Alumina a $4 billion aluminum manufacturer operates globally with 70% of sales in the USA. Alumina is located on the fringes of Lake Dira in the state of Erehwon, which is under the jurisdiction of region 6 of the Environmental Protection Agency (EPA).
Five years ago Alumina was found to be in violation of EPA environmental discharge norms in a routine EPA compliance evaluation. The EPA ordered a cleanup and Alumina promptly cleaned up the excess. An environmental audit afterwards reported that Alumina had corrected the violation. Apart from this one incident, Alumina has a good record with environmental compliance issues. However, recently a local resident, Bates has accused Alumina of contaminating Lake Dira, which she alleges has resulted in her daughter contracting leukemia.
The accusation by Bates of environmental damages has made the State paper, and the leadership team of Alumina; legal counsel, Todd, PR person, Richards, Chairman, Lloyd, and COO, Blake, has met to decide the next course of action. Alumina wants to preserve a good public image and follow EPA standards whilst at the same time preventing any losses, both environmental and commercial.
Todd wants to release a news story explaining to the public how Alumina is in compliance with the Clean Water Act. A news story would show the community that Alumina is making a big effort in following EPA guidelines and would not repeat the mistake of 5 years ago. Lloyd recommends performing an independent audit of the site, to check for new EPA violations, and to take advantage of the EPA’s self-policing incentives, by disclosing any results. Richards considers a private investigation of Bates, but the risk of liability for invasion of privacy is too high, and the bad publicity it would generate. Richards also contemplates a direct approach to dealing with Bates.
Alumina’s leadership chose to conduct an independent site study to check for any new violations. The results...