Sanno Park Tower 12F (Reception) and 14F,
11-1, Nagatacho 2-chome, Chiyoda-ku,
Tokyo 100-6114, Japan

Tokyo Metro Ginza Line: G06 Tameike-sanno Station, Exit 7 (directly accessible through the second basement)

Tokyo Metro Nanboku Line: N06 Tameike-sanno Station, Exit 7 (directly accessible through the second basement)

Tokyo Metro Chiyoda Line: C07 Kokkai-gijido-mae Station, Exit 5 (3 minutes’ walk)

Tokyo Metro Marunouchi Line: M14 Kokkai-gijido-mae Station, Exit 5 (10 minutes’ walk through Chiyoda Line platform)

Special Topics
Special Topics

1. Errors in Responses to Administrative Authorities that could lead to fatal failures and the liability of companies and executives

If appropriate procedures are not followed for the disposal of by-products, secondary products, trash, and environmentally hazardous substances generated in the manufacturing of electrical appliances, automobiles, chemical products, food products, clothing, and other products, various administrative dispositions may be imposed by the competent authorities, prefectures, and municipalities. In addition, in some cases, it may be necessary to report to the competent authorities, prefectures, and municipalities.

Depending on the case, it is not uncommon that smooth business operations may become difficult according to business suspension or surcharges, and/or delisting from a stock exchange. Actually, in the case where a company had developed a business related to the sale of recycled products using the by-products discharged by the company, the municipal government carried out on-site inspections at the company’s head office and factories and ordered the removal of the products on the grounds that the materials were judged to be “waste” defined under the Waste Management Disposal and Public Cleansing Act and such waste did not undergo appropriate procedures and the like. In this case, the company carried out the removal of the products which cost approximately 48.5 billion yen.

Furthermore, there are cases where criminal liability ensues because it is discovered that improper handling has been carried out in violation of laws and regulations. In the aforementioned cases, a fine of 50 million yen was imposed on the company, and its officer who led the misconduct was sentenced to imprisonment with work for two years. It has been pointed out that, in response to breaches of environmental laws, including the Waste Management and Public Cleansing Act, proactive criminal accusations are being made by governmental agencies and local governments. Therefore, such breaches could lead to fatal risks threatening the very existence of the company.

In addition, such breaches might harm the reputation of a company, cause the company to face a large amount of criticism for its response after the discovery of a risk, and cause the company to suffer serious damage such as from the loss of customers.

In some cases, not only companies but also their officers might be held criminally responsible like the aforementioned case or might be liable for a very large amount of damages through shareholder derivative lawsuits (in the aforementioned case, a shareholder derivative lawsuit was filed and one of the former officers was ordered to pay approximately 48.5 billion yen).

2. Features and Problems of Response to Administrative Authorities to be Considered in New Businesses

(1) Responses to administrative authorities expanding the possibilities of new businesses and consideration of such responses

Even in the operations of general companies that do not engage in either waste-related, recycling businesses or environment-related businesses, there are not a few cases in which the companies have been burdened with legal restrictions such as the Waste Management and Public Cleansing Act and other laws and regulations on the recycling and reuse of waste generated in the course of their business, such as situations in which by-products and secondary products generated in the product manufacturing processes are diverted and reused as materials for other businesses or as fuel resources for power generation. This is a problem that many companies are plagued with.

Specifically, “disposal” for recycling and reuse falls under “disposal” subject to the Waste Management and Public Cleansing Act. Therefore, if a company carries out such disposal properly in accordance with the said law, it will incur considerable transportation and disposal costs, which may be a significant burden. Besides, depending on the amount of such costs, the said measures and business of recycling and reuse may not be economically feasible.

For this reason, it is important to investigate business schemes exempted from legal restrictions to the extent possible. If it is impossible to find such a scheme, there are various systems even in cases where they are subject to legal restrictions. Therefore, if the company can investigate and find the optimum scheme in consideration of the relevant systems and restrictions, the possibility of new business entry and expansion will broaden significantly.

