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JC Walker practices environmental, product safety and energy efficiency law.

Mr. Walker’s environmental practice focuses on a wide range of matters, including compliance with U.S. requirements governing the safe management and disposal of chemical and hazardous substances under the Resource Conservation and Recovery Act and state analogues. Mr. Walker regularly advises industry and trade association clients on regulations of hazardous air pollutants under the federal Clean Air Act (CAA) and state and local air pollution statutes, as well as emissions of volatile organic compounds (VOCs) in adhesives, paints, and other industrial and consumer products.

Mr. Walker also regularly advises clients on product safety issues. This includes assessing compliance with the Federal Hazardous Substances Act (FHSA), other Consumer Product Safety Commission (CPSC) requirements, and state consumer product requirements.

Additionally, Mr. Walker counsels a broad range of industries on compliance with the U.S. Energy Policy and Conservation Act and California’s energy efficiency regulations. Representative clients include manufacturers and distributors of: consumer appliances; commercial refrigeration equipment; heating, ventilation and air conditioning equipment; and computers and consumer electronic devices.

In addition to compliance advice, Mr. Walker regularly represents clients in actions brought by the U.S. Environmental Protection Agency, the Department of Energy, the Federal Trade Commission (FTC), and other Federal and state agencies.

February 26, 2018 – Keller and Heckman LLP is pleased to announce the introduction of its Audit and Inspection Program (AIP) for Tobacco and Vapor Product Manufacturing Establishments.

The AIP was developed in response to the Food and Drug Administration’s (FDA) inspection authority under the Food, Drug, and Cosmetic Act (FDCA or the Act), as amended by the Tobacco Control Act, which provides that FDA shall inspect each factory, warehouse, establishment, or vehicle in which tobacco products, including deemed tobacco products, are manufactured, processed, packed, or stored.  Pursuant to Sections 704 and 905 of the Act, FDA is directed to inspect every establishment at least once every two years.

Audit and Inspection Program

Keller and Heckman’s experienced team of attorneys and scientists will provide a comprehensive, on-site training and facility auditing program designed to help your company adequately prepare for an FDA inspection.  As part of the AIP, companies can expect:

  • An introductory presentation and memorandum detailing FDA’s inspection authority, what to expect during an inspection, and how to adequately prepare for – and respond to – an FDA inspection;
  • A full facility audit, consisting of a complete mock-inspection; and
  • A written post-inspection report detailing the overall readiness of the facility for an FDA inspection, including a list of specific recommendations and opportunities for improvement*

Keller and Heckman’s AIP program is designed to provide companies that are involved in any aspect of the tobacco or vapor product supply chain with confidence that their facilities are operating in accordance with FDA requirements.  The AIP will consider a broad range of inspection activities, including: recordkeeping, product labeling, product samples, requests for video/audio/photographic recordings, standard operating procedures, cleanliness and sanitation, inventory control, and personnel interviews.

Supplemental Environmental and OSHA Compliance Components

In addition to FDA compliance, the AIP offers companies the option to include supplemental compliance training and auditing focusing on environmental and occupational health and safety regulations and requirements – efficiently leveraging the FDA mock inspection and full facility audit.

  • Environmental: The AIP program will offer companies the opportunity to add an additional training and compliance component focusing on federal and state environmental and waste management regulations. Specifically, nicotine-bearing products may be subject to regulation under the Federal Resource Conservation and Recovery Act (RCRA) when disposed.  State regulations governing dangerous or industrial wastes also could apply.  This component will provide an overview of how nicotine in tobacco-based products are regulated differently than when found in e-cigarettes and other vaping products, and will provide valuable information regarding companies’ obligations in responding to these additional requirements.  For more information on environmental requirements, see here.
  • Occupational Health and Safety: Participants in the AIP program will also have the opportunity to add an additional training and compliance component focusing on federal and state Occupational Safety and Health laws. OSHA recordkeeping requirements apply to all employers, except very small businesses.  Most other OSHA standards apply to all employers, regardless of size.  This component will provide companies with a review of existing policies and practices, and will recommend specific actions designed to bring companies into compliance with regulations in areas relevant to the industry, including: personal protective equipment, emergency plans, fire protection, and hazard communication (g., labeling and safety data sheets).

Pre-Registration

Pre-registration for the AIP is available immediately by filling out the form available here:

Tobacco and Vapor Product Manufacturing Establishment Audit and Mock Inspection Program Pre-Registration Form

The completed pre-registration form can be E-mailed to chowdhury@khlaw.com, faxed to (202) 434-4646, or mailed to:

Keller and Heckman LLP
Attn: Azim Chowdhury
1001 G Street NW, Suite 500 West
Washington, D.C. 20001

Upon receipt of your pre-registration form, Keller and Heckman will provide your company with a formal written proposal and cost-estimate to conduct on-site training and mock inspection at your facility.  Scheduling is generally available on a first-come, first-serve basis.

