CHAPTER 15 – ADMINISTRATIVE LAW, CONSUMER, INVESTOR,
AND ENVIRONMENTAL PROTECTION
A.
Chapter Introduction
Chapter 15 introduces the concepts of laws designed to protect consumer and the
environment. Agencies and laws that regulate food, drugs, and cosmetics are discussed,
as are agencies and laws that regulate the air, water, endangered species, and the
collection and disposal of hazardous wastes.
After completion of this chapter, students should be able to:
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B.
Describe government regulation.
Describe government regulation of food additives, drugs, cosmetics, and
medicinal devices.
Explain the coverage of consumer product safety acts.
Identify unfair and deceptive practices that violate Section 5 of the Federal
Trade Commission Act.
Describe an environmental impact statement and identify when one is
needed.
Describe the national ambient air quality standards required by the Clean
Air Act.
Describe the effluent water standards required by the Clean Water Act.
Explain how environmental laws regulate the storage, transport, and
disposal of hazardous wastes.
Describe the government’s authority to recover the cost of cleaning up
hazardous waste sites pursuant to the Superfund law.
Describe how the Endangered Species Act protects endangered and
threatened species and their habitats.
Instructional Ideas
1.
For class discussion purposes, explain what “Made in America” means.
Then ask the class whether it matters that products are made in America.
This might provide an interesting insight into the students’ views on
protectionism.
2.
Explain the role of the Food and Drug Administration and its regulation
of food, drugs, and cosmetics. You might want to find some recent news
articles on the controversy of the vitamin and supplement industry and the
drug makers’ desire that vitamins and supplements be regulated as if they
were drugs. Assign students to go to a health food store and ask an
employee what the olive leaf extract really does or what benefits come
from taking any other of the health remedies. This might get the students
thinking about the role of the government in regulating foods and drugs
and whether supplements should be considered drugs by the FDA.
3.
Look for some news articles on toys or other products that the Consumer
Product Safety Commission has declared to be dangerous. This might
help the students understand what role these agencies have in regulating
American life.
C.
4.
Discuss the role of the Federal Trade Commission. Specifically, explain
what constitutes a false and deceptive advertisement. Ask the class
whether they have seen ads in print or on television that seem to be false.
The airways and Internet have been cluttered with ads and infomercials
for pills that guarantee to make you shrink in certain areas, and pills that
guarantee to make you grow in certain areas. Are those false and
deceptive?
5.
Bring in some newspaper advertisements for mortgages, home equity
loans, home equity lines of credit, and car loans. Ask the class to see how
the Truth-In-Lending Act is being followed or disregarded.
6.
Explain the role of the EPA in American life.
7.
Distinguish between the major federal statutes that regulate air pollution
and water pollution.
8.
Explain what makes an animal an endangered species, and what
consequences flow from that designation by the EPA.
9.
Explain the significance of the Comprehensive Environmental Response,
Compensation, and Liability Act (Superfund). Explain what makes
something a hazardous waste. More importantly, show the chain of
liability for Superfund cleanup costs and how someone could be liable
without fault.
Video Recommendation(s)
Insight Media has a video series entitled Landmark Consumer Rights Trials that would be
great for this chapter. The series consists of five, 50-minute videos: Tobacco on Trial,
Prozac on Trial, Silicon Implants on Trial, Automobile on Trial, and A Hospital on Trial.
Erin Brockovich would be a strong candidate for this chapter. In addition to its stylized
portrayal of a self-made paralegal with some less than honorable ways of getting
information, the case on which she is working for her boss is the Pacific Gas & Electrictoxic pollution case brought by the people of Hinkley, California.
A Civil Action, recommended earlier for Chapter 3, is strongly recommended here. Not
only is it a strong movie, but it, more than Erin Brockovich, focuses on the litigation
against the corporate conglomerates accused of poisoning the water near Boston.
D.
Chapter Outline
I.
