Organic grocer, EPA reach $3.5M settlement

October 11th, 2016 by Dakota Software Staff Industry News

A national grocery store chain focused on healthy eating options, organic produce and similar health-conscious products recently reached a major settlement with the Environmental Protection Agency. The grocer, based in Austin, Texas, agreed to pay roughly $3.5 million to the federal environmental regulator as part of a settlement deal agreed upon by both parties in late September. The company ran afoul of EPA rules in the agency's Region 6, which includes Arkansas, Louisiana, New Mexico, Oklahoma and Texas, related to the safe disposal of hazardous waste, according to The Austin American-Statesman.

Specifically, the EPA found supermarkets owned by the company in Region 6 failed to properly document, handle and process returns from customers that contained potentially hazardous substances. While most products sold by grocers don't fall under relevant classifications of hazardous chemicals, products like nail polish and perfumes are considered dangerous when not safely stored and disposed of. Other common merchandise that fall under the environmental regulations include hand sanitizer and vitamins, as The American-Statesman pointed out. In situations where customers returned open containers of such items, stores failed to follow necessary protocols to ensure environmental safety in the local area.

The improvements made following the settlement
Along with the substantial monetary penalty - which was so high partially due to the EPA's recent increase of fine schedules- the supermarket operator will also take steps to mitigate the potential for similar behavior in the future. OzarksFirst.com reported the grocery chain will implement a new hazardous waste tracking program to increase transparency and maintain a better grasp on the location and disposal of potentially dangerous substances sold by and returned to its stores. Regional EPA administrator Ron Curry was happy with the actions promised by the company related to the settlement, according to a statement shared by OzarksFirst.com. He called the tracking system innovative and said he hopes other businesses will use similar models and that, eventually, such an approach will be an industry standard.

The company's written statement on the issue showed a contrite approach to the issue, emphasizing its partnership with the EPA and noting a number of benefits that arose from the settlement. Those include resolving the problems found with stores disposing hazardous waste in five states, improving its current environmental management program and implementing these changes at all of its stores, including those outside of Region 6.

The need for a proactive approach to environmental management
Despite the cost of the settlement, the company's public statements on the issue have taken a positive and proactive attitude. A major concern for the business in the weeks and months ahead may be its reputation and standing among customers who look to it as more environmentally conscious than traditional grocers, thanks to a long tradition of focus on organic and sustainable products.

"It's not a big deal in the grand scheme of things," said Brian Yarbrough, an analyst for Edward Jones, to The American-Statesman. "But it's another black eye for this company and they've had a squeaky clean image."

The reputational damage caused by a violation of EPA rules, fueled by the potential publicity of a settlement or fine payment and any initial reporting about violations, can cause major problems for businesses. A variety of stakeholders, from employees to shareholders, may feel negatively impacted in such a situation. Companies need to take charge in their compliance efforts and not wait for a state or federal regulator to take action before reviewing, fixing and improving processes subject to environmental regulations.