The U.S. Environmental Protection Agency ("EPA") is pursuing plans to address the unique challenges faced by retailers in complying with the waste handling regulations of the Resource Conservation and Recovery Act ("RCRA"). In particular, retailers must make hazardous waste determinations for a diverse and ever-changing lineup of products, and the "reverse distribution" process raises a number of compliance questions exclusive to the retail industry. The agency’s initiative has been in the works for a number of years (since 2008), but gained renewed momentum when EPA released its Strategy for Addressing the Retail Sector under RCRA’s Regulatory Framework1 last Fall. Given the goal of reducing regulatory burdens, implementation of the Strategy is expected to continue with the incoming Trump Administration.
Challenges in Addressing the Retail Sector
RCRA and its implementing regulations were developed primarily with the industrial sector in mind. However, retailers manage a large number and variety of products that become regulated as hazardous waste under RCRA when they are “discarded.” Examples include pharmaceuticals and non-prescription drugs, aerosol cans, products containing nicotine, cleaners and solvents, pesticides, and electronics.
Particular aspects of the retail sector make compliance with RCRA regulations difficult, including, for example, determining when certain handling practices do or do not qualify as “discard” or “waste management.” The reverse distribution process, often used to handle unwanted or returned goods, is commonly cited as an area in need of regulatory clarification. Further, retail industry waste is generated at episodic and unpredictable rates, and the point at which products are disposed of and the best way to make a hazardous waste determination is often unclear. EPA is seeking to amend the RCRA regulations in order to better take into account these issues.
Over the past few years, EPA has pursued RCRA enforcement actions against several major retailers. For example, in 2013, Wal-Mart settled with EPA for allegedly failing to manage properly hazardous wastes at retail locations, including products that were damaged or returned.2 Walmart paid a $7.6 million civil penalty and agreed to implement operational changes to ensure compliance with RCRA and avoid sending hazardous waste to reverse distribution centers. More recently, in 2016, EPA settled alleged violations of hazardous waste regulations by Whole Foods for $3.5 million.3 EPA found that Whole Foods had not properly made hazardous waste determinations at its facilities and was improperly handling spent lamps. As part of its settlement, Whole Foods is engaging in a Supplemental Environmental Protect to educate smaller retailers about hazardous waste laws and the importance of maintaining compliance. States have also brought enforcement actions against retailers under their own hazardous waste laws, collecting millions of dollars in penalties.
EPA’s Strategy for Addressing the Retail Sector
EPA’s strategy to rework RCRA policy for the retail sector has three prongs: (1) issuing new guidance, policies, and rules that improve the fit between RCRA regulations and the retail sector; (2) learning more about hazardous waste management practices and reverse distribution in the retail sector; and (3) identifying additional approaches to address outstanding retail sector issues as needed. EPA’s start in this process was issuing a Notice of Data Availability in 2014 to identify the principal issues in the retail sector; EPA then began planning the policy changes that it is instituting in response.
EPA identified a number of challenges the retail sector faces when implementing RCRA regulations. These include:
- A large number of stores in multiple locations, even multiple states, that handle consumer goods which can become hazardous waste when discarded;
- A large variety of goods that are usually manufactured by another entity, therefore making the ingredients largely unknown and hazardous waste determinations difficult;
- Unpredictable and episodic waste generation due to recalls and customer returns;
- Difficulty in employee hazardous waste training because of frequent turnover; and
- Use of the reverse distribution process for unsaleable products.
EPA also collected a number of suggestions from retail sector interests on how to address these challenges in policy and rulemaking, including:
- Addressing pharmaceuticals by including them within the definition of “universal wastes”;
- Removing the hazardous “P-listing” for nicotine-containing products;
- Endorsing the use of reverse distribution systems and addressing the point of waste generation and how/when to conduct waste determinations within the system; and potentially exempting wastes managed through reverse distribution from the definition of solid waste;
- Expanding the definition of universal waste to include aerosol cans, pesticides, electronics, and/or all retail goods;
- Providing flexibility for episodic generation and hazardous waste quantity determinations;
- Excluding retail goods as a “household hazardous waste” that is exempted from regulation; and
- Revising satellite accumulation area requirements.
After establishing these concerns and receiving a number of recommended paths for resolution, EPA has begun to change its policies and determine a path forward for appropriate RCRA regulation of the retail sector.
Responses and Planned Regulatory Changes for the Retail Sector
EPA has taken a number of actions to clarify waste handling issues for the retail sector. These revisions have come in the form of rulemakings on general and specific subjects, guidance letters to regulated entities, and memoranda to EPA Regions. The modifications, addressing particular issues, are outlined below.
Household Hazardous Waste Exemption: In the Strategy for Addressing the Retail Sector, EPA clarifies that it will not include retail goods as a “household hazardous waste” exempt from regulation. To qualify for this exclusion, wastes must (1) be generated by individuals on the premises or a temporary or permanent residence, and (2) be composed primarily of materials found in wastes generated by consumers in their homes. EPA found that retail waste does not meet both prongs of this definition. Industry continues to push consideration of extension of the exemption to intact and unused customer returns as well as unsaleable items.
