Business Regulation    

        

Running Head:  BUSINESS REGULATION SIMULATION

Business Regulation Simulation

Rhonda Johnston

University of Phoenix

MBA560 Enterprise Risk

Thomas Kershaw

April 28, 2008

Business Regulation and Alumina Inc.

        Companies that operate within the industrial environment are obligated to follow the regulations mandated by the Environmental Protection Agency (EPA); a federal government subsidiary regarding the effects of industry on human health and the natural environment. Non compliance of environmental regulations can come at extraordinary cost both monetarily and in perception of a company. Alumnia, Inc. (AI); a multi-billion dollar aluminum maker with subsidiaries in manufacturing automotive components, packaging materials, bauxite mining, alumina refining and aluminum smelting with its businesses in eight countries around the world, borders Lake Dira in the state of Erewhon, is one such company (University of Phoenix, 2008). In 1997 AI was cited in violation of excess PAH (Polycyclic aromatic hydrocarbon) levels in the discharging effluents to Lake Dira. The EPA ordered a cleanup. AI responded by an immediate clean up and implementation of new and improved treatment technologies reducing the PAH level to well below limits. AI has stayed well within good standing of overall environmental compliance since the incident.  

Key Facts, Regulations, and Legal Issues

        PAH is a “Polycyclic Aromatic Hydrocarbon also known as Polynuclear Aromatic Hydrocarbons, PNA” (Wisconsin.gov, 2004). Examples of PAH are Benzo (a) pyrene, Benzanthracene, Benzofluoranthene, Fluoranthene and Nanthalene to name a few; 10,000 groups of known PAHs can affect human health by way of breathing, drinking, and touching dependent on the group derivative (Wisconsin.gov, 2004). PAH does not have a designated reportable quantity (RQ) in the 40 CFR 302.4, the site dependent derivative will determine the RQ limit. AI has a prescribed limit of 5 milligrams per liter of hydrocarbons. Derivatives of PAH are probable known carcinogens.

        AI is considered to be a “direct discharger,” a facility that discharges wastewater directly to surface waters. Limitations are based on a technical (industry) or water quality basis in the stream, whichever is most stringent; AI falls under the technical basis. Title 40 CFR 302.4 list the limits reportable quantities for released substances considered hazardous by CERCLA (The Comprehensive Environmental Response, Compensation, and Liability Act), commonly known as Superfund. CERCLA defines a ‘release’ as “any spilling, leaking, pouring, dumping, emitting, emptying, discharging, injecting, escaping, leaching, or disposing into the environment” of any hazardous substance unless permitted by a regulatory agency. A reportable quantity is the limit number that once exceeded must be reported within 24 hours.

        In  April 2002, Kelly Bates; a single mother, publicly claimed that her daughters recent diagnosis of Leukemia resulted from the consumption of Lake Dira’s waters that AI has continually contaminated with “carcinogenic effluents” and alleged that the condition may be as old as AI’s PAH violation in 1997.

        An accusation of this caliber will leave a very negative perception to the community. AI needs to take careful steps in addressing the issue as they attempt to assuage the plaintiff and public while simultaneously substantiating their innocence.

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The first response AI took to the allegations was to conduct an inclusive independent site study of PAH levels in the effluent system. The PAH levels were found to be lower than the prescribed limit finding in favor of EPA standards.

May 2002, another article posted in the newspaper regarding Ms. Bates daughter and AI’s violation of PAH limits in 1997. On the cusp of this article, AI was notified by the EPA that the plaintiff had requested an audit report under the Freedom of Information Act (FOIA). AI had to decide whether disclosure of information was necessary and ...

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