On December 5, 2018, the Minnesota-based Target Corp. store chain settled with a coalition of California governmental entities for $7.4 million, which included enhanced environmental compliance measures and injunctive obligations related to the company’s handling and disposal of retail hazardous waste. The Target settlement follows a similar stipulation filed in California state court on September 17, 2018, whereby major retailer Whole Foods Market and related entities Mrs. Gooch’s Natural Food Markets and WFM-WO, Inc. settled with several District Attorneys for over $1.6 million, following allegations of mishandling various hazardous wastes and materials over a five-year period.
Outside California, the U.S. Environmental Protection Agency has also taken aggressive enforcement action for hazardous waste violations, including with major retailer Macy’s, which was required to correct violations, develop a program with the capacity to train 400 retailers in Oklahoma and Texas, and conduct third-party audits at 11 of its largest facilities in Texas, Oklahoma, Louisiana, and New Mexico, among other injunctive relief and payment of a civil penalty.
This alert provides an update on the Target and Whole Foods settlements in the context of recent enforcement actions involving hazardous waste mismanagement that retailers and other businesses should be aware of as they build and maintain robust waste management compliance programs.
Background
Agency inspection reports, “dumpster dives,” and accompanying violation notices have yielded millions of dollars in penalties over the last several years, as California prosecutors have targeted businesses that generate hazardous or universal waste and have failed to adhere to the state’s complicated and rigorous compliance rules. Effective January 1, 2018, California nearly tripled the administrative and civil penalty for hazardous waste violations from the previous maximum of $25,000 to the current maximum of $70,000 per day per violation.
The state’s aggressive hazardous waste enforcement has been supported by U.S. EPA, which awarded $22.94 million to the California Department of Toxic Substances Control in a three-year grant in September 2017 to support its hazardous waste management and reduction activities. The New Mexico Environment Department received a similar grant, for $213,511, for its Resource Conservation and Recovery Act (RCRA) hazardous waste programs in May 2017.
Commercial and retail businesses must comply with federal regulations under RCRA, 42 U.S.C. § 6901 et seq., 40 CFR Parts 239 through 282, and its state corollaries for the management of hazardous and universal waste from “cradle to grave,” ensuring that management and disposal will safeguard the environment. Once hazardous and universal wastes are generated and identified, they must be managed according to federal and state rules which govern personnel training, recordkeeping, storage, labeling and packaging, maintenance of emergency plans, and registered transport to the proper disposal or recycling destination.
Failure to comply with the applicable statutes, regulations, and guidance can lead to investigations and significant fines, as demonstrated by the Target, Whole Foods, and Macy’s settlements and other recent enforcement actions.
Pattern of Enhanced Hazardous Waste Enforcement
Both the Target and Whole Foods settlements in late 2018 were follow-up agency actions, after these companies had already faced hefty penalties and settlements with state and federal agencies related to similar hazardous waste issues in the past few years. The latest settlements demonstrate a continued pattern of increased enforcement, as well as the difficulties of implementing and maintaining an effective compliance regime.
For example, in January 2017, Whole Foods entered into a nationwide RCRA administrative settlement with U.S. EPA, following settlements with EPA Region 6 covering stores in several southern and southwestern states. Respondents under the nationwide Consent Agreement included Whole Foods Market Rocky Mountain/Southwest, L.P., WFM Northern Nevada, Inc., WFM Southern Nevada, Inc., and Whole Foods Market Lusher Court Frisco, CO, LLC. For purposes of the national settlement, Whole Foods Market voluntarily disclosed to EPA that it may not have consistently made sufficient hazardous waste determinations on all solid waste streams (e.g., discarded consumer products,) or complied with some of the “universal waste” standards at all of its stores, as required by federal regulations. Most, if not all, of the Whole Foods stores generate 100 kilograms of hazardous waste or less in a given month, generally exempting them from more stringent RCRA requirements. As part of the settlement, however, the retailer agreed to an enhanced hazardous waste program that goes above and beyond the minimum requirements applicable under the law, as well as $2.75 million in spending on a supplemental environmental project.
Less than two years later, the grocery chain again faced enforcement regarding its hazardous waste management practices. According to the Complaint filed in California on September 6, 2018, Whole Foods and its affiliates mishandled batteries, electronic devices, ignitable liquids, aerosol products, cleaning agents, and other flammable, reactive, toxic, and corrosive materials, and failed to document employee hazardous waste training. In addition to injunctive relief to prevent the stores from committing similar violations in the future, the settlement requires the retailers to properly label, package, and store hazardous waste to minimize the risk of exposure to employees and customers, and to ensure that incompatible wastes do not combine to cause dangerous chemical reactions. The judgment also requires the companies to properly document and dispose of their hazardous waste at authorized disposal facilities, and to hire an employee to strengthen the companies’ compliance programs.
Whole Foods and Target are the latest in a string of major retailers to settle with California over hazardous waste violations in the past ten years. In March 2018, Home Depot agreed to pay $27.84 million for violations identified during approximately two years of dumpster inspections, including improper disposal of waste including batteries, aerosol cans, paints, and electronic devices routinely sent to landfills not permitted to receive this waste. In April 2017, Dollar General paid a $1.125 million settlement, and Big Lots Stores, Inc. paid $3.5 million, arising out of similar investigations and violations. Other businesses subject to recent enforcement actions include Lowe’s ($18.1 million), Walmart ($27.6 million), Target ($22.5 million), Walgreens ($16.6 million), Rite Aid ($12.3 million), AT&T ($23.8 million), Costco ($3.5 million), and CVS ($13.57 million).
Recommendations for Retailers and Other Businesses
With the help of experienced consultants and counsel specializing in environmental regulation and hazardous waste laws, companies doing business in multiple states should undertake a periodic review of their internal compliance programs, including employee training and recordkeeping, to ensure they are meeting established and evolving regulations in each state. This is especially critical in California, given the demonstrated pattern of enforcement and steep penalties. The recent Macy’s and Whole Foods settlements show hazardous waste management to be a nationwide enforcement priority, particularly for companies with multiple stores/operations across the country. Federal hazardous waste regulations and their state counterparts are stringent and can be complex for companies to navigate. Experienced counsel can help companies navigate this complexity and ensure any internal investigation is protected to the maximum extent allowed by law.
