Recognizing and Minimizing Tort and Regulatory Risk

Recognizing and Minimizing Tort and Regulatory Risk

LAW 531

This paper is intended as a resource for manufacturing companies such as Alumina, Inc., to enable them to recognize and manage regulatory risks and tort liability. The first portion provides general knowledge and defines general concepts. The second portion provides some practical strategies for avoiding or reducing liability through various prevention, detection, and correction methods.

USC (United States Code) CFR (Code of Federal Regulation) or otherwise compiled statutes governing the Environmental Protection Agency (EPA) and/or the state Department of Natural Resources (DNR). Often these statutes will specify requirements for testing and correcting defects relating to any operations over which the EPA or DNR has jurisdiction by virtue of its operations. This body of administrative law may have remedies that range from clean-up requirements to injunctions/cease and desist orders to criminal penalties.

Tort is the French word for a “wrong.” The law provides remedies to persons and businesses that are injured by the tortuous actions of others. Under tort law, an injured party can bring a civil lawsuit to seek compensation for a wrong done to the party or to the party’s property. Many torts have their origin in common law. The courts and legislatures have extended tort law to reflect changes in modern society (Cheeseman, 2010). Whereas a crime is an injury or wrong where an individual can be separated from his/her liberty as a result, a tort is an action in law which, most commonly, has monetary damages as its remedy. This means a person will separate from his/her assets to compensate a victim. Torts consist of three types: strict liability, intentional and negligent.

Strict Liability arises where an individual or company is engaged in an ultra-hazardous activity (blast mining, demolition of buildings, keeping wild animals) or an activity which cannot be made reasonably safe...