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Government Reportables
Measurements for government reportables, notices of violation and compliance orders, and fines and penalties are truly lagging indicators of performance. Simply put, they are not an accurate measurement of current performance but are typically one to two years behind because of the various stages in the regulatory process. Despite the timeframe involved, our current performance in these areas is not up to the standards that we have set for ourselves. These numbers should be declining, and they are not. We are not content to accrue government penalties as a way to run our business. Information about how we plan to improve our performance is detailed below. These measurements, however, are all strongly impacted by loss of primary containment (LOPC) performance. As we've made great strides recently in our LOPC performance, we expect that these lagging indicators will generate an improvement on these measurements on the near horizon. Therefore the acceleration of improvement in LOPC performance will improve these lagging indicators but not necessarily concurrent with the same timeframe.
| Government Reportables |
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Government reportables are those incidents that are reported to government agencies – both voluntarily and required. They represent either spills or releases that exceed reportable quantities established by the government, or incidents that exceed our permit level.
In 2003, we reported a total of 226 reportable quantity exceedences and 139 permit/regulatory exceedences worldwide.
Government reportables are primarily triggered by loss of primary containment (LOPC) incidents and permit exceedances. As we have been successful at reducing our overall LOPC numbers, we are optimistic that an LOPC reduction initiative at just a few of our facilities will turn this performance around. Our approach to improvement includes not only reliance upon the LOPC initiative at targeted sites, but continued focus on assuring permit requirements are institutionalized in our management system and effective implementation of our improvement tools in that system. |
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| Notices of Violation and Compliance Orders |
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The number of notices of violation increased from 56 to 82 in 2003. The majority of these violations occurred within our North American operations. There is an overlap between government reportables and notices of violation (NOV's) and compliance orders. Government reportables typically use a self-reporting mechanism to commence their enforcement actions.
Compliance orders are issued by the government setting out the conditions a facility must meet to continue operation. In 2003, we had eight more compliance orders than in 2002.
NOV's also are primarily triggered by LOPC's. To improve this performance, we again are relying upon our LOPC reduction initiative applied at specific sites, which are currently experiencing the most difficulty in this area.
The use of NOV's and compliance orders are a reflection not only of our performance, but also of the enforcement culture of the governmental entities in authority. |
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| Fines and Penalties |
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Fines and penalties are tracked globally and are recorded in the year they are paid. In lieu of paying a fine or penalty, alternate pay amounts usually encompass projects benefiting the environment or local community, such as pollution prevention or remediation programs, public awareness, education activities, or wetland conservation activities. Fines and penalties are troubling not only because they indicate government-mandated performance, but also because they require cash outlays at the same time we are so focused on cost containment within the Company.
In 2003, Dow paid $2,428,070 in fines and penalties. One North American facility accounted for 92 percent of the fines. Because fines and penalties are again a lagging indicator, we expect that our recent improvement in LOPC performance will begin to reflect the progress that we have made. |
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