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ENVIRONMENTAL CONSULTING FIRMS.
Term Paper ID:28535
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Need for such services for businesses. Environmental law, contract law, labor law. IRS & OSHA roles. Land use control. Uses hypothetical firm for example.... More...
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Paper Abstract:
Need for such services for businesses. Environmental law, contract law, labor law. IRS & OSHA roles. Land use control. Uses hypothetical firm for example.
Paper Introduction:
Federal and state laws that protect the environment affect businesses of all kinds, not just developers. Consequently, numerous firms have sprung up that help companies navigate this area. To succeed, such firms must be knowledgeable about many areas of the law beyond their expertise in environmental law. This paper will examine the breadth of knowledge required for a successful environmental consulting firm.
This hypothetical firm provides services for environmental site assessments, environmental compliance audits, discharge permit acquisitions, and environmental liability assessments associated with real property transfers. In addition to environmental law, the firm would need to be familiar with administrative law, contract law, labor law, and real property law (land use control).
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The latest versionof the law requires the EPA to classify all pesticides as either "generaluse" or "restricted use." The former may be used by anyone, while onlylicensed individuals may use restricted pesticides, and then only inspecific ways.[xxiii] An environmental consulting firm must completely understand all ofthese laws, especially CERCLA, RCRA, and Section 4 4 of the Clean WaterAct. purview. One factor that the IRS cannot consider is how dependent the employeeis on the employer. Finally, the IRS' examination looks at how the relationship betweenthe firm and the worker can be terminated. Though this section was not intended as acomprehensive tool to protect wetlands, court decisions and agencyinterpretations have greatly expanded the jurisdiction of Section 4 4.Consequently, decisions made under Section 4 4 do not necessarily reflect abroad policy consensus but rather a bureaucratic process influenced by manyfactors.[i] In the 19th century, wetlands were viewed as a nuisance, a piece ofland to be reclaimed. Consequently, numerous firms havesprung up that help companies navigate this area. At thattime, representatives from various groups and members of the public cancomment on the proposed regulations. Enter the administrative agency-in this case, theEPA-which attempts to achieve those broad policy goals by drafting andcodifying rules and regulations that give the law teeth. CERCLA established a system of strict liability, so finding theactual wrongdoer is not essential to the EPA. For a discussion of what thatruling means for federal environmental law, see Julia A. The client must understand beforehand what theclient is paying for. [xi]United States v. Several courtdecisions have held that intent is also relevant in determining the statusof the worker. The firm can avoid that possibility (and others like it) by limitingits liability in its contracts with clients. § 1344(a) (1998). OSHA ischarged with regulating workplace safety. Contract Law Every business needs to understand contract law, especially one thatprovides environmental consulting. The IRS' Twenty Factors cover three areas. However, in the modern world, businesses rarely can terminate at willbecause of a host of factors, such as discrimination laws, state laws, andcompany regulations governing severance packages and the like.Consequently, this test has little use. All businesses exercise some control overtheir workers, whether independent contractors or employees. OSHA's relevance to an environmental consulting firm mainly involvesasbestos but also other hazards. For example, if the client only wants a site assessment, theconsultants must sit down and explain exactly what the client will receive. Congress passes legislation to protect theenvironment, but in so doing, it speaks more in broad policy terms thanspecific requirements. Correctly determining their status will save the firm a lot ofmoney, hassle, and headaches from having to deal with governmentalagencies. & Pol'y 187 (Summer 1998). Congress also authorized the EPA to track hazardous wastes as theirsource with the Toxic Substances Control Act (TSCA), enacted in 1976. Navigating these waters can be very difficult, even for themost experienced attorney. [xxii]15 