REGULATORY COMPLIANCE: Is IT ENOUGH?

In 1993, a lawsuit was filed on behalf ofnative groups in Ecuador against Texaco for environmental damage resulting from petrole­um production activities which had occurred many years earlier. The basis of the lawsuit at the time was that Texaco had failed to perform its foreign activities in the same manner that it operated in the U.S. No environmental regulations were in existence in Ecuador at the time of Texaco's operations. Also in 1993, a lawsuit for over $3 billion Australian was filed on behalf of native New Guineans for alleged environ­mental damages and health impacts that occurred as a result of BHP's operations at its Ok Tedi Mine. Since then, Royal Dutch Shell has been subjected to major criticism for environmental damage caused by its operations in Nigeria. A more recent report has criticized Shell for groundwater contamination of an aquifer in Turkey. Southern Peru Copper is now defending against a lawsuit filed by citizens exposed to air emissions from smelter operations in Peru. In all of these cases, much of the alleged damages occurred many years previous. A defense com­monly made by the companies has been that operations were conducted according to the standards in place at the time. This has not limited the lawsuits nor minimized the international publicity which has followed. While such lawsuits have been common in the U.S. for many years, their appearance in other nations have pointed out a growing sense of worldwide concern with regard to the impacts of industrial operations. Of particular concern is the fact that lawsuits have been filed in countries that have up to now had few, if any, environmental regulations. The regulatory environment has been a part of most U.S. business operations since the early 1970's. Now, however, envi­ronmental regulations are starting to be implemented in many less developed nations. This has led to the formulation of a myriad of standards and approaches to environmental regulation around the world. For multinational companies, the challenge becomes one of anticipating the level of compliance that will be required to minimize liabilities not only for the present but also in the future. The purpose of this paper is to provide some guid­ance with regards to choosing a level of compliance, particular­ly as it applies to water quality.