CHAPTER 26-ENVIRONMENTAL LAW
TRUE/FALSE
1. Weste, Inc. decided to expand by building a $50 million manufacturing facility. The
expansion is not regulated or approved by the government. Nevertheless, Weste must prepare
an environmental impact statement.
Answer: False
2. Local regulation is more effective than state or federal regulation in controlling air
pollution.
Answer: False
3. Armand Industries is producing a foul-smelling odor as a by-product of its factory’s
operations. However, the emission is not harmful to the health of those exposed to it. Armand
would be subject to a primary national ambient air quality standard established by the EPA.
Answer: False
4. A Japanese company operates a ship called the Kinia. If the Kinia sails in U.S. waters, it
must comply with the standards set by the Oil Pollution Act of 1990.
Answer: True
5. Cincy, Inc. is building a $20 million dollar addition onto its distribution facility. To build
the facility, Cincy must fill in two acres of wetlands. Under the Clean Water Act, Cincy must
obtain a permit before filling in the wetlands.
Answer: True
6. TriColor, Inc. purchased a piece of land from HBC, Inc. Hazardous waste was
subsequently discovered on the land. Even though TriColor did nothing illegal, it may be
liable under CERCLA for the cleanup costs.
Answer: True
7. Researchers have found that the EIS process generally does not have a beneficial impact on
the environment.
Answer: False
8. Truan, Inc. has decided to market a new pesticide. Truan must register the pesticide with
the EPA.
Answer: True
9. An Environmental Impact Statement must be prepared for every major federal action that
significantly affects the quality of the environment.
Answer: True
10. A person who violates the Clean Water Act can face possible imprisonment in addition to
other penalties.
Answer: True
11. The cost-benefit trade-off is particularly complex in environmental issues because those
who pay the cost often are not the ones who receive the benefit.
Answer: True
12. In 2008, then-President George W. Bush reached an agreement with other world leaders
to cut greenhouse gases in half by 2028.
Answer: False
13. In 2005, the EPA set standards for soot emissions from buses and power plants that were
recommended by its own Scientific Advisory Committee.
Answer: False
14. The prevention of significant deterioration (PSD) program was developed to prevent
deterioration in air quality that would create health problems for those affected.
Answer: False
15. We Care, a nonprofit environmental organization, believes that Quanaco is violating the
Clean Air Act. The EPA has not taken any action against Quanaco. We Care can file a
citizens’ suit against the EPA.
Answer: True
MULTIPLE CHOICE
1. Under the Clean Air Act:
a. states and the EPA were to act as partners wherein the individual states would formulate
State Implementation Plans to meet primary and secondary standards created by the EPA.
b. the EPA formulated primary and secondary standards for air pollution; however, the
individual states were not required to comply with these standards if they already had
reasonable state statutes or regulations in place.
c. the states were required to follow the guidelines established by the EPA and did not have
the authority to create their own state plans for implementing the federal standards.
d. state laws or regulations preempt or take precedence over the guidelines promulgated by
the EPA.
Answer: A
2. What prevents the market system from achieving a clean environment on its own?
a. Externalities.
b. Inefficiently managed business.
c. Remainders.
d. SIPs.
Answer: A
3. Under the prevention of significant deterioration (PSD) program:
a. no one may undertake a building project that will cause a major increase in pollution
without first obtaining a permit from the EPA.
b. a successful permit applicant must demonstrate that its emissions will not cause an overall
decline in air quality.
c. a successful permit applicant must demonstrate that it has installed the best available
control technology for every pollutant.
d. All of the above.
Answer: D
4. The Environmental Protection Agency (EPA) was created by Congress to:
a. consolidate environmental regulations under one agency.
b. protect corporate investors.
c. prevent conflicts between the Departments of Commerce and Interior.
d. eliminate discrimination.
Answer: A
5. Environmental protection issues are regulated by:
a. federal statutory law.
b. state statutory law.
c. administrative regulations.
d. All the above.