U.S.C. Workers eligible for pensions, bonuses, paid vacations, orsick pay will almost certainly be classified as employees. Identifying and avoiding potential Superfundsites is a critical service for an environmental consulting firm. Several court decisions helped define theexpansive limits of that authority, forcing both agencies to take on moreresponsibility, per Congress' wishes. Another financial factor the IRS considers is the extent of investmentby the worker. Many developers have gone bankrupt waitingfor CERCLA issues to be resolved. To ascertain that fact, the IRS would turn to its "Twenty FactorTest," an analytical tool used by the taxing authority to determine thestatus of workers. government made reclamation ofwetlands a national policy in the 18 s.[ii] Not until the second half ofthe 2 th century did the federal government begin to understand the crucialrole of wetlands in the environment. § 125 (1999). The client may expectthe firm to take care of every environmental matter related to the propertyfor the flat fee paid up front. 318.Indeed, the Court's rulings over the years have held that no one factor canbe decisive in classifying a worker. L. [v]33 U.S.C. Fillburn, 137 U.S. Such agencies serve multiple functions, includingadjudication, regulation, and legislation. § 26 1 (1999) [xxiii]7 U.S.C. [xiv]See, e.g., Hoffman Homes Inc. Somesubstances can be disposed of safely, while others pose such a risk thattheir manufacture must be banned completely.[xxii] Similarly, the Federal Insecticide, Fungicide, and Rodenticide Act(FIFRA) authorizes the EPA to regulate the manufacture and use of thosesubstances. Most of the consulting firm's dealings with administrative agencieswill relate to the agencies' adjudicatory function. RCRA regulates howhazardous wastes are to be handled. This determination is particularly relevant to anenvironmental consulting firm because many people will perform services forthe company off-site. Is it more like a contract between vendor and avendee or like an employer and an employee? Consequently, a landowner can sue an adjacentlandowner for contaminating the land. § 1321 (d) (1999). Otherwise, the consulting firm could open itself to a lawsuitby the buyer. If the worker is an independent contractor, then the firm does nothave to pay any Social Security and Medicare taxes on the worker's behalf.In addition, the firm does not have to provide benefits (such as stockoptions and health insurance) and the worker has no recourse if terminated. It does not matter if the businessactually controls the worker so long as the business has the right to doso. [xxiv]26 U.S.C. 23 .3(t)(1998). But an environmental consulting firm can help aclient complete this process. CERCLA also created a trust to pay for thecleanup of contaminated sites, funded by a tax on the chemical andpetroleum industries. First, it examines theextent of behavioral control. Anothermethod of drafting regulations is called negotiated rulemaking. An environmental consulting firm also would earn its fee by helpingdevelopers and property owners through another legal minefield called theComprehensive Environmental Response, Compensation, and Liability Act(CERCLA), commonly known as Superfund. Baxendale, the firmcould be held accountable for the profits the client would have earned ifthe site assessment had been correct. For engineers completing a site assessment, this is just anotherfactor to consider. Administrative Law The environmental consulting firm will constantly interact withgovernment agencies, such as the EPA, along with many state and localregulatory bodies. If the client receives a negative determination from a local zoningboard or state agency, it can appeal. This is done not so much toprotect the firm's legal position but to insure that the client is notsurprised. Court cases involving challenges to this exercise of authority alsohelp mold the regulations, as happened with the Clean Water Act. While the firm certainly can provide suchservices, Such situations can be avoided with detailed contracts, but theprocess goes beyond that. v. at 365. The federal government limits development of wetlands by requiring apermit for "the discharge of dredged or fill material into the navigablewaters at specified disposal sites."[iv] The Environmental ProtectionAgency (EPA) administers most of the CWA, but the granting or denial ofSection 4 4 permits falls under the responsibility of the Army Corps ofEngineers (Corps).[v] The act also contains a host of exceptions relatedto runoff from normal farming activities.