SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) August 8, 1997
SMITHFIELD FOODS, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 0-2258 52-0845861
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
900 DOMINION TOWER
999 WATERSIDE DRIVE
NORFOLK, VIRGINIA 23510
(Address of principal executive (Zip Code)
offices)
Registrant's telephone number, including area code (757) 365-3000
<PAGE>
ITEM 5. OTHER EVENTS
Reference is made to the disclosure appearing in Part I, Item 1 of the
Registrant's Annual Report on Form 10-K for the fiscal year ended April 27,
1997, under the caption "BUSINESS - Regulation."
On August 8, 1997, in United States of America v. Smithfield Foods,
Inc. et al. (Civil Case No. 2:96:cv1204), a federal judge for the United States
District Court for the Eastern District of Virginia imposed a $12.6 million
civil penalty on the Registrant and two of its operating subsidiaries, The
Smithfield Packing Company, Incorporated ("Smithfield Packing") and Gwaltney of
Smithfield, Ltd. ("Gwaltney"), in a case brought by the U.S. Environmental
Protection Agency for violations of the federal Clean Water Act at the
Registrant's Smithfield Packing and Gwaltney plants at the Town of Smithfield in
Isle of Wight County, Virginia. As discussed in previous filings, most of the
violations for which the court imposed a civil penalty were based upon permit
exceedences by Smithfield Packing and Gwaltney between 1991 and 1997 which the
Registrant asserts were expressly excused for both state and federal purposes by
an administrative consent order issued in 1991 by the Virginia State Water
Control Board. The Registrant plans to appeal the court's decision promptly to
the United States Court of Appeals for the Fourth Circuit in Richmond, Virginia.
A copy of a news release issued by the Registrant on August 8, 1997 is
filed herewith as Exhibit 99.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SMITHFIELD FOODS, INC.
(Registrant)
By: C. Larry Pope
-------------------
(Signature)
C. Larry Pope
Vice President and Controller
Dated: August 11, 1997
For more information:
Aaron D. Trub
757-365-3000
Smithfield Foods, Inc. to Appeal
Federal Court Decision
NORFOLK, Virginia, August 8, 1997 - Smithfield Foods, Inc.
(NASDAQ:SFDS) today issued the following statement:
Smithfield Foods has received the decision of the U. S.
District Court imposing $12.6 million in civil penalties for Clean Water Act
violations, most of which were expressly excused by a Consent Order issued by
the Virginia State Water Control Board. The Court's decision was issued in a
case brought by the U. S. Environmental Protection Agency. Smithfield Foods
plans to appeal this decision promptly to the U.S. Court of Appeals for the
Fourth Circuit in Richmond.
Smithfield Foods is very disappointed by the Court's decision,
and earnestly hopes that the many other Virginia industries and municipalities
which now operate under Consent Orders entered into with the Virginia Department
of Environmental Quality will not have to suffer through the same ordeal that
the Company has experienced. Since 1991, Smithfield Foods has been operating in
good faith under a Consent Order issued by the State Water Control Board which
bound the Company to connect its plants to the Hampton Roads Sanitation District
sewer system. To provide this service, the HRSD agreed to build a 17-mile long
sewer to the Town of Smithfield and expand and upgrade its Nansemond Wastewater
Treatment Plant.
When the sewer was completed in 1996, the Company hooked up its Gwaltney
facilities, as agreed. On August 4, 1997, the Company connected its Smithfield
Packing Company facilities to the HRSD system, more than forty-five (45) days
ahead of schedule. The Company has spent almost three million dollars in new
capital facilities to make this connection to the HRSD. In addition, the Company
will spend several million dollars each year in the future to pretreat its
wastewater and pay the HRSD for treatment services. As a result of these
commitments, there is no longer any significant point source wastewater
discharge into the Pagan River.
The 1991 Consent Order set a compliance schedule by which the
Company would comply with the State's new phosphorous standard, and settled
Smithfield Foods' court challenge to the reasonableness of that standard. Since
1991, the EPA has known and approved of this Consent Order which is similar to
many other consent agreements between the State and Virginia municipalities and
industries. In fact, the EPA encourages states to use such agreements and itself
uses such agreements in many cases. These consent agreements specify the
schedules by which cities and industries will achieve compliance after the State
imposes new wastewater treatment requirements -- like the phosphorus standard --
on them.
Richard N. Burton, who was Executive Director of the State
Water Control Board in 1991, testified on behalf of Smithfield Foods in the
recently-concluded federal trial. Burton testified that Smithfield's choice of
connecting to the HRSD system had many environmental and economy-of-scale
benefits. Besides solving Smithfield Foods' phosphorus compliance problem, the
Company's HRSD commitment also solved the sewage problems of the Town of
Smithfield and brought sewage service to Isle of Wight County. With the
Company's commitment in hand, the HRSD got the financial help it needed to
upgrade and expand its Nansemond Wastewater Treatment Plant, which also required
to comply with the new phosphorus standard. The total cost of these HRSD
facilities exceeds $65 million, eighty percent (80%) of which was provided by
the U. S. Environmental Protection Agency.
When the Consent Order was executed in 1991, Burton
anticipated that it would take three to four years for HRSD to complete the
needed facilities. The Board understood and agreed that compliance with this
State-promulgated standard would not occur until the HRSD could build the
17-mile long pipeline to Smithfield and complete the vast improvements to the
Nansemond Plant. The Board also concluded that the Pagan River would not be
exposed to any significant risk or adverse effect from the excess phosphorus
discharges while these public improvements were being constructed. The
correctness of this conclusion was borne out by expert testimony in the recent
federal trial that the Pagan River had not been damaged by these discharges.
Virginia, like most of the States, has primary responsibility
to make the Clean Water Act system work, and the Consent Order is its principal
compliance tool. Neither the Company nor the Commonwealth expected the EPA to
bring this suit, nor did either expect the Court to sustain the EPA's position
and impose severe penalties on the Company despite its compliance with its
duties under the Consent Order. The EPA's intervention undermines the State's
authority, and confounds those who must work with the State to achieve
compliance with Clean Water Act requirements. The Company will appeal the
Court's ruling and trusts that it will prevail on appeal. Moreover, the Company
will work with others to change the Clean Water Act enforcement scheme, so that
the EPA will not be allowed to commence and prosecute an enforcement action when
a responsible State has previously taken effective action.
