Alumina Inc: Minimizing Tort Liability Arising Out of Regulatory Risks

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Regulatory risks are risks associated with the failure to comply with a whole host of governmental regulations. Such risks impact a company’s existing assets, earnings, and often, reputation. In the context of tort liability arising out of non-compliance of government regulations, it is in every company’s business interest to allocate resources to identify those risks, and to implement action plans to avoid such risks. In the event those risks do materialize, the company needs to have system in place to properly manage and contain monetary and reputational loss to the company. Additionally, companies will also benefit by anticipating what regulatory changes are upcoming so as to adjust the business practices accordingly, thereby minimizing the exposure to tort liability arising out of non-compliance of regulations.

Given the fact that Alumina was cited by the government five years ago for discharging effluents with higher than permitted concentration of PAH, this paper will first focus on ways to identify risks of non-compliance with environmental regulations, followed by the various preventative, detective, and corrective measures to be taken at various stages of development of those risks.

A. Identifying risk of tort liability involving non-compliance of regulations:

The starting point of identifying risks should be the known risks. In the scenario presented in the simulation, Alumina was cited for environment regulation violations five years ago. The company should review the various regulations involving effluents discharge, in terms of amount of discharge, an...

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...Kelly Bates claims that Alumina is liable to her for “repeated violations” of the regulatory standards. There is no evidence in the scenario presented that Alumina repeatedly violated the standard. In fact, the site investigation report shows that the test results showing compliance with the legal limits. However, if there is evidence showing that Alumina acted recklessly in the previous discharge 5 years ago, there might be greater risk of liability exposure.

In summary, it is essential for Alumina to institute company standards, and implement protocols for handling environmental regulation compliance, ensuring that tort liability involving regulatory compliance is minimized.

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