[vi] At first, the Corps took a narrow view of its authority, exercisingjurisdiction only over waters that traditionally would have been considered"navigable."[vii] That changed after an environmental group sued the Corpsin the 197 s and won.[viii] A federal court found that Congress' intent inpassing the CWA had been to assert federal jurisdiction "over the nation'swaters to the maximum extent possible under the Commerce Clause of theConstitution."[ix] Based on the Commerce Clause, which allowed regulationof anything that "affects interstate commerce,"[x] federal jurisdiction wasalmost limitless. TheInternal Revenue Service (IRS) and state and federal labor agencies arepressing this issue. Wetlands serve several importantecological functions, including water purification and flood control.Wetlands also serve as an important habitat for fish and wildlife.[iii]The realization that wetlands play a pivotal role in the Americanenvironment led to a revamped federal policy towards wetlands, a policythat stressed preservation rather than reclamation. Informal rulemaking is permitted if Congress does not specificallyrequire the agency to conduct to notice and comment rulemaking. [xii]33 C.F.R. Manycompanies that are regulated by federal administrative agencies spendmillions of dollars trying to influence (via lobbying) the content offederal regulations. [xvi]Id. More important, does theworker market his or her services to other companies? EPA, 15 Energy L.J. Local and state governments also are helping push the process.Frustrated by the numerous parcels that lie blighted within city limits,many states passed laws that expedited the permit process and encourageddevelopment by limiting liability for the current owners. How is theworker paid? Riverside Bayview Homes, Inc., 474 U.S. It also has little use from the other perspective. A thorough understanding of contract law also will help theenvironmental consulting firm limit its liability. The IRS first offered the Twenty Factor Test in RevenueRuling 87-41, though some of the factors have been watered down bysubsequent court decisions. [ix]Id. J. If the client later determines that it wants the firm to secure permitsfor the site, a new contract will have to be drawn up, with a new feearrangement. The contract mustcontain clauses that limit the firm's liability; otherwise, it could beopened up to huge damage awards. Thisvigilance is required because many chemicals once thought to be safeactually pose a threat to human health and the environment. The Corps responded by expanding its jurisdiction to conform to thecourt's decision. [iv]33 U.S.C. § 1344(d) (1998). Theagencies involved (the EPA, Army Corps of Engineer) initially took alimited view of their authority. 111, 125 (1942). According to theforeseeable or consequential damages rule of Hadley v. The former is muchmore prevalent than the latter. Land Use Control Land use law refers to the restrictions on the development of land.State and local agencies, in an attempt to limit growth, enact suchrestrictions. Many state agencies carry thesame name and often impose even greater requirements on employers. Lobbying administrative committees is probably beyondthe realm of this environmental consulting firm, but understanding theprocess is essential for the firm's success. Federal administrative agencies can make rules in one of two ways:notice and comment rulemaking, and informal rulemaking. The questionis how much control does the business have over the details of theindividual's work? Third, the IRS examines the relationship of the parties. Finally, CERCLA created guidelines for closed and abandoned hazardouswaste sites, including the assignment of liability to those responsible forreleasing the hazardous waste at those sites (with the trust fund payingwhen no party could be held liable, either because of bankruptcy or lack ofproof). Department of Labor. Sellers of landalso encourage development by offering indemnity agreements that immunizethe buyer from Superfund liability. government began regulating such substances in 191 ,and Congress passed the first version of FIFRA in 1947. In addition to environmental law, the firm would needto be familiar with administrative law, contract law, labor law, and realproperty law (land use control). Does the business instruct or train the worker? To determine a worker's status, the IRS relies on the common lawdefinition of employee. [viii]National Resources Defense Council, Inc. Handling the adjudicatory process correctly willstrengthen the client's case if the issue ultimately winds up in federalcourt. Envtl. v.United States, 896 F.2d 354 (9th Cir. The environmental consulting firm must understand these