Government Regulations
A. Government Regulation of Business
1. General government regulation. Government regulation that
applies to many industries (e.g. , antidiscrimination laws).
2. Specific government regulation. Government regulation that
applies to a specific industry (e.g., banking laws).
II.
Foods, Drugs, and Cosmetics
A. Federal Food, Drug, and Cosmetic Act (FDCA): Federal statute
that regulates the testing, manufacture, distribution, and sale of foods,
food additives, drugs, cosmetics, and medicinal products.
B. Required FDA Approval:
1. Federal Food and Drug Administration (FDA). Federal
administrative agency empowered to interpret and enforce the
Federal Food, Drug, and Cosmetic Act and other federal consumer
protection laws.
2. Powers of the FDA. The FDA has the power to approve or deny
applications by private companies to distribute drugs, food
additives, and medicinal devices to the public.
C. Regulation of Food, Drugs, and Cosmetics: Adulterated food. The
FDA prohibits the shipment, distribution, or sale of adulterated or
misbranded food, drugs, cosmetics, or medicinal devices.
III.
Product Safety
A. Consumer Product Safety Act (CPSA): Federal statute that
regulates the safety of consumer products. It created the Consumer
Product Safety Commission.
1. Consumer Product Safety Commission (CPSC): Federal
administrative agency that is empowered to:
a. interpret and enforce the Consumer Product Safety Act,
b. conduct research on safety, and
c. collect data regarding injuries.
IV.
Unfair and Deceptive Practices
A. Section 5 of the Federal Trade Commission Act (FTC Act):
Federal Statute that prohibits unfair and deceptive practices, including
false and deceptive advertising, abusive sales tactics, consumer fraud,
and other unfair business practices.
Federal Trade Commission (FTC). Federal administrative agency
that is empowered to enforce the Federal Trade Commission Act and
other federal consumer protection statutes.
B. Truth-In-Lending Act (TILA): Federal statute that requires
creditors to make certain disclosures to consumer-debtors in most
consumer credit transactions. It mandates disclosure of a single-figure
annual percentage rate (APR).
Regulation Z. Regulation adopted by the Federal Reserve Board to
enforce and interpret the TILA.
V.
Environmental Protection
A. Environmental Protection: Environmental protection laws are
federal and state statutes designed to control pollution and to penalize
those who violate these statutes.
B. The Environmental Protection Agency (EPA): Federal
administrative agency created in 1970 that is empowered to implement
and enforce federal environmental protection statutes. The EPA can
adopt regulations to interpret and enforce the laws it is authorized to
administer.
C. National Environmental Policy Act (NEPA): Federal statute that
mandates that the federal government consider the adverse impact a
federal government action would have on the environment before the
action is implemented.
D. Environmental Impact Statement (EIS): A document that must be
prepared for all proposed legislation or major federal action that
significantly affects the quality of the human environment. The EIS
must:
1) describe the affected environment,
2) describe the impact of the proposed federal actions on the
environment,
3) identify and discuss alternatives to the proposed action,
4) list the resources that will be committed to the action, and
5) contain a cost-benefit analysis of the proposed action and
alternative actions.
VI.
Air Pollution
A. Air Pollution: Pollution caused by factories, homes, vehicles, and the
like that affects the air.
B. Clean Air Act: Federal statute, enacted in 1963 and amended several
times, that regulates air pollution.
C. National Ambient Air Quality Standards (NAAQS): Standards for
certain pollutants set by the EPA that protect (1) human beings
(primary) and (2) vegetation, matter, climate, visibility, and economic
values (secondary).
D. Stationary Sources of Air Pollution: Sources of air pollution such as
industrial plants, oil refineries, and public utilities.
1. Pollution controller. Stationary sources are required to install
pollution control equipment.
E. Mobile Sources of Air Pollution: Sources of air pollution such as
automobiles, trucks, buses, motorcycles, and airplanes.
