SURPLUS HOUSEHOLD CONSUMER

PRODUCT WASTE

(Retail Waste)

REPORT TO THE LEGISLATURE

As required by Senate Bill 423 (Bates, Chapter 771, Statutes of 2016)

Prepare by the Retail Waste Working Group under in association

with California Department of Toxic Substances Control

May 2017

To obtain a copy of the Report to the Legislature titled, “Surplus Household Consumer Product Waste” contact:

Department of Toxic Substances Control, Research and Policy Development Branch P.O. Box 806, MS 11a Sacramento, California

Email: Retail@dtsc.ca.gov Internet Address: https://www.dtsc.ca.gov/HazardousWaste/Retail_Industry/Index.cfm

ACKNOWLEDGEMENTS

EXECUTIVE SUMMARY This report details the findings of the Retail Waste Working Group (RWWG) established by SB 423, Bates, to examine and make recommendations relating to management of surplus household consumer products. This group is comprised of Employees of DTSC and other federal, state and local agencies as well as stakeholders from the retail industry, reverse distributors, manufacturers and various non-governmental organizations. The oversight and management of household consumer waste is shared through multiple layers of government. The United States Environmental Protection Agency (USEPA) provides Federal guidance under the 1976 Resource Conservation and Recovery Act (RCRA) addressing solid and hazardous waste. DTSC manages California only regulations in partnership with the California Environmental Protection Agency (CalEPA), and CalRecycle.

TABLE OF CONTENTS

I. INTRODUCTION .............................................................................................

II. STAKEHOLDER MEETING PROCESS ..........................................................

III. PROBLEM STATEMENTS ..............................................................................

IV. ANALYSIS AND FINDINGS ............................................................................

V. RECOMMENDATIONS ...................................................................................

APPENDIX A .........................................................................................................

APPENDIX B .........................................................................................................

APPENDIX C.........................................................................................................

APPENDIX D.........................................................................................................

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INTRODUCTION Senate Bill (SB) 423 (Bates, ch. 771, Stats. 2016) (SB 423) requires DTSC to convene a Retail Waste Working Group (RWWG) to discuss the issues and make recommendations for statutory or regulatory changes. This report is a culmination of significant discussions and recommendations resulting from the efforts of the RWWG. Sponsored by the California Retailers Association, the bill as introduced in 2015 proposed to change hazardous waste law to allow the shipment of unsold retail products to reverse distribution companies where they could be assessed and arrangements made for resale, donation, or disposal of the unsold products. Additionally the bill as proposed allowed for over-the-counter pharmaceuticals to be characterized and managed under hazardous waste requirements, rather than as a medical waste under the Medical Waste Medical Act (MWMA). A number of important but complex aspects of the bill could not be resolved and the sponsor agreed to amended the bill. The revised bill required DTSC convene the RWWG to:

• make findings and recommendations on regulatory and statutory requirements that may be considered confusing or may need clarification or specification when applied to the overall management by manufacturer, distributor, supplier, vendor, retail, and reverse logistics facilities of surplus household consumer products, including products that can be considered hazardous waste or pharmaceutical waste once a waste determination is made.

• Make findings and recommendations on statutory or regulatory recommendations to facilitate and increase the donation, liquidation, and sale of surplus household consumer products, and waste reduction opportunities for those products, and to clarify waste management requirements to encourage the management of surplus household consumer products by manufacturer, distributor, supplier, vendor, retail, and reverse logistics facilities in a manner that is protective of public health and the environment.

The RWWG is comprised of representatives of large retailers, small retailers, district attorneys, certified unified program agencies, non-government organizations, local governments, other relevant state agencies as determined by DTSC (such as the California Department of Public Health, and the California Department of Resources Recycling and Recovery), manufacturers, reverse distributors, and other interested stakeholders. The group is similar to a Workgroup that DTSC convened in 2013 prior to the introduction of the legislation, that formed in response to a need to facilitate the sharing of information and to open lines of communication between DTSC and other regulatory agencies and the retail industry.

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STAKEHOLDER MEETING PROCESS DTSC, state and local agencies and retail stakeholders formed the Retail Waste Working Group (RWWG) and met from October 2016 through June 2017. The Steering Committee (SC) was initially formed early in the process to act as s representative body for what was anticipated to be a much larger group that would focus on identifying and deliberating on key issues. The Steering Committee met bi-monthly while the RWWG met monthly. By early March, the group’s evolutionary process formed essential the same number and level of participation and therefore merged. Initial discussions centered on terms and definitions, which varied among different entities. A Glossary of Terms was generated to facilitate further discussions(see appendix B). Presentations were made throughout the time period on a variety of topic including process of reverse distributors, legal terms and definitions, and the benefit of non-profit donation clearing house. Discussion led to defining eight areas where subcommittees were formed to develop consensus statements. As provide in more detail in Section 3, the problem statements include:

• Donations and Salvage • Recalls • Recycling • Manufacturers Credit • Dietary Supplements and products with Drug Facts • Partial and Partially Empty Containers • Aquatic Toxicity • Hazardous Waste Determination

PROBLEM STATEMENTS 3.1 DONATIONS AND SALVAGE - CONSENSUS STATEMENT BACKGROUND

Unsold consumer products are an important source of donations to charitable organizations in California. These products may not be able to be sold through the forward distribution chain for a number of reasons, for example because they are seasonal or out of fashion. Under the current system, many suppliers and retailers transport unsold consumer products to a reverse logistics facility for consolidation, product condition analysis and financial reconciliation prior to disposition. (It is generally recognized that unsold consumer products that are broken/leaking and unfit for use for their original intended purpose should be managed as wastes at the store level and not transported to a reverse logistics facility.) Dispositions by the reverse logistics facility may include not only donation, but also liquidation, recycling and disposal. PROBLEM

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Of the products shipped to a reverse logistics center, a small portion are disposed of, and of those that are disposed of, a small percentage are hazardous or medical wastes under California law. Such products may be disposed of by the reverse logistics facility for a variety of reasons, including product condition (while not broken or leaking, the product is too worn or damaged to donate or sell), lack of a market (even a donation market), or at the supplier’s direction. Some regulators have taken the position that, at least in some cases, if such a product returned to a reverse logistics facility is disposed of by the reverse logistics facility, the product should have been considered a waste by the supplier or retail facility and managed in accordance with hazardous and medical waste laws from that “point of generation” (e.g., shipped under manifest to a regulated treatment, storage or disposal facility). In addition, some prosecutors have reported that donations transported to charities sometimes contain products that obviously cannot be reused, and that, in effect, charities are being used as a means of disposing of wastes (“sham donation”). CONSEQUENCES

If unsold products cannot be consolidated at reverse logistics facilities because the “point of generation” of such ultimately discarded products is the retail store, a large volume of products that would otherwise be donated are likely to be disposed of. Charities do not have the resources to pick up donations at thousands of retail facilities. Moreover, suppliers and retailers may be less likely to incur the costs associated with donating unsold products if they are not allowed to use reverse logistics facilities for other purposes (to obtain credit or to arrange for the sale of the products on secondary markets). In addition, industry believes that safeguards against “sham donation” are more likely to be effective when imposed at centralized reverse logistics facilities than at thousands of retail facilities. 3.2 RECALLS - CONSENSUS STATEMENT Background

• Every year, thousands of consumer products are “recalled” because someone determines that such products should not be sold in California. In some cases, a governmental agency, such as the federal Food & Drug Administration or the Consumer Product Safety Commission, orders the recall. More commonly, private parties, such as manufacturers, distributors or retailers, will initiate a “voluntary’ recall in order to avoid a government mandated recall. (While the term “recall” also may be used to refer to a purely commercial decision to no longer sell a particular product or to sell it in another location or part of the U.S., these scenarios are outside the scope of this problem statement.)

