SMOKINCHOICES (and other musings)

September 9, 2012

$12.5M fines for Scotts (birdseed)

Scotts to pay $12.5M in fines

Toxic birdseed, falsified EPA forms among the violations


Scotts Miracle-Gro Co. has agreed to pay $12.5 million in civil and criminal fines and penalties for violating federal pesticide laws.

A U.S. District Court judge in Columbus ordered the criminal penalties yesterday against the Marysville lawn-care company. Those totaled $4.5 million, the largest criminal penalty a company ever has paid under the Federal Insecticide, Fungicide and Rodenticide Act.

Scotts also settled separate civil charges by the U.S. Environmental Protection Agency by agreeing to pay $6 million in civil penalties as well as $2 million on environmental projects. That deal stems from Scotts’ distribution or sale of unregistered, canceled or misbranded pesticides, including some with inadequate warnings, according to the EPA.  Those violations are not related to the criminal violations.

Scotts shares rose 59 cents to $43.21 on the New York Stock Exchange yesterday. However, the shares were falling in after-market trading.
That settlement is the largest civil penalty paid under the pesticide act, the Justice Department said.

The criminal sentencing was for two separate incidents: selling wild birdseed coated with toxic pesticides and selling lawn and garden products with falsified pesticide registrations.   Scotts pleaded guilty to charges related to the two incidents in February and negotiated a plea deal with government attorneys.

According to court documents, Scotts distributed 73 million units of birdseed that was coated with insecticides to prevent insect infestation.   One insecticide was Storcide II, which is labeled as being “toxic to birds and other wildlife.” The seed was distributed from November 2005 to March 2008 despite warnings in 2007 from Scotts’ experts.

Justice Department attorney Jeremy F. Korzenik said in court that Scotts made $25 million in profits from the birdseed. Government attorneys said it is likely that birds were harmed by the seed but that harm was not proved.

Scotts said the level of pesticides was not high enough to harm birds. The company blamed three rogue employees for the toxic birdseed.
In the second criminal incident, the EPA found that some Scotts’ products had false registration numbers.

A former manager for the company, Sheila R. Kendrick of the North Side, pleaded guilty in May to federal charges in that case, admitting that she falsified EPA forms that were submitted to state regulatory agencies.   Kendrick is scheduled to be sentenced Oct. 12.

Late yesterday, Scotts Chairman Jim Hagedorn wrote in a two-page letter on the company website that the firm has put procedures and employees in place to prevent similar problems.   “We expect better of ourselves and you have the right to expect better of us as well,” he wrote.

Hagedorn attended yesterday’s court hearing but would not comment afterward.
Part of the criminal fine Scotts is paying, $500,000, is being evenly split among five groups and agencies to fund efforts to protect birds.

(What goes around, comes around.   Scotts will have to work on building trust again.   Jan)


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