Statutory Responses to Littering

Clearly the problem of cigarette litter has attracted the attention of lawmakers at every level. All the laws that we mentioned in this section are current or proposed statutory laws—laws made by legislative bodies. Enacted by the Connecticut General Assembly, the Clean Indoor Air Act of 2004 and Littering Law (amended 2005) are state statutes, as is California’s Vehicle Code, which was enacted by the California State Legislature. The antilittering law in Wallingford is a local law, or municipal ordinance, passed by the Town Council, whose authority derives from the state General Assembly. If Senator’s Lieberman’s proposed Cigarette Litter Prevention Act is passed by the U.S. Congress, it will become a federal statute. Note, by the way, that each of these laws is a criminal statute designed to prohibit and punish wrongful conduct (usually by fine).

Excises and Externalities

These taxes are excise taxes, a rather vague term that refers to taxes placed on “goods” produced within a country. Traditionally, excise taxes have been levied on a wide variety of products, and today they’re often placed on items and activities with which people may harm themselves (such as cigarettes), those around them (alcohol when overused), or the general environment (activities that pollute the air we all breathe).

In talking about taxes, we’re talking about one means of covering the costs of these items and activities, and economists have a word for such costs: externalitiesCost that doesn’t show up as part of the market price for a product. are costs that don’t show up as part of the market price for a product.See Robert S. Pindyck and Daniel L. Rubinfeld, Microeconomics, 7th ed. (Upper Saddle River, NJ: Pearson Education, 2009), 315–16. Actually, externalities can be either bad (i.e., costs) or good (i.e., benefits), but in detailing the negative effects of cigarette littering, we’re obviously focusing on negative externalities. Think of externalities as spillover effects: they’re costs or benefits that result from marketplace transactions—payments of certain prices for certain products—but that aren’t borne by the sellers or buyers of the products exchanged in those transactions. The price of a pack of cigarettes, for example, doesn’t include the cost of cigarette-litter cleanup or the cost of extinguishing wildfires. These costs are borne by other people—people who are outside or external to the basic transactions.See Daniel H. Cole and Peter Z. Grossman, Principles of Law and Economics (Upper Saddle River, NJ: Pearson Education, 2005), 14–15.

Because these costs don’t affect the seller’s total cost in making the product available, they don’t affect the price that the seller charges the buyer. And because the smoker doesn’t pay these costs when he or she pays the price of a pack of cigarettes, the product is, in effect, cheaper than it would be otherwise. How much cheaper? As we’ve just seen, the answer to that question depends on the total cost of externalities. We can’t pretend to trace every penny required to cover the total cost of having cigarettes for sale in the United States, but we can draw some conclusions from a few well-researched estimates. It’s estimated, for example, that the total cost of public and private cigarette-related health care in the United States is approximately $96 billion annually; it’s also estimated that the total cost to U.S. businesses in cigarette-related lost productivity is another $97 billion per year.Campaign for Tobacco-Free Kids, “Toll of Tobacco in the United States of America,” Campaign for Tobacco-Free Kids, http://www.tobaccofreekids.org/research/factsheets/pdf/0072.pdf (accessed November 11, 2011). According to the U.S. Centers for Disease Control and Prevention, the combined cost of cigarette-related health care and lost productivity comes to $10.47 per pack.“Economic Costs Associated with Smoking, Economic Facts about U.S. Tobacco Production and Use,” Centers for Disease Control and Prevention, http://www.cdc.gov/tobacco/data_statistics/fact_sheets/economics/econ_facts/index.htm (accessed November 12, 2011).

If you’re a smoker, in other words, it could be (and from an economic standpoint, should be) worse. Why isn’t it worse? Because the taxes attached to cigarette prices are, as we’ve explained, excise taxes, and excise taxes cover only a part of external costs.

Government Intervention in the Marketplace

This brings us to a crucial question among political theorists, economists, policymakers, business owners, and consumers—just about every member of society who has social and economic activities to pursue: Why does government intervene in marketplace transactions? Or, perhaps more accurately, Why have most of us come to expect and accept government intervention in our economic activities?

Efficiency and the Law

Efficiency, therefore, is one foundation of law: the rule of law encourages “efficiency” in the sense that it requires us to act within certain well-defined limits. It prohibits activities that take place outside those limits—such as stealing resources—because they make the process of allocating resources more wasteful and expensive.

