ENVIRONMENTAL LAW AND AMERICAN BUSINESS

Dilemmas of Compliance

ENVIRONMENT, DEVELOPMENT, AND PUBLIC POLICY A series of volumes under the general editorship of Lawrence Susskind, Massachusetts institute of Technology

ENVIRONMENTAL POLICY AND PLANNING Series Editor: Lawrence Susskind, Massachusetts Institute of Technology, Cambridge, Massachusetts

BEYOND THE NEIGHBORHOOD UNIT Residential Environments and Public Policy Tribid Banerjee and William C. Baer

CAN REGULATION WORK? Paul A. Sabatier and Daniel A. Mazmanian

ENVIRONMENTAL DISPUTE RESOLUTION Lawrence S. Bacowand Michael Wheeler

ENVIRONMENTAL LAW AND AMERICAN BUSINESS Dilemmas of Compliance Joseph F. DiMento

THE LAND USE POLICY DEBATE IN THE UNITED STATES Edited by Judith I. de Neufville

PATERNALISM, CONFLICT, AND COPRODUCTION Learning from Citizen Action and Citizen Participation in Western Europe Lawrence Susskind and Michael Elliott

RESOLVING DEVELOPMENT DISPUTES THROUGH NEGOTIATIONS Timothy J. Sullivan

Other subseries:

CITIES AND DEVELOPMENT Series Editor: Lloyd Rodwin, Massachusetts Institute of Technology, Cambridge, Massachusetts

PUBLIC POLICY AND SOCIAL SERVICES Series Editor: Gary Marx, Massachusetts Institute of Technology, Cambridge, Massachusetts

ENVIRONMENTAL LAW AND AMERICAN BUSINESS

Dilemmas of Compliance

Joseph F. DiMento University of California, Irvine

Irvine, California

Springer Science+Business Media, LLC

Ubrary of Congress Cataloging in Publication Data

DiMento, Joseph F. Environmental law and American business.

(Environment, development, and public law. Environmental policy and planning) Bibliography: p. Includes index. 1. Environmental law-United States. 2. Pollution-Law and legislation-United

States. I. Title. II. Series. KF3775.D5 1986 344.73'046 86-75

ISBN 978-1-4899-0567-3 ISBN 978-1-4899-0565-9 (eBook) DOI 10.1007/978-1-4899-0565-9

© 1986 Springer Science+Business Media New York Originally published by Plenum Press, New York in 1986. Softcover reprint of the hardcover 1st edition 1986

All rights reserved

No part of this book may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, microfilming, recording, or otherwise, without written permission from the Publisher

To little man, J. L. D., with love

PREFACE

We are in the second decade of modem environmental law. By some indicators this body of regulation has matured greatly. We can point to statutes and codes at the federal, state, and local levels which address almost every conceivable form of pollution and environmental insult. Yet, despite the existence of this large body of law, despite considerable expenditures on enforcement, and despite the energetic efforts of people sympathetic to environmental objectives, violations are numerous. Serious pollution problems are commonplace. Love Canal, the Valley of the Drums, Times Beach, and Stringfellow Acid Pits epitomize the national environmental quality challenge. Daily, a major illegal disposal of haz­ardous waste is recorded; a new mismanaged dump site is discovered; a toxic substance is found in our drinking water; or a failure to meet a water or air quality standard is identified.

Many of these violations involve American business. Failures to comply are of several types. A small businessman in Pennsylvania mistakenly allows a spillover of a pollutant into a protected stream. An industrialist in the Midwest adds to his fortune by illegally dumping dangerous chemicals. A series of errors by several firms, some of which no longer exist, combine to create a health­threatening conflagration on the West Coast. An automobile company interprets one of the almost innumerable air pollution rules differently from government: It produces a car which the government says fails to comply with the Clean Air Act.

Part of the challenge of achieving compliance derives from this diversity of business actions and part from the different interpretations of compliance by corporate executives, governmental lawyers, environmental advocates, and pri­vate citizens. So, too, assessments vary on the wisdom of promoting strict adherence to environmental rules over other national goals, including economic growth and employment.

Environmental law is at a critical juncture in its history. We clearly must reduce the incidence of violations. But we also must respond to legitimate economic and other interests, including that of efficiency in government.

