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San Joaquin County Page 3 twenty (20) years. This business relationship provides for a safe, efficient and single-source operator to handle returned products, rather than leave such functions to the individual stores or Distribution Centers. For your information, returned products are those that a store no longer intends to sell from its retail shelves to the public. There may be several reasons for taking a particular product off sale from the store; including, but not limited to, label changes, product formulation changes, change in promotions, replacement by different brand, over-stock, and expiration of best-used-by dates. In general, these products are still usable by the consumer and, as such, should not be considered waste. Instead,the store elects not to continue to market the product even if acceptable for its intended purpose. When a decision is made to return a product, Safeway has a definitive and well- designed system to deal with such products. However, the process of transferring the products from the stores to the PRC is not an act of"discarding" the items; rather it is based on a system designed to best dispose of the particular item. For this purpose, it is important to understand that disposition of a product may take various forms, including, liquidation (i.e. selling at reduced price), donation, recycling, and disposal. Of these choices, only recycling and disposal could be considered a form of"discarding" since by virtue of such process the product is actually destroyed and no longer available to a consumer or end-user in any form. Except in one instance described below, the disposition determination for a particular item only occurs and is made at the PRC, instead of the store or Distribution Center. When a store removes an item from retail, it does not have knowledge or control over the ultimate disposition of the item. The store is merely transferring the product to the PRC for handling as described herein. Also, note that the store receives monetary credit for every returned item, establishing that these items still have value even if taken off shelf. The U.S. EPA has issued opinion letters in many instances that discuss the handling of product returns. In one letter (5/16/91), the EPA states: "As I understand your letter, pharmaceutical products may be returned for many reasons, including, among others: 1) an oversupply at the dispenser, 2) expiration of the recommended shelf life, 3) a recall has been initiated by the manufacturer, 4) the product was received as a result of a shipping error, and 5) the product has been damaged. You state that, in general the dispensers of the pharmaceutical products do not know whether the returned products will be reused, reclaimed, sold overseas, or disposed (i.e.,they are not able to determine whether these materials are solid wastes). Because the dispensers receive credit for the returned products (either because the products actually have real value to manufacturer or because such credits are part of a competitive marketing approach),the products have a monetary value to the dispensers and they would not normally assume such materials to be wastes.