Environmental/Ethical Dilemma.

Legal Ramifications – Civil and Criminal

In 1976, Congress enacted the Toxic Substances Control Act (TSCA) to meet the special environmental problems posed by the use of toxic chemicals (http//www.epa.gov). The primary purpose of the TSCA is to force an early evaluation of suspect chemicals before they become economically important. The EPA collects information under TCSA sections that require manufacturers and distributors to report to the EPA any information they possess that indicates a chemical substance presents a substantial risk of injury to health or to the environment. Therefore, if we choose to dump toxic chemicals into the company’s holding pond, rather than take steps to prevent this contamination, we are taking the risk of exposing company employees to toxic waste, as well as intentionally violating the Toxic Substances Control Act (TSCA) requirements.  This could result in employees of the company being subject to civil and criminal fines and imprisonment.        

Congress amended the Solid Waste Disposal Act by drafting the Resource Conversation and Recovery Act (RCRA) also in 1976.  This act was an effort to ensure companies properly handled and disposed of hazardous and toxic waste using strict guidelines.  Under the RCRA, companies that generated hazardous types of wastes have two primary obligations (Reed, Shedd, Moorehead and Corley 2002):

• Determine whether its waste would qualify as hazardous under RCRA
• To see that such wastes are properly transported to a disposal facility that has an EPA permit or license for proper disposal.  

This law also gives the EPA investigator rights to enforce record keeping requirements and assess penalties for failure to comply with its strict provisions.  Penalties include criminal fines and imprisonment.  Between the years of 1983 and 1990, criminal charges were levied against 253 individuals and corporations under the RCRA.  By the end of this period, RCRA requirements cost businesses an estimated $20 billion annually.  What specific ramification is the company subject to if we choose to dump toxic chemicals into a holding pond?  According to the U.S. Code (2003) penalties include:

Civil Violations

• $25K/Day Injunction (retroactive from time of first pollution incident)

Criminal Violations

• 2 Years in Prison (first offense)
• $100K/Day
• 4 Years in Prison (subsequent offenses)

Knowing Endangerment

• 15 Years in Prison
• $250K (personal),  $1 Million Corporate

The company could be assessed a civil action in the U.S. District Court for any past or current violations.  This would require compliance immediately or within a specified time period or both, which may include a temporary or permanent injunction.  We also face risk of permit suspension or revocation by the Administrator.  In assessing such a penalty, the Administrator will take into account the seriousness of the violation and any good faith measures the company has taken to comply with applicable requirements.

If the company’s dumped toxic chemicals made their way into a waterway, such as into an underground water table, we would be in violation of additional federal laws.  One of these laws is the Clean Water Act, passed by Congress in 1972 for the purpose of regulating and eliminating water pollution (http://www.epa.gov).  A second law is the Safe Water Drinking Act of 1974.  It was designed to protect our drinking water from contamination of toxic chemicals and pollutants.  A third law is the Ground Water Protection Act designed to protect our ground water from pollutants (http://www.emsei.psu.edu).  All three of these federal laws have strong enforcement provisions, which must be followed by companies that dispose of wastes.

Possible Courses of Action

When deciding on a course of action, it is important to analyze all of the factors mentioned above and endeavor to minimize the financial and ethical impacts of the decision on all directly and indirectly effected parties.  Most environmental laws such as the Clean Air and Water Acts contain citizen enforcement provisions, which grant private citizens and groups the standing to sue to challenge failures to comply with environmental laws (Reed, et.al.).

Listed below are four potential courses of action that may be followed when presented with the knowledge that the Vice President of the company is planning to pollute the environment.  

1. Speak directly with the Vice President and discuss the pollution issue.
2. Speak with the Chief Executive Officer of the company and discuss the pollution issue
3. Notify the State Attorney General and the Environmental Protection Agency (EPA) and discuss the pollution issue.
4. Contact your Business Ethics Hotline and/or company legal department and discuss the pollution issue.

Each course of action and the possible repercussions of these actions are discussed below:

1. Speak to Vice President. A wise course of action when faced with this situation would be to speak directly to the company Vice President (VP).  