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viii PREFACE

This book offers policy reforms that aim to achieve the goal of inducing business to comply with reasonable environmental law . By describing classes of illegal acts, linking them to characteristics of noncomplying companies and to types of rule development, and critically reviewing economic and legal strategies to influence the firm, I hope to add to our knowledge of deterrence of rule violations and environmental crime.

Environmental law is a window on the regulatory process. My second aim is to cut into the debate about the wisdom, efficacy, and effects of health and safety rules in general. Attention to enforcement, to communication of law, and· to characteristics and motivations of the groups that make, defy, and comply with regulation uncovers implications for many areas of regulation.

What function can the criminal law play in promoting compliance? Why do business responses to regulation differ? Are there relatively inexpensive ways to promote regulations while respecting rights of privacy and property? Do rules that are seen as rational, fair, and cost-effective invite compliance? I address these questions and attempt to identify traits of government associated with legitimate and authoritative law and types of enforcement which make legal action work.

There is no one segment of the literature or one classic case that identifies why organizations comply. No one respondent group has a persuasive insight into compliance. But several bodies of writing do describe the firm's response to law. Also, business executives, government attorneys, agency officials, and private citizens-the respondents in our study-offer perspectives on what makes environmental law effective. And several cases, such as the four that begin this book, demonstrate how businesspeople react to regulatory law. This volume calls on these writings and experiences to suggest means of realizing reasonable compliance with reasonable law.

JOSEPH F. DIMENTO

ACKNOWLEDGMENTS

This book has benefited from the assistance of several people. In developing the framework for compliance and addressing the approaches to data collection, I gained important insights from Gilbert Geis. He also assisted in the interviews in the automotive industry and made extensive valuable comments on drafts of the manuscript, as did John Monahan. James Krier asked pointed questions about my focus on compliance and on its significance; these made the project more objective. Thomas Anton identified an important gap in the original compliance framework. Steven Colome provided useful perspectives on the environmental sciences as they influence the regulatory process. I, of course, remain fully responsible for any deficiencies in the framework.

Wesley Marx helped me with suggestions on the generalizability of my findings and on writing style. I was assisted in bibliographical work and data collection by William Lambert, Terri Port, and Dean Hestermann, graduate students in the Program in Social Ecology at the University of California, Irvine. Pat Ward, Beverly McKinney, and Sandra Wickland provided invaluable pro­duction assistance.

David Swan, Kennecott Copper; Herbert Misch, Ford Motor Company; Richard Davis and David Potter, General Motors; and Christopher Kennedy, Chrysler Corporation stand out for their helpfulness in arranging interviews in their companies. Also, I thank all those persons who allowed me to investigate their attitudes toward environmental law and their analyses of the cases in which they were involved.

The Louisville Courier Journal and The News and Observer and The Raleigh Times (Raleigh, North Carolina) provided valuable background informa­tion on midnight dumping cases.

I received financial assistance from the University of California, Irvine. Timely grants on two occasions enabled me to complete the data collection. I wish to thank the Kellogg Foundation for funding under the National Fellowship Program that allowed me to interview government and industry officials and do other work on the scientific bases of environmental regulation.

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Chapter 1

Chapter 2

Chapter 3

CONTENTS

MUSHROOMS AND MERCURIES: CASES OF NONCOMPLIANCE

Case 1

Case 2

A Mushroom Farmer Goes to Jail for a Water Runoff from a Holding Tank • 1 A Businessman Is Convicted of Disposing of Toxic Chemicals into the Louisville Sewer System • 5

1

Case 3 A Hazardous Waste Site Becomes an Inferno and No One Appears Accountable • 9

Case 4 An Automaker Is Charged with a Technical Violation • 12

THE NONCOMPLIANCE PROBLEM

Introduction • 19 The Nature of Environmental Violations • 20 The Nature of Compliance • 25

What Does It Mean to Comply? • 25 Is Compliance Desirable? • 28

The Aims of This Volume • 33 Overview of the Work • 34 A Word on the Study • 35

PURSUING COMPLIANCE: SOCIETY'S TOOLS

The Criminal Sanction • 41 The Case for Use of Criminal Sanctions • 42

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19

39

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Chapter 4

Chapter 5

CONTENTS

The Case against Use of Criminal Sanctions • 45 The Civil Sanction • 47 The Case for Use of Civil Sanctions • 49 The Case against Use of Civil Sanctions • 50 Administrative Sanctions • 51 Arguments for and against Use of Administrative Orders • 52 Less Formal Approaches and Their Strengths and VVeaknesses • 54