*The written post-inspection report is covered by any existing attorney-client relationship between Keller and Heckman and the Company, and is generally not subject to discovery.  The recommendations set forth in the post-inspection report are for informational purposes only, and do not constitute any warranties or guarantees regarding the outcome of an actual FDA, EPA or OSHA inspection.  Keller and Heckman’s attorneys remain available and look forward to the opportunity to assist with any post-inspection activities or questions following completion of the written report.

Beyond the Food and Drug Administration (FDA) and Tobacco Control Act requirements that now apply to deemed tobacco products, manufacturers and retailers of vapor products, and particularly e-liquids, also face stringent environmental and waste management regulations and compliance issues that are significantly more complex than those faced by cigarette and traditional tobacco product companies. This dichotomy arises because regulations promulgated pursuant to the federal Resource Conservation and Recovery Act (RCRA) treat nicotine in tobacco-based products differently than when found in e-cigarettes and other vaping products.

Compliance with the waste management regulations can be confusing because their scope and extent will vary by the amount of waste nicotine produced at a manufacturing facility or the amount of nicotine-containing products collected for disposal by a retailer. Further complicating the issue, even if exempted from the RCRA regulations, certain nicotine-containing products may be subject to state regulation of nicotine as a dangerous or industrial waste. Although there have been few enforcement actions brought against vapor or e-liquid manufacturers or retailers, regulators have noted the industry’s growth and potential for noncompliance. Going forward, we expect regulators to focus less on educating the industry about waste management obligations and follow a more active enforcement approach.

RCRA Overview

The federal RCRA regulations and state analogues establish a comprehensive system for managing hazardous waste from “cradle to grave,” that is from the point the waste is generated until its ultimate disposal. Broadly speaking, the regulations prescribe how to determine if and when a material is regulated as a hazardous waste, and how to manage the waste once the determination is made. Critically, RCRA only applies when the material becomes solid waste, meaning that it has been discarded by being abandoned, recycled, or treated as “inherently-waste like,” or the decision to discard has been made.[1]

Having decided to discard a material, the waste generator must next determine whether the waste is hazardous. This is done in one of two ways: (1) does the waste contain materials that EPA has listed in one of the three hazardous waste lists codified at 40 C.F.R. Part 261, subpart D; or (2) does the waste exhibit one or more of four characteristics: ignitability, corrosivity, reactivity, or toxicity?[2] With regards to e-liquids and other nicotine-bearing products, certain unused chemicals are listed hazardous wastes when discarded.[3] The hazardous waste listing applies when the following three criteria have been met. First, the chemical must be listed at 40 C.F.R. § 261.33(e) or (f). Nicotine and its salts are listed at 40 C.F.R. § 261.33(e) as an acute hazardous waste with the P075 waste code. Second, the listing applies “if and when they are discarded or intended to be discarded” prior to use.[4] Given its intended function, nicotine in e-cigarettes is not used until it has been inhaled by the end user.

Third, the listed chemical must be discarded in the form of a “commercial chemical product or manufacturing chemical intermediate having the generic name of the listed chemical” (CCP). The term CCP refers to a chemical substance which is manufactured or formulated for commercial or manufacturing use and which consists of the commercially pure grade of the chemical, any technical grades of the chemical that are produced or marketed, all formulations in which the chemical is the sole active ingredient, and any off-specification forms of the foregoing chemicals.[5] Products with more than one active ingredient are not regulated as CCP, although they may still be regulated hazardous wastes if they exhibit one of the hazardous characteristics.

According to the U.S. Environmental Protection Agency (EPA), nicotine is the “sole active ingredient” in e-cigarettes because it is the “only chemically active component that performs the function of the product.[6] Flavorings, sweeteners, colorants and other components are considered inert ingredients. Consequently, raw material (i.e., nicotine), off-spec e-liquids, container residues, and spill residues are hazardous wastes when they are discarded or intended to be discarded from businesses. In addition, EPA has stated that because certain e-cigarettes contain cartridges that are containers of a CCP, they too must be treated as hazardous waste when disposed.[7] This also applies to tanks and pods used in open-systems and advanced vaporizers to hold the nicotine-containing e-liquid.

RCRA Requirements Depend on Quantity

Hazardous waste compliance requirements vary significantly under RCRA depending on the amount of hazardous waste a facility generates each month. Thus, the generator category of a company and commensurate requirements, including storage and accumulation, recordkeeping and reporting, and training requirements could change from month to month.[8] Keeping up with these changes and ensuring a facility complies can be particularly burdensome for small businesses, such as those that constitute a large portion of the vapor industry.

Nicotine’s status as an acute hazardous waste is likely the primary driver for determining the “generator” category for an e-liquid or vapor product manufacturer. Businesses that generate acute hazardous waste (“generators”) are categorized as very small quantity generators (VSQGs) when generating up to 2.2 pounds (1 kilogram) per month, and large quantity generators (LQGs) when generating more than 2.2 pounds per month.[9] Regulatory requirements are significantly greater for LQGs, as is clear from a guidance chart developed by EPA.[10] Thus, e-liquid manufacturers have a strong incentive to operate as VSQGs or small quantity generators (SQGs).

