Hazardous Waste Update
The past decade has seen a monumental shift in regulatory oversight of retailers’ environmental compliance programs, forcing companies to adapt compliance solutions to the myriad of hazardous waste control laws impacting the retail sector.
Historically, most enforcement has been at the state and local level. But in late 2016, the industry witnessed a flurry of retail-related activity from the Environmental Protection Agency, including:
A $3.5 million settlement with Whole Foods Market regarding allegations of improper hazardous waste handling;
Publication of a final Generator Improvements Rule and announcement of additional delays in the finalization of its proposed “Hazardous Waste Pharmaceuticals” rule; and
Announcement of the EPA’s new “Retail Strategy” regarding hazardous waste regulations in the retail sector.
Whole Foods settlement
On Sept. 20, 2016, the EPA announced a settlement with Whole Foods Market arising from allegations of improper hazardous waste handling in Texas, Arkansas, Louisiana, New Mexico and Oklahoma. The settlement followed an investigation initiated by New Mexico regulators and subsequently referred to EPA Region 6.
The EPA’s investigation revealed that Whole Foods lacked a hazardous waste determination system resulting in the improper disposal of hazardous waste and spent lamps. Products at issue included paint, fluorescent bulbs, household cleaners, bleach, beauty products, perfumes and nutritional supplements.
To resolve these allegations, Whole Foods agreed to pay more than $3.5 million and implement the following supplemental environmental projects:
Develop standard operating procedures to ensure compliance with applicable hazardous waste laws and regulations;
Retention of a third party to assist with implementation of an electronic hazardous waste identification system; and
Fund a $500,000 training program to promote retail hazardous waste compliance in Texas.
Retailers have become accustomed to similar state-level enforcement, particularly in California, where companies have paid more than $160 million to settle claims of improper hazardous waste handling.
While the EPA has not shied away from more issue-specific retail enforcement, we have not seen it actively involved in statewide investigations relating to the sufficiency of a retailer’s hazardous waste compliance program. If this becomes a trend, retailers can expect increased scrutiny of their operations in areas of the country where retail enforcement has been less prevalent.
Rulemaking update
Beginning in February 2014, the EPA has extensively engaged with retailers in an effort to address the retail compliance conundrum created by the application to the retail sector of environmental regulations developed with the industrial and manufacturing setting in mind.
Until recently, it was the EPA’s stated goal to finalize both the Generator and Pharmaceutical Rules together. On Nov. 28, 2016, it published the final Generator Improvement Rule. However, due to the extensive and substantive comments received in response to the proposed Pharmaceutical Rule, it will not be finalized until 2017, at the earliest.
The finalization of the Generator Rule, without finalization of the Pharmaceutical Rule, could create retail compliance headaches. Without the companion Pharmaceutical Rule, retailers may be left without a mechanism to avoid Large Quantity Generator status and may, until publication of the final Pharmaceutical Rule, be forced to overhaul their hazardous waste compliance programs to comply with the onerous LQG requirements under the new Generator Rule.
Retail strategy
The EPA also announced its new “Strategy for Addressing the Retail Sector under RCRA’s Regulatory Framework.” Building on its recent retail engagement in drafting the new Generator and Pharmaceutical Rules, the EPA identified the following retail priorities: Finalization of the Pharmaceutical Rule, issuing guidance on aerosol can recycling, expanding universal waste rules to include aerosol cans and issuing guidance regarding the proper use of reverse distribution by retailers.
While this retail strategy leaves many questions unanswered, the EPA’s commitment to addressing challenges faced by retailers has been well received by the regulated community.
While the upcoming administration change leaves many open questions, we are hopeful that the agencies engagement with the retail sector will continue.
Matthew Williamson is a partner in Manatt, Phelps & Phillips’ Orange County office; Ted Wolff is a partner in the firm’s New York office; and Matthew Dombroski is a counsel in the New York office.