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Compliance Costs

Managers are held accountable for regulatory requirements, and fines for violations can be considerable. These are examples of some of the large organizations that have been charged in North America. Many of these organizations have been in existence for many years and still, without the watchful eyes of government, have not implemented programs to improve environment and health and safety risks.

No matter if you are a small, medium-sized, or large organization, it is key to identify the risks tied to your company and implement a plan of action for managing them, prior to being charged. In some cases these charges can put you out of business.

The watchful eyes of government officials have helped in North America; however, in many other countries, standards and regulations are not in place or are not at the same levels as in Canada or the United States.

There may be cheaper labor in other countries; however, the environmental conditions are not the same. For example, soil contamination levels and air pollution levels are high in some of these countries. Food is being grown in these areas, where cheaper labor exists, yet irrigation is being done with gray water, which would not be allowed in North America. These food items are then exported to North America. Is North America lowering its standards? We now import not only food products but also materials that are cheaper because they use materials and processes that governments in North America have banned.

A solution may be to have governments put a tax (tariff) on products being imported that do not meet the quality standards that are required in North America? If so, verification through an audit process would be a new business, bringing international standards for product manufacturing and food processing in those countries.

Barrick Sudamerica

On May 25, 2013, CBC News reported on Barrick Sudamerica Gold in Chile's Pascua-Lama being fined one of the highest environmental fines in Chile's history – $16.4 million. The Diaguita Indians live in the foothills of the Andes, just downstream of this gold mine.

The story tells of the enormous quantity of cyanide Barrick works with and the impact on the glacier-fed river, which they believe is contaminated and drying up. This river irrigates their orchards and vineyards and feeds their animals. There were complaints by the Indians of cancerous growths and aching stomachs.

This small community united to defend their rights to “not take away their water and end their culture,” as quoted in the article.[1]

Cabot Corporation

The chemical industry is another sector under the watchful eye of government and the public.[2] Cabot Corporation, which is headquartered in Boston, Massachusetts, on November 19, 2013, agreed to spend over $84 million to control harmful air pollution in three facilities in Louisiana and Texas. It is the second largest carbon black manufacturer in the United States, which includes rubber additives for tires and brake pads, activated carbon for air purifiers, and chemicals used in the manufacturing of lithium-ion batteries and inkjet colorants.

The company operates in over 20 countries, with 36 manufacturing plants. It will pay a civil penalty of $975,000 as well, related to controlling harmful air pollutants that can cause serious long-term respiratory harm.

The EPA has been focusing on enforcing emissions reductions at carbon manufacturing plants in the United States and ensuring pollution control technology. The 15 carbon black manufacturing plants in the United States do not have controls of SO2 and NOx and do not have continuous emissions monitors.

City of Shreveport

Another example of fines announced by the EPA and Department of Justice is the City of Shreveport, which agreed to do significant upgrades to reduce overflows from its sanitary sewer system.

They were required to pay a $650,000 civil penalty to resolve Clean Water Act (CWA) violations stemming from illegal discharges of raw sewage.

Shell Oil

The EPA reported on July 10, 2013, that “Shell Oil and affiliated partnerships (Shell) have agreed to resolve alleged violations of the Clean Air Act at a large refinery and chemical plant in Deer Park, Texas, by spending at least $115 million to control harmful air pollution from industrial flares and other processes, and by paying a $2.6 million civil penalty.

“Shell has agreed to spend $1 million on a state-of-the-art system to monitor benzene levels at the fence line of the refinery and chemical plant near a residential neighborhood and school and to make the data available to the public through a website.”

Walmart Stores, Inc.

Walmart, the largest retail company in the world, is another organization cited on the U.S. Environmental Protection Agency (EPA) enforcement page, with civil violations of the Resource Conservation and Recovery Act (RCRA) and the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA) for management of hazardous waste at Walmart stores across the country and mismanagement of damaged pesticide containers.

Prior to 2006 Walmart did not have a program in place for managing hazardous wastes at its locations, which would include identification, proper handling and storage, manifesting, emergency response requirements, and proper disposal. This civil penalty cost it $7.6 million in civil penalties to the United States.

Owens-Brockway Glass Container Inc.

The EPA and Department of Justice ordered the Ohio-based OwensBrockway Glass Container Inc., the nation's largest glass container manufacturer, to pay a $1.45 million penalty to resolve alleged Clean Air Act violations at five of the company's manufacturing plants.

It agreed to install pollution control equipment to reduce harmful emissions of nitrogen oxide (NOx), sulfur dioxide (SO2), and particulate matter (PM) by nearly 2,500 tons per year at its five facilities in Atlanta, Georgia; Clarion, Pennsylvania; Crenshaw, Pennsylvania; Muskogee, Oklahoma; and Waco,Texas.

Companies making modifications to their equipment, such as furnaces, get preconstruction permits, which the organization did not do. The company is spending an estimated $37.5 million on controls to reduce emissions of NOx, SO2, and PM and installing continuous emission-monitoring equipment.

What is important related to these charges is that NOx can cause or contribute to many different types of health problems and impact ground-level ozone, acid rain, global warming, etc.

  • [1] The Canadian Press. “Canadian mine giant Barrick fined a record $16.4M in Chile,” May 25, 2013. Available at: cbc .ca/m/touch/business/story/1.1308099.
  • [2] Fines are posted on the EPA government website: cfpub.epa .gov/compliance/cases/.
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