• Although recalls are commonly undertaken because of safety concerns (e.g., the product is adulterated or is mislabeled), that is not always the case. For example, a supplier may recall a perfectly safe product because it is defective and simply does not work as intended.

• Although recalled products are often disposed of, in some cases recalled products may be returned to the vendor, repaired, relabeled or sold in another state. For example, a product recalled under Prop 65 may be sold in a state that does not impose similar warning label requirements.

• California law (AB 1860) requires manufacturers to provide for and pay for the safe return

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of recalled products to the manufacturer. Parties undertaking recalls want to be certain (and may be required to prove) that the recall has been “effective,” which requires being able to document the quantity of recalled product “returned or accounted for.” 21 C.F.R. Part 7; http://www.fda.gov/safety/recalls/industryguidance/ ucm129259.htm. In addition, parties such as retailers may receive credit for recalled items and need to provide evidence of the number of items actually recalled. For these reason, parties undertaking recalls often rely on third parties to collect recalled products in centralized locations where they can be counted, tracked, safely held until a determination has been made as to an appropriate and secure disposition.

The Problem

• There is uncertainty as to the “point of generation” for discarded recalled items that are hazardous or medical waste under California law. Some parties maintain that the point of generation is the retail store because in many cases (e.g., an adulterated medicine), the retailer knows (or should know) that recalled items will not be resold for their original intended purpose. Others argue that the point of generation for a discarded recalled product is not the retail store because the retail store often does not know the ultimate disposition of the recalled items and the intent of the recalling party is to not discard the items until they are returned to a central location and accounted for. Still others argue that, in the context of the retail reverse supply chain, making the “point of generation” turn on amorphous concepts such as intent and knowledge requires a case-by-case analysis into the minds of an indeterminate group of people and thereby produces a regulatory framework that is too subjective and difficult to comply with and enforce.

• The issue is complicated by the fact that, although recalls are typically limited to specific lots or and/or products produced within specific dates (Lot W of Product X, produced from dates Y to Z), it is common for retailers to return a broader range of products (e.g., all lots within a given UPC) and rely on other parties to sort through the returned products and cull out those that are not actually subject to the recall. Accordingly, even where a recall may result in the destruction of all properly recalled items, some percentage of the items initially identified by the retailer for recall may actually end up back on retail shelves. Consequences. Today, recalls of products that would be hazardous or medical waste when disposed of occur on a regular basis and are typically not managed at the retail location.

• If the point of generation for recalled items is the retail store, then the items subject to recall must be accumulated, stored, and transported under manifest to permitted hazardous or medical waste treatment, storage and disposal facilities and cannot be shipped to the recalling party or its agent for aggregation, tracking and secure destruction.

• Managing recalls at retail stores poses logistical and security problems for stores because of limited space in store backrooms to safely and securely store recalled products and ensure that the products are not comingled with saleable products.

• Safe and effective recalls are an important public safety concern, and ineffective recalls potentially conflict with federal law (e.g., the federal Food, Drug and Cosmetics Act). Managing recalls at thousands of individual retail stores would prevent consolidation of products for efficient accounting and shipping and impede verification of the recall by third parties, including government agencies.

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HYPOTHETICAL

An aspirin manufacturer determines that there is a mistake on the label of one of its products, Product X. Product X is a hazardous waste when disposed of in California. The manufacturer notifies the FDA that it will undertake a voluntary recall of Product X in accordance with federal law. Pursuant to California law (AB 1860), the manager provides for a reverse logistics facility to receive Product X from California retailers and notifies California retailers that the manufacturer will provide and pay for the safe return of its products to the reverse logistics facility. Hundreds of retailers ship Product X to the reverse logistics facility, either directly, or through their distribution centers, on a bill of lading (not a hazardous waste manifest). When the reverse logistics facility receives the returned Product X, it scans each item and tracks how much of Product X was received from each retail location. As the recall proceeds, the reverse logistics facility provides updates to the manufacturer of the volume of Product X returned. Although theoretically there was nothing wrong with the aspirin and it could have been repackaged for sale, due to public perception that Product X is somehow tainted, at some point the manufacturer instructs the reverse logistics facility to securely dispose of 100% of the returned product in accordance with applicable law.

1. Under this scenario, are the retail stores in violation of the HWCL for shipping hazardous waste to their distribution centers and the reverse logistics facility without a manifest? 2. Does the answer change if the manufacturer announced its decision to discard 100% of the returned products before they were shipped by the retail stores? 3. Does the answer change if the product was recalled because the aspirin itself was unsafe such that it was obvious, even prior to any announcement, that the product could no longer be sold as aspirin?

3.3 Recycling Problem Statement Background

• Under California’s Integrated Waste Management Act (AB 939), there is a state-wide recycling goal that 75% of solid waste generated be diverted from landfills in the following order of priority: (1) source reduction, (2) recycling and composting, and (3) environmentally safe transformation and land disposal.

• Retail locations manage and sell over 100,000 types of consumer products. Some of these products are not sold to customers or are returned due to a variety of factors, for example because they have slight packaging imperfections, are close to their sell-by or expiration date, are returned by customers, or expired.

• Certain of these unsold and returned products can no longer be used for their intended purpose, but may still have significant value if reformulated, recycled, or reclaimed. For example, products contained in aerosol cans that have been dented (or have broken actuator nozzles that cannot be repaired) could be recovered for use as fuel or repurposed for other uses (one such use that has been identified is the use of aerosol string toy products to manufacture parking lot wheel stops). Other products that could be recycled include hand sanitizers, surfactants, nicotine replacement products, aerosol cans, and other cleansers (including toothpaste).

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• Unsold consumer products at a retail location, including those listed above, fall into

one of several categories depending on their eventual disposition (use, reuse, processing to recover usable materials, reclamation, burning for energy recovery, destruction), and, if they are wastes, upon their characteristics (RCRA-hazardous, non-RCRA hazardous, or not hazardous). The eventual disposition for such products frequently changes, depending on liquidation, donation, and recycling markets and other factors.

