Richard Sieg, Regulatory Counsel, Inmar

The Environmental Protection Agency (EPA) is loading stakeholder comments into the regulatory dockets for the proposed rule for Management of Hazardous Waste Pharmaceuticals. Our review of comments posted thus far indicates some common themes that support retailers’ needs to change the rules to more appropriately fit the retail reverse logistics environment.

Aside from issues related to prescription drug management under this rule, a common theme among retailers and the reverse supply chain is that the HWP Proposal creates a regulatory scheme that does not work with consumer product like “pharmaceuticals” (e.g., dietary supplements and over-the-counter products (OTC).  OTCs and dietary supplements are managed as typical retailer returns and not as pharmaceutical returns.

As the HWP Proposal is currently written, retailers and reverse distributors would have a huge sorting issue.  Some multi-vitamins and other products may have to be sorted and managed differently than the typical consumer returns. These burdensome and unnecessary proposed requirements would significantly impact both retailers and reverse distributors. Also, we believe this regulatory framework would actually have the unintended consequence of discouraging donation and liquidation of non-salable HWPs.

So, what’s the solution?  In commenting on the rule, Inmar proposed that EPA create a conditional exemption: Consumer products being returned to a reverse distributor would not be solid wastes.  This would satisfy the industry and agency goal of having a single set of requirements for all “pharmaceuticals” (as defined in the rule) without overburdening the reverse supply chain.

The bottom line is that the cumbersome requirements proposed are not at all warranted for consumer products.  The Department of Transportation (DOT) has evaluated the risks associated with the shipping of consumer products and concluded that  consumer products “present a limited hazard during transportation due to its form, quantity and packaging.” (49 CFR § 173.144)

DOT is tasked with the responsibility to protect health, safety and property.  EPA is tasked with the responsibility to protect human health and the environment.  The balancing of burden that DOT has already codified in its regulation should also be embraced by EPA as it develops its hazardous waste regulatory framework for the retail and healthcare sectors.

The Generator Proposal suffers from the same flaw as the original hazardous waste regulations – it was not developed with the retail sector in mind.  As a natural outgrowth from the original regulations, which were written to regulate industrial environments, it adds requirements that don’t fit the unique challenges associated with the retail stores and reverse distributors.

For example, the Generator Proposal would require the use of berms and dikes to separate non-compatible hazardous wastes.  Unlike the industrial environment, berms and dikes simply aren’t feasible for retailers and reverse distributors.

Most importantly, the Generator Proposal would require retailers and reverse distributors to maintain records of waste determinations, even for non-hazardous wastes.  Such a requirement, if finalized, would cascade through the industry with significant impact to the management of product returns.  Unlike the industrial sector that has maybe, for example, nine process waste streams (HW and non-hazardous), retailers deal with tens of thousands and even hundreds of thousands of SKUs.  The retailers would have to maintain determination records for each of these consumer products.  And, because reverse distributors manage a broad product mix, they manage millions of SKUs.

Fortunately, strong representatives of the retail sector have commented on this proposal and hopefully EPA will thoughtfully consider these concerns as it proceeds with any further rulemaking.

One of the purposes of the rulemaking and comment processes is to ensure the agency understands the industries it regulates so that it may draft rules appropriate for those industries.  Hopefully, the stakeholder comments will help EPA avoid creating another square peg in a round hole framework so that human health and the environment is sufficiently protected without the application of expensive, overly burdensome and unnecessary regulatory requirements on the retail sector.

Click a link below to see select comments on the proposed rule:

Costco, Dec. 18, 2015
Wal-Mart, Dec. 24, 2015
Joint Associations (RILA, FMI, NACDS, NRF, NGA)
Inmar, Dec. 24, 2015
Advance Stores, Incorporated
Cynthia A. M. Stroman, Partner, King & Spalding LLP, Dec. 24, 2015

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