Environmental Regulation and Sustainability &&&& Contracts and Sales: Introduction, Formation, and Consumer Protection

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Chapter10-EnvironmentalRegulationandSustainability..pptx

Chapter 10 Environmental Regulation and Sustainability

Its Legal, Ethical, and Global Environment

Marianne M. Jennings

Business

11th Ed.

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10-1

Nuisances

Interference with use and enjoyment

Damages and injunction possible

Balancing test employed

Case 10.1 Spur Industries, Inc. v. Del E. Webb Dev. Co. (1972)

What is “moving to the nuisance”?

Who wins? Who pays?

Common Law Remedies

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10-2

Air Pollution Regulation

Air Pollution Control Act (1955)

Clean Air Act (1963)

Air Quality Act (1977/1990)

Statutory Environmental Laws

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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

Clean Air Act Amendments of 1977

Non-attainment areas

Prevention of significant deterioration (PSD) areas

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Statutory Environmental Laws

Economic Controls for Nonattainment 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

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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

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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) (Michigan v. EPA)

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Statutory Environmental Laws

New Forms of Control: Administrative Regulation Expansion

Emissions offset policy

Bubble concept

Plant modification (Environmental Defense v. Duke Energy)

Clean Power Plan and the ultra vires challenge

Upwind and downwind liability

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Statutory Environmental Laws

Clean Power Plan and the ultra vires challenge

Upwind and downwind liability

Transport Rule under challenge

Climate Change/Global Warming

Paris Accord 2015

10-8

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10-9

Statutory Environmental Laws

1990 Amendments to Clean Air Act

Affected small businesses such as dry cleaners, paint shops, and bakeries

Created emissions permit market

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10-10

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 1899

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

Statutory Environmental Laws

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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

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Statutory Environmental Laws

Effluent guidelines

Conventional; Nonconventional; Toxic

National Pollution Discharge Elimination Permit (NPDES)

Best Conventional Treatment (BCT)

Best Available Treatment (BAT)

Cost-benefit analysis is required (Entergy Corporation v. Riverkeeper, Inc.)

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Other Water 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

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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

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Superfund

“SUPERFUND”: Comprehensive Environmental Response, Compensation, & Liability Act (CERCLA)

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

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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

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Four Classes 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

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Case 10.2

Case 10.2 Burlington Northern Railway/Shell Oil Co. v. U.S. (2009)

What is the meaning of “arranger” for purposes of CERCLA liability?

What is the basis for allocation of liability for CERCLA clean-ups?

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10-19

Due Diligence and EPA Standards

“All appropriate inquiries” pursuant to CERCLA section 101(35)(B) must be conducted within one year prior to the date of acquisition of the subject property and must include:

(1) An inquiry by an environmental professional as defined in §312.10, as provided in §312.21;

(2) The collection of information pursuant to §312.22 by persons identified under §312.1(b); and

(3) Searches for recorded environmental cleanup liens, as required in §312.25

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10-20

Due Diligence and EPA Standards

The following components of the all appropriate inquiries must be conducted or updated within 180 days of and prior to the date of acquisition of the subject property:

Interviews with past and present owners, operators, and occupants (see §312.23);

Searches for recorded environmental cleanup liens (see §312.25);

Reviews of federal, tribal, state, and local government records (see §312.26);

Visual inspections of the facility and of adjoining properties (see §312.23); and

The declaration by the environmental professional (see §312.21(d))

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10-21

Guidelines for Self-Audits

The violations were uncovered as part of a self-audit or due diligence done on property

The violations were uncovered voluntarily

The violations were reported to the EPA within 10 days

The violations were discovered independently and disclosed independently, not because someone else was reporting or threatening to report

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Guidelines for Self-Audits

There is correction of the violations within 60 days

There is a written agreement that the conduct will not recur

There can be no repeat violations or patterns of violations

There is no serious harm to anyone as a result of the violation

The company cooperates completely with the EPA

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10-23

Brownfield Issues

Many CERCLA Sites That are Abandoned and/or Unused (Brownfields)

Fear of Liability Precludes Development and Use

Cost of Cleanup is Prohibitive For Projects

Federal, State, and Local Programs to Encourage Redevelopment

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10-24

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

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Environmental Quality

Case 10.3 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?

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Other Regulations

Surface Mining and Reclamation Act of 1977 requires mining company to restore land

The Fracking Issue

Noise Control Act of 1972; EPA and FAA regulate noise pollution for aircraft

Pesticide Control Act

Must register with EPA to ship

Must label all pesticides

OSHA

Responsible for work place environment and safety issues

Other Environmental Laws

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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 Environmental Laws

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Case 10.4 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?

Endangered Species

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State Environmental Laws

State EPA

Regulation of fuel used

Incentives for carpooling

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Enforcement

Parties

Environmental Protection Agency (EPA)

Council on Environmental Quality (CEQ)

Part of executive branch

Sets national policies and makes recommendations

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Parties

Other agencies

Atomic Energy Commission

Federal Power Commission

HUD

Department of Interior

Forest Service

Bureau of Land Management

Department of Commerce

Enforcement

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Criminal Sanctions

Clean Air Act

$25,000 per day, up to one year in prison, or both

15 years for willful or repeat violations

$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

$250,000 and/or fifteen years for intentional

Enforcement

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Criminal Sanctions

Oil Pollution Act

$25,000 per day or $1,000 per barrel

$3,000 per barrel if willful or negligent

$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

Enforcement

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Case 10.5 U.S. v. Citgo Petroleum Corp. (2015)

Did Congress intend to prosecute the failure to take action to protect birds and other species from injury?

Is there strict liability when animals are injured or killed by conditions on private property?

Enforcement

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EU Has European Environment Agency

ISO 14000

LEED Certification

International Issues

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Eco-Audit Stickers

Shows products environmental impact

International Organization for Standardization (ISO) developed ISO 14000, a series of environmental standards

Companies seek ISO 14000 certification

International Issues

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BP and the Troubling History on Budget Cuts

Texas City Refinery

15 deaths; 170 workers injured

4,000 suits totaling $2.1 billion in damages

OSHA found 271 safety violations at the plant; they were not addressed prior to the explosion; post-explosion, 439 “willful and egregious violations”

$87 million OSHA fine (4X the last largest fine)

$50 million fine to EPA

Prudhoe Bay Pipeline Burst: No Smart-Pigging

10-37

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Findings on BP Atlantis Problems

“Put off repairing the pump in the context of a tight cost budget.”

“Leadership did not clearly question the safety impact of the delay in repair.”

Employee safety officer: “You only ever got questioned on why you couldn’t spend less.”

10-38

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BP Headlines

“BP Crew Focused on Costs” Wall Street Journal, June 15, 2010, p. A1.

“Unusual Decisions Set Stage for BP Disaster,” Wall Street Journal, May 27, 2010, p. A1.

“Oil Execs: BP Didn’t Meet Standards,” USA Today, June 16, 2010, p. 1B.

“Members of Past Disaster Panels See Recurring Pattern,” Wall Street Journal, June 16, 2010, p. A4.

“The Five Shortcuts That Prioritized Time and Money Over Safety,” Wall Street Journal, June 16, 2010, p. A4.

“BP Chose Riskier of Two Options for Well Casing,” Wall Street Journal, May 27, 2010, p. A1.

“Safety and Cost Drives Clashed As CEO Hayward Remade BP,” Wall Street Journal, June 30, 2010, p. A1.

“BP Relied on Cheaper Wells,” Wall Street Journal, June 19-20, 2010, p. A1.

10-39

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