Conference and Conciliation • 54 Negotiation-Based Approaches • 57

Incentive-Based Approaches • 59 The Case for Use of Economic Incentives • 60 The Case against Use of Economic Incentives • 61 Using Society'S Tools • 64

THE BEHAVIOR OF COMPLIANCE: A SHORT INTRODUCTION 67

The Framework Introduced: The Compliance System • 67 The Framework Elaborated • 71

Enforcement • 71 Communicating the Law • 73 The Actors • 75

"THEY TREATED ME LIKE A CRIMINAL": SANCTIONS, ENFORCEMENT CHARACTERISTICS, AND COMPLIANCE

Enforcement: Necessary But Not Sufficient • 78 The Nature of the Sanction • 78

The Business Perspective • 79 Cost-Benefit Calculations of the Regulatee • 84

Fairness, Legitimacy, and Rationality of Enforcement Policy • 88 Certainty and Imminence • 92

Surprise and "Compliant for a Day" • 94 Enter the Courts • 98

Continuity and Consistency • 100

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CONTENTS

Chapter 6

Chapter 7

Chapter 8

THE BEHAVIOR OF COMPLIANCE: COMMUNICATING LAW

Clarity and Specificity of the Law • 103 Participation in Rule Making as an Avenue to Clarity • 106 Participation in Rule Making as an Avenue for Regulatory Capture? • 108

Consistency in Articulation of the Law • 110 Inconsistency as Organizational Outcome • 113

Rationality of Regulation: Is the Law "A Ass"? • 118 Legislative Irrationality: Clear Air. Dirty Coal • 118 The Scientific Basis of Regulation • 121

THE ACTORS

What Makes a Difference in Public Agencies? • 135 Agency Access to Resources • 136 Coordination of the Government Effort • 137 Administrator Qualities • 138 Agency Characteristics • 139 The Administrator as Ideologue • 142 The Quality of Lawyering in Environmental Litigation • 144

Support Groups: Advocating Compliance • 147 Coalitions for Compliance • 151 Business Support • 153

American Business: Correlates of Compliance • 154 Size • 154 Differentiation • 156 Differentiation and Lawyering • 157 Law as "Stone Wall" • 159 Standard Legal Procedures and the Challenge of Compliance • 159 A Word on Corporate Culture • 160

MAKING ENVIRONMENTAL LAW WORK

Introduction • 163 Making Environmental Law Communicate • 164

Operational Law • 164

xiii

103

135

163

xiv CONTENTS

Full Communication and Its Relationship to Other Reforms • 166 Setting Priorities • 168 Operational Law and Elected Officials: The End of Liberalism Revisited • 170 Operational Law and Officialdom • 172 Operational Law: Some Conclusions • 172 Information Flow to Agencies • 173 Independent EPAjs? • 1~4- I _ Educating American Business and Government • 176

Enforcing Environmental Law • 177 Communication of Enforcement Policy • 177 Sanctions • 178 Prerequisites: Inspection, Monitoring • 179 Litigation Tactics • 181

Assisting Support Groups • 182 Access to the Legislative Function and to Regulation • 183 Access to Judicial Review of Environmental Violations • 185 Channeling Support, and Support Within the Firm • 187

A Final Word • 188

APPENDIX 191

BIBLIOGRAPHY 205

INDEX 221

CEO DOl DOJ EDF EPA MEPA NAAQS NRC NRDC NSPS OMB OSHA RCRA SCAQMD SIP Superfund

TCE TSCA

LIST OF ABBREVIATIONS

Chief Executive Officer United States Department of the Interior United States Department of Justice Environmental Defense Fund United States Environmental Protection Agency Michigan Environmental Protection Act National Ambient Air Quality Standards Nuclear Regulatory Commission Natural Resources Defense Council New Source Performance Standards Under the Clean Air Act Office of Management and Budget Occupational Safety and Health Administration Resource Conservation and Recovery Act South Coast Air Quality Management District State Implementation Plan Comprehensive Environmental Response, Compensation, and Lia­bility Act Provision Trichloroethylene Toxic Substances Control Act

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