Revisions to the Definition of Solid Waste

Note: EPA no longer updates this information, but it may be useful as a reference or resource.
PDF Version (50 pp, 427K, About PDF)

[Federal Register: October 30, 2008 (Volume 73, Number 211)]
[Rules and Regulations]
[Page 64717-64766]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr30oc08-14]

Revisions to the Definition of Solid Waste

[[Continued from page 64716]]
[[Page 64717]]

units, as well as any future releases, would be as part of corrective
action for all releases at the facility--an approach that the Agency
believed would achieve the same environmental results and would provide
the owner or operator the option of integrating the cleanup more
closely into the broader facility response.
    Some commenters on the March 26, 2007, supplemental proposal
objected to this approach of addressing releases from units that
previously managed hazardous wastes and, as a result of today's rule,
would subsequently only receive hazardous secondary materials excluded
from Subtitle C control. These commenters requested that EPA expressly
recognize that units storing or managing hazardous secondary materials
excluded as a result of this rule would no longer be regulated as solid
waste management units and are not subject to RCRA's corrective action
requirements. EPA disagrees with this approach, as we have discussed
previously in this section and as discussed below, and continues to
believe that the best approach to addressing releases from
conditionally excluded units is, generally, to address them as part of
corrective action for all releases at the facility.
    The Agency discussed the issue of its corrective action authority
to address non-SWMU-related releases at RCRA treatment, storage, or
disposal facilities in the May 1, 1996, Advance Notice of Proposed
rulemaking (see 61 FR 19442-3). There, the Agency stated, ``[g]iven the
legislative history of RCRA section 3004(u), which emphasizes that RCRA
facilities should be adequately cleaned up, in part, to prevent the
creation of new Superfund sites, EPA believes that corrective action
authorities can be used to address all unacceptable risks to human
health and the environment from RCRA facilities. In the permitting
context, remediation of non-SWMU related releases may be required under
the ``omnibus'' authority * * * In other contexts, orders under RCRA
sections 3008(h) or 7003 may require remedial action to address
releases regardless of whether a SWMU is present.''
    The Agency envisions three scenarios that might apply to units from
which releases have occurred. The first will arise in situations where
an owner or operator fails to comply with the applicable conditions and
limitations of the exclusion, and the unit consequently loses its
exemption. In these situations, the unit itself will once again become
a hazardous waste management unit, and the unit, as well as materials
in the unit, will become subject to all requirements that were
applicable prior to this final rule. Not only will corrective action
authority be available at such a unit, but the closure requirements of
40 CFR part 264 or 265 will once again apply at the unit as well, and
releases from that unit may be addressed through either the corrective
action or the closure process.
    The second scenario will arise in situations where releases occur
at an excluded unit but, based on the site-specific factors, the Agency
does not consider the release to be significant and, therefore, the
release does not cause the unit to lose its exclusion. Failure on the
part of the owner or operator to respond to such releases could be
considered an act of illegal disposal. The Agency generally would
address these situations by issuing an enforcement action under RCRA
section 3008(a), or other applicable authorities, to compel cleanup
actions and/or impose penalties. It should be noted that this approach
is consistent with the approach taken by the Agency in a July 2002
final rule, in which the Agency excluded hazardous secondary materials
used to make zinc fertilizers from the definition of solid waste (see
``Zinc Fertilizers Made from Recycled Hazardous Secondary Materials,''
67 FR 48400, July 24, 2002).
    The third scenario will arise in situations where releases from the
unit, of either the now excluded hazardous secondary material and/or
other hazardous or solid wastes previously managed in the unit, were
not addressed prior to the unit obtaining its exclusion. At permitted
and interim status facilities, the status of those releases is
unaffected by this rulemaking, and the Agency retains its authority to
address them under all authorities applicable to them prior to this
final rule, including sections 3004(u) and (v), and section 3008(h).

D. Financial Assurance Obtained for Closure at Newly-Excluded Units

    The requirements in 40 CFR parts 264 and 265 subpart H, which
applied at these units prior to their exclusion under this final rule,
provide for the release of financial assurance upon certification by
the facility owner or operator that closure has been completed in
accordance with the approved closure plan, and after the Agency has
verified that certification (see 40 CFR 264.143(i) and 265.143(h)).\17\
---------------------------------------------------------------------------

    \17\ Similar provisions at 40 CFR 264.145(i) and 265.145(h)
provide for release of financial assurance for post-closure care.
---------------------------------------------------------------------------

    Under the approach discussed in section VII.D. and VIII.D. of this
preamble, hazardous waste management units that convert to managing
only hazardous secondary materials that are excluded under this final
rule will no longer be subject to the 40 CFR part 264 or part 265
closure requirements. Further, while reclaimers who receive hazardous
secondary materials that have been excluded under the new 40 CFR
261.4(a)(24) are required to meet financial assurance requirements,\18\
persons who recycle hazardous secondary materials under the exclusions
for materials recycled under the control of the generator (Sec. 
261.2(a)(2)(ii) and Sec.  261.4(a)(23)) are not required to meet the
financial assurance requirements.
---------------------------------------------------------------------------

    \18\ See section VIII.C.4 of this preamble for a complete
discussion of financial assurance as a condition of the exclusion
for this group of facilities.
---------------------------------------------------------------------------

    Under the requirements of 40 CFR parts 264 and 265 subpart G,
owners and operators of units now eligible for the exclusion of Sec. 
261.2(a)(2)(ii) and Sec.  261.4(a)(23) would have been required to
remove and decontaminate all contaminated structures, equipment, and
soils (see Sec.  264.114 and Sec.  265.114). The financial assurance
provided under 40 CFR parts 264 and part 265 subpart H was designed to
assure that funds would be available for these activities. In the case
of generator controlled units, where financial assurance is no longer
required, previous releases from the unit, which would have been
addressed during closure and for which financial assurance was obtained
will, as a result of this rule, now be addressed through corrective
action authority. The question raised by the Agency in the March 26,
2007, supplemental proposal was whether funds obtained for closure should,
therefore, be directed to corrective action activities at the unit.
    Commenters on the March 26, 2007, supplemental proposal generally
agreed that funds obtained for closure at units excluded under Sec. 
261.2(a)(2)(ii) and Sec.  261.4(a)(23) (under the control of the
generator) should be directed to address releases from the unit. The
Agency agrees with these commenters, and encourages regulators to work
with owners and operators that seek to modify their permits to remove
conditions applicable to these units that will operate under the
exclusion of Sec.  261.2(a)(2)(ii) and Sec.  261.4(a)(23), to verify
that there are no unaddressed releases from the unit. In situations
where corrective action is necessary at the unit, the Agency encourages
regulators to work with owners and operators to assure that the
releases from the unit are addressed promptly.

[[Page 64718]]

XIII. Effect on CERCLA

    A primary purpose of today's final rule is to encourage the safe,
beneficial reclamation of hazardous secondary materials. In 1999,
Congress enacted the Superfund Recycling Equity Act (SREA), explicitly
defining those hazardous substance recycling activities that may be
exempted from liability under the Comprehensive Environmental Response,
Compensation and Liability Act (CERCLA) (CERCLA section 127). Today's
final rule does not change the universe of recycling activities that
could be exempted from CERCLA liability pursuant to CERCLA section 127.
Today's final rule only changes the definition of solid waste for
purposes of the RCRA Subtitle C requirements. The final rule also does
not limit or otherwise affect EPA's ability to pursue potentially
responsible persons under section 107 of CERCLA for releases or
threatened releases of hazardous substances.

XIV. Effect on Imports and Exports

    The exclusion for hazardous secondary materials generated and
reclaimed under the control of the generator is limited to recycling
performed in the United States or its territories. However, the
exclusion for hazardous secondary materials exported for reclamation
and the non-waste determinations included in today's final rule do not
place any geographic restrictions on movements of such hazardous
secondary materials, provided they meet the conditions of the exclusion
or, if stipulated, conditions of the non-waste determination. It is
therefore possible that in some cases excluded hazardous secondary
materials could be generated in the United States or its territories
and subsequently exported for reclamation to a facility in a foreign
country. It is also possible that hazardous secondary materials could
be generated in a foreign country and imported for reclamation in the
United States. Under today's exclusion for hazardous secondary
materials exported for reclamation, hazardous secondary materials are
only excluded from the definition of solid waste in the U.S. and, thus,
may be considered solid and hazardous wastes in the foreign country
under that country's laws and regulations. If this is the case, the
U.S. facility that exports or imports hazardous secondary materials
will also need to comply with any applicable laws and regulatory
requirements of the foreign country. For further discussion, see
section VIII.C.5. of today's preamble regarding specific export and
import conditions for hazardous secondary materials excluded under
today's rule.

XV. General Comments on the Proposed Revisions to the Definition of
Solid Waste

    EPA received hundreds of comments on the October 2003 proposal and
the March 2007 supplemental proposal, most of which were quite detailed
and raised multiple issues. Below is an overview of some of the major
comments on general aspects of the proposals and a summary of EPA's
responses to those comments. For a complete discussion of all the
comments and EPA's responses to those comments, please see Revisions to
the Definition of Solid Waste Final Rule Response to Comment Document
found in the docket for today's rulemaking.

A. EPA's Legal Authority To Determine Whether a Material Is a Solid Waste

Comments: Legal Authority
    EPA received many comments from environmental groups and the waste
treatment and recycling industry regarding EPA's authority to define
when recyclable hazardous secondary materials are solid wastes and how
EPA used this authority in the proposed rulemaking. Some commenters
argued that EPA has no authority under the RCRA statute to broadly
exclude hazardous secondary materials from the definition of solid
waste. These commenters asserted that Congress intended for hazardous
secondary materials to be classified as solid wastes even when they are
recycled. The commenters argued that the proposed exclusions are
contrary to the plain statutory language of RCRA and that EPA may not
lawfully exclude pollution control sludges and materials resulting from
industrial, commercial, mining, and agricultural operations, according
to accepted principles of statutory interpretation. Although the
commenters acknowledged that EPA has promulgated such exclusions in the
past, and that one such exclusion was recently upheld in court in Safe
Food and Fertilizer v. EPA, they stated that they believed that the DC
Circuit erred in Safe Food. The commenters argue that, in the
fertilizer rule upheld in Safe Food, EPA considered impermissible
factors (e.g., market participation, management practices, and chemical
identity) in defining which materials are not discarded under RCRA, and
that the Agency has done so again in the current rulemaking effort.
EPA's Response: Legal Authority
    EPA disagrees with comments that state that we have exceeded our
authority by the exclusions being finalized today. While EPA clearly
has the authority to regulate hazardous secondary materials that are
reclaimed under Subtitle C of RCRA when discard is involved, the Agency
also believes (and the courts have generally confirmed) that when
hazardous secondary materials are reclaimed and such recycling
operations do not involve discard, the hazardous secondary materials
involved are not solid wastes under RCRA. EPA also has the authority to
determine which types of recycling do not involve discard and,
therefore, which types of hazardous secondary materials are not solid
wastes. As EPA noted in the March 2007 supplemental proposal, ``[u]nder
the RCRA Subtitle C definition of solid waste, many existing hazardous
secondary materials are not solid wastes and, thus, not subject to
RCRA's `cradle-to-grave' management system if they are recycled. The
basic idea behind this construct is that recycling of such materials
often closely resembles normal industrial manufacturing, rather than
waste management'' (72 FR 14197). Existing exclusions, found in 40 CFR
261.4(a), provide a long historical precedent for EPA's authority to
exclude reclaimed materials from the definition of solid waste. EPA
refers these commenters to the discussion of case law, above, and
asserts that this rule follows valid precedent in the DC Circuit,
including the court's opinion in Safe Food.

B. Adequacy of Conditions and Restrictions Used To Determine Whether a
Material Is a Solid Waste

Comments: Adequacy of Conditions
    Other commenters did not dispute EPA's authority to exclude
hazardous secondary materials from the definition of solid waste, but
instead argued that before EPA can lawfully claim that excluded
materials are not discarded, the Agency would need to strengthen the
conditions to protect human health and the environment. For example,
one commenter believed that all legitimacy criteria should be
mandatory, that performance standards, such as secondary containment
are needed for materials stored in tanks and containers, and that EPA
should require engineered liner systems and monitoring for materials
stored in land-based units.

[[Page 64719]]

EPA's Response: Adequacy of Conditions
    EPA disagrees that the restrictions we are requiring for the under
the control of the generator exclusions or the conditions and
restrictions we are requiring for the transfer-based exclusion are
inadequate. Each of the restrictions and/or conditions is specifically
linked to defining when the hazardous secondary materials are not
discarded and to ensuring that the regulatory authority has the
information needed to oversee the exclusion. Specifically, for
hazardous secondary materials reclaimed under the control of the
generator, the fact that the generator maintains control and liability
for the hazardous secondary materials, either by managing them on-site,
within the same company, or under a specific tolling contract, is
itself an indication that the materials are not discarded. The
prohibition on speculative accumulation (as defined in 261.1(c)(8)),
addresses both the situation in which a large percentage of the
hazardous secondary material is accumulated over the year without being
recycled and the situation where there is no feasible means of
recycling the hazardous secondary material, regardless of volume.
Finally, the requirement that the hazardous secondary materials must be
contained in the unit recognizes the reality that hazardous secondary
materials that are released to the environment are discarded.
    For hazardous secondary materials transferred to another party for
reclamation, the fact that the generator is required to make reasonable
efforts to ensure that its hazardous secondary materials are properly
and legitimately reclaimed demonstrates that the generator is not
simply disposing of the material, but instead is taking responsibility
that the hazardous secondary materials will be recycled. In addition,
by maintaining a record of each shipment and a confirmation of receipt,
the generator demonstrates that it continues to take responsibility for
knowing the ultimate disposition of its hazardous secondary materials.
Furthermore, by obtaining financial assurance, the reclamation facility
demonstrates that it has also taken on the responsibility to ensure
that the hazardous secondary materials will not be abandoned in the
event that circumstances make it impossible for the facility to reclaim
the hazardous secondary materials. For further discussion of how these
and other restrictions and/or conditions of the exclusions are linked
to defining when hazardous secondary materials are not discarded, see
section V of this preamble, as well as sections VII-IX and sections
XVI-XVIII. Support for the Agency's determination regarding which
materials are not discarded is also found throughout the rulemaking
record in this proceeding.
    EPA also disagrees that specifying further engineering conditions,
such as secondary containment, liners, and leak detection systems, is
needed to determine which hazardous secondary materials are not being
discarded. The restrictions EPA has established and the conditions that
EPA is finalizing today address a variety of hazardous secondary
materials and reclamation operations that are linked to defining the
act of discard, rather than specifying a particular technology that may
not be appropriate in some cases.
    Furthermore, hazardous secondary materials excluded under today's
rule may remain subject (or become subject) to requirements under other
statutory programs. For example, hazardous secondary material
generators, transporters, intermediate facilities and reclaimers may be
subject to regulations developed under:
    • The Occupational Safety and Health Act of 1970, which
requires hazard communication programs, labeling, material safety data
sheets (MSDS) and employee information and training (29 CFR part 1910).
The Occupational Safety and Health Administration (OSHA) regulations
also require emergency response planning and training under their
Emergency Response Program to Hazardous Substance Releases (29 CFR
1910.120);
    • The Hazardous Materials Transportation Act of 1975 and the
subsequent Hazardous Materials Transportation Uniform Safety Act of
1990, which requires hazardous secondary materials meeting DOT's
defining criteria for hazard classes and divisions to comply with
hazard identification, shipping papers, labeling and placarding,
incident reporting and security plans (49 CFR part 107 and parts 171-180);
    • The Comprehensive Environmental Response, Compensation and
Liability Act (CERCLA), Emergency Planning and Community Right-to-Know
Act (EPCRA) and the Superfund Amendments and Reauthorization Act (SARA)
of 1986 which, combined, require notification of hazardous substance
releases above a reportable quantity, emergency planning and, if
applicable, MSDS and inventory reporting (40 CFR 302.6, 40 CFR parts
355 and 370). Hazardous secondary material generators and reclaimers
meeting defined criteria are also subject to toxic chemical release
reporting (i.e., Toxics Release Inventory (TRI) under EPCRA (40 CFR
part 372)).
    While not exhaustive, this list provides examples of regulatory
programs designed to protect human health and the environment developed
under other statutory authorities alongside of RCRA. For more
information on these regulatory programs, please see ``Memorandum:
Requirements that other Regulatory Programs would place on Generators,
Reclaimers and Transporters of Hazardous Secondary Materials'' located
in the docket for this rulemaking.

C. EPA's Authority To Regulate Recycling

Comments: EPA's Authority
    EPA also received comments from the hazardous waste generating
industry disputing EPA's authority to promulgate today's rule. Unlike
the environmental groups' and waste treatment and recycling industry's
comments, which argued that EPA has no authority to deregulate
hazardous secondary materials recycling, many of the generator industry
comments asserted that EPA has no authority to regulate such recycling,
even to prohibit speculative accumulation or require that the hazardous
secondary materials be contained.
    While most such commenters applauded EPA's decision in the March
2007 supplemental proposal to explicitly link the proposed exclusions
to the concept of defining when hazardous secondary materials are not
discarded, many of these comments argued that EPA has over-reached its
statutory authority by imposing restrictions or conditions that the
commenters argued have no relationship to discard.
    Some commenters asserted that limiting the exclusions for hazardous
secondary materials reclaimed under the control of the generator and
imposing conditions on the exclusion for hazardous secondary materials
transferred to a third party for reclamation, EPA has misread the
intent of Congress. These comments cite previous court cases, noting
the ``analysis of the statute reveals clear Congressional intent to
extend EPA's authority only to materials that are truly discarded,
disposed of, thrown away, or abandoned'' (AMC I, 824 F2d. at 1190).
They go on to argue that materials being recycled do not fall into one
of these enumerated activities.
    Specifically, many of the comments cite the ABR decision (which in
turn cites earlier court decisions), where the

[[Page 64720]]

court noted that EPA's authority is ``limited to materials that are
`discarded' by virtue of being disposed of, abandoned, or thrown away''
and that ``[s]econdary materials destined for recycling are obviously
not of that sort. Rather than throwing them away, the producer saves
them, rather than abandoning them, the producer reuses them'' (ABR 208
F.3d at 1051). ``To say that when something is saved it is thrown away
is an extraordinary distortion of the English language'' (Id. at 1053).
The commenters assert that, by limiting the exclusion to hazardous
secondary materials intended for recycling that are ``contained'' in
the unit, EPA is illegally imposing conditions on a material that has
not been discarded.
    Other comments take issue with EPA's decision to impose conditions
for the transfer-based exclusion. These comments criticize EPA's
rationale that, in part, bases the conditions on the fact that
``subsequent activities are more likely to involve discard, given that
the generator has relinquished control of the hazardous secondary
material'' (72 FR 14178). One commenter specifically challenged the
proposed financial assurance requirement, claiming that the condition
does not define the absence of discard and would effectively impose a
waste management requirement upon a non-waste.
EPA's Response: EPA's Authority
    EPA disagrees with the comments that Congress did not intend to
give EPA the authority to regulate hazardous waste recycling. As EPA
noted in both the October 2003 proposal and the March 2007 supplemental
proposal, the RCRA statute and the legislative history suggest that
Congress expected EPA to regulate as solid and hazardous wastes certain
materials that are destined for recycling (see 45 FR 33091, citing
numerous sections of the statute and U.S. Brewers' Association v. EPA,
600 F. 2d 974 (DC Cir. 1979); 48 FR 14502-04, April 3, 1983; and 50 FR
616-618). Moreover, the case law discussed above clearly shows instances
where EPA properly regulated the recycling of solid and hazardous wastes.
    EPA also disagrees that requiring the hazardous secondary materials
to be ``contained'' contradicts the court's finding in ABR that EPA
does not have the authority to define when hazardous secondary
materials are not discarded. By limiting the exclusion to hazardous
secondary materials that are contained, EPA is defining ``discard'' for
this material. While it is true that the court has said that materials
recycled in a continuous process by the generating industry are not
solid wastes, commenters have failed to demonstrate how hazardous
secondary materials that are not contained meet that description. By
``contained,'' EPA means not released to the environment. It is a self-
evident fact that hazardous secondary materials released to the
environment (e.g., causing soil and groundwater contamination) are not
``destined for recycling'' or ``recycled in a continuous process'';
thus, they are part of the waste management problem. Moreover, as
discussed above in section VII.C, to the extent that significant
releases to the environment from a storage unit have occurred and
remain unaddressed, it is reasonable to conclude that the material
remaining in the unit is also actively being discarded. It is important
to note that the hazardous secondary materials that remain in the unit
are not solid wastes, unless the releases from the storage unit
indicate that these materials are not being managed as valuable
commodities and are, in fact, discarded. For examples of releases from
a hazardous secondary materials storage unit that indicate that the
hazardous secondary material in the unit is discarded and examples of
releases that do not indicate discard, see section VII.C. of this preamble.
    EPA also disagrees with comments that, under the transfer-based
exclusion, EPA cannot consider the fact that the generator has
relinquished control of the hazardous secondary material (along with
other factors that indicate discard) in determining what conditions are
needed for this exclusion. EPA's authority to regulate such transfers
is clear: as the Court noted in Safe Food, ``materials destined for
future recycling by another industry may be considered `discarded'; the
statutory definition does not preclude application of RCRA to such
materials if they can reasonably be considered part of the waste
disposal problem'' (350 F.3d at 1268).
    EPA's record for today's rulemaking demonstrates that third-party
recycling of hazardous secondary materials has been and continues to be
part of the waste disposal problem, and, without the conditions being
finalized today, these hazardous secondary materials would be solid
wastes. Of the 208 damage cases in EPA's study of environmental
problems associated with post-RCRA, post CERCLA hazardous secondary
materials recycling, 94% appeared to take place at commercial off-site
facilities. Moreover, EPA's study of how market forces impact recycling
demonstrates that these damages are consistent with our understanding
of how the business model for commercial recycling can lead to sub-
optimal results. As opposed to manufacturing, where the cost of inputs,
either raw materials or intermediates, is greater than zero and revenue
is from the sale of the output, recycling conducted by commercial
hazardous secondary materials recyclers involves generating revenue
from receipt of the hazardous secondary materials, as well as from the
sale of the output. Recyclers of hazardous secondary materials in this
situation can have a short-term incentive to accept more hazardous
secondary materials than they can economically or safely recycle,
resulting in the hazardous secondary materials eventually being discarded.
    The financial assurance condition for the transfer-based exclusion
being finalized today is directly linked to this situation. By
obtaining financial assurance, the owner or operator of the reclamation
facility is making a direct demonstration that it will not abandon the
hazardous secondary material. Of the 208 damage cases, 69 (or 33%) were
primarily caused by abandonment of the hazardous secondary material by
the recycler. None of 69 facilities whose damages were primarily caused
by abandonment had financial assurance.
    Under the transfer-based exclusion, financial assurance is the
means by which the recycler demonstrates an investment in the future of
the recycled materials; even if the market changes in such a way that
the recycler can no longer process the hazardous secondary materials,
by obtaining financial assurance, it has made certain that the
hazardous secondary materials will not be abandoned and therefore not
discarded. EPA therefore disagrees with the comment that the financial
assurance condition is not related to discard of the material.
    Moreover, financial assurance also addresses the correlation of the
financial health of a reclamation facility with the absence of discard
of hazardous secondary materials. According to the successful recycling
study, an examination of a company's finances is an important part of
many of the environmental audits generators currently use to determine
that their hazardous secondary materials will not be discarded. In
addition, the environmental problems study showed that bankruptcies or
other types of business failures were associated with 138 (66%) of the
damage cases, and the market forces study identified a low net worth of
a firm as a strong indication of a sub-optimal outcome of recycling
(i.e., over-accumulation of hazardous secondary materials, resulting in
releases to the environment and

[[Page 64721]]

abandonment of hazardous secondary materials).
    In the March 2007 supplemental proposal, EPA proposed to require
that reclamation facilities obtain financial assurance to ensure that
the reclamation facility owner/operators who would operate under the
terms of this exclusion are financially sound (72 FR 14191), and many
commenters supported this condition and EPA's rationale. EPA continues
to believe that the findings in the recycling studies indicate a
correlation between financial health of a reclaimer and the likelihood
he will not discard the hazardous secondary materials.

D. Comments on Recycling Studies

1. Environmental Problems Study
    EPA completed An Assessment of Environmental Problems Associated
with Recycling of Hazardous Secondary Materials in order to identify
and characterize environmental problems attributed to hazardous
secondary materials recycling activities and to provide the stakeholders
with a clearer picture of the recycling industry in the United States.
    The environmental problems study (or study) was conducted in
response to public comments received on the October 2003 proposal and
to guide EPA's deliberations on how to proceed with the March 2007
supplemental proposal. In the public comments to the October 2003
proposal, a number of commenters expressed concern that deregulating
hazardous secondary materials that are reclaimed in the manner
described in that proposal could result in mismanagement of the
hazardous secondary materials, and thus could create new cases of
environmental damage requiring remedial action under federal or state
authorities. Some of these commenters illustrated their concern by
citing specific examples of environmental damage related to hazardous
secondary materials recycling. A number of other commenters expressed
the view that the great majority of the damage cases cited by
commenters had occurred before RCRA, CERCLA, or other environmental
regulatory programs were established in the early 1980s and, therefore,
that the cases represent ``historical'' recycling-related environmental
damage and are not particularly relevant or instructive for revising
the RCRA Subtitle C definition of solid waste. These commenters further
argued that the environmental programs--most notably RCRA's hazardous
waste regulations and the liability provisions of CERCLA--have created
strong incentives for the proper management of recyclable hazardous
secondary materials and recycling residuals.
    In response to the March 2007 supplemental proposal and to the
study, made public in the rulemaking docket in conjunction with that
proposal, EPA received comments on the study from a variety of
commenters. In general, the comments pertain to the scope and
methodology of the study and how the study reflects on today's
exclusions and restrictions and/or conditions of the exclusions.
Comments: Scope and Methodology
    With respect to the scope and methodology of the study, a few
commenters agreed with excluding historical damage cases from the study
and stated that recycling operations have in fact improved since RCRA
was enacted. A few commenters provided several types of recycling-
related environmental problems familiar to state agencies and a few
commenters suggested the review of several additional damage cases. A
few commenters argued that inclusion of their facility in the study, or
the inclusion of their industry representatives' facilities, was
unfounded due to one or more of the following reasons: Hazardous
secondary materials were exempt from RCRA when environmental problems
occurred; environmental problems stem from historical or pre-RCRA
activities; numerous facilities in the study shut down during the 1980s
in response to the creation of regulatory disincentives; environmental
problems were addressed pursuant to CERCLA; and problematic activities
were clearly a result of non-compliance. Also, a commenter suggested
that one damage case profiled in the study ``is not a good example of a
contaminated site caused by recycling.'' In support of their comment,
the commenter cited a Record of Decision (ROD) which stated that the
site's former foundry operations, which existed pre-RCRA, caused soil
and groundwater contamination.
    One commenter suggested EPA overlooked potential sources of
information for the study, including television commentary, media
reports, books, and other reports (specifically one state report), and
one commenter suggested that EPA ``may have missed reviewing relevant
files'' by not analyzing state and regional paper files. Another
commenter expressed concern that the study was not peer reviewed.
EPA's Response: Scope and Methodology
    EPA acknowledged in the preamble to the March 2007 supplemental
proposal that we did not search every possible information source for
damage cases for the environmental problems study. For example, we did
not systematically survey all state environmental agencies for relevant
cases, nor did we search paper files in EPA Regional offices. We did
solicit damage cases from regional representatives and we solicited
additional cases through the public comment process. We recognize that
there are likely to be additional cases that we did not identify.
However, we have no reason to believe that additional cases would
substantially change the overall picture. In fact, information submitted
to EPA does not indicate that EPA has failed to find a representative
sample of environmental damage caused by recycling activities.
    EPA maintains that historical recycling-related damage cases are
much less relevant and instructive than cases which have occurred
within the current regulatory and liability landscape, and several
commenters shared our belief. We value state commenters' general
discussion of environmental problems encountered at recycling
operations and note that any facility taking advantage of today's
exclusion will need to comply with all applicable protective
restrictions and conditions.
    We also appreciate the suggestion of additional damage cases to
review for the study. Based on our analysis of these cases, we have
added one new damage case site to the study and updated two existing
damage case profiles with more information about environmental problems
(see Addendum: An Assessment of Environmental Problems Associated With
Recycling of Hazardous Secondary Materials). We also determined that
three damage cases identified in the public comments already are
included in the 2007 study and additional information was not revealed
to supplement the profiles; determined that one damage case identified
in the public comments was previously reviewed and the damage was
deemed unrelated to recycling and that no additional information was
provided to change this conclusion; and determined that two sites
identified in the public comments had damage unrelated to recycling. We
concluded that the new damage cases and the supplemental information
added to existing cases are consistent with the damage cases previously
cited in the study; therefore, the additional facts do

[[Page 64722]]

not substantially change our understanding of the hazardous secondary
materials recycling damage cases.
    EPA maintains that the damage cases captured in the environmental
problems study fall within the study's scope and, as such, are relevant
for guiding the development of today's rulemaking. As we discussed in
the study, we are interested in whether damage may be more or less
prevalent for hazardous secondary materials that are explicitly
exempted or excluded from RCRA regulatory controls and we are less
interested in historical or pre-RCRA cases (defined in the study as
before 1982). We also indicated in the study that we are interested in
``whether or not the recycler * * * went out of business'' and which
``government program is responsible for overseeing the cleanup of the
site,'' and clearly we are interested in acts of non-compliance that
resulted in environmental damage. These points of interest, among
others cited on pages 4-5 of the study, are informative for the purpose
of this rulemaking and are within the scope of the study. Consequently,
we disagree with industry and association commenters who argued that
certain damage cases did not warrant inclusion in the Environmental
Problems Study.
    We acknowledge that the particular damage case referenced by a
commenter as ``not a good example'' for the study does in fact exhibit
environmental damage which can be partially attributed to foundry
operations pre-1982. However, as indicated in the damage case profile
in Appendix II of the study, the damage case was included in the study
due to the following factors, which do not include damage associated
with pre-1982 operations: Abandonment of drums of spent catalyst,
bankruptcy, and business closure. As a result, we maintain that this
damage case is within the scope of the study.
    While we acknowledge that we did not review all possible sources of
information for our study and generally relied on readily available
material, we did in fact rely on media reports for information and we
collaborated with regional representatives who are very knowledgeable
about the damage cases and who assisted us in fact checking and
suggesting damage cases. With respect to a commenter's suggestion that
we review the ``Final Report of the Waste and Hazardous Materials
Division, Fire & Explosions Task Force,'' produced by Michigan DEQ, we
regret that the state has not yet made the report publicly available.
However, we note that the scope of the draft Michigan study was not
limited to hazardous secondary materials recycling operations, and
shows that accidents can and do occur in all types of manufacturing
facilities.
    Despite the fact that we did not conduct an exhaustive review of
all possible sources of damage case information, we believe that the
restrictions and conditions of today's exclusions are sufficient to
ensure safe recycling activities. For facilities operating under the
transfer-based exclusion, sudden accidental liability coverage for
bodily injury and property damage to third parties is required for all
units, and non-sudden accidental liability coverage is required for
land-based units (see section VIII.C.4. for a more detailed discussion
of liability coverage). We also note that facilities may be subject to
other regulations that ensure facility safety, such as the OSHA
requirements and state and local requirements (see ``Memorandum:
Requirements that other Regulatory Programs Would Place on Generators,
Reclaimers and Transporters of Hazardous Secondary Materials'' made
available in the docket for today's final rulemaking). While EPA has
not done a definitive study of other regulatory requirements, we are
reasonably comfortable with the fact that the available information
indicates oversight by other regulatory agencies would significantly
mitigate potential damage from the non-discarded materials.
    With respect to the comment regarding peer review, we believe that
while the study was not peer reviewed, the scope and methodology are
sound, as evidenced by the small number of comments received on this
issue. Additionally, peer review was not warranted by EPA peer-review
standards because the study is not a scientific and/or technical work
product. Rather, the study is an analysis of existing and publicly
available information compiled to provide a representative view of
hazardous secondary materials recycling.
Comments: Study's Relation to Today's Actions
    EPA received a number of comments alleging that the study does not
support today's exclusions. Several commenters strongly believe that
the study reflected that recycling hazardous secondary materials is a
high risk activity and thus should remain fully regulated. A few
commenters wrote that the study does not support the transfer-based
exclusion and these commenters collectively predicted that the
exclusion will create future damage cases. To bolster their feedback,
one commenter stressed that the majority of all damage cases cited in
the study are located off-site from the facilities that generated the
hazardous secondary materials. Commenters also used the study's
findings (namely damage type, damage cause, cost of cleanup) to support
their opposition to the transfer-based exclusion. In particular,
commenters stressed the financial impact to states and communities if
additional environmental clean-ups were to result from facilities
taking advantage of the exclusions.
    On the other hand, EPA also received responses from several
commenters stating that the environmental problems study supports the
proposed conditions of the transfer-based exclusion for reclaimers and
generators. While several of these commenters opposed codification of
the transfer-based exclusion, other commenters supported it as long as
there were requirements to ensure protection of public health and the
environment. For example, commenters responded that mismanagement of
hazardous secondary materials, residuals, and recycled products or
intermediates in the damage cases clearly represented a need to have
requirements for protective management and storage, as well as a
requirement for safe residuals management. Additionally, commenters
believed in the importance of a financial assurance requirement to
protect against the damage noted in the study related to bankruptcy and
the abandonment of hazardous secondary materials and residuals. A
commenter also responded that generators should assess whether the
above protections exist at reclamation facilities in order to minimize
their future liability. Additionally, in response to the study, EPA
received one comment suggesting that each of the following safeguards
be added to the exclusions: Tracking materials, restriction on land-
based storage, and 90-day storage provisions in 40 CFR part 262 for all
generators, including those who recycle on-site.
EPA's Response: Study's Relation to Today's Actions
    While EPA agrees that the study reflects the risk and problems
involved with recycling hazardous secondary materials, we disagree with
those commenters who stated that the study does not support today's
exclusions because of the perceived risk posed by the exclusions.
Instead, we agree that the environmental problems highlighted in the
study demonstrate the need to promulgate restrictions and conditions
for the exclusions (e.g., requirements for