Let’s say, for example, that you (hereinafter “Party A”) enter into a contract with Party B.This section is based on Daniel H. Cole and Peter Z. Grossman, Principles of Law and Economics (Upper Saddle River, NJ: Pearson Education, 2005), 156. The grid in Figure 16.8 "Contract Game" shows all the possible outcomes of this agreement. If you both perform as contracted, you both benefit from the bargain, each realizing a profit of $X. This is the result in the upper-left–hand box of the grid. Let’s say, however, that Party B takes your money but fails to live up to her end of the bargain. In that case, we get the outcome in the upper-right–hand box: because you’ve lost your money, you end up with –$X, and because Party B got your money without spending hers, she ends up with $2X. Understandably, you don’t intend for this to happen and so stipulate that Party B must perform her end of the bargain before you hand over your money. Fearing that you might not pay after she’s lived up to her part of the contract, Party B demands payment before she performs her part. The inevitable result of the contract is now displayed in both lower boxes of the grid: no one does anything and no one earns any profit. In completely wasting the value of every resource committed to the agreement by Party A and Party B, the business process has reached the ultimate level of inefficiency; it’s actually ground to a halt.

Figure 16.8 Contract Game

The only thing that prevents this scenario from playing out in any (or every) contractual situation is the existence of a legal system that can enforce contractual agreements. When such a system is in place, nonperformance makes very little sense. Had Party B taken your money and then failed to perform, the legal system would have required her either to pay back your $X or to live up to the contract, whereby you would earn your expected $X in profit. As a matter of fact, because she would also have been required to pay court costs, she’d end up with less than her original $X—in which case, she’d be worse off than had she performed her part of the bargain in the first place.

Federal Statutory Law: OSHAct

As most of us learned if we studied American government in high school, Article I, Section 1 of the U.S. Constitution gives “all legislative powers granted herein”—that is, all lawmaking powers set aside for the federal government—to Congress.This section is based on John Jude Moran, Employment Law: New Challenges in the Business Environment (Upper Saddle River, NJ: Pearson Education, 2008), 450–53. See also “Occupational Safety and Health Administration (OSHA),” Encyclopedia of Small Business, 2nd ed. (2002), http://findarticles.com/p/articles/mi_gx5201/is_/ai_n19121420 (accessed November 26, 2008). So that’s where we’ll start—with a specific law enacted by Congress under its constitutional powers. Congress passed the Occupational Safety and Health Act (OSHAct) in 1970 to establish standards of safety and health for American workers. In particular, the statute requires employers to keep workplaces free from occupational hazards.

Federal Administrative Law: OSHA

The OSHAct created three administrative agenciesBody created by legislative act to carry out specific duties.—bodies created by legislative act to carry out specific duties. The most important agency established by the OSHAct is the Occupational Health and Safety Administration (OSHA)Federal administrative agency empowered to set workplace safety and health standards and to ensure that employers take appropriate steps to meet them., which is empowered to set workplace safety and health standards and to ensure that employers take appropriate steps to meet them. OSHA was among a number of agencies created during the so-called rights revolution of 1960–1980, in which government acted to protect workplace, consumer, and environmental rights in addition to rights against discrimination based on race, sex, age, and national origin.

Responsibility for implementing the OSHAct is delegated to the Department of Labor, making OSHA one of more than fifty agencies managed by the executive branch of the federal government. Figure 16.9 "Administrative Agencies" shows the growth of federal administrative agencies from the end of the nineteenth century to the present. As you can see, periods of significant increase in the creation of such agencies tend to correspond to eras of perceived market failure—that is, the failure of unregulated market activity to maintain certain levels of fairness or social responsibility.See Kenneth F. Warren, Administrative Law in the Political System, 4th ed. (Boulder, CO: Westview Press, 2004), 41-43, http://books.google.com/books?id=AZVD_QM1QlYC&ie=ISO-8859-1&output=html (accessed November 12, 2011).

Figure 16.9 Administrative Agencies

Administrative Rulemaking: OSHA’s General Duty Clause

In passing the OSHAct, Congress didn’t determine appropriate standards of safety and health, nor did it designate specific occupational hazards. It stipulated only a so-called General Duty Clause requiring an employer to provide “employment and a place of employment which are free from recognized hazards that are causing or are likely to cause death or serious physical harm to his employees.”Occupational Safety and Health Administration, “SEC. 5 Duties” (U.S. Dept. of Labor, 2008), http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=OSHACT&p_id=3359 (accessed November 12, 2011). In setting more specific standards for satisfying this “general duty,” OSHA may choose to adopt those of recognized industry groups or it may set its own standards, usually relying on research conducted by a sister agency, the National Institute of Occupational Safety and Health (NIOSH). In either case, proposed regulations must go through the five-step process summarized in Figure 16.10 "Administrative Rulemaking Procedure". When a regulation has passed through this process, it becomes administrative law, which, as we’ve seen, refers generally to statutes and regulations related to the activities of such agencies as OSHA.

