Audit, Compliance and Risk Blog

Environmental Compliance: Walmart Pays $110 Million in Fines

Posted by Jon Elliott on Wed, Jun 05, 2013 May 28 Walmart bundled guilty pleas in a number of pending federal cases alleging environmental compliance violations at some of the company’s 4600+ stores in the U.S.  These arose because Walmart had not implemented a corporate hazardous waste management program until January 2006, leaving locations to manage—or mismanage—such wastes.

The cases were brought under several environmental laws administered by the US Environmental Protection Agency (EPA) and delegated state agencies, with the criminal cases prosecuted by the US Department of Justice (DOJ).  These cases cover the following:

Hazardous Waste Management (Resource Conservation and Recovery Act (RCRA) and State Laws) Violations

Walmart disposes of a significant quantity of consumer products annually as hazardous waste, when they are damaged or returned and cannot be sold, recycled, or donated.  However, until 2006 Walmart did not have a program for managing hazardous wastes at its retail locations, which sent damaged and returned items to one of six Walmart reverse distribution warehouses (“Return Centers”).  These shipments were made without determining whether any packages qualified as hazardous wastes, and without use of shipping “manifests” for those that did so.  The Return Centers also operated as treatment, storage, and disposal (TSD) facilities without required permits and associated compliance programs.

Pesticide Management (Federal Insecticide, Fungicide and Rodenticide Act (FIFRA)) Violations

From 2006 to 2008, Walmart sent approximately 2 million pounds of damaged containers of pesticides and other hazardous products to a third-party management company called Greenleaf.  Greenleaf was under contract to recycle pesticide products, but lacked the necessary FIFRA registrations to mix, repackage, and re-label some of the pesticides. Greenleaf also did not have the capacity to handle all the products sent to it by Walmart, resulting in significant releases of hazardous substances.  Walmart shipments of damaged containers therefore resulted in FIFRA violations through detachment and/or alteration of pesticide labels and distribution of misbranded pesticidal products.  Walmart subsequently removed and disposed of all these materials under the supervision of the Missouri Department of Natural Resources.

Water Quality (Clean Water Act (CWA)) Violations

Walmart retail facilities in California discharged “hazardous liquids derived from household and pool cleaning products” into sanitary sewer systems, in violation of the sewer agency’s pretreatment programs (required by CWA, and addressed in the public owned treatment works’ discharge permits).

The Settlements

Walmart has already made a number of enhancements to its corporate-level and facility-level environmental compliance programs, in part as a response to the material and waste management shortfalls that resulted in these cases.  The May 28 settlements also involve payment of an aggregate amount of approximately $82 million, consisting of the following payments:

  • $60 million for misdemeanor CWA violations in California ($40 million fine and $20 million community service payments, including $6 million for a “Retail Compliance Assistance Center that will help retail stores across the nation learn how to properly handle hazardous waste”).

  • $14 million in Missouri for a misdemeanor FIFRA violation ($11 million fine and $3 million in community service payments).

  • $7.6 million civil penalty to EPA to settle charges for FIFRA ($1.5 million) and RCRA violations ($6.1 million).

DOJ’s press release noted that Walmart has previously agreed to pay nearly $30 million in penalties to California and Missouri for the same conduct, producing a combined total of more than $110 million.

Lessons Learned?

Walmart is a huge and diverse organization, with corporate responsibilities including actions of over a million employees at thousands of stores.  Walmart has worked for over two years to upgrade its management systems to prevent future violations, and has just paid tens of millions to close out enforcement cases resulting from previous violations.

Smaller organizations can face appropriately scaled penalties for failure to manage environmental responsibilities at their own facilities.  The best way to avoid painful enforcement actions is to ensure proper environmental management before regulators unleash prosecutors.

Implementation Checklist

Does the organization have entity-level environmental management policies and procedures, to:

  • Identify applicable environmental responsibilities, including those triggered by waste management?

  • Establish and implement entity-level and operation/facility/activity-level programs to ensure compliance with these responsibilities, including training of employees who implement these programs in order to ensure compliance?

  • Provide adequate organizational resources in each sub-unit, and organization-wide, to implement applicable responsibilities?

  • Provide internal reporting and accountability, to verify implementation of programs and compliance with applicable requirements?

Where Can I Go For More Information?

  • Walmart webpage on this settlement (including links to its Environmental Compliance Program Fact Sheet) 

  • Walmart case page on EPA’s enforcement website (RCRA and FIFRA cases) 

  • Walmart information on US Attorney (San Francisco) website (CWA cases) 

About the Author Elliott is President of Touchstone Environmental and has been a major contributor to STP’s product range for over 25 years. He was involved in developing 16 existing products, including Environmental Compliance: A Simplified National GuideGreenhouse Gas Auditing of Supply Chains and The Complete Guide to Environmental Law.

Mr. Elliott has a diverse educational background. In addition to his Juris Doctor (University of California, Boalt Hall School of Law, 1981), he holds a Master of Public Policy (Goldman School of Public Policy [GSPP], UC Berkeley, 1980), and a Bachelor of Science in Mechanical Engineering (Princeton University, 1977).

Mr. Elliott is active in professional and community organizations. In addition, he is a past chairman of the Board of Directors of the GSPP Alumni Association, and past member of the Executive Committee of the State Bar of California's Environmental Law Section (including past chair of its Legislative Committee).

You may contact Mr. Elliott directly at:

Tags: Corporate Governance, Business & Legal, California Legislation, Environmental risks, Environmental, EPA, Hazcom