Business Law Notes: Environmental Law


course notes from my core MBA business law class covering environmental law
Subject: Business Law


  • Goals: control industry waste; protect natural resources & endangered species
  • Common law actions can be brought against business firms & individuals for damages caused by polluting activities.
  • Federal statutes & regulations have been created to protect the environment.
  • Injured individuals rely on common law to obtain damages & injunctions against business polluters.

Common law doctrine of nuisance
Persons may be held liable if they use their property in a manner that unreasonably interferes with others’ rights to use or enjoy their own property. Courts attempt to balance the equities between the harm caused by the pollution & the costs of stopping it.

  • A public authority (such as a state’s attorney general) can sue to abate a “public” nuisance. Courts often deny injunctive relief on the ground that the hardships to be imposed on the polluter & on the community are greater than the hardships to be suffered by the plaintiff. For example, a factory that causes neighbors smoke, dirt, & vibrations may be allowed to continue to operate if it is the core of the local economy.
  • Private” Nuisance: A property owner may be given relief from pollution in situations in which he/she can identify a distinct harm separate from that affecting the general public.

Negligence: A business polluter is negligent if the business fails to use reasonable care toward a party whose injury was foreseeable. Businesses in ultra hazardous activities are strictly liable for whatever injuries the activities cause. In a strict liability action, the injured party doesn’t need to prove that the business failed to exercise reasonable care.

Toxic torts: Actions against toxic polluters based on common law theories.

Federal Regulation: Congress has passed a number of statutes to control the impact of human activities on the environment. These include:

  • (CERCLA) Comprehensive Environment Response, Compensation, & Liability Act (a.k.a. Super-fund) (1980): Regulates the clean-up of hazardous waste disposal sites; deals with past toxic sites. (RCRA)
  • Resource Conservation & Recovery Act: Establishes standards for hazardous waste disposal; deals with toxic waste in the present. Uses the same classes & liability as under CERCLA.
  • Liability under CERCLA & RCRA:
    • Joint & Several
    • Strict
    • Retroactive
    • Four classes of Potentially Responsible Parties (PRPs):
      • Generators
      • Transporters
      • Owner / Operator at time of disposal
      • Current Owner / Operator
    • A person who generates only a fraction of hazardous waste disposed at the site may be liable for all of the clean-up costs.
    • Bankruptcy will not necessarily limit environmental liability.
    • Innocent Landowner Defense: Used if “all appropriate inquiry” & due diligence is done at time of purchase.
    • Lender liability: In 1996 CERCLA was amended such that banks are only liable if they participate in the management of the borrower (on toxic land).
    • Trustee Liability: The government can take trust funds under CERCLA. The government can take personal funds only if the trustee is personally negligent. Trustee can be held personally liable beyond the amount of the trust.
  • Clean Air Act (1963)
    • Controls air pollution.
    • Performance standards are based on the best available technology.
    • Designed to protect water, fish, & wildlife from pollution.
    • Prohibits the filling or dredging of wetlands unless a permit is obtained from the Army Corps of Engineers.
  • Water Pollution Control Act: Eliminates discharge of pollutants into water.
  • Endangered Species Act (1973):
    • Protects species threatened by extinction.
  • Other info:
    • Environmental Impact Statement (EIS): Must be prepared for every major federal action that significantly affects the quality of the environment.
    • Environmental Protection Agency (EPA) (1970): Administers most federal environmental policies. The EPA sets two levels – primary & secondary – of ambient standards, but the states formulate plans to achieve those standards
    • Potentially Responsible Parties: generators, transporters, current owners/operator at time of disposal
    • Liability not limited for individuals if they had control over handling & decision-making related to hazardous waste
    • Successor company acquires liability in almost all cases
    • APA – Administrative Procedures Act
    • MACT: Maximum Achievable Control Technology
    • NEPA – National Environmental Policy Act: requires that all agencies of the federal government consider environmental factors when making management decisions
    • CWA—Clean Water Act The EPA promulgates regulations
    • Citizen lawsuits against EPA
      • Case heard by Administrative Law Judge
      • Either side can appeal to court
      • Court may overturn rule only if arbitrary or capricious
    • RCRA—Resource Conservation Recovery Act: cradle to grave disposal of waste

There Are No Comments
Click to Add the First »