22.6: Environmental Law
Federal and state governments have passed environmental laws to limit pollution and protect the health and welfare of the public. Although most people are supportive of these laws in theory, the practical implementation of them has been controversial. Underlying the political debate is the question, how should the law balance the costs and benefits of environmental decisions?
Clean Air Act
In 1963, Congress passed the Clean Air Act to regulate air pollution. Under the Clean Air Act, the Environmental Protection Agency (EPA) has the authority to regulate both the total amount of existing air pollution and its ongoing production. The Clean Air Act was passed to address concerns of global warming and acid rain.
Figure 22.6 EPA Seal
The Clean Air Act requires the EPA to set national air quality standards that protect public health and provide an adequate margin of safety without regard to cost and to implement them if appropriate and necessary. This “without regard to cost” directive has been heavily litigated. In 2015, the US Supreme Court ruled that the EPA must consider costs as part of its analysis of whether the standards are “appropriate” and necessary. In other words, a regulation is not “appropriate” if it does more harm than good.
The Clean Air Act is a federal law that is implemented through the states. After the EPA sets air quality standards, states must enforce them. States may implement more stringent air quality standards than the EPA requires, but they cannot do less. Therefore, businesses must comply with both state and federal agencies to ensure their compliance with the Clean Air Act.
A controversial aspect of the Clean Air Act is that it allows for trading of credits. For example, a manufacturer who removes more carbon monoxide than necessary from its emissions is given a “credit” from the EPA. These credits can then be sold to another manufacturer that does not remove enough to be compliant with the law. The rationale is that credits make it profitable for manufacturers to invest in technology that pollutes less than is legally required. By giving a market incentive to industries to protect the environment, there will be less need for governmental enforcement.
The Clean Air Act imposes daily fines for emission violations, as well as punitive damages and criminal liability for corporate officers who knowingly and willfully violate the law. As a result, the Clean Air Act is a law that manufacturers must take seriously.
Figure 22.7 Common Air Pollutants
Clean Water Act
Congress passed the Clean Water Act in 1972 to regulate water quality of navigable waters. Similar to the Clean Air Act, the EPA sets standards that are enforced by the states. The intent of the Clean Water Act is to keep water clean for recreational use and to protect fish and wildlife. It requires a discharge permit to release waste into navigable water.
Figure 22.8 Photo of discharge of industrial waste into river
The EPA sets limits, by industry, on the amount of each type of pollution that can be discharged in a given area, as well as the type of technology that can be used to treat water. As a result, the two biggest issues when enforcing the Clean Water Act are (1) is the waterway navigable? and (2) what is the best available technology that each industry can use to reduce pollution. Both issues are heavily litigated.
The Clean Water Act also requires the EPA to set national standards for water quality in general. It is worth noting that water quality standards vary depending on the use of the water. Water quality for drinking is the highest, with wildlife and recreation higher than irrigation and industry. As a result, even businesses that are not discharging waste into navigable waterways are subject to EPA standards of water quality on their premises. For example, a retailer must comply with water quality requirements in its drinking fountains and bathrooms.
Like the Clean Air Act, the Clean Water Act imposes daily fines for emission violations, as well as punitive damages and criminal liability for corporate officers who knowingly and willfully violate the law.
Waste Disposal
Waste disposal, especially of chemicals, has been an area of increased regulation over the past decades. The disposal of ordinary garbage is primarily regulated by the states. However, the federal government sets minimum standards for landfills and regulates how states manage garbage. Most of these regulations are “invisible” to businesses and individuals.
Figure 22.9 Improper Toxic Waste Disposal
Toxic waste, on the other hand, directly impacts manufacturers. In 1976 Congress passed several laws to address the problem of industrial waste and toxic waste. Toxic waste is hazardous or poisonous substances that cause an increase in the death rate or serious irreversible illnesses. Toxic waste includes arsenic, asbestos, clinical waste (i.e. syringes), cyanide, lead, and mercury. Many of these chemicals are found in batteries, electronics, and household cleaners. Manufacturers have a “cradle to grave” responsibility for all hazardous and toxic waste. This means that hazardous waste must be (1) tracked from creation to final disposal and (2) disposed of at a certified facility.
To clean up hazardous waste that was illegally dumped in the past, Congress passed the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), which is popularly known as “Superfund.” The philosophy of Superfund is that the polluter pays. Therefore, former and current owners of a site on which hazardous waste is found or who transported waste to the site are strictly liable for remediation of the land. The law has an exception for innocent landowners who unknowingly purchased the land. However, that exception is narrowly applied.
Environmental Impact Statements
The National Environmental Policy Act (NEPA) requires all federal agencies to prepare an environmental impact statement (EIS) for every major federal action that significantly affects the quality of the human environment. An EIS is required not only for actions by the federal government, but also activities regulated or approved by the government. Therefore, private businesses that need federal approval to open or expand their operations are subject to this requirement. For example, an EIS was needed before expanding the Snowmass ski area in Aspen because the US Forest Service was required to approve the expansion.
An EIS must include:
- A description of the environmental impact of the proposed action;
- An estimate of the energy requirements for the project;
- A description of potential adverse effects on the urban quality, including historic and cultural resources;
- Identification of the short-term and long-term impact on the environment;
- A description of any irreversible impact on the environment;
- A plan of how to mitigate any adverse environmental impact; and
- A discussion of possible alternatives.
The process of preparing an EIS can be long and expensive. After an EIS is written, the federal agency must allow for public comments and hold a hearing. Therefore, a private business may have its EIS scrutinized and commented on by interest groups and competitors before receiving federal approval. There is also a risk to the business that the government agency denies the business’s request based on public comments and concerns.