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The challenges that surrounded Alumina, Inc. could have been detrimental to the corporation. Areas the management team needed to concentrate on were the corporation’s image to the general public as well as competitors, current customers and potential customers. Management’s duty was to manage the crisis by preventing extensive losses to the company while at the same time preserving the image of the company and doing right by the community. As a team we agreed upon the strategies and recommendations to solve the challenges for Alumina, Inc., although the timing of how the events would play out was slightly different. We agreed the initial strategy was to release a statement highlighting Alumina’s clean record over the five years. This would show the community our company has been in compliance with current regulations and that we are maintaining a high standard. Following the local newspaper’s release of a damaging article suggesting that Alumina responded quickly because it was on the defense, we agreed that an independent investigation checking for new violations would be a prudent business decision. The result from the investigation indicated our PAH levels were lower than the prescribed levels.
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Strategy for Challenges
When further inquiries questioned our business practices, we decided to a partial release of the report. To ignore this opportunity could be very damaging,
indicating our company is hiding something. A full release of the report would jeopardize Alumina’s competitive position in the global aluminum trade business.
When Bates threatened a million dollar lawsuit, we decided mediation would be an appropriate route to follow as opposed to litigation. This provided a win-win situation for Alumina and Bates. Alumina in exchange for a confidentiality agreement provided Bates with reimbursement of past medical expenses and a lump sum for future medical care for her daughter. The cost of mediation was a fraction litigation costs and avoided negative publicity that comes from a trial.
Congress passed the FOIA in 1967 after a “16 year campaign by journalism organizations and others to promote the citizen’s “right to know.” It was strengthened in 1974 and expanded to include electronic records in 1995″
(Weitzel 2004). The Attorney General is directly involved in applying the rules that govern what information is allowable for public scrutiny through the FOIA. Since 9-11 and the inception of the Homeland Security Administration the amount of information both governmental and private that is considered classified has increased dramatically. This increase of what is considered classified has caused a delay of up to four years in the processing of requests for information (Sangillo, 2004). It is unlikely with the current political climate that the information asked for in the environmental audit report would have been made available
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through the FOIA in time to offset the growing blackening of Alumina’s public image by local journalists.
Alternate strategy
To be proactive we also would recommend an extensive investigation to determine whether or not there was any direct link between leukemia and chemicals discharged by the company. We felt that although Alumina had never had a citation there should have been better monitoring system in place. The EPA is required by section 304 of the Clean Water Act to issue an effluent guidelines program plan every 2 years. The plan sets the schedule for reviewing and revising existing guidelines and identifies new industry categories for which the EPA may develop new effluent guidelines (Beckley, 2004).
The review of the regulation and results, depending on the outcome, would help formulate a plan of action. If there was no relationship, we would have our attorney contact Bates with the findings and make the report known to the public.
We would not settle because by doing so, we would be opening the door to other liability suits. Any resident with a fatal illness could attribute their illness to actions from years ago and expect restitution. This could drive the company into bankruptcy.
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In addition, a single source of communication between Alumina and the public is crucial. All public information should be approved by legal council. The spokesperson must be seen a credible person; well-liked, well-respected, knowledgeable and able to show compassion. The image of the spokesperson is as critical of the message itself. Public and press releases must be practiced until they flow seamlessly.
Timing is a critical element when dealing with media, plaintiffs, and possible litigation. It is essential that you dedicate enough manpower to the situation to assure you are able to investigate, interpret, analyze, and report on topics such as EPA, the Clean Water Act, Toxic Issues, Audit Analyses, and FOIA in a responsible and timely manner.
If we were certain that Alumina did no wrong, the politically correct decision was to mediate with Bates using a neutral third party. This would save money and provide an aspect of caring and compassion to the accuser. If the news has leaked out to the media, then further analyses must be weighed determining strengths, weakness, opportunities, and threats of defending ourselves in court.
In making this determination we must consider the differences in arbitration verses a judge, jury, and how your case is seen in the public eye by
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the community, competitors, and customers. One of the essential decisions in determining arbitration verses litigation is how the case can be settled without damage to our company’s reputation. We would only suggest litigation if we believed we had a full-proof case. “Torts are private or civil wrongs or injury, other than a breach of contract, for which courts will award damages and other relief if the person committing the wrong breached a duty” (Gale 2002).” Further, “Toxic torts present major challenges to tort law and the court system. The central problem for toxic tort plaintiffs is proving the cause of injuries that: 1. remain latent for years, 2. are related to diverse risk factors, and 3. occur at background levels even without any apparent cause…(Gold 1986)”.
Regulations Affecting Private Businesses
The environment is only one area of business regulation where community stakeholders can make emotional arguments supportive of government intervention. There are other areas of business regulation that hold similar dangers for private businesses.