Figure 16.10 Administrative Rulemaking Procedure

Administrative Law and Judicial Review

OSHA Regulation 29 CFR 1910.1000 deals with air contaminants but doesn’t address cigarette smoke itself. Rather, it limits exposure to some of the forty-seven thousand chemical compounds contained in environmental tobacco smoke. Based in part on NIOSH studies, OSHA has set permissible exposure limits for such compounds and stipulated that employee exposure to them shall not exceed designated permissible exposure limits.Occupational Safety and Health Administration, “Air Contaminants—1910.1000” (U.S. Dept. of Labor, 2008), at http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_id=9991&p_table=STANDARDS (accessed November 12, 2011). OSHA continues to use permissible exposure limits to assess levels of specific contaminants, and up until the early 1990s, it also relied on the General Duty Clause to deal with cases involving the hundreds of substances not covered by specific permissible exposure limits. Since then, however, the agency has been forced to restrict its use of both the General Duty Clause and permissible exposure limits in enforcing air-contaminant standards.See Occupational Safety and Health Administration, “Reiteration of Existing OSHA Policy on Indoor Air Quality” (U.S. Dept. of Labor, 2003), at http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=INTERPRETATIONS&p_id=24602 (accessed November 12, 2011). What’s responsible for this change in policy? What could possibly prevent a federal executive agency from enforcing authority explicitly granted to it by Congress?

Case Law

To answer this question, we must understand an extremely important source of law known as case lawBody of law resulting from judicial interpretations of statutory and other forms of law.—law resulting from judicial interpretations of statutory and other forms of law. The business of the courts is resolving disputes, and when a dispute involves an interpretation of law, the court’s decision in the case may establish a precedentRule of case law that must be used by lower courts in deciding future cases.—a rule of law that must be used by lower courts in deciding future cases. The principle behind case law is known as judicial review, and it permits the judicial branch of government to “check and balance” the actions both of the legislative branch in making laws and of the executive branch in enforcing them.

At what point may judicial review affect the process of enforcing administrative law? After an agency rule has passed through the rulemaking process outlined in Figure 16.10 "Administrative Rulemaking Procedure", it usually becomes law. Typically, the courts accept these rules as law by upholding actions taken by agencies to enforce them. But not automatically. In a 1973 case involving a fine based on OSHA’s General Duty Clause, a federal court carefully translated the terms of the clause into three “necessary elements of a violation” and ruled that OSHA could win such cases only if it showed that a violation met all three requirements. A fourth requirement was later added, and OSHA now cites these four requirements in its official interpretation the General Duty Clause, issuing violations only “when the four components of this provision are present.”See National Realty and Construction v. OSHRC (1973), http://cases.justia.com/us-court-of-appeals/F2/489/1257/152788 (accessed November 12, 2011); OSHA, “Reiteration of Existing OSHA Policy on Indoor Air Quality”; OSHA, “Elements Necessary for a Violation of the General Duty Clause” (U.S. Dept. of Labor, 2003), at http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=INTERPRETATIONS&p_id=24784 (accessed November 25, 2008).

In another case, the U.S. Supreme Court confirmed the opinion of a lower court that the OSHAct did not give OSHA “the unbridled discretion to adopt standards designed to create absolutely risk-free workplaces regardless of costs.” In this 1980 case involving workplace exposure to a cancer-causing substance, the Court set down much stricter requirements for the validity of OSHA-issued permissible exposure limits and other standards.Industrial Union v. American Petroleum Institute (1980), http://biotech.law.lsu.edu/cases/adlaw/benzene.htm (accessed November 12, 2011). See Mark Robson and William Toscano, Risk Assessment for Environmental Health (Hoboken, NJ: John Wiley & Sons, 2007), 209–12, http://books.google.com/books?id=s_ih18SnrvcC&pg=PA212&lpg=PA208&ots=aiV5C-1chP&dq=Industrial+ Union%2BPELs&ie=ISO-8859-1&output=html (accessed November 12, 2011); Randy Rabinowitz, Occupational Safety and Health Law (Washington, DC: BNA Books, 2004), 387, http://books.google.com/books?id=11e2Q2zABmIC&pg=PA91&lpg=PA91&dq=National+Realty+and+ Construction+Co,+Inc+v+Occupational+Safety+and+Health+Review+Commission& source=web&ots=G8vrviG6JB&sig=_p1-watPer8eovM6o3hKLjy2Ask&hl=en&sa=X& oi=book_result&resnum=9&ct=result (accessed November 12, 2011).

