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Volume [field_article_intvolume_value], Issue [field_article_intissue_value] — September 1988


Judicial Review of an Agency's Decision Not to Prepare an Environmental Impact Statement

by E. David Hoskins

Editors' Summary: Although NEPA requires the preparation of an EIS for every major federal action significantly affecting the environment, federal agencies often decide in particular cases that compliance with NEPA is satisfied by preparation of EAs. The decision not to prepare an EIS is usually based on a finding of no significant impact. When an agency's threshold NEPA decision is challenged in court, what is the appropriate standard of review? The federal courts of appeals answer this question in at least two different ways: some circuits use the "arbitrary and capricious" standard, while others inquire into the "reasonableness" of the agency's decision. Several courts have expressed doubt that there is any genuine distinction between the rival standards,and the Supreme Court has so far declined to settle the issue. The author of this Article surveys the federal case law on this question, exploring the approach of each circuit and taking issue with those who maintain that the difference between the standards is illusory. The vital difference, the author argues, is that courts using the reasonableness standard are more likely to substitute their own judgment for that of the agency, while courts adopting the arbitrary and capricious standard tend not to second-guess an agency's decision. Because he sees an important difference between these two approaches, the author urges the Supreme Court to grant certiorari to resolve the circuit split.

The Burden of Environmental Regulation (Environmental Compliance . . . : A. Environmental Regulation, Bankruptcy Law, and the Problem of Limited Liability)

by Douglas G. Baird

When bankruptcy lawyers appear before lay people or other lawyers, we're sometimes looked at the same way as pathologists. We talk about how death is natural and beautiful, but everyone else is somewhat disgusted at how we spend our time. The image of bankruptcy lawyers as pathologists in the minds of most, however, helps to counterbalance the tendency among some bankruptcy judges and lawyers to view themselves not as pathologists but rather as miracle workers, people who can make flowers grow in the desert and bring the dead back to life. Understanding environmental law issues—or any other legal issues in bankruptcy—can begin only after we recognize the modesty of bankruptcy law's ambitions, the limits of what can be done in a bankruptcy proceeding.

Bankruptcy issues, I shall suggest, are largely procedural ones. One you pass the technical vocabulary, they are not that difficult. Do not be misled by people reciting odd vocabulary and section numbers. Bankruptcy changes how litigation goes forward, but the substantive issues, such as who should prevail over whom, are not in themselves determined by bankruptcy law. They are determined by the substantive state or federal nonbankruptcy law.


The Burden of Environmental Regulation (Environmental Compliance . . . : B. Environmental Issues in a Bankruptcy or Reorganizational Proceeding: A Bankruptcy Lawyer's Perspective)

by Richard P. Krasnow

In the sixteen years that have passed since the first Airlie House Conference, concern about preventing hazardous toxic exposures and cleaning up toxic waste sites has steadily increased. In turn, more and more federal and state legislation and regulations have appeared to redress these problems. The costs attendant to both preventive and cleanup costs, however, have become perhaps the most significant financial problem that many companies must face, often posing a threat to their continued viability.

During this same period, another growth industry has appeared on the scene: bankruptcy and reorganization. Larger companies with increasingly complex financial structures have been seeking protection under the federal bankruptcy laws. The trend became particularly apparent with the enactment in 1979 of the Bankruptcy Code, which, among other changes, eliminated the requirement that a debtor be either insolvent or unable to pay its debts before it could file a petition—whether in Chapter 7 for liquidation or Chapter 11 for reorganization. The problems now being presented to the bankruptcy court for resolution range from rejections of union contracts to products liability claims to multi-billion-dollar judgments. One side-effect has been the erosion of concern that filing for reorganization is an embarrassing, morally reprehensible thing to do. In its place has come the recognition that the Code affords the opportunity for a company to restructure. It is viewed as just one more management tool.


Tbe Burden of Environmental Regulation (Environmental Compliance . . . : C. Government Perspectives on Bankruptcy and Environmental Law Interaction)

by Nancy Firestone

There are about 600 environmental cases pending at the U.S. Justice Department, of which 58 involve bankruptcy issues. Thus, nearly 10 percent of our case docket forces us to confront the interaction of bankruptcy and environmental law.

In response, we have had to hire bankruptcy experts. We now have a senior attorney who is responsible for ensuring that we take consistent positions in all of those cases.