[[Page 64723]]

financial assurance, reasonable efforts, shipping documentation,
hazardous secondary materials management, legitimate recycling, and
speculative accumulation). EPA maintains that the restrictions and
conditions finalized with today's exclusions, and discussed more in
depth in sections VII.C. and VIII.C., will address the problems
identified in the study and will limit the exclusions to materials that
EPA has determined are not discarded. We also agree with those
commenters who suggest that generators should assess whether
reclamation facilities adequately manage hazardous secondary materials
in order to mitigate the risk of future environmental problems.
Consequently, we are finalizing the reasonable efforts condition for
the transfer-based exclusion.
Comments: Restrictions on Mining and Mineral Processing
    A few commenters responded that the study does not support controls
on land-based storage of hazardous secondary materials at mining and
mineral processing facilities. They cited that only 1 of the 208 damage
cases is associated with a primary mineral processing facility. Thus,
the commenters argued that the small number of environmental problems
stemming from recycling at mining and mineral processing facilities
does not warrant the proposed regulatory oversight of the industry.
EPA's Response: Restrictions on Mining and Mineral Processing
    EPA acknowledges that the environmental problems study included one
damage case from primary mineral processing and two damage cases from
secondary mineral processing. We note that whether an industry has a
single damage case represented in the study or numerous damage cases,
all industries are treated equally within the final rulemaking for
hazardous secondary materials generated, reclaimed, and managed in
land-based units (40 CFR 261.4(a)(23)).
    Moreover, further review of publicly available data revealed four
additional damage case profiles from primary and secondary mineral
processing facilities, which corroborates EPA's view that the findings
from the environmental problems study apply across industries,
including the mining and mineral processing industries (see Addendum:
An Assessment of Environmental Problems Associated with Recycling of
Hazardous Secondary Materials to review new damage case profiles). Of
the four additional damage cases, three are primary mineral processing
facilities and one is a secondary mineral processing facility. Improper
disposal of residuals and improper management of recyclables are the
most frequently observed primary damage cause at such facilities. The
primary environmental damage type resulting from the above activities
are soil contamination, wildlife exposure, and groundwater and surface
water contamination.
    We have concluded that the additional damage cases do not
substantially change the overall picture of environmental problems
caused by hazardous secondary materials recycling activities at
facilities, including mining and mineral processing facilities. We also
disagree with the commenters' assertion that restrictions on land-based
storage units are not supported by the environmental problems study.
Cumulative damage causes from the study support the restrictions
imposed by 40 CFR 261.4(a)(23) and the identification of additional
mining and mineral processing damage cases corroborates EPA's finding
that no industry should be exempt from the restrictions and/or
conditions due to the limited number of damage case profiles exhibited
in the environmental problems study.
2. Good Recycling Practices Study
    EPA completed An Assessment of Good Current Practices for Recycling
of Hazardous Secondary Materials to provide a more complete picture of
the hazardous secondary materials recycling industry in the United
States. The study examines what practices responsible generators and
recyclers currently use to ensure that their hazardous secondary
materials are recycled responsibly.
    One purpose of the study was to provide the Agency with another
angle from which to view the hazardous secondary materials recycling
industry. EPA has long heard from representatives of that industry that
management of hazardous secondary materials has changed and improved
since RCRA was implemented in the early 1980s. In addition, by
indicating what controls responsible recyclers are using, the study was
intended to help EPA determine which kinds of regulatory requirements
would be most appropriate and effective as conditions of the exclusions.
    Some of the comments on the successful recycling study supported
the conclusions in the study. Particularly, these commenters stated
that audits are typical, that they usually cover the subjects described
in the study, and that RCRA and CERCLA liability are drivers of
responsible recycling behavior. Several other commenters suggested that
other incentives affecting the behavior of recyclers include economic
concerns, the RCRA hazardous waste regulations, and environmental and
safety regulations under other statutes.
Comments: Scope of the Successful Recycling Study
    EPA received several critical comments in response to the study on
responsible recycling behaviors. One comment that appeared more than
once was that EPA's study focused too much on large companies and that
many of the practices a large company undertakes with a full
environmental staff would not be possible for a smaller company and,
therefore, that the practices are not widespread among smaller companies.
EPA's Response: Scope of the Successful Recycling Study
    EPA agrees with the focus on larger companies in the study and
discusses it in the methodology section of the report's introduction.
Because many of the contacts for interviews for the report came out of
the public comments on the October 2003 proposed rule, much of the
information in the report came from companies large enough to have
staff responsible for submitting public comments to federal proposed
rulemakings. However, where possible and appropriate, the study does
examine the options for small businesses, as well as what small
businesses are doing that approximates the audit programs and other
practices of larger companies. The Agency did find that many small
companies are concerned with questions of liability in their hazardous
secondary materials recycling and often either belong to auditing
consortiums or already do smaller audits by mail and telephone if they
cannot afford to set up visits to the recycling facilities to examine
them in person.
Comments: Purpose of the Successful Recycling Study
    Another comment made by several commenters expressed a concern that
circular logic was in place in the March 2007 supplemental proposal.
The commenters stated that it was regulation under RCRA that led to the
growth of the good practices being described and stated that EPA was
using these practices as justification for taking away the very
regulations that led to them.
EPA's Response: Purpose of the Successful Recycling Study
    The Agency believes that those making this comment misunderstood

[[Page 64724]]

the relationship between the successful recycling study and the March
2007 supplemental proposal. The proposal did not state that this
background material was a justification for why the Agency proposed the
conditional exclusion for hazardous secondary materials not under the
control of the generator. Rather, the Agency looked to the study to
determine what the current responsible practices are and to use that
information to inform decisions on what restrictions and/or conditions
would be appropriate for the transfer-based exclusion. By promulgating
restrictions and/or conditions that will lead to responsible management
of hazardous secondary materials, the Agency intends to encourage
hazardous secondary materials recycling, while protecting human health
and the environment.
3. Market Forces Study
    EPA received very few comments on Potential Effects of Market
Forces on the Management of Hazardous Secondary Materials Intended for
Recycling. The purpose of this study is to use economic theory to
describe how various market incentives can influence a firm's decision
making process when the recycling of hazardous secondary materials is
involved. Different economic incentives between the recycling of
hazardous secondary materials and manufacturing can arise due to
differences in these two business models. As opposed to manufacturing,
where the cost of inputs of either raw materials or intermediates is
greater than zero and revenue is generated primarily from the sale of
the output, some models of hazardous secondary materials recycling
involve generating revenue primarily from the receipt of the hazardous
secondary materials. Recyclers of hazardous secondary materials in this
situation may thus respond differently to economic forces and
incentives from traditional manufacturers.
Comments and EPA's Response: Market Forces Study
    Most of the commenters agreed with the underlying premise of the
study that market forces affect commercial recycling differently from
how they affect manufacturing from virgin materials, thus creating a
potential incentive for the over-accumulation of hazardous secondary
materials in some circumstances. Thus, the study supports both the
proposed conditions for the transfer-based exclusion and the ``useful
contribution'' factor for the legitimacy criteria. EPA agrees with
these comments.
    One commenter stated that as a result of the market forces study,
EPA should also include a requirement that the generator evaluate the
financial health of the recycler before shipping a hazardous secondary
material to the recycler. While EPA agrees that evaluating the
financial health of a company can be useful and informative, and
encourages companies to do so, it is not an activity that lends itself
to an objective standard that would be appropriate for regulation.
Instead, EPA is requiring recyclers under the transfer-based exclusion
to have financial assurance in order to determine that negative
economic factors will not result in the hazardous secondary materials
being abandoned.
    One commenter disagreed with the study's conclusion that intra- and
inter-company recyclers have more flexibility in their waste management
decisions than commercial recyclers do. The commenter noted that
company politics and internal goals can make it difficult to switch
from recycling to disposal, even if the market forces make it more
economical, and that it may take two or more months to find a disposal
contractor.
    While EPA generally agrees that there are more factors at work than
those described in the study, we continue to believe that intra- and
inter-company recycling have more flexibility in waste management
decisions than a commercial recycler does. When a commercial recycler's
entire income is from accepting hazardous secondary materials for
recycling and selling recycled products, there is no economic
alternative for it to stop recycling and continue to stay in business
unless it can afford the cost of a hazardous waste management permit
and the cost of becoming a hazardous waste disposal facility. This
finding is supported by the results of the damage cases, the
overwhelming majority of which were at commercial recycling facilities.

E. Use Constituting Disposal (UCD) and Burning for Energy (BFE)

Comments: UCD and BFE
    EPA received extensive comments on both the October 2003 proposal
and the March 2007 supplemental proposal requesting that the scope of
the proposed rules be expanded to include hazardous secondary materials
used in a manner constituting disposal and hazardous secondary
materials burned for energy recovery. Commenters argued that these
operations do not involve discard, and that they can have many
environmental benefits, including resource conservation and reduction
in greenhouse gas emissions. In particular, commenters argued that
hazardous waste that is indistinguishable from a commercial fuel should
be not a solid waste. Other commenters supported keeping the exclusion
focused on reclamation and not including use constituting disposal and
burning for energy recovery. Commenters noted that these types of
activities, in some cases, are akin to discard, that precedents exist
for regulation of these hazardous secondary materials, and that
recycling and reclamation are higher on the waste management hierarchy
and more likely to conserve resources than burning for energy recovery.
EPA's Response: BFE and UCD
    EPA continues to maintain that comments on UCD and BFE are outside
the scope of the solid waste exclusions in today's final rule, which
are focused on reclamation. EPA agrees that hazardous secondary
materials that are comparable to commercial fuels should not be solid
wastes, and the Agency has already promulgated an exclusion for certain
of these materials (40 CFR 261.4(a)(16)). However, as stated earlier,
such materials are outside the scope of today's final exclusions and
are best addressed under separate rulemaking efforts.

XVI. Major Comments on the Exclusion for Hazardous Secondary Materials
Legitimately Reclaimed Under the Control of the Generator

A. Scope of the Exclusion

1. Exclusion for Materials Recycled On-Site
Comments: On-Site Exclusion
    In our March 2007 supplemental proposal, EPA proposed to exclude
from the definition of solid waste hazardous secondary materials that
are generated and legitimately reclaimed at the generating facility.
EPA proposed to define ``generating facility'' in 40 CFR 260.10 as
``all contiguous property owned by the generator'' (72 FR 14214). We
noted that our proposed definition would include situations where a
generator contracted with another company to reclaim hazardous
secondary materials at the generator's facility, either temporarily or
permanently. The Agency solicited comment on whether facilities under
separate ownership, but located at the same site (e.g., industrial
parks), should be included within this proposed exclusion. We also
solicited comment on other definitions which might be compatible with
the concept of generator control.

[[Page 64725]]

    Commenters who addressed this issue generally supported the
proposed on-site exclusion. They agreed with EPA that hazardous
secondary materials reclaimed by a generator at its facility are
unlikely to be discarded because the materials will be managed and
monitored by a single entity who is familiar with both the generation
and recycling of the hazardous secondary materials. Several commenters
also agreed with EPA that environmental risks were lessened if the
hazardous secondary materials were not transported off-site, and that
fewer liability questions would arise in the case of accidents or
mismanagement.
    With respect to companies under separate ownership, but located at
the same site, commenter reaction was more mixed. Some commenters said
that this situation is not compatible with generator control. They
argued that unrelated companies would not be as likely to have
knowledge of each other's operations and hazardous secondary materials,
and that additional controls were necessary, such as financial assurance
for the reclaimer and reasonable efforts on the part of the generator
(conditions that EPA had proposed for the transfer-based exclusion).
    Other commenters supported an exclusion for facilities under
separate ownership, but located at the same site, (i.e., co-located
facilities). These commenters said that such an exclusion would
encourage recycling. These commenters mentioned a variety of scenarios
which they argued should be eligible for the exclusion. Some commenters
described integrated chemical manufacturing operations with co-located
facilities that are owned by different entities because of corporate
mergers and acquisitions. Another commenter noted that at some steel
plants, spent pickle liquor is reclaimed on-site by a company that is
different from the company operating the steel plant. Other commenters
noted that coke and tar plants at iron and steel facilities are
sometimes owned by electric utilities. A few commenters argued that
facilities at airports should be eligible for the exclusion, and other
commenters mentioned various cooperative recycling ventures within the
automotive industry. Some operations mentioned by commenters appeared
to be prospective rather than actual.
EPA's Response: On-Site Exclusion
    After evaluating these comments, EPA has decided to finalize this
provision as proposed and to limit the exclusion to hazardous secondary
materials that are generated and legitimately reclaimed by the
hazardous secondary material generator at that generator's facility. We
agree with the commenters that at least some of the situations they
described are not necessarily incompatible with generator control. One
of the situations--spent pickle liquor recycled on-site at a steel
mill--is eligible for the generator-controlled exclusion if the
generator has contracted with the company to reclaim the material at
the generator's facility. However, the Agency does not have sufficient
legal or factual information about other situations mentioned by the
commenters to determine if there is a single entity who remains in control
of the hazardous secondary material throughout the reclamation process.
    For this reason, EPA believes that such situations may be more
appropriately addressed under the exclusion for hazardous secondary
materials transferred for reclamation (40 CFR 261.4(a)(24)) or under
the case-by-case non-waste determination procedures finalized today in
Sec.  260.30.
    For the sake of clarity and in response to comments, we are also
adding a definition of ``hazardous secondary material'' and ``hazardous
secondary material generator'' to Sec.  260.10. ``Hazardous secondary
material'' means a secondary material that, when discarded, would be
identified as hazardous waste under part 261 of 40 CFR. ``Hazardous
secondary material generator'' means any person whose act or process
produces hazardous secondary material at the generating facility. A
facility that collects hazardous secondary materials from other persons
is not the hazardous secondary material generator. These definitions
would apply to all of the exclusions promulgated today. We note that
generators sometimes contract with a second company to collect
hazardous secondary materials at the generating facility, after which
the hazardous secondary materials are subsequently reclaimed at the
facility of the second company. In that situation, the hazardous
secondary materials would no longer be considered ``under the control
of the generator'' because the materials are not reclaimed at the
generating facility. The materials should instead be managed under the
exclusion for materials transferred for reclamation.
    EPA agrees with certain comments that a facility that generates
hazardous secondary materials may lease the property where it conducts
operations, rather than own the property and that our proposed
definition of ``generating facility'' would not cover such
arrangements. EPA has therefore changed the definition of ``generating
facility'' in 40 CFR 260.10 to read ``all contiguous property owned,
leased, or otherwise controlled by the hazardous secondary material
generator.'' We have also amended the existing definition of
``facility'' in Sec.  260.10 to include a reference to management of
hazardous secondary materials. Therefore, any references to
``facilities'' or ``units'' of a facility in today's rule also refers
to facilities or units managing hazardous secondary materials excluded
under this rule.
2. Exclusion for Materials Recycled by the ``Same Company''
    In its March 2007 supplemental proposal, EPA proposed to exclude
from the definition of solid waste hazardous secondary materials that
were generated and reclaimed by the same ``person'' as defined in 40
CFR 260.10, if the generator certified the following: ``on behalf of
[insert company name], I certify that the indicated hazardous
recyclable material will be sent to [insert company name], that the two
companies are under the same ownership, and that the owner corporation
[insert company name] has acknowledged full responsibility for the safe
management of the hazardous secondary material'' (72 FR 14214).
``Person,'' as defined in Sec.  260.10, means an individual, trust,
firm, joint stock company, Federal Agency, corporation (including a
government corporation), partnership, association, State, municipality,
commission, political subdivision of a State, or any interstate body.
EPA proposed the certification requirement because of existing
complexities in corporate ownership and liability. The certification
would clarify the responsibilities of the generator and reclaimer and
would help regulatory authorities determine whether a facility was
eligible for this exclusion. The Agency solicited comment on any other
certification language that might accomplish the same end, and on other
definitions of ``same-company'' (72 FR 14186).
Comments: Same-Company Exclusion
    Many commenters supported this exclusion and stated that hazardous
secondary materials sent from one company's facility to another
remained essentially under the control of the generating company.
According to these commenters, if a generator sends materials to a
reclaimer that is part of the same corporate structure, the generator
is likely to be familiar with the recycling and materials management
processes employed by the reclaimer. In addition, questions regarding
liability

[[Page 64726]]

and responsibility for such hazardous secondary materials are likely to
be clearer than is the case with facilities from unrelated companies.
    Other commenters stated that when hazardous secondary materials are
generated and transported off-site for reclamation, additional controls
were needed to avoid discard and protect human health and the
environment even in the case of intra-company recycling. Some of these
commenters preferred such reclamation to be regulated under the
proposed conditional exclusion for hazardous secondary materials
transferred for the purpose of reclamation. This measure would ensure
that generators would have to perform reasonable efforts and that
reclaimers would have to obtain financial assurance. Other commenters
suggested additional notification and recordkeeping requirements for
any hazardous secondary materials transported off-site.
EPA's Response: Same-Company Exclusion
    After evaluating these comments, the Agency has decided to retain
``same-company'' recycling under the exclusion for hazardous secondary
materials legitimately reclaimed under the control of the generator. We
do not believe that facilities exchanging hazardous secondary materials
within the same corporate structure should be subject to the
requirements for our exclusion at Sec.  261.4(a)(24), as long as
appropriate control of the recycling process is maintained. In
particular, it is unnecessary for the generator to perform reasonable
efforts on the reclaimer, because the generator is likely to be
knowledgeable about the reclaimer's ability to recycle the hazardous
secondary materials properly and legitimately. Similarly, if the
generator and reclaimer are part of the same corporate structure and if
common control is maintained over the policies of both facilities,
there are strong incentives to ensure that the hazardous secondary
materials are properly and legitimately reclaimed, thus making a
financial assurance requirement for the reclaimer unnecessary.
    In response to commenters who suggested additional notification and
recordkeeping requirements, we note that the Agency is revising our
proposed requirements for notification and recordkeeping for all
exclusions promulgated today. These revisions are discussed in sections
VII.C. and VIII.C. of this preamble.
Comments: Certification of Same Company
    Some commenters argued that no certification should be necessary
when hazardous secondary materials are sent between the same or related
companies because generator knowledge of the materials and the
potential CERCLA liability should suffice to ensure safe and legitimate
recycling. Other commenters supported a certification provision, but
suggested alternative language that they stated would be more
compatible with generator control. Still other commenters disagreed
with our proposed requirement for certifying that the generator and
reclaimer of hazardous secondary materials were under the same
ownership and that the owner corporation must acknowledge responsibility
for the safe management of the hazardous secondary materials.
    According to these commenters, under existing corporate law, parent
companies do not (and sometimes cannot) assume legal liability for
their subsidiaries. EPA's proposed certification requirement regarding
the owner company would therefore have little legal effect and could
actually discourage same-company recycling. Some of these commenters
suggested that either the generator or the reclaimer should acknowledge
responsibility for properly managing the hazardous secondary material,
not a third-party owner corporation.
    Other commenters said that the proposed requirement that the
hazardous secondary materials be generated and reclaimed by the same
``person'' under 40 CFR 260.10 was not appropriate because a
corporation and its affiliates or subsidiaries are legally distinct and
not the same ``person.'' Therefore, one commenter suggested that we
refer to related ``facilities'' rather than ``companies.'' Some other
commenters suggested that we focus on the concept of ``control'' rather
than ``ownership.''
EPA's Response: Certification of Same Company
    After evaluating these comments, EPA does not agree with the
commenters who argued that a certification requirement is not needed.
We note that the purpose of the certification is not to directly ensure
proper and legitimate recycling, but to clarify responsibility for the
hazardous secondary materials and to demonstrate to regulatory
officials that the hazardous secondary materials are not discarded and
are within the terms of the generator-controlled exclusion. We are
therefore retaining a certification requirement for this exclusion.
    However, the Agency has also decided that its proposed
certification language should be revised to avoid confusion and to
ensure more effective generator control. We have therefore revised our
proposed regulatory definition for this exclusion to refer to
``facilities'' rather than companies. Under the definition finalized
today at 40 CFR 260.10, the reclaiming facility must be ``controlled''
by the generating facility or by a person (under Sec.  260.10) who
controls both the generating facility and the reclaiming facility.
``Control,'' for purposes of this exclusion, means ``the power to
direct the policies of the facility, whether by the ownership of stock,
voting rights, or otherwise, except that contractors who operate
facilities on behalf of a different person shall not be deemed to
``control'' such facilities'' (see Sec.  260.10). Our final
certification language requires the generating facility to certify that
it controls the reclaiming facility, or that the generating facility
and the reclaiming facility are under common control. In addition, the
generator must certify that either the generating facility or the
reclaiming facility acknowledges full responsibility for the proper
management of the hazardous secondary materials. To avoid confusion, we
have also amended the definition of ``facility'' at 40 CFR 260.10 to
include facilities which manage hazardous secondary materials.
Therefore, any reference to ``facilities'' in this rule also includes
facilities which manage materials excluded under the regulations
promulgated today.
    EPA believes that this revised language more appropriately reflects
the concept of ``generator control'' that underlies the exclusions at
40 CFR 261.2(a)(2)(ii) and 261.4(a)(23). Requiring that a generating
facility control the reclaiming facility, or that both be under common
control, ensures that there is an ongoing relationship between the
generator and reclaimer and that the two facilities are more likely to
be familiar with each others' waste management practices, thereby
minimizing the possibility of discard. If there is no such
relationship, the two facilities should not be eligible for this
exclusion and the use of the transfer-based exclusion would be more
appropriate. In addition, requiring the hazardous secondary material
generator to certify that either the generating facility or the
reclaiming facility acknowledges responsibility for the safe management
of hazardous secondary materials ensures that the responsibility rests
with the party most capable of assuming such responsibility. This

[[Page 64727]]

certification should be made by an official familiar with the corporate
structure of both the generating and the reclaiming facilities and
should be retained at the site of the generating facility.
Comments and EPA's Response: Application to Government Agencies and
Universities
    Some commenters requested that EPA clarify whether two government
agencies (such as the Department of Defense and the Department of
Energy) would be considered the same ``person'' under 40 CFR 260.10 if
hazardous secondary materials are generated by one agency and reclaimed
by another. In response, we note that for purposes of RCRA, the federal
government is not a single ``person''; rather, each agency or
department would be considered a separate ``person.'' We also note that
under today's final rule, a federal agency that is a generating
facility does not normally have the power to direct the policies of a
different federal agency that is a reclaiming facility, nor is there a
``person'' under Sec.  260.10 who directs the routine policies of both
facilities. In certain situations, the two different federal agencies
involved may wish to apply for a case-by-case non-waste determination
under 40 CFR 260.30, as appropriate, or use the transfer-based exclusion.
    Other commenters requested that EPA clarify whether the same-
company exclusion extends to hazardous secondary materials that are
generated and reclaimed at different facilities, when both facilities
are owned by the same government agency or university, but operated by
a contractor. In some of these situations, the same contractor operates
both the generating facility and the recycling facility, but, in other
situations, the generating facility and the reclaiming facility are
operated by different contractors. In those situations where the
generating facility and the reclaiming facility are both owned by the
same government agency or university, the two facilities would be under
common control because the agency or university in question has the
power to direct the policies of both the generating facility and the
reclaiming facility. Under this scenario, both facilities would
therefore be eligible for the same-company exclusion, even if operated
by different contractors. However, if the generating facility and the
reclaiming facility were each owned by a separate government agency or
university, they would not be eligible for this exclusion even if both
facilities were operated by the same contractor, because the element of
common control would be lacking. We have revised the certification
language of 40 CFR 260.10 to reflect this approach. The parties
involved may apply for a case-by-case non-waste determination under 40
CFR 260.30, as appropriate, or use the transfer-based exclusion.
3. Types of Tolling Arrangements Eligible
    In its March 2007 supplemental proposal, the Agency proposed to
exclude from the definition of solid waste certain hazardous secondary
materials that are generated pursuant to a written contract between a
tolling contractor and a toll manufacturer. Through the contract, the
tolling contractor would arrange for the manufacture by the toll
manufacturer of a product made from unused materials specified by the
tolling contractor. To be eligible for the exclusion, the tolling
contractor would have to retain ownership of and responsibility for the
hazardous secondary materials that were generated during the course of
the production of the product. EPA solicited comment on other types of
contractual arrangements under which discard is unlikely to happen and
which could appropriately be covered by the exclusion for generator-
controlled hazardous secondary materials. For example, one company
could enter into a contractual arrangement for a second company to
reclaim and reuse (or return for reuse) the first company's hazardous
secondary materials. The first company could create a contractual
instrument that exhibits the same degree of control over how the second
company manages the hazardous secondary materials as is found in a
tolling arrangement (72 FR 14186).
Comments: Tolling Arrangements
    Some commenters stated that tolling arrangements are incompatible
with ``generator control'' and are best regulated under the proposed
exclusion for materials that were transferred for legitimate
reclamation. They argued that requirements such as reasonable efforts
(by generators) and financial assurance (for reclaimers) were necessary
to avoid discard in the case of off-site reclamation. Some of the
commenters argued that the physical generator of the hazardous
secondary material (in this case, the toll manufacturer) retains legal
liability for the material. They stated that contracts which
reallocated resources to address financial responsibility for
mismanagement or mishap could contain loopholes that would allow
tolling contractors to dispose of hazardous secondary materials or send
them to a third party for reclamation.
    Other commenters, on the other hand, urged EPA to expand the
tolling exclusion to other types of contractual arrangements. A few
commenters said that the exclusion should be allowed for any contract
between a generator and a reclaimer where the generator was willing to
retain ownership of and/or responsibility for the hazardous secondary
materials. Other commenters mentioned specific contractual situations
in which they argued the hazardous secondary materials in question were
clearly handled as a commodity and discard was therefore highly
unlikely. One example given was a facility that reclaims metals from
electric arc furnace dust and then sends the metals back to steel mills
to be reused. Another example was a facility that takes spent copper
etchant from manufacturers of printed wiring boards and uses the
material to make new copper compounds. Still another example was a
facility that collects used paint purge solvent from auto body paint
operations, reclaims it, and sells regenerated solvent back to the auto
body facility.
EPA's Response: Tolling Arrangements
    After considering these comments, the Agency has decided to retain
the tolling exclusion, but not to broaden its scope. The exclusion will
therefore be limited to situations where a tolling contractor contracts
with a toll manufacturer to make a product from specified unused
materials. We do not agree with those commenters who said that tolling
contracts are not compatible with ``generator control.'' The typical
tolling contract contains detailed specifications about the product to
be manufactured, including the management of any hazardous secondary
materials that are generated and returned to the tolling contractor for
reclamation. In addition, the tolling contractor will enter into a
tolling contract with such requirements only if it has decided that the
economic benefit from such recycling is justified. For these reasons,
we do not believe that tolling arrangements should be subject to the
conditions applicable to the transfer-based exclusion.
    On the other hand, the Agency also does not agree with those
commenters who urged that we should allow the generator-controlled
exclusion for any hazardous secondary materials generated under a
contract between a generator and a reclaimer. We believe that the
exclusion should be limited to the types of tolling arrangements
specified in 40 CFR 260.10. When hazardous secondary materials are

[[Page 64728]]

transferred off-site for reclamation, there is, in general, less
likelihood of generator control, and, hence, more likelihood of
discard, in the absence of conditions that ensure the hazardous
secondary materials will be handled as valuable products. In these
situations, additional requirements are needed for the Agency to
determine that no discard has occurred. Conversely, in the specific
situations included in the generator-controlled exclusion (on-site,
same-company, and tolling reclamation), we believe that the generator
is much more likely to be familiar with the reclaimer and to have
powerful incentives to see that the hazardous secondary materials are
reclaimed properly and legitimately. In these cases, the requirements
that we have finalized today (notification, legitimate recycling,
compliance with speculative accumulation limits, and containment) are
sufficient for the Agency to determine that such hazardous secondary
materials are not discarded. These requirements may not be sufficient
in the case of unrelated generators and reclaimers who have a non-
tolling type of contract.
    To clarify the requirements for tolling contracts under today's
rule, and to assist regulatory authorities in determining whether a
facility is eligible for an exclusion under a tolling contract, EPA has
also added a certification requirement to the definition of hazardous
secondary material generated and reclaimed under the control of the
generator in Sec.  260.10 of the final rule. This provision would
require the tolling contractor to certify that it has a written
contract with the toll manufacturer to manufacture a product or
intermediate which is made from unused materials specified by the
tolling contractor, and that the tolling contractor will reclaim the
hazardous secondary materials generated during the course of this
manufacture. The tolling contractor must also certify that it retains
ownership of, and responsibility for, the hazardous secondary materials
that are generated during the course of the manufacture, including any
releases of hazardous secondary materials that occur during the
manufacturing process. This certification should be made by an official
familiar with the terms of the written contract and should be retained
at the site of the tolling contractor.
    In response to those commenters who described specific types of
contractual arrangements that should be eligible for the generator-
controlled exclusion, we note that facilities operating under such
arrangements may apply for a non-waste determination under Sec. 
260.30, as appropriate. In some cases, commenters did not include
enough detail about the contracts to enable the Agency to draft
appropriate regulatory language. In other cases, the arrangement
suggested was industry-specific and the conditions or requirements
suggested by the commenters were not appropriate for an exclusion
covering many different types of facilities. We believe that such
arrangements are best evaluated on a case-by-case basis by the
regulatory authority, possibly under 40 CFR 260.30, to determine their
eligibility for exclusion.
Comments: Terms Used in Tolling Exclusion
    One commenter suggested that we replace the term ``batch
manufacturer'' with ``toll manufacturer.'' This commenter stated that
``batch manufacturer'' was too broad and generally referred to a
facility which engages in a distinct, short production campaign, not
necessarily tied to a two-party contractual agreement. ``Toll
manufacturer,'' this commenter stated, is a subset of batch
manufacturers and generally refers to a party which undertakes
manufacturing pursuant to a contract with a tolling contractor, such as
the arrangement we proposed. This commenter also requested that EPA
clarify that the ``product'' required to be produced under a tolling
contract can include intermediates, as well as final products, and that
materials used in toll manufacturing were sometimes specialty chemicals
or intermediates that could not be described as ``raw materials,'' as
would be required under our proposal. They suggested that we use the
term ``specified materials'' instead.
EPA's Response: Terms Used in Tolling Exclusion
    The Agency agrees that the suggested term ``toll manufacturer'' is
more accurate and has revised the definition in Sec.  260.10
accordingly. EPA also agrees that a product produced under a tolling
contract can be an intermediate or a final product and has revised the
definition in Sec.  260.10 to refer to ``production of a product or
intermediate.'' Finally, the Agency agrees that the term ``raw
materials'' may not be accurate, but prefers to use the term ``unused
materials'' instead of ``specified materials,'' because we believe that
term encompasses specialty chemicals and intermediates without also
including spent or secondary materials, which are not included in our
definition of toll manufacturing.

