Safeway (NYSE:SWY) will pay $600,000 to settle U.S. Environmental Protection Agency charges that the grocery chain allowed greenhouse gases to leak from refrigeration equipment at its stores for four years, the Associated Press reported.
Under the settlement reached Wednesday (Sept. 4), the second-largest U.S. grocery chain will also spend an estimated $4.1 million on new systems, equipment upgrades and other changes to reduce leaks on refrigerators at all 659 of its U.S. stores under the Safeway banner. The work will reduce Safeway's company-wide average leak rate from 25 percent to 18 percent or less, and must be completed by 2015.
The EPA settlement, which is the largest ever reached under the Clean Air Act, stems from leaks of a refrigerant called HCFC-22 between 2004 and 2007. Safeway was accused of failing to promptly fix the leaks and failing to keep proper maintenance records. The settlement didn't require Safeway to admit liability.
The settlement apparently doesn't affect more than 700 other stores under banners that include Von's and Dominick's.
It hasn't been reported what the average age of the equipment at Safeway's stores is, or the age of the leaky equipment that led to the EPA charges. But almost all grocery chains may face similar scrutiny over the next few years as chains try to keep equipment going at stores that are decades old. For buildings that don't actually require replacement, the temptation has been strong to give stores a quick makeover instead of a much more expensive full upgrade. But if the EPA has begun to crack down on chains with questionable equipment, older chillers will be likely to get the most attention.
Ironically, the biggest challenge for some smaller chains is now coming from convenience and dollar stores that are expanding their food offerings. In many cases those stores have had to install all-new refrigeration equipment, which is far less likely to leak or use the most problematic refrigerants.
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