Please note, however, there are very worrisome risks in the following two situations and it is necessary to carefully consider them when considering new businesses (especially in cases where environmental and waste administration are issues).

(2) Many national laws and regulations and various ordinances and guidelines of each local government in the field of the environment

There are various waste and environmental pollutants (specified hazardous substances, dioxins, oil contaminants, asbestos, PCBs, underground piles and other underground buried objects and obstacles, etc.) regulated by national laws, regulations, notifications, and guidelines and so on, the number of which are extremely large compared to other legal fields. Moreover, in addition to such national laws and regulations, each local government can also have its own ordinances and guidelines. The scope of such national and municipal restrictions, including but not limited to licensing, registration, notification, and periodic reporting, is extremely broad and complicated, and all must be understood.

In terms of municipal ordinances, they regulate the field of the environment and urban development, including, but not limited to, waste management, waste recycling, plastic resources recycling, carbon neutrality (energy conservation and greenhouse gas measures), photovoltaic power generation facilities, promotion of use of renewable energy, and the environmental standards for buried soil, landscape, private lodging, soil pollution, groundwater, asbestos, and air pollution and so on. There are difficulties in complying with municipal ordinances in that municipalities (cities、towns、or villages) have their own ordinances (standards) as well as the prefectures and that such ordinances including enforcement regulations and guidelines must be covered comprehensively. In cases where there are regulatory standards or additional obligations in the local governmental ordinances that differ from those in the national laws and regulations, there are many cases where overlooking or insufficient understanding of them lead to breaches of regulations.

In addition, when considering new businesses, it is essential to examine the regulatory framework, not only domestically but also of foreign countries, where the company has subsidiaries, and to understand whether planning new businesses is subject to the regulations such as periodic reporting requirements around the world.

Furthermore, since these regulations are revised and updated daily, if appropriate changes are not made in a timely manner, it frequently happens that an act, which was legal a little while ago, becomes illegal, then the company may violate the laws and regulations unknowingly. For example, the Tokyo Metropolitan Government’s environment-related ordinances have been revised many times over just the last year.

(3) Broad administrative discretion over new businesses and waste disposal decisions

In many cases, it is difficult to determine whether or not a waste (and an environmentally hazardous substance), which the company intends to dispose of or recycle, falls under the category of waste subject to laws and regulations (the necessity or not for administrative approval), or whether or not it meets the requirements for using various systems (the possibility of using the system).

Although there are guidelines and guidance in addition to ordinances, as mentioned above, administrative authorities do not necessarily have clear standards and interpretations. In particular, environmental administration is left to the discretion of local governments. In some cases, even though some local governments and government agencies have presented their views that there is no issue, other governments agencies determine that the disposition in accordance with such views is illegal. In fact, when a waste disposal operator used recycled products that solidified a mixture of debris, wood chips, earth, and sand, other than the items approved by the municipal government, along with sludge, on residential development land , the said products were regarded as industrial waste, and the president of such waste disposal operator was arrested by the Kyoto Prefectural Police on suspicion of violating the Waste Management and Public Cleansing  Act.

For this reason, it is essential to request support from experts with extensive experience and successes, in the field of responses to administrative authorities, after careful consideration of, among other things, the latest guidelines and notifications, regulatory trends, judicial precedents, and administrative judgment trends.

In new businesses, the necessity of administrative approval and registration becomes a problem not only in environmental administration but also in the case of registration of financial instruments business operators (e.g., type-II financial instruments businesses, and investment advisory businesses) under the Financial Instruments and Exchange Act and registration of funds transfer services and crypto-asset exchange services (virtual currency exchange businesses) under the Payment Services Act.

3. Problems in Response to Administrative Authorities in the Event of an Accident

As mentioned above, if an accident or other incident occurs under the jurisdiction of the government or if a violation of laws or regulations is suspected, there is a risk of receiving an administrative disposition. In such cases, the company may receive guidance and advice, recommendations, have its name published, and/or receive orders for measures.