Answer: D
6. The Clean Air Act of 1970 directed the EPA to reduce automobile pollution levels by:
a. 50 percent within 10 years.
b. 75 percent within 8 years.
c. 90 percent within 6 years.
d. 80 percent within 20 years.
Answer: C
7. Federal law regulates:
a. point source and non-point source pollution.
b. neither point source nor non-point source pollution.
c. point source but not non-point source pollution.
d. None of the above is correct.
Answer: C
8. Acid rain is caused primarily by:
a. sulfur emissions from coal-burning utility plants.
b. automobile emissions, especially from large cities.
c. pesticides.
d. large-scale farming operations that raise livestock.
Answer: A
9. The EPA brought an administrative action against Boch Industries for violating the Clean
Air Act. The administrative law judge ruled in the EPA's favor. Boch Industries:
a. can appeal the decision to a U.S. Court of Appeals and then to the U.S. Supreme Court.
b. can appeal to the U.S. Congress and then to the Chief Justice of the Supreme Court.
c. can appeal to the Chair of the EPA.
d. cannot appeal the decision.
Answer: A
10. Congress established a trust fund for the EPA to use in Superfund cleanup. This trust fund
was initially financed by a tax on what?
a. The general public through federal income taxes.
b. Waste management and landfill operators.
c. The construction industry.
d. The oil and chemical industries.
Answer: D
11. Which of the following Acts sets goals without regard to the cost involved in meeting the
goals?
a. Clean Water Act.
b. Clean Air Act.
c. Both the Clean Water Act and the Clean Air Act.
d. Neither the Clean Water Act nor the Clean Air Act.
Answer: C
12. Coastal City Power Plant received its annual sulfur dioxide emission allowance. Because
it is using a low-sulfur fuel which burns cleaner than some fuels, it does not need its entire
allowance this year. Coastal:
a. loses whatever unused allowance it has for the year.
b. may sell its leftover allowance to another company.
c. will not be regulated by an allowance next year since it was within its allowance for this
year.
d. will only avoid future regulation if it signs an agreement to continue using either lowsulfur coal or natural gas in the future.
Answer: B
13. Sam, the chief executive officer of Boch Industries, was criminally prosecuted for
violating the Resource Conservation and Recovery Act. Which of the following is correct
concerning the penalties?
a. Sam cannot be punished because he was acting for Boch Industries. Boch Industries faces
criminal fines.
b. Sam faces criminal fines as well as imprisonment.
c. Sam faces only criminal fines.
d. The only remedy Sam faces is an injunction to prevent further violations.
Answer: B
14. Under Superfund legislation, to what extent must a hazardous waste site be cleaned?
a. Reasonable conditions under the circumstances.
b. A safe level for the area in which it is located.
c. Pristine condition, regardless of cost, even if this is better than it was before the hazardous
waste was dumped onto it.
d. To the condition of the property before the hazardous waste was dumped on it.
Answer: C
15. James owned real estate. He leased the building to two tenants. An insurance agent leased
the first floor and a law firm leased the second floor. James later sold the land to Mary, who
used the entire building for her business. She discovered that there were underground storage
tanks buried in the land. She had to remove the tanks and then sued James and the former
tenants for the cost of removing the tanks, even though none of them knew the tanks had been
there.
a. James and the two tenants are liable.
b. James is liable to Mary, but the tenants are not.
c. The tenants are liable to Mary, but James is not.
d. Neither James nor the tenants are liable to Mary.
Answer: B
16. What administrative agency regulates pesticides, insecticides, fungicides and
rodenticides?
a. The Food and Drug Administration.
b. The Occupational Safety and Health Administration.
c. The EPA.
d. All the above.
Answer: C
17. Which of the following options are available to power plants for meeting emissions
standards?
a. Installing scrubbers.
b. Switching to alternative fuels.
c. Trading emissions allowances.
d. All of the above are options that power plants can use in meeting emissions standards.
Answer: D
18. Under the Clean Air Act:
a. California was granted special permission to set stricter pollution standards than the federal
standards.
b. all states must follow federal automobile emission standards.
c. the states must each set automobile emission standards, which must then be approved by
the EPA.
d. the EPA was directed to reduce automobile pollution levels by 50 percent within six years.