The Burden of Environmental Regulation (Environmental Liabilities . . . : C. EPA's Role in and Perspectives on Property Transfer and Financing Liabilities)

by Gene A. Lucero

At the EPA, we begin with the assumption that people who never expected to be will find themselves involved in toxic-waste cases. Generally, we will seek out everyone associated with the contaminated property and send them a notice letter of potential liability. Thereafter, many questions will be raised about the fact of—and the extent of—liability, and those who are contacted will be invited to join in the relevant decisions. At a minimum, these people will experience the irritation of considering whether they are liable and perhaps seeking out advice. With few exceptions, the Agency strives to make no distinctions when it gives notice, in part because we often lack the information necessary to determine liability with precision.

Our objective is to clean up sites. Thus, we take broad, sometimes ambiguous provisions of the law and constantly seek to expand them to further that end. In certain areas, the result is that potentially responsible parties will encounter considerable difficulty, in a way that they might not now suspect.


The Burden of Environmental Regulation (Lender's Perspectives on Hazardous Waste and Similar Liabilities)

by Thomas M. McMahon

I recently came across a little publication entitled, "Sue the Lender." It was the script for a video training program prepared for lending officers. As I glanced through it, I noticed that it said nothing about environmental liability.

This example illustrates two points. First, lenders are just beginning to recognize their important environmental liability. Second, lenders are being sued for many reasons in many different substantive areas, of which environmental law is just one. The business relationship that lenders maintain with their borrowers has exposed and is continuing to expose them to liability.


The Burden of Environmental Regulation (Can Someone Else Besides a Lawyer Determine Who Really Is Innocent? Technical Perspectives on Due Diligence and Environmental Assessments)

by Joseph Highland, Ph.D.

The ENVIRON Corporation is a multi-disciplinary scientific and regulatory affairs consulting firm providing a broad range of services to clients concerned with the problems of human exposure to potentially hazardous substances in the environment. We offer expert counsel and technical assistance in toxicology, chemical risk assessment and risk management.

I would like to draw upon our three years of experience with ECRA in New Jersey to discuss the technical problems that have arisen and to propose remedies for the legislature.


The Burden of Environmental Regulation (Local Government's Role in Hazardous Waste—Can Traditional Zoning Police Power Now Extend to the Boardroom and to the Closing Table?)

by William L. Earl

It is appropriate that local government comes at the tail end of today's program. When we advise our clients about the long list of hazardous waste regulation, the final topic is local programs. This order of things, however, is changing. Local governments are now in the hazardous waste regulation business. If a company ignores this development when operating in more than one jurisdiction, it does so at its own peril.

There are some innovative, far reaching programs at the local level around the country. I would like to discuss what local governments are doing and where they might surpass federal or state expertise. I will focus specifically on two programs at either end of the country, one in San Francisco and a proposed one in Dade County, Florida. Finally, I will discuss what sort of impacts this trend will have as local government momentum builds.


The Burden of Environmental Regulation (Closing Observations)

by Owen Olpin

I share with you an idea that was most eloquently stated by the late Leon Green of the University of Texas Law School. Professor Green observed that law and lawyers merit no particular reverence except to the extent they enable people to carry on their various activities conveniently and safely. I will consider this idea in light of some issues raised during our Airlie deliberations.

Our first topic was bankruptcy. We examined the bankruptcy regime as it dealt with yet another subtle and complicated problem testing the capabilities of the bankruptcy bar and bench. In the final analysis, there was no transformation of bankruptcy law into something else by virtue of having addressed tough environmental problems. Rather, there were struggles with the particular issues in bankruptcy law's customary manner within its customary framework. This is confirmed by the Supreme Court's 1985 decision in Kovacs, which held that claims for hazardous waste cleanup costs are just like any other claims presented to a bankruptcy court and may be discharged through bankruptcy proceedings. Only a superficial reading of Midlantic, decided the following year, would yield any different conclusion. Read superficially, one might believe Midlantic holds that no longer can a bankruptcy trustee ever abandon contaminated property. Such a reading, though, is much too simplistic. The key concern of bankruptcy remains the division of the proceeds of the debtor's estate, and Midlantic does not stand for the proposition that claims for cleanup costs have priority over other claims.