B. Restrictions on Exclusions for Hazardous Secondary Materials Managed
Under the Control of the Generator in Land-Based Units and Non-Land-
Based Units

    In its March 2007 supplemental proposal, the Agency proposed in 40
CFR 261.4(a)(23)(i) that hazardous secondary materials generated and
legitimately reclaimed under the control of the generator must be
contained if they were stored in land-based units (72 FR 14216). EPA
proposed to use the existing definition of land-based units and defined
a land-based unit in 40 CFR 260.10 as a landfill, surface impoundment,
waste pile, injection well, land treatment facility, salt dome
formation, salt bed formation, or underground mine or cave. EPA did not
propose a containment limitation for such materials if they were stored
in non-land-based units.
    EPA did not propose a regulatory definition of ``contained,'' nor
did we propose specific performance or storage standards. We stated
that whether hazardous secondary materials are contained would be
decided on a case-by-case basis, and that such materials are generally
contained if they are placed in a unit that controls the movement of
the hazardous secondary materials out of the unit. We solicited comment
on whether additional requirements might be necessary to demonstrate
absence of discard when hazardous secondary materials were recycled
under the control of the generator. In particular, we asked whether
additional requirements for storage would be appropriate, such as
performance-based standards designed to address releases to the
environment. We also indicated that if commenters believed such
requirements were appropriate, they should specify the technical
rationale for each requirement suggested and why the requirement is
necessary if the hazardous secondary material remains under the control
of the generator.
Comments and EPA's Response: Definition of ``Land-Based Unit''
    EPA received several comments expressing confusion over our
proposed definition of ``land-based unit.'' We proposed land-based unit
to mean ``a landfill, surface impoundment, waste pile, injection well,
land treatment facility, salt dome formation, salt bed formation, or
underground mine or cave.'' Commenters noted that including
``landfills'' and ``injection wells'' was not necessary for the proposed
exclusion, since these management units are clearly inappropriate for

[[Page 64729]]

hazardous secondary materials intended for recycling. Furthermore,
commenters also noted that Subtitle C defines these terms waste-
centrically (i.e., as a unit that handles ``waste'' in one way or
another). This could create confusion because a hazardous secondary
material would not, by definition, be ``managed'' (or ``stored'') in
one of these ``waste'' units. EPA agrees with these comments, and in
the final rule has defined ``land-based unit'' as an area where
hazardous secondary materials are placed in or on the land before
recycling. However, as discussed below, the Agency has clarified that
land-based units that are production units are not included in the
definition.
Comments and EPA's Response: Mineral Processing Industry
    Some commenters asserted that the Agency has no jurisdiction over
land-based production units in the mineral processing industry. As
previously stated, EPA agrees that the Agency does not regulate the
production process. (See 63 FR 28580). Accordingly, EPA has clarified
the definition of ``land-based unit'' to clarify that production units
are not included in that definition. However, these commenters also
asserted that EPA cannot legally require containment for these units.
To the extent that these comments are intended to mean that EPA cannot
regulate material that has been released into the environment, these
comments are addressed in section XV.C. of this preamble, and also in
the response to comments document in the record for this rulemaking.
Comments: Standards for Units (Both Land-Based and Non-Land-Based)
    Other commenters, however, were opposed to allowing any land-based
storage, at least without a RCRA Part B permit or strict requirements,
such as secondary containment, leak detection measures, regular
inspections, monitoring, or financial assurance. Most of these
commenters did not appear to distinguish between land-based units under
the generator-controlled exclusion and those under the exclusion for
hazardous secondary materials transferred for reclamation; presumably,
they wanted the same conditions for both.
    Regarding non-land-based units such as tanks, containers, or
containment buildings, some commenters agreed with EPA's approach, but
other commenters preferred minimum storage standards for these units.
Some commenters wanted Subtitle C standards to apply. Other commenters
believed that the RCRA hazardous waste requirements were not necessary,
but suggested other standards, such as requiring tanks to be in good
condition, to be compatible with the stored material, to have secondary
containment, or to be subject to routine inspections.
EPA's Response: Standards for Units (Land-Based and Non-Land-Based)
    After evaluating these comments, the Agency has decided not to add
performance standards or other requirements for managing hazardous
secondary materials excluded under any of the exclusions promulgated
today (Sec. Sec.  261.2(a)(2)(ii), 261.4(a)(23), or 261.4(a)(24)). Such
detailed measures are unnecessary for hazardous secondary materials
that are handled as valuable products that are destined for recycling.
Under today's rule, regulatory authorities can determine whether such
materials in a unit are contained by considering all such site-specific
circumstances. For example, local conditions can greatly affect whether
hazardous secondary materials managed in a surface impoundment are
likely to leak and cause damage, and, therefore, whether the unit could
be considered contained. Similarly, facilities may employ such measures
as liners, leak detection measures, inventory control and tracking,
control of releases, or monitoring and inspections. Any or all of these
practices may be used to determine whether the hazardous secondary
materials are contained in the unit.
    EPA also believes that detailed standards are not necessary to
determine that valuable materials destined for recycling are not
discarded when managed in non-land-based units. As with land-based
units, the regulatory authorities can identify hazardous secondary
materials that have been released from the unit and determine that the
released material is discarded. To clarify this approach and to
facilitate its implementation, however, EPA has revised its regulatory
language to require that hazardous secondary materials that are
generated and reclaimed under the control of the generator and managed
in non-land-based units must also be contained (Sec.  261.4(a)(23)(i)).
Comments and EPA's Response: State Regulatory Program-Compliant Units
    A few commenters indicated that hazardous secondary materials
managed in units complying with state regulatory programs to address
releases should be considered contained. Because of the variety of such
programs, and because the Agency has not conducted an in-depth
evaluation of such state requirements, we are not adding a definition
of ``contained'' that would incorporate this suggested element.
However, regulatory authorities may consider compliance with such
requirements as one of the factors in determining whether the hazardous
secondary materials are contained in the units.
Comments: Releases
    In the March 2007 supplemental proposal, the Agency stated that
hazardous secondary materials that remain contained in these units
would still meet the terms of the exclusion even if a release occurred,
unless the hazardous secondary materials are not managed as a valuable
product, and, as a result, a significant release from the unit takes
place. If such a significant release occurred, the hazardous secondary
material remaining in the unit may be considered a solid and hazardous
waste. Some commenters noted that a series of small releases from a
unit could occur over time, causing cumulative environmental harm even
though no single release was significant in terms of volume. These
commenters said that such a series of releases should generally lead to
the conclusion that the hazardous secondary material remaining in the
unit was a waste.
EPA's Response: Releases
    EPA agrees with the comment concerning small releases from a unit
over time. Thus, a ``significant'' release is not necessarily large in
volume, but would include an unaddressed small release from a unit
that, if allowed to continue over time, could cause significant damage.
Any one release may not be significant in terms of volume. However, if
the cause of such a release remains unaddressed over time and hazardous
secondary materials are managed in such a way that the release is
likely to continue, the hazardous secondary materials in the unit would
not be contained. For example, a rusting tank or containers that are
deteriorating may have a slow leak that, if unaddressed, could, over
time, cause a significant environmental impact. Similarly, a surface
impoundment with a slow, unaddressed leak to groundwater could, over
time, result in significant damage. Another example would be a large
pile of lead-contaminated finely ground material without any provisions
to prevent wind dispersal of the particles. Such releases, if
unaddressed over time and likely to continue, would mean that the
hazardous secondary materials remaining in the unit were not being

[[Page 64730]]

managed as a valuable raw material, intermediate, or product and that
the materials had been discarded. As a result, the hazardous secondary
materials in the unit would be hazardous wastes and these units would
be subject to the RCRA hazardous waste regulations.

XVII. Major Comments on the Exclusion for Hazardous Secondary Materials
Transferred for the Purpose of Legitimate Reclamation

A. Status of Facilities Other Than the Generator or Reclaimer
(``Intermediate Facilities'')

Comments: Intermediate Facilities
    In its March 2007 supplemental proposal, EPA requested comment on
its proposal that under the proposed exclusion for hazardous secondary
materials transferred for reclamation, such materials would have to be
transferred directly from the generator to the reclaimer and not be
handled by anyone other than a transporter.
    EPA received many comments on this provision. Some commenters
supported the provision as proposed because they were concerned that if
hazardous secondary materials were transferred to a ``middleman,'' the
generator would not have a reasonable understanding of who would
reclaim the hazardous secondary materials and how they would be managed
and reclaimed. If the generator was unable to ascertain whether the
hazardous secondary materials in question could be properly and
legitimately recycled, the materials should be considered discarded.
    Other commenters objected to this proposed limitation. They argued
that many persons who generate smaller quantities of hazardous
secondary materials need help in consolidating shipments to make
reclamation economically feasible. Some of these commenters also argued
that intermediate facilities provided valuable assistance to generators
by helping them properly transport, package, and store material, and by
helping them find responsible reclaimers. These commenters believed
that EPA's proposed limitation could discourage reclamation by persons
who generate smaller quantities of such hazardous secondary materials.
    Most of the commenters who suggested that intermediate facilities
be eligible for the exclusion also suggested conditions for these
facilities. These conditions included requiring the generator to select
the reclaimer, requiring the generator to perform reasonable efforts on
the intermediate facility, as well as the reclaimer, and requirements
for notification and recordkeeping. A few commenters argued that
intermediate facilities should be required to have a RCRA Part B permit
or interim status.
EPA's Response: Intermediate Facilities
    After evaluating these comments, the Agency has decided that
intermediate facilities storing hazardous secondary materials should be
eligible for the exclusion at 40 CFR 261.4(a)(24) under certain
conditions. We believe that such facilities make it easier for
generators that generate smaller quantities of hazardous secondary
materials to send these materials for reclamation and that storage at
such facilities under the conditions designed to address discard is
completely consistent with handling the hazardous secondary materials
as valuable commodities. To this end, we have added a new definition of
``intermediate facility'' to 40 CFR 260.10. We note that this rule does
not address ``brokers'' because that term is commonly understood to
mean a person who helps arrange for the transfer of hazardous waste or
hazardous secondary material, but does not take possession of the
material or manage it in any way. Brokers that never take possession of
hazardous secondary materials would not have been affected under the
supplemental proposal, nor are they affected by today's rule.
    Under today's rule, an intermediate facility is a facility that
stores hazardous secondary materials for more than 10 days, other than
a generator or reclaimer of such materials. If an intermediate facility
treats the hazardous secondary materials or commingles it with other
hazardous secondary materials or with hazardous waste, it would not be
eligible as an ``intermediate facility'' as defined in Sec.  260.10
under today's regulation. Under 40 CFR 260.42, intermediate facilities
must submit the same notification required of generators and reclaimers
of hazardous secondary materials transferred for reclamation. In
addition, under Sec.  261.4(a)(24)(v) of today's rule, generators must
also perform appropriate reasonable efforts on the intermediate
facility, as well as the reclamation facility, and generators are
responsible for the ultimate selection of the reclamation facility.
These requirements will ensure that the intermediate facility is
handling the hazardous secondary materials as a commodity.
    Today's rule also requires intermediate facilities to comply with
the applicable requirements for reclaimers of hazardous secondary
materials under 40 CFR 261.4(a)(24)(vi), including recordkeeping,
storage of excluded materials, financial assurance, and speculative
accumulation. The Agency believes that these conditions are fully
sufficient to ensure that hazardous secondary materials stored at
intermediate facilities are handled as valuable products and not
discarded. Therefore, we do not agree with those commenters who
suggested that intermediate facilities should be required to operate
under Part B permits or interim status.
    The Agency notes that in some cases, the intermediate facility
performs the physical measures associated with generator reasonable
efforts to ensure that the reclaimer will properly and legitimately
recycle the hazardous secondary materials. These measures may include
facility inspections and preparation of audits. In those cases, the
generator must carefully review such measures to ensure that any
information provided is credible.
    Under today's rule (see 40 CFR 261.4(a)(24)(ii)), if hazardous
secondary materials are stored for 10 days or less at a transfer
facility, the transit is not subject to the requirements applicable to
intermediate facilities under the transfer-based exclusion. Instead, it
must only be packaged in accordance with applicable DOT requirements.
The Agency considers hazardous secondary materials stored by transfer
facilities for short periods of time to be in transit, similar to
hazardous waste stored by similar facilities for the same time period.
They are therefore not discarded. We have revised the existing
definition of ``transfer facility'' at 40 CFR 260.10 to clarify that
such facilities may store hazardous secondary materials, as well as
hazardous waste. The generator need not perform reasonable efforts on
such facilities, nor must such facilities comply with the requirements
applicable to reclaimers of hazardous secondary materials under 40 CFR
261.4(a)(24)(vi). In addition, hazardous secondary materials at
transfer facilities may be repackaged from one container to another
(e.g., the materials may be consolidated from smaller to larger
containers) or transferred to different vehicles for shipment (see 45
FR 86966, December 31, 1980). However, different hazardous secondary
materials may not be mixed together. In addition, if there is a release
of the hazardous secondary materials at the transfer facility that is
not cleaned up immediately, such materials become solid waste, and, if
they exhibit a hazardous characteristic or are specifically listed by
EPA, a hazardous waste as well. Depending on the nature of the release,
the hazardous secondary materials remaining in the unit could

[[Page 64731]]

also become a solid and hazardous waste subject to Subtitle C
regulation (for a discussion of when such units are considered
``contained,'' see section XVI of this preamble).

B. Reasonable Efforts Condition

    EPA received many comments on the condition proposed in the March
2007 supplemental proposal that generators ``make reasonable efforts to
ensure that the reclaimer intends to legitimately recycle the material
and not discard it * * * and that the reclaimer will manage the
material in a manner that is protective of human health and the
environment.'' This condition was proposed to be fulfilled by hazardous
secondary material generators sending hazardous secondary materials to
any reclamation facility not operating under a RCRA Part B permit or
interim status standards, and the condition would have to be satisfied
prior to transferring the hazardous secondary materials to the
reclamation facility (72 FR 14190-14194). Below is a summary of six
major issues raised in the comments and EPA's responses. For more
detailed comment responses, please see Revisions to the Definition of
Solid Waste Response to Comments Document.
Comments: An Objective Standard for Reasonable Efforts
    As proposed, the codified reasonable efforts provision for
generators was a general standard, rather than a more specific standard
with clearly stated requirements. EPA requested comment on establishing
a more objective standard for making reasonable efforts, such as
requiring generators to answer the questions discussed in the preamble.
EPA acknowledged that creating an objective standard could provide
generators and overseeing agencies with more regulatory certainty and
requested comment on codifying the six questions outlined in the preamble.
    EPA received many comments in support of an objective standard for
satisfying the reasonable efforts condition. Commenters suggested that
a minimum standard was needed to determine whether a generator
fulfilled the condition and as a way of determining what is
``reasonable.'' Many of these commenters also believed that a standard
that generators must meet was necessary to delineate liability for
hazardous secondary materials that are transferred from a generator to
a reclamation facility. In contrast, several commenters suggested that
formalizing a minimum standard which all generators must meet is
inappropriate since recycling is inherently case-specific.
    On the issue of whether to codify a reasonable efforts standard,
which several commenters addressed separately from the development of a
standard, EPA received many comments both in support of and against
codification. A large number of commenters addressed this issue by
commenting on the six questions EPA discussed in the preamble. Those in
favor of codification believed that establishing a minimum, objective
standard was important in order to provide regulatory certainty for
generators regarding what is ``reasonable'' and for overseeing agencies
needing to make consistent determinations that the condition is
satisfied. Industry commenters responding in support of codification
believed the six questions resemble existing audit questions, and would
therefore be straightforward to answer and satisfy. Recyclers and waste
management commenters believed that small quantity generators would
benefit from having a clear standard and also that the standard would
make additional clarifying guidance unnecessary in the future. Some
commenters conditionally supported codification contingent upon
severance of RCRA liability for generators that meet the minimum
condition. These commenters supported EPA's proposal to create what
they termed as a ``safe harbor'' for generators that, having met the
reasonable efforts condition, would be shielded from any future RCRA
liability caused by environmental damage at a reclamation facility.
    On the other hand, several commenters (mostly from the generating
industry) opposed codifying a standard. They believed a standard would
be unnecessary since generators that already audit recyclers have
existing criteria for making reasonable efforts. Some of these
commenters also stressed a need to maintain flexibility in their
activities and to avoid additional burdensome requirements. One state
commenter requested that EPA allow generators to establish their own
standard for reasonable efforts so that generators will weigh their own
level of risk and ultimately be responsible for their decisions. This
commenter also believed that one standard is impractical for both ``a
large industrial generator of a highly toxic hazardous secondary
material'' and ``a small generator of a barely ignitable hazardous
secondary material.''
    Of the commenters that responded to the March 2007 supplemental
proposal to codify a standard for reasonable efforts, many also
provided comments on the six questions in the preamble. In general,
commenters were divided between supporting and opposing codification of
all six questions, but responses were generally favorable when
commenters discussed the value of individual questions within a
reasonable efforts inquiry. One exception to this is with respect to
proposed question (B) (``Does the reclamation facility have the
equipment and trained personnel to properly recycle the hazardous
secondary material?''), which several commenters believed to be
difficult for a hazardous secondary material generator to answer with
existing knowledge. A few commenters also noted that questions (D) and
(E), the two proposed questions pertaining to legitimacy within the
preamble discussion of reasonable efforts, did not represent the
legitimacy ``factors to be considered'' that were proposed in the March
2007 supplemental proposal at 40 CFR 261.2(g). These commenters
suggested that a reasonable efforts inquiry should include all criteria
and factors in the proposed legitimate recycling requirement. A few
commenters also suggested including an additional question about the
financial health of a reclaimer.
EPA's Response: An Objective Standard for Reasonable Efforts
    After evaluating these comments, EPA agrees that an objective
minimum standard is appropriate and necessary for hazardous secondary
material generators to determine that they have fulfilled the
reasonable efforts condition. We believe that without such a standard,
both generators and the regulatory agencies would experience difficulty
in determining whether the condition is met. However, in defining the
standard, it would in no way limit a generator's ability to tailor and
enhance its reasonable efforts inquiry to evaluate a particular
industry or recycler.
    We also agree with the commenters who stated that the six questions
from the preamble to the March 2007 supplemental proposal, with two
modifications noted below, serve as a minimum objective standard.
Therefore, we are codifying them, with certain modifications. We
strongly believe that any generator who takes advantage of today's
transfer-based exclusion must be able to answer all reasonable efforts
questions affirmatively for each reclamation facility (and intermediate
facility, if such hazardous secondary materials are sent to such a
facility) in order to demonstrate that its hazardous

[[Page 64732]]

secondary materials will be properly and legitimately recycled and not
discarded. In EPA's view, a generator who is unable to satisfy the
reasonable efforts condition has not demonstrated that its hazardous
secondary materials are not discarded when recycled. The hazardous
secondary materials would thus be ineligible for today's transfer-based
exclusion.
    With respect to question (4) (``Does the available information
indicate that the reclamation facility and any intermediate facility
that is used by the hazardous secondary material generator have the
equipment and trained personnel to safely recycle the hazardous
secondary material?''), we believe that its inclusion within reasonable
efforts is appropriate and necessary since the question informs a
generator's inquiry as to whether its hazardous secondary materials
will be properly and legitimately recycled. If a reclamation facility
were found to have inadequate equipment or untrained personnel, it
would raise serious questions as to whether the facility would be
engaged in proper recycling or discard. Without exploring this
question, we believe that a generator cannot ascertain that a
reclamation facility will properly and legitimately recycle its
hazardous secondary materials. However, we also agree that, as drafted
in the proposed rule, answering this question may require specialized
knowledge and expertise. Accordingly, EPA is changing this question to
allow the generator to rely on the reclamation facility to explain why
its equipment and personnel are appropriate. Of course, the generator
must have an objectively reasonable belief that the reclamation
facility's equipment and trained personnel are adequate for safe
recycling. Accordingly, if the equipment and personnel described by the
reclamation facility would be, to an objective reasonable person,
clearly inadequate for safe recycling of the generator's hazardous
secondary material, then the generator would not have met this
condition. However, EPA does not require nor expect the generator to
have specialized knowledge or expertise of the recycling process. We
also discuss in more detail how a generator can answer this question in
section VIII.C.2. of this preamble.
    As noted previously, we are codifying the questions with two
modifications. The first modification to the questions is language that
accommodates the inclusion of intermediate facilities within the
transfer-based exclusion. As discussed in section VIII.C. of this
preamble, if a generator sends hazardous secondary materials to an
intermediate facility where they are stored for longer than 10 days
prior to being transferred to a reclamation facility, the generator
will need to perform reasonable efforts for both the intermediate
facility and reclamation facility.
    The second modification is to the questions pertaining to
legitimate recycling activities. EPA acknowledges that one source of
confusion for commenters regarding the relationship between the
reasonable efforts condition and the legitimate recycling requirement
may have been the two questions pertaining to legitimacy (proposed
questions (D) and (E)) within the reasonable efforts preamble
discussion and the proposed legitimacy requirement at 40 CFR 261.2(g).
Questions (D) and (E) and the proposed regulatory language for
legitimacy did not share the exact same wording, although both concepts
were intended to be consistent. Furthermore, we understand the concern
commenters raised that questions (D) and (E) did not represent the
legitimacy ``factors to be considered'' that were proposed within 40
CFR 261.2(g). As a result, we have restructured the reasonable efforts
questions pertaining to legitimacy to read as a single question that
ensures that a reclamation facility receiving hazardous secondary
materials intends to legitimately recycle the hazardous secondary
materials. Because of changes to the legitimacy provision in this final
rule as compared to the March 2007 supplemental proposal, this question
now refers to the legitimacy requirement in Sec.  260.43 of today's
final rule.
Comments: Liability Related to Reasonable Efforts
    EPA proposed the reasonable efforts condition as a way for
hazardous secondary material generators to demonstrate that they met
their regulatory obligation to ensure that their hazardous secondary
materials, when transferred to a reclamation facility, would not be
discarded. Based on our assessment of good recycling practices and the
comments received, we believe that the reasonable efforts condition
reflects current industry best practices of auditing or assessing
reclamation facilities prior to entering into business relations; this
is done to minimize potential regulatory and liability exposures and to
demonstrate a commitment to environmental stewardship.
    We received many comments related to liability and the reasonable
efforts condition. Many commenters stated that making reasonable
efforts to evaluate a reclaimer is a good method for limiting future
liability and that many generators already employ some form of the
practice. These commenters largely supported the provision. Other
commenters expressed concern that the reasonable efforts condition is
an unnecessary requirement since existing incentives, such as economic
motivations and CERCLA liability, would cause a generator to perform
evaluations of reclaimers without being mandated as a condition of the
exclusion.
    Additionally, EPA received comments about whether satisfying the
reasonable efforts condition would sever a generator's regulatory
liability if, after being sent to a reclamation facility, its hazardous
secondary materials were discarded or involved in environmental damage.
Several commenters (namely from industry) asked that EPA clarify that
upon conducting a reasonable efforts evaluation of a reclamation
facility, a generator would not be liable for a reclaimer's subsequent
environmental violations or if a reclaimer's actions caused or
contributed to some environmental harm or damage. Many of these
commenters supported the codification of a reasonable efforts standard,
provided that liability would be severed upon meeting the condition.
Conversely, several commenters stated that generator liability should
be maintained into the future regardless of satisfying the condition.
In general, these commenters were concerned that hazardous secondary
material generators could subvert RCRA liability by conducting
incomplete and superficial evaluations of reclaimers, and that future
environmental damage would result at reclamation facilities. A few of
these commenters suggested that EPA clarify that a hazardous secondary
material generator would be held liable for violating the condition of
the exclusion into the future if it was shown that the generator did
not conduct a thorough assessment of the reclaimer.
EPA's Response: Liability Related to Reasonable Efforts
    EPA disagrees that the reasonable efforts condition is unnecessary
in light of economic forces or CERCLA liability, which may motivate
some generators to evaluate recyclers. We proposed the reasonable
efforts condition as a way for hazardous secondary material generators
to demonstrate that they are not discarding the hazardous secondary
materials when sending them to a third party for reclamation. The language
of the condition is intended to capture within the regulatory text how

[[Page 64733]]

responsible generators currently inquire and make decisions about
recycling of hazardous secondary materials and how generators manage
potential liability and regulatory non-compliance risks. Several
commenters suggested that not all generators currently audit or
evaluate reclamation facilities despite having economic interests and
existing liability concerns. Analysis of the environmental problems
study also suggests that CERCLA liability alone is not enough to
prevent damage and that increased generator inquiry of reclamation
facilities may help avoid future cases of abandonment or discard,
residuals mismanagement, sham recycling, and improper management of
hazardous secondary materials and recycled products.
    By proposing the reasonable efforts condition, EPA intended to
maintain RCRA liability for any hazardous secondary materials that are
discarded. The condition clearly holds a generator accountable for
determining that its hazardous secondary materials will not be
discarded at a reclamation facility or any intermediate facility prior
to transferring such materials to the facility. If a generator does not
meet the condition, then the generator's hazardous secondary materials
would not be eligible for the transfer-based exclusion and would be
considered by EPA to be hazardous waste subject to the RCRA Subtitle C
controls from the point of generation.
    EPA did intend, however, that if the hazardous secondary materials
generator had satisfied the reasonable efforts condition and discard
subsequently occurred while hazardous secondary materials were under
the control of the reclamation or intermediate facility, then the
reclamation or intermediate facility, not the generator, would be
liable under RCRA. EPA acknowledges that meeting this condition will
not affect CERCLA liability. (See section XIII for more information on
CERCLA liability.) We recognize commenters' concern that in order to
satisfy the reasonable efforts condition and be released from RCRA
liability, hazardous secondary material generators could be tempted
into making incomplete evaluations of reclamation and intermediate
facilities. EPA believes that codifying an objective reasonable efforts
standard that all generators must meet in order to satisfy the
condition will alleviate this concern (see section VIII.C. of today's
rulemaking for more discussion). We also believe that specifying a
standard that hazardous secondary material generators must satisfy will
assist both regulatory agencies and the regulated community in determining
whether the condition of the exclusion has been met or violated.
Comments: Relationship Between the Reasonable Efforts Condition and the
Legitimate Recycling Requirement
    EPA received a variety of comments on the relationship between the
condition that hazardous secondary material generators must make a
reasonable efforts inquiry of reclamation facilities and the
requirement that hazardous secondary materials must be legitimately
recycled. Several commenters stated that evaluating whether a reclaimer
meets the legitimacy criteria should be part of a reasonable efforts
inquiry to ensure that a generator's hazardous secondary materials are
legitimately recycled. One commenter stated that while a hazardous
secondary material generator would need to ensure that a recycling
activity being considered is legitimate in order to protect its own
liability interests, a legitimacy determination should be entirely
separate from the reasonable efforts condition. Another commenter also
stressed that, as a matter of good practice, many responsible
generators already ensure that they send hazardous secondary materials
to facilities engaged in legitimate recycling; therefore, a legitimacy
evaluation within reasonable efforts is unnecessary. Furthermore,
several commenters (mostly from industry) stated that a reasonable
efforts condition is redundant since the proposed legitimate recycling
requirement in 40 CFR 261.2(g) ensures that hazardous secondary
materials transferred off-site are safely recycled.
EPA's Response: Relationship Between the Reasonable Efforts Condition
and the Legitimate Recycling Requirement
    EPA agrees with the commenters who stated that determining whether
a recycling activity is legitimate is a sound practice and, based on
comments we received, that many responsible generators already use
existing legitimacy guidance as a way to manage their potential
liability. The reasonable efforts condition is intended to assist
generators in determining that their chosen reclamation facilities will
properly and legitimately recycle the generators' hazardous secondary
materials. Consequently, EPA strongly believes that the reasonable
efforts condition must contain a provision that explicitly refers
generators to their obligation to ensure that their hazardous secondary
materials are legitimately reclaimed. Including legitimacy as part of
the reasonable efforts condition means that if the generator made
reasonable efforts to ensure that its hazardous secondary materials are
legitimately recycled in a way that satisfies this condition and,
subsequently, the reclamation facility fails to recycle the materials
legitimately, the reclamation facility, not the generator, becomes
liable for violating RCRA (see section VIII.E. for more information).
Comments: Periodic Updates to Reasonable Efforts
    EPA requested comment on a requirement for making periodic updates
to reasonable efforts, but did not propose an explicit time period.
Some commenters favored requiring a specific time limit for updating
the reasonable efforts provision, while others (a slightly smaller
number) favored a flexible time frame for updating reasonable efforts,
to be determined by the hazardous secondary material generator. The
commenters who supported a specific time frame for updating the
reasonable efforts condition included states, several representatives
of the recycling industry, one industry generator, and one
environmental organization. Several of these commenters stated that the
hazardous secondary material generator needed to evaluate changes over
time to the recycling facility (e.g., compliance status, financial
assurance, permit renewals, impact of changes in recycling markets) to
ensure that their hazardous secondary materials continue to be recycled
properly and legitimately. Commenters also suggested that generators
re-evaluate recyclers whenever the generator becomes aware of new,
``material'' information about or changes to a reclamation facility.
These commenters asked EPA to set a minimum schedule for updating
reasonable efforts. The suggested schedules ranged from annually to
every five years.
    Several industry generators and associations, as well as one waste
management association, submitted comments in opposition to requiring
specific periodic updates of the reasonable efforts provision.
Commenters expressed concern that an arbitrary time frame would
unnecessarily change generators' current schedules for auditing or
making inquiries of recycling facilities. Several commenters suggested
that schedules for evaluating reclaimers should vary from facility to
facility and by industry and that a generator should be allowed to
decide when to update reasonable efforts given a facility's history and
the generator's familiarity

[[Page 64734]]

with the facility. One commenting organization cited its use of an
internal risk-based audit schedule to determine when to review a
reclamation facility. The stated criteria for judging the level of risk
included facilities with lower financial health and the addition of
``new processing capabilities and when ownership changes.'' Another
generator requested EPA to ``suggest, and not require, the frequency of
periodic updates.''
EPA's Response: Periodic Updates to Reasonable Efforts
    EPA agrees with the comments stating that requiring generators to
conduct specific periodic updates of the reasonable efforts provision
is critical for ensuring that reclamation facilities continue to
properly and legitimately recycle the hazardous secondary materials
into the future. We believe that if a hazardous secondary material
generator evaluated a reclamation facility (or an intermediate facility
if hazardous secondary material is sent to such a facility) only once
before the initial transfer of hazardous secondary materials for
recycling, it would not provide adequate assurance to regulators that
hazardous secondary material generators have met the reasonable efforts
condition to ensure discard will not occur 5, 10, or 20 years into the
future. We understand that generators often evaluate recyclers or
intermediate facilities on a recurring schedule determined by the
generator's particular interests, concerns, and experience. However,
EPA believes that hazardous secondary material generators are also
interested in having regulatory certainty regarding the time frame for
which reasonable efforts must be conducted, rather than a completely
discretionary ``generator decides'' approach, which will present many
disagreements and challenges as to what a ``reasonable'' schedule is.
We are also aware that many generators do not currently conduct
reasonable efforts, let alone re-evaluate such facilities over time.
For these reasons, we are requiring that hazardous secondary material
generators update their reasonable efforts evaluation at least every
three years, at a minimum. Based on public comments, this appears to
represent general industry practice and to be within the average time
frame for those generators who currently conduct environmental audits
of facilities to which they send their hazardous secondary materials.
    By specifying a time frame for periodic updates, EPA in no way
intends to limit a generator to conducting evaluations only every three
years. In fact, we acknowledge that shorter time frames could be
appropriate for certain industries. Additionally, we would expect that
any hazardous secondary material generator who has concerns about a
reclamation or intermediate facility, or who gains new knowledge of
significant changes or extraordinary situations at such facilities,
would conduct reasonable efforts regardless of the minimum required
update schedule.
Comments: Requiring Generators to Certify Reasonable Efforts
    EPA solicited comment on requiring hazardous secondary material
generators to certify that they made reasonable efforts prior to
arranging for transport of hazardous secondary materials to be
recycled. As discussed in the preamble to the March 2007 supplemental
proposal, the certification statement would be a form of documentation
necessary for each reclamation facility and would be signed and dated
by an authorized representative of the generator company. We also
provided certification language as an example.
    Several commenters including recyclers, all responding states but
one, and a few industry generators and associations, commented in favor
of requiring hazardous secondary material generators to certify that
they had met the reasonable efforts condition. All commenters that
responded regarding the example certification statement supported the
language. A few commenters reiterated that generators must certify
reasonable efforts for each reclamation facility and that certification
should not be necessary for RCRA Part B permitted facilities. One
commenter requested that the certification must be made ``prior to
implementing exempt operations.'' Another commenter believed that a
certification statement would improve the enforceability of the
reasonable efforts condition. A generator that currently audits its
waste facilities stated that ``a letter signed and dated by the
department manager is mailed to the audited facility stating the
results of the audit,'' and that the letter should act as a
certification. Another commenter suggested that given the large number
of facilities for which reasonable efforts are required, having a
company representative, as opposed to an ``authorized representative,''
sign and date a certification should be sufficient and would be less
burdensome. One recycler requested that the generator certification and
signature be built into the one-time notification that EPA is requiring
for the exclusion.
    A smaller number of comments from generators opposed the
certification requirement. A few generators found the certification
statement to be overly burdensome and stated that it would stifle the
use of third-party reclaimers. One generator, who currently audits
reclamation facilities, stated it could not certify the accuracy of
information prepared by third parties, nor could it certify responses
by reclamation facilities to questions (B) through (E), which EPA
discussed in the preamble. Another generator responded that without
further clarification as to the minimum requirements for satisfying
reasonable efforts, the generator could not certify that the condition
was met. A commenter also suggested that requiring certification of
reasonable efforts for reclamation facilities that recycle hazardous
secondary materials was unnecessary if certification is not required
for the storage, treatment, and disposal of hazardous waste.
EPA's Response: Requiring Generators To Certify Reasonable Efforts
    After evaluating the comments, EPA has concluded that certifying
the reasonable efforts provision is a necessary and minimally
burdensome requirement for ensuring that the reasonable efforts
condition is met prior to transferring the hazardous secondary
materials to a reclamation facility. We also strongly believe that
requiring the signature of an authorized representative of the
generator company, who can be any appointed company representative, is
critical for ensuring accountability for satisfying the condition. In
the event of an enforcement action, we believe that the certification
will lend support to hazardous secondary material generators needing to
prove that the reasonable efforts condition was met. Therefore, in
today's final rulemaking, we are finalizing a requirement that
hazardous secondary material generators must certify that reasonable
efforts were made for each reclamation and intermediate facility prior
to transferring hazardous secondary materials to such facilities.
    With respect to those commenters who opposed certification and
specifically argued that requiring such certification would stifle the
use of third-party auditors, it is our understanding that third-party
auditors do not generally draw any conclusions based on their audits,
but simply report the results. In addition, the reasonable efforts
condition requires that the hazardous secondary material generator
decide whether a reclaimer is acceptable. Therefore, we disagree with

[[Page 64735]]

those commenters who stated that requiring a certification would
constitute a significant new burden. Rather, EPA believes that
requiring a hazardous secondary material generator to certify the
reasonable efforts condition would provide them the flexibility to use
audits or other information necessary in certifying that the condition
of the exclusion was met. We find that the commenter example of an
existing practice of sending a letter with audit results to an audited
facility would need to include the certification language in 40 CFR
261.4(a)(24)(v)(C)(2) in order to meet the reasonable efforts condition.
Comments: Documenting of Reasonable Efforts
    While EPA proposed that generators conduct reasonable efforts
before sending hazardous secondary materials to the reclamation
facility, we did not propose that documentation records must be kept of
such demonstrations. However, EPA requested comment on whether to
require hazardous secondary material generators to maintain
documentation at the generating facility demonstrating that the
reasonable efforts condition was satisfied prior to transferring the
hazardous secondary materials to a reclamation facility. No form of
documentation or format was specified, although EPA did cite audits as
one type of documentation that could be relevant. Additionally, EPA
requested comment on whether hazardous secondary material generators
should be required to maintain certification statements that reasonable
efforts were conducted for each reclamation facility to which the
generator transferred the hazardous secondary materials to be reclaimed.
    A majority of commenters supported a requirement that generators
maintain documentation of reasonable efforts. A few commenters asked
that documentation be kept on-site, while a few commenters asked that
the documentation could be kept at a headquarters or other off-site
location. Other commenters specifically requested that EPA not specify
a location for the documentation. Commenters in favor of this
requirement stated that documentation would be necessary for showing
the basis for the reasonable efforts determination, as well as for
improving the enforceability of the condition. A few commenters
suggested that documentation be maintained for three years and one
industry commenter asked that EPA set a time requirement specifying how
long such documentation must be kept.
    On the other hand, a few commenters were opposed to a documentation
requirement. These commenters cited the confidential and proprietary
nature of the audits and reports used by generators for making
reasonable efforts and stated they did not believe they should share
this information with regulators. A few commenters, including one
state, also argued that a certification statement of having made
reasonable efforts, signed by an authorized representative of the
generator company, would provide adequate documentation that reasonable
efforts were made. One state commenter also suggested that it would be
difficult for states to enforce the requirement of documentation,
presumably because EPA proposed that ``any credible evidence
available'' could be used to demonstrate that the condition is met.
EPA's Response: Documenting Reasonable Efforts
    After evaluating the comments, EPA has concluded that it is
important for hazardous secondary material generators to produce
documentation to demonstrate that the reasonable efforts condition has
been met prior to transferring hazardous secondary materials to a
reclamation and/or intermediate facility. We do not believe it is
necessary to mandate that, for example, audits are specifically
required for documentation and we prefer to maintain some flexibility
in terms of the format for documenting the condition based on commenter
input and the knowledge that each reasonable efforts inquiry will be
unique. This flexibility for documentation is also in response to
commenter concern about the confidentiality of audits. We do not
believe that this flexibility will in any way impact the ability of
regulatory authorities to determine whether the condition is satisfied.
We believe that the certification statement is critical for ensuring
accountability for satisfying the condition and that the act of making
reasonable efforts is in fact genuine. We believe this requirement
helps generators support their position that hazardous secondary
materials have not been discarded and helps regulators determine
whether a generator has satisfied this condition. Since updates of
reasonable efforts are required at a minimum of every three years, EPA
believes that such generators should maintain documentation for a
minimum of three years to show that the requirement to update
reasonable efforts has been satisfied.
    We understand that audits and evaluations of reclamation facilities
are not always kept on-site and may be maintained at a generator's
headquarters or at another off-site location. For this reason, EPA is
requiring that documentation must be made available, upon request by a
regulatory authority, within 72 hours, or within a longer period of
time as specified by the regulatory authority. We understand that in
the age of near-instantaneous communication, a hazardous secondary
material generator that performed reasonable efforts prior to
transferring hazardous secondary materials should be able to retrieve
documentation with relative ease. We also note that time frames for
producing documentation are generally determined by regulatory
authorities on a case-by-case basis and time frames are clearly outlined
by authorities within RCRA Section 3007 information request letters.

