Tesco and Riverside County March Joint Powers Authority File Appeal Over Fresh & Easy Distribution Center Environmental Review Court Order

Inside Tesco's (above) Riverside County distribution center in Southern California.

According to court documents filed in Riverside County in Southern California, lawyers for Tesco and a regional governmental body called the March Joint Powers Authority are appealing a court ruling which rescinded the authority's previous approvals of Tesco's huge 850,000 square foot distribution center which is in Riverside County, along with the company's U.S. corporate headquarters

The court ruled the approvals were invalid after the filing of a lawsuit in 2007 by a group called Health First, which is opposed to some environmental impact aspects of the distribution center.

Tesco opened the huge distribution center in November, 2007 at about the same time its first stores opened in Southern California. The Riverside County DC remains open and currently serves the 61 Fresh & Easy grocery stores operating in Southern California, Arizona and Nevada.

However, the Riverside County Superior Court earlier this month ordered the March Joint Powers Authority, which approves permits for facilities like the Fresh & Easy distribution center in the county, to submit a plan for obtaining environmental approvals for the facility within 90 days, which would mean doing so by no later than early June, 2008.

Riverside County Superior Court Judge Thomas Cahraman first ruled in November, 2007 in the civil suit filed by Health First that the Tesco Fresh & Easy Neighborhood Market distribution center was not exempt from state of California-required environmental reviews.

The March Joint Powers Authority had granted Tesco its permit for the facility based on an environmental plan it reviewed for the Meridian Business Park, which the Tesco facility is a part of. The business park is located on property that once was home to a former air-force base which the U.S. federal government closed. Judge Cahraman ruled however that the Tesco Fresh & Easy distribution center needed its own, separate environmental review and impact statement.

According to the court documents filed on April 8, 2008, Tesco and the March Joint Powers Authority are appealing the most-recent court order that Tesco's Fresh & Easy distribution center must go through an environmental impact review to California's Fourth District Court of Appeals, which is located in the city of Riverside.

If Tesco and the March Joint Power Authorities lose their appeal, it could mean a costly environmental review process for the distribution center, which could result in potential distribution and supply chain problems for the start up, small-format, convenience-oriented grocery chain.

Tesco has already experienced some supply chain problems, including stores having out-of-stocks of fresh, prepared foods, because of general production and logistics problems involving the distribution center.

Tesco CEO Sir Terry Leahy said nothing about the appeal of the court's ruling yesterday in a conference call with analysts as part of the retailer's reporting of its fiscal year annual sales and profit.

Additionally, CEO Leahy taped a four minute public relations-style question and answer session with a gentleman who asked him questions about Fresh & Easy USA. The interview was webcast yesterday as part of the company's sales and profit report communications efforts.

In the video webcast, Tesco chief Leahy didn't mention--nor did the "interviewer" ask him--anything about the Riverside County distribution center situation or the filing of the appeal regarding the court order that Tesco and the March Joint Powers Authority file a plan for an environmental review for the facility by June, 2008.

The distribution center environmental review issue has come up before in the U.S. press. However, Tesco's Fresh & Easy USA has said they believed they had the environmental review situation under control. However, that doesn't appear to be the case.

There is no date set as of yet when the Riverside-based Fourth District Court of Appeals will hear the case.

Additionally, no court order has been filed which prohibits Tesco from continuing to operate the Riverside distribution center and servicing its stores.