Law 531 - Recognizing and Minimizing Tort and Regulatory Risk

Recognizing and Minimizing Tort and Regulatory Risk

Jane Doe

LAW/531

August 22, 2012

Thomas I. Friedman, Esq.

Recognizing and Minimizing Tort and Regulatory Risk

In this paper I will devise a plan for Alumina explaining how regulatory risks, such as tort liability can be identified and managed through preventive, detective, and corrective measures. In addition I will identify common torts and other regulatory risks found in the simulation and the textbook, such as key facts, regulations, and legal issues. Last, the plan also will describe specific measures to manage each individual risk.

Alumina, Inc. is a $4 billion USA-based aluminum maker that operates in eight countries globally. Alumina is headquartered in Lake Dira, Erehwon, and conducts business operations in automotive components and manufacture of packaging materials, bauxite mining, alumina refining, and aluminum smelting. The USA-based sites are the largest and fastest growing locations and accounts for 70% of its sales.

Regulatory Compliance

        Environmental regulation is one of the most uncompromising areas of government’s regulation of business. The government shows no leniency on industry for regulatory compliance.

        Alumina, Inc. was accused of repeatedly contaminating the waters of Lake Dira with carcinogenic effluents. This contamination allegedly caused leukemia to a 10 year-old resident.  Therefore, a lawsuit was filed against the company of environmental law violation.

Key Facts, Regulations, and Legal Issues

        The first key factor in the simulation is that five years ago, Alumina was in violation of environmental discharge during a routine Environmental Protection Agency (EPA) compliance evaluation. The Polycyclic Aromatic Hydrocarbons (PAH) concentrations have been discovered to be 100 times greater than controlled levels and pose a threat and danger to animal, aquatic, and human life. EPA enforced removal and cleanup of the waste, which Alumina complied.

        Another key factor in the simulation is the EPA compliance incentive and auditing policy. The audit policy encourages organizations to self-police including discovery, disclosure, correction, and prevention of violations, which protect human health and environment by providing incentives to organizations to be in compliance with environmental laws and regulations. Incentives include penalty reduction and no recommendation for criminal prosecution.

        Roger Lloyd, Chairman of Alumina, stated this law and recommended conducting an independent site study to check for any new violations and disclose the results to the EPA to take advantage of their self-policing incentives. The independent site study reported the PAH levels were lower than the prescribed levels therefore; the accusation of “repeatedly contaminating the waters of lake Dira” are incidental.