factorsbecause undoubtedly it will be utilizing many people in its business.Engineers, testers, appraisers, etc., will be utilized at one time oranother. It isutilized when the agency's proposed regulations affect only a small group.Those with an interest join in the process and negotiate a settlementamenable to all parties. Hourly seems to indicate employee, while a flat fee suggestsindependent contractor. [xviii]Ausness, supra note 6, at 361. Similarly, theIRS looks at training. The Twenty Factor Test since has been codifiedin Section 31.34 1(c)-1(b) of the IRS' Employment Tax Regulations. The process begins when the EPA identifies a site for cleanup. The EPA thendetermines responsibility, and if the responsible party or parties cannotpay, the Superfund trust pays for cleanup. Notice and comment rulemaking involvesnotice to the public of hearings on the proposed regulations. Business sign their workers tocontracts all the time (see professional athletes and corporate executives)yet treat them as employees. Second, the firm must be aware of regulations enacted by theOccupational Safety and Health Administration (OSHA). This stage shouldalways be thought of as a prelude to litigation, so any agency decision isnot truly final. [xx]42 U.S.C. This hypothetical firm provides services for environmental siteassessments, environmental compliance audits, discharge permitacquisitions, and environmental liability assessments associated with realproperty transfers. United States, 514 U.S. § 1344(f) (1998). v. Private parties may also sue under RCRA, and unlike CERCLA, they canrecover attorneys' fees. Later that assessment turns out to be incorrect, but too late for theclient, who has lost out on a lucrative opportunity. This paper will examine the breadth of knowledgerequired for a successful environmental consulting firm. [vii]Ausness, supra note 6, at 361. When a company violates RCRA, thenCERCLA may apply.[xxi] However, RCRA mostly addresses ongoing situations involving hazardouswaste. If the determination is based onenvironmental grounds, then the consulting firm can help build a case tochallenge that determination. 1993) and Leslie Salt Co. Nohearings are held and public comment, while accepted, is limited. Do they havea written agreement? If so, that is proof of an independent contractor because thepossibility of loss indicates a person in business for himself. The U.S. The contract should include aliquidated damages clause (a specific, limited amount to be paid in theevent either party breaches) and a clause explicitly disclaiming liabilityfor foreseeable or consequential damages. If a builderdiscovers a property is contaminated after buying it and pays to clean upthe parcel, the builder may be able to recover under the Superfund law.The same rules apply as if the EPA had brought the action, only theplaintiff is the builder. [xv]Ausness, supra note 6, at 362. For example, Congress passeslaws that feature broad language, often leaving most of the work toadministrative agencies, which then must draft regulations. Environmental Law Providing services such as discharge permit acquisitions and siteassessments will necessarily involve Section 4 4 of the Clean Water Act,which Congress enacted in 1972. Congress amended CERCLA in 1986, raising the Superfund trust from$1.6 billion to $8.5 billion, and it added another $5.1 billion in 1994).The amendment revised the guidelines to ensure that only dangerous sitesmade it to CERCLA's list, and that only the most dangerous sites found aspot on the Superfund National Priority List.[xx] Superfund often discourages development, as builders avoidpotentially contaminated sites for fear of becoming embroiled in years ofcostly CERCLA litigation. For example, the state may deny a buildingpermit for coastal parcel because of a fear of erosion. Another environmental protection law from the 197 s is the ResourceConservation and Recovery Act (RCRA). [iii]Stokes, supra note 3, at 137. By default, most employees are terminable at will, and thatfact indicates substantial control over the worker. Atbest, developing an area designated as wetlands cannot be done withoutsurmounting extensive (and expensive) bureaucratic hurdles; at worst,development of the land will be denied entirely.[xix] The broad scope of this law means that it could apply to almost anyproposed real estate development, even in suburban areas. at 686. Federal and state laws that protect the environment affect businessesof all kinds, not just developers. "Wetlands now fall within the definition of waters ofthe United States if they are adjacent to waters that otherwise qualify aswaters of the United States."