In some cases, the company may voluntarily announce countermeasures or improvement measures showing their self-purification efforts to avoid administrative punishment. However, if the contents of such voluntary measures or responses are insufficient, the company may be ordered by the authorities to take steps regardless of their voluntary responses or representations.

As a result, the company may be prohibited from bidding or forced to withdraw from the business. In the case mentioned in 1. above, the company decided to voluntarily collect the waste, however, after that, the company has been ordered by the authorities to take steps to remove the waste.

For this reason, when the company has to report to the administrative authorities and consider voluntary responses in the event of an accident, it is necessary first to request support from experts with a wealth of experience and successes in the field of responding to administrative authorities, and then to take actions including reporting to administrative authorities carefully and promptly.

4. Our services

In response to requests from both domestic and overseas clients, our Office has numerous successes and extensive experience in dealing with various problems and procedures related to waste treatment/disposal and environmental pollution (e.g., soil contamination and water contamination) that may pose a business risk, including negotiations with local governments and governmental bodies throughout the country, and handling administrative and criminal procedures (including disputes).

Our Office also has numerous successes in dealing with registration and administrative guidance for financial instruments business operators (e.g., type-II financial instruments business and investment advisory businesses), funds transfer services and crypto-asset exchange services (virtual currency exchange businesses) under the Payment Services Act.

Rather than simply providing knowledge, we provide services backed by an overwhelming track record and experience.

5. References

  • Kenji Sarukura, “Points to Be Considered in Inquiries to Local Governments, Government Offices, etc., Concerning the Disposal of Environmental Hazardous Substances and Waste” (“BUSINESS LAWYERS,” May 22, 2020)
  • Kenji Sarukura, “The Risks and Points to Be Considered in Response to the Revised Ordinance; and “Ordinance Alerts””  Supporting Ordinance Management” (“BUSINESS LAWYERS,” July 14, 2022)”
  • Kenji Sarukura, “Environmental Contamination / Waste Risks and Legal Work Pertaining to Real Property Business / M&A” (SEIBUNSHA, July 2021)
  • Kenji Sarukura, ” Environmental Risks and Corporate Sustainability (SDGs and ESG)” (Special Topics of Ushijima & Partners, May 25, 2022) (
  • Kenji Sarukura, “Practical Points to Note Concerning Disposal of Waste for the Purpose of Recycling ” (Newsletter of Ushijima & Partners, June 5, 2020)
  • Kenji Sarukura, “Regulation regarding Environmental Hazardous Substances, Wastes, Greenhouse Gases, Etc., that can be Blind Spots for Businesses (Regulation for Each)” (Seminar sponsored by Business & Law, 2022)
  • Kenji Sarukura, “Determination of the Applicability of Biomass Power Generation Fuels to Wastes (Based on Case Studies of the Ministry of the Environment 2021)” (“BUSINESS LAWYERS,” January 6, 2023)
  • Kenji Sarukura, “Points to Consider in Determining Whether an Investment Advisory Business Registration is Required (2022 Later Revision)” (Newsletter of Ushijima & Partners, October 27, 2022)
  • Kenji Sarukura, ” Laws and Regulations and Practical Points Regarding Construction Waste Disposal and Recycling (Part 1)” ” Laws and Regulations and Practical Points Regarding Construction Waste Disposal and Recycling (Part 2) ” (“BUSINESS LAWYERS”, November 2 / 9, 2020))
  • Kenji Sarukura, “[Serial] Recent Scandals and Crisis Management / Risk Prevention (First): Points for Early Detection and Investigation of Fraud Considering the Case of Unauthorized Dumping of Industrial Waste” “[Serial] Recent Scandals and Crisis Management / Risk Prevention (Second): Points for Reference and Formulation of Recurrence Preventive Measures after the Detection of Fraud Considering the Case of Unauthorized Dumping of Industrial Waste ” (“BUSINESS LAWYERS”, February 22, 2022 and March 1, 2022)