State Tries New Tactic in Environmental Suit
Safety-Kleen Corp., the world’s largest recycler of chemical solvents, was sued by state health officials Wednesday in an unprecedented case that seeks to force the corporation to report its environmental violations to shareholders and potential investors.
The suit, filed in Alameda County Superior Court, accuses the company of violations at 10 plants, one of them in Los Alamitos, and seeks a court order requiring that any fine assessed against Safety-Kleen be paid out of revenues from sales of new shares of the company’s stock. State health officials say it is the first time in the nation that such a technique to involve shareholders has been tried.
Officials with the California Department of Health Services say that they are seeking a substantial fine and that they want it to capture the attention of Safety-Kleen’s owners, hoping that they will put economic pressure on corporate officials to comply with environmental laws.
Jill Singleton, a spokeswoman with the health department, said that the company has had “a widespread, continuing pattern of serious violations.”
In the suit, Safety-Kleen, which recycles industrial cleaning solvents, is charged with almost 100 violations of hazardous waste laws at its plants in Los Alamitos, Highland, El Monte, San Diego and Sylmar in Southern California and at plants in Central and Northern California. The charges include lack of underground storage tank leak detection systems, unsafe storage of waste, and lack of adequate training and testing.
Safety-Kleen Corp. officials said Wednesday that they would have no public comment on the allegations until Thursday, when corporate officials at the Illinois headquarters would be available.
The company was charged with many of the same violations last year at seven of its plants and was assessed a penalty of $725,000 last May.
Health officials assert that they are trying the new tack because, in their view, last year’s penalty did not deter the company from committing more of the same violations.
“Our legal team only recently heard about this new enforcement tool,” Singleton said. “It requires that the companies use sale of stock revenues to pay for these fines, rather than use other company assets. A Columbia University law professor suggested this recently in an Op-Ed piece in the Wall Street Journal, and that’s where our in-house lawyers saw it. They researched it and decided to try it.”
Singleton said the state chose the Safety-Kleen suit to try the legal tactic because it has “so many assets and repeated offenses.” Attorneys for the state agency hope to eventually use it against other companies.
“Companies could merely pass the cost on to the consumers or lay somebody off or not pay a creditor, so we are hoping through this tool, what happens instead is the owners of the company become aware of the noncompliance with environmental laws and exert pressure on corporate management,” she said.
Federal Securities and Exchange Commission requirements dictate that any pending litigation and fines that could be paid from stock sales of a publicly held company be reported to investors and stockholders.