1. Pollution controls. The Clean Air Act requires air pollution to
controls to be installed on automobiles and other sources of mobile
air pollution.
VII.
Water Pollution
A. Water Pollution: Pollution of lakes, rivers, oceans, and other bodies
of water.
1. River and Harbor Act of 1886. Established a permit system for
the discharge of refuse, wastes, and sewage into U.S. navigable
waters.
B. Clean Water Act: Federal Water Pollution Control Act (FWCPA) of
1948. Federal statute that regulates water pollution. As amended,
called the Clean Water Act.
C. Point Sources of Water Pollution: Sources of water pollution such
as paper mills, manufacturing plants, electric utility plants, and sewage
plants.
1. Pollution controls. Point sources are required to install pollution
control equipment.
D. Thermal Pollution.Heated water or material discharged into
waterways that upsets the ecological balance and decreases the oxygen
content. Thermal pollution is subject to the provisions of the Clean
Water Act.
E. Wetlands: Areas that are inundated or saturated by surface or
groundwater that support vegetation typically adapted for life in such
conditions. The Clean Water Act forbids the filling or dredging of
wetlands unless a permit has been obtained from the Army Corps of
Engineers.
F. Safe Drinking Water: The Safe Drinking Water Act of 1974
authorizes the EPA to establish national minimum quality of water
standards for human consumption. States are primarily responsible for
enforcing the act. If a state fails to do so, the federal government can
enforce the act.
G. Oil Spills: 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. The
act authorizes the federal government to recover the cleanup costs from
responsible parties.
VIII. Hazardous Waste
A. 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.
B. Resource Conservation and Recovery Act: Federal statute that
authorizes the EPA to regulate facilities that generate, treat, store,
transport, and dispose of hazardous wastes.
IX.
Comprehensive Environmental Response, Compensation, and
Liability Act (Superfund)
A. Federal statute that gives the federal government a mandate to deal
with hazardous wastes that have been spilled, stored, or abandoned.
This act is commonly called “Superfund.”
1. Hazardous waste sites. CERCLA requires the EPA to identify
sites in the United States where hazardous wastes have been
disposed, stored, spilled, or abandoned, and to rank these sites
regarding the severity of the risk. The EPA has identified more
than 25,000 hazardous waste sites.
2. Superfund. CERCLA created a fund to finance the cleanup of
hazardous waste sites (hence, the name Superfund). The fund is
financed through taxes on chemicals, feedstocks, motor fuels, and
other products that contain hazardous substances.
3. Liability for cleanup costs. The EPA can order a responsible
party to clean up a hazardous waste site. If that party fails to do so,
the EPA can clean up the site and recover the cost of the cleanup
from the responsible parties. Superfund imposes strict liability
(liability without fault). Liability is joint and several (i.e., a party
who is only partially responsible may be liable for all the cleanup
costs).
4. Right to know provision. A provision in Superfund that requires
businesses to (1) disclose the presence of certain listed chemicals
to the community, (2) annually disclose emissions of chemical
substances released into the environment, and (3) immediately
notify the government of spills, accidents, and other emergencies
involving hazardous substances.
X.
The Endangered Species Act
A. Endangered Species Act: Federal statute that protects endangered
and threatened species of animals.
1. Critical habitat. The act requires the EPA to designate critical
habits for each endangered and threatened species.
2. Taking. The act prohibits the taking (e.g., hunting, trapping,
harming) of any endangered species.
XI.
State Environmental Protection Laws
A. State Environmental Protection Laws: Many state and local
governments have enacted statutes and ordinances to protect the
environment. States and local governments are entitled to set
pollution control standards that are stricter than federal requirements.
E.
Critical Legal Thinking Questions
1.
Describe the difference between general government regulation and
specific government regulation.
General government regulation is that which applies to many businesses
and industries collectively, such as the regulation conducted by OSHA.
Specific regulation, on the other hand, occurs when certain agencies are
empowered to regulate certain industries, such as the FAA’s regulation of
commercial airlines.
