Business Context and Reporting Period
Company: American Water Works Company, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: November 6, 2013
Subject: Item 8.01 Other Events regarding a regulatory investigation into hazardous waste disposal by subsidiary California American Water (Cal-Am).
Key Financial Metrics
This filing is a current report regarding a specific legal/regulatory event and does not contain financial statements. Consequently, data regarding revenue, profit, cash flow, margins, debt, and liquidity are not provided in this document.
Material Changes and Events
- Regulatory Complaint: On June 13, 2013, the Monterey County Health Department (MCHD) notified Cal-Am of a complaint regarding arsenic levels and sludge disposal from the Ambler Park and Toro Park water treatment plants prior to May 2013.
- Company Findings: In July 2013, Cal-Am submitted records to MCHD and acknowledged that some residual wastes may have exceeded California hazardous waste soluble threshold limits and were improperly disposed of at non-hazardous landfills.
- Corrective Action: Cal-Am stated it has modified procedures to ensure proper characterization and management of wastes.
- Enforcement Notice: On November 6, 2013, the Monterey County District Attorney notified Cal-Am of potential violations of the California Health and Safety Code and Business and Professions Code.
- Penalties: Violations may subject the company to civil penalties of up to $25,000 per violation under the Health and Safety Code and $2,500 per violation under the Business and Professions Code.
Outlook, Risks, and Management Commentary
- Current Status: The District Attorney has requested a meeting with Cal-Am prior to taking enforcement action.
- Financial Impact: Management states it is unable to predict the outcome of the matter but does not expect a material impact on the Company's results of operations, liquidity, or financial position.
- Risk: Potential civil penalties and reputational risk associated with hazardous waste disposal violations.
Investor Verification Checklist
- Verify the total number of potential violations to estimate maximum civil penalty exposure.
- Monitor the outcome of the requested meeting between Cal-Am and the District Attorney.
- Review subsequent filings for updates on the status of the investigation or any settlement agreements.
- Confirm that the modified waste disposal procedures have been fully implemented and are effective.