For example, the Freedom of Information Act (FOIA) was a milestone for the American public. FOIA establishes a presumption that records in the possession of agencies and departments of the executive branch of the U.S. Government are accessible to the people. Before enactment of the FOIA in 1966, the burden was on the individual to establish a ‘right’ to examine government
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Records. With the passage of the FOIA, the public was given the “right to know” doctrine. The government now has to justify the need for secrecy.
The Privacy Act of 1974 is a companion to the FOIA. The Privacy Act regulates Federal Government agency record keeping and disclosure practices. The act allows most individuals to seek access to Federal agency records about themselves. The act requires that personal information in agency files be accurate, complete, relevant, and timely. The subject of a record may challenge the accuracy of information. The act requires that agencies obtain information
directly from the subject of the record and that information gathered for one purpose not is used for another purpose.
Global Business is another area that suggests the need for government intervention. As a private business you must be aware of legal issues surrounding global business. When you consider expanding your market beyond your comfort zone, it is critical to know and understand the global laws in detail. You must understand more than just broad issues, often regulations can look similar on the surface but have very complex details that make the regulation very different than what you are accustom to.
Ethical dilemmas also can create dangers for private businesses. Even though something is legal does not always make it ethical. You must know and understand your boundaries, set your mission, vision, goals and objectives and follow them. Put ethical questions to the test. If you are not comfortable with the situation you should abandon the idea.
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There are additional factors that concern the private sector. The Clean Water Act is a good way for businesses to make adjustments and assure they are complying with regulations. It helps identify a problem and bring it to the attention of the EPA, to remain in compliance with the law. [EPA]…studies
conducted concluded that humans could safely tolerate exposure to perchlorate at levels higher than a standard being considered by the U.S. Environmental
Protection Agency. However some environmentalists criticized the manner in which the study was conducted, questioning whether the White House influenced the findings. The EPA is preparing a drinking water standard for perchlorate contamination, but sought input from the National Academy of Sciences before finalizing the findings (Geiselman, 2005).
“The Environmental Protection Agency (EPA) was established in the executive branch as an independent agency pursuant to Reorganization Plan #3 of 1970, effective December 2, 1970. The EPA was created to permit coordinated and effective governmental action on behalf of the environment.” (EPA website). The EPA is not only assigned the task of preventing and controlling pollution, but also is the public’s advocate for a healthier environment. The EPA partners with public and private institutions, individuals, state governments and other government agencies to ensure compliance with the nations’ environmental laws. From 1970 to date, a number of Acts have been enacted to regulate the air, land and water in the US. One of such Acts is the CWA (Clean Water Act) which was established in 1972 and gave the EPA the
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right to set standards for waste water that is discharged into the oceans and rivers by industrial companies. In recent years, the Act has been amended or revised numerous times to give clearer meanings and definitions to water pollutants and the degree of pollution by the EPA; unfortunately, numerous organizations have been fined or sanctioned due to violations of the Act.
In conclusion, the information presented indicates the importance of regulations, understanding regulations, and the implications of not abiding by regulations as set by the government. Regulations have been enacted to protect, although we may often find them cumbersome and expensive to follow. Education, proper legal advice, and participative management allow an organization to adhere to regulations and keep our environment and public safe.
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References:
Beckley, E. (2004). Effluent Program emerges from court oversight:
Waste News. Vol.10 Issue 10 p 17.
Geiselman, B. (2005). Water contamination study raises questions. Waste
News. Vol 10 issue 21, p 14.
Bacha, E. (2004). Ninth circuit explains the meaning of the word “pollutant” under
the Clean Water Act and refuses to ignore the constitution’s Supremacy Clause. Ecology Law Quarterly. 31(3), p751.
US Environmental Protection Agency: History. Retrieved on February
28, 2005 from http://www.epa.gov/history/org/origins/overview.htm
Ashman, A. (1978). Freedom of Information Act..Obtaining research data. ABA Journal. Vol. 64 Issue 9, p1427.
Bolton, J. (1996). Working with Freedom of Information and protection of
Records Management Quarterly. Vol. 30 Issue 1, p20.
Gale (2002) World of Criminal Justice. Retrieved 26 February 2005, from
xreferplus. http://www.xreferplus.com/entry/4828300
Gold, S. (1986). Causation in Toxic Torts: Burdens of Proof, Standards of
Persuasion, and Statistical Evidence. The Yale Law Journal. New Haven:.Vol.96, Iss. 2; p376.
Sangillo,G. (2004). Incarceration of information? [Electronic version]. National
Journal, 36, 3227-3228.
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Weitzel,P. (2004). The steady march of government secrecy [Electronic version].
Nieman Reports, 58(3) 84-89.