2.
Describe the federal government regulation of foods, drugs, and
cosmetics. Does this regulation serve a useful purpose?
Food, drugs, and cosmetics are regulated by the Food and Drug
Administration (FDA), which is empowered by the Food, Drug, and
Cosmetic Act. Included in the FDA’s powers is the right to approve or
disapprove certain food additives, drugs, cosmetics, and medicinal
devices before being sold to the public. One could readily say that the
government’s regulation of these products serve a useful purpose of
consumer safety.
3.
What does the United Nations Biosafety Protocol for Genetically
Altered Foods provide? Do you think this protocol is necessary?
This protocol provides that the 138 countries who were party to the
agreement would require all genetically engineered foods to be clearly
labeled with the phrase, “May contain living modified organisms.” Also,
the boxes and containers in which such goods are shipped must be clearly
marked as containing genetically altered food products. Whether this
protocol is necessary is an opinion question, designed to stimulate thought
on how much value there are in international, commercial agreements.
4.
What does the Consumer Product Safety Act regulate? Does this
regulation serve a useful purpose?
The CPSA creates the CPSC, an independent federal regulatory agency
empowered to adopt rules and regulations to interpret and enforce the
CPSA, conduct research on the safety of consumer products, and collect
data regarding injuries caused by consumer products. Whether this
regulation serves a useful purpose is an opinion question logically
connected to the follow-up question: how useful a purpose is this
regulation?
5.
Define an unfair and deceptive practice prohibited by Section 5 of the
Federal Trade Commission Act. What is a bait and switch?
One unfair and deceptive practice prohibited by Section 5 is advertising
that contains misinformation or omits important information that is likely
to mislead a reasonable consumer or makes an unsubstantiated claim. A
bait and switch occurs when a seller advertises the availability of a lowcost discounted item (the “bait”) to attract customers to its store. Once the
customers are in the store, however, the seller pressures them to purchase
more expensive merchandise (the “switch”).
6.
What does the Truth-In-Lending Act provide? Do you think this law
is necessary?
The Truth-In-Lending Act requires creditors to make certain disclosures
to debtors in consumer transactions that do not exceed $25,000 and real
estate loans of any amount on the debtor’s home. Those disclosures
include the APR, charges not included in the finance charge, the total
dollar amount financed, specific information on the number and due dates
of payments, penalties for late payments, and prepayment penalties.
Whether this law is necessary is technically an opinion question, but one
could readily say that it is, considering how many consumers are confused
by the minutiae associated with borrowing money.
7.
What is air pollution? Do you think current federal and state laws
are doing enough to regulate air pollution?
Air pollution is any substance that enters the air and negatively affects the
air quality. Air pollution is most often invisible and odorless and is
caused by mobile sources (automobiles) and stationary sources
(households). Whether there is enough being done by government to
regulate air pollution is an opinion question. An equally valid question is
whether too much is being done to regulate air pollution.
8.
What is water pollution? As you think current federal and state laws
are doing enough to regulate water pollution?
Water pollution is any substance that enters the waterways and negatively
affects the water quality. Water pollution can include water pollution
caused by point sources (mines, or sewage plants). It can include thermal
pollution, the discharge of heated waters or materials into the nation’s
waterways, as well as oil spills. [See the above question for the opinion
portion of this question.]
9.
What does the Superfund Act provide? What is the public policy
behind this act?
Superfund, the Comprehensive Environmental Response, Compensation,
and Liability Act (CERCLA) requires the EPA to identify sites in the U.S.
where hazardous wastes had been disposed, stored, abandoned, or spilled,
and rank these sites regarding the severity of the risk. It also provides for
the creation of a fund to finance the cleanup of hazardous waste sites,
financed through taxes. The EPA can order responsible parties to clean
up a hazardous waste site or pay for the costs of cleaning up a site. The
public policy behind the Superfund is self-evident: hazardous sites are
bad for us all, and cleaning them up is good.
