Alleged Storm Water Violations 'Roll Back' on Wal-Mart 
But Consent Decree Stops Short of Companywide EMS

In the first settlement of its kind, the U.S. Environmental Protection Agency (EPA) and the U.S. Department of Justice (DOJ) reached an agreement with Wal-Mart Stores Inc. June 7 to improve the company’s compliance with storm water requirements under the Federal Clean Water Act (CWA). The settlement is the first federal enforcement action against a company for multi-state violations of the CWA’s storm water provisions. 

The consent decree commits the retail giant to implement an environmental management plan to address issues at sites where new stores are being built-at an estimated cost of $4.5 million. But while EPA and Wal-Mart representatives agree that the plan is a sophisticated one, there is a certain degree of confusion as to whether the terms of the settlement-which includes detailed requirements for oversight and monitoring of Wal-Mart’s construction practices-constitute a full-fledged environmental management system (EMS). 

"This particular settlement has to do with construction issues, but it really doesn’t speak to environmental management of stores once they’re built," said Wal-Mart spokesman Bill Wertz when asked if the settlement might spur the corporation to look into an EMS for all of its stores. "I’m not aware of that being contemplated as a result of this settlement." 

Elyse DiBiagio-Wood, EPA counsel in the case, told IESU that her opinion was that while Wal-Mart has a very structured system for checking on the way stores are constructed, the company is not a prime candidate for EMS implementation. 

"I would speculate that there is no overall management system at Wal-Mart, because it manages a lot of its activities separately," she said. 

Behind the Lines 
The circumstances surrounding the case involve Wal-Mart’s compliance with the storm water regulations within the CWA. They state that owners and operators of construction sites must have permits requiring site operators to create and implement pollution prevention plans to minimize pollutant discharge in storm water runoff. In this case, EPA officials conducting routine site inspections in Texas, New Mexico, Oklahoma and Massachusetts found violations that were significant enough to notify EPA headquarters. 

"We’re quite concerned about compliance and that all storm water regulations be complied with," DiBiagio-Wood said, "because not complying with them really has a tremendously negative impact on streams and rivers and lakes." 

The majority of the violations are what can be termed as paperwork violations. Allegedly, contractors working for Wal-Mart failed to:

• have structures in place to prevent contaminated runoff from leaving the site; 
• update their storm water plans; 
• perform the necessary site inspections; and 
• provide adequate training to the people on-site so that they were aware of their responsibility for various requirements. 

"If there is a big construction project, you have to be concerned about what’s going off-site," he said. "[Runoff] can affect water quality and human drinking water in particular." 

Although Wal-Mart is responsible for any activities undertaken by contractors it hires, following those activities can be monumental, according to Richard Mays, Wal-Mart’s outside counsel in the case. He told IESU that the company has perhaps 300 or 400 sites under construction throughout the country at any given time. 

"You’re talking about a sizeable number of contractors at those sites," Mays said. "There is a lot that has to be left to the contractors. They are chosen based on their claimed ability to comply with environmental laws and their knowledge of them. 

"To a great extent, a lot of this has to be delegated to the contractors, and Wal-Mart tries to ensure that contractors are aware of applicable environmental requirements and that they observe them." 

Wal-Mart officials are quick to emphasize that the company pays close attention to contractors and has for some time. Mays stated that company policy dictates that construction contracts include specific wording that requires contractors to comply with the applicable laws and regulations. It also mandates that Wal-Mart construction managers at each site go out periodically and make sure that the environmental requirements are being met. Wal-Mart’s corporate headquarters employs an associate whose job it is to track contractors’ compliance with these requirements. That person tracks reports that come back from the construction managers and records any violations that may have been observed. 

"The beauty of this plan is that Wal-Mart has added additional measures so that it can determine if its stores are being built by contractors who are complying with relevant environmental regulations," Blesi said. 

There also are strict requirements placed on contractors hired by Wal-Mart, who in turn hire others to assist them in their duties. For example, contractors must have meetings with their subcontractors to go over the environmental permitting requirements. Contractors must provide copies of the permits and provide Wal-Mart construction managers with a certification that those meetings have taken place. The controls required by law must be in place before excavation. 

"Through the years, [Wal-Mart] has developed a fairly advanced plan for this industry," Mays said. "I would say that it’s the most elaborate plan of any large developer in the country, as far as how its sites will be managed for compliance with environmental requirements and how they will be monitored." 

All of these things are not policies that came out of the consent decree, however. Wertz made it clear that Wal-Mart has had these procedures in place for some time and has not had any major allegations made against it up to this point. 

"Beginning in 1999, we implemented a number of steps that we are continuing to do today, and a lot of those are what were outlined in the consent decree," he said. 

"We have been doing many of the things that are outlined in the settlement for the last several years in terms of having discussions with our contractors about the requirements of the CWA, making sure that those discussions are carried forward to subcontractors and having sites inspected to make sure that the proper permits and logs are being kept." 

Examining the Details 

While the allegations were serious enough to warrant an investigation into Wal-Mart’s construction practices, the environmental impact of the violations was minimal in terms of damage to the ecosystems surrounding the construction areas. 

