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.
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.
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.
Nike raises its retail game
Nike has seen the future of retail — and it’s immersive and digitally connected.
The athletic giant has opened a five-level, multi-sport category outpost in New York City’s SoHo neighborhood that pushes the envelope of sports retailing.
Designed to deliver the best of Nike products, personalized services and experiences under one roof, the 55,000-sq.-ft. store is an immersive experience that envelops the customer and offers a link between Nike’s digital and physical platforms. Visitors can do anything from taking a virtual run in Central Park to shooting hoops surrounded by the digitally rendered sights of the city’s iconic basketball courts.
Throughout the store, Nike “store athletes” stand ready to assist and guide shoppers and lend expert advice.
“With Nike SoHo, we can realize the promise of personalized performance,” said Heidi O’Neill, Nike’s president of global direct to consumer. “Powered by immersive digital trials and in-store experts, this store is about elevating every athlete’s potential.”
Nike SoHo is designed as a personal sport experience. The offerings run the gamut with a dedicated service space for customers to consult Nike experts, a personalization studio, a women’s boutique with personal styling services and enhanced fitting rooms with adaptive lighting that customers can adjust. A community space, The Stands, includes a seating area for in-store programming. An enormous footwear wall — 54 ft. wide — is Nike’s largest to date.
Nike SoHo has a sleek, modern look, enhanced by state-of-the art video and touchscreens that serve up a wealth of content, including community, store and company news, product launches and more. It offers several benefits connected to the brand’s app, Nike+, including 30-day product trials and the ability to book one-on-one appointments.
Here are some of the store’s highlights:
Basketball Trial Zone
Customers can shoot hoops, test basketball shoes and do custom drills in this half-court space, which boasts 23-ft. ceilings and an adjustable hoop. Five sensors guide players as they go through up to six custom drills in front of oversized high-definition video screens that provide real-time on-screen tracking on the trial. The screens immerse players in New York City’s famous street basketball courts.
Running Trial Zone
Housed on different floors for men and women, this space allows customers to test out shoes on a treadmill, surrounded by two cameras capturing data from their run. Video screens allow for a three-sided immersive experience that takes customers on a 90-second run through Central Park or Battery Park. Each customer’s experience can be saved to his or her Nike+ member profile.
Soccer Trial Zone
Customers can try out Nike’s soccer cleats in this 400-sq.-ft. cleat trial area that is encased in glass walls, and features a synthetic turf field.
Nike By NYC Personalization Studio
This on-site space allows customers to engrave and print iconic NYC symbols on products, with the customer notified via text when it’s ready. Swooshes, heel back tabs, shoe tongues, etc., can all be personalized with the in-store laser machines.
When it comes to retail operating costs, energy is one of the top three expenses. Lighting is, of course, a component of this, accounting for 50% of energy costs for non-food retailers. The typical retail store spends roughly 71 cents per square foot per year — a cost that quickly adds up at the store and chain level.
However, the lighting world has undergone a seismic shift in the past six years. LED technologies are now economically viable, and quickly replacing metal halide, fluorescent and halogen technologies in many businesses. LEDs are five to 10 times more efficient than halogen lighting, and LED fixtures can be 1.2 to 1.4 times more efficient than HID and fluorescent fixtures. This translates to big energy savings.
Target, for example, has achieved a more than 25% energy reduction in lighting by replacing fluorescent fixtures with new LED fixtures and LED retrofit kits. (Target replaced 120,000 59 watt troffers across 100 stores, resulting in 15 million kWh saved annually, or $1.5 million in electricity savings.) As more and more companies choose LEDs, the technology continues to improve and equipment prices continue to plummet.
LED options exist for virtually every lighting application, and many manufacturers are starting to discontinue non-LED equipment. As the market commits even further to LEDs, new opportunities are emerging to harness the inherent benefits to this technology, and leading retailers are sharing their strategies and solutions through the Department of Energy’s Better Buildings Initiative and its Interior Lighting Campaign.
Beyond energy savings
The benefits of LED technology go beyond energy cost reduction. LEDs, which are relatively easy to install or retrofit, can enable dynamic new color-tuning options, reduced cooling costs, and in-store smart communication with customers.
The light from early LEDs was cold and stark, but color options have advanced significantly. LEDs now provide richer color options than fluorescent sources and can draw out blues and purples more than halogen lights, allowing retailers to highlight those colors in merchandise. Beyond richer color options, LEDs allow for dynamic color shifts, known as color tuning. For example, a store could have warm white light in the morning, and cool white light in the evening, using the same fixture to modulate the color.
Retailers can leverage their LED lighting systems to tap into the Internet of Things. Visible Light Communication, also known as Li-Fi, works like Wi-Fi for computers, but instead of using radio signals, light signals that are imperceptible to humans are broadcast by the LEDs and picked up by customers’ phones, providing connections at just the right time and place. For example, Li-Fi can be used to share a coupon directly to a customer’s phone when they walk by a display.
This new lighting benefit is not yet regularly monetized by retailers, but if incorporated, it has the potential to increase revenue enough to help offset the cost of installation.
Because all electrical devices, including lighting, produce heat when they operate, more efficient lighting results in a reduced cooling load. As a rule of thumb, every three watts of lighting reduction offers a one-watt reduction in cooling loads, further increasing energy savings on top of the reduced lighting costs. In the best case scenario, retailers can downsize or even eliminate some heating and cooling equipment because of the additional load reduction.
In new construction, dedicated LED fixtures are an easy and cost-effective option. For retrofits, however, the labor costs of installing new fixtures can be cost prohibitive, so LED replacement lamps and kits are more often a better solution.
There are many available retrofit options that allow for improved optical design and the potential use of controls or communications. In some cases, LED lamps can be installed as direct replacements for incandescent lamps with virtually no additional labor costs above a typical lamp replacement.
For fluorescent lamps, tubular LEDs may be an alternative. Although TLEDs may have lower upfront costs, they may also have greater lifetime costs because certain TLEDs operate on fluorescent ballasts and in time, those ballasts will fail and require a replacement.
Retrofit kits have the advantage of allowing retailers to achieve energy savings while still managing the depreciation of the larger capital investment in the original fixture.
Michael Myer is a lighting expert at Pacific Northwest National Laboratory, a U.S. Department of Energy national laboratory working with companies as part of the Better Buildings Alliance.