• Under California’s waste management laws governing recycling (including Health and Safety Code Section 25143.2), management standards for recyclable materials depend on the eventual disposition and the characteristics of a given item. o For example, if a product will be reused and is RCRA-hazardous, it can be

managed as excludable recyclable materials (“ERM”), but if it will be reclaimed (processed), then it must be managed as a hazardous waste. ERM materials must be segregated and labeled as “Excludable Recyclable Material.”

o As another example, for products that will be reclaimed (other than filtering, sorting, sieving, grinding, screening, physical separation, pH adjustment, or viscosity adjustment) and are non-RCRA hazardous, the ERM standards only apply if there are no other constituents present than those for which the product will be recycled and the product will be used “in manner for which the product is commonly used.”

• When unsold or returned products are consolidated at a central location, including

at reverse distribution facilities, there are increased opportunities to use, reuse, or recycle these products in order to divert them from disposal in landfills or incineration (in the case of OTC products subject to the Medical Waste Management Act).

The Problem

• Some agencies and prosecutors have taken the position that retailers must determine whether unsold or returned products will be liquidated, donated, or otherwise used for their intended purposes or are recyclable before returning the products to the supplier or shipping them to reverse distributors. However, the employees at retail stores generally do not know whether such products will be resold, donated or disposed of, or whether they could be reformulated, recycled or reclaimed.

• Even if retail employees could make a determination of whether a product can be reformulated, recycled or reclaimed, management of those products as Excludable Recyclable Materials at the store level would create an additional stream of products (in addition to hazardous, non-hazardous and perhaps medical and universal wastes) that must be segregated and labeled as Excludable Recyclable Materials, and therefore add an additional level of complexity to an already

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complicated management system and require more space in retail backrooms that are already space-limited.

Consequences

• Because retail store employees do not know whether unsold or returned products can or will be used, reused, recycled, reformulated, or reclaimed, to ensure compliance with the interpretation of California’s hazardous and medical waste management laws by some agencies and prosecutors, retailers may manage all such products as waste rather than seeking ERM designation, resulting in significant unnecessary waste and lost opportunities to recycle these products.

• Most retailers do not have adequate backroom space to manage multiple waste streams, which limits the benefits of this program for the retail sector.

• Changing liquidation, reuse, and recycling markets over time may mean that the same product would be considered ERM one month and hazardous waste the next, which could lead retailers to over-manage products as waste to avoid frequent changes in the store-level management guidance and therefore further frustrate achieving recycling/sustainability goals.

• Management of products at the store level as waste reduces or eliminates the recycling opportunities that are provided by consolidating unsold or returned products at reverse distributors. The absence of such economies of scale further limits waste minimization opportunities, may unnecessarily increase incineration emissions, and may unnecessarily increase waste management and disposal costs for generators without an environmental benefit.

Hypothetical

Manufacturer tells retailer to pull existing inventory of shampoo because it has a new package design. The shampoo in the old packaging is still lawful for use. Manufacturer tells retailer it may donate the old shampoo, liquidate it (sell to a discounter) or dispose of it. The shampoo fails the DTSC’s aquatic toxicity test. Therefore, if the shampoo is a waste, it is a hazardous waste. Retailer sends the shampoo to Reverse Distributor for consolidation for possible donation, liquidation, or an evaluation for recycling opportunities. The shampoo is still in its original, intact packaging and is shipped by common carrier in compliance with all applicable DOT shipping requirements for such products. Reverse Distributor receives the shampoo and determines that there is no current donation or liquidation demand for the shampoo, but the shampoo can be sent to a recycler to be repurposed.

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Did the retailer violate the HWCL by failing to manage the shampoo as ERM at the store level? If so, would the answer change if the business rules adopted by the retailer and the shampoo supplier made recycling a secondary disposition (i.e., to be pursued if the Reverse Distributor could not find a resale market)? Does the answer change again if the retailer’s corporate office learns that for the first six months of the year, no resale market was found and all of the shampoo was sent to a recycler? 3.4 MANUFACTURER CREDIT/FINANCIAL RECONCILIATION Background: Although retailers make every effort to match their product inventories with consumer demand, it is not possible to do so with exact precision. Products may become unsellable due to a variety of factors, for example because they are seasonal, out of fashion or expired. To reduce the financial risk to retailers, manufacturers/suppliers frequently provide retailers with credit or some other form of financial reconciliation for products that cannot be sold. Credits can be substantial and are very important to retail economics generally and the profitability of California retail stores. For example, Walmart reported in its NODA Response that Walmart Return Centers process in excess of $1 billion in credit each year. To ensure that these very lucrative credits are in fact warranted, suppliers often require that unsold products subject to credit agreements be returned to the vendor or accounted for (i.e., individually counted and tracked) by independent third parties, generally reverse distributors. While theoretically manufacturers could inspect products on a store by store basis, given the tens of thousands of retail locations in California and the limited space that retail stores have available to store unsellable products, return of these products to a centralized location for counting and tracking is the only practically and economically feasible alternative. Problem: Some agencies have taken the position that the retailer must determine whether such unsold products will be liquidated, donated or otherwise used for their intended purposes before shipping them to reverse distributors, and that it does not matter whether the products have potential credit value. The ultimate disposition of these products is typically the subject of business rules agreed to between the vendor and the retailer, and may be impacted by the reverse distributor’s assessment on a product by product basis, and the employees at retail stores generally do not know whether such unsold products will be liquidated, donated, returned to the vendor or disposed of. They also do not know the specific credit arrangements that each vendor has with the retail company. Consequences: This interpretation of the law can make it impossible to recover value from unsold products. Because retail store employees do not know whether such unsold inventory will be liquidated, donated, returned to the vendor or disposed of, to ensure compliance, all such products would need to be disposed of at the store level, resulting in significant unnecessary waste. This would require retailers to set up much larger areas at their locations to manage the waste, taking up storage space typically used to manage

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product inventory. Many smaller retail operations lack sufficient space to manage large quantities of unsold products as medical or hazardous wastes. This interpretation also eliminates the ability to send unsold products to independent third parties for credit accounting. Without these credits, retailers incur a significant increase in costs, which is passed on to consumers. Moreover, but for the credit they receive, it is doubtful that retailers would incur the significant costs associated with transporting unsold products to reverse distribution centers for donation. Without the economies of scale provided by such centers, it is likely that large quantities of products would be disposed of rather than donated. 3.5 Dietary Supplements and Products with Drug Facts Labeling Background

• Under the California Medical Waste Management Act, “pharmaceutical” includes an “over-the-counter [“OTC”] human or veterinary drug, including, but not limited to, a drug as defined in Section 109925 of the Federal Food, Drug, and Cosmetic Act” (“FDCA”). Provided, however, under this section a “pharmaceutical” does not include any pharmaceutical that is regulated pursuant to either the federal Resource Conservation and Recovery Act of 1976 (“RCRA”), or the Radiation Control law for California. See Section 117747 Health and Safety Code. OTCs include a wide array of consumer products, and can include items such as pain relievers, sun screens, cosmetics, and saline solution.

