On September 12, 2016, the U.S. Environmental Protection Agency (EPA) issued its Strategy for Addressing the Retail Sector under RCRA’s Regulatory Framework. As part of this strategy, EPA will finalize the Resource Conservation and Recovery Act (RCRA) Hazardous Waste Generator Improvements Rule this fall, and is working to finalize the Management Standards for Hazardous Waste Pharmaceuticals Rule, but appears to need additional time to do so. While EPA states that it is focusing efforts on these rulemakings, it will also issue a Policy on Reverse Distribution and RCRA.
EPA recognizes that RCRA regulations were developed for industrial and manufacturing settings, and are not a well-suited for retailers, healthcare facilities and reverse logistics providers that manage products that are hazardous waste when discarded. When an item is “discarded” the material becomes a solid waste under RCRA. The entity making the discard decision becomes a generator of solid waste and is required to make a hazardous waste determination. Thus, this point of waste generation is key to triggering RCRA liability.
For pharmaceuticals, EPA’s historic policy has been that a pharmaceutical does not become waste until after a reverse distributor evaluates it for credit and makes a disposal determination. EPA’s proposed Management Standards for Hazardous Waste Pharmaceuticals Rule threatened EPA’s historic point of generation policy. Under the proposed regulations, potentially creditable hazardous waste pharmaceuticals would be considered solid waste at the healthcare facility, which would be considered to be the “point of generation.” Generally, state interpretations of the point of generation have varied, which has made compliance particularly challenging for companies operating across multiple states. It is an issue that extends beyond pharmaceutical reverse distribution to the entire reverse logistics industry and the reverse flow of consumer goods. In its Strategy, EPA appears to recognize these concerns. The agency intends for its Reverse Distribution and RCRA Policy to take into account various positions on the point of generation, and its Policy will (hopefully) provide clarity in this area of regulatory uncertainty.
EPA will craft its Policy on Reverse Distribution and RCRA around its understanding of the flow of retail goods and the relationships between entities that manage goods and wastes, as shown in this EPA-created diagram. All players in the retail system should carefully review the diagram and provide comments and points of clarification to EPA. The components of EPA’s strategy are intended to be cohesive, so it is crucial EPA gets the roles and flows right not only for its Reverse Distribution and RCRA Policy, but also for the forthcoming Hazardous Waste Generator Improvements Rule and the Management Standards for Hazardous Waste Pharmaceuticals Rule.
For example, it is unclear where third-party logistics providers (3PLs) fall in EPA’s diagram. The diagram indicates that distribution centers, like 3PLs, receive goods under both forward and reverse flows, in contrast to reverse logistics centers, which only receive goods through reverse flows. However, in its notes EPA lists services that reverse logistics centers provide, which include services provided by 3PLs like tracking of returned items. Clarifying the role of 3PLs with EPA could help alleviate concerns raised by the 3PL industry that its ancillary return services would trigger overly burdensome RCRA regulation under the proposed Management Standards for Hazardous Waste Pharmaceuticals Rule.
In addition to the Hazardous Waste Generator Improvements Rule, the Management Standards for Hazardous Waste Pharmaceuticals Rule and the Policy on Reverse Distribution and RCRA, EPA will also propose a rule regulating aerosol cans as universal waste, and create a guide on recycling aerosol cans as part of the Strategy.
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