[xv] That only left the question of defining wetlands. today likelyrequires a permit. For aclient already trying to develop a Superfund site, the consulting firm canhelp the developer push the process. If the worker decides what to do and when to do it,that favors classification as an independent contractor. The law, enacted by Congress in198 , greatly expanded federal authority over the release or threatenedrelease of hazardous materials. Endnotes----------------------- [i]Richard C. [ii]Stephen Jay Stokes, The Limit of Government's Regulatory AuthorityOver Non-Adjacent Wetlands: Hoffman Homes, Inc. § 1 3 (1999) [xxi]Office of Solid Waste, RCRA Orientation Manual, EnvironmentalProtection Agency, 1999. For larger firms, that rulemaking process is critical. Labor Law Labor law applies to this business in two ways. Thus, a site could be declaredsafe and usable by the EPA but still not pass the stringent requirements ofOSHA. Supreme Court decision inNationwide Mutual Insurance Company vs. Supreme Court, which held that the Corps' expertise was entitled todeference in determining whether a particular area constituted awetland.[xi] Federal rulemakers codified those two decisions into the Codeof Federal Regulations. In otherwords, the IRS asks whether the business has the right to determine whatwork is done and how the work is done. Many towns andcities have marshy areas that become more desirable as metropolitan areasexpand. United States EnvironmentalProtection Agency, 999 F.2d 256 (7th Cir. Callaway, 392 F.Supp. [vi]33 U.S.C. The Supreme Courtrecently reined in the seemingly limitless reach of the Commerce Clause inLopez v. The act establishes guidelines forthe disposal of waste, both toxic and solid, and sets up programs designedto reduce the amount of waste, in part by recycling. The consultingfirm could demonstrate that the fear is overblown and ask for a variance.Once again, this should be thought of as a prelude to litigation, and ifhandled correctly at this stage, it will strengthen the client's case onceit reaches the courts. Generally,"wetlands are transitional areas, lying between identifiable bodies ofwater and dry land.[xvi] The Code of Federal Regulations defines wetlandsas "those areas that are inundated or saturated by surface or ground waterat a frequency and duration sufficient to support...a prevalence ofvegetation typically adapted for life in saturated soil conditions.Wetlands generally include swamps, marshes, bogs, and similar areas."[xvii] To determine whether an area is a wetland for regulatory purposes,the Corps uses three criteria: wetland hydrology (requires a periodicinundation of water, at a minimum), hydrologic vegetation (such as marshgrasses, willows, and cypress trees), and hydric soils (saturated soil thatdevelops anaerobic conditions).[xviii] Many landowners fight hardest atthis stage of the Corps' evaluation, recognizing that a designation oftheir land as wetlands will have negative consequences for development. Second, the IRS looks at financial control. CERCLA also can work to the developer's advantage. Thus, even those companiesonly remotely connected to the contaminated property can be forced to helppay for its cleanup. 549 (1995). 137,137-38 (Winter 1994). The investorsenvision wetlands as a remote spot populated by waterfowl. To succeed, such firmsmust be knowledgeable about many areas of the law beyond their expertise inenvironmental law. If the firm reimburses the workerfor some or all of their expenses, that indicates an employer/employeerelationship. Darden (1992), 5 3 U.S. In addition, many states have created an extensive web ofenvironmental laws that supplement and sometimes go beyond federalregulations. Ausness, Regulatory Takings and Wetland Protection inthe Post-Lucas Era, 3 Land & Water L. The law has abroader view of what constitutes wetlands, and that is where anenvironmental consulting firm would earn its fee. The firm will need to understand this part of thelaw so it can properly classify all of its workers, both in the office andout at sites. For example, consider a hypotheticalsituation where the firm does a site assessment and informs a client that aparcel of land is too contaminated to be developed. If the worker has invested thousands of dollars to furnisha home office with computer equipment and other office supplies, that isindicative of an independent contractor. When the firm is providing an environmental liability assessment, itneeds to limit its liability with both the seller (the firm's client) andthe buyer. A dissatisfied buyer could sue the seller and the consultingfirm, or just sue the seller, at which point the seller could try todisclaim liability by blaming the consulting firm. Olson, The NewTakings Doctrine, Lopez's Return to State Power, and Impacts onEnvironmental Protection: A Look at Isolated Wetlands Protection, 4Hastings W.