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On May 9, 2007, Kmart was penalized $102,422 for violating federal environmental regulations that were accounted for 17 distribution centers across the states, which included hazardous waste, emergency planning and preparation regulations to the U.S. Emergency Protection Agency, and violations of clean water. Kmart corrected the violations by preparing and implementing spill prevention control and countermeasure plans, applying for appropriate storm water permits, complying with hazardous waste generator requirements, and submitting reports to state and local emergency planning and response organizations informing them of the presence of hazardous substances. The Environmental Agency also accused Kmart of not maintaining adequate information and failing to act in accordance with hazardous waste storage and disposal requirements. For instance, the EPA reported to have discover improperly labeled oil storage drums at Falls, Pennsylvania.

In concern for the environment, Kmart promoted the recycling of batteries to the public. Kmart even proposed to spend about $80 million to help recover junk batteries at $2 each on full-page newspaper advertisements.