Regulatory Burdens On Retailers Continue to Evolve

In the run up to the Presidential Election, you may have missed some of the following regulatory developments that might impact your business.

Prop 65 Amendments.

If your company sells consumer products in California (the 6^th largest economy in the world!)[1], it will want to be familiar with recent amendments to the Proposition 65 warning regulations.[2]  Many Arizona businesses over the years have been unpleasantly surprised to learn about Proposition 65’s applicability to their products sold in California via a not-so-friendly notice from a bounty hunting California plaintiff’s attorney demanding thousands in penalties and fees for the failure to properly warn California residents of the toxic ingredients in their products.  Rather than propose amendments that might actually further the right-to-know purposes of the law, or dis-incentivize the abuse of Prop 65 by the legal cottage industry that reaps millions in profits off the law each year at the expense of businesses, California predictably made the law even less consumer and business friendly (but more lawyer friendly!).

The labeling regulations provide a safe harbor to Prop 65’s “clear and reasonable warning” requirement, and therefore are often relied on by business in meeting the warning requirements. Among the amendments, the rule clarifies the relatively narrow circumstances under which a manufacturer can rely on a retailer to satisfy the Prop 65 requirements (consistent with Prop 65’s mandate to minimize the burdens imposed on retailers to satisfy the warning requirements); changes the safe harbor warning language, including to require a warning pictogram, and identification of at least one of the specific chemicals in the product if the warning is not provided on the product itself (a truncated warning without chemical identification is allowed for warnings on the product itself); provides safe harbor requirements for internet and catalog purchases; and requires the warnings to be provided to the consumer prior to or at the time of purchase (rather than prior to exposure).

There is a two-year transition period for the amendments to go into effect during which compliance with the current or new requirements is acceptable. Unfortunately, at some point, the new regulations are sure to make your company’s compliance efforts more challenging, and may even increase bounty hunter litigation by suggesting ways to challenge warnings that do not meet the safe harbor requirements.

EPA’s Retailer Strategy for Hazardous Waste.

Soon-to-be-ex EPA Assistant Administrator Mathy Sanislaus recently blogged out an update on EPA’s strategy in enforcing RCRA requirements on retailers.[3]  For the last few years, EPA and California have cost big box and grocery retailers millions by taking an extremely aggressive stance in forcing the square peg of retailer waste generation into the round hole of RCRA’s waste determinations and management requirements.[4]  With a better “understanding of how retailers handle consumer goods that cannot be sold” and “the challenges retailers face when managing goods that are hazardous waste when disposed,” EPA announced it intended to cease all enforcement activity in favor of stakeholder meetings to develop a sensible approach.  Just kidding.  It announced more forthcoming rules and guidance, to include rules for hazardous waste generator “improvements,” a rule focusing on pharmaceuticals, and a rule on aerosol cans, plus guidance on recycling aerosol cans and “reverse distribution” (the management of returned consumer goods by retailers).  While the paper industry is rejoicing, the impact on retailers remains to be seen.  A week later, EPA announced another multi-million dollar enforcement settlement against well-known industrial manufacturing giant … er … Whole Foods![5]

Hazardous Waste Generator Improvements Rule.

Right on the heels of EPA’s retailer strategy blog, EPA released a pre-publication version of its “improvements” rule, which does anything but, to the RCRA requirements facing retailers.  The rule’s amendments potentially impact every generator of hazardous waste, not just retailers, as EPA has tinkered with the regulations on waste determinations, labeling, emergency response, waste accumulation, closure etc.  With respect to retailers, EPA attempted to provide some relief for episodic generators (facilities that typically qualify as conditionally exempt small quantity generators, to be known from now on as very small quantity generators, but occasionally have a larger quantity of waste to dispose that would trigger large quantity generator status, and associated requirements).  Unfortunately, in typical EPA fashion, EPA burdened the new episodic generator provisions with so many requirements as to make them likely rarely useable to retailers.  This rule will not be effective in Arizona, or any other RCRA-authorized state, until the State takes action to adopt the new provisions in whole or in part.

[1]  http://www.sacbee.com/news/business/article83780667.html.

[2]  http://oehha.ca.gov/proposition-65/crnr/notice-adoption-article-6-clear-and-reasonable-warnings.

[3] https://blog.epa.gov/blogs/2016/09/retail-strategy-a-new-focus-on-hazardous-waste-regulations/.

[4] See, e.g., https://www.epa.gov/enforcement/wal-mart-stores-inc-settlement; http://www.sdcda.org/files/99%20Cent%20Only%20%20Settlment%201-6-15.pdf.

[5]  https://www.epa.gov/newsreleases/whole-foods-agrees-improve-waste-management-epa-settlement.