Pharmaceuticals: On September 25, 2015, EPA proposed management standards for hazardous waste pharmaceuticals.4 The proposed rule would apply to healthcare facilities, pharmaceutical reverse distributors, and owners and operators of treatment, storage, and disposal facilities for hazardous waste pharmaceuticals, which would include retail pharmacies. It would add a Subpart P to the regulations covering specific types of hazardous waste, and would exempt pharmacies and pharmaceutical reverse distributors from the general regulations for hazardous waste generators and treatment, storage, and disposal facilities. Reverse distributors of pharmaceuticals would have their own standards similar to those for large quantity generators. The proposal also discusses exempting from the hazardous waste P-list over-the-counter smoking cessation products containing nicotine, or establishing a concentration-based approach to nicotine in products. No date is set in the EPA’s 2017 Unified Agenda for a final rule.
Definition of Solid Waste: On January 13, 2015, EPA issued its final rule changing the exclusions for hazardous secondary materials under the RCRA definition of solid waste.5 The revision exempts from solid waste regulations hazardous materials that have been legitimately recycled by being sent to a verified recycler. Retailers may be able to use the verified recycler exemption to recycle aerosol cans and other retail wastes outside of the solid waste regulations.
Generator Improvements Rule: On November 28, 2016, EPA published the final Hazardous Waste Generator Improvements rule, which makes a litany of relatively modest, though some significant, changes to regulations governing waste generators.6 Of particular interest for the retail sector are provisions creating flexibility for episodic generators of hazardous waste; allowing conditionally exempt small quantity generators to send their waste to a related large quantity generator for consolidation and handling; and permitting waiver of the 50-foot buffer requirement for ignitable and reactive wastes under certain conditions.
Nicotine Guidance: On May 8, 2015, EPA issued guidance clarifying that: (1) e-cigarettes are P075 waste due to their nicotine cartridges;7 and (2) nicotine patches, gums, lozenges, and e-cigarettes are not solid or hazardous waste if they are sent for nicotine reclamation.8
Pharmaceuticals Collection: On October 2, 2015, EPA approved the disposal of pharmaceutical waste from households at Drug Enforcement Agency-authorized collection receptacles, including those at retail stores with pharmacies.9
Upcoming EPA Regulatory Activities
EPA is planning a number of upcoming actions in order to further clarify retail issues under RCRA regulations. These include:
- Issuing a guide on recycling aerosol cans under the existing Subtitle C recycling exclusions, including scrap metal recovery operations;
- Further investigating the possibility of adding aerosol cans, pesticides, and/or electronics to the federal universal waste regulations;
- Developing a policy on reverse distribution that will potentially address the scope of the retail universe, help clarify the point of generation, and address when and how reverse distribution is a sufficient management process; and
- Finalizing the Pharmaceuticals rule.
Retailers should pay close to attention to EPA’s evolving efforts to better adapt RCRA to the waste management realities of the retail industry, and become engaged in the rulemaking and policy setting process. If you have any questions or would like additional information, please feel free to contact Joe Green at (202) 342-8525 or JGreen@KelleyDrye.com, or Catherine Wilmarth at (202) 342-8473 or CWilmarth@KelleyDrye.com.
Kelley Drye’s Environmental Law Practice Group specializes in providing comprehensive solutions to complex problems. We provide both advice and representation for clients participating in rule-making and policy-making activities by federal regulatory agencies, including the U.S. Environmental Protection Agency and the Occupational Safety & Health Administration, and similar state agencies. We have decades of experience advising companies and industry trade organizations with respect to RCRA and waste management requirements and related compliance and litigation matters.
 U.S. Environmental Protection Agency, Strategy for Addressing the Retail Sector under the Resource Conservation and Recovery Act (Sept. 12, 2016), available at https://www.epa.gov/sites/production/files/2016-09/documents/strategy_for_addressing_the_retail_sector508.pdf.
 Letter from Barnes Johnson, Director, Office of Resource Conservation and Recovery, Office of Solid Waste and Emergency Response, U.S. Environmental Protection Agency, to Daniel K. DeWitt, Warner, Norcross & Judd LLP, RCRA Online 14850 (May 8, 2015).
 Letter from Barnes Johnson, Director, Office of Resource Conservation and Recovery, Office of Solid Waste and Emergency Response, U.S. Environmental Protection Agency, to Scott DeMuth, Vice President, g2revolution LLC, RCRA Online 14851 (May 8, 2015).
 Memorandum from Barnes Johnson, Director, Office of Resource Conservation and Recovery, Office of Solid Waste and Emergency Response, U.S. Environmental Protection Agency, to RCRA Division Directors, EPA Regions I to X, Household Hazardous Waste Exemption for Pharmaceuticals Collected via DEA Approved Take-back or Collection Programs, RCRA Online 14853 (Oct. 2, 2015).