10.
Describe the protection afforded by the Endangered Species Act?
What are the arguments for and against this Act?
The Endangered Species Act protects endangered and threatened species
of animals. The Secretary of the Interior is empowered to declare a form
of wildlife endangered or threatened and then act to enforce these
declarations. The Endangered Species Act also prohibits the taking of any
endangered species. Taking is defined as an act intended to “harass,
harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect” an
endangered animal. The arguments for this Act include the need to
protect wildlife and preserve species from extinction, as well as urban
sprawl. The arguments against this Act include the need to protect
capitalism and private property ownership from extinction.
F.
Cases for Discussion
Federal Trade Commission v. Colgate-Palmolive, Co., 380 U.S. 374 (1965), concerned
whether a shaving cream ad violated Section 5 of the Federal Trade Commission Act.
Colgate produced a commercial in which its Rapid Shave® shaving cream was applied to
a substance that appeared to be sandpaper, then a razor was shown shaving the substance
clean. In fact, the substance wasn’t sandpaper; it was Plexiglas® on which sand had been
glued. The FTC issued a complaint against Colgate and the advertising company. The
circuit court of appeals ruled in favor of Colgate and the U.S. Supreme Court reversed,
concluding that the ad was false and materially deceptive. Chief Justice Warren found
that just because the advertisement’s claims couldn’t be verified on television without the
use of simulation doesn’t mean that the seller is entitled to make up for that deficiency by
deceiving the public with its ad. Comparing an advertising case about ice cream in which
mashed potatoes served as an undeclared substitute, the Court noted that the mashed
potatoes weren’t being used as additional proof of the product claim, whereas here the
fake sandpaper was used to prove that the shaving cream could be used to shave
sandpaper.
QUESTIONS
1.
Does the government owe a duty to protect consumers from false and misleading
business practices?
Yes, in a regulated, free market economy as ours, the government has a role in
protecting consumers from false and misleading business practices.
2.
Did Colgate and Bates act ethically in this case? Do you think the viewing public
believed the commercial?
This was a deceptive ad, which does make it seem unethical. If the ad was
viewed as a parody, such as the Joe Isuzu ads of the 1980s, then it is unlikely that
the court would have decided this case as it did.
3.
Do you think Colgate needed “some fencing in”?
I think one could say that Colgate deserved a nick for their ad that shaved too
close to the line of falsity.
Natural Resources Defense Council, Inc. v. EPA, 624 F.2d 1146 (D.C. Cir. 1987),
concerned how much (or little) vinyl chloride the EPA is allowed to authorize to be
emitted. The EPA issued a proposed rule, and then a final order, under Section 112 of the
Clean Air Act setting a level of emissions for vinyl chloride, used in the manufacture of
plastics, that, it believed, would provide an ample margin of safety for human beings.
The NRDC sued the EPA, arguing that the EPA must set a zero level of emissions of
vinyl chloride. The D.C. Circuit Court of Appeals, in a decision authored by Robert
Bork, held that, in order to accept the NRDC’s position, one would have to conclude that
Congress intended that many industries in America would have to shut down, resulting in
many thousands of jobs lost. Nothing in the legislative history shows that Congress
intended a zero-emissions standard for toxic pollutants. “Safe” does not mean “riskfree.” The EPA met its obligation by relying on an expert judgment to determine what
level of emissions is acceptable.
QUESTIONS
1.
Should emission levels of toxic pollutants be set at “risk-free” levels rather than
just “safe” levels? Explain.
If emission levels (or anything else in American life, for that matter) were set at a
risk-free level, not much, if any, industry could operate. Life isn’t risk-free.
2.
Do environmental activist groups and organizations serve an important public
purpose? Explain.
This is a lofty opinion question. If employing lawyers and lobbyists is an
important public purpose, then the answer is yes. If making the public aware of
environmental issues and harms is an important public purpose, the answer is
again yes. If destroying industries, engaging in pseudo-science, and scaring the
public is not an important public purpose, then the answer is no.