When a generator has multiple hazardous waste streams, the generator must quantify each waste stream separately and abide by the more stringent generator category.[11] An e-liquid manufacturer will be classified as an SQG if the manufacturer does not exceed the 2.2 pound per month threshold for acute hazardous waste but generates greater than 100 pounds of non-acute hazardous waste per month.[12] For example, a generator of up to 2.2 pounds of acute hazardous waste that crossed the 220 pound threshold for non-acute hazardous waste may need to comply with SQG requirements, as opposed to VSQG requirements.

Fortunately, a generator has some options for managing hazardous wastes: recycling, treatment, storage, or disposal. Each approach has its own implications and requirements under RCRA. Recycling (e.g., nicotine reclamation) is a management method that can have a meaningful impact on the standards applicable to hazardous waste generators. Provided that the company can demonstrate the recycling is legitimate, the reclaimed nicotine will not be considered solid waste.[13] Recycling is a particularly appealing option as it can reduce the amount of material counted as hazardous waste for purposes of determining the generator category.

E-liquids May Be an Increasing Focus for Enforcement

Compliance with RCRA requirements by vapor product and e-liquid manufacturers is an increasing area of emphasis for both the states and EPA. Thus far, states have focused on outreach to the industry regarding compliance measures.[14] Such outreach typically lasts from six months to a year to provide a chance for the industry to come into compliance before the agencies transition to enforcement. Given that the e-cigarette and vaping industries have been growing for several years, and that the past two years have seen an increase in state proposals and communications concerning this issue, industry members need to consider whether regulators will pursue a more aggressive enforcement agenda in the new year and going forward. Accordingly, e-cigarette and e-liquid manufacturers should evaluate their processes and potential impact on generator status to determine whether their facilities are complying with RCRA or state analogues.

To learn more about the environmental and hazardous waste management regulations that apply to your e-liquid or vapor business, be sure to attend our upcoming E-Vapor and Tobacco Law Symposium on February 6-7, 2018 in Irvine, California. Click here to register and for more information.

For more information on our Tobacco and E-Vapor Practice, visit www.khlaw.com/evapor. For more information on our Environmental Practice, visit www.khlaw.com/Environmental. Follow Keller and Heckman Tobacco and E-Vapor Partner Azim Chowdhury on Twitter.

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[1] 40 C.F.R. §§ 261.2(a), 261.33.
[2] 40 C.F.R. §§ 261.20-261.24.
[3] See 40 C.F.R. § 261.33.
[4] 40 C.F.R. § 261.33. See also EPA Letter to Merck Sharp & Dohme, FaxBack #11012, May 13, 1981.
[5] 40 C.F.R. § 261.33(b)
[6] Letter from Barnes Johnson, EPA, to Daniel K. DeWitt, Warner, Norcross & Judd LLP (May 8, 2015), RCRA Online #14850.
[7] Id.
[8] Recent revisions to the regulations do provide some relief to companies that consistently qualify under one category but experience an episodic event that shifts them to a more burdensome one. The rules generally limit the facility to one episodic event, however. See Hazardous Waste Generator Improvements Rule, 81 Fed. Reg. 85,732 (November 28, 2016).
[9] 40 C.F.R. § 262.13.
[10] U.S. EPA, “Hazardous Waste Generator Regulatory Summary,” available at:https://www.epa.gov/hwgenerators/hazardous-waste-generator-regulatory-summary.
[11] 40 C.F.R. § 262.13.
[12] See 40 C.F.R. § 262.13.
[13] Four factors are used to determine whether recycling is “legitimate.” 40 C.F.R. § 260.43(g). First, recycling must involve a hazardous secondary material that provides a useful contribution to the recycling process or to a product or intermediate of the recycling process. For example, the nicotine-containing materials may be the source of a valuable constituent (i.e., nicotine) recovered in the recycling process. Second, the recycling process must produce a valuable product or intermediate, which can be demonstrated by sale of the recycled product to a third party, by its use as an effective substitute for a commercial product, or by its use as ingredient in a process. Third, the generator and the recycler must manage the hazardous secondary material as a valuable commodity when it is under their control. This would entail management of nicotine-containing materials consistent with how raw nicotine is managed. Fourth, the product of the recycling process must be comparable to a legitimate product or intermediate. For example, the recycled product should meet widely recognized specifications for the raw material and not contain hazardous constituents in greater levels than a non-recycled analogue. See Letter from Barnes Johnson, EPA, to Scott DeMuth, g2revolution LLP (May 8, 2015), RCRA Online #14851.
[14] See, e.g., New Jersey Department of Environmental Protection, “Compliance Advisory Update – Compliance Assistance Available for Vape Shops and Manufacturers” (June 20, 2017), available at: http://www.nj.gov/dep/enforcement/advisories/2017-03.pdf.