• Under the FDCA, “drugs” must be labeled with “Drug Facts,” but manufacturers may elect to add drug facts labeling to items out of an abundance of caution or as a marketing strategy when it would not otherwise be required by the FDCA. Dietary Supplements are labeled with “Supplement Facts” and are regulated as foods, not drugs, under the FDCA.

• Unsold Dietary Supplements and OTCs can be a high volume waste stream for some retailers. Many Dietary Supplements and OTCs tested to date appear to pass aquatic toxicity testing, but some fail.

• The Problem

• There is some confusion and concern within the regulated community that some Dietary Supplements could be considered a “pharmaceutical,” and therefore, a medical waste regulated under the California Medical Waste Management Act. As a result, unsold Dietary Supplements are being managed and destroyed as medical waste by some retailers out of an abundance of caution.

• This same uncertainty could be applicable to homeopathic drugs sold by some retailers because such drugs are not defined in section 109925 of the Federal Food, Drug, and Cosmetic Act, but can nonetheless be considered an OTC human or veterinary drug under the common usage of that term. This uncertainty could equally apply to regulators.

• Unsold consumer products labeled with “Drug Facts” are considered by some regulators as presumptively OTC pharmaceuticals subject to the California Medical Waste Management Act. As a result, a number of seemingly benign products,

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including sun screen and saline solution, when discarded, are being incinerated to comply with the California Medical Waste Management Act.

• Due to uncertainty surrounding the point of generation for consumer products that can no longer be sold at California retail locations, many retailers manage disposal of OTCs at the retail store level, which could subject them to a requirement to develop a separate medical waste management program. Retailers maintain that they have received guidance from DTSC and CDPH that they can elect to manage discarded OTCs in accordance with hazardous waste rules in lieu of complying with medical waste regulations. Not all regulators may be aware of that guidance.

• How do retailers address differences in brands, where one’s product formulation may be benign while another’s formula for the same type product contains a hazardous or toxic substance? Examples can include personal care and cleaning products and disposal criteria could differ.

Consequences • The practice of incinerating dietary supplements and OTCs prevents potential

waste minimization opportunities, may unnecessarily increase incineration emissions, and may unnecessarily increase waste management and disposal costs for generators without an environmental benefit.

• According to persons outside the retail sector, disposal of some non-hazardous OTCs as non-hazardous, municipal solid waste may pose risks or hazards in landfills that are unlined and without leachate collection systems and disposal of non-hazardous OTCs into sewers may pose risks or hazards to publically owned treatment works or water systems (including groundwater). OTCs may also enter the environment when leachate is siphoned off and put through the waste water system. POTWs were not designed to address complex chemicals and cannot remove all of them. This can cause 1) environmental harm, increase treatment costs, and/or cause publicly supported POTWs to be out of compliance with CWA-based discharge requirements. This is why the wastewater community has championed source control.

• According to the retail sector, the requirement to develop a separate medical waste management program for the management and incineration of OTCs and prescription pharmaceuticals at each retail store creates additional, unnecessary burdens for retailers who are otherwise already subject to California’s stringent requirements for hazardous waste management.

Medical Waste Management Act Overview of Proposal Limit the number of consumer products that are being incinerated by:

o Excluding cosmetics, personal care products, and homeopathic remedies from the Medical Waste Management Act (“MWMA”)

o Clarifying that supplements are not “drugs” subject to MWMA For remaining products regulated under MWMA (upon discard), provide options for

incineration so that retailers can incinerate pharmaceutical waste without having to maintain two separate programs (medical waste and hazardous waste)

Revise MWMA to effect legislative intent of previously enacted legislation (AB1442) to allow pharmaceuticals to be sent to a reverse distributor for credit

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• Excluding Cosmetics, Personal Care Products, and Homeopathic Remedies from MWMA

o The MWMA requires the incineration of any “pharmaceutical,” including “over-the-counter [“OTC”] human or veterinary drug, including, but not limited to, a drug as defined in Section 109925 of the Federal Food, Drug, and Cosmetic Act” (“FDCA”). Section 117747 Health and Safety Code.

o Some regulators and prosecutors have interpreted the MWMA to be applicable to retailers and OTC pharmaceuticals sold at retail locations. Moreover, some consumer products are labeled with “Drug Facts” even if they may not be considered a “drug” under the FDCA, creating regulatory uncertainty. As a result, homeopathic remedies as well as cosmetics and other personal care products that are labeled with Drug Facts, including sunscreen, lip balm, and saline solution, when discarded, are being incinerated to comply with the MWMA instead of being discarded in accordance with the Hazardous Waste Control Law (“HWCL”) (if hazardous upon discard), which would require disposal in a Subtitle C landfill, which are constructed with a double liner, double leachate collection system, groundwater monitoring, and are subject to ongoing inspections and post-closure care obligations.

o Proposal: To avoid unnecessary incineration, pass legislation to exclude cosmetics and other personal care products like shampoos, sunscreens, toothpaste, lip balm, antiperspirants, and saline solution as well as homeopathic remedies from the MWMA. Instead, these products would be managed under the HWCL upon discard when hazardous (either RCRA or California-hazardous), and under California’s solid waste disposal rules when non-hazardous.

• Clarify MWMA Does Not Apply to Dietary Supplements o Dietary supplements are regulated under the Dietary Supplement Health

and Education Act of 1994 (DSHEA), which defines dietary supplements as food and not drugs. Nevertheless, there is some confusion and concern within the regulated community that some dietary supplements could be considered a “pharmaceutical,” and therefore, a medical waste regulated under the MWMA. As a result, some retailers are managing dietary supplements as pharmaceutical waste that must be incinerated out of an abundance of caution.

o Proposal: To avoid unnecessary incineration, issue written guidance clarifying that vitamins and other dietary supplements that are regulated under DSHEA are not subject to the MWMA and instructing generators to manage these products under the HWCL upon discard when hazardous (either RCRA or California-hazardous), and under California’s solid waste disposal rules when non-hazardous.