-N.W. First, the firm mustunderstand labor law in dealing with its employees and vendors. 121(1985). The fact that an independent contractor isoverwhelmingly dependent on one client is not sufficient to reclassify aworker as an employee, according to the U.S. The hottest issue in labor law today is determining whether someonewho works for a company is an independent contractor or an employee. A challenge to that revised policy was rejected by theU.S. [xvii]33 C.F.R. Thus, under RCRA, the EPA can sue for injunctive relief to force acompany to stop the improper disposal of hazardous waste at a particularsite. See also 4 C.F.R. Those who can be held responsible include the owners or operatorsat the time of the disposal of hazardous waste, the current owners oroperators, those who arranged for the disposal of hazardous waste, andthose who transported the waste to the site. at 363. Second, anenvironmental consulting firm must be aware of safety regulations thatcould be relevant to environmental site assessments. Just because theworker can terminate the relationship does not make him an employee.Similarly, a signed contract between the parties for a fixed time does notmake the worker an independent contractor. 1975). Congress mandated this approach by statute, andthe Department of Treasury then enacted regulations to effectuate thelegislation.[xxiv] This common law test hinges on whether the business hasthe right to control and direct the activities of the worker. Enter entrepreneurs, who try to develop the land, only they soonfind themselves embroiled in the minefield of Section 4 4. Indeed, the U.S. In addition, the liability is joint and several, so aminor offender could have to pay the entire amount. For environmental laws, the rulemaking process is just as importantas the legislative debate. The EPA and Army Corpsof Engineers make determinations that will affect the firm's clients.Negative determinations may result in litigation, especially if theagencies did not follow their own rules and regulations. Whether the worker receives benefits also helps determine hisclassification. Rev. 349, 361 (1995). Could a worker losemoney? Thus, the ability of either party toterminate the relationship has little value in determining a worker'sclassification. The contract must be explicit as to what servicesthe consulting firm will provide. The potential for misunderstandings anddisagreements between clients and the consulting firm is huge because manyclients do not understand or recognize the pitfalls of environmental laws.Consequently, their understanding of the services provided by the firmoften will differ from the firm has agreed to do. Therefore, even the smallest intrastate bodies of watertheoretically fall under U.S. [xiii]Ausness, supra note 6, at 362. Identifying a responsibleparty, litigating the matter, and cleaning up the parcel of land can takeyears, even more than a decade. 199 ). It isplaced on the National Priority List, with its ranking determined by theextent of contamination and the threat to public health. [x]Wickard v. § 328.3(b) (1998). The process takes months before the agency can codify new rules into theFederal Register. Congress authorizedOSHA's creation in 197 within the U.S. After receiving comment, theadministrative agency can go ahead as planned or modify the proposed rules. OSHA can order an employer to correctsituations that pose a threat to workers. 685 (D.D.C. Federal authority now explicitly extends to anywaters, even those wholly within a state, which "the use, degradation ordestruction of...could affect interstate or foreign commerce[.]"[xii] For example, the Corps justifies its regulation of isolated wetlandson the grounds that migratory birds and endangered species use the area,thus creating a connection to interstate commerce.[xiii] Two federalcircuit courts have upheld that assertion of authority.[xiv] As a resultof those decisions, filling any area of wetlands in the U.S. v. Equally important, the firm must explainto the client what services it will provide. TheEPA tracks the 75, types of chemicals produced in the United States,regularly testing them to ensure all potential hazards are known. [xix]Id. Traditionally, the fact that abusiness could terminate someone at will indicated an employer-employeerelationship. § 328.3(a)(3) (1998).
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