Regulation of the Environment
In 1969, Congress enacted the National Environmental Policy Act (NEPA) to establish environmental protection as a goal of federal policy. The NEPA’s declaration of national environmental policy states:
The Congress, recognizing the profound impact of man’s activity on the interrelations of all components of the natural environment, particularly the profound influences of population growth, high-density urbanization, industrial expansion, resource exploitation, and new and expanding technological advances, and recognizing further the critical importance of restoring and maintaining environmental quality to the overall welfare and development of man, declares that it is the continuing policy of the Federal Government, in cooperation with State and local governments … to use all practicable means and measures … in a manner calculated to foster and promote the general welfare, to create and maintain conditions under which man and nature can exist in productive harmony, and fulfill the social economic and other requirements of present and future generations of Americans.
The NEPA has two major substantive sections, one creating the Council on Environmental Quality (CEQ) and the other requiring that each federal agency, when recommending or reporting on proposals for legislation or other major federal action, prepare an environmental impact statement (EIS) if the legislation or federal action will have a significant environmental effect.
The Council on Environmental Quality
The Council on Environmental Quality (CEQ), a three-member advisory group, is not a separate administrative agency but rather is part of the Executive Office of the President; as such, it makes recommendations to the president on environmental matters and prepares annual reports on the condition of the environment. Although not expressly authorized to do so by statute, the CEQ, acting under a series of executive orders, has issued regulations regarding the content and preparation of environmental impact statements. The federal courts generally have deferred to these regulations.
Environmental Impact Statements
Unlike most federal environmental statutes, the NEPA does not focus on a particular type of environmental damage or harmful substance but instead expresses the federal government’s continuing concern with protection of the environment. The NEPA’s promotion of environmental considerations is effected through the EIS requirement.
Procedure for Preparing an EIS: When proposing legislation or considering a major federal action, the CEQ regulations require that a federal agency initially make an “environmental assessment,” which is a short analysis of the need for an EIS. If the agency decides that no EIS is required, it must make this decision available to the public. If, on the other hand, the agency concludes that an EIS is required, the agency must engage in “scoping,” which consists of consulting other relevant federal agencies and the public to determine the significant issues the EIS will address and the statement’s appropriate scope. After scoping, the agency prepares a draft EIS, for which there is a comment period. After the comment period ends and revisions, if necessary, are made, a final EIS is published.
Scope of EIS Requirement : The EIS requirement of the NEPA applies to a broad range of projects: There is “Federal action” within the meaning of the statute not only when an agency proposes to build a facility itself, but also whenever an agency makes a decision which permits action by other parties which will affect the quality of the environment. NEPA’s impact statement procedure has been held to apply where a federal agency approves lease of land to private parties, grants licenses and permits to private parties, a approves and funds state highway projects. In each of these instances the federal agency took action affecting the environment in the sense that the agency made a decision which permitted some other party-private or governmental-to take action affecting the environment.
The NEPA’s EIS requirement applies not only to a broad range of projects but also to a broad range of environmental effects. The NEPA has been held to apply not only to the natural environment but also to the urban environment.
AIR POLLUTION REGULATION
The Clean Air Act of 1963 had not been a very effective Act until 1970 when some substantial amendments were adopted. This was the first legislation which had some authority for federal enforcement. The Environmental Protection Agency (EPA) was authorized to establish air quality standards and the states were required to implement these standards. These standards included such things as controlling the amount of certain substances in the air like carbon monoxide.
The 1977 Amendments to the Clean Air Act gave authority to the EPA to regulate business growth in order to achieve air quality standards. The EPA was given authority to designate nonattainment areas. These would be areas which had significant air quality problems. A new facility can not be built in one of these areas unless the new plant has the greatest possible emission controls.
The Clean Air Act was again substantially amended in 1990. These amendments focused on such things as acid rain, smog, and chemicals that would deplete the ozone layer. Acid rain is rain that has acid in it from coal smoke. Other aspects of these amendments:
- Cities were given deadlines to meet antipollution standards.
- What constituted a source of pollution was tightened up so as to include many small businesses which had not been previously covered such as dry cleaners, paint shops and bakeries.
- Regulations on car emission control systems were tightened.
- Plants that have the potential of being major polluters now have to get operating permits from the EPA and are required to use what is called maximum achievable control technology (MACT) in their operations regarding toxic emissions. This is a standard for controlling air emissions that is stricter that the previous standards.
- This Act carries both civil and criminal penalties.
This Act is administered in Mississippi by the Department of Environmental Quality (DEQ).
WATER POLLUTION REGULATION
The Federal Water Pollution Act of 1972 was the first meaningful and enforceable federal legislation in this area. This Act is now known as the Clean Water Act. Some highlights of this Act:
- Federal standards for discharges by factories into waterways, like rivers, are now enforced on an industry-wide basis.
- The EPA establishes a range of permissible discharge which differs depending on what kind of industry is involved. For example, the ranges for pulp mills are different than those for textile manufacturers.
- A business must obtain a permit from the EPA in order to discharge waste products into a waterway. This does not include discharges into sewer systems. Permits are difficult to obtain. The EPA may require the waste to be treated prior to release.
The Oil Pollution Act of 1990 was passed in response to huge spills like the Exxon Valdez. Pursuant to this Act, companies must either clean up the spill or pay the federal government its costs for the clean-up. This Act applies to all navigable waters up to 200 miles offshore. Those responsible for spills are liable for penalties of up to $25,000 per day or $1,000 per barrel spilled. If negligence or willful misconduct is involved, penalty is increased to $3,000 per day. Failure to report a spill can bring a $250,000 fine for an individual plus imprisonment. Corporations can be fined up to $500,000.
SOLID WASTE DISPOSAL REGULATION
The Toxic Substances Control Act of 1976 was passed by Congress in response to the dumping of chemicals by businesses. Pursuant to this Act, the EPA is authorized to control the manufacture, use, and disposal of toxic substances.
The Resource Conservation and Recovery Act of 1976 (RCRA) regulates the disposal of potentially harmful substances by requiring permits for storage or transfer of these substances. These permits tell the EPA where these substances are located.
The Comprehensive Environmental Response, Compensation, and Liability Act of 1980
(CERCLA) authorizes the President to issue funds for the cleanup of areas that were once disposal sites for hazardous wastes. The funds are held in a trust fund often called the Superfund. If funds are expended from the trust fund to clean up a site, the company can be sued by the EPA for money to reimburse the fund. Seven hundred hazardous substances are now covered.
CERCLA is triggered when a hazardous substance has been spilled, leaked, pumped, poured, discharged, dumped, or disposed into the environment from a facility. A facility includes a building, structure, equipment, pipe, well, storage container or motor vehicle. CERCLA places liability on past and present owners and operators of a facility and transporters of a hazardous substance to a facility. To prove liability under CERCLA, a plaintiff seeking to recover clean-up costs only needs to prove that the site is a facility, that the defendant is a responsible party, that a release or threatened release of a hazardous substance has occurred, and that the release or threatened release caused the plaintiff to incur costs in response to the release or threatened release. Negligence of the plaintiff does not have to be proven.
A current property owner is liable under CERCLA, even though the owner did not contribute to the pollution. Prior owners are liable under CERCLA if they owned the site at the time of the disposal of the hazardous substance.
CERCLA does provide some defenses to a suit for cost recovery. The third party defense allows a defendant to avoid liability for releases caused solely by the act or omission of a third party unless the third party is an employee or agent of the defendant or where the act or omission occurs in connection with some sort of contractual relationship between the third party and the defendant.
Another defense is the innocent landowner defense. CERCLA was amended by the Superfund Amendments and Reauthorization Act of 1986 (SARA). SARA defines the term contractual relationship to include a land transfer or deed unless the defendant acquired the property in question after the disposal or placement of the hazardous substance on, in, or at the facility. To take advantage of this defense, a property owner must establish either that when it acquired the property it did not know and had no reason to know that any hazardous substance had been disposed of on the land, or that it acquired the land by inheritance or bequest. To establish that he did not know or have reason to know, the landowner must show that at the time of acquisition, he made an appropriate investigation into the previous ownership and uses of the property. A relative high standard of investigation is required in commercial transactions.
STATE ENVIRONMENTAL LAWS
Not only must businesses be aware of federal environmental laws, individual states have their own set of environmental laws. In an article in the July/August issue of The Mississippi Lawyer entitled Environmental Law and Property Rights: Lurking Danger, the authors demonstrate how Mississippi environmental laws and federal environmental laws can affect even a small family business. The following is a hypothetical fact situation prepared by the authors of the article which is based in part on an actual case.
Assume that a small family business began in a fairly populated rural area several years ago in a small shop making barbecue grills. Due to the reputation of the quality of the product, the business grew, thus requiring the business to construct a metal building with a concrete floor. The building was solely used for the manufacture of barbecue grills. The manufacture process was simple and included punching, forming, and welding metal. The grills were painted in paint booths, dried off and then packed for delivery. As the business continued to grow, the owners constructed electrostatic spray paint booths, an oven booth and a cleaning furnace. A natural gas boiler was also installed as a heat and energy source. The building had to be enlarged to accommodate the additional spray booths. Debris from construction was disposed of in the back of the property in a waste pile. At times it was necessary to wash out the building, and the wastewater ran into a ditch by the building. The ditch eventually ran into a creek.
Eventually, a manufacturer of barbecue grills learned of the quality production of the family business and approaches the owners about buying them out. A site inspection does not reveal any possible contamination of the property. However, the day before the purchase is made, the manufacturer learns that the family business has never held any environmental permits. The owners are surprised to learn that a small family business like theirs would need any environmental permits.
What permits should the owners have obtained, and what is the exposure of the manufacturer in purchasing this business? The business should have obtained an air permit in accordance with section 49-17-29 of the Mississippi Code. The statute states that it is unlawful for any person to build, erect, alter, replace, use or operate any equipment which will cause the issuance of air contaminants unless that person holds a permit from the Permit Board. This statute requires two air permits, a permit to construct equipment which will emit air emissions and a permit to operate the equipment. The operation of the spray paint booth and the natural gas boiler are emission points which require a permit to construct prior to construction and a permit to operate the equipment.
The Permit Regulations for the Construction and Operation of Air Emissions Equipment contain criteria regarding where the equipment should be located. The air emissions equipment should have been located at least 150 feet from the nearest residential or recreational area. Other buffer zones are also described in the regulations.
The business also should have complied with the federal Clean Air Act which could require additional permit limitations. This Act is administered by the Mississippi Department of Environmental Quality (DEQ). Paints, in general, contain styrenes, xylenes, toulene, and formaldehyde. These compounds are classified as hazardous air pollutants which, when emitted in sufficient quantities, trigger many complex regulatory air controls.
The company should have obtained a permit to discharge wastewater. Section 49-17-29 of the Mississippi Code requires a permit for the discharge of any wastewater into waters of the state. The federal Clean Water Act and the National Pollutant Discharge Elimination System (NPDES), which is also administered by DEQ, requires a permit for discharges of wastewater from a point source. The wastewater discharge in our hypothetical business involved a point source. The industrial waste permit required by the NPDES would have included limits on the contaminants in the wastewater, monitoring, sampling, and record keeping to protect the water quality of the stream receiving the wastewater.
The business should have obtained a rubbish general permit for onsite disposal of rubbish. Section 17-17-27 of the Mississippi Code states that no person shall construct, substantially alter or operate any solid waste treatment or disposal . . . site . . . without first obtaining a permit from the Permit Board. The Nonhazardous Waste Management Regulations set forth all requirements for general permits for solid waste disposal, including rubbish facilities.
If the manufacturer acquires the business and continues operations, it assuming the risk of the imposition of civil penalties from the state Commission on Environmental Quality. The potential violations include:
- failure to obtain a state air construction permit;
- failure to obtain an operating permit as required by state law and the federal Clean Air Act;
- discharging wastewater into waters of the state without a permit as required by state law and the federal Clean Water Act;
- unlawful disposal of solid waste, and
- operating a solid waste disposal site without a permit as required by state law.
The Commission on Environmental Quality is authorized to assess penalties of $25,000.00 per day, per violation. The Commission can also issue a cease and desist order requiring the company to cease all operations until the facility is brought into compliance with applicable environment requirements.
A purchaser of an existing company that holds all required permits must also be aware of the requirements regarding the transfer of permits. The state Permit Board is the exclusive authority regarding permit decisions, including the transfer of permits from one business to another. Transfer of a permit is not automatic. The Permit Board has often requested that an applicant submit information to show that it has the financial resources, operational expertise and environmental compliance history over the last five years to insure compliance with the terms and conditions of the permit to be transferred. A purchaser of a company that does not comply with the transfer requirement would be subject to civil penalties for operating without a permit.
While the above hypothetical includes some of the environmental permits required by federal and state law, it does not include all permits that may be required in any given situation. Prior to purchasing any existing company or developing a new business, environmental laws should be considered.
Environmental Law Overview and Information
The National Environmental Policy Act (NEPA) was passed in 1970 along with the Environmental Quality Improvement Act, the Environmental Education Act, and the Environmental Protection Agency (EPA). The main objective of these federal enactments was to assure that the environment be protected against both public and private actions that have resulted in costs or harms inflicted on the ecosystem.
The EPA was created to monitor and analyze the environment, conduct research, and work closely with state and local governments to devise pollution control policies. NEPA has been described as one of Congress’s most extensive pieces of environmental legislation ever passed. The basic purpose of NEPA is to force governmental agencies to evaluate the impact of their decisions on the environment.
State laws also similarly provide for actions in nuisance to allow adversely affected property owners to seek a judicial remedy for environmental harms.
Some of the areas litigated under environmental laws include groundwater and drinking water contamination, Brownfields (the redevelopment of contaminated properties), Superfund cases, permitting and compliance matters (including governmental agency challenges), hazardous substance discharges, wetlands, CAFRA, regulatory “takings” matters, and toxic torts.
Attorneys who practice in the area of environmental law handle matters such as regulatory compliance and permitting, representation during civil or criminal enforcement actions, counseling on air and water quality regulations, toxic tort litigation, etc. Some of the issues handled also include emissions trading by manufacturers and “sick building syndrome” claims, among others.