• Provide Options for Incineration of Pharmaceutical Waste o Pharmaceutical wastes that are hazardous, as defined under the federal

Resource Conservation and Recovery Act (“RCRA”) are excluded from the MWMA. As currently drafted, the MWMA requires non-RCRA pharmaceutical waste to be managed as medical waste, which could be read to require retailers to maintain two separate waste management programs: (1) RCRA waste and (2) medical waste (a combination of

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California hazardous and non-hazardous pharmaceutical waste). o There is a legal presumption under RCRA and California’s HWCL that a

waste is regulated by RCRA unless a generator determines that it is non-RCRA. See, e.g., Health and Safety Code section 25117.9. As recently as 2015, in the proposed Generator Improvements Rule, EPA acknowledged and endorsed the practice of self-declaring waste as RCRA hazardous, stating that “The Agency also realizes that generators, whether inadvertently or intentionally, often make a hazardous waste determination when the material is actually a non-hazardous solid waste. … The generator is always free to manage its solid waste as a hazardous waste if it so desires.” 80 Fed. Reg. 57945, col. 2 (Sept. 25, 2015).

o From retailers’ perspective, maintaining two separate waste management programs is overly complex, creating additional unnecessary regulatory burden without an attendant environmental benefit. Nevertheless, some stakeholders have expressed concern with the disposal of pharmaceutical waste in landfills, highlighting the potential for collected leachate to be discharged to publically owned treatment works that were not designed to address complex chemicals.

o Proposal: To reduce regulatory burden of complying with two management programs while avoiding disposal of pharmaceutical waste in landfills, issue joint guidance or pass legislation to ensure that generators have options for how to incinerate pharmaceutical waste, including as (1) medical waste, (2) California-hazardous waste subject to a land disposal ban (requiring incineration), or (3) if non-hazardous, for energy recovery.

• Reverse Distribution of Medical Waste o Under the MWMA, pharmaceuticals sent to a reverse distributor that is

licensed as a wholesaler of dangerous drugs by the California Board of Pharmacy are excluded from the definition of “pharmaceutical waste” that must be incinerated. This language was added by AB1442 and was intended to allow pharmaceuticals to be sent back to reverse distributors for credit determinations, even if expired or otherwise unsellable.

• For example, AB1442 Assembly Floor Analysis comments indicated that “Under existing law, pharmaceutical drugs can be sent to health care facilities through standard common carriers, or standard shipping means. Unused drugs can sometimes be returned to the manufacturer for credit, via a common carrier. Expired and non-dispensable drugs must be shipped as ‘Medical Waste,’ requiring expensive hazardous waste shipping, instead of common carrier. This is unnecessarily expensive for pharmacies, hospitals, and other health care facilities, who are simply returning the exact same drug that was shipped to them by common carrier.”

o In practice, this exclusion has not been implemented as intended, as a result of intervening legislation (AB333), which moved this language to Section 117690. As currently drafted, some regulators and prosecutors have interpreted this language to exclude such pharmaceuticals from the MMWA entirely, and thus subject to the Hazardous Waste Control Law (“HWCL”) (if hazardous), which currently does not provide a similar allowance.

o Proposal: To the extent that the HWCL is not amended to allow consumer

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products to be sent back to reverse distributors for credit determinations, even if expired or otherwise unsellable, the MWMA should be further amended to give effect to the intent of previously enacted legislation (AB1442).

Q&A Q: How can we be sure that excluding cosmetics, personal care products, and homeopathic remedies from the MWMA is protective of human health and the environment? A: Excluding these products from the MWMA would not mean they will no longer be subject to regulatory standards upon disposal. Instead, if they exhibit a hazardous characteristic under RCRA or California’s stringent hazardous waste standards (including the aquatic toxicity test), the HWCL would require them to be disposed of in a Subtitle C landfill, with a double liner, double leachate collection system, groundwater monitoring, ongoing inspections, and post-closure care requirements. Many personal care products, cosmetics, and homeopathic remedies meet the RCRA or California-hazardous standards and would need to be managed as hazardous waste upon discard. Q: How do retailers address differences in brands, where one’s product formulation may be benign while another’s formula for the same type product contains a hazardous or toxic substance that would require management as a hazardous waste upon discard? Examples can include personal care and cleaning products and disposal criteria could differ. A: Most retailers make waste characterizations at the universal product code (UPC) level, which differs by manufacturer and therefore accounts for differences in formulation between brands even if in the same item category. As a result, differences in formulation will be accounted for upon discard, and those products with hazardous characteristics will be disposed of in Subtitle C landfills. Subtitle C Landfill Requirements https://www.epa.gov/hwpermitting/hazardous-waste-management-facilities-and-units#landfills Landfills regulated under Subtitle C of RCRA are excavated or engineered sites where non-liquid hazardous waste is deposited for final disposal and covered. These units are selected and designed to minimize the chance of release of hazardous waste into the environment. Design standards for hazardous waste landfills require:

• Double liner • Double leachate collection and removal systems • Leak detection system • Run on, runoff, and wind dispersal controls • Construction quality assurance program

Operators must also comply with inspection, monitoring, and release response requirements. Since landfills are permanent disposal sites and are closed with waste in place, they are subject to closure and post-closure care requirements including:

• Installing and maintaining a final cover • Continuing operation of the leachate collection and removal system until leachate

is no longer detected • Maintaining and monitoring the leak detection system • Maintaining ground water monitoring • Preventing storm water run on and runoff

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• Installing and protecting surveyed benchmarks

3.6 Empty and Mostly Empty Containers

Background

Retailers are faced with managing millions of empty or mostly empty containers that enter their waste streams. Many of these containers previously contained California regulated materials and are being conservatively managed by retailers as hazardous waste after their contents have been dispensed. However, if these containers are emptied in accordance with state requirements, they are exempt from hazardous waste laws and regulations. This issue can also be complicated by the disposal of public, tenant or employee personal containers on the property.

DTSC guidance provides that “all material must be removed by any practicable means (including draining, pouring, pumping or aspirating) before the container can be considered empty. In regards to draining, a container is empty when there is no longer a continuous stream of material coming from the opening when the container is held in any orientation,” otherwise described as dripping. (Managing Empty Containers, DTSC Fact Sheet, February, 2009)

Empty and Mostly Empty Containers

Issues Associated with Topic Consequences as a Result of the Issues

After disposal, used containers are often left unattended for long periods of time and/or subjected to heat, causing many once-empty containers to potentially become non-empty according to the literal application of this definition.

Because used containers may have been empty at the time of disposal but subsequently have residual contents re-pool to produce continuous streams, retailers could potentially be pulled into the realm of hazardous waste regulations even after the container has been properly emptied. The retailers would have to manage these containers as hazardous wastes, including transporting them under manifest to permitted hazardous waste treatment, storage and disposal facilities.

Concern with the ambiguity of the status of these used containers as empty or non-empty could result in overly cautious hazardous waste management practices by retailers. Instead of becoming a significant source of recyclable material, these containers would be disposed of as hazardous waste, resulting in unnecessary

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hazardous waste generation, especially if barriers exist to the consolidation of these containers.

With thicker or more viscous liquids (such as shampoo, oil, lotion, surfactants), containers can be emptied to the point where the liquid has changed from a continuous stream to dripping and then placed back into a non-inverted position. After a period of time, however, the liquid may pool in the container again to the point where the liquid potentially could be poured in a continuous stream if inverted again.