1. It is important to request a private audience when addressing this issue so that both parties feel comfortable with the exchange of information and to ensure that the VP does not feel judged or threatened.
2.  Explain to the VP the conversation you overheard and express your concerns for the company.  
3. Discuss the potential legal and financial impacts to the company if the pollution were to occur.  
4. Let him/her know that you have the company’s best interests at heart.
5. Perhaps the VP will respond positively to your discussion.  He/she may be glad you brought this issue to his/her attention first, before escalating it to senior management or to external agencies.   The VP may not have had any illegal intentions in mind when discussing the toxic waste disposal with the environmental consultant.  Perhaps he/she may have been on a fact-finding mission for other purposes. He/she may not have realized the financial impacts to the company and may decide against dumping toxic waste into the holding pond as a result of your timely intervention.  

There are many possible negative consequences to discussing the issue of pollution directly with the VP.  

1. He/she may respond angrily to your accusations or feel threatened by the possibility of future charges.  
2. He/she may seek to demote you or move you into another work group so that you are no longer in a position to monitor his actions.  

1. Furthermore, he/she could just decide to terminate your position altogether.  Employees may be protected under  “whistleblower” protection legislation.  
2. In 1986, Congress added anti-retaliation protections to the False Claims Act. These provisions, which did not exist previously, are contained in 31 U.S.C. § 3730(h): 

Any employee who is discharged, demoted, suspended, threatened, harassed, or in any other manner discriminated against in the terms and conditions of employment by his or her employer because of lawful acts done by the employee on behalf of his employer or others in furtherance of an action under this section, including investigation for, initiation of, testimony for, or assistance in an action filed or to be filed under this section, shall be entitled to all relief necessary to make the employee whole (http://whistleblowerlaws.com/statutes.htm).

2. Speak with CEO. A second possible course of action would be to discuss the issue directly to the company’s Chief Executive Officer (CEO).  

1. The CEO has full authority over his Vice Presidents and has the greatest responsibility to act in the company’s best interests.
2.      The CEO has a fiduciary responsibility to the company.  The potential penalties that could be leveled against the company could be extremely financially impacting.

3. Notify Appropriate State Regulatory Agencies. The third possible course of action is to notify the appropriate state and federal agencies of the possible pollution.

1. It is also possible to file an anonymous complaint directly with the EPA. They have a website (.)  which allows a person to file a complaint against any known EPA violator.      
2.       Certain state agencies are responsible for ensuring the standards outlined by the Environmental Protection Agency (EPA) are enforced.  It is also possible to file an anonymous complaint directly with the EPA. They have a website that allows you to file a complaint against any known EPA violator.  They will contact the appropriate state authorities to pursue the issue.  
3.      By notifying the environmental agencies, the pollution will be prevented while your anonymity is maintained.  The EPA can closely monitor your firm for any possible transgressions and criminally prosecute the company if toxic waste dumping were to occur.  
4. They can also issue an injunction against the company demanding they abstain from any polluting activity.
5. Both the Clean Water Act and the Solid Waste Disposal Act contain provisions to prevent termination or demotion as a result of exercising your rights under these acts.
6. There are laws within the Occupational Safety and Health Administration (OSHA) and the Whistleblower Provisions of Sarbanes-Oxley Act that protects an employee’s employment if they are accidentally exposed as the whistleblower.

4. Contact Internal Resources. Many companies have internal processes to expose unethical behaviors and actions.   Employees can contact their internal resources, i.e., ethics hotlines, or legal departments, to discuss their concerns.

Summary

When companies understand the financial impacts that violations have towards the company’s bottom line, they will be more cautious in managing their toxic wastes. Summarized below are examples of regulatory fines and penalties under the Resource Conservation and Recovery Act ( RCRA).  Congress amended the Solid Waster Disposal Act in 1976 in order to ensure proper handling and disposal of hazardous and toxic wastes.

There are no easy answers when deciding how to prevent a company from performing an unethical and illegal act. All scenarios potentially have negative repercussions if compliance to the environmental protection laws is not adhered to. It is important to analyze all possible courses of action and decide on the path that has the most positive results for the environment, while attempting to minimize any negative impact to the company.  

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Works Cited

Environmental/Ethical Dilemma 28 November, 2003

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Environmental Management. 29 November, 2003

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Environmental Management. 27 November, 2003

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Reed, O. Lee, Peter J. Shedd, Jere W. Morehead and Robert N. Corley. The Legal and

        Regulatory Environment of Business. New York. McGraw-Hill. 2002.