EPA Launches Criminal Investigation Against Tyson Foods

Poultry producer Tyson Foods has announced that the Environmental Protection Agency is launching a criminal investigation into last May’s wastewater discharge at Tyson’s Monett, Missouri plant.

The information was revealed in Tyson’s Aug. 7 Securities and Exchange Commission filing, in which Tyson acknowledged that it is also being sued by the state of Missouri for the company’s part in allegedly causing a massive fish-kill in Clear Creek in May of this year.

According to a report filed by the state’s Department of Natural Resources (DNR), the city wastewater plant first acknowledged there was a problem on May 21 when it reported a potential violation of effluent discharge into the local waterway. The foul odor led the department back to Tyson, where it discovered that the wastewater the company was discharging apparently contained large amounts of the feed supplement Alimet. The supplement is used to help chickens absorb protein more readily from feed. However, the high doses of Alimet, which Tyson’s Monett plant says it was not aware was in the discharge, caused the city’s wastewater plant to release large amounts of ammonia into the water system. The ammonia has been credited with killing more than 100,000 fish in a four-mile stretch of the river.

If the EPA finds Tyson is in violation, the company will not only be subject to heavy fines but may also be subject to “government contract suspension and debarment,” said Tyson. “We are cooperating with the Environmental Protection Agency but cannot predict the outcome of its investigation at this time.”

The company has also acknowledged that its troubles may not stop with the EPA’s finding.

“It is also possible that other regulatory agencies may commence investigations and allege additional violations. Finally, we may be subject to claims from the City of Monett for causing it to violate various municipal regulations and for damages to the City’s treatment system,” Tyson stated in its August SEC filing.

According to the Monett Times, Tyson said that the Alimet was shipped to the Monett pre-treatment facility on Friday, May 16 for disposal and would normally have been specially processed before being released as wastewater. A series of “miscommunication[s]” between Tyson staff, however, led to a portion of the feed being released into the waterway, which in turn, caused the city’s wastewater plant to counteract the discharge with large amounts of ammonia.

The city has also been cited for violations of the state’s Clean Water Law, since it was working with Tyson at the time to process the company’s wastewater and did not report the potential violation until five days after Tyson had begun releasing the discharge. The city maintains that it was unaware that there were high levels of feed supplement in the discharge.

A string of bad news

It’s been a difficult few years for Tyson. In Feb. 2011, the company agreed to pay a $4 million criminal penalty after investigators asserted that the company had bribed meat inspectors in Mexico. The deferred prosecution agreement charged Tyson with conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and with violating that Act. According to a DOJ brief, the company was forced to “accept responsibility for the actions of its subsidiaries, employees and agents who made improper payments to government-employed veterinarians who inspected two of its chicken processing plants in Gomez Palacio, Mexico."

Tyson admitted in its Aug. 7 SEC report that it is facing a number of other challenges including “other lawsuits, investigations and claims (some of which involve substantial amounts) arising out of the conduct of our business.” It did not specify the nature of the lawsuits, but acknowledged that it has "various employment matters outstanding," which may be a reference to the citations it received in 2013 from the Occupational Safety and Health Administration for a workplace injury relating to missing safety guards and training issues at its Hutchinson, Kansas facility.

The company also announced that it is reconsidering an agreement it made earlier this year to acquire the Hillshire Farms brand (SEC filing, pg. 44). According to the SEC report, Tyson is now questioning whether it will be able to absorb the new acquisition successfully.

“Employee uncertainty and lack of focus during the integration process may also disrupt our business and result in undesired employee attrition. An inability of management to successfully integrate the operations of the two companies could have a material adverse effect on the business, results of operations and financial condition of the combined businesses.”

The company did not say whether the impending criminal investigation and other possible violations played into its decision.

Wastewater discharge: Missouri DNR

Tyson chicken: Tyson Foods