Today, therefore, because it’s difficult to meet the stringent requirements set by judicial precedent, OSHA rarely resorts either to the General Duty Clause or to permissible exposure limits established later than the 1970s.OSHA, “Enforcement Policy for Respiratory Hazards Not Covered by OSHA Permissible Exposure Limits” (U.S. Dept. of Labor, 2003), http://www.osha.gov/pls/oshaweb/owadisp.show_document?p_table=INTERPRETATIONS&p_id=24749 (accessed November 12, 2011). In the case of cigarette smoke, OSHA rules are applied only in rare and extreme cases, usually when cigarette smoke combines with some other contaminant produced by a manufacturing process.Nolo’s Encyclopedia of Everyday Law: Answers to Your Most Frequently Asked Legal Questions, ed. Shea Irving (Berkeley, CA: Nolo Press, 2007), 63, http://books.google.com/books?id=mvlXStpeSVEC&dq=%22OSHA+rules+apply+to+tobacco+smoke+only+in +rare+and+extreme+circumstances%22&ie=ISO-8859-1&output=html& source=gbs_summary_s&cad=0 (accessed November 12, 2011).

Beyond OSHA: Public Law, Public Policy, and Environmental Tobacco Smoke

And yet, if you’ve spent much time recently around American workplaces, you’ve no doubt observed that a lot of employers have instituted complete or partial restrictions on smoking. In 1985, for example, 27 percent of U.S. worksites with fifty or more employees either were smoke free or limited smoking to separately ventilated areas. According to recent data, the number had risen to nearly 90 percent by 2000.Nell H. Gottlieb, “Workplace Smoking Policies and Programs,” Encyclopedia of Public Health (New York: Macmillan Reference USA, 2002), http://www.answers.com/topic/workplace-smoking-policies-and-programs (accessed November 12, 2011); Jon Jenney, “Clean Indoor Air Ordinances,” Encyclopedia of Public Health (New York: Macmillan Reference USA, 2002), http://www.novelguide.com/a/discover/eph_01/eph_01_00186.html (accessed November 12, 2011). If OSHA standards aren’t responsible for this trend toward smoke-free worksites, to what can we attribute it?

For one thing, of course, national attitudes toward smoking have undergone significant changes in the last three or four decades. Few people would be surprised to find that the percentage of U.S. adults who smoke declined from just over 42 percent in 1965 to 22 percent in 2009.Campaign for Tobacco-Free Kids, “Number of Smokers and Number of Smokers Who Have Quit,” Campaign for Tobacco-Free Kids, http://www.cdc.gov/tobacco/quit_smoking/how_to_quit/you_can_quit/alone/ (accessed November 11, 2011). In addition, more and more American workers are aware of the effects of secondhand smoke. In one study, 76.5 percent of respondents said they believed that secondhand smoke causes heart damage, and 84.5 percent said they believed that it causes lung cancer.“Smoking Prevalence among U.S. Adults, 1955–2007” (2007), Information Please Database, http://www.infoplease.com/ipa/A0762370.html (accessed November 12, 2011); data from Centers for Disease Control and Prevention. Ellen Striebel, “Marion County Residents’ Attitudes toward Secondhand Smoke in Public Places,” December 8, 2005, http://www.bowenresearchcenter.iupui.edu/brc_lectures/BowenLecture2005-12-08.pdf (accessed November 12, 2011). (Interestingly, the conviction that secondhand smoke harms nonsmokers doubles the likelihood that a smoker will succeed in quitting.Stanton A. Glantz and Patrick Jamieson, “Attitudes toward Secondhand Smoke, Smoking, and Quitting among Young People,” Pediatrics 106:6 (December 2000), http://pediatrics.aappublications.org/cgi/content/full/106/6/e82 (accessed November 12, 2011).)