3.
Can you think of instances in which environmental laws should be used to shut
down whole industries? Explain.
This is another opinion question, designed to stimulate class discussion.
Tennessee Valley Authority v. Hill, Secretary of the Interior, 437 U.S. 153 (U.S. 1978),
concerned whether the snail darter’s existence was more significant than the operation of
the Tellico Dam. The TVA, with congressionally-funneled funds, built the Tellico Dam,
whose operation required the flooding of the Little Tennessee River in order to create a
reservoir. However, the perch known as the snail darter was found in the fast-moving
river. Had the dam been put to use, the snail darter would have become extinct. Section
7 of the Endangered Species Act authorizes the Secretary of the Interior to create an
endangered species list and identify the critical habitat of those creatures. When a
species is identified, Section 7 mandates that action be taken to ensure that the federal
government’s actions don’t jeopardize that species’ existence. Because it was determined
that the snail darter could only survive in the Little Tennessee River, conservationists
sued to prevent the operation of the dam, which cost over $100 million to complete and
would provide irrigation and electricity. The U.S. Supreme Court, in an opinion by Chief
Justice Burger, held in favor of the snail darter. The Court concluded that the exact
language of Section 7 of the Endangered Species Act commands that an endangered
species and its habitat be protected. Even though the TVA project was underway at the
time of the passage of Section 7, the language of the statute doesn’t allow for a contrary
conclusion.
[It was later determined the snail darter could survive in another habitat. So, the snail
darter population was moved to its new habitat, and the Tellico Dam began its operation.]
QUESTIONS
1.
Should the law protect endangered species? Why or why not?
This is moot, since the law does protect endangered species. As for the policy of
government acting to protect wildlife, there are many reasons why it should. At
what cost is another question.
2.
Did the TVA act ethically in this case by completing construction of the dam?
Would it have been unethical if they had not completed a dam that was funded by
taxpayer money? These are opinion questions.
3.
Do you think the cost of constructing the Tellico Dam ($100 million) should have
been considered by the Court in reaching its decision?
It might have been considered, but the Court had no judicial authority to consider
it, since the Endangered Species Act leaves no room for such a consideration. It
simply mandates that an endangered species and its habitat be protected.
15.1
United States v. Gel Spice Co., Inc., 601 F.Supp. 1205 (E.D.N.Y. 1984), concerned
spices that were a little too spicy. The Gel Spice Company, owned by Engel and located
in New York City, imported spices for resale. Between July 1976 and 1979, Gel Spice’s
NYC warehouse was inspected four times by the FDA, and everything from live rats to
rat feces and urine was discovered in the warehouse and the products. The FDA brought
criminal charges against Engel and Gel Spice.
ISSUE: Are they guilty?
Yes, they both are guilty. The evidence was sufficient to show that the Gel Spice
Company violated the law by allowing food in its warehouse to become “adulterated.”
Engel was guilty also since he, as the company’s president, was principally responsible
for the warehouse’s sanitation.
15.2
United States v. Reserve Mining Co., 412 F.Supp. 705 (D.Minn. 1976), concerned the
dumping of toxic wastes in Lake Superior. The Reserve Mining Co. received a permit to
dump its wastes in Lake Superior, with the condition that the discharges wouldn’t “result
in any clouding or discoloration of the water outside the specific discharge zone” or
“result in any material adverse affects on public water supplies.” Reserve dumped its
wastes for decades, up to 67,000 tons per day. The water outside the discharge zone
became discolored and contained carcinogens that adversely affected public water
supplies. The U.S. sued Reserve for unlawful water pollution.
ISSUE: Who wins?
The United State wins. Although the District Court concluded that the discharges of
67,000 tons per day wasn’t illegal because it was authorized by the 1947 permit, it found
that Reserve violated the permits because the dumping was discoloring the surface water
outside the discharge zone. Penalties and sanctions against Reserve totaled over
$1,000,000 for the time period the violations occurred after the state penalty statute went
into effect .
