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Environmental Policy and Health Equity Case Study
Case scenario:
(Note: Information in this case study was derived from published media reports and court documents. The names of individuals and corporations used in this case study are a matter of public record.)
As countries become more environmentally aware, governments have legislated programs and directives to limit the amount of environmentally hazardous material to which people are exposed. The main targets for this legislation are the large petroleum refining and chemical manufacturing companies. These companies are very careful to adhere to the strict regulations within their own countries but may not abide by these high standards when company operations are established in other countries where legislation may not be as strict. This type of behavior constitutes a double standard that may pose an ethical dilemma for the employees of the company in the country with the stricter rules. While the country in which the subsidiary company is operating may not have standards as strict as those of the country where the parent company is located, the danger of exposure to the chemical of concern for any other population is just as great as that of the population in the country of the parent company. Employees who are concerned about the health of the public in the less developed/regulated country may be fired with impunity if they voice opposition to their company's application of different standards, which would place at risk the health and/or lives of people in the country with less strict regulations. In several states in the USA, these employees are now protected by so-called "whistleblower laws". In New Jersey, this legislation is called the Conscientious Employee Protection Act, and protects employees who act in the public interest from employers who see such acts as counter to their business interests.
Dr. Peter Smith was employed as the director for environmental health and toxicology for the American-owned Petroil Oil Corporation. In addition, Smith ran, in his own time, a scientific publishing company. From time to time, Smith's roles would overlap. Such overlap was seen by Petroil as adding to the company's prestige and was well known to Petroil.
In September, 1989, Smith was sent to Thailand to speak at a symposium on gasoline health risks which was also attended by executives of the Petroil-owned affiliate, Petroil Oil and Gas Thailand (POGT) and Thai government officials. In Smith's presentation, he reported that the level of benzene in gasoline that Petroil was selling in Thailand was 2.5-3.5 times that permitted in the USA, but noted that this was well below the Thail government's legislated level. After he had given his presentation, Smith was said to have been approached by one of the POGT executives who informed him that the level of benzene in gasoline sold by POGT was actually in excess of even the Thai standard. Smith's figures had, in fact, been on the low side.
Benzene is a gasoline additive used as a blending agent to improve engine performance. It is also a very toxic and carcinogenic agent (a leukemogen) and has been targeted in recent years by US environmental law. Currently in the USA, any products containing more than 5% benzene must be labeled "danger" and "poison" with a skull and crossbones symbol. In 1989, maximum allowable benzene levels in US gasoline were in the 1.5-2% range. The US Environmental Protection Agency now limits levels to 1%. In the company's Thai operation, levels were said to be in excess of 5%.
Smith informed the POGT executive that the levels were extremely high and hence very dangerous. He strongly advised the executive to reduce the benzene levels or to stop selling the gasoline. The executive is on record as having stated that upgrading the refineries (built during World War II) to provide lower benzene levels would cost Petroil hundreds of millions of dollars.
On returning to the US after the symposium, Smith was denied access to the toxicology laboratory and was informed that he had been placed on "special assignment indefinitely". Petroil executives alleged that he had used Petroil resources and employees for his publishing business. Smith sued Petroil for wrongful dismissal under New Jersey's whistleblower law (i.e. the Conscientious Employee Protection Act).
In court testimony, Petroil stated that it was unable to produce documents which would have cleared Smith of any wrongdoing because these documents were "eaten" and/or "defecated" upon by mice. In addition, many exculpatory (i.e. exonerating) statements about Smith were excluded from Petroil's investigative report. Petroil's security manager admitted that he had omitted several statements from his report that would have been exculpatory for Smith. Petroil executives also acknowledged that the company had gained prestige from Smith's publishing activities and that many Petroil scientists had published in Smith's journals. Despite these admissions from Petroil, Smith was fired in November 1989. The company denied that he had been fired for voicing concerns over the benzene levels in the Thai gasoline. They launched a smear campaign to discredit Smith, claiming that he had appropriated Petroil funds and employees' time for his publishing company.
Resolving the issues:
The jury awarded Smith US$3.4 million in compensatory damages and US$3.5 million for punitive damages in March 1994. The trial judge allowed only half of the jury's award, saying that the compensatory damages were inapplicable because the whistleblower law was not valid outside the USA.
Both sides appealed the ruling - Petroil against the heavy punitive damages, and Smith for reinstatement of the full award.
In June 1996, a three-judge appellate court ruled in Smith's favor, stating that he had identified a "clear mandate for public policy" under the whistleblower law. In its decision, the panel wrote that Smith's concerns with "professional negligence" and "professional ethics" were justified as Petroil had defied its own policy to apply "health standards of developed countries in the absence of local regulations". Smith's lawyer said that the decision serves as a warning to American oil companies not to ignore the health of customers abroad. He further predicted that US companies would no longer be able to apply the double standard of abiding by strict regulations set by federal and state environmental laws within the USA while allowing hazardous levels to exist elsewhere. A further award of approximately US$3 million was granted by the court in interest payments and additional legal fees. The decision was being appealed by Petroil to the State Supreme Court at the time this case study went to press.
Question 1: Is it the responsibility of companies from more environmentally regulated countries to protect the citizens of other countries by enforcing the strict environmental standards of the more regulated country on their operations in the less regulated country? (provide details on what you believe Petroil should do regarding their high amounts of Benzene in the Thai gasoline).
a) If so, should these standards be enforced even if the facilities in the less regulated country are unable to meet these higher standards? Should the company insist that inadequate facilities be upgraded, possibly at the company's expense?
b) If not, what number of expected deaths could be considered an unacceptable risk to the population of the less regulated country? Who decides what that level is?
Question 2: Would Petroil's decision not to upgrade its Thai plant result in more good than harm? (Identify the stakeholders involved in this decision and what they have to gain or lose as well as impacts this might have on the public health of the area as well as health equity)
Question 3: Discuss how the introduction of whistleblower laws may help to prevent negligent and unethical behavior on the part of corporate executives/employers. Do you believe that such legislation is appropriate in view of the lengths to which Petroil demonstrated that it would go to protect its interests? What distinctions are there between law and professional codes of conduct and would codes be sufficient to prevent unethical behavior?
Question 4: How tenacious should Dr. Smith have been in making his point that people should not be subjected to poisonous levels of a substance regardless of whether they are American or Thai citizens? Were his actions justifiable? Use the principles of beneficence, non- maleficence, autonomy and justice to help formulate your answers. How typical is the fortitude demonstrated by Dr. Smith?