The retailers would have to manage these containers as hazardous wastes, including transporting them under manifest to permitted hazardous waste treatment, storage and disposal facilities.

Thicker or more viscous liquids may also pool if the container is warmed up, such as stored in a compactor in the California sun.

The retailers would have to manage these containers as hazardous wastes, including transporting them under manifest to permitted hazardous waste treatment, storage and disposal facilities.

Law and guidance is being followed by the retailers but prosecutors may find these containers later and presume it was non-empty.

Retailers would conservatively manage these containers as hazardous waste, although they were empty at the time of disposal.

In the case of aerosols, it is unclear to retailers when an aerosol can be considered empty.

Concern with the ambiguity of the status of these used containers as empty or non-empty could result in overly cautious hazardous waste management practices by retailers. Instead of becoming a significant source of recyclable material, these containers would be disposed of as hazardous waste, resulting in unnecessary hazardous waste generation, especially if barriers exist to the consolidation of these containers.

DTSC’s “Managing Empty Containers” (DTSC Fact Sheet, February, 2009) guidance clearly exempts household containers, less than 5 gallons, that had contained household hazardous materials removed using practices commonly employed to remove materials from that type of container.

This guidance is different than the guidance earlier in the same document, which uses the standard of “no longer a continuous stream,” potentially causing confusion over when a container is empty.

Regulatory criteria for “empty” are difficult to quantify.

Concern with the ambiguity of the status of these used containers as empty or non-empty could result in overly cautious hazardous waste management practices by retailers.

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When the interior contents are dry, some non-pourable materials (e.g., roofing tar) do not leave a thin, uniform layer and additional material cannot be removed.

Retailers would conservatively manage these containers as hazardous wastes, because the contents cannot be emptied further.

Materials dried with less than one inch of residue are practically empty if the top is also dried. (e.g., paint)

Retailers would conservatively manage these containers as hazardous wastes, because the contents cannot be emptied further.

Containers made of wood, paper, cardboard, fabric, or any other similarly absorptive material are not exempt from regulation if the container was in direct contact with and has absorbed the hazardous waste or a hazardous material.

These containers may need to be managed as hazardous rather than “empty” if the capacity is five gallons or less.

Products may not be known to contain containing acutely hazardous wastes.

Some “empty” products may need to be managed as hazardous.

3.7 Aquatic Toxicity Testing Problem Statement and Background It is challenging to discuss the issues surrounding aquatic toxicity testing of consumer products in a silo, without putting it into context with the other the broader issues surrounding the disposal of retail hazardous waste in general, which are being discussed in the other subgroups. The other issues the Steering Committee is dealing with address the following questions: WHEN a product becomes "waste," WHERE the waste is technically generated and WHAT is "hazardous"? However, the aquatic toxicity test is a strict standard required by California regulations and really is an underlying issue that must be considered simultaneously and evaluated to answer the question, WHY is a product classified as "hazardous" in the first place? Problem: In sum, difficult toxicity testing methodologies result in additional costs and regulatory burdens for regulatory agencies, as well as retailers in the State of California, and exacerbates waste management capacity issues within California's overly subscribed hazardous waste management system. Background:

• Retailers who dispose of consumer products face many challenges in complying with increasingly complex federal, state and local regulations. Retailers primarily rely on data contained in the Safety Data Sheets (SDSs) supplied with some products, which do not frequently contain sufficient information for compliance with

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ALL regulations. Therefore, many prominent retailers rely on WERCSmart, a private data system that provides retailers the data required to comply with additional government regulations.

• In absence of an affirmative determination provided by manufacturers in the

WERCS database (the system attempts to provide conservative coding to guide retailers on disposal methods), many retailers are left with the ultimate decision of administrating duplicative toxicity testing on hundreds of thousands of products or relying on their in-store employees to manage the waste in absence of scientific data, which has resulted in over-management of some hazardous products.

• Nearly 60% of the total hazardous waste loads in the State of California are

classified as "hazardous" by federal standards, Resource Conservation and Recovery Act (RCRA) — meaning the waste is so potentially harmful it must be regulated in all 50 states. The remaining 30% falls under California's stricter standards. Retailers, such as supermarkets, chain drug and general merchandise stores, primarily manage household consumer products that are subjected to the higher California standards. These include some products that have failed the aquatic toxicity test, because they are poorly soluble or solid products that are not easily put into solution. Common products such as body lotions, shampoos or Vaseline may kill the fish physically, but not due to toxicity.

• In 1998, DTSC considered reviewing California's regulatory framework for hazardous waste, the Regulatory Structure Update (RSU). The intent of this effort was to streamline and reduce its regulatory program for California-only hazardous waste. A major component of that effort was to change the current hazardous waste classification system, which would have evaluated the scientific testing methodologies for "hazardous waste." It is unknown why this review, nor any other substantive review of California’s regulatory framework and modern toxicity testing methodologies and standards has not been considered by the State of California or completed in the last 20 years.

3.8 HAZARDOUS WASTE DETERMINATION

HAZARDOUS WASTE DETERMINATION

Issues Associated with Topic Consequences as a Result of the Issues

Retail store personnel do not possess the expertise or training needed to make hazardous waste determinations.

Unsold products are often presumed hazardous and nonhazardous waste is sent for hazardous waste disposal.

Chemical hazard information that is needed to make an accurate waste determination is not available to retailers or does not adequately classify the waste.

In the absence of data or needed information, unsold products are often presumed hazardous. Incomplete data or missing information can result in unsold products being inaccurately classified as hazardous.

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HAZARDOUS WASTE DETERMINATION

Issues Associated with Topic Consequences as a Result of the Issues

Who is the generator in the reverse distribution process if an unsold product is sent to another person or location in a viable condition, but later is discarded? [Comment. This concept was mentioned at the meeting and I realize it is a concern by some retailers but I question how accurate it is?]

The liability that may result from the unsold products’ later management decisions is causing retailers to be conservative and make the decision to discard and classify still useable unsold products as medical waste or hazardous waste, rather than send them elsewhere for sale or for donation as a useable product.

California’s hazardous waste criteria are unnecessarily stringent without evidence of increased protection of human health and the environment. Many more wastes are classified as hazardous waste in California than in any other state due to the more stringent criteria.

Waste classified as hazardous in California, is being sent out of the state for disposal (sometimes as non-hazardous waste) and common consumer products that are regulated in California aren’t collected at household hazardous waste take-back locations, while a small portion of these items are managed by retailers at great expense.

There is a lack of clarity regarding the application of California’s testing requirements.

Lack of clarity can lead to products being mismanaged or to over-classification.

There is a lack of understanding of how to run California’s testing methodologies.

Lack of understanding can lead to inconsistent results, as evidenced in the RWATT results released in 2016 where 15% of the time the two labs disagreed on whether the item was hazardous.

Designation (and regulation) of unsold consumer products as medical waste or hazardous waste requires retailers to set up larger areas at their locations to manage the waste and imposes additional regulatory requirements.

Because more products are managed as hazardous/medical waste, a large amount of storage space is required in retail back rooms. Many smaller retail operations lack sufficient space to manage additional unsold products as medical or hazardous wastes. This designation can increase the cost of managing the product and impose additional regulatory requirements.

Disposal of common consumer products into waterways are already regulated by the CWA, and WWTPs are designed to handle many consumer products (such as surfactants).

Management standards are triggered by the designation of being hazardous waste which are not necessary to handle and store these products.

The costs to conduct all the analytical testing needed to demonstrate the waste is not hazardous waste are expensive.

It may be cheaper to assume the waste is hazardous rather than conduct all the needed tests.

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HAZARDOUS WASTE DETERMINATION

Issues Associated with Topic Consequences as a Result of the Issues

In some cases, both federal and California hazardous waste tests are required in order to determine if a waste is hazardous.

It may be cheaper to assume unsold products are often presumed hazardous.

Some wastes that are not classified as hazardous or medical wastes may still require special handling for land disposal, e.g. designated wastes that impact water quality.

This criteria is difficult to determine since it is land disposal site specific thus management as hazardous or medical waste may be required

Obtaining regulatory concurrence for classifying wastes is a difficult process.

It may be easier to assume the waste is hazardous.

Full hazardous waste testing (including aquatic toxicity, acute oral, dermal and inhalation testing) would involve significant animal testing.

Many companies do not condone or support animal testing and the EU has banned marketing of cosmetics that have been tested on animals. Furthermore, there is no benefit to such testing on consumer products that are intended for use on humans, such as sunscreen or hand lotions.

ANALYSIS AND FINDINGS

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RECOMMENDATIONS

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APPENDIX A Retail Waste Working Group and Retail Waste Working Group Steering Committee Meetings

October 6, 2016 – Kick Off - Sacramento (California EPA) November 4, 2016 – Steering Committee - (Cal EPA) November 4, 2016 – RWWG - Sacramento (Cal EPA) November 17, 2016 – Steering Committee - (Cal EPA) December 8, 2016 – Steering Committee - (Cal EPA) January 6, 2017 – Steering Committee - (Cal EPA) January 6, 2017 – RWWG - Sacramento (Cal EPA) January 20, 2017 – Steering Committee - (Cal EPA) February 3, 2017 – Steering Committee - (Cal EPA) February 3, 2017 – RWWG - Sacramento (Cal EPA) February 24, 2017 – Steering Committee - (Cal EPA) March 3, 2017 – Steering Committee - (Cal EPA) March 3, 2017 – RWWG - Sacramento (Cal EPA) For efficiency, the meetings combined at this point. March 17, 2017 – RWWG - Sacramento (Cal EPA) April 3, 2017 – RWWG - Sacramento (Cal EPA) April 13, 2017 – RWWG - Sacramento (Cal EPA) April 28, 2017 – RWWG - Sacramento (Cal EPA) May 11, 2017 – RWWG - Sacramento (Cal EPA) May 25, 2017 – RWWG - Sacramento (Cal EPA)

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APPENDIX B

RETAIL WASTE WORKING GROUP GLOSSARY OF TERMS

The glossary of key terms associated with retail waste and reverse distribution activities reflect common phrases and legal definitions in guiding the activities of the working group. Please note that individual companies often use the same term to refer to different items and processes.

Best if Used by Date – A recommendation to the consumer to use the product by a certain date for best flavor or quality. There is no legal prohibition against selling a product beyond its Best if Used by Date, which is different than expiration date (see discussion of “expiration dates” and “retrograde”).

Business Rules – The rules governing the disposition of surplus consumer products agreed to by a manufacturer and retailer and/or, in some cases, a reverse distributor. Business rules vary by Universal Product Code (UPC) and change periodically. Business rules are often provided to reverse distributors that implement the business rules by scanning UPC codes at their reverse distribution centers and arranging for the agreed upon disposition (see discussion on “reverse distribution”).

Commercial Chemical Products – Chemical substances that are manufactured or formulated for commercial or manufacturing use that consist of pure grade of the chemical, technical grades, and all formulations in which the chemical is the sole active ingredient.

Container Residues – [to be defined]

Damaged – Defaced or otherwise adversely affected in appearance or function. Damaged can range from dented exterior packaging to broken products and depending on the nature of the damage, the products may still be appropriate to donated or liquidated depending on the circumstance.

Destroy – Discard, recycle or reuse for a different purpose; can sometimes mean “remove from inventory” as opposed to “dispose of” but may still meet the definition of a waste (see discussion of “waste” and “retrograde”).

Destroy Disposition – A business rule that requires a surplus consumer product to be disposed of, typically after the product is evaluated for manufacturer credit or other financial reconciliation (see discussion on “dispose”).

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Discard – Can be a term of art and has a precise meaning used to describe items that are a waste as in a hazardous waste under Hazardous Waste Control Law1 (see discussion on “waste”).

Discarded Material2 – Material that is relinquished, recycled, or inherently waste-like and can include incineration and disposal (see discussion on “relinquished”).

Distribution Center or DC – A warehouse facility operated by a retailer to which consumer products are delivered for sorting and delivery to retail sales locations and can include the locations for forward or reverse distribution. In some cases, surplus consumer products are returned from retail locations to distribution centers for consolidation and future disposition (see discussion on reverse distribution).

Dispose – To discard as a waste; can sometimes include “recycle” or more broadly refer to any disposition other than sale by the retailer (see discussion on “waste”).

Disposition – [to be defined]

Donation – Gifting of surplus consumer products to a charitable organization that can use or otherwise obtain value from the donated products.

Empty Container – [to be defined]

Expiration Date (Foods) – A date provided by the manufacturer indicating that the labeling information is accurate as of that date and the time limit to purchase or use the product at its best quality. With the exception of infant formula, the laws that the Food and Drug Administration (FDA) administers do not preclude the sale of food that is past the expiration date indicated on the label. FDA does not require food firms to place "expired by", "use by" or "best before" dates on food products. FDA provides guidance on “dating” on its website3

Expiration Date (Drugs) – FDA requires that all prescription drugs, and most over-the-counter drugs, bear an expiration date after which the product

1 Under the Hazardous Waste Control Law (“HWCL”), Health and Safety Code section 25100 et seq. (Health & Saf. Code, § 25100 et seq.) Note 1: All further references to Health and Safety Code are under the “HWCL” and will be in abbreviated form. 2 California Code of Regulations, title 22, section 66261.2 (Cal. Code Regs., tit. 22, §66261.2 (b)) – A discarded material is any material which is any of the following: (1) relinquished as explained in section (c); or (2) recycled, as explained in subsection (d); or (3) considered inherently waste-like, as explained in paragraph (e) of this section. Note 2: All further references to sections in the California Code of Regulations will be in title 22 and will be in abbreviated form. 3http://www.fda.gov/AboutFDA/Transparency/Basics/ucm210073.htm; https://www.fsis.usda.gov/wps/wcm/connect/19013cb7-8a4d-474c-8bd7-bda76b9defb3/Food_Product_Dating.pdf?MOD=AJPERES

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cannot be sold with its existing label. California law prohibits the sale of expired drugs.