Answer: A
19. Which of following must be included in a federal Environmental Impact Statement?
a. Available alternatives to the proposed action.
b. Means to mitigate adverse environmental impacts.
c. Direct and indirect effects of the proposed action.
d. All of the above.
Answer: D
20. The disposal of nonhazardous solid waste is:
a. generally regulated by state law, but the federal government sets guidelines that must be
followed.
b. the only area of environmental concern that has yet to be regulated by federal action.
c. completely governed by federal administrative law.
d. currently the subject of great debate since the federal government has declared such
activity falls under the Endangered Species Act and, therefore, a small annoying fly known to
frequent landfills must be protected.
Answer: A
21. The United States has ____ percent of the world’s population and consumes about ____
percent of the world’s energy.
a. 20; 65
b. 25; 10
c. 10; 50
d. 5; 25
Answer: D
22. Under the Endangered Species Act, what federal agency is responsible for preparing a list
of species that are in danger of becoming extinct?
a. Department of Commerce.
b. Department of the Interior.
c. Department of Labor.
d. Both a and b are correct.
Answer: D
23. Fresh Air, a nonprofit environmental organization, believes that Cincy Co. is violating the
Clean Air Act. The EPA has not taken any action against Cincy Co. Fresh Air:
a. can file a citizen suit against the EPA.
b. can file an executive order with Cincy Co.
c. cannot file a lawsuit but can ask an administrative law judge to hear its complaint.
d. cannot file a lawsuit but can lobby Congress to force the EPA to act.
Answer: A
24. Which of the following projects would require the preparation of an Environmental
Impact Statement?
a. A plan initiated by the Forest Service to eliminate a herd of wild goats causing damage in
the Olympic (Washington) National Park.
b. The building of a golf course outside of Los Angeles that requires a government permit to
build in wetlands.
c. The expansion of a runway to a major city airport.
d. All the above.
Answer: D
25. The Toxic Substances Control Act regulates:
a. chemicals other than pesticides, foods, drugs, and cosmetics.
b. insecticides.
c. natural gas.
d. pesticides.
Answer: A
ESSAY
1. Discuss the four major provisions of the Clean Air Act.
Answer: The four major provisions of the Clean Air Act are:
• Primary Standards. Congress directed the EPA to establish national ambient air quality
standards (NAAQSs) for primary pollution, that is, pollution that harms the public health.
These standards are to be set without regard to cost.
• Secondary Standards. Congress directed the EPA to establish NAAQSs for pollution that
may not threaten health but has other unpleasant effects, such as obstructing visibility or
harming plants.
• State Implementation Plans (SIPs) States set SIPs to meet primary standards within three
years and secondary standards within a reasonable time.
• Citizen Suits. The Clean Air Act permits anyone to file suit against a polluter or against the
EPA for failing to enforce the statute.
2. Trent was the production manager at HGB, Inc. Under his supervision, HGB emitted into
the air three times the amount of toxins it is allowed under the Clean Air Act. Has Trent
violated the law? What penalties might he face?
Answer: Trent has violated the law. He faces civil penalties. In addition, he may be
prosecuted criminally. Trent knowingly violated the law. As a result, he may have to serve a
prison sentence.
3. James purchased an abandoned lot. When he started to develop the land, he discovered
several underground storage tanks containing hazardous waste buried on the site. He claims
the seller, Richards, is liable to him for the cost of removing the tanks. Richards claims he
owned the lot for 20 years and never knew of the underground tanks. Richards argues he
purchased the land from Thomas and that Thomas or his heirs are liable for the cost of
removing the underground tanks. Explain whether Richards is liable to James. Does Thomas
or do his heirs have any liability to James or Richards?
Answer: Richards, as the seller of the land, is liable to James for the cost of removing the
storage tanks containing the hazardous waste. Under the Comprehensive Environmental
Response, Compensation, and Liability Act, usually referred to as the Superfund Act, anyone
who has ever owned a site where hazardous waste is found is liable for the cost of the
cleanup. It is irrelevant whether the owner knew of the existence of the waste.
