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Who's Gonna Protect You?

The courts have given the EPA the power to protect the environment. Now if they could just stop it from running all over you.

The passage of the Clean Air Act in 1970 turned the tide of environmental damage in America. It was the first of hundreds of increasingly strict federal laws designed to restore the quality of the country's air and water. The EPA throws its considerable authority into enforcing those laws-at times with excessive zeal. Two recent court decisions have defined the scope of that authority.

Clearing the Air?

In 1997, the EPA released new standards for smog and soot, based on updated research on their detriment to public health. A coalition of truckers and other advocates of industry sued, arguing that in passing the Clean Air Act, Congress had unconstitutionally delegated too much of its authority to the EPA. They also contended that the smog standards were invalid because the agency failed to consider the costs of compliance.

In February 2001, the U.S. Supreme Court heard the case and clearly affirmed the authority of the EPA to issue standards without regard to the cost of implementation. The court found that Congress intended for the EPA to consider only public health concerns, not the cost to industry.

However, the court also ruled that the EPA violated the intent of Congress when it called for immediate implementation of the smog standards, rather than allowing regions reasonable time to comply. Further, the court stated that states could take costs into account when planning how to comply.

The decision didn't please the plaintiffs, but it's generally a good one. Congress, not the courts, should determine how to balance public interests with those of business. The EPA may seem like a thorn in the paw of business, but we all benefit from the clean air and water its vigilance has produced. Most of us wouldn't want to sacrifice purity for profits.

Still, many business owners can testify that in its zeal to protect the environment, the EPA has at times run roughshod over individual companies. In fact, a U.S. District Court decision in August 2000 rapped the agency on the knuckles for its tactics. The case involved James Knott, owner of The Riverdale Mills of Northbridge, Massachusetts, which produces wire mesh for lobster traps. The court awarded Knott $68,000 in expenses and legal fees when he sued the EPA under a rarely used provision of the Hyde Amendment, passed in 1997, that allows a defendant who's been exonerated of criminal action to seek legal fees from the government if the prosecution was "frivolous, in bad faith or vexatious."

The EPA had been tipped off by a former employee of the mill that highly acidic waste water was being discharged illegally into the town's sewage system. EPA inspectors tested the water in a manhole outside the plant and confirmed its acidity. However, at the urging of Knott, they also tested water in a second manhole closer to where mill water entered the town system and found it within legal limits. The EPA withheld the information from the second test, however, when it requested a search warrant.

The events that followed were described in the judge's opinion: "A virtual SWAT team consisting of 21 EPA law enforcement officers and agents, many of whom were armed, stormed the facility to conduct pH samplings. They vigorously interrogated and videotaped employees, causing them great distress." The business was then indicted on two counts of violating the Clean Water Act of 1998, and the EPA issued a press release stating that if convicted, Knott faced a jail term of six years and fines of up to $1.5 million.

Later, when a federal prosecutor revealed that the exonerating evidence of the test at the second manhole had been withheld, the agency dropped its case. That's when Knott sued and won compensation.

Our nation now enjoys the cleanest air and water since the 1970s, largely thanks to the vigilance of the EPA. But it's reassuring for business owners to know that when the agency oversteps its bounds, owners can fight back and win.


Steven C. Bahls, dean of Capitol University Law School in Columbus, Ohio, teaches entrepreneurship law. Freelance writer Jane Easter Bahls specializes in business and legal topics.

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This article was originally published in the September 2001 print edition of Entrepreneur with the headline: Who's Gonna Protect You?.

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