EPA’s New Retail Waste Guidance

On the surface the Environmental Protection Agency’s (EPA) new hazardous waste pharmaceutical rule may not appear relevant for non-pharmaceutical retailers. But dig deeper and it becomes apparent that the new rule establishes important guidance applicable to all retailers – including those that do not sell pharmaceuticals. Published February 22, the new EPA guidance fulfills the agency’s September 2016 Retail Strategy commitment to address the difficulty of applying the Resource Conservation and Recovery Act (RCRA) to the retail sector.

In the guidance, EPA makes clear that unsold retail items managed through reverse logistics “are not solid wastes [and thus also not a hazardous waste] at the retail store if they have a reasonable expectation of being legitimately used/reused (e.g., lawfully redistributed for its intended purpose) or reclaimed.” EPA appears to be flexible and deferential to retailers by not giving specific criteria for determining what constitutes a “reasonable expectation.” EPA nevertheless addresses six issues that are important considerations for retailers when determining whether retail items can be managed through reverse logistics centers, as follows:

  1. “Reasonable Expectation.” If retail items do not have a reasonable expectation of being legitimately used/reused or reclaimed after they are returned to a manufacturer or vendor, then the unsold retail item would be a solid and potentially hazardous waste at the reverse logistics center. This provision seemingly emphasizes that the retail facility is not responsible for determining the ultimate disposition of retail items once those items are returned to the manufacturer or vendor; instead, the burden is on the better-suited reverse logistics center to determine the manufacturer’s or vendor’s ultimate disposition for the items.
  2. Expiration Date. Expiration date alone does not mean that a retail item cannot be returned to a reverse logistics center. EPA states that unsold retail items that have expired are not wastes if they have a reasonable expectation of being legitimately used/reused or reclaimed.
  3. Manufacturer Direction to Destroy. If a manufacturer has established “business rules” that prohibits unsold retail items from being redistributed for their intended purpose (i.e., liquidated or donated) and prohibits the item from being reclaimed, the item is a solid waste, and potentially a hazardous waste, at the retail store. If, however, a manufacturer has adopted a business rule that still allows reclamation, the items would not be wastes at the retail store level if there is a reasonable expectation that the items will be reclaimed.
  4. Manufacturer Credit. Whether manufacturer credit will be issued for a given item is not relevant to the waste status of the unsold retail item. The decision point on whether a retail item is a solid waste is when the decision has been made to discard the material.
  5. FDA & CPSC Recall Exemption. RCRA does not apply to a recall overseen by the U.S. Food and Drug Administration (FDA) or the U.S. Consumer Product Safety Commission (CPSC). RCRA is still applicable to other recalls.
  6. Damaged Retail Items. Retailers cannot send broken, damaged or leaking items to reverse logistics centers. Retailers must instead manage these items as solid waste, and potentially hazardous waste, at the retail store. EPA does, however, acknowledge the uncertainty surrounding when an item is broken, damaged or leaking. For example, if the outer cardboard box is damaged, but the vials containing nonprescription pharmaceuticals are intact and not damaged or leaking, EPA does not consider the item to be damaged such that it cannot go through reverse logistics.

Issues related to which unsold retail items may lawfully be transported to reverse logistics centers have been important topics in recent years, particularly in California. EPA acknowledges that many retailers have entered settlement agreements with California prosecutors on retail hazardous waste management, and these settlements have included many of the above issues. California prosecutors, and states like Florida and North Carolina, continue to scrutinize reverse logistics centers on whether unsold retail items were lawfully transported to the reverse logistics center.

For additional information on the new EPA retail guidance, please contact Karlie Webb, Greg Blount and Angela Levin.