Naturally, public attitudes show up in public policy. In the legal environment of business, we can identify at least two areas that reflect public policy toward smoke-free workplaces:

• Other federal statutes. In particular, two federal laws support civil suits against employers that fail to take action against environmental tobacco smoke or secondhand smoke:

  • The Americans with Disabilities Act protects people with impairments that affect “major life activities.” The law requires employers to provide “reasonable accommodation” that allows impaired employees to perform their jobs. An employee with a respiratory impairment that prevents him or her from working in the presence of cigarette smoke may sue an employer that fails to provide appropriate working conditions.
  • The Rehabilitation Act of 1973 bars employment discrimination on the basis of disability. A worker with a respiratory disability can sue an employer that fails to limit workplace smoke for unlawful discrimination.

• State laws. Currently, twenty-four states have laws governing smoke-free workplaces (up from just two states in 2002), and these and related laws in many states have become more stringent in the past few years. According to the Centers for Disease Control, between 2004 and 2007, the following statistics were true:

  • Eighteen states strengthened restrictions for private-sector worksites, eighteen strengthened restrictions for restaurants, and twelve strengthened restrictions for bars.
  • The number of states requiring all three settings to be smoke free climbed from three to twelve.
  • The number of states with no restrictions on any of the three settings decreased from sixteen to eight.Centers for Disease Control and Prevention, “State Smoking Restrictions for Private-Sector Worksites, Restaurants, and Bars—United States, 2004 and 2007,” Morbidity and Mortality Weekly Reports (MMWRs) (U.S. Dept. of Health and Human Services, May 23, 2008), http://www.cdc.gov/mmwr/preview/mmwrhtml/mm5720a3.htm#content_area (accessed November 12, 2011); Centers for Disease Control and Prevention, “New Study Shows Tobacco Control Programs Cut Adult Smoking Rates” (U.S. Dept. of Health and Human Services, January 30, 2008), http://www.cdc.gov/media/pressrel/2008/r080130.htm?s_cid=mediarel_r080130_x (accessed November 12, 2011).

Connecticut law, for example, restricts smoking in most workplaces with at least five employees to specially ventilated smoking rooms.Saul Spigel, “Statewide Smoking Ban,” OLR Research, June 9, 2003, http://cga.ct.gov/2003/rpt/2003-R-0466.htm (accessed November 12, 2011).

In addition, we shouldn’t underestimate the role played by business itself in the campaign to curb workplace smoking. In Connecticut, for example, the workplace smoking ban applies only to indoor areas, but many companies in the state take advantage of a provision allowing them to ban smoking anywhere on their properties. Businesses, of course, aren’t motivated strictly by civic responsibility. Workplace smoking increases employer costs in numerous ways. Smokers are absent from work 50 percent more often than nonsmokers, and they have twice as many accidents. Smoke-free firms often pay 25 percent to 35 percent less for health and fire insurance, and one government report calculates that U.S. businesses could save from $4 billion to $8 billion annually in building operations and maintenance costs if workplace smoking bans were enforced nationwide.“Smoking in the Workplace Costs Employers Money” (Washington, DC: Action on Smoking and Health, 2005), http://www.ash.org/papers/h100.htm (accessed November 12, 2011); American Lung Association, “Smoking Policies in the Workplace Fact Sheet.” http://no-smoke.org/document.php?id=209, (accessed November 11, 2011).

And last but not least, both for-profit and nonprofit organizations must always contend with lawsuits:See E. L. Sweda Jr., “Lawsuits and Secondhand Smoke,” Tobacco Control (London: BMJ Publishing Group, 2004), http://tobaccocontrol.bmj.com/cgi/content/full/13/suppl_1/i61 (accessed November 12, 2011).

• A man suffering from asthma repeatedly asked Olympic Airways flight attendants to change his seat because of persistent secondhand smoke. They refused, he died, and his widow sued the airline for negligence. A U.S. District Court awarded the plaintiff damages of $1.4 million.
• After sharing an office with a chain smoker for twenty-six years, a nonsmoking New Jersey teacher contracted tonsilar cancer and sought workers’ compensation benefits for a temporary disability caused by secondhand smoke. A workers’ compensation judge and a state appeals panel ordered the Middletown Board of Education to pay the plaintiff $45,000 in disability benefits, $53,000 in medical costs, and $20,000 in legal fees and to provide for any future treatment that he might require.
• When her employer refused to provide reasonable accommodation to protect her from secondhand smoke, a woman suffering from severe respiratory allergies sued under the Americans with Disabilities Act. A U.S. Appeals Court agreed with her contention that her disability interfered with a “major life activity”—namely, breathing. The case is still under consideration.