15.3
United States v. Hoflin, 880 F.2d 1033 (9th Cir. 1989), concerned the illegal dumping of
55-gallon paint drums. Douglas Hoflin directed the Public Works Department for Ocean
Shores, Washington. The Department used 3,500 gallons of paint for the roads, which
contained lead. When 14 of the drums were discovered to still contain unused paint,
Hoflin instructed employees to haul the drums to the city’s sewage treatment plant and
bury them. The employees did as they were told, burying the drums in the ground. As
with the lead-based paint, the story of the dumping leaked out. The EPA got wind of the
dumping, and the U.S. brought criminal charges against Hoflin for aiding and abetting the
illegal dumping of hazardous waste.
ISSUE: Who wins?
Hoflin loses…his appeal from his criminal conviction. The court concluded that Hoflin’s
claim that he didn’t know the city didn’t have a permit to dispose of the paint wasn’t
valid. The statute under which Hoflin was charged didn’t making knowledge an element
of the crime.
15.4
Charles of the Ritz Distributing Corp. v. FTC, 143 F.2d 676 (2nd Cir. 1944), concerned
the claims of a product called Rejuvenescence Cream. The ads of the company
producing and selling the cream stated that the user’s skin would return to the “petal-like
quality and texture of youth” upon using the cream. Other similarly extravagant claims
were made, and the FTC investigated the claims only to discover that they weren’t true.
The FTC issued a cease-and-desist order against the advertising, and the company
appealed.
ISSUE: Who wins? Did Ritz act ethically in its advertising claim?
The FTC. The court agreed with the FTC’s expert uncontradicted testimony that there
was nothing known to medical science that could restore the youthful appearance of the
skin. Regarding Ritz’s wildly extravagant and silly advertising claim, designed to tug at
the emotional desires of aging women, one could conclude that this advertising claim was
as unethical as the claims of snake oil salesmen of the 19th century.
G.
Case for Briefing
1.
Case Name
FMC Corp. v. United Sates Department of Commerce, 786 F.Supp. 471
(E.D. PA. 1992)
2.
Key Facts
A.
The FMC Corporation (FMC) owned and operated a
manufacturing company (the Facility) in Virginia from 1963 to
1976.
B.
The federal government brought a claim under CERCLA against
FMC for the cleanup costs associated with the Facility because it
had been on the National Priorities List since 1986.
C.
FMC sought indemnification for some of its present and future
costs associated with the cleanup against the United States
government, arguing that the government was also liable as an
owner, operator, and/or arranger under Section 107 of CERCLA.
D.
Specifically, FMC presented evidence that during World War II
the U.S. government participated in managing and controlling the
Facility, then owned by American Viscose, which was producing
rayon yarn.
E.
During the war, the War Production Board and top officials of the
War Department constantly gave their attention to the Facility and
its production of high tenacity of rayon yarn.
F.
The government knew, or should have known, that the disposal or
treatment of hazardous substances was inherent in the manufacture
of high tenacity rayon yarn and that much hazardous substances
was being generated at the Facility during that time.
3.
Issue
Is the U.S. Government also liable under its own environmental laws for
the costs of cleaning up a hazardous waste site when it engaged in activity
that would make a non-governmental actor liable for the costs of cleanup?
4.
Holding
The U.S. District Court held that U.S. Government was liable as an owner
and, therefore, responsible for costs cleanup.
5.
Court’s Reasoning
A.
Liability of an owner of a facility, as defined by Section 107, for
the cost of cleanup “is strict and joint and several.”
B.
As defined by Section 101 of CERCLA , the U.S. Government
qualified as an owner of the Facility through the actions and
authority of the WPB and other federal departments from January
1942 through at least November 1945.
C.
During that time period, hazardous wastes were disposed of at the
Facility.