"There were no alleged effects on the environment, wildlife, people or anything like that," Wertz asserted. 

"The only substantive allegation was that in a couple of cases there was runoff into a stream from a construction site, but there was no damage to the environment alleged." 

Nonetheless, the company must submit to various inspections by EPA as part of the agreement. There will be quarterly meetings held over the next two years between Wal-Mart’s vice president of construction and EPA’s head of water enforcement to make an assessment of the implementation and effectiveness of the decree. Also, 20 sites will be selected at random and subjected to sampling and analysis of their effluent run-off, and there are 20 sites where an independent auditing firm will be brought in to review the contractor’s compliance as well as Wal-Mart’s oversight. 

Many consent decrees against companies that have been charged with causing serious harm to the environment involve large fines that go toward remediation efforts as well as toward the development and implementation of an EMS. (See IESU, February 2001.) The EPA press release regarding this case states that Wal-Mart has agreed to pay a $1 million civil penalty, which company officials have verified. However, the release also states that Wal-Mart "commits to establish a $4.5 million environmental management plan." 

"There is no basis for that $4.5 million figure," Mays stated. "It’s just a figure that [EPA and DOJ] pulled out of the air." 

He went on to explain that EPA and the DOJ would have liked for Wal-Mart to tell them how much it would cost to meet the requirements of the decree, but the company declined to do so. Many of the elements of the program were already in place within the company’s policy framework, and trying to determine the costs of each aspect of the agreement was an exercise that Wal-Mart officials thought "wasn’t very productive." 

"It’s not like you’re going out to buy a $10 million piece of equipment; that’s pretty easy to fix the price," Mays said. "This is not the kind of thing that you can do that for." 

None of the parties involved have challenged the charges made against Wal-Mart in this case. However, both parties also have agreed that many of the charges revolve around procedural violations and that many of the elements outlined in the consent decree were programs that Wal-Mart already had in place or was in the process of implementing. Add that to the fact that no significant environmental harm resulted from the violations, and one may wonder why the complaint was pursued by the EPA and DOJ at all. Both sides have their own explanation. 

"EPA and the states have a regular inspection scheme where they go out and inspect various different sites, and it turned out that Wal-Mart had enough violations that several of our regions sent in information about the violations," DiBiagio-Wood said. "Wal-Mart just kind of rose to the top." 

Mays had a different opinion. 

"EPA is concerned about discharge of silt from construction sites into streams, lakes and rivers," he stated. "It keeps citing statistics and saying that this is one of the most common forms of pollution problems related to water quality. 

"I think they’re continuing to look for ways to tighten up the requirements of storm water permits, and that they’re using this [case] as an experiment to see if these enhanced management systems will make any difference. I think the motivation of EPA and DOJ was to pick out a company that had high visibility and a lot of construction sites-and Wal-Mart fits both of those criteria. [They] bring a real high-profile case against a company to set a precedent." 

DiBiagio-Wood answered the assertion that Wal-Mart was being made an example for other large developers and retail companies by saying that Wal-Mart is not the only company EPA is looking at. 
"I wouldn’t say at all that Wal-Mart was intended to be an example," she replied. "It just so happened that several of the regions sent in information on Wal-Mart violations. That’s why it was the first, but it certainly won’t be the only one." 

One System for Each Aspect 

Outside of the severity of the violations or motivations behind the charges in this case, it is safe to say that EPA, DOJ and Wal-Mart are satisfied that the company’s programs for meeting the storm water regulations of the CWA will soon be rigorous and comprehensive. All of the parties agree that Wal-Mart’s construction activities will be managed adequately if the company complies with the decree. 

When asked if the agreement would spur the company to pursue similar management system implementation on a companywide level, however, Wertz replied that he did not know. DiBiagio-Wood added that the agency did not use this case as a vehicle for promoting EMS implementation. 

"I don’t think that we approached [this case] with that in mind," she said. "I certainly think that it is a good approach, but it wasn’t one that we went in thinking, ‘This is our objective.’" 

She went on to compliment Wal-Mart’s system for checking on the way stores are constructed, adding that one of EPA’s motivations was that it wanted Wal-Mart to put storm water control requirements on its radar screens as one of those things that it checks. 

"The nature of the violations was such that it made sense to have an environmental management system for Wal-Mart to look at all of its facilities," she explained. "If it was only building one site per year, it would be different. But since Wal-Mart builds hundreds of stores a year, it made sense for Wal-Mart to do an EMS, which would help it work with its contractors to eliminate these types of violations." 

According to the International Organization for Standardization (ISO), an EMS is defined as the part of the overall management system that addresses the environmental impact of all of an organization’s activities. By that definition, Wal-Mart does not have an EMS in place for its corporate activities. But Mays argued that the level of sophistication for the program outlined in this agreement as it relates to Wal-Mart’s construction activities could be considered a type of EMS. 

"If you go through the consent decree and put it all together, there’s a fairly comprehensive system there," Mays said. "It’s certainly worthy of the name when you put it all together."