$1 Million Settlement Highlights Hazardous Materials Handling Risks For Restaurants In California

On December 2, 2025, California prosecutors announced a $1.06 million settlement with Panda Restaurant Group, Inc. (Panda) following allegations that the company failed to comply with hazardous materials rules governing the use of carbonated fountain beverage systems in its restaurant locations across the state. The case underscores California's strict enforcement of hazardous materials laws, including for substances found in most restaurant operations.

For more than two decades, California prosecutors have been intensifying their oversight of industry compliance with intricate waste and materials management regulations. While recent enforcement actions have focused on retailers and health care providers, this latest settlement signals that food service operations are firmly on prosecutors' radars.

In the instant case, prosecutors alleged that Panda violated various California hazardous materials laws regulating the use of carbon dioxide (CO₂). This included alleged failures to prepare hazardous materials business plans, to train employees and to maintain required records. CO₂ is an essential component of fountain beverage systems and is stored in cannisters in most food service locations. While no injuries were alleged in this case, CO₂ can pose certain hazards if it is mismanaged. For example, undetected leaks can displace oxygen in the surrounding air, leading to significant health effects or even fatalities. As part of its settlement with prosecutors, in addition to a substantial fine, Panda took steps to implement a more robust compliance assurance program at its stores throughout the state.

Industry experts have noted that these beverage systems are often leased and serviced by third-party vendors, potentially leading to gaps in training and recordkeeping responsibilities. Nevertheless, regulators place the compliance burden squarely on the business operating the facilities.

To avoid costly enforcement actions and million-dollar penalties from California prosecutors, restaurant operators should proactively consider the following options:

• Audit Training Programs: Verify that all employees handling CO₂ or other hazardous materials receive annual training;
• Update Reporting: Confirm that certifications and Hazardous Materials Business Plan updates are filed in the California Environmental Reporting System;
• Clarify Vendor Roles: Define responsibilities between suppliers and in-house staff for hazardous materials management;
• Document Compliance: Maintain accessible training records and review them regularly; and
• Conduct Internal Audits: Schedule periodic compliance checks and implement corrective actions promptly.

By strengthening compliance measures today, operators can lower the risk of triggering an investigation and, if one is initiated, create an opportunity to conclude it swiftly with limited financial impact.

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