Managers and the Legal Environment 7th Edition by David Madsen, Constance Bagley

Exercise 9

Gregg Entrepreneur is organizing a small company to manufacture a new biotechnology product. Entrepreneur will be a principal shareholder and president of the company. What measures should Entrepreneur take to ensure that his company operates in compliance with environmental laws?
Despite all the measures Entrepreneur has taken to ensure environmental law compliance, his vice president of operations reports that the production manager has been disposing of wastes into the sewer in violation of national pretreatment standards and that she has been submitting false reports to the publicly owned sewage treatment works (POTWs) to cover up the violations. All of the reports have been signed by the vice president of operations, who had no knowledge that they contained false statements. What steps should Entrepreneur take? Should he report the violations to the POTWs even if doing so could result in personal civil or criminal liability? What about the vice president? The production manager? What is Entrepreneur's ethical responsibility? [See, e.g., United States v. Alley, 755 F. Supp. 771 (N.D. Ill. 1990).]