Business Regulation Simulation Essay

2401 words - 10 pages

Business Regulation Simulation
Alumnia Inc. is a $4 billion dollar company that operates in eight countries around the world with 70% of its sales in the United States. They are located by Lake Dira in the state of Erehwon. Alumnia Inc. business interests are in automotive components and manufacture “packaging materials, bauxite mining, alumina refining and aluminum smelting. Alumuna falls under jurisdiction of region 6” of the Environmental Protection Agency (EPA) (University of Phoenix, 2002). The company was cited by the EPA 5 years ago for a Polycyclic Aromatic Hydrocarbon (PAH) discharge in nearby Lake Dira. Five years later, Kelly Bates accused Alumina Inc. of contaminating the ...view middle of the document...

6). The regulation of the Clean Water Act of 1972 “sets goals to eliminate water pollution. Principally, these goals are to make the nation’s waterways safe for swimming and other recreational use and clean enough for the protection of fish, shellfish, and wildlife. The law sets strict deadlines and strong enforcement provisions, which must be followed by industry, municipalities, and other water polluters” (Reed, et. al., 2005, p. 11). A clean up was ordered by the EPA and Alumina complied. “The subsequent environmental audit reported the violation as corrected” (University of Phoenix, 2002).
Five years later, “a 38 year old mother, Kelly Bates, has accused Alumina Inc. of repeatedly contaminating the waters of Lake Dira with carcinogenic effluents, and has alleged that consumption of the contaminated water is the proximate cause of her 10 year old daughter’s leukemia. Bates also alleges that her daughter’s disease may be as old as Alumina’s first instance of environmental law violation” (University of Phoenix, 2002). The legal issue for Alumina is twofold; first to deal with the allegations of corporate negligence for the release of PAHs effect on Kelly Bates’ 10 year old daughter and the second is to substantiate that the PAH levels are fine today. Alumina decided to conduct an independent study and it show that the PAH levels are 5 milligrams per liter and are within safe levels thus not in violation of the Clean Water Act (University of Phoenix, 2002).
Kelly Bates’ still looking for the root cause in her 10 year old daughter’s leukemia requested information under the Freedom of Information Act, 1966, to obtain the information on the PAH release from 5 years ago. A partial release of information was decided to protect company interests and not to disclose proprietary information. This gave time for Alumina to address community concerns and Ms. Bates. Ms. Bates has threatened to file “a million dollar personal injury lawsuit against Alumina Inc. to recover compensatory and punitive damages. Alumina’s negligent conduct, evident in the “serious violation” of environmental laws five years ago , is proximate cause of her daughter’s leukemia, bates alleges” (University of Phoenix, 2002). The legal issue is negligence. “Negligence is the failure to exercise the degree of care the law requires under the circumstances” (Reed, et. al., 2005, p. 18). Alumina’s failed to safe guard local residents by the harmful release of PAHs. In assessing the impact of the regulatory environmental on industry and organizational risks the release of PAHs clearly makes Alumina responsible for liability due to negligence. Alumina is confronted with three legal solutions; to offer her a trust fund to pay for medical expenses, seek arbitration or no negotiation and let Ms. Bates file a lawsuit.
Alumina’s senior staff chose to use arbitration. “In arbitration, disputing parties submit their dispute to a neutral third party, called an arbitrator. ...

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