“Kill Code” – A term coined by California prosecutors to refer to “destroy dispositions.” It is not a term typically used by the retail industry.

Liquidation – See “Salvage” below.

Manufacturer – The entity that actually manufactured a product or caused the product to be manufactured. Some product manufacturers may contract with other companies for the actual assembly or production of their products and also serve to function as a supplier or vendor of the product.

Off Speculation Species – [to be defined]

Recall – An agency-driven, manufacturer-driven, retailer-driven or supplier-driven removal of a product from sale that requires an accounting for all such items in the marketplace at the time of the recall. A “safety recall”4 is initiated in cooperation with a government agency or a court of law and in compliance with agency regulations. Note that some retailers use the term “recall” loosely to refer to any product returned through the reverse supply chain.

Recycling5 – Refers to using, reusing, or reclaiming a recyclable material. Also means the collecting, transporting, storing, transferring, handling, segregating, processing, using or reusing, or reclaiming of recyclable material to produce recycled material.

Recycled Material6 - Refers to a material has been used or reused, or reclaimed and does not include an intermediate manufacturing process stream.

Relinquished7 – Refers to a waste that is disposed of; burned or incinerated; or accumulated, stored, or treated, but not recycled, before or in lieu of, being relinquished by being disposed of, burned or incinerated.

Retailer – An entity that sells consumer products directly to consumers, including brick and motor stores or on-line.

Retrograde Material – Can no longer be used for the intended purpose. As defined in CCR §66260.108 means any hazardous material which is not to be used, sold, or distributed for use in an originally intended or prescribed manner or for an originally intended or prescribed purpose and meets specific criteria including has undergone chemical, biological, physical or other changes due to the passage of time or the environmental conditions under which it was stored; has exceeded

4 Safety recalls may meet the definition of retrograde material 5 Cal. Health & Saf. Code § 25121.1, subd. (a) and (b) (Westlaw) 6 Cal. Health & Saf. Code § 25121 (Westlaw) 7 Cal. Code Regs.,tit. 22, §66261.2 subsec. (c) et. Seq

8 CAL. CODE REGS., TIT. 22, §66260.10

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recommended shelf life, or cannot be used for reasons of economics, health or safety or environmental hazard.

Repair and Refurbishment – Applies to retail items that are still intended to remain products for consumer use by being offered for sale by the original store or placed on the secondary market (liquidation/salvage) with repair involving items that are not functional but could be made functional and refurbishment involving items that, while functional, could be made to function better (or at least be made more marketable). Repair and refurbishment are typically undertaken by third-party contractors with expertise in addressing these types of products and may not be considered waste if there is not intent to dispose.

Repurpose or Repurposing – [to be defined]

Return to Vendor (RTV) or Return to Manufacturer (RTM) – Products are returned to the vendor or manufacturer and bypasses the distributor. The product is often returned by the end user.

Returns – Consumers return merchandise or products for a number of reasons and bring them back in a variety of conditions ranging from unopened and in new condition to opened, used or broken or missing parts.

Reuse9 – See “Use”.

Reverse Distribution – (also referred to as reverse logistics10) is a process by which surplus consumer products are processed for purposes of:

(A) evaluating manufacturer’s, vendor’s or supplier’s credit or other financial reconciliation; (B) liquidation; (C) donation; (D) transfer to a manufacturer, distributor, vendor or supplier or their respective agent(s); (E) completing recalls as required by law or by manufacturers, distributors, suppliers, vendors, or retailers, including safety recalls for secure destruction; or

(F) disposal after completion of any of the foregoing activities (A) through (E).

Salvage – Sale of surplus consumer products to others for subsequent resale to consumers in a secondary market; also referred to as liquidation.

Secondary Market – [to be defined]

Stock Keeping Unit or SKU– Used by some companies in place of or in tandem with UPCs. Always unique within a manufacturer/supplier. One SKU may have multiple UPCs assigned to it, but one UPC will only have one corresponding SKU.

9 40 C.F.R. § 261.1(c)(5) 10 Reverse logistics differs from revers distribution in that it is limited to non-pharmaceuticals

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Supplier11 – the entity with a direct relationship with the retailer for sale of a consumer product; which may include an importer, broker or distributor, or product manufacturer (see discussion on vendor).

Surplus Consumer Product – A product that is not sold by the retailer who carried it in inventory. For various reasons the retailer no longer wants to offer the product for sale to consumers. For example, a product may become surplus in the primary retail market because the label or packaging is defaced or damaged, the product does not have consumer appeal, the product has been superseded by a newer version or has been withdrawn from the market, demand for the product is seasonal, the product is expired or the product has been recalled.

Universal Product Code (UPC)/Barcode – A scannable barcode that is printed on a product or its packaging. The barcode includes the manufacturer identification number and a 5 digit numeric code that identifies the product. Reverse distributors often scan UPCs to determine the business rules applicable to a surplus consumer product.

Used or Reuse12 – A material that is either employed as an ingredient in an industrial process to make a product or employed in a particular function or application as an effective substitute for a commercial product. For example the regulations identifies use of distillation bottom from one process used a feedstock in another process.

Vendor – a term used by the retail sector to refer to as supplier.

Waste13 – any “discarded” material that is not an excluded material of any form (solid, liquid, or semisolid, or contained gaseous) that is relinquished (disposed, burned or incinerated, accumulated, stored, or treated); recycled; poses a threat to public health or the environment14; or considered inherently waste-like (see “discarded material,” “relinquished” or “recycling”).

APPENDIX C

11 The retail sector uses the term vendor to represent the supplier 12 Cal. Code Regs., tit. 22, §66260.10 13 Waste is defined in statute and regulations. Cal. Code Regs.,tit. 22, §66261.2 waste means any discarded material of any form (for example liquid, semi-solid or gaseous) that is not excluded by HSC §25143.2, subd. (b) and (d). Cal. Health & Safety Code §25124 has a similar but not the same definition. 14 Cal. Health & Saf. Code §25124, subd. (b)(3) Poses a threat to public health or the environment and meets either, or both, of the following conditions: (A) It is mislabeled or not adequately labeled, unless the material is correctly labeled or adequately labeled within 10 days after the material is discovered to be mislabeled or inadequately labeled. (B) It is packaged in deteriorated or damaged containers, unless the material is contained in sound or undamaged containers within 96 hours after the containers are discovered to be deteriorated or damaged.

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APPENDIX D