Thomas, if still living, is also liable to either Richards or James. Only if Thomas's heirs have
ever owned the land, or if there had been a contract that created potential liability for the
heirs, would they be liable for the cost of cleanup.
4. Foiler Manufacturing, a new corporation, estimates it may generate approximately 200
kilograms of hazardous waste each month. Discuss the EPA requirements it faces in relation
to this waste.
Answer: Foiler, as does anyone who creates, transports, stores, treats, or disposes of more
than a certain quantity of hazardous wastes, must apply for an EPA permit. All hazardous
wastes must be tracked from the time they are created to their final disposal at a certified
facility. Any company that generates more than 100 kilograms of hazardous waste in any
month must obtain an identification number for its wastes. When it ships the waste to a
disposal facility, it must send along a multicopy manifest identifying the waste, who is
transporting it, and where it is going. Foiler must notify the EPA if it does not receive a
receipt from the disposal site indicating that the waste has been received.
5. Big Hog Farms of America, Inc., purchased 6,000 acres of farmland in South Dakota. The
company intends to build several hog confinement buildings that will house nearly 40,000
hogs in each one. When completed, the facility will have over 200,000 hogs. The "hog
factory" will cause terrible odors which will be extremely unpleasant for neighbors within
five miles. A town of 2,500 people is only three miles north of the planned facility. The most
serious concern is the disposal of all the hog manure, which will be very substantial. The hog
factory will dump the hog sewage into large lagoons and then empty the watered-down
sewage onto farm fields. It plans to sell some of this manure as fertilizer, though most of it
will be spread on grounds the facility owns.
Despite all the uproar from people in the area, many people are in favor of the facility. It will
employ nearly 200 people, purchase a lot of products (feed, supplies, etc.) from local
businesses, and generate a lot of money into the economy.
Is this business required to submit an Environmental Impact Statement to the federal
government and/or obtain a permit to operate from the EPA? Does the operation need any
permits from the federal government to operate? Does it need authorization from state or
local authorities? Explain.
Answer: The hog operation is not required to file an Environmental Impact Statement with
the EPA since it is a private operation. It is not a federal operation nor is it regulated by the
federal government. It is very possible that state law could require an EIS to be submitted to a
state agency.
Whether or not the hog factory needs to obtain permits is not easy to answer. Traditionally,
farming activities (and that term has been very broadly defined by many courts) are exempt
from obtaining the type of permits that an urban-based operation would be required to get. By
the nature of farming, animals can often smell but neighbors are often far away -- thus it is
not a problem to anyone unless they drive by! The states of North Carolina and Iowa, in
particular, have been wrestling with how to regulate large hog farms. If they make the
regulations too strict, the traditional family farmer that raises 500 hogs could be driven out of
business since it could become too expensive to comply with all the environmental laws.
Many of the environmental laws, such as the Clean Water Act and the Clean Air Act, require
the individual states to implement programs to achieve EPA objectives. The large- scale hog
farm would be subject to these two laws in particular (water and air pollution legislation).
The state governmental agency charged with carrying out EPA objectives would require
permits for these large-scale operations. Also, state law can be even stricter than any federal
legislation. In the case of hog farms, state law will mandate that the sewage lagoons are made
according to specifications and with particular materials so as to avoid polluting the aquifer
under the hog operation.
6. Discuss the purpose of and problems with the Kyoto Protocol from the perspective of the
United States.
Answer: The Kyoto Protocol is an international treaty requiring emissions to be reduced in an
effort to reduce the greenhouse effect. The United States is the only leading industrialized
nation that refused to ratify the treaty. The problems, from the perspective of the United
States, are that: (1) developing countries such as China and India, which are important
economic competitors of the United States, were not bound by the treaty, and (2) the cost of
compliance would be very high, with little benefit to the United States. The treaty has had
little impact on greenhouse gases.
Test Bank For Introduction to Business Law
Jeffrey F. Beatty, Susan S. Samuelson
9781133188155
