Wal-Mart found out this week it needs to be more careful about what it puts in its trash. The federal government has accepted a huge payment by Wal-Mart to end a pile of hazardous materials dumping investigations.
The Los Angeles Times reports that Wal-Mart has agreed to pay $27.6 million to settle charges brought against it by the U.S. Attorney’s Office for the Central District of California, which has been investigating the retailer for years regarding violations of environmental laws in the disposal of hazardous materials.
In Footnote 11 of Wal-Mart’s 2010 Annual Report, the company discusses its legal problems, including the California hazardous materials investigation. “On November 8, 2005, the
company received a grand jury subpoena from the United States Attorney’s Office for the Central District of California, seeking documents and information relating to the company’s receipt, transportation, handling, identification, recycling, treatment, storage and disposal of certain
merchandise that constitutes hazardous materials or hazardous waste.” The merchandise that raised all the fuss included pesticides, chemicals, paint, acid, aerosols, fertilizer and motor oil — items that California residents are expected to dispose of properly.
According to the Los Angeles Times, the investigation began when a San Diego County Department of Environmental Health inspector saw a Wal-Mart employee dumping bleach down a drain. And in Northern California, a child was found playing in a fertilizer pile left near his home by Wal-Mart. No doubt the fertilizer pile was left to help area families ‘live better.’
According to Wal-Mart, the U.S. Attorney’s Office told the company four and a half years ago that it was a target of a criminal investigation into potential violations of the Resource Conservation and Recovery Act (“RCRA “), the Clean Water Act and the Hazardous Materials Transportation Statute.
“This U.S. Attorney’s Office contends, among other things, that the use of company trucks to transport certain returned merchandise from the company’s stores to its return centers is prohibited by RCRA,” Wal-Mart explains, “because those materials may be considered hazardous waste.”
The government told Wal-Mart that the company must ship from its store certain materials as ‘hazardous waste’ directly to a certified disposal facility using a certified hazardous waste carrier — not its ordinary trucks. Wal-Mart replied that the practice of transporting returned merchandise
to its return centers for disposal by certified facilities, met all the applicable laws and regulations.
But the company was hedging its bets with shareholders. “While management cannot predict the ultimate outcome of this matter,” the Wal-Mart footnote says, “management does not believe the outcome will have a material effect on the company’s financial condition or results of operations.”
Wal-Mart notes that a second U.S, Attorney’s Office in the Northern District of California also was investigating the company, and a third investigated was launched by the California Department of Toxic Substances Control, seeking documents from Wal-Mart regarding two of the company’s distribution facilities.
A fourth investigation was initiated by the Los Angeles County District Attorney’s Office, which sent the retailer a subpoena for documents regarding Wal-Mart’s handling of materials and hazardous waste.
If these investigations were not enough, California state and local government authorities also had initiated investigations into illegal disposal of hazardous materials. The San Diego County District Attorney’s office and the California Attorney General’s office charged that Wal-Mart’s 236 stores and distribution centers were in violation of environmental laws.
“The company is cooperating fully with the respective authorities,” Wal-Mart told its shareholders. “While management cannot predict the ultimate outcome of this matter, management does not believe the outcome will have a material effect on the company’s financial condition or results of operations.”
Wal-Mart’s Annual Report was available to shareholders for only a week when it became clear that not only was Wal-Mart ‘cooperating fully’ with law enforcement officials — — it had already set in motion a $27.6 million settlement to dump money on top of the investigations to end the bad public relations caused by the mounting investigations. The settlement was signed this week by a Superior Court Judge.
When these settlements are announced, all sides slap themselves on the back and move on. “This settlement ensures that Wal-Mart obeys the laws when shipping potentially hazardous materials on our streets and highways,” the Los Angeles County District Attorney told the media.
The only excuse Wal-Mart could summon up was that the dumping was done years ago. A Wal-Mart Vice President, working from a prepared statement, said: “It’s important to note that these incidents happened at least four years ago. Since then, we have worked closely with the state of California on a comprehensive hazardous waste plan that includes improved training programs, policies and procedures.” The fact that Wal-Mart got busted in 2005 means we should cut them some slack today.
Of the settlement money, $3 million will go into a fund to pay for similar environmental investigations. Another $3 million will be used to make sure Wal-Mart store comply with environmental laws in the future.
Wal-Mart explains in Footnote 11, entitled “Legal Proceedings,” that “the company may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if it believes settlement is in the best interest of the company’s shareholders.” In recent years, Wal-Mart has chosen to pay out large sums to settle litigation that has gone on for many years.
For example, in February of 2010, Wal-Mart paid $12 million to settle a nine year old lawsuit brought by the federal Equal Employment Opportunity Commission (“EEOC “) in the Eastern District of Kentucky on behalf of a class of women who charged that they were not hired in a Wal-Mart distribution center in London, Kentucky.
Readers are urged to email Wal-Mart customer relations at http://walmartstores.com/contactus/feedback.aspx with the following message: “Wal-Mart deserves the ‘environmental unsustainability’ award for its recent hazardous materials dumping in California. It turns out that the Green Giant has a black trash bag full of hazardous materials. At the front door, Wal-Mart is telling its suppliers to get better at making recyclable packaging, while out the back door Wal-Mart is illegally dumping hazardous materials. Your $27.6 million settlement is more than most small business make in a lifetime of work. It’s time for Wal-Mart to clean up its environmental act.”