicide, and Rodenticide Act of 1947 (as amended) Requires pesticides, herbicides, fungicides, and rodenticides to be registered with the EPA The EPA may deny, suspend, or cancel registration

37. 33 - 37Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Hazardous Waste (1 of 2) Hazardous Waste Hazardous Waste Solid waste that may cause or significantly contribute to an increase in mortality or serious illness or pose a hazard to human health or the environment if improperly managed Land Pollution Land Pollution Pollution of the land that is generally caused by hazardous waste being disposed of in an improper manner

38. 33 - 38Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Hazardous Waste (2 of 2) Resource Conservation and Recovery Act (RCRA) of 1976 Resource Conservation and Recovery Act (RCRA) of 1976 Federal statute that authorizes the EPA to regulate facilities that generate, treat, store, transport, and dispose of hazardous wastes States have primary responsibility for implementing the standards established by the act and EPA regulations

39. 33 - 39Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Comprehensive Environmental Response, Compensation and Liability Act (1980) “Superfund” Commonly called “Superfund” Significantly amended in 1986 Administered by the EPA Gives the federal government a mandate to deal with hazardous wastes that have been spilled, stored, or abandoned

40. 33 - 40Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Superfund (continued) The Superfund requires the EPA to: Identify sites in the U.S. where hazardous wastes have been disposed, stored, abandoned, or spilled, and Rank these sites regarding the severity of risk The hazardous waste sites with the highest ranking are put on a National Priority List The law provides for the creation of a fund to finance the cleanup of hazardous waste sites

41. 33 - 41Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nuclear Waste (1 of 3) Radiation Pollution Radiation Pollution Emissions from radioactive wastes that can cause injury and death to humans and other life and can cause severe damage to the environment Nuclear Waste Policy Act of 1982 Nuclear Waste Policy Act of 1982 A federal statute that says the federal government must select and develop a permanent site for the disposal of nuclear waste

42. 33 - 42Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nuclear Waste (2 of 3) Nuclear Regulatory Commission Nuclear Regulatory Commission Licenses the construction and opening of commercial nuclear power plants Continually monitors the operation of nuclear power plants and may close a plant if safety violations are found

43. 33 - 43Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Nuclear Waste (3 of 3) Environmental Protection Agency (EPA) Environmental Protection Agency (EPA) Empowered to set standards for radioactivity in the environment and to regulate the disposal of radioactive waste Regulates thermal pollution from nuclear power plants Regulates emissions from uranium mines and mills

44. 33 - 44Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Endangered Species Act of 1973 (as amended) endangeredthreatened Protects endangered and threatened species of animals endangered threatened The Secretary of the Interior is empowered to declare a form of wildlife as endangered or threatened critical habitats The Act requires the EPA and the Department of Commerce to designate critical habitats for each endangered and threatened species taking The Act prohibits the taking of any endangered species endangeredthreatened Protects endangered and threatened species of animals endangered threatened The Secretary of the Interior is empowered to declare a form of wildlife as endangered or threatened critical habitats The Act requires the EPA and the Department of Commerce to designate critical habitats for each endangered and threatened species taking The Act prohibits the taking of any endangered species

45. 33 - 45Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. Other Federal Laws That Protect Wildlife: Migratory Bird Treaty Act Bald Eagle Protection Act Wild Free-Roaming Horses and Burros Act Marine Mammal Protection Act Migratory Bird Conservation Act Fishery Conservation and Management Act Fish and Wildlife Coordination Act National Wildlife Refuge System Migratory Bird Treaty Act Bald Eagle Protection Act Wild Free-Roaming Horses and Burros Act Marine Mammal Protection Act Migratory Bird Conservation Act Fishery Conservation and Management Act Fish and Wildlife Coordination Act National Wildlife Refuge System

46. 33 - 46Copyright © 2006 by Pearson Prentice-Hall. All rights reserved. State Environmental Protection Laws Many state and local governments have enacted statutes and ordinances to protect the environment States are entitled to set pollution standards that are stricter than federal requirements