C. Financial Assurance Requirement

    In EPA's March 2007 supplemental proposal, EPA proposed that
reclamation facilities receiving and recycling hazardous secondary
materials under the transfer-based exclusion be required to demonstrate
financial assurance in accordance with the requirements of subpart H of
40 CFR part 265. As part of this proposal, EPA sought comment on
whether the existing subpart H requirements should be modified in some
way specifically for reclamation facilities affected by the proposed
exclusion. EPA also requested comment on whether EPA should tailor the
costing requirements associated with the subpart H financial assurance
requirements. Because of these comments, EPA has made several revisions
to the financial assurance condition, as explained below.
Comments: Financial Assurance
    Many commenters supported EPA's proposal that reclamation
facilities receiving and recycling hazardous secondary materials under
the transfer-based approach be required to demonstrate financial
assurance in accordance with the current requirements of subpart H of
40 CFR part 265 in order to demonstrate that the hazardous secondary
materials are not being discarded. Commenters argued that without a
codified financial assurance requirement, recyclers that mismanage
hazardous secondary materials could simply close their doors (as has
happened previously) and abandon their hazardous secondary materials,
leaving an environmental problem for the public to address and imposing
the financial burden of cleaning up recycling facilities on states and
local authorities, which may not have the resources to do so.

[[Page 64736]]

Commenters also noted that EPA's environmental problems study shows
that the primary cause of damage incidents has been the business
failure of recycling facilities. Without financial assurance, the
commenters argue that states and taxpayers have been left with the bill
for cleaning up these abandoned sites. Finally, these commenters stated
that a recycling facility that does not meet the financial test, cannot
obtain an insurance policy or other financial instrument, and does not
have the resources to establish a trust fund or other mechanism, should not
be handling hazardous secondary materials under the conditional exclusion.
    Other commenters supported EPA's proposal on financial assurance,
but also made suggestions for modifications. One commenter recommended
that a financial assurance program be developed specifically for
reclaimers. A few commenters recommended that reclamation facilities
taking advantage of the exclusion maintain a closure plan that would be
available for review, upon request, that substantiates and verifies the
amount of financial assurance required.
    Still other commenters stated that reclamation facilities that
receive hazardous secondary materials from off-site generators under
the transfer-based approach should not be held to the same financial
assurance standards as facilities with permits to manage hazardous
waste. Instead, the financial assurance requirements for recycling
facilities should reflect the relatively lower risks associated with
the manufacturing/recycling activities. Commenters claimed that
reclamation facilities are essentially processing raw materials for
beneficial use as opposed to RCRA-permitted facilities that are
treating, storing, and disposing hazardous waste.
    Finally, some commenters disagreed completely with EPA's approach
to financial assurance. Commenters stated that EPA lacks the authority
to subject facilities to the requirements or conditions when using
hazardous secondary materials in production operations in which these
materials are never discarded. Commenters stated that proposed
conditions for the exclusion do not define the absence of discard and
would effectively impose a waste management requirement upon a non-waste.
EPA's Response: Financial Assurance
    EPA finds those comments that support the financial assurance
condition persuasive and agrees with their conclusions. Requiring
financial assurance for reclamation facilities (and intermediate
facilities, which are included in the final rule) operating under the
transfer-based exclusion is appropriate and reasonable for the Agency
to determine that the hazardous secondary materials managed at these
facilities are not discarded and is supported by the findings of the
recycling studies conducted as part of this rulemaking effort.
Financial assurance as a condition will ensure that the reclamation and
intermediate facilities either have the financial wherewithal
themselves, as demonstrated by qualifying for self insurance under the
financial test, or that funds from a third party will be available to
ensure that the hazardous secondary materials will not be abandoned. An
owner or operator who must fully fund a trust to cover the retirement
cost estimate will be careful not to discard the hazardous secondary
materials so that he may recover the funds from the trust. Sureties,
banks providing letters of credit and insurers will screen applicants
to ensure that they are only providing assurance for good risks who are
unlikely to abandon or discard such materials, thus demonstrating that
the hazardous secondary material is not being discarded. As noted by
the commenters, at least 138 of the 208 damage cases were firms that
had gone out of business and abandoned the ``hazardous secondary
material,'' a material that they presumably believed could be reclaimed.
    In addition, the market forces study indicates that recyclers of
hazardous secondary materials can behave differently from traditional
manufacturers due to differences in the economic forces and incentives
involved in recycling. Unlike manufacturing, where the cost of raw
materials or intermediates (or inputs) is greater than zero and revenue
is generated primarily from the sale of the output, some models of
hazardous secondary materials recycling involve generating revenue
primarily from receipt of the hazardous secondary materials. This
situation can lead to over-accumulation and abandonment of hazardous
secondary materials, particularly in cases where the product of the
recycling process has low value, the prices are unstable, and/or the
firm has a low net worth.
    By requiring financial assurance, the public and federal, state and
local governments can have confidence that the recycler's business
model takes these market factors into consideration and that it will
therefore not abandon the hazardous secondary materials, even if
unforeseen market changes occur. The successful recycling study
indicated that one of the main reasons that generators audit recyclers
is to evaluate their financial health and resources to respond to
accidents or other problems that could cause adverse environmental or
human health consequences. This is primarily because of the joint-and-
several liability provisions of CERCLA, under which a generator becomes
a ``responsible party'' obligated to pay (in part or in whole) for
remediation expenses if (in this example) a recycler to whom he sent
recyclable hazardous secondary materials were to create contamination
problems, but lacked the resources to pay for the cleanup.
    Because American manufacturers have considerable experience with
these types of CERCLA liability issues, evaluating the financial health
of the reclamation facility before shipping recyclable hazardous
secondary materials to them has become a standard business precaution
for responsible generators. The condition for financial assurance thus
can be seen as a way of addressing the same concern, thus ensuring that
the reclamation and intermediate facility owner/operators who operate
under the terms of this exclusion are financially sound and will not
abandon or otherwise discard their hazardous secondary materials.
    Thus, EPA disagrees with the commenters who argued that recycling
hazardous secondary materials is, as a general matter, the same as
processing raw materials for beneficial use. Because of the nature of
these materials (i.e., hazardous spent materials and listed by-products
and listed sludges), they are frequently more difficult to process than
most raw materials, and the nature of the economics of the transfer of
these materials can create an incentive for discard. Requiring
financial assurance is essential for helping to define those situations
where the hazardous secondary material is not being discarded.
    However, EPA agrees that some adjustments to the existing 40 CFR
part 265 financial assurance requirements would help better tailor them
to hazardous secondary material reclamation and intermediate
facilities. The current hazardous waste financial assurance regulations
include provisions (such as post-closure) not appropriate to hazardous
secondary material units, and the terminology is directed towards
permitted TSDFs. EPA also agrees that the regulations need to be more
explicit as to the documentation requirements for the financial
assurance cost estimate. The financial assurance requirements in 40 CFR
part 265 subpart H in turn

[[Page 64737]]

reference and rely on certain requirements in the 40 CFR part 265
subpart G closure regulations. Although the hazardous secondary
material units are not required to undergo Subtitle C closure, some of
the provisions of 40 CFR part 265 subpart G are important to
implementing 40 CFR part 265 subpart H and need to be clarified. As a
convenience to the regulated community, EPA has placed the financial
assurance requirements applicable to hazardous secondary materials in a
stand-alone regulation (see 40 CFR part 261 subpart H). Substantively,
these regulations generally mirror and include the same requirements as
the 40 CFR part 265 financial assurance regulations, but they have been
condensed and reframed to refer to reclamation and intermediate
facilities rather than TSDFs and to directly incorporate (rather than
just referencing) those aspects of 40 CFR part 265, subpart G that are
necessary for implementing the financial assurance condition.
    For further discussion of how the financial assurance condition
operates and how the provisions map to the requirements in 40 CFR part
265, see section VIII.C of today's preamble.

D. Ability of Excluded Reclamation Facility To Accept Manifested
Hazardous Waste

    In the March 2007 supplemental proposal, EPA proposed that
reclaimers receiving hazardous secondary materials from generators that
continue to manage such materials under the current hazardous waste
regulatory system would still be able to claim the exclusion for those
hazardous secondary materials. In essence, this would allow manifested
hazardous waste to be sent to an unpermitted facility, as long as that
facility met the conditions of the exclusion.
Comments and EPA's Response: Excluded Reclamation Facilities Accepting
Manifested Waste
    Most of the commenters on this issue raised serious concerns about
this provision, among other things arguing the fact that it would be
unworkable. Commenters also raised concerns about the generator's
liability under such a situation, particularly if the reclaimer failed
to inform the generator that its hazardous waste would be managed under
the exclusion. Commenters also noted that the lack of a requirement for
``reasonable efforts'' on the part of the generator is contrary to the
basic premise of the exclusion, which is that generators will be
responsible and ensure reclaimers properly manage and recycle the
hazardous materials.
    After considering the comments received, EPA is not allowing
reclaimers to manage manifested federal hazardous waste under the
exclusion. Although this provision may have increased recycling
opportunities, the fact that the hazardous secondary material generator
manages the hazardous secondary materials as manifested hazardous
wastes would have decoupled the exclusion from the underlying rationale
that the materials are not discarded.

E. Imports and Exports

    In the March 2007 supplemental proposal, the Agency proposed to
exclude hazardous secondary materials that are exported from the United
States for reclamation at a facility located in a foreign country,
provided the hazardous secondary material generator complies with the
generator requirements under the transfer-based exclusion (e.g.,
notification, reasonable efforts, etc.), as well as notice and consent
regarding planned exports of such hazardous secondary materials. We
also requested comment on whether the Agency should allow exports under
the generator-controlled exclusion.
Comments: Scope of Exports
    Overall, commenters expressed few concerns with the specifics of
the proposed export regulations, although a few disagreed with allowing
exports of hazardous secondary materials under the proposed rule
altogether. These commenters believed that allowing exports of such
hazardous secondary materials would run contrary to international
agreements (such as agreements established by the Organization for
Economic Cooperation and Development (OECD) and the Basel Convention
regarding transport of hazardous waste) and may also increase the risk
of environmental damage in other countries. At least two commenters
suggested limiting exports to our bilateral partners only (i.e., Canada
and Mexico). On the other hand, some industry commenters argued that
many companies have worldwide operations and would therefore benefit
from broader provisions allowing exports of hazardous secondary
materials to be managed under the control of the generator because it
would improve the companies' ability to recycle hazardous secondary
materials.
EPA's Response: Scope of Exports
    After considering these comments, the Agency is largely maintaining
the export provisions as proposed, with some minor modifications
described below. We believe that hazardous secondary materials exported
for legitimate reclamation in accordance with today's final rule are
not discarded and, thus, not solid wastes and, therefore, we have no
basis for prohibiting exports when a hazardous secondary material
generator complies with the regulatory requirements.
    We also disagree with commenters who believe today's rule runs
contrary to international agreements controlling the movement of
hazardous waste. We note the U.S. is an OECD Member and is, therefore,
legally bound to comply with the OECD's ``Decision of the Council
C(2001)107/FINAL, Concerning the Control of Transboundary Movements of
Wastes Destined for Recovery Operations, as amended by C(2004)20,''
which provides a framework for OECD Member countries to control
transboundary movements of recoverable waste in an environmentally
sound manner. The Amended 2001 Decision recognizes that Member
countries may develop their own regulations to determine whether or not
materials are controlled as hazardous wastes. Under today's rule,
hazardous secondary materials meeting certain conditions and exported
for reclamation are not solid wastes under U.S. regulation. The Agency
notes, however, that once hazardous secondary materials reach the
border of the receiving country, the hazardous secondary material is
regulated in accordance with the receiving country's laws and
regulations. In other words, such hazardous secondary materials that
are not solid and hazardous wastes under the U.S. hazardous waste
regulations may be solid and hazardous wastes under the receiving
country's regulations and, therefore, facilities should be aware of the
requirements that competent authorities of receiving countries may impose.
    Additionally, some commenters asserted that today's rule was
inconsistent with the Basel Convention, a separate multilateral
international agreement governing the transboundary movements of
hazardous wastes. The U.S., however, is not a party to the Basel
Convention and thus is not held to the Convention's agreements
(although, because the Convention prohibits exports between a Basel
party and a non-Basel party, the U.S. may not export hazardous waste to
any Basel party, absent a bilateral or multilateral agreement with that
party). Beyond this point, EPA, in any case, considers today's rule to
be consistent with Basel for the same reason that it is consistent with
the OECD agreement described above.

[[Page 64738]]

    In response to comments on allowing exports under the generator-
controlled exclusion, we note this exclusion is subject to few
restrictions and is largely based on the assumption that hazardous
secondary materials are unlikely to be discarded because they would be
closely managed and monitored by a single entity. However, this same
assumption does not pertain to exports of hazardous secondary materials
because EPA would not be able to ensure the close management and
monitoring by a single entity of hazardous secondary materials in a
foreign country. Accordingly, we believe that hazardous secondary
materials exported for reclamation is excluded only if the receiving
country has consented and is provided an opportunity to determine and
ensure that hazardous secondary materials exported to its reclamation
facilities are not discarded.
    Additionally, we note that in today's rule we have replaced the
term ``exporter,'' which was used in the March 2007 supplemental
proposal, with the term ``hazardous secondary material generator.''
This is because, under the exclusion for hazardous secondary materials
exported for reclamation (today's 40 CFR 261.4(a)(25)), the
``exporter'' is required to comply with the generator responsibilities
listed under the transfer-based exclusion (such as reasonable efforts),
as well as notice and consent and annual reports. By replacing the term
``exporter'' with ``hazardous secondary material generator,'' we are
clarifying that for hazardous secondary materials exported for
reclamation, the hazardous secondary material generator is responsible
for notice and consent and for submitting annual reports. We would also
like to clarify that intermediate facilities can still be used for
exports (as with the transfer-based exclusion), but the generator, not
the intermediate facility, must comply with the notice and consent and
annual report requirements. This is because the intermediate facility
cannot perform the generator responsibilities under the transfer-based
exclusions and, therefore, cannot perform the duties of the
``exporter'' under this rule. We also note that this exclusion
specifically references the condition in Sec.  261.4(a)(24)(iv) that
recycling be legitimate as specified in Sec.  260.43.
Comments: Annual Reports
    In the proposed rule, we solicited comment on whether facilities
managing hazardous secondary materials under the exclusions should be
required to submit periodic (e.g., annual) reports detailing their
recycling activities, such as information on the types or volumes of
hazardous secondary materials reclaimed or other relevant information.
    With respect to exports, a few commenters suggested that we add to
40 CFR 261.4(a)(25) a requirement that hazardous secondary material
generators submit annual reports regarding the exports of their
hazardous secondary materials. This requirement would be similar to the
requirement currently in 40 CFR part 262 subpart E, in which primary
exporters must submit annual reports regarding exports of hazardous
waste. Conversely, a few commenters urged EPA to finalize the export
requirements, as proposed with at least one commenter explicitly
agreeing with EPA's proposal not to require annual reports for
hazardous secondary material generators.
EPA's Response: Annual Reports
    The Agency agrees with those commenters who supported a requirement
for hazardous secondary material generators to submit to EPA annual
reports regarding the exports of their hazardous secondary materials.
We believe that such a requirement will help determine that hazardous
secondary materials exported for reclamation are handled as commodities
and not discarded. We have, therefore, added a provision to 40 CFR
261.4(a)(25) requiring hazardous secondary material generators who
export hazardous secondary materials to file a report with the Office
of Enforcement and Compliance Assurance \19\ that summarizes the types,
quantities, frequency, and ultimate destination of all hazardous
secondary materials exported for reclamation during the previous
calendar year. Such reports would document the total amount of
hazardous secondary materials exported during the calendar year, which
is often not the same as the amount specified in an export notice. Such
a report would also enable EPA to compare actual shipments in the
annual report against proposed shipments in the export notice to ensure
that the shipments occurred under the terms approved by the receiving
country. Finally, such a report would enable EPA to provide summary
information, if requested by a receiving country, that could assist the
receiving country in determining what amount of hazardous secondary
materials was received in that country for reclamation.
---------------------------------------------------------------------------

    \19\ The Office of Enforcement and Compliance Assurance (OECA)
is the office within EPA that implements the notice and consent
process for exports.
---------------------------------------------------------------------------

Comments and EPA's Response: Tacit Consent
    In the March 2007 supplemental proposal, we specified that the
hazardous secondary material generator must receive consent (through
EPA) in writing from the receiving country before the hazardous
secondary materials could be exported. Some commenters pointed out that
under the existing export regulations for hazardous wastes exported to
OECD Member countries, the receiving country may use tacit consent to
respond to the notification (40 CFR part 262 subpart H). Commenters
expressed concern that this was a point of confusion, as fully
regulated hazardous wastes are eligible for tacit consent, whereas
excluded hazardous secondary materials would require consent in
writing. To eliminate this confusion, EPA has added a provision to the
regulations that allows tacit consent for hazardous secondary materials
exported to OECD Member countries similar to that allowed for hazardous
wastes under 40 CFR part 262 subpart H. We note that Canada and Mexico,
though OECD Member countries, typically require written consent for
exports to their countries.
    For a detailed description of today's exclusion for hazardous
secondary materials exported for reclamation, see section VIII.C.5. of
today's preamble.

F. Notification and Other Recordkeeping and Reporting Requirements

    EPA proposed a total of three recordkeeping and reporting
requirements in the March 2007 supplemental proposal: (1) A one-time
notification to be submitted by hazardous secondary material generators
and reclaimers (required for both the generator-controlled and the
transfer-based exclusions); (2) for the transfer-based exclusion, a
requirement for both the hazardous secondary material generator and
reclaimer to maintain for three years records of all off-site shipments
of excluded hazardous secondary materials (either sent by the generator
or received by the reclaimer); and (3) notice and consent for hazardous
secondary materials exported for reclamation in foreign countries.
Comments: General Recordkeeping and Reporting Requirements
    Many commenters supported increasing the recordkeeping and
reporting requirements in order to adequately monitor compliance with
the exclusions and to measure increases in

[[Page 64739]]

safe hazardous waste recycling. Alternatively, some commenters urged
EPA to finalize the requirements as proposed, cautioning that onerous
reporting and recordkeeping requirements would discourage facilities
from taking advantage of the exclusions. A few commenters questioned
EPA's authority for including recordkeeping and reporting requirements
altogether; these commenters argued that, since hazardous secondary
materials are not solid wastes and thus not subject to regulation,
recordkeeping and reporting requirements should not apply.
EPA's Response: General Recordkeeping and Reporting Requirements
    EPA agrees with the majority of commenters and believes that
additional recordkeeping and reporting requirements are necessary to
enable effective and credible oversight. We therefore consider the
recordkeeping and reporting requirements in today's rule to be the
minimum information necessary to determine that hazardous secondary
materials are reclaimed and not discarded. Some of the recordkeeping
requirements that we are finalizing today are discussed in detail
within other relevant sections of today's preamble (see section XVII.B.
for our response to comments on documentation and certification of
reasonable efforts and section VII.C. for a detailed description of
financial assurance). This section focuses on our response to comments
regarding the notification requirement and, for the transfer-based
exclusion, the requirement that the generator maintain confirmations of
receipt of hazardous secondary materials from the reclamation facility
and intermediate facility.
Comments: Notification as a Condition of the Exclusion
    In the March 2007 supplemental proposal, EPA noted that the one-
time notification requirement under the authority of RCRA section 3007
would not be a condition of the exclusions, and that failure to notify,
while constituting a violation of the notification regulations, would
not affect the excluded status of the hazardous secondary materials.
    A number of commenters disagreed with this rationale and argued
instead that the notification requirement should be made a condition of
the exclusions. These commenters stated that, as proposed, the
notification requirement would create an unintended incentive for
hazardous secondary material generators and reclaimers not to notify,
because those who chose not to notify would likely evade oversight for
many years and, if caught, could simply regard the ``paperwork
violation,'' and possible penalty for that violation, as a cost of
doing business. These commenters maintained that the failure of a
hazardous secondary material generator or reclaimer to provide
notification is a strong indication that these entities are either
unaware of or trying to circumvent the regulatory requirements, in both
cases possibly increasing the likelihood for environmental damage.
Therefore, these commenters argued that failure to notify should be
regarded as more serious than a reporting violation and should, therefore,
remove the excluded status of the hazardous secondary materials.
    Conversely, some commenters supported EPA's proposed approach,
agreeing that if an entity fails to notify, it does not necessarily
indicate that the hazardous secondary materials were discarded and,
therefore, should not automatically affect the excluded status of the
materials.
EPA's Response: Notification as a Condition of the Exclusion
    At issue here is not the requirement to submit a notification, but
rather the consequences an entity would face for failing to notify.
Notification as a requirement under the authority of RCRA section 3007
of the exclusion means failure to notify would constitute a violation
of the notification regulations. On the other hand, notification as a
condition of the exclusion means failure to notify would potentially
result in the loss of the exclusion for the hazardous secondary
materials (i.e., the hazardous secondary materials would become solid
and hazardous wastes and subject to full Subtitle C regulation). In
context with this issue, EPA considered the intent of the notification,
which is to provide basic information to regulatory agencies about who
will be managing hazardous secondary materials under the exclusions.
This basic information enables regulatory agencies to administer
oversight and set enforcement priorities, but does not allow regulatory
agencies to directly determine that hazardous secondary materials were
discarded. In other words, a generator or reclaimer could fail to
notify yet still be legitimately recycling their hazardous secondary
materials according to the conditions of the exclusion. Therefore, EPA
is retaining notification as a requirement under the authority of RCRA
section 3007, and, thus, notification is not a condition of today's
exclusions.
Comments: Format of Notification
    In the March 2007 supplemental proposal, EPA requested comment on
whether the notification should be submitted in a particular format and
discussed the option of using the Subtitle C Site Identification Form
(EPA Form 8700-12) to collect the information. By far, the majority of
commenters were in favor of using the Site ID form, pointing out that
EPA would effectively minimize burden by leveraging this form because
it is already familiar to the regulated community. Of the very few
commenters opposed to using the Site ID form, some argued that the form
was not appropriate for collecting information on hazardous secondary
materials because it is primarily used to collect information regarding
hazardous wastes. However, other commenters thought the Site ID form
was appropriate because it is currently used to collect information on
other types of recycling activities not subject to full Subtitle C
regulation, such as used oil and universal waste activities. Finally,
some commenters supported use of the Site ID form because it would
result in standardized and consistent data that users could
electronically access through EPA's databases.
EPA's Response: Format of Notification
    EPA agrees with the majority of commenters and is requiring
hazardous secondary material generators, tolling contractors, toll
manufacturers, reclaimers and intermediate facilities managing
hazardous secondary materials to use the Site ID form (EPA Form 8700-
12) when notifying in accordance with today's rule. We believe that the
Site ID form will provide standardized data, while minimizing the
collection burden because many facilities notifying under today's rule
are already familiar with the form and will not need to invest
resources in learning a new form and process. EPA also agrees with
commenters who stated that the form is appropriate for today's rule,
since it already collects information on other types of recycling
activities. However, EPA will modify the current Site ID form in order
to accommodate the notification requirement for today's rule.
Comments: Types of Information in Notification
    In the March 2007 supplemental proposal, EPA proposed that
generators and reclaimers of hazardous secondary materials include in
the notification the name, address, and EPA ID number (if

[[Page 64740]]

applicable) of the generator or reclaimer; the name and number of a
contact person; the type of hazardous secondary materials that would be
managed according to the exclusion; and when the hazardous secondary
materials would begin to be managed in accordance with the exclusion.
Many commenters, particularly states, argued that this information was
insufficient to monitor hazardous secondary material generators and
reclaimers adequately and, instead, suggested additional types of
information to include in the notification, such as quantity of the
hazardous secondary materials managed under the exclusion, the name and
EPA ID number of the reclaimer receiving the hazardous secondary
materials and a description of the recycling process. These commenters
argued that additional information was important to monitor compliance
of the facilities with the exclusions and to measure increases in safe
hazardous secondary materials recycling.
    On the other hand, some commenters urged EPA to retain the basic
information in the notification as proposed. These commenters
questioned how additional information would assist with defining
discard and also noted that EPA, historically, has not required
notification for the existing self-implementing exclusions from the
definition of solid waste located in 40 CFR 261.4.
EPA's Response: Types of Information in Notification
    After carefully considering these comments, we agree with those
commenters who support requiring additional information in the
notification in order to monitor compliance with the exclusions
adequately. We believe today's notification requirement reflects the
minimum amount of information needed to identify which facilities will
be managing hazardous secondary materials under today's rule in order
to enable regulatory agencies to administer oversight and ensure that
hazardous secondary materials are reclaimed and not discarded. We,
however, did not include suggested data elements that might be
difficult or complex to collect, such as a description of the recycling
process, and did not include information that is more appropriately
documented and maintained at the facility. For example, some commenters
suggested adding a requirement that generators indicate the identity of
the reclaimer receiving their hazardous secondary materials for
reclamation; however, under today's transfer-based exclusion, this
information is already documented as part of the requirement for
hazardous secondary material generators to keep records of all off-site
shipments.
    We consider the information we are requiring in the notification
under today's rule to reflect what responsible companies would
routinely collect as part of their normal business operations. For
example, responsible companies track quantities of valuable commodities
that are managed on-site or shipped off-site and, thus, we believe
reporting quantities of hazardous secondary materials managed in the
notification will not present an undue burden.
    Furthermore, we note that EPA currently requires notification under
certain of the 261.4 exclusions, such as for spent materials generated
and recovered within the primary mineral processing industry (40 CFR
261.4(a)(17)) and for hazardous secondary materials used to make zinc
micronutrient fertilizers (40 CFR 261.4(a)(20)) and, thus, we do not
agree with those commenters who believe that the notification requirement
is inconsistent with the existing solid waste exclusion requirements.
    For a detailed discussion on the notification requirement that EPA
is finalizing today, see sections VII.C. and VIII.C.
Comments: Periodic Reporting
    In the March 2007 supplemental proposal, EPA proposed that
hazardous secondary material generators and reclaimers submit a one-
time notification, but asked for comment on whether facilities using
the exclusion should be required to submit periodic (e.g., annual)
reports detailing their recycling activities.
    Several commenters supported requiring periodic reports (or
periodic notification). These commenters argued that data collected in
a one-time notification would become obsolete very quickly and would
likely require substantial investment in order to `clean up' the
information before it could be used, a resource burden that would
likely fall on the states. For example, over time, some facilities that
originally submitted a one-time notification would cease managing
hazardous secondary materials according to the exclusion. Some
commenters argued that, by using a one-time notification approach, it
would be a challenge to identify these facilities and, subsequently, a
challenge to compile a list of facilities who are currently managing
hazardous secondary materials according to the exclusions, thereby
inhibiting the states' ability to monitor compliance at these facilities.
    Furthermore, as one state commenter said, some generators managing
hazardous secondary materials will go out of business and without a
steady feed of updated information, states have no way of knowing which
generating facilities have closed and, thus, are unable to ensure that
their hazardous secondary materials were reclaimed and not discarded.
This leaves states acutely vulnerable to costs incurred from potential
environmental damage caused by abandonment of the hazardous secondary
materials.
    Other commenters noted that periodic notifications would allow
public agencies to compile credible information regarding hazardous
secondary materials recycling that can be used to demonstrate success,
target additional recycling opportunities, and improve the public's
understanding and acceptance of recycling practices. One commenter also
supported a clear requirement to file periodically in order to reduce
confusion regarding when to re-notify and also to ensure that the
information was kept accurate and current.
    On the other hand, some commenters urged EPA to finalize the
notification requirements as proposed and stressed that numerous
recordkeeping and reporting requirements may inhibit facilities from
taking advantage of the exclusions, thereby discouraging further
increases in recycling.
EPA's Response: Periodic Reporting
    In considering these comments, EPA reflected on the intent of the
notification requirement, which is to provide basic information to
regulatory agencies about who is managing hazardous secondary materials
under the exclusions in order to monitor compliance with the
exclusions. As commenters noted, with a one-time notification approach,
there is no assurance that the information collected in EPA's databases
over time will accurately reflect facilities that are managing
hazardous secondary materials according to the exclusion. Therefore,
the Agency can imagine instances where precious resources are required
to be spent on `cleaning up' the data before regulatory authorities can
use it to identify facilities who are currently managing hazardous
secondary materials under the exclusions. With a one-time notification,
we can also foresee problems where regulatory agencies spend time and
resources monitoring compliance at facilities that have since stopped
managing hazardous secondary materials at some point in the past. This
inefficient use of resources would serve to lower the effectiveness of
regulators

[[Page 64741]]

to monitor compliance overall and could potentially increase the risk
of environmental damage from abuse of today's exclusions.
    EPA further believes that responsibility for submitting and
maintaining updated information lies with the hazardous secondary
material generators, reclaimers, and intermediate facilities that use
today's exclusions. We understand arguments made by commenters that, as
originally proposed, the one-time notification would in effect reverse
this responsibility, placing an unreasonable burden on the states and
EPA to `clean up' the data every time a regulating agency sought to use
the information. Instead, the incremental burden to facilities who must
submit periodic notifications is minimal compared to the considerable
public expense that states and EPA would likely incur over time in
order to use the information submitted in a one-time notification. Once
an initial notification is submitted, to re-notify, a facility need
only review the previous notification and either make changes if
necessary or confirm that the information remains accurate. EPA has
chosen to use the Site ID form for this notification because it is
standardized, electronically-accessible, and familiar to the regulated
community and, therefore, will assist facilities by reducing the
overall time and effort required to report the information. Currently,
large quantity generators on average spend $364 a year on biennial
reporting under full Subtitle C regulation, whereas under today's rule,
an initial notification is estimated to be only a third of that cost,
with subsequent notifications likely costing even less.\20\ EPA has
designed the notification requirement in today's rule to strike an
appropriate balance between providing essential information to
regulators, while keeping additional burden at a minimum.
---------------------------------------------------------------------------

    \20\ Estimates are from the Regulatory Impact Analysis for U.S.
EPA's 2008 Final Rule Amendments to the Industrial Recycling
Exclusions from the Definition of Solid Waste.
---------------------------------------------------------------------------

    We are convinced of the validity of the above arguments raised by
commenters in support of periodic reporting and agree that the
limitations of a one-time notification approach would undermine the
purpose of the notification. Therefore, EPA is requiring hazardous
secondary material generators, tolling contractors, toll manufacturers,
reclaimers, and intermediate facilities managing hazardous secondary
materials to notify the Regional Administrator prior to operating under
the exclusions and by March 1 of each even-numbered year thereafter. We
chose the two-year time frame to reflect both commenters' suggestions
(of those who supported periodic reporting, most suggested annual or
biennial reporting) and to best fit with the biennial reporting process
for hazardous wastes (pursuant to 40 CFR 262.41, biennial reports are
due by March 1 of each even-numbered year). Since many facilities are
accustomed to the biennial reporting process and likely have structured
their processes around the biennial report schedule, we chose the same
calendar date for the notification requirement in order to allow
facilities to leverage their existing processes and submit the
notification at the same time their biennial report is due.
Comments: Confirmation of Receipt
    In the March 2007 supplemental proposal, EPA requested comment on
whether hazardous secondary material generators should be required to
maintain confirmations of receipt of the hazardous secondary materials
by the reclaimer. Many commenters expressed support for this
requirement, citing that responsible commercial recyclers routinely
issue receipt confirmations or ``recycling certificates'' to assure the
generator that its hazardous secondary materials reached the intended
destination and were not discarded. Of those who supported the
requirement, many argued that EPA should not specify a specific form of
documentation so that facilities could leverage existing business
practices already in place to track valuable commodities. A few
commenters continued to urge EPA to be conscious of the imposition of
additional recordkeeping and reporting requirements lest the Agency
discourage recycling of hazardous secondary materials.
EPA's Response: Confirmation of Receipt
    We agree with commenters who support requiring confirmation of
receipts and are, therefore, adding to 40 CFR 261.4(a)(24) a
requirement that generators maintain confirmation of receipts from
reclaimers and intermediate facilities for all off-site shipments of
excluded hazardous secondary materials for a period of three years.
Under today's rule, hazardous secondary materials may be transferred to
intermediate facilities for storage or, where reclamation consists of
multiple steps occurring at separate facilities, may be transferred to
more than one reclaimer. This requirement would confirm that the
hazardous secondary materials did in fact reach the reclaimer (or each
reclaimer, if reclamation occurs at separate facilities) and any
intermediate facility as originally intended and were not discarded.
EPA also agrees with commenters that responsible companies would
produce and maintain receipts as part of their normal business
operations and, thus, the Agency believes this requirement will not
pose an undue burden. The Agency is not specifying a certain form or
format for this documentation, but instead provides examples of routine
business records that would contain the appropriate information in
section VIII.C.4. of today's preamble and in today's rule.

XVIII. Major Comments on Legitimacy

A. Codification of Legitimacy Factors

    EPA's October 2003 proposal to codify the legitimacy criteria was
in response to the comments that have been made over the years by both
industry and states that the existing legitimacy guidance is useful,
but somewhat hard for members of the regulated community to know about
because it could only be found in preamble discussions and guidance.
The March 2007 supplemental proposal made some adjustments to the
October 2003 proposal, including a change from the term ``criteria'' to
``factors,'' but left intact the general intention to codify those
legitimacy factors for all recycling. As expected, the Agency received
public comments from both state environmental agencies and from
industry on our approach.
Comments: Codification of Legitimacy.
    State commenters were unanimously in favor of codifying the
legitimacy factors in the regulations. In response to the October 2003
proposal, twenty-three states expressed their support for codification.
In comments to the March 2007 supplemental proposal, two additional
states supported codification of the proposed factors. All twelve
states that commented on legitimacy in both proposals expressed their
strong support for codification in both their 2003 and 2007 comments.
    States have long advocated for establishing regulations that
specifically address the legitimacy of recycling. In response to EPA's
proposals, many states commented that they are currently relying on the
concept of legitimacy as laid out in definition of solid waste
preambles and in the 1989 ``Lowrance Memo'' guidance because they are
the best sources of information that can be used in evaluating a
recycling operation. Codification is a

[[Page 64742]]

priority to the states because, as a regulation, the requirement for
recycling to be legitimate would be better known and understood by the
regulated community and it would be easier for states to monitor
compliance. One commenter stated that it makes more sense to implement
a regulation than a collection of statements found in guidance.
    Industry commenters, on the other hand, were split on the issue of
codification. Including comments from both the October 2003 proposal
and the March 2007 supplemental proposal, just over half of the
industry commenters opposed codification of the legitimacy factors,
although they tended to express support in their comments for the
purpose and goals of the legitimacy factors and agree with the goal of
identifying which processes are true recycling and which are sham
recycling. Several industry commenters stated that the guidance is
working well already and many of those opposed to codification
expressed concern that if the legitimacy factors were codified, they
would lose the flexibility in the guidance that allows the factors to
apply to many varied industrial sectors and processes, automatically
becoming more stringent. Another concern expressed by the commenters
regarding codification of the legitimacy factors was that, in their
view, the terms used in the regulatory text are too ambiguous and
should be clarified before they can be part of a regulation. These
commenters argue that codification of the factors without addressing
these concerns would automatically be more stringent than having
guidance, thereby inappropriately inhibiting legitimate recycling.
    About one-third of the forty-two industry commenters on the issue
of whether or not to codify backed the codification of the legitimacy
factors. Many of these commenters represented segments of the waste
management industry, but a number of representatives of generating
industries also made this comment. The industry commenters that
supported codification stated that they did so because it would provide
clarity, consistency, and predictability by making it more apparent
which hazardous secondary materials and processes are covered by the
recycling exclusions. One commenter noted the value in the legitimacy
factors going through the notice and comment process since they are
being used by the states in implementation of the regulations and
another expressed an expectation that the codified requirements would
lead to more uniformity in interpretation between implementing
agencies. Several of these commenters also stated that they also valued
the flexibility of the structure of the Lowrance memo and stressed the
importance of the codified legitimacy factors retaining that flexibility.
    In addition, several more industry commenters stated that they saw
the value in codifying the legitimacy factors and could support its
codification under certain conditions. The suggested conditions
included the codification of only the two proposed mandatory factors,
codification of the factors in conjunction with finalizing what we
called the ``broader exclusion'' option in the October 2003 proposal,
and codification of legitimacy factors to be used only with the
definition of solid waste exclusions that were included within the
supplemental proposal in March 2007.
EPA's Response: Codification of Legitimacy.
    In today's final rule, EPA is codifying the legitimacy factors as a
requirement for today's exclusions and for the non-waste
determinations, but not for all recycling. To avoid confusion among the
regulated community, as well as the state and other implementing
regulatory agencies about the status of recycling under the existing
exclusions, EPA is not codifying the legitimacy factors as specifically
applicable to existing exemptions in today's final rule. In developing
the codified legitimacy language, we did not intend to raise questions
about the status of legitimacy determinations that underlie existing
exclusions from the definition of solid waste, or about case-specific
determinations that have been made by EPA or the states. Current
exclusions and other prior solid waste determinations or variances,
including determinations made in letters of interpretation and
inspection reports, remain in effect.
    In codifying the legitimacy provisions for the exclusions and non-
waste determinations in today's final rule, EPA has taken into
consideration all the comments it received in response to the October
2003 proposal and March 2007 supplemental proposal on the structure of
the legitimacy factors, as well as on the individual factors themselves
and has made the appropriate changes to the factors to address those
comments.
    In response to a general comment, EPA is aware of the comments that
each of the terms in the legitimacy regulations should be more clearly
defined and the suggestions for specific tests for each of the factors.
We are, however, seeking a balance between having a set of specific
tests and having the flexibility needed for a requirement that applies
to the range of recycling practices in various industries in different
industrial or commercial settings.
    Therefore, in response to comments, the discussion of legitimacy in
today's preamble describes more clearly what EPA means by the terms we
use in the regulatory text for this element of the final rule. The
Agency also is providing more examples of both legitimate and sham
recycling than were included in the discussions of the individual
factors in the preambles for the October 2003 proposal and March 2007
supplemental proposal to illustrate the meaning of the legitimacy
factors. The Agency also is stressing the importance of case-by-case
determinations that are based on the facts of a specific situation.

B. Effect on Current Determinations of Legitimate Recycling Activities

    In the March 2007 supplemental proposal, EPA stated its opinion
that the concept of legitimate recycling originally proposed in October
2003 is not substantively different from our longstanding policy, as
articulated in the 1989 Lowrance Memo and subsequent preambles. We
stated that we were simply reorganizing, streamlining, and clarifying
the existing legitimacy principles. Thus, we stated in the March 2007
supplemental proposal that we believe that the regulatory definition of
legitimate recycling, when applied to specific recycling scenarios,
would result in determinations that were consistent with EPA's earlier
policy. We went on to say that we did not believe the regulated
community or implementing agencies would need to revisit previous
legitimacy determinations. However, we did request examples of
determinations which could be impacted by the codification.
Comments: Relationships With Existing Determinations
    Commenters expressed concern that, in spite of EPA's intentions,
the codification could prompt implementing agencies to revisit past
legitimacy determinations. In addition, comments on the October 2003
proposed rule suggested that implementing agencies could interpret the
proposed regulatory text as meaning that a recycling activity must
satisfy all four of the factors to be considered legitimate. Several
commenters on the March 2007 supplemental proposal stated that
legitimacy should not apply to the existing recycling exclusions in the
current regulations and others were

[[Page 64743]]

concerned that codification may lead implementing agencies to consider
only the four factors and not consider other key information about the
recycling activity.
EPA's Response: Relationships With Existing Determinations
    Regarding the existing exclusions in the regulations, EPA
acknowledges that, in establishing a specific exclusion, we have
already determined in the rulemaking record that the specific recycling
practice is excluded from the definition of solid waste provided all
the conditions of the rule are met. However, the Agency has always
enforced its rules on the basis that any recycling must be legitimate
(See U.S. v. Self, 2 F. 3d 1071, 1079 (10th Cir. 1993); U.S. v. Marine
Shale Processors, 81 F. 3d 1361, 1366 (5th Cir. 1996): Marine Shale
Processors v. EPA, 81 F. 3d 1371, 1381-83 (5th Cir. 1996)). This is
meant to prevent a company from claiming to be operating under an
existing exclusion and simply using that as a way to avoid full RCRA
Subtitle C regulation.
    However, to avoid confusion among the regulated community and state
and other implementing agencies about the status of recycling under
existing exclusions, we have decided that the focus of this rule should
be the specific changes it is making to the definition of solid waste
in the form of the exclusions and non-waste determinations finalized
today. Thus, the legitimacy factors codified in 40 CFR 260.43 only
apply to the exclusions and non-waste determination process being
finalized in this rule and we do not expect implementing agencies to
revisit past legitimacy determinations based on this final rule
preamble language.
    Also, it should be noted that the regulatory language does not
preclude other considerations when looking at the codified factors for
making legitimacy determinations. We recognize that additional
information about the recycling activity could be helpful and could be
used when assessing the four legitimacy factors and in making a
determination about whether a specific recycling activity is
legitimate. In fact, we encourage the regulated community and
implementing agencies to use any and all information about the
recycling process to come to an informed decision on the legitimacy of
a hazardous secondary material recycling operation. However, given the
public comment on the October 2003 proposed rule and the March 2007
supplemental proposal, no other factors have been identified and we
believe that the four legitimacy factors codified in this rule include
the relevant principles of legitimate recycling for the purposes of the
exclusions and non-waste determinations being finalized today.

C. Revised Structure for the Definition of Legitimate Recycling

    In the March 2007 supplemental proposal, we proposed a new
structure for the definition of legitimate recycling. The first part
consisted of those factors that must be met, which included a
requirement that the hazardous secondary materials being recycled
provide a useful contribution to the recycling process or to the
product of the recycling process and a requirement that the product of
the recycling process be valuable. EPA considers these two factors to
be fundamental to legitimate recycling and if a recycling process does
not meet them, it is sham recycling (i.e., treatment or disposal of a
hazardous waste under the guise of recycling).
    The second part of the proposed structure included two additional
factors that must be taken into account when a legitimacy determination
is being made. We explained that while these two additional factors are
important in determining whether a particular process is legitimate,
there may be circumstances under which a legitimate recycling process
might not conform to one or both of these factors. The two additional
factors are whether the hazardous secondary materials are managed as a
valuable commodity and whether the product of the recycling process
contains significant concentrations of hazardous constituents. We note,
however, that in cases where a recycling practice does not meet one or
both of these factors, the hazardous secondary material generator and/
or recycler should be able to demonstrate why the recycling is in fact
still legitimate.
Comments: Revised Structure
    The public comments on the individual factors in the March 2007
supplemental proposal showed that, as in the comments to the October
2003 proposal, there continues to be general agreement from industry
and state commenters on two factors (useful contribution and valuable
product/intermediate). Commenters were virtually unanimous in their
agreement that these two factors are crucial indicators of legitimacy
and should be included in the concept of legitimacy. In other words,
there was agreement that recycling cannot be legitimate if the material
being recycled does not provide a useful contribution to the process or
to the product and if the recycling process does not yield a product or
intermediate that is valuable to someone. Certain commenters requested
that EPA provide additional information on how it defines these terms
and, while there was some disagreement with the specifics laid out in
the preamble, there was little disagreement with the basic overarching
concepts.
    Although there was support for the structure for legitimacy that
was proposed in the March 2007 supplemental proposal, most states, the
environmental community, and the waste management industry argued that
all four of the factors should be mandatory requirements-that is, they
must all be met for the recycling activity to be considered legitimate
recycling. Industry had a more mixed response to this issue with some
supporting the proposed structure and others preferring that the
factors be finalized as balancing factors. Others expressed their
opinion that while they preferred non-mandatory criteria, the proposed
approach was reasonable. Several commenters expressed their preference
for keeping the legitimacy factors as guidance, but stated that if the
Agency decided to codify the legitimacy factors, they preferred the
structure as proposed in the March 2007 supplemental proposal.
EPA's Response: Revised Structure
    EPA agrees with the commenters on the importance of the two factors
(useful contribution and valuable product/intermediate) that were
proposed to be mandatory in evaluating legitimate recycling and, for
this final rule, we have decided that these two concepts are, in fact,
at the very core of what it means to recycle legitimately. Therefore,
the final regulatory language states in 40 CFR 260.43(b) that
``[l]egitimate recycling must involve a hazardous secondary material
that provides a useful contribution to the recycling process or to a
product of the recycling process, and the recycling process must
produce a valuable product or intermediate.'' This statement is
followed by clauses (1) and (2) that give more details on how the
Agency defines these concepts.
    EPA has determined that the other two factors are still important
in making legitimacy determinations, but do not necessarily have to be
met for the recycling activity to be considered legitimate. Instead,
the regulations state that a person making a legitimacy determination
must consider these two factors, which are found in Sec.  260.43(c) of
the final language. In stating that the factors must be considered, EPA
expects that those making legitimacy determinations will evaluate how the

[[Page 64744]]

hazardous secondary materials in question are managed as compared to
analogous raw materials and how levels of hazardous constituents in
their products compare with the levels of hazardous constituents in
analogous products. If the generator or recycler determines that one or
both of these factors are not met, that person should be prepared to
explain why their recycling activity is nevertheless still legitimate.
As described in Sec.  260.43(c)(3) of the regulatory text, in
evaluating the extent to which these factors are met and in determining
whether a process that does not meet one or both of these factors is
still legitimate, persons can consider the protectiveness of the
storage methods, exposure from toxics in the product, the
bioavailability of the toxics in the product, and other relevant
considerations. We would note that the facility may be requested to
demonstrate the legitimacy of their recycling process and explain why
failure to meet one or both of these factors does not affect the
legitimacy of the recycling process.
Comments: Mandatory Factors
    As part of the October 2003 proposal, the Agency solicited comment
on whether the factors should continue to be used in the same way as
the previous guidance had been used, as factors to be balanced or
considered in making an overall determination, or whether the factors
should be structured differently in the final rule, such as in the form
of mandatory requirements that must all be met. Based on the comments
received on that proposed rulemaking, we proposed a new structure in
the March 2007 supplemental proposal with two mandatory factors and two
factors that must be taken into account, but not necessarily met in
every situation (72 FR 14198).
    Many state implementing agencies argued that all the factors should
be written as mandatory requirements that must be met. Most industry
commenters (but not all) did not. The main argument in favor of making
the factors mandatory requirements is that commenters argued that this
approach would result in legitimacy determinations that are more
objective and more enforceable. The main arguments against making all
the factors mandatory requirements is that the overall determination is
made on a case-by-case basis, which is often facility-specific, and not
all legitimate recycling can fit into such a rigid system.
EPA's Response: Mandatory Factors
    The Agency can see both state and industry viewpoints and, in the
end, as described above, has decided upon a course of action that
results in a compromise between the two approaches. In section IX of
this preamble, we explain in detail the final design of the legitimacy
factors, which includes two factors that must be met (useful
contribution and valuable product/intermediate) and two factors that
must be taken into account in making an overall legitimacy
determination. We believe this approach and the attendant regulatory
language is clearer than the existing guidance, yet retains enough
flexibility to account for the variety of legitimate hazardous
secondary materials recycling practices that exist today.

D. Comments on the Specific Factors

    In developing the legitimacy factors, the Agency sought a balance
between having a set of specific tests and having the flexibility that
is necessary to allow the four legitimacy factors to apply to hazardous
secondary material recycling practices in the many industrial or
commercial settings to which the factors would be applied. As a result,
each of the legitimacy factors included a term or terms that drew
public comments arguing that the factors were not clearly enough
defined. The underlined terms in the following excerpts from the
regulatory text demonstrate what these terms are:
    • Factor 1: ``Legitimate recycling must involve a hazardous
secondary material that provides a useful contribution to the recycling
process or to a product of the recycling process.''
    • Factor 2: ``The recycling process must produce a valuable
product or intermediate.''
    • Factor 3: ``The generator and recycler should manage the
material as a valuable commodity * * * Where there is no analogous raw
material, the hazardous secondary material should be contained.''
    • Factor 4: ``The product of the recycling process does not
contain significant concentrations of hazardous constituents [or]
contain concentrations * * * at levels that are significantly elevated
from those found in analogous products.''
    The October 2003 proposal gave some narrative descriptions of these
terms to explain what they mean in the context of legitimate recycling,
but that proposal did not provide any concrete tests for how those
specific terms are to be used when judging whether a process and/or
hazardous secondary material meets these factors.
Comments: Defining Legitimacy Terms
    For each of the four factors, the Agency received public comments
that focused specifically on the meaning of and the difficulties in
implementing these factors when the terms are not accompanied by a test
for the hazardous secondary material generators and recyclers to use
when making determinations of legitimacy. For the first factor, the
Agency received several comments on the definition of ``useful
contribution'' from the October 2003 proposal. For the second factor,
over twenty commenters submitted comments on the definition of
``valuable'' in response to the October 2003 proposal. In addition, the
Agency received several comments on the definition of ``valuable'' and
on the definition of ``contained'' related to the third factor and over
twenty comments on the definition of ``significant'' in the fourth
factor. We also received some additional comments on the March 2007
supplemental proposal relating to the same definitional terms in each
factor.
    The comments on these terms will be described in more depth in the
discussion below for each of the applicable factors, but, in general,
the comments showed a wide range of opinions: Some commenters found the
discussion in the preamble to define the terms was adequate and
appropriate, other commenters objected to the terms as not being
clearly defined, while still other commenters found the terms to be too
subjective to be a useful tool. We also received comments that
suggested alternative ways to define the terms to be clearer or to
better meet the Agency's objectives.
EPA's Response: Defining Legitimacy Terms
    The Agency has incorporated the ideas generated by the comment
process into the final rule, as appropriate. The final language and
decisions regarding the legitimacy factors are laid out below in this
section and in section IX of this preamble, where the final legitimacy
language is discussed more fully. However, after considering the
comments, we have decided that we would not develop specific
definitions or precise tests that hazardous secondary material
generators and recyclers must use when making legitimacy
determinations. Instead, the Agency has bolstered our preamble
discussion on the meaning of these terms and has included more examples
than we had in the preambles to the October 2003 proposal and the March
2007 supplemental proposal.

[[Page 64745]]

    EPA's decision not to include specific bright-line tests for the
final legitimacy factors reflects the fact that legitimacy
determinations do not lend themselves to the application of absolute
distinctions, especially given the breadth of recycling practices and
recycled hazardous secondary materials that exist in industry. The main
argument we received for developing specific tests was that, without
specific tests, those making legitimacy determinations may be uncertain
about whether their regulatory agency would agree with that
interpretation of the recycling scenario. This may lead to reduced
recycling rates if companies choose not to take advantage of the
exclusions for recycling rather than risk interpreting their activities
differently than the regulator does.
    Although we understand the concerns behind this argument, we are
addressing them by including more discussion and explanations of the
final factors in the preamble to the final rule. The complexities of
defining ``valuable commodity/product,'' ``useful contribution,''
``contained,'' and ``significant'' so that they can be determined
through a bright-line test and are still appropriate for all
industries, all recycling processes, and all recycled hazardous
secondary materials are too great for the Agency to be able to design a
simple and straightforward system of tests to be used in making such
determinations. The complex regulatory system of tests for different
types of industries or different processes that would be necessary
would not be efficient or accessible to most generators, especially
small businesses.
    In addition, we believe that legitimacy determinations are best
made on a case-by-case basis, which has always been the case, with the
facts of a specific situation in hand. In a case-by-case determination,
a series of specific tests may not be as useful and as accurate in
determining legitimacy as careful consideration of the hazardous
secondary material, the recycling process, and the specifics of the
situation would be. If a person has any questions as to the legitimacy
of a particular recycling activity, he can always approach the appropriate
regulatory agency for assistance in making a legitimacy determination.
Comments: Factor 1--The Hazardous Secondary Material Provides a Useful
Contribution
    Factor 1 expresses the fundamental principle that hazardous
secondary materials must actually be useful (i.e., contribute
positively) to the recycling process and is intended to prevent the
practice of incorporating hazardous secondary materials within
manufacturing operations simply as a means of disposing of them. The
Agency firmly believes that this concept is crucial to the definition
of legitimacy and is finalizing it as part of the core definition. This
factor, along with the second factor described below, must be met for
any recycling activity to be considered legitimate recycling. The
regulatory text for this factor is found in 40 CFR 260.43(b)(1).
    In general, we received much support for and agreement with the
underlying principle of this factor--that the hazardous secondary
materials must provide some useful contribution to either the recycling
process or the recycled product. Commenters asked for clarification on
a number of issues related to this factor, specifically in regard to
the October 2003 proposal and how the economics of recycling is
connected to this factor and how the economics of recycling should be
evaluated. In the March 2007 supplemental proposal, we described how
the economics of recycling relates not only to the useful contribution
factor but, in fact, to all of the factors of legitimacy and explained
our thinking about how evaluating the economics of recycling
transactions should be undertaken.
EPA's Response: Factor 1--The Hazardous Secondary Material Provides a
Useful Contribution
    The Agency is today finalizing this factor as part of the core
definition of legitimate recycling and as a factor that must be met for
the recycling to be considered legitimate under Sec.  260.43. We also
revised the October 2003 proposal discussion regarding the
consideration of economics related to this criterion, and we expanded
its consideration beyond just the useful contribution criterion. Today,
we are offering further guidance, similar to the March 2007
supplemental proposal, which explains how economics may be considered
in making legitimacy determinations and how it may apply to the
mandatory factors and the factors that must be taken into account.
Comments and EPA's Response: Factor 1--Contribution to the Process
    EPA also received comments on our statements in the October 2003
proposal that indicated that not every component of a hazardous
secondary material does or must contribute to the recycling process or
product of the recycling process in order for there to be an overall
contribution. In particular, one state agency favored allowing the non-
hazardous component of hazardous secondary materials to provide the
useful contribution and one industry commenter agreed that not all of
the hazardous secondary material would have to contribute for this
factor to be met. Another state agency asked us to clarify that the
statement ``not every component of a hazardous secondary material would
necessarily have to contribute to the product or the process to meet
this criterion'' was applicable only in the context of this factor.
    It has been the Agency's longstanding policy that in a legitimacy
determination not every constituent or component in a hazardous
secondary material would have to contribute to a product of the
recycling process or intermediate or to the recycling process in order
for there to be an overall contribution and this applies to the
provision in Sec.  260.43 as well. For example, the use of hazardous
secondary materials in zinc fertilizer is considered legitimate
recycling when the zinc, a non-hazardous constituent, is the main
contribution to the fertilizer. Another example is the use of CRT glass
used in copper smelters as a fluxing agent. In this case, the glass
provides a useful contribution by facilitating the manufacturing
process. Thus, we agree with those commenters who raised questions
about this issue and are restating our position here.
Comments and EPA's Response: Factor 1--Efficiency of the Process
    Another issue that was discussed in the October 2003 proposal
arising in the context of useful contribution was the efficiency of a
recycling process in recovering or regenerating the useful component of
the hazardous secondary material. One example we used was the recovery
of copper from a hazardous secondary material. We stated that where the
process was reasonably efficient and recovered all but a small
percentage of the copper, it looked like legitimate recycling. However,
where a small percentage of copper in the hazardous secondary material
is recovered, sham recycling may be indicated. However, we did not
discuss recovery rates in the middle range (e.g., 50% of copper
recovered from a particular recycling process) and some commenters
asked for clarification, including how the factor applies to hazardous
secondary materials that are contributing to the recycling process
either as a carrier or a catalyst.
    The Agency is clarifying in today's preamble and regulatory text
that the useful contribution of a hazardous secondary material to the
recycling

[[Page 64746]]

process or product can be demonstrated in a number of ways. We provided
a number of different ways such a material could contribute to the
process in the preamble to the October 2003 proposed rule (68 FR 61584-
61585) and did not mean to imply that the hazardous secondary material
would have to meet all of the examples to provide a useful
contribution. For example, hazardous secondary materials could provide
a useful contribution to a process by serving as a carrier or catalyst
and the process efficiency would not factor into the demonstration of
this factor in this example.
    In general, the regulated community should look to typical industry
recovery rates to determine if the recycling recovery rates are
reasonably efficient in terms of making a useful contribution to the
recycling process or product. In addition, it should be noted that EPA
would generally look at the quantity or the rate of recovery of the
overall process, not the recovery rate of a single step in the process,
when analyzing this factor for legitimacy. For example, if one step in
the process recovers a small percentage of the constituent, but the
overall process recovers a much larger percentage, the Agency would
consider the overall efficiency of the recycling process in determining
whether hazardous secondary materials are providing a useful
contribution. This assumes that there is enough of the target
constituent present in the hazardous secondary materials to contribute
meaningfully to the recycling activity.
Comments and EPA's Response: Factor 1--Residuals
    In the discussion of useful contribution in the October 2003
proposal, in the context of process efficiency, we stated that a
``pattern of mismanagement of the residues'' may be an indicator of
sham recycling (68 FR 61584). We received several comments asking us to
explain the connection between useful contribution of the hazardous
secondary materials and management of residues. Several commenters
questioned this statement and disagreed that how a facility managed its
residues had any bearing on whether the hazardous secondary materials
going into a recycling process were being legitimately recycled.
    We agree with the commenters who suggested that the management of
residuals from the recycling process is not an indicator of whether the
hazardous secondary materials provide a useful contribution and thus is
not a factor in determining whether legitimate recycling is occurring.
For these reasons, we are making it clear that the management of
recycling residuals is not a consideration in making legitimacy
determinations. Instead, as part of today's final rule, we are
requiring that any residuals that are generated from the recycling
process be managed in a manner that is protective of human health and
the environment. Specifically, there is a requirement for hazardous
secondary material generators to make reasonable efforts to ensure that
the hazardous secondary materials are legitimately recycled and, among
other things, that the reclaimer manages the hazardous secondary
materials in a manner that is protective of human health and the
environment, including how any recycling residuals are managed.
Finally, we note that the generation of residuals that are solid wastes
are subject to the waste characterization and identification
requirements in 40 CFR Part 261 as a newly generated waste.
Comments: Factor 2--The Recycling Process Yields a Valuable Product/
Intermediate
    This factor is intended to capture the fundamental concept that
legitimate recycling must produce something of value. For the purposes
of evaluating this factor, a product of the recycling process or
intermediate would be considered valuable if it can be shown to have
either economic value or value that is more intrinsic (i.e., it is
useful to the end user, even though it may not be salable as a product
or commodity in the open marketplace). The regulatory text for this
factor can be found in 40 CFR 260.43(b)(2).
    In general, most commenters agreed with the concept that the
recycling process must produce something of value. Many commenters also
stressed the importance of keeping the concept of ``intrinsic'' value--
that is, a product does not have to be sold to have value. Instead, it
can be used as an effective substitute for a commercial product or as a
useful ingredient in an industrial process. However, other commenters
disagreed, contending that intrinsic value is too subjective to use to
determine compliance. One commenter also thought this factor was
redundant with the factor that hazardous secondary materials must
provide a useful contribution and should be deleted.
    Another common concern in the comments was how to evaluate whether
the product or intermediate is valuable. Some commenters stressed the
importance of evaluating this factor over time, given that markets and
prices fluctuate, and others argued that it must be done on a case-by-
case basis.
EPA's Response: Factor 2--The Recycling Process Yields a Valuable Product
    In general, the Agency agrees with the commenters who stated that a
product's value can be either monetary or intrinsic. Clearly, not all
valuable products are sold. For example, many legitimate recycling
situations exist where the intermediate or product of the recycling
process has value and is used on-site, sent off-site to another
facility owned by the same company, or even traded between companies.
There are a number of already established networks where hazardous
secondary materials are exchanged among and across industries. This
rule does not interfere with those ongoing exchanges where such
materials are being legitimately recycled. One example of such a
program is the U.S. Business Council for Sustainable Development's by-
product synergy program which has conducted a number of regional pilots
in which diverse industries are brought together to facilitate
feedstock and by-product exchanges. No money is exchanged in these
types of programs.
    We are also clarifying in the regulatory text that the product of
the recycling process can be either a commercial product or
intermediate, as long as it has value to the end user. In addition, we
are further clarifying that the regulated community does not need to
evaluate each step in the recycling process to determine if the final
products or intermediates are valuable. Rather, an individual recycler
or generator would look at its final product or intermediate and must
be able to demonstrate why it has value.
    We understand the concerns of some commenters that intrinsic value
is harder to demonstrate than the value of a product of the recycling
process that is sold in the open marketplace. While this demonstration
is not as straightforward, there are a number of ways the end user can
demonstrate the intrinsic value of the recycled intermediate or
product. Some examples include showing that the product of the
recycling process replaces an alternative product or material that
would otherwise have to be purchased or by demonstrating that a product
of the recycling process or intermediate meets specific product
specifications or established industry standards. Another approach to
demonstrating the value of a product of the recycling process or
intermediate would be to compare its characteristics (e.g., its
physical/chemical properties or its usefulness for

[[Page 64747]]

certain applications) with comparable products or intermediates made
from raw materials.
    Finally, we disagree with the commenter who stated that this factor
is equivalent to the hazardous secondary material making a useful
contribution to a product or intermediate. It is certainly possible for
a recycling process to result in the production of a valuable product
or intermediate without the hazardous secondary materials added to the
process making any contribution whatsoever. For example, this would be
the case when hazardous secondary materials are added to the process
and all of the hazardous secondary materials, including the hazardous
constituents, end up in the residuals, which are discarded, and the
materials added to the process provide no benefit whatsoever. This is
the essence of sham recycling. A vast majority of the commenters saw
the need for both factors and after exploring the concept of legitimate
recycling further, we were unable to find any examples of legitimate
recycling that did not meet both of the core factors (i.e., the
hazardous secondary material provides a useful contribution and the
recycling process produces a product of value), nor did any commenters
provide us with such examples. Thus, we are retaining both concepts as
factors that must be met in order for a process to be considered
legitimate recycling.
Comments: Factor 3--How the Hazardous Secondary Material To Be Recycled
Is Managed
    This factor on the management of hazardous secondary materials was
designed to illustrate that hazardous secondary materials that are
bound for recycling should be managed to prevent releases into the
environment in the same way that valuable commodities would reasonably
be expected to be managed. Hazardous secondary materials that are
recycled are valuable production inputs. As such, we believe that such
materials should be managed in a way that retains their value and
prevents significant losses to the environment. Hazardous secondary
materials that are mismanaged to the extent that they are released into
the environment are not recycled.
    This factor is one of the two legitimacy factors that EPA believes
needs to be considered. However, in some cases, it may not be clear
that the factor is met or it may not be met, yet the recycling activity
can still be legitimate. The regulatory text for the factor can be
found in 40 CFR 260.43(c)(1) and it states that the handler should
manage the hazardous secondary material ``as a valuable commodity.'' If
an analogous raw material exists, the hazardous secondary material
should be managed, ``at a minimum, in a manner consistent with the
management of the raw material.'' If there is no analogous raw
material, the proposal states that the hazardous secondary material
should be ``contained.''
    The response from commenters on this factor was mixed in response
to both the October 2003 proposal and the March 2007 supplemental
proposal. Many states and environmental organizations commented that
the factor should be mandatory and some argued that it should include a
strict test. Many commenters from the generating industry and the waste
management industry stated that they support this factor and believe
that it is a fair and reasonable indicator of legitimacy. Some industry
commenters thought that this factor should be mandatory, whereas others
commented that the factor should neither be codified nor mandatory. At
least one commenter stated that the factor was not necessary because of
other existing disincentives for mismanagement. Representatives from
extractive industries were most strongly opposed to this factor,
stating that EPA cannot include legitimacy requirements on secondary
materials that are going to be recycled because they are not in EPA's
jurisdiction.
EPA's Response: Factor 3--How the Hazardous Secondary Material To Be
Recycled Is Managed
    Today, we are finalizing this factor as one of the two factors that
must be considered during a legitimacy determination, but not
necessarily met. We modified the language of this factor since the
October 2003 proposal and are finalizing it basically as proposed in
the March 2007 supplemental proposal.
    EPA has decided that it is most appropriate to finalize this factor
as one of the factors that must be considered rather than as a
mandatory factor. Although we believe that this factor is an important
part of a legitimacy determination because hazardous secondary
materials that are not being managed carefully may be materials that
the recycler does not value for its process, the factor is not part of
what the Agency considers the core of legitimacy. In addition, as
discussed in section IX of this preamble, EPA and commenters were able
to identify situations in which this factor is not met, but the
recycling appears to be legitimate because the hazardous secondary
materials are still being managed in a responsible manner. EPA does not
want to restrict legitimate recycling and, therefore, in these cases,
the facility could make a determination of legitimacy without meeting
this factor, but should be prepared to explain why its recycling is
legitimate.
    EPA also believes that this factor can be critical when considering
whether hazardous secondary materials are legitimately recycled and EPA
disagrees with commenters who argued that evaluating ``materials
management'' is outside the scope of RCRA because hazardous secondary
materials are not solid wastes due to being excluded. EPA believes that
the commenters' argument is circular. The hazardous secondary materials
are excluded only if the recycling is legitimate. How materials are
managed is part of determining legitimate recycling. EPA has the
authority to define legitimate recycling and, therefore, has the
authority to require this evaluation.
Comments: Definition of Terms in Factor 3
    Commenters stated that compliance with this factor is dependent on
the regulated community and regulators understanding what EPA means by
it. In the October 2003 proposal, we proposed that the factor read,
``[w]here there is no analogous raw material, the secondary material
should be managed to minimize the potential for releases to the
environment.'' Many commenters stated that the term ``minimize'' in
this context was particularly unclear. State commenters argued that the
term ``minimize'' did not provide enough guidance or could be
interpreted to allow unclear amounts of hazardous secondary materials
to be released, leaving room for potential mismanagement of that
material, whereas some industry commenters asked if this standard meant
they would have to meet or exceed controls required for regulated
hazardous wastes in their recycling operations. Several commenters also
asked about the term ``valuable commodity'' and how ``valuable'' is defined.
EPA's Response: Definition of Terms in Factor 3
    EPA agrees that terms for this factor should be more clear to
facilitate compliance. Although we have not developed a specific test
or codified definitions to explain this factor, we have adjusted some
of the language in the factor to address this concern and are providing
further explanation of what we intend by this factor in today's
preamble so that it is better understood and can be consistently applied.

[[Page 64748]]

    In the March 2007 supplemental proposal, we modified the language
for this factor to state instead that ``[w]here there is no analogous
raw material, the hazardous secondary material should be contained.''
This change addressed the ambiguity of the word ``minimize,'' as well
as state comments that the storage requirements in this factor needed
to be better defined. The Agency believes that facilities that value
hazardous secondary materials as part of their manufacturing process
will contain those materials to prevent their release. The term
``contained'' is also being used elsewhere in the exclusions being
finalized. EPA is defining this term in the same way throughout: A
recyclable material is ``contained'' if it is placed in a unit that
controls the movement of that material out of the unit into the
environment. We also believe that the standard for contained is more
clear for states and industry than the standard to minimize potential
releases to the environment was in the October 2003 proposal.
    We also want to clarify the use of several other terms on which we
received comments. These terms are discussed briefly here and in more
depth in section IX of this preamble, where the legitimacy factors are
fully described. ``Analogous raw material,'' also defined elsewhere in
the exclusions, is a raw material for which a hazardous secondary
material is a substitute and which serves the same function and has
similar physical and chemical properties as the hazardous secondary
material. Materials generally would not be considered analogous if
their chemical makeup were very different from one another--
particularly if the hazardous secondary materials contain hazardous
constituents that necessitate management processes that the raw
material does not--or if their physical properties are different.
    Regarding the term ``valuable commodity,'' EPA believes that
hazardous secondary materials should be managed in the same or similar
manner as raw materials that have been purchased or obtained at some
cost. The legitimacy criteria are designed to determine whether a
process is like manufacturing rather than like waste management. We
believe that the standard for management of the hazardous secondary
materials is reasonable for helping assess whether disposal in the
guise of normal manufacturing is occurring.
Comments: Factor 4--Comparisons of Toxics in the Product
    This factor was designed to prevent hazardous constituents from
being ``discarded'' by being incorporated into a product made from
hazardous secondary materials. The factor identifies this situation as
being hazardous constituents that are in a product made from hazardous
secondary materials when they are not in analogous products, or when
hazardous constituents are at significantly higher levels in products
made from hazardous secondary materials than in analogous products that
contain such hazardous constituents, or when the product exhibits one
or more of the hazardous characteristics and the analogous product does
not. An analogous product can either be the final product of
manufacturing or, in some cases, an intermediate in a process. These
hazardous constituents are often called ``toxics along for the ride''
(TARs) and, if present, could be an indicator of discard.
    This factor is the second of the two legitimacy factors that EPA
believes needs to be considered but, in some cases, does not need to be
met for the recycling activity to be considered legitimate. We modified
the language of this factor since the October 2003 proposal and are
finalizing the factor basically as proposed in the March 2007
supplemental proposal. The regulatory text for the factor can be found
in 40 CFR 260.43(c)(2) and it states that the person making the
determination should look at the product of the recycling process and
compare it to analogous products that are made without hazardous
secondary materials. The person making the determination should examine
the concentrations of hazardous constituents to learn whether the
product of the recycling process contains significant concentrations of
hazardous constituents when the analogous product contains none,
whether it contains significantly elevated levels of hazardous
constituents when compared to the analogous product that contain such
hazardous constituents, or whether it exhibits a hazardous
characteristic when the analogous product does not.
    The Agency received many comments on the fourth factor in response
to both the October 2003 proposal and the March 2007 supplemental
proposal. The comments the Agency received on Factor 4 were very mixed,
ranging from commenters who argued that this factor should be one of the
factors that must be met to those who stated that the factor is irrelevant
and should not be considered as part of a legitimacy determination.
EPA's Response: Factor 4--Comparisons of Toxics in the Product
    Today, we are finalizing this factor as one of the two factors that
must be considered during a legitimacy determination, but not
necessarily met. EPA maintains that this factor is an important way of
determining whether a recycling process is, in fact, true recycling
rather than a ``sham.''
    If hazardous secondary materials with a toxic constituent or toxic
constituents in amounts or concentrations greater than analogous raw
materials are simply being run through a manufacturing process, it is
an indication that those hazardous secondary materials may be being
discarded in the guise of recycling. Toxics that are illegally disposed
of in this manner can become exposure risks and could harm human health
and the environment. EPA has jurisdiction over materials being
discarded and, therefore, is requiring that this factor be considered
in legitimacy determinations. The factor is not one of the mandatory
factors because the Agency has identified situations where higher
levels of toxic constituents may not be relevant or applicable and,
thus, would not be an indicator of ``sham'' recycling if this factor is
not met, as discussed in section IX of this preamble. In these cases,
the facility could make a determination of legitimacy without meeting
this factor, but should be prepared to explain why its recycling is
legitimate.
Comments: Factor 4--the Term ``Significant'' and Alternative Approaches
    Many of these comments sought further guidance on the meaning of
the term ``significant'' in the proposed regulatory text, stating that
the definition in the proposal was unclear or subjective, which may
lead to a wide range of possible interpretations of the term.
Commenters also expressed concern that a definition that is too vague
may discourage recycling. In a related topic, commenters also responded
to EPA's request for comments on two alternate approaches in the
October 2003 proposal: (1) An approach that would establish a ``bright
line'' for complying with the factor by specifically defining the terms
``significant amounts'' and ``significantly elevated'' in the
regulatory text and (2) an approach that would require the use of risk
assessment tools to determine if a product with elevated levels of a
hazardous constituent due to use of hazardous secondary materials in
its manufacture process posed a greater risk to human

[[Page 64749]]

health or the environment than the analogous product made from raw
materials.
    On the whole, commenters were not enthusiastic about the two
alternative approaches that EPA suggested. Most commenters stated that
a specific test of either nature would not be appropriate because of
the wide variety of recycling situations to which it would have to apply.
EPA's Response: Factor 4--the Term ``Significant'' and Alternative
Approaches
    The Agency believes that designing a specific test, such as those
described in the preamble to the October 2003 proposal, that is
applicable to the many different recycling scenarios possible in the
exclusions and non-waste determinations would be difficult, if not
impossible. Thus, we agree with those commenters who argued against
adopting such a specific test. Therefore, the Agency has more clearly
described in this preamble to the final rule what it means by
``significant'' so that members of the regulated community can be
confident in their evaluations of whether their products made from
hazardous secondary materials contain ``toxics along for the ride.''
Therefore, members of the regulated community will neither be
discouraged from recycling nor be forced to seek an opinion from a
regulatory agency in every case. Details on implementation of this
factor are in section IX of today's preamble.
Comments: Factor 4--Comparing the Products Instead of Hazardous
Secondary Materials
    Most commenters responded positively to a change the Agency made in
its October 2003 proposal to compare the product of the recycling
process to the analogous product made from raw materials rather than
comparing the hazardous secondary materials to the analogous raw
materials. EPA discussed this shift in its October 2003 proposal at 68
FR 61586-61587.
    However, several commenters argued that the change is an attempt by
the Agency to regulate products or stated that certain unique elements
of their production processes made it so that this factor should not
apply to their industry or their particular process. In addition, some
commenters were concerned that under this factor, in some cases, the
generator would have to know what was being done with its hazardous
secondary material several steps downstream in the recycling process
when it was incorporated into a final product.
EPA's Response: Factor 4--Comparing the Products Instead of Hazardous
Secondary Materials
    The Agency believes that for an entity to ensure that hazardous
secondary materials are being legitimately recycled and not discarded,
it needs to know what happens to the hazardous secondary materials once
they leave the generator's control. However, in response to these
comments, we are clarifying in today's preamble that the final
legitimacy factor allows the entity conducting the legitimacy
determination to make the comparison on ``toxics'' either between the
final products or between the hazardous secondary material and the
analogous raw material it replaces. If the comparison of materials
going into the process shows no significant difference in levels of
toxics, the product of the recycling process will not significantly
differ from analogous products in those levels either. In cases where
the generator finds it too complex to compare the product from its
recycling process to the analogous product made from the virgin raw
material, it can, instead, compare the chemistry of the materials going
into the process to evaluate this factor.
Comments and EPA's Response: Relevance of Factor 4 to a Particular Process
    Regarding the implementation of this factor, several commenters
raised the concern that many products that are made from hazardous
secondary materials do not have analogous products made from raw
materials because they are always or have always been made from a
combination of primary and in-process materials and that these are
cases where this factor is not relevant to that particular recycling
process. The commenters stated that this is especially true in the
mineral extraction industries, but also may be the case in other
industries as well.
    The Agency is aware that there are situations where there may not
be analogous products made from raw materials. In that case, the
facility can opt to compare the toxic constituents in the hazardous
secondary material it is using against those in an analogous raw
material instead. We also note that while this factor needs to be
considered, it is not mandatory because EPA recognizes that in some
situations, it will not be relevant to a particular industrial process.
In the case where the facility considers this factor and decides that
it is not applicable to its process, the Agency suggests that the
facility evaluate the presence of hazardous constituents in its product
and document both that it considered this factor and the reasons it
believes the factor is not relevant.

E. Consideration of Economics in Legitimacy

Comments: Economics Considerations
    EPA received several comments in response to the preamble
discussion about how to consider economics in the context of making
legitimacy determinations in the March 2007 supplemental proposal. EPA
did not propose that economic consideration be codified within the
regulatory definition of legitimate recycling and instead offered
guidance on how economic consideration is relevant to determining the
legitimacy of a recycling operation.
    EPA received only positive comments on the preamble discussion
about consideration of economics in legitimacy. Specifically, EPA
agrees with commenters who supported our position on the following: The
economics of recycling are relevant to making legitimacy
determinations, the economics of recycling are in fact different from
traditional manufacturing, a recycling activity can be legitimate if a
recycler charges a fee to accept hazardous secondary materials,
economic considerations need to take into account the fluctuations in
market prices of raw materials, and negative economic factors can
contribute to environmental problems, such as speculative accumulation,
abandonment, and sham recycling.
    However, EPA received many comments from both industry and
recycling associations that opposed the October 2003 proposal to codify
the economics consideration as a separate ``factor to be considered.''
These commenters generally argued that consideration of economics was
inherent within the four legitimacy factors (e.g., both of the
mandatory factors, as well as the two factors which must be considered)
and, therefore, a separate factor was not warranted. On the other hand,
a few commenters (primarily states) requested that EPA codify a
separate economics factor to be considered and they supported the
inclusion of an enforceable factor for legitimacy determinations.
EPA's Response: Economics Considerations
    EPA agrees with those commenters who argued that economic
considerations are inherent within the legitimacy factors. We believe
that one specific factor cannot encompass all

[[Page 64750]]

economic scenarios for the entire universe of hazardous secondary
materials recycling. Furthermore, we do not believe that a separate
enforceable factor in the regulations strengthens the definition of
legitimate recycling, but we do believe that articulating how economic
considerations can influence the legitimacy factors adds real value to
the legitimacy determinations made by state regulators and the
regulated community.
    Based on the comments we received, the Agency is not codifying
specific regulatory language on economic considerations. Instead,
today's preamble offers guidance and clarification on how economics may
be considered in making legitimacy determinations, similar to the
preamble discussion in the March 2007 supplemental proposal. For more
detailed information on economic considerations, please refer to ``How
consideration of economics applies to legitimacy'' in section IX of
today's rulemaking.
Comments and EPA's Response: Specific Test for Economics
    EPA received some comments on the need for a specific test for
consideration of economics. Commenters that supported a specific test
believed it could include an accounting of economic flows over a period
of time to determine longevity; an annual regulatory review of markets
and a facility's economics; a ``rebuttable presumption that the
recycling is legitimate where the recycler pays for the secondary
materials,'' similar to manufacturing operations; and a requirement
that payment for recycled products and intermediates be more than
nominal if considered to be a sign of positive economics. One comment
was also submitted which expressly opposed a specific test, citing that
markets fluctuate too much to analyze the flows of revenues.
    EPA believes that none of the examples suggested by the commenters
are applicable to a broad universe of recycling activities. We also
acknowledge that fluctuations in markets for hazardous secondary
materials and recycled products, and subsequent impacts in revenue
flows, create another challenging aspect of developing a test for the
consideration of economics. Therefore, we believe that it is not
possible to craft an economic test for legitimacy that can accommodate
all legitimate recycling activities. As stated in section IX of today's
rulemaking, we believe that this preamble discussion provides sufficient
guidance on how to consider economics in legitimacy determinations.

F. Documentation of Legitimacy

Comments and EPA's Response: Documentation of Legitimacy
    Several of the public comments stated that it is important that the
hazardous secondary material generator or recycler of a recycled
material maintain documentation that substantiates how the recycling
activity complies with the legitimacy requirements. The comments stated
that these records would show how the recycling activity meets the
factors or, if a factor is not applicable, the records would document
why it is not necessary for it to meet that factor. In this way, the
hazardous secondary material generator or recycler could show that it
considered all the factors. Other commenters objected to any recordkeeping
requirements documenting that a recycling activity is legitimate.
    After considering the comments, the Agency has determined that for
the purpose of the legitimacy factors in the final rule, 40 CFR
261.2(f) applies. Section 261.2(f) states that, in the context of an
enforcement action to implement Subtitle C of RCRA, a person claiming
that a material is not a solid waste or is conditionally exempt from
regulation is responsible for showing that they meet the terms of the
exclusion and must provide appropriate documentation to show why they
are eligible. For the legitimacy requirements finalized today, this
provision would require that persons claiming that their recycling
activity is legitimate would have the burden to provide documentation
showing how the hazardous secondary materials provide a useful
contribution to the recycling process and how the product of the
recycling activity--whether it is a consumer product or a process
intermediate--is valuable. In addition, the documentation would have to
show that the hazardous secondary material generator or recycler
considered the other two factors and determined for each of them that
either the activity meets the factor or that the factor does not apply
to this recycling activity and why it is not relevant or appropriate to
consider.
    In addition, as part of today's transfer-based exclusion, the
hazardous secondary material generator has to undertake reasonable
efforts to ensure its hazardous secondary materials will be
legitimately recycled pursuant to Sec.  260.43. As part of the
reasonable efforts requirements, generators must document their
reasonable efforts per Sec.  261.4(a)(24)(v)(C).

XIX. Major Comments on the Non-Waste Determination Process

    In the March 2007 supplemental proposal, EPA proposed a non-waste
determination process that would provide persons with an administrative
process for receiving a formal determination that their hazardous
secondary materials are not discarded and, therefore, not solid waste.
The process would be voluntary and available in addition to the two
self-implementing exclusions. EPA proposed three types of non-waste
determinations: (1) For hazardous secondary materials reclaimed in a
continuous industrial process; (2) for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate; and (3) for hazardous secondary materials reclaimed under
the control of the generator, such as through contracts similar to
tolling arrangements. For each type of non-waste determination, EPA
proposed a set of criteria which the hazardous secondary materials
would have to meet in order to receive a formal non-waste determination
from the regulatory authority. For a detailed description of the non-
waste determination process that EPA is finalizing today, see section X
of today's preamble.
Comments: Finalizing the Non-Waste Determination Process
    Overall, many commenters supported the non-waste determination
process because it provides persons with regulatory certainty and
offers a flexible alternative to the self-implementing exclusions
included in today's rule. On the other hand, some commenters argued
that the non-waste determination process would be resource-intensive,
placing a significant burden on the states that would have to perform a
case-by-case review of each application. One commenter said that,
historically, many hazardous waste facilities have sought formal
approval of their recycling practices from regulators and that EPA may
be underestimating the number of applications that states would receive
from the regulated community. Additionally, one state commenter
mentioned that the non-waste determination process would increase
regulatory inconsistency between states and at least two state
commenters saw no reason to establish a formal non-waste determination
process since they viewed the current variance procedure under 40 CFR
260.33 and their own state

[[Page 64751]]

determination processes as an effective means to the same end. Finally,
a few commenters did not support the non-waste determination process
because of its lack of explicit conditions, such as those conditions
required for the two self-implementing exclusions in today's rule.
EPA's Response: Finalizing the Non-Waste Determination Process
    EPA agrees with the majority of commenters who support the non-
waste determination process as an alternative way for hazardous
secondary material generators to seek regulatory certainty in
circumstances involving reclamation of hazardous secondary materials
which do not clearly fit under today's self-implementing exclusions.
EPA, however, does not agree with commenters who believe the non-waste
determination would cause significant burden to states. Instead, we
anticipate that the vast majority of persons will choose to use the
self-implementing exclusions because this would be less resource
intensive for the facility. In fact, the Agency does not envision any
person submitting such an application if they are considered ``under
the control of the generator'' because there are relatively few
restrictions for this exclusion, and, indeed, it would probably require
less effort than seeking a non-waste determination. Thus, the Agency
only expects a limited number of persons to submit applications where
the regulatory status is unclear under today's exclusions and a formal
non-waste determination may be appropriate. EPA further believes that,
by modeling the non-waste determination process after the current
variance procedures, it has kept the additional burden to the states at
a minimum because states can leverage their existing processes.
    EPA believes that requiring explicit conditions, such as those
required for today's self-implementing exclusions, is not warranted for
hazardous secondary materials receiving non-waste determinations
because persons are, instead, required to make specific demonstrations
as to how the hazardous secondary materials meet the eligibility
criteria. Furthermore, regulatory authorities, if they so choose, may
stipulate conditions within the non-waste determination as appropriate
and relevant on a case-by-case basis. One purpose of the non-waste
determination is to provide a measure of flexibility not provided by
the self-implementing solid waste exclusions and specifying the
conditions to be imposed would defeat this purpose.
    With respect to the comment regarding inconsistency among state
non-waste determinations, EPA notes that, by allowing states to become
authorized to conduct their own RCRA hazardous waste programs, the RCRA
statute provides states flexibility to regulate hazardous waste more
stringently than required under the federal regulations. Additionally,
states sometimes take different interpretations of the same or similar
regulations. This situation ultimately leads to variations between
state regulations and interpretations, which EPA views as inherent to
the RCRA structure and, thus, not a quality unique to the non-waste
determination process.
    We also want to clarify that, although today's non-waste
determination process is similar to the current variance procedures,
non-waste determinations are technically not variances in which EPA
regulations otherwise classify materials as solid wastes and facilities
may apply for an exception. Instead, the new procedure would apply to
cases in which hazardous secondary materials are not discarded, but
which do not fit within the self-implementing exclusions, or for which
the restrictions and conditions of the exclusions are not applicable.

A. Eligibility for Non-Waste Determination Process

Comments: Scope of Non-Waste Determinations
    In the March 2007 supplemental proposal, EPA indicated that non-
waste determinations would be limited to reclamation activities and
would not apply to recycling of ``inherently waste-like'' materials, as
defined at 40 CFR 261.2(d), recycling of materials that are ``used in a
manner constituting disposal,'' or ``used to produce products that are
placed on the land,'' (40 CFR 261.2(c)(1)), or ``burning materials for
energy recovery'' or ``used to produce a fuel or otherwise contained in
fuels'' (40 CFR 261.2(c)(2)).
    EPA received a number of comments urging the Agency to broaden the
non-waste determinations to include all recycling scenarios in which
hazardous secondary materials are not discarded. Some commenters
supported expanding the scope to allow recycling for ``burning for
energy recovery'' and ``use constituting disposal.'' These commenters
argued that EPA could achieve further increases in recycling if the
Agency broadened the scope of the hazardous secondary materials
eligible to apply for a non-waste determination. On the other hand,
some commenters agreed with EPA's proposed scope and supported limiting
eligibility to only hazardous secondary materials being reclaimed.
Alternatively, a few commenters supported limiting eligibility only to
those circumstances where the recycling of hazardous secondary
materials would not meet either a condition of the self-implementing
exclusions or one of the legitimacy criteria, but still would not be
considered discard. These commenters also argued that narrowing the
eligibility would effectively limit the number of applications
submitted and thus reduce the overall burden on the states.
EPA's Response: Scope of Non-Waste Determinations
    EPA agrees with those commenters who supported limiting non-waste
determinations to reclamation activities. With respect to ``burning for
energy recovery'' and ``use constituting disposal,'' EPA confirms that
these types of recycling are ineligible for today's non-waste
determination process. EPA believes that these types of recycling
activities would best be left to other rulemaking proceedings.
Furthermore, we disagree with those commenters who suggest further
limiting the eligibility to only those cases where reclamation of the
hazardous secondary materials would specifically violate a condition of
today's self-implementing exclusions. We believe that by modeling the
non-waste determination procedure after the existing variance
procedure, we have ensured that any additional burden to the states
will be kept at a minimum and thus further limits on eligibility are
not necessary.
Comments: Whether the Hazardous Constituents in the Hazardous Secondary
Materials Are Reclaimed Rather Than Released to the Air, Water, or Land
    Overall, we received only a few comments that discussed the
specific criteria that EPA proposed for the non-waste determinations.
For the criterion regarding whether the hazardous constituents in the
hazardous secondary materials are reclaimed rather than released to the
air, water, or land at significantly higher concentrations, some
commenters argued that this criterion was inappropriate for determining
discard because these types of releases are inevitable when reclaiming
hazardous secondary materials. At least two commenters suggested that
EPA should establish a ``bright line'' to clearly define ``significantly
higher concentrations'' in order to provide persons with greater

[[Page 64752]]

regulatory certainty. Other commenters expressed concern that this
criterion (as well as the other criteria within 40 CFR 260.34) would be
construed to apply to other types of recycling, including those
eligible for today's self-implementing exclusions.
EPA's Response: Whether the Hazardous Constituents in the Hazardous
Secondary Materials Are Reclaimed Rather Than Released to the Air,
Water, or Land
    EPA disagrees with commenters who believe this criterion is not
relevant for determining if hazardous secondary materials are being
discarded. By indicating that such releases must not be at
``significantly higher concentrations'' than would otherwise be
released during the production process, we believe we have set a
reasonable and meaningful bar that applicants must meet in order to
demonstrate that their hazardous secondary materials are reclaimed and
not discarded. Hazardous secondary materials that fail to meet this
criterion may exhibit an indication that they are discarded and that
such handling may present a greater risk of adverse impacts to human
health and the environment. Regarding those commenters who support a
``bright line'' in order to define ``significantly higher
concentrations,'' EPA believes that, given the wide variety of production
processes and recycling practices, establishing a ``one size fits all''
objective standard is not practical and would invite inefficiency.
    EPA also confirms that this criterion, and the other criteria in 40
CFR 260.34, are specific to the relevant non-waste determinations, and
thus are not required for the self-implementing exclusions or those
exclusions found in 40 CFR 261.4, unless they are specifically included
under state regulations as a criteria to consider.
Comments and EPA's Response: Whether the Capacity of the Production
Process Would Allow for Use of the Hazardous Secondary Material in a
Reasonable Time Frame
    For the criterion regarding whether the capacity of the production
process would allow for use of the hazardous secondary material in a
reasonable time frame (proposed explicitly for the non-waste
determination for hazardous secondary materials reclaimed in a
continuous industrial process), some commenters regarded this criterion
as consistent with judicial direction and, thus, supported adding this
criterion to the other non-waste determinations. Since EPA would
consider hazardous secondary materials that were eternally ``stored''
for future recycling to be akin to discard, EPA agrees with these
commenters that all non-waste determinations should take into account
whether the hazardous secondary materials will be reclaimed within a
``reasonable time frame.'' Therefore, in this final rule, EPA has added
this criterion (with appropriate modifications to the language) to the
non-waste determination for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate. As with the non-waste determination for hazardous
secondary materials reclaimed in a continuous industrial process, a
person does not need to demonstrate that the hazardous secondary
material meets the speculative accumulation limits per 40 CFR
261.1(c)(8), but he must provide sufficient information about the
hazardous secondary material and the process to demonstrate that the
material will in fact be reclaimed in a reasonable time frame and will
not be abandoned. However, a person may still choose to use the
speculative accumulation time frame as a default if he so chooses.
Comments: Non-Waste Determination for Hazardous Secondary Materials
Reclaimed Under the Control of the Generator
    A few commenters disagreed with the non-waste determination for
hazardous secondary materials reclaimed under the control of the
generator via a tolling arrangement or similar contractual arrangement.
These commenters believed that the generator would be unable to
maintain control over its hazardous secondary materials and residuals
once at the reclamation facility and, thus, could not reliably meet the
criteria for this non-waste determination. One state foresaw major
enforcement problems with situations involving a commercial facility
that handles hazardous secondary materials from multiple customers in a
single process and then mismanages the residuals from that unit. As the
residuals would be linked back to multiple generators, the liability
for the mismanaged residuals would be difficult to detangle. On the
other hand, some commenters felt that all tolling arrangements,
including those eligible for the self-implementing exclusion, would
best be evaluated through the non-waste determination process. These
commenters argued that the regulatory authority should be required to
review all tolling arrangements and their respective liability
provisions in order to ensure that the hazardous secondary materials
will not be discarded.
EPA's Response: Non-Waste Determination for Hazardous Secondary
Materials Reclaimed Under the Control of the Generator
    We did not intend for such circumstances where a hazardous
secondary material generator was unable to maintain control and
responsibility over his hazardous secondary materials to be eligible
for a non-waste determination for hazardous secondary materials
reclaimed under the control of the generator. Where an applicant's
hazardous secondary materials are intermingled with materials from
other hazardous secondary material generators in a way that renders the
applicant unable to maintain control and liability over his specific
materials, the applicant would have been effectively precluded from
obtaining this formal non-waste determination since he would ultimately
fail the first criterion.
    EPA, however, has decided not to finalize the non-waste
determination for materials reclaimed under the control of the
generator because EPA could not identify any comments which described
in detail other specific situations involving tolling or contractual
arrangements that would not already be covered under today's self-
implementing generator-controlled exclusion. We, therefore, remain
unclear as to what other arrangements exist where the generator would
retain control over its hazardous secondary materials to ensure they
are reclaimed and not discarded. Without this clear picture, EPA
believes we cannot finalize this non-waste determination and thus we
are not including it in today's final rule.

B. Process for Non-Waste Determinations

    In the March 2007 supplemental proposal, EPA proposed that the non-
waste determination process would be the same as that for the solid
waste variances found in 40 CFR 260.33. In order to obtain a non-waste
determination, a facility must apply to the Administrator or the
authorized state. The Administrator or authorized state evaluates the
application and issues a draft notice and opportunity for comment in
the locality where the facility is located. The Administrator or
authorized state would then issue a final decision based on the
evaluation of the comments received.
Comments and EPA's Response: Requirement To Renew Applications
    A few commenters argued that non-waste determinations should be

[[Page 64753]]

renewed, either periodically or in the event of certain changes to the
recycling process, so that regulators can ensure that the hazardous
secondary materials continue to be reclaimed and not discarded.
    EPA agrees with those commenters who believe that certain changes
in the recycling process should logically trigger a re-review of the
circumstances. Therefore, in the event of a change that affects how
hazardous secondary materials meet one or more of the criteria upon
which a non-waste determination has been based, EPA is requiring
persons to re-apply to the Administrator or the authorized state for a
formal determination that the hazardous secondary material continues to
meet the relevant criteria and is not discarded and, therefore, not a
solid waste.
Comments and EPA's Response: Timelines for Regulators
    Some commenters expressed concerns about the length of time an
applicant would need to wait before receiving a formal determination
from their regulatory authority, explaining that particularly lengthy
delays would adversely affect business operations. Although we
understand this concern, requiring non-waste determinations to be made
within a specific time frame would be difficult, as each case varies in
complexity with some requiring more time to review than others.
Furthermore, EPA would be challenged to prescribe one time frame that
would accommodate numerous state regulatory agencies that vary in
staffing and workloads. Therefore, we are not requiring regulators to
issue determinations within a certain period of time.
Comments and EPA's Response: Public Comment Process
    At least two commenters suggested updating the format for public
notice. For example, instead of requiring notice through a ``newspaper
advertisement or radio broadcast'' (as EPA proposed), public notice
should be allowed to include electronic formats, such as posting on a
Web site or distribution through e-mail, in order to reduce costs.
Other commenters supported requiring public notice for a broader
audience, not necessarily limited to the ``locality where the recycler
is located.'' These commenters argued that non-waste determinations may
have national implications and would be more appropriately published in
the Federal Register or made available through the EPA Docket Center.
    In response to these comments, EPA notes the non-waste
determination process was purposely structured to follow the same
procedures as outlined for solid waste variances in 40 CFR 260.33 in
order to leverage the existing structure and keep additional burden on
the states to a minimum. EPA, furthermore, believes that any changes to
the type of format required for public notice would be more
appropriately handled as part of a separate, wholesale effort to update
all public notice requirements in the federal hazardous waste
regulations. Therefore, for today's rule, EPA is retaining the same
public notice provisions as proposed and required in 40 CFR 260.33.

XX. How Will These Regulatory Changes Be Administered and Enforced in
the States?

A. Applicability of Rules in Authorized States

    Under section 3006 of RCRA, EPA may authorize qualified states to
administer the RCRA Subtitle C hazardous waste program within the
state. Following authorization, EPA retains Subtitle C enforcement
authority, although authorized states have primary enforcement
responsibility. EPA retains authority under sections 3007, 3008, 3013,
3017 and 7003. The standards and requirements for state authorization
are found at 40 CFR part 271.
    Prior to enactment of the Hazardous and Solid Waste Amendments of
1984 (HSWA), a state with final RCRA authorization administered its
hazardous waste program entirely in lieu of EPA administering the
federal program in that state. The federal requirements no longer
applied in the authorized state and EPA could not issue permits for any
facilities in that state, since only the state was authorized to issue
RCRA permits. When new, more stringent federal requirements were
promulgated, the state was obligated to enact equivalent authorities
within specified time frames. However, the new federal requirements did
not take effect in an authorized state until the state adopted the
federal requirements as state law.
    In contrast, under RCRA section 3006(g) (42 U.S.C. 6926(g)), which
was added by HSWA, new requirements and prohibitions imposed under HSWA
authority take effect in authorized states at the same time that they
take effect in unauthorized states. EPA is directed by the statute to
implement these requirements and prohibitions in authorized states,
including the issuance of permits, until the state is granted
authorization to do so. While states must still adopt HSWA related
provisions as state law to retain final authorization, EPA implements
the HSWA provisions in authorized states until the states do so.
    Authorized states are required to modify their programs only when
EPA enacts federal requirements that are more stringent or broader in
scope than existing federal requirements. RCRA section 3009 allows the
states to impose standards more stringent than those in the federal
program (see 40 CFR 271.1). Therefore, authorized states may, but are
not required to, adopt federal regulations, both HSWA and non-HSWA,
that are considered less stringent than previous federal regulations.

B. Effect on State Authorization

    Today's rule eliminates specific requirements that apply to
hazardous secondary materials currently managed as hazardous waste. EPA
believes that today's final rule describes the appropriate scope of the
federal program under RCRA. These exclusions will encourage recycling
and are consistent with RCRA's statutory objective of conserving
valuable material and energy resources.
    EPA strongly encourages states to adopt the regulations being
finalized today. When EPA authorizes a state to implement the RCRA
hazardous waste program, EPA determines whether the state program is
consistent with the federal program and whether it is no less
stringent. This process, codified in 40 CFR part 271, ensures national
consistency and minimum standards, while providing flexibility to the
states in implementing the rules. In making this determination, EPA
evaluates the state requirements to ensure they are no less stringent
than the federal requirements. Because today's rule eliminates specific
requirements for hazardous secondary materials that are currently
managed as hazardous waste, state programs would no longer need to
include those specific requirements in order to be consistent with
EPA's regulations.
    However, if a state were, through implementation of state waiver
authorities or other state laws, to allow compliance with the
provisions of today's rule in advance of adoption or authorization, EPA
would not generally consider such implementation a concern for purposes
of enforcement or state authorization. Of course, the state could not
implement the requirements in a way that was less stringent than the
federal requirements in today's rule.

[[Page 64754]]

    In the case of the case-by-case non-waste determinations found in
40 CFR 260.34, a non-waste determination may be granted by the state if
the state is either authorized for this provision or if the following
conditions are met: (1) The state determines the hazardous secondary
material meets the applicable criteria for the non-waste determination;
(2) the state requests that EPA review its determination; and (3) EPA
approves the state determination.
    It should be noted that, under RCRA section 3009, a state may adopt
standards that are more stringent than the federal program. Thus, a
state is not required to adopt today's final rule or a state may choose
to adopt only parts of today's final rule. Some states incorporate the
federal regulations by reference or have specific state statutory
requirements that their state program can be no more stringent than the
federal regulations. In those cases, EPA anticipates that the
exclusions in today's final rule will be adopted by these states,
consistent with state laws and state administrative procedures, unless
they take explicit action as specified by their respective state laws
to decline the revisions. We note that if states choose not to adopt
the provisions of today's final rule concerning exports, then any
hazardous secondary materials that are exported would be subject to the
hazardous waste export requirements in 40 CFR part 262 subparts E or H,
or analogous export requirements that are part of a state's RCRA
authorized program. EPA also notes that, as described in this preamble,
we believe that the legitimacy provision finalized in Sec.  260.43 is
substantially the same as and no more stringent than the existing
regulatory scheme in which all recycling must be legitimate. If a state
agency were to adopt the four legitimacy factors in Sec.  260.43 for
all recycling, EPA would consider their regulations to be equivalent to
the federal requirements.

XXI. Administrative Requirements for This Rulemaking?

A. Executive Order 12866: Regulatory Planning and Review

    Under section 3(f)(1) of Executive Order (EO) 12866 (58 FR 51735,
October 4, 1993), this action is a ``significant regulatory action''
because today's action contains novel policy issues (EO 12866 Section
3(f)(4)) and because its potential impact on the economy will be
greater than the $100 million or more annual effect, meeting the
``economically significant'' threshold of EO 12866 Section 3(f)(1).
Because this rule meets two of the EO 12866 ``significant'' criteria,
EPA submitted this action to the Office of Management and Budget (OMB)
for review under EO 12866 and any changes made in response to OMB's
recommendations have been documented in the docket for this action. EPA
also prepared an analysis of the potential economic costs and benefits
associated with this proposed action. The analysis is contained in our
``Regulatory Impact Analysis'' (RIA) which is available from the docket
(http://www.regulations.gov) and is briefly summarized below.
    Assuming full adoption of this final rule by all RCRA-authorized
states, EPA's best estimate (i.e., ``expected value'') of the future
average annual net benefits of this final rule to the national economy
is $95 million per year, affecting about 5,600 facilities in 280
industries in 21 economic sectors. However, the sensitivity analysis
section of our RIA for this final rule identifies 11 numerical
uncertainty factors behind our calculation of this best estimate.
Future variation in one or more of these factors may result in future
annual net benefits ranging between $19 million to $333 million in any
given future year. Therefore, EPA is classifying this final rule as
``economically significant'' because the $333 million per year upper-
bound of our net benefits uncertainty range exceeds the $100 million
``annual effect'' threshold established by section 3(f)(1) of the 1993
Executive Order 12866.''
    This action is expected to remove from RCRA regulation 1.5 million
tons per year of hazardous secondary materials currently managed as
RCRA hazardous waste. These affected hazardous secondary materials
consist of about 98% that are currently reclaimed as RCRA hazardous
waste, and about 2% of hazardous waste that is currently disposed of
(e.g., landfilled, incinerated, or deepwell injected), which EPA
expects may switch from disposal to reclamation as a result of this
action. This $95 million annual net cost savings estimate is 11% less
than the $107 million annual net cost savings estimated in our 2007 RIA
in support of the March 2007 supplemental proposal for this action.
This difference is largely explained by enhancements made to the
methodology of the RIA based on public comments received from 30
organizations on our 2003 and 2007 RIA's in support of this action, as
well as by updates of key data underlying the RIA.
    These impact estimates are EPA's best estimates within the economic
impact estimation uncertainty range of $19 million to $333 million in
annual materials management cost savings for the net effect of the
exclusions. These impact ranges reflect the overall uncertainty range
of -80% to +249% across eleven different uncertainty factors addressed
as a sensitivity analysis in our RIA. The specific uncertainty factors
evaluated are (1) state government adoption, (2) future fluctuations in
affected hazardous secondary materials generation tonnages, (3) within-
year discrepancies between hazardous secondary materials generation and
corresponding management tonnages, (4) future industrial production
levels, (5) omission of SQG facility counts in our impact estimates by
artifact that we based the impacts on LQG and TSDRF data from the RCRA
Biennial Report database, (6) Biennial Report database quality
assurance considerations, (7) physical and chemical quality of the
hazardous secondary materials affected, (8) impact estimation
methodology level of effort, (9) changes in future market price of
commodities recovered from recycled material, (10) the possibility of
same-company facilities sharing offsite captive recycling facility, and
(11) the possibility of baseline disposal switchover to onsite
recycling. Concerning the uncertainty of state government adoption,
included as one component of potential industry cost savings is the
transfer effect of an expected $5 million reduction in future annual
state government hazardous waste fee revenues if all state governments
adopt today's rule.
    With respect to each of the regulatory exclusions in today's
action, the $95 million per year net cost savings effect consists of
approximately (a) $7 million per year for hazardous secondary materials
reclaimed under the control of the generator in either land or non-land
based units (which includes on-site, same-company, and tolling
exclusions), plus (b) $87 million per year cost savings for exclusion
of other offsite transfers, plus (c) $1 million per year in cost
savings for case-by-case non-waste determinations.
    Embedded in this overall impact estimate is $4.7 million per year
in potential commodity market value of three categories of 15
constituents in affected materials we expect may begin to be recovered
from hazardous secondary materials that would otherwise continue to be
disposed of as hazardous wastes in the absence of today's action: (1)
Commodity metals (chromium, copper, lead, molybdenum disulfide, nickel,
zinc), (2) commodity solvents (acetone, alkyl benzenes, C9-C10 alkyl
benzenes, methanol, methyl ethyl ketone, toluene, xylene), and (3)

[[Page 64755]]

other commodity materials (acids, carbon). However, the RIA estimate of
potential new induced recycling does not include an evaluation of
whether the U.S. or global recycling markets are large enough to
sustain this potential future increase in supply of recovered
materials. Market conditions for recycled hazardous secondary materials
can vary considerably over time. Demand for recycled solvents, for
example, is largely dependent on the petroleum market because virgin
solvents are made from petroleum products, and high petroleum prices
encourage solvent recycling. Similarly, high metals prices obviously
favor the recycling of metal-bearing hazardous secondary materials.
    The RIA, available from the docket (http://www.regulations.gov),
provides many more details and descriptions about these assorted
components of expected economic impacts, including potential
distributional effects on other industries not directly subject to
today's action.

B. Paperwork Reduction Act (Information Collection Request)

    The information collection requirements in this rule have been
submitted for approval to OMB under the Paperwork Reduction Act, 44
U.S.C. 3501 et seq. The information collection requirements are not
enforceable until OMB approves them. The information collection request
has been updated since the March 2007 supplemental proposal to reflect
the final rule requirements and to respond to public comments.
    The information requirements established for this action are
voluntary to the extent that the exclusions being finalized today are
voluntary and represent an overall reduction in burden as compared with
the alternative information requirements associated with managing the
hazardous secondary materials as hazardous waste. The information
requirements help ensure that (1) entities operating under the
regulatory exclusions contained in today's action are held accountable
to the applicable requirements; (2) state inspectors can verify
compliance with the restrictions and conditions of the exclusions when
needed; and (3) hazardous secondary materials exported for recycling
are actually handled as commodities abroad.
    For the recordkeeping and reporting requirements applicable to
hazardous secondary materials sent for reclamation, the aggregate
annual burden to respondents over the three-year period covered by this
ICR is estimated to be 11,552 hours, with a cost to affected entities
(i.e., industrial facilities) of $1,417,242. However, this represents
an annual reduction in burden to respondents of 52,050 hours,
representing a cost reduction of $3,474,035 per year. The estimated
annual operation and maintenance costs to affected entities are
$739,469 per year, primarily for purchasing audit or other similar type
reports. There are no startup costs and no costs for purchases of
services. Administrative costs to the Agency are estimated to be 1,257
hours per year, representing an annual cost of $49,891. Burden is
defined at 5 CFR 1320.3(b).
    An agency may not conduct or sponsor, and a person is not required
to respond to, a collection of information unless it displays a
currently valid OMB control number. The OMB control numbers for EPA's
regulations in 40 CFR are listed in 40 CFR part 9. When this ICR is
approved by OMB, the Agency will publish a technical amendment to 40
CFR part 9 in the Federal Register to display the OMB control number
for the approved information collection requirements contained in this
final rule.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), as amended by the Small
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C.
601 et seq., generally requires an agency to prepare a regulatory
flexibility analysis of any rule subject to notice and comment
rulemaking requirements under the Administrative Procedure Act or any
other statute, unless the agency certifies that the rule will not have
a significant economic impact on a substantial number of small
entities. Small entities include small businesses, small organizations,
and small governmental jurisdictions.
    For purposes of assessing the impacts of today's rule on small
entities, small entity is defined as: (1) A small business as defined
by the Small Business Administration's (SBA) regulations at 13 CFR
121.201; (2) a small governmental jurisdiction that is a government of
a city, county, town, school district or special district with a
population of less than 50,000; and (3) a small organization that is
any not-for-profit enterprise which is independently owned and operated
and is not dominant in its field. For more information regarding the
expected economic impact of this action, please refer to our ``Regulatory
Impact Analysis'' available from the docket for this final rule.
    After considering the economic impacts of this final rule on small
entities, I certify that this action will not have a significant
economic impact on a substantial number of small entities. In
determining whether a rule has a significant economic impact on a
substantial number of small entities, the impact of concern is any
significant adverse economic impact on small entities, since the
primary purpose of the regulatory flexibility analyses is to identify
and address regulatory alternatives ``which minimize any significant
economic impact of the rule on small entities.'' 5 U.S.C. 603 and 604.
Thus, an agency may certify that a rule will not have a significant
economic impact on a substantial number of small entities if the rule
relieves regulatory burden, or otherwise has a positive economic effect
on all of the small entities subject to the rule. Because today's
action is designed to lower the cost of industrial hazardous secondary
materials management for entities subject to today's requirements, this
final rule will not result in an adverse economic impact effect on
affected small entities. EPA therefore concludes that today's action will
relieve regulatory burden for all size entities, including small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public
Law 104-4, establishes requirements for Federal agencies to assess the
effects of their regulatory actions on state, local, and tribal
governments and the private sector. Under section 202 of the UMRA, EPA
generally must prepare a written statement, including a cost-benefit
analysis, for proposed and final rules with ``Federal mandates'' that
may result in expenditures to state, local, and tribal governments, in
the aggregate, or to the private sector, of $100 million or more in any
one year. Before promulgating an EPA rule for which a written statement
is needed, section 205 of the UMRA generally requires EPA to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost-effective or least burdensome alternative
that achieves the objectives of the rule. The provisions of section 205
do not apply when they are inconsistent with applicable law. Moreover,
section 205 allows EPA to adopt an alternative other than the least
costly, most cost-effective or least burdensome alternative if the
Administrator publishes with the final rule an explanation why that
alternative was not adopted. Before EPA establishes any regulatory
requirements that may significantly or uniquely affect small
governments, including tribal governments, it must have developed

[[Page 64756]]

under section 203 of the UMRA a small government agency plan. The plan
must provide for notifying potentially affected small governments,
enabling officials of affected small governments to have meaningful and
timely input in the development of EPA regulatory proposals with
significant Federal intergovernmental mandates, and informing,
educating, and advising small governments on compliance with the
regulatory requirements.
    EPA has determined that this rule does not include a Federal
mandate that may result in expenditures of $100 million or more for
state, local, or tribal governments, in the aggregate, or the private
sector in any one year. This is because this rule imposes no
enforceable duty on any state, local, or tribal governments. Although
one public commenter noted that many states choose to incorporate EPA's
regulations by reference, EPA does not require them to do so. EPA also
has determined that this rule contains no regulatory requirements that
might significantly or uniquely affect small governments. In addition,
as discussed above, the private sector is not expected to incur costs
exceeding $100 million. Therefore, today's rule is not subject to the
requirements of sections 202 and 205 of UMRA.

E. Executive Order 13132: Federalism

    Executive Order 13132, entitled Federalism (64 FR 43255, August 10,
1999), requires EPA to develop an accountable process to ensure
meaningful and timely input by state and local officials in the
development of regulatory policies that have federalism implications.
Policies that have federalism implications are defined in the Executive
Order to include regulations that have substantial direct effects on
the states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government.
    This final rule does not have federalism implications. It will not
have substantial direct effects on the states, on the relationship
between the national government and the states, or on the distribution
of power and responsibilities among the various levels of government,
as specified in Executive Order 13132. There are no state and local
government bodies that incur direct compliance costs by this
rulemaking. State and local government implementation expenditures are
expected to be less than $500,000 in any one year. Thus, the
requirements of Section 6 of the Executive Order do not apply to this
final rule. Although one public commenter noted that many states choose
to incorporate EPA's regulations by reference, EPA does not require
them to do so.

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    Executive Order 13175, entitled Consultation and Coordination with
Indian Tribal Governments (59 FR 22951, November 9, 2000), requires EPA
to develop an accountable process to ensure a meaningful and timely
input by tribal officials in the development of regulatory policies
that have tribal implications. This final rule does not have tribal
implications, as specified in Executive Order 13175. It does not
significantly or uniquely affect the communities of Indian tribal
governments, nor would it impose substantial direct compliance costs on
them. Thus, Executive Order 13175 does not apply to this final rule.

G. Executive Order 13045: Protection of Children From Environmental
Health Risks and Safety Risks

    This action is not subject to EO 13045 (62 FR 19885, April 23,
1997) because the Agency does not believe the environmental health
risks or safety risks addressed by this action present a
disproportionate risk to children. An assessment of countervailing risk
and a discussion of how today's rule addresses those risks can be found
in Chapter 11 of the Regulatory Impact Analysis, found in the docket
for today's rulemaking.

H. Executive Order 13211: Actions That Significantly Affect Energy
Supply, Distribution, or Use

    This final rule is not a ``significant energy action'' as defined
in Executive Order 13211, ``Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 28355,
May 22, 2001) because it is not likely to have a significant
adverse effect on the supply, distribution, or use of energy. This
final rule reduces regulatory burden and as explained in our Regulatory
Impact Analysis, may possibly induce fuel efficiency and energy savings
from the voluntary shifting of some types of hazardous secondary
materials, where it is cost-effective for firms to do so, from current
landfill and incineration to reclamation. It therefore should not
adversely affect energy supply, distribution, or use.

I. National Technology Transfer and Advancement Act of 1995

    Section 12(d) of the National Technology Transfer and Advancement
Act of 1995 (``NTTAA''), Public Law No. 104-113, 12(d) (15 U.S.C. 272
note) directs EPA to use voluntary consensus standards in its
regulatory activities unless to do so would be inconsistent with
applicable law or otherwise impractical. Voluntary consensus standards
are technical standards (e.g., materials specifications, test methods,
sampling procedures, and business practices) that are developed or
adopted by voluntary consensus standards bodies. NTTAA directs EPA to
provide Congress, through OMB, explanations of when the Agency decides
not to use available and applicable voluntary consensus standards.
    This action does not involve technical standards. Therefore, EPA
did not consider the use of any voluntary consensus standards.

J. Executive Order 12898: Environmental Justice

    Executive Order 12898, Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Population (February 11,
1994), is designed to address the environmental and human health
conditions of minority and low-income populations. EPA is committed to
addressing environmental justice concerns and has assumed a leadership
role in environmental justice initiatives to enhance environmental
quality for all citizens of the United States. The Agency's goals are
to ensure that no segment of the population, regardless of race, color,
national origin, income, or net worth bears disproportionately high and
adverse human health and environmental impacts as a result of EPA's
policies, programs, and activities. Our goal is to ensure that all
citizens live in clean and sustainable communities. In response to
Executive Order 12898, and to the concerns voiced by many groups
outside the Agency, EPA's Office of Solid Waste and Emergency Response
(OSWER) formed an Environmental Justice Task Force to analyze the array
of environmental justice issues specific to waste programs and to
develop an overall strategy to identify and address these issues (OSWER
Directive No. 9200.3-17).
    This final rule would streamline the requirements for certain
hazardous secondary materials sent for reclamation. Facilities that
would be affected by today's final rule include those generating
hazardous secondary materials, as well as facilities which reclaim such
materials. Disposal and treatment facilities would not be affected by
this final rule. While commenters assert that minorities now comprise a
majority in neighborhoods

[[Page 64757]]

with commercial hazardous waste facilities, and much larger (over two-
thirds) majorities can be found in neighborhoods with clustered
facilities, EPA does not believe that such neighborhoods will be
adversely impacted by today's rule. As explained in Chapter 11 of the
Regulatory Impact Analysis found in the docket to today's rule, EPA has
performed an assessment of potential countervailing risks and has
determined that the conditions address those risks and no net impact is
expected. Thus, overall, no disproportionate impacts to minorities or
low income communities are expected.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by
Subtitle E of the Small Business Regulatory Enforcement Fairness Act of
1996 (SBREFA), generally provides that before a rule may take effect,
the agency promulgating the rule must submit a report containing the
rule and other required information to the U.S. Senate, the U.S. House
of Representatives, and to the Comptroller General of the United
States, prior to publication of the rule in the Federal Register.
Furthermore, a ``major rule'' cannot take effect until 60 days after it
is published in the Federal Register. Today's action is expected to be
a ``major rule'' as defined by 5 U.S.C. 804(2) according to the first
of its three ``major rule'' definitions: ``The term ``major rule''
means any rule that the Administrator of the Office of Information and
Regulatory Affairs of OMB finds has resulted in or is likely to result
in--(A) an annual effect on the economy of $100,000,000 or more; (B) a
major increase in costs or prices for consumers, individual industries,
Federal, state, or local government agencies, or geographic regions; or
(C) significant adverse effects on competition, employment, investment,
productivity, innovation, or on the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic and
export markets.'' EPA has submitted a copy of this rule to each House
of the Congress and to the Comptroller General, and this rule will be
effective December 29, 2008.

List of Subjects

40 CFR Part 260

    Environmental protection, Administrative practice and procedure,
Confidential business information, Hazardous waste, Reporting and
recordkeeping requirements.

40 CFR Part 261

    Environmental protection, Hazardous waste, Recycling, Reporting and
recordkeeping requirements.

40 CFR Part 270

    Administrative practice and procedure, Hazardous waste, Reporting
and recordkeeping requirements, Permit application requirements, Permit
modification procedures, Waste treatment and disposal.

    Dated: October 7, 2008.
Stephen L. Johnson,
Administrator.

• For the reasons stated in the preamble, title 40, chapter I of the Code
of Federal Regulations is amended to read as follows:

PART 260--HAZARDOUS WASTE MANAGEMENT SYSTEM: GENERAL

• 1. The authority citation for part 260 continues to read as follows:

    Authority: 42 U.S.C. 6905, 6912(a), 6921-6927, 6930, 6935, 6937,
6938, 6939 and 6974.

Subpart B--Definitions

• 2. Section 260.10 is amended by revising the definitions of
``Facility'' and ``Transfer facility'' and by adding in alphabetical
order the definitions of ``Hazardous secondary material,'' ``Hazardous
secondary material generated and reclaimed under the control of the
generator'' and ``Hazardous secondary material generator,''
``Intermediate facility,'' and ``Land-based unit'' to read as follows:

Sec.  260.10  Definitions.

* * * * *
    Facility means:
    (1) All contiguous land, and structures, other appurtenances, and
improvements on the land, used for treating, storing, or disposing of
hazardous waste, or for managing hazardous secondary materials prior to
reclamation. A facility may consist of several treatment, storage, or
disposal operational units (e.g., one or more landfills, surface
impoundments, or combinations of them).
    (2) For the purpose of implementing corrective action under 40 CFR
264.101 or 267.101, all contiguous property under the control of the
owner or operator seeking a permit under Subtitle C of RCRA. This
definition also applies to facilities implementing corrective action
under RCRA Section 3008(h).
    (3) Notwithstanding paragraph (2) of this definition, a remediation
waste management site is not a facility that is subject to 40 CFR
264.101, but is subject to corrective action requirements if the site
is located within such a facility.
* * * * *
    Hazardous secondary material means a secondary material (e.g.,
spent material, by-product, or sludge) that, when discarded, would be
identified as hazardous waste under part 261 of this chapter.
    Hazardous secondary material generated and reclaimed under the
control of the generator means:
    (1) That such material is generated and reclaimed at the generating
facility (for purposes of this defintion, generating facility means all
contiguous property owned, leased, or otherwise controlled by the
hazardous secondary material generator); or
    (2) That such material is generated and reclaimed at different
facilities, if the reclaiming facility is controlled by the generator
or if both the generating facility and the reclaiming facility are
controlled by a person as defined in Sec.  260.10, and if the generator
provides one of the following certifications: ``on behalf of [insert
generator facility name], I certify that this facility will send the
indicated hazardous secondary material to [insert reclaimer facility
name], which is controlled by [insert generator facility name] and that
[insert the name of either facility] has acknowledged full
responsibility for the safe management of the hazardous secondary
material,'' or ``on behalf of [insert generator facility name] I
certify that this facility will send the indicated hazardous secondary
material to [insert reclaimer facility name], that both facilities are
under common control, and that [insert name of either facility] has
acknowledged full responsibility for the safe management of the
hazardous secondary material.'' For purposes of this paragraph,
``control'' means the power to direct the policies of the facility,
whether by the ownership of stock, voting rights, or otherwise, except
that contractors who operate facilities on behalf of a different person
as defined in Sec.  260.10 shall not be deemed to ``control'' such
facilities, or
    (3) That such material is generated pursuant to a written contract
between a tolling contractor and a toll manufacturer and is reclaimed
by the tolling contractor, if the tolling contractor certifies the
following: ``On behalf of [insert tolling contractor name], I certify
that [insert tolling contractor name], has a written contract with
[insert toll manufacturer name] to manufacture [insert name of product
or intermediate] which is made from specified unused materials, and
that [insert tolling contractor name] will

[[Page 64758]]

reclaim the hazardous secondary materials generated during this
manufacture. On behalf of [insert tolling contractor name], I also
certify that [insert tolling contractor name] retains ownership of, and
responsibility for, the hazardous secondary materials that are
generated during the course of the manufacture, including any releases
of hazardous secondary materials that occur during the manufacturing
process. For purposes of this paragraph, tolling contractor means a
person who arranges for the production of a product or intermediate
made from specified unused materials through a written contract with a
toll manufacturer. Toll manufacturer means a person who produces a
product or intermediate made from specified unused materials pursuant
to a written contract with a tolling contractor.
    Hazardous secondary material generator means any person whose act
or process produces hazardous secondary materials at the generating
facility. For purposes of this paragraph, ``generating facility'' means
all contiguous property owned, leased, or otherwise controlled by the
hazardous secondary material generator. For the purposes of Sec. 
261.2(a)(2)(ii) and Sec.  261.4(a)(23), a facility that collects
hazardous secondary materials from other persons is not the hazardous
secondary material generator.
* * * * *
    Intermediate facility means any facility that stores hazardous
secondary materials for more than 10 days, other than a hazardous
secondary material generator or reclaimer of such material.
* * * * *
    Land-based unit means an area where hazardous secondary materials
are placed in or on the land before recycling. This definition does not
include land-based production units.
* * * * *
    Transfer facility means any transportation-related facility,
including loading docks, parking areas, storage areas and other similar
areas where shipments of hazardous waste or hazardous secondary
materials are held during the normal course of transportation.
* * * * *

• 3. Section 260.30 is amended by revising the section heading, the
introductory text, paragraph (b), and adding paragraphs (d) and (e) to
read as follows:

Sec.  260.30  Non-waste determinations and variances from
classification as a solid waste.

    In accordance with the standards and criteria in Sec.  260.31 and
Sec.  260.34 and the procedures in Sec.  260.33, the Administrator may
determine on a case-by-case basis that the following recycled materials
are not solid wastes:
* * * * *
    (b) Materials that are reclaimed and then reused within the
original production process in which they were generated;
* * * * *
    (d) Hazardous secondary materials that are reclaimed in a
continuous industrial process; and
    (e) Hazardous secondary materials that are indistinguishable in all
relevant aspects from a product or intermediate.
* * * * *

• 4. Section 260.33 is amended by revising the section heading, the
introductory text, paragraph (a) and adding paragraph (c) to read as
follows:

Sec.  260.33  Procedures for variances from classification as a solid
waste, for variances to be classified as a boiler, or for non-waste
determinations.

    The Administrator will use the following procedures in evaluating
applications for variances from classification as a solid waste,
applications to classify particular enclosed controlled flame combustion
devices as boilers, or applications for non-waste determinations.
    (a) The applicant must apply to the Administrator for the variance
or non-waste determination. The application must address the relevant
criteria contained in Sec.  260.31, Sec.  260.32, or Sec.  260.34, as
applicable.
* * * * *
    (c) For non-waste determinations, in the event of a change in
circumstances that affect how a hazardous secondary material meets the
relevant criteria contained in Sec.  260.34 upon which a non-waste
determination has been based, the applicant must re-apply to the
Administrator for a formal determination that the hazardous secondary
material continues to meet the relevant criteria and therefore is not a
solid waste.

• 5. Section 260.34 is added to Subpart C to read as follows:

Sec.  260.34  Standards and criteria for non-waste determinations.

    (a) An applicant may apply to the Administrator for a formal
determination that a hazardous secondary material is not discarded and
therefore not a solid waste. The determinations will be based on the
criteria contained in paragraphs (b) or (c) of this section, as
applicable. If an application is denied, the hazardous secondary
material might still be eligible for a solid waste variance or
exclusion (for example, one of the solid waste variances under Sec. 
260.31). Determinations may also be granted by the State if the State
is either authorized for this provision or if the following conditions
are met:
    (1) The State determines the hazardous secondary material meets the
criteria in paragraphs (b) or (c) of this section, as applicable;
    (2) The State requests that EPA review its determination; and
    (3) EPA approves the State determination.
    (b) The Administrator may grant a non-waste determination for
hazardous secondary material which is reclaimed in a continuous
industrial process if the applicant demonstrates that the hazardous
secondary material is a part of the production process and is not
discarded. The determination will be based on whether the hazardous
secondary material is legitimately recycled as specified in Sec. 
260.43 and on the following criteria:
    (1) The extent that the management of the hazardous secondary
material is part of the continuous primary production process and is
not waste treatment;
    (2) Whether the capacity of the production process would use the
hazardous secondary material in a reasonable time frame and ensure that
the hazardous secondary material will not be abandoned (for example,
based on past practices, market factors, the nature of the hazardous
secondary material, or any contractual arrangements);
    (3) Whether the hazardous constituents in the hazardous secondary
material are reclaimed rather than released to the air, water or land
at significantly higher levels from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process; and
    (4) Other relevant factors that demonstrate the hazardous secondary
material is not discarded.
    (c) The Administrator may grant a non-waste determination for
hazardous secondary material which is indistinguishable in all relevant
aspects from a product or intermediate if the applicant demonstrates
that the hazardous secondary material is comparable to a product or
intermediate and is not discarded. The determination will be based on
whether the hazardous secondary material is legitimately

[[Page 64759]]

recycled as specified in Sec.  260.43 and on the following criteria:
    (1) Whether market participants treat the hazardous secondary
material as a product or intermediate rather than a waste (for example,
based on the current positive value of the hazardous secondary
material, stability of demand, or any contractual arrangements);
    (2) Whether the chemical and physical identity of the hazardous
secondary material is comparable to commercial products or intermediates;
    (3) Whether the capacity of the market would use the hazardous
secondary material in a reasonable time frame and ensure that the
hazardous secondary material will not be abandoned (for example, based
on past practices, market factors, the nature of the hazardous
secondary material, or any contractual arrangements);
    (4) Whether the hazardous constituents in the hazardous secondary
material are reclaimed rather than released to the air, water or land
at significantly higher levels from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process; and
    (5) Other relevant factors that demonstrate the hazardous secondary
material is not discarded.

• 6. Section 260.42 is added to Subpart C to read as follows:

Sec.  260.42  Notification requirement for hazardous secondary materials.

    (a) Hazardous secondary material generators, tolling contractors,
toll manufacturers, reclaimers, and intermediate facilities managing
hazardous secondary materials which are excluded from regulation under
Sec.  261.2(a)(2)(ii), Sec.  261.4(a)(23), (24), or (25) must send a
notification prior to operating under the exclusion(s) and by March 1
of each even numbered year thereafter to the Regional Administrator
using EPA Form 8700-12 that includes the following information:
    (1) The name, address, and EPA ID number (if applicable) of the
facility;
    (2) The name and telephone number of a contact person;
    (3) The NAICS code of the facility;
    (4) The exclusion under which the hazardous secondary materials
will be managed (e.g., Sec.  261.2(a)(2)(ii), Sec.  261.4(a)(23), (24),
and/or (25));
    (5) For reclaimers and intermediate facilities managing hazardous
secondary materials in accordance with Sec.  261.4(a)(24) or (25),
whether the reclaimer or intermediate facility has financial assurance
(not applicable for persons managing hazardous secondary materials
generated and reclaimed under the control of the generator);
    (6) When the facility expects to begin managing the hazardous
secondary materials in accordance with the exclusion;
    (7) A list of hazardous secondary materials that will be managed
according to the exclusion (reported as the EPA hazardous waste numbers
that would apply if the hazardous secondary materials were managed as
hazardous wastes);
    (8) For each hazardous secondary material, whether the hazardous
secondary material, or any portion thereof, will be managed in a land-
based unit;
    (9) The quantity of each hazardous secondary material to be managed
annually; and
    (10) The certification (included in EPA Form 8700-12) signed and
dated by an authorized representative of the facility.
    (b) If a hazardous secondary material generator, tolling
contractor, toll manufacturer, reclaimer or intermediate facility has
submitted a notification, but then subsequently stops managing
hazardous secondary materials in accordance with the exclusion(s), the
facility must notify the Regional Administrator within thirty (30) days
using EPA Form 8700-12. For purposes of this section, a facility has
stopped managing hazardous secondary materials if the facility no
longer generates, manages and/or reclaims hazardous secondary materials
under the exclusion(s) and does not expect to manage any amount of
hazardous secondary materials for at least one year.

• 7. Section 260.43 is added to Subpart C to read as follows:

Sec.  260.43  Legitimate recycling of hazardous secondary materials
regulated under Sec.  260.34, Sec.  261.2(a)(2)(ii), and Sec. 
261.4(a)(23), (24), or (25).

    (a) Persons regulated under Sec.  260.34 or claiming to be excluded
from hazardous waste regulation under Sec.  261.2(a)(2)(ii), Sec. 
261.4(a)(23), (24), or (25) because they are engaged in reclamation
must be able to demonstrate that the recycling is legitimate. Hazardous
secondary material that is not legitimately recycled is discarded
material and is a solid waste. In determining if their recycling is
legitimate, persons must address the requirements of Sec.  260.43(b)
and must consider the requirements of Sec.  260.43(c) below.
    (b) Legitimate 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, and the
recycling process must produce a valuable product or intermediate.
    (1) The hazardous secondary material provides a useful contribution
if it
    (i) Contributes valuable ingredients to a product or intermediate;
or
    (ii) Replaces a catalyst or carrier in the recycling process; or
    (iii) Is the source of a valuable constituent recovered in the
recycling process; or
    (iv) Is recovered or regenerated by the recycling process; or
    (v) Is used as an effective substitute for a commercial product.
    (2) The product or intermediate is valuable if it is
    (i) Sold to a third party; or
    (ii) Used by the recycler or the generator as an effective
substitute for a commercial product or as an ingredient or intermediate
in an industrial process.
    (c) The following factors must be considered in making a determination
as to the overall legitimacy of a specific recycling activity.
    (1) The generator and the recycler should manage the hazardous
secondary material as a valuable commodity. Where there is an analogous
raw material, the hazardous secondary material should be managed, at a
minimum, in a manner consistent with the management of the raw
material. Where there is no analogous raw material, the hazardous
secondary material should be contained. Hazardous secondary materials
that are released to the environment and are not recovered immediately
are discarded.
    (2) The product of the recycling process does not
    (i) Contain significant concentrations of any hazardous
constituents found in Appendix VIII of part 261 that are not found in
analogous products; or
    (ii) Contain concentrations of any hazardous constituents found in
Appendix VIII of part 261 at levels that are significantly elevated
from those found in analogous products; or
    (iii) Exhibit a hazardous characteristic (as defined in part 261
subpart C) that analogous products do not exhibit.
    (3) In making a determination that a hazardous secondary material
is legitimately recycled, persons must evaluate all factors and
consider legitimacy as a whole. If, after careful evaluation of these
other considerations, one or both of the factors are not met, then this
fact may be an indication that the material is not legitimately recycled.
    However, the factors in this paragraph do not have to be met for
the recycling to be considered legitimate. In evaluating the extent to
which these factors are met and in determining

[[Page 64760]]

whether a process that does not meet one or both of these factors is
still legitimate, persons can consider the protectiveness of the
storage methods, exposure from toxics in the product, the bioavailability
of the toxics in the product, and other relevant considerations.

PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTE

• 8. The authority citation for part 261 continues to read as follows:

    Authority: 42 U.S.C. 6905, 6912(a), 6921, 6922, 6924(y), and 6938.

Subpart A--[Amended]

• 9. Section 261.1 is amended by revising paragraph (c)(4) to read as
follows:

Sec.  261.1  Purpose and scope.

* * * * *
    (c) * * *
    (4) A material is ``reclaimed'' if it is processed to recover a
usable product, or if it is regenerated. Examples are recovery of lead
values from spent batteries and regeneration of spent solvents. In
addition, for purposes of Sec. Sec.  261.2(a)(2)(ii), 261.4(a)(23), and
261.4(a)(24) smelting, melting and refining furnaces are considered to
be solely engaged in metals reclamation if the metal recovery from the
hazardous secondary materials meets the same requirements as those
specified for metals recovery from hazardous waste found in Sec. 
266.100(d)(1)-(3) of this chapter, and if the residuals meet the
requirements specified in Sec.  266.112 of this chapter.
* * * * *

• 10. Section 261.2 is amended by revising paragraph (a)(1), (a)(2),
(c)(3) and Table 1 in paragraph (c)(4) to read as follows:

Sec.  261.2  Definition of solid waste.

* * * * *
    (a)(1) A solid waste is any discarded material that is not excluded
under Sec.  261.4(a) or that is not excluded by a variance granted
under Sec. Sec.  260.30 and 260.31 or that is not excluded by a non-
waste determination under Sec. Sec.  260.30 and 260.34.
    (2)(i) A discarded material is any material which is:
    (A) Abandoned, as explained in paragraph (b) of this section; or
    (B) Recycled, as explained in paragraph (c) of this section; or
    (C) Considered inherently waste-like, as explained in paragraph (d)
of this section; or
    (D) A military munition identified as a solid waste in Sec.  266.202.
    (ii) A hazardous secondary material is not discarded if it is
generated and reclaimed under the control of the generator as defined
in Sec.  260.10, it is not speculatively accumulated as defined in
Sec.  261.1(c)(8), it is handled only in non-land-based units and is
contained in such units, it is generated and reclaimed within the
United States and its territories, it is not otherwise subject to
material-specific management conditions under Sec.  261.4(a) when
reclaimed, it is not a spent lead acid battery (see Sec.  266.80 and
Sec.  273.2), it does not meet the listing description for K171 or K172
in Sec.  261.32, and the reclamation of the material is legitimate, as
specified under Sec.  260.43. (See also the notification requirements
of Sec.  260.42). (For hazardous secondary materials managed in land-
based units, see Sec.  261.4(a)(23)).
* * * * *
    (c) * * *
    (3) Reclaimed. Materials noted with a ``--'' in column 3 of Table 1
are not solid wastes when reclaimed. Materials noted with an ``*'' in
column 3 of Table 1 are solid wastes when reclaimed unless they meet
the requirements of Sec. Sec.  261.2(a)(2)(ii), or 261.4(a)(17), or
261.4(a)(23), or 261.4(a)(24) or 261.4(a)(25).
    (4) * * *

                                                     Table 1
----------------------------------------------------------------------------------------------------------------
                                                                              Reclamation
                                                                            (261.2(c)(3)),
                                                                               except as
                                                                           provided in Sec.       Speculative
                                   Use constituting    Energy recovery/          Sec.         accumulation (Sec.
                                    disposal (Sec.        fuel (Sec.       261.2(a)(2)(ii),       261.2(c)(4))
                                     261.2(c)(1))        261.2(c)(2))        261.4(a)(17),
                                                                             261.4(a)(23),
                                                                           261.4(a)(24), or
                                                                             261.4(a)(25)
----------------------------------------------------------------------------------------------------------------
                                                  1                   2                   3                   4
----------------------------------------------------------------------------------------------------------------
Spent Materials.................                (*)                 (*)                 (*)                 (*)
Sludges (listed in 40 CFR Part                  (*)                 (*)                 (*)                 (*)
 261.31 or 261.32)..............
Sludges exhibiting a                            (*)                 (*)                  --                 (*)
 characteristic of hazardous
 waste..........................
By-products (listed in 40 CFR                   (*)                 (*)                 (*)                 (*)
 261.31 or 261.32)..............
By-products exhibiting a                        (*)                 (*)                  --                 (*)
 characteristic of hazardous
 waste..........................
Commercial chemical products                    (*)                 (*)                  --                  --
 listed in 40 CFR 261.33........
Scrap metal other than excluded                 (*)                 (*)                 (*)                 (*)
 scrap metal (see 261.1(c)(9))..
----------------------------------------------------------------------------------------------------------------
Note: The terms ``spent materials,'' ``sludges,'' ``by-products,'' and ``scrap metal'' and ``processed scrap
  metal'' are defined in Sec.   261.1.

* * * * *

• 11. Section 261.4 is amended by adding new paragraphs (a)(23), (24),
and (25) to read as follows:

Sec.  261.4  Exclusions.

    (a) * * *
    (23) Hazardous secondary material generated and reclaimed within
the United States or its territories and managed in land-based units as
defined in Sec.  260.10 of this chapter is not a solid waste provided that:
    (i) The material is contained;
    (ii) The material is a hazardous secondary material generated and
reclaimed under the control of the generator, as defined in Sec.  260.10;
    (iii) The material is not speculatively accumulated, as defined in
Sec.  261.1(c)(8);
    (iv) The material is not otherwise subject to material-specific
management conditions under paragraph (a) of this section when
reclaimed, it is not a spent lead acid battery (see Sec.  266.80 and
Sec.  273.2 of this chapter), and it does not meet the listing
description for K171 or K172 in Sec.  261.32;

[[Page 64761]]

    (v) The reclamation of the material is legitimate, as specified
under Sec.  260.43 of this chapter; and
    (vi) In addition, persons claiming the exclusion under this
paragraph (a)(23) must provide notification as required by Sec.  260.42
of this chapter. (For hazardous secondary material managed in a non-
land-based unit, see Sec.  261.2(a)(2)(ii)).
    (24) Hazardous secondary material that is generated and then
transferred to another person for the purpose of reclamation is not a
solid waste, provided that:
    (i) The material is not speculatively accumulated, as defined in
Sec.  261.1(c)(8);
    (ii) The material is not handled by any person or facility other
than the hazardous secondary material generator, the transporter, an
intermediate facility or a reclaimer, and, while in transport, is not
stored for more than 10 days at a transfer facility, as defined in
Sec.  260.10 of this chapter, and is packaged according to applicable
Department of Transportation regulations at 49 CFR Parts 173, 178, and
179 while in transport;
    (iii) The material is not otherwise subject to material-specific
management conditions under paragraph (a) of this section when
reclaimed, it is not a spent lead-acid battery (see Sec.  266.80 and
Sec.  273.2 of this chapter), and it does not meet the listing
description for K171 or K172 in Sec.  261.32;
    (iv) The reclamation of the material is legitimate, as specified
under Sec.  260.43 of this chapter;
    (v) The hazardous secondary material generator satisfies all of the
following conditions:
    (A) The material must be contained.
    (B) Prior to arranging for transport of hazardous secondary
materials to a reclamation facility (or facilities) where the
management of the hazardous secondary materials is not addressed under
a RCRA Part B permit or interim status standards, the hazardous
secondary material generator must make reasonable efforts to ensure
that each reclaimer intends to properly and legitimately reclaim the
hazardous secondary material and not discard it, and that each
reclaimer will manage the hazardous secondary material in a manner that
is protective of human health and the environment. If the hazardous
secondary material will be passing through an intermediate facility
where the management of the hazardous secondary materials is not
addressed under a RCRA Part B permit or interim status standards, the
hazardous secondary material generator must make contractual
arrangements with the intermediate facility to ensure that the
hazardous secondary material is sent to the reclamation facility
identified by the hazardous secondary material generator, and the
hazardous secondary material generator must perform reasonable efforts
to ensure that the intermediate facility will manage the hazardous
secondary material in a manner that is protective of human health and
the environment. Reasonable efforts must be repeated at a minimum of
every three years for the hazardous secondary material generator to
claim the exclusion and to send the hazardous secondary materials to
each reclaimer and any intermediate facility. In making these
reasonable efforts, the generator may use any credible evidence
available, including information gathered by the hazardous secondary
material generator, provided by the reclaimer or intermediate facility,
and/or provided by a third party. The hazardous secondary material
generator must affirmatively answer all of the following questions for
each reclamation facility and any intermediate facility:
    (1) Does the available information indicate that the reclamation
process is legitimate pursuant to Sec.  260.43 of this chapter? In
answering this question, the hazardous secondary material generator can
rely on their existing knowledge of the physical and chemical
properties of the hazardous secondary material, as well as information
from other sources (e.g., the reclamation facility, audit reports,
etc.) about the reclamation process. (By responding to this question,
the hazardous secondary material generator has also satisfied its
requirement in Sec.  260.43(a) of this chapter to be able to
demonstrate that the recycling is legitimate).
    (2) Does the publicly available information indicate that the
reclamation facility and any intermediate facility that is used by the
hazardous secondary material generator notified the appropriate
authorities of hazardous secondary materials reclamation activities
pursuant to Sec.  260.42 of this chapter and have they notified the
appropriate authorities that the financial assurance condition is
satisfied per paragraph (a)(24)(vi)(F) of this section? In answering
these questions, the hazardous secondary material generator can rely on
the available information documenting the reclamation facility's and
any intermediate facility's compliance with the notification
requirements per Sec.  260.42 of this chapter, including the
requirement in Sec.  260.42(a)(5) to notify EPA whether the reclaimer
or intermediate facility has financial assurance.
    (3) Does publicly available information indicate that the
reclamation facility or any intermediate facility that is used by the
hazardous secondary material generator has not had any formal
enforcement actions taken against the facility in the previous three
years for violations of the RCRA hazardous waste regulations and has
not been classified as a significant non-complier with RCRA Subtitle C?
In answering this question, the hazardous secondary material generator
can rely on the publicly available information from EPA or the state.
If the reclamation facility or any intermediate facility that is used
by the hazardous secondary material generator has had a formal
enforcement action taken against the facility in the previous three
years for violations of the RCRA hazardous waste regulations and has
been classified as a significant non-complier with RCRA Subtitle C,
does the hazardous secondary material generator have credible evidence
that the facilities will manage the hazardous secondary materials
properly? In answering this question, the hazardous secondary material
generator can obtain additional information from EPA, the state, or the
facility itself that the facility has addressed the violations, taken
remedial steps to address the violations and prevent future violations,
or that the violations are not relevant to the proper management of the
hazardous secondary materials.
    (4) Does the available information indicate that the reclamation
facility and any intermediate facility that is used by the hazardous
secondary material generator have the equipment and trained personnel
to safely recycle the hazardous secondary material? In answering this
question, the generator may rely on a description by the reclamation
facility or by an independent third party of the equipment and trained
personnel to be used to recycle the generator's hazardous secondary
material.
    (5) If residuals are generated from the reclamation of the excluded
hazardous secondary materials, does the reclamation facility have the
permits required (if any) to manage the residuals? If not, does the
reclamation facility have a contract with an appropriately permitted
facility to dispose of the residuals? If not, does the hazardous
secondary material generator have credible evidence that the residuals
will be managed in a manner that is protective of human health and the
environment? In answering these questions, the hazardous secondary
material generator can rely on publicly available information from EPA
or the

[[Page 64762]]

state, or information provided by the facility itself.
    (C) The hazardous secondary material generator must maintain for a
minimum of three years documentation and certification that reasonable
efforts were made for each reclamation facility and, if applicable,
intermediate facility where the management of the hazardous secondary
materials is not addressed under a RCRA Part B permit or interim status
standards prior to transferring hazardous secondary material.
Documentation and certification must be made available upon request by
a regulatory authority within 72 hours, or within a longer period of
time as specified by the regulatory authority. The certification
statement must:
    (1) Include the printed name and official title of an authorized
representative of the hazardous secondary material generator company,
the authorized representative's signature, and the date signed;
    (2) Incorporate the following language: ``I hereby certify in good
faith and to the best of my knowledge that, prior to arranging for
transport of excluded hazardous secondary materials to [insert name(s)
of reclamation facility and any intermediate facility], reasonable
efforts were made in accordance with Sec.  261.4(a)(24)(v)(B) to ensure
that the hazardous secondary materials would be recycled legitimately,
and otherwise managed in a manner that is protective of human health
and the environment, and that such efforts were based on current and
accurate information.''
    (D) The hazardous secondary material generator must maintain at the
generating facility for no less than three (3) years records of all
off-site shipments of hazardous secondary materials. For each shipment,
these records must, at a minimum, contain the following information:
    (1) Name of the transporter and date of the shipment;
    (2) Name and address of each reclaimer and, if applicable, the name
and address of each intermediate facility to which the hazardous
secondary material was sent;
    (3) The type and quantity of hazardous secondary material in the
shipment.
    (E) The hazardous secondary material generator must maintain at the
generating facility for no less than three (3) years confirmations of
receipt from each reclaimer and, if applicable, each intermediate
facility for all off-site shipments of hazardous secondary materials.
Confirmations of receipt must include the name and address of the
reclaimer (or intermediate facility), the type and quantity of the
hazardous secondary materials received and the date which the hazardous
secondary materials were received. This requirement may be satisfied by
routine business records (e.g., financial records, bills of lading,
copies of DOT shipping papers, or electronic confirmations of receipt);
and
    (vi) Reclaimers of hazardous secondary material excluded from
regulation under this exclusion and intermediate facilities as defined
in Sec.  260.10 of this chapter satisfy all of the following conditions:
    (A) The reclaimer and intermediate facility must maintain at its
facility for no less than three (3) years records of all shipments of
hazardous secondary material that were received at the facility and, if
applicable, for all shipments of hazardous secondary materials that
were received and subsequently sent off-site from the facility for
further reclamation. For each shipment, these records must at a minimum
contain the following information:
    (1) Name of the transporter and date of the shipment;
    (2) Name and address of the hazardous secondary material generator
and, if applicable, the name and address of the reclaimer or intermediate
facility which the hazardous secondary materials were received from;
    (3) The type and quantity of hazardous secondary material in the
shipment; and
    (4) For hazardous secondary materials that, after being received by
the reclaimer or intermediate facility, were subsequently transferred
off-site for further reclamation, the name and address of the
(subsequent) reclaimer and, if applicable, the name and address of each
intermediate facility to which the hazardous secondary material was sent.
    (B) The intermediate facility must send the hazardous secondary
material to the reclaimer(s) designated by the hazardous secondary
materials generator.
    (C) The reclaimer and intermediate facility must send to the
hazardous secondary material generator confirmations of receipt for all
off-site shipments of hazardous secondary materials. Confirmations of
receipt must include the name and address of the reclaimer (or
intermediate facility), the type and quantity of the hazardous
secondary materials received and the date which the hazardous secondary
materials were received. This requirement may be satisfied by routine
business records (e.g., financial records, bills of lading, copies of
DOT shipping papers, or electronic confirmations of receipt).
    (D) The reclaimer and intermediate facility must manage the
hazardous secondary material in a manner that is at least as protective
as that employed for analogous raw material and must be contained. An
``analogous raw material'' is a raw material for which a hazardous
secondary material is a substitute and serves the same function and has
similar physical and chemical properties as the hazardous secondary
material.
    (E) Any residuals that are generated from reclamation processes
will be managed in a manner that is protective of human health and the
environment. If any residuals exhibit a hazardous characteristic
according to subpart C of 40 CFR part 261, or if they themselves are
specifically listed in subpart D of 40 CFR part 261, such residuals are
hazardous wastes and must be managed in accordance with the applicable
requirements of 40 CFR parts 260 through 272.
    (F) The reclaimer and intermediate facility has financial assurance
as required under subpart H of 40 CFR part 261.
    (vii) In addition, all persons claiming the exclusion under this
paragraph (a)(24) of this section must provide notification as required
under Sec.  260.42 of this chapter.
    (25) Hazardous secondary material that is exported from the United
States and reclaimed at a reclamation facility located in a foreign
country is not a solid waste, provided that the hazardous secondary
material generator complies with the applicable requirements of
paragraph (a)(24)(i)-(v) of this section (excepting paragraph
(a)(v)(B)(2) of this section for foreign reclaimers and foreign
intermediate facilities), and that the hazardous secondary material
generator also complies with the following requirements:
    (i) Notify EPA of an intended export before the hazardous secondary
material is scheduled to leave the United States. A complete
notification must be submitted at least sixty (60) days before the
initial shipment is intended to be shipped off-site. This notification
may cover export activities extending over a twelve (12) month or
lesser period. The notification must be in writing, signed by the
hazardous secondary material generator, and include the following
information:
    (A) Name, mailing address, telephone number and EPA ID number (if
applicable) of the hazardous secondary material generator;
    (B) A description of the hazardous secondary material and the EPA
hazardous waste number that would

[[Page 64763]]

apply if the hazardous secondary material was managed as hazardous
waste and the U.S. DOT proper shipping name, hazard class and ID number
(UN/NA) for each hazardous secondary material as identified in 49 CFR
parts 171 through 177;
    (C) The estimated frequency or rate at which the hazardous
secondary material is to be exported and the period of time over which
the hazardous secondary material is to be exported;
    (D) The estimated total quantity of hazardous secondary material;
    (E) All points of entry to and departure from each foreign country
through which the hazardous secondary material will pass;
    (F) A description of the means by which each shipment of the
hazardous secondary material will be transported (e.g., mode of
transportation vehicle (air, highway, rail, water, etc.), type(s) of
container (drums, boxes, tanks, etc.));
    (G) A description of the manner in which the hazardous secondary
material will be reclaimed in the receiving country;
    (H) The name and address of the reclaimer, any intermediate
facility and any alternate reclaimer and intermediate facilities; and
    (I) The name of any transit countries through which the hazardous
secondary material will be sent and a description of the approximate
length of time it will remain in such countries and the nature of its
handling while there (for purposes of this section, the terms
``Acknowledgement of Consent'', ``receiving country'' and ``transit
country'' are used as defined in 40 CFR 262.51 with the exception that
the terms in this section refer to hazardous secondary materials,
rather than hazardous waste):
    (ii) Notifications submitted by mail should be sent to the
following mailing address: Office of Enforcement and Compliance
Assurance, Office of Federal Activities, International Compliance
Assurance Division, (Mail Code 2254A), Environmental Protection Agency,
1200 Pennsylvania Ave., NW., Washington, DC 20460. Hand-delivered
notifications should be delivered to: Office of Enforcement and
Compliance Assurance, Office of Federal Activities, International
Compliance Assurance Division, Environmental Protection Agency, Ariel
Rios Bldg., Room 6144, 12th St. and Pennsylvania Ave., NW., Washington,
DC 20004. In both cases, the following shall be prominently displayed
on the front of the envelope: ``Attention: Notification of Intent to
Export.''
    (iii) Except for changes to the telephone number in paragraph
(a)(25)(i)(A) of this section and decreases in the quantity of
hazardous secondary material indicated pursuant to paragraph
(a)(25)(i)(D) of this section, when the conditions specified on the
original notification change (including any exceedance of the estimate
of the quantity of hazardous secondary material specified in the
original notification), the hazardous secondary material generator must
provide EPA with a written renotification of the change. The shipment
cannot take place until consent of the receiving country to the changes
(except for changes to paragraph (a)(25)(i)(I) of this section and in
the ports of entry to and departure from transit countries pursuant to
paragraphs (a)(25)(i)(E) of this section) has been obtained and the
hazardous secondary material generator receives from EPA an Acknowledgment
of Consent reflecting the receiving country's consent to the changes.
    (iv) Upon request by EPA, the hazardous secondary material
generator shall furnish to EPA any additional information which a
receiving country requests in order to respond to a notification.
    (v) EPA will provide a complete notification to the receiving
country and any transit countries. A notification is complete when EPA
receives a notification which EPA determines satisfies the requirements
of paragraph (a)(25)(i) of this section. Where a claim of
confidentiality is asserted with respect to any notification
information required by paragraph (a)(25)(i) of this section, EPA may
find the notification not complete until any such claim is resolved in
accordance with 40 CFR 260.2.
    (vi) The export of hazardous secondary material under this
paragraph (a)(25) is prohibited unless the receiving country consents
to the intended export. When the receiving country consents in writing
to the receipt of the hazardous secondary material, EPA will send an
Acknowledgment of Consent to the hazardous secondary material
generator. Where the receiving country objects to receipt of the
hazardous secondary material or withdraws a prior consent, EPA will
notify the hazardous secondary material generator in writing. EPA will
also notify the hazardous secondary material generator of any responses
from transit countries.
    (vii) For exports to OECD Member countries, the receiving country
may respond to the notification using tacit consent. If no objection
has been lodged by any receiving country or transit countries to a
notification provided pursuant to paragraph (a)(25)(i) of this section
within thirty (30) days after the date of issuance of the
acknowledgement of receipt of notification by the competent authority
of the receiving country, the transboundary movement may commence. In
such cases, EPA will send an Acknowledgment of Consent to inform the
hazardous secondary material generator that the receiving country and
any relevant transit countries have not objected to the shipment, and
are thus presumed to have consented tacitly. Tacit consent expires one
(1) calendar year after the close of the thirty (30) day period;
renotification and renewal of all consents is required for exports
after that date.
    (viii) A copy of the Acknowledgment of Consent must accompany the
shipment. The shipment must conform to the terms of the Acknowledgment
of Consent.
    (ix) If a shipment cannot be delivered for any reason to the
reclaimer, intermediate facility or the alternate reclaimer or
alternate intermediate facility, the hazardous secondary material
generator must re-notify EPA of a change in the conditions of the
original notification to allow shipment to a new reclaimer in
accordance with paragraph (iii) of this section and obtain another
Acknowledgment of Consent.
    (x) Hazardous secondary material generators must keep a copy of
each notification of intent to export and each Acknowledgment of
Consent for a period of three years following receipt of the
Acknowledgment of Consent.
    (xi) Hazardous secondary material generators must file with the
Administrator no later than March 1 of each year, a report summarizing
the types, quantities, frequency and ultimate destination of all
hazardous secondary materials exported during the previous calendar
year. Annual reports submitted by mail should be sent to the following
address: Office of Enforcement and Compliance Assurance, Office of
Federal Activities, International Compliance Assurance Division (Mail
Code 2254A), Environmental Protection Agency, 1200 Pennsylvania Ave.,
NW., Washington, DC 20460. Hand-delivered reports should be delivered
to: Office of Enforcement and Compliance Assurance, Office of Federal
Activities, International Compliance Assurance Division, Environmental
Protection Agency, Ariel Rios Bldg., Room 6144, 12th St. and
Pennsylvania Ave., NW., Washington, DC 20004. Such reports must include
the following information:
    (A) Name, mailing and site address, and EPA ID number (if applicable) of

[[Page 64764]]

the hazardous secondary material generator;
    (B) The calendar year covered by the report;
    (C) The name and site address of each reclaimer and intermediate
facility;
    (D) By reclaimer and intermediate facility, for each hazardous
secondary material exported, a description of the hazardous secondary
material and the EPA hazardous waste number that would apply if the
hazardous secondary material was managed as hazardous waste, DOT hazard
class, the name and U.S. EPA ID number (where applicable) for each
transporter used, the total amount of hazardous secondary material
shipped and the number of shipments pursuant to each notification;
    (E) A certification signed by the hazardous secondary material
generator which states: ``I certify under penalty of law that I have
personally examined and am familiar with the information submitted in
this and all attached documents, and that based on my inquiry of those
individuals immediately responsible for obtaining the information, I
believe that the submitted information is true, accurate, and complete.
I am aware that there are significant penalties for submitting false
information including the possibility of fine and imprisonment.''
    (xii) All persons claiming an exclusion under this paragraph
(a)(25) must provide notification as required by Sec.  260.42 of this
chapter.
* * * * *

Subparts F-G [Reserved]

• 12. In part 261, Subpart F and Subpart G are added and reserved.
• 13. Part 261 is amended by adding new Subpart H to read as follows:
Subpart H--Financial Requirements for Management of Excluded Hazardous
Secondary Materials
Sec.
261.140 Applicability.
261.141 Definitions of terms as used in this subpart.
261.142 Cost estimate.
261.143 Financial assurance condition.
261.144-261.146 [reserved].
261.147 Liability requirements.
261.148 Incapacity of owners or operators, guarantors, or financial
institutions.
261.149 Use of State-required mechanisms.
261.150 State assumption of responsibility.
261.151 Wording of the instruments.

Subpart H--Financial Requirements for Management of Excluded
Hazardous Secondary Materials

Sec.  261.140  Applicability.

    (a) The requirements of this subpart apply to owners or operators
of reclamation and intermediate facilities managing hazardous secondary
materials excluded under 40 CFR Sec.  261.4(a)(24), except as provided
otherwise in this section.
    (b) States and the Federal government are exempt from the financial
assurance requirements of this subpart.

Sec.  261.141  Definitions of terms as used in this subpart.

    The terms defined in Sec.  265.141(d), (f), (g), and (h) of this
chapter have the same meaning in this subpart as they do in Sec. 
265.141 of this chapter.

Sec.  261.142  Cost estimate.

    (a) The owner or operator must have a detailed written estimate, in
current dollars, of the cost of disposing of any hazardous secondary
material as listed or characteristic hazardous waste, and the potential
cost of closing the facility as a treatment, storage, and disposal facility.
    (1) The estimate must equal the cost of conducting the activities
described in paragraph (a) of this section at the point when the extent
and manner of the facility's operation would make these activities the
most expensive; and
    (2) The cost estimate must be based on the costs to the owner or
operator of hiring a third party to conduct these activities. A third
party is a party who is neither a parent nor a subsidiary of the owner
or operator. (See definition of parent corporation in Sec.  265.141(d)
of this chapter.) The owner or operator may use costs for on-site
disposal in accordance with applicable requirements if he can
demonstrate that on-site disposal capacity will exist at all times over
the life of the facility.
    (3) The cost estimate may not incorporate any salvage value that
may be realized with the sale of hazardous secondary materials, or
hazardous or non-hazardous wastes if applicable under Sec.  265.5113(d)
of this chapter, facility structures or equipment, land, or other
assets associated with the facility.
    (4) The owner or operator may not incorporate a zero cost for
hazardous secondary materials, or hazardous or non-hazardous wastes if
applicable under Sec.  265.5113(d) of this chapter that might have
economic value.
    (b) During the active life of the facility, the owner or operator
must adjust the cost estimate for inflation within 60 days prior to the
anniversary date of the establishment of the financial instrument(s)
used to comply with Sec.  261.143. For owners and operators using the
financial test or corporate guarantee, the cost estimate must be
updated for inflation within 30 days after the close of the firm's
fiscal year and before submission of updated information to the
Regional Administrator as specified in Sec.  261.143(e)(3). The
adjustment may be made by recalculating the cost estimate in current
dollars, or by using an inflation factor derived from the most recent
Implicit Price Deflator for Gross National Product published by the
U.S. Department of Commerce in its Survey of Current Business, as
specified in paragraphs (b)(1) and (2) of this section. The inflation
factor is the result of dividing the latest published annual Deflator
by the Deflator for the previous year.
    (1) The first adjustment is made by multiplying the cost estimate
by the inflation factor. The result is the adjusted cost estimate.
    (2) Subsequent adjustments are made by multiplying the latest
adjusted cost estimate by the latest inflation factor.
    (c) During the active life of the facility, the owner or operator
must revise the cost estimate no later than 30 days after a change in a
facility's operating plan or design that would increase the costs of
conducting the activities described in paragraph (a) or no later than
60 days after an unexpected event which increases the cost of
conducting the activities described in paragraph (a) of this section.
The revised cost estimate must be adjusted for inflation as specified
in paragraph (b) of this section.
    (d) The owner or operator must keep the following at the facility
during the operating life of the facility: The latest cost estimate
prepared in accordance with paragraphs (a) and (c) and, when this
estimate has been adjusted in accordance with paragraph (b), the latest
adjusted cost estimate.

Sec.  261.143  Financial assurance condition.

    Per Sec.  261.4(a)(24)(vi)(F) of this chapter, an owner or operator
of a reclamation or intermediate facility must have financial assurance
as a condition of the exclusion as required under Sec.  261.4(a)(24) of
this chapter. He must choose from the options as specified in
paragraphs (a) through (e) of this section.
    (a) Trust fund. (1) An owner or operator may satisfy the
requirements of this section by establishing a trust fund which
conforms to the requirements of this paragraph and submitting an
originally signed duplicate of the trust agreement to the Regional
Administrator. The trustee must be an entity which has the authority to
act as a trustee and whose trust operations are regulated and examined
by a Federal or State agency.

[[Page 64765]]

    (2) The wording of the trust agreement must be identical to the
wording specified in Sec.  261.151(a)(1), and the trust agreement must
be accompanied by a formal certification of acknowledgment (for
example, see Sec.  261.151(a)(2)). Schedule A of the trust agreement
must be updated within 60 days after a change in the amount of the
current cost estimate covered by the agreement.
    (3) The trust fund must be funded for the full amount of the
current cost estimate before it may be relied upon to satisfy the
requirements of this section.
    (4) Whenever the current cost estimate changes, the owner or
operator must compare the new estimate with the trustee's most recent
annual valuation of the trust fund. If the value of the fund is less
than the amount of the new estimate, the owner or operator, within 60
days after the change in the cost estimate, must either deposit an
amount into the fund so that its value after this deposit at least
equals the amount of the current cost estimate, or obtain other
financial assurance as specified in this section to cover the difference.
    (5) If the value of the trust fund is greater than the total amount
of the current cost estimate, the owner or operator may submit a
written request to the Regional Administrator for release of the amount
in excess of the current cost estimate.
    (6) If an owner or operator substitutes other financial assurance
as specified in this section for all or part of the trust fund, he may
submit a written request to the Regional Administrator for release of the
amount in excess of the current cost estimate covered by the trust fund.
    (7) Within 60 days after receiving a request from the owner or
operator for release of funds as specified in paragraph (a) (5) or (6)
of this section, the Regional Administrator will instruct the trustee
to release to the owner or operator such funds as the Regional
Administrator specifies in writing. If the owner or operator begins
final closure under subpart G of 40 CFR part 264 or 265, an owner or
operator may request reimbursements for partial or final closure
expenditures by submitting itemized bills to the Regional
Administrator. The owner or operator may request reimbursements for
partial closure only if sufficient funds are remaining in the trust
fund to cover the maximum costs of closing the facility over its
remaining operating life. No later than 60 days after receiving bills
for partial or final closure activities, the Regional Administrator
will instruct the trustee to make reimbursements in those amounts as
the Regional Administrator specifies in writing, if the Regional
Administrator determines that the partial or final closure expenditures
are in accordance with the approved closure plan, or otherwise
justified. If the Regional Administrator has reason to believe that the
maximum cost of closure over the remaining life of the facility will be
significantly greater than the value of the trust fund, he may withhold
reimbursements of such amounts as he deems prudent until he determines,
in accordance with Sec.  265.143(i) that the owner or operator is no
longer required to maintain financial assurance for final closure of
the facility. If the Regional Administrator does not instruct the
trustee to make such reimbursements, he will provide to the owner or
operator a detailed written statement of reasons.
    (8) The Regional Administrator will agree to termination of the
trust when:
    (i) An owner or operator substitutes alternate financial assurance
as specified in this section; or
    (ii) The Regional Administrator releases the owner or operator from
the requirements of this section in accordance with paragraph (i) of
this section.
    (b) Surety bond guaranteeing payment into a trust fund. (1) An
owner or operator may satisfy the requirements of this section by
obtaining a surety bond which conforms to the requirements of this
paragraph and submitting the bond to the Regional Administrator. The
surety company issuing the bond must, at a minimum, be among those
listed as acceptable sureties on Federal bonds in Circular 570 of the
U.S. Department of the Treasury.
    (2) The wording of the surety bond must be identical to the wording
specified in Sec.  261.151(b).
    (3) The owner or operator who uses a surety bond to satisfy the
requirements of this section must also establish a standby trust fund.
Under the terms of the bond, all payments made thereunder will be
deposited by the surety directly into the standby trust fund in
accordance with instructions from the Regional Administrator. This
standby trust fund must meet the requirements specified in paragraph
(a) of this section, except that:
    (i) An originally signed duplicate of the trust agreement must be
submitted to the Regional Administrator with the surety bond; and
    (ii) Until the standby trust fund is funded pursuant to the
requirements of this section, the following are not required by these
regulations:
    (A) Payments into the trust fund as specified in paragraph (a) of
this section;
    (B) Updating of Schedule A of the trust agreement (see Sec. 
261.151(a)) to show current cost estimates;
    (C) Annual valuations as required by the trust agreement; and
    (D) Notices of nonpayment as required by the trust agreement.
    (4) The bond must guarantee that the owner or operator will:
    (i) Fund the standby trust fund in an amount equal to the penal sum
of the bond before loss of the exclusion under Sec.  261.4(a)(24) of
this chapter or
    (ii) Fund the standby trust fund in an amount equal to the penal
sum within 15 days after an administrative order to begin closure
issued by the Regional Administrator becomes final, or within 15 days
after an order to begin closure is issued by a U.S. district court or
other court of competent jurisdiction; or
    (iii) Provide alternate financial assurance as specified in this
section, and obtain the Regional Administrator's written approval of
the assurance provided, within 90 days after receipt by both the owner
or operator and the Regional Administrator of a notice of cancellation
of the bond from the surety.
    (5) Under the terms of the bond, the surety will become liable on
the bond obligation when the owner or operator fails to perform as
guaranteed by the bond.
    (6) The penal sum of the bond must be in an amount at least equal
to the current cost estimate, except as provided in paragraph (f) of
this section.
    (7) Whenever the current cost estimate increases to an amount
greater than the penal sum, the owner or operator, within 60 days after
the increase, must either cause the penal sum to be increased to an
amount at least equal to the current cost estimate and submit evidence
of such increase to the Regional Administrator, or obtain other
financial assurance as specified in this section to cover the increase.
Whenever the current cost estimate decreases, the penal sum may be
reduced to the amount of the current cost estimate following written
approval by the Regional Administrator.
    (8) Under the terms of the bond, the surety may cancel the bond by
sending notice of cancellation by certified mail to the owner or
operator and to the Regional Administrator. Cancellation may not occur,
however, during the 120 days beginning on the date of receipt of the
notice of cancellation by both the owner or operator and the Regional
Administrator, as evidenced by the return receipts.
    (9) The owner or operator may cancel the bond if the Regional
Administrator has given prior written consent based on his receipt of
evidence of alternate

[[Page 64766]]

financial assurance as specified in this section.
    (c) Letter of credit. (1) An owner or operator may satisfy the
requirements of this section by obtaining an irrevocable standby letter
of credit which conforms to the requirements of this paragraph and
submitting the letter to the Regional Administrator. The issuing
institution must be an entity which has the authority to issue letters
of credit and whose letter-of-credit operations are regulated and
examined by a Federal or State agency.
    (2) The wording of the letter of credit must be identical to the
wording specified in Sec.  261.151(c).
    (3) An owner or operator who uses a letter of credit to satisfy the
requirements of this section must also establish a standby trust fund.
Under the terms of the letter of credit, all amounts paid pursuant to a
draft by the Regional Administrator will be deposited by the issuing
institution directly into the standby trust fund in accordance with
instructions from the Regional Administrator. This standby trust fund
must meet the requirements of the trust fund specified in paragraph (a)
of this section, except that:
    (i) An originally signed duplicate of the trust agreement must be
submitted to the Regional Administrator with the letter of credit; and
    (ii) Unless the standby trust fund is funded pursuant to the
requirements of this section, the following are not required by these
regulations:
    (A) Payments into the trust fund as specified in paragraph (a) of
this section;
    (B) Updating of Schedule A of the trust agreement (see Sec. 
261.151(a)) to show current cost estimates;
    (C) Annual valuations as required by the trust agreement; and
    (D) Notices of nonpayment as required by the trust agreement.
    (4) The letter of credit must be accompanied by a letter from the
owner or operator referring to the letter of credit by number, issuing
institution, and date, and providing the following information: The EPA
Identification Number (if any issued), name, and address of the
facility, and the amount of funds assured for the facility by the
letter of credit.
    (5) The letter of credit must be irrevocable and issued for a
period of at least 1 year. The letter of credit must provide that the
expiration date will be automatically extended for a period of at least
1 year unless, at least 120 days before the current expiration date,
the issuing institution notifies both the owner or operator and the
Regional Administrator by certified mail of a decision not to extend
the expiration date. Under the terms of the letter of credit, the 120
days will begin on the date when both the owner or operator and the
Regional Administrator have received the notice, as evidenced by the
return receipts.
    (6) The letter of credit must be issued in an amount at least equal
to the current cost estimate, except as provided in paragraph (f) of
this section.
    (7) Whenever the current cost estimate increases to an amount
greater than the amount of the credit, the owner or operator, within 60
days after the increase, must either cause the amount of the credit to
be increased so that it at least equals the current cost estimate and
submit evidence of such increase to the Regional Administrator, or
obtain other financial assurance as specified in this section to cover
the increase. Whenever the current cost estimate decreases, the amount
of the credit may be reduced to the amount of the current cost estimate
following written approval by the Regional Administrator.
    (8) Following a determination by the Regional Administrator that
the hazardous secondary materials do not meet the conditions of the
exclusion under Sec.  261.4(a)(24), the Regional Administrator may draw
on the letter of credit.
    (9) If the owner or operator does not establish alternate financial
assurance as specified in this section and obtain written approval of
such alternate assurance from the Regional Administrator within 90 days
after receipt by both the owner or operator and the Regional
Administrator of a notice from the issuing institution that it has
decided not to extend the letter of credit beyond the current
expiration date, the Regional Administrator will draw on the letter of
credit. The Regional Administrator may delay the drawing if the issuing
institution grants an extension of the term of the credit. During the
last 30 days of any such extension the Regional Administrator will draw
on the letter of credit if the owner or operator has failed to provide
alternate financial assurance as specified in this section and obtain
written approval of such assurance from the Regional Administrator.
    (10) The Regional Administrator will return the letter of credit to
the issuing institution for termination when:
    (i) An owner or operator substitutes alternate financial assurance
as specified in this section; or
    (ii) The Regional Administrator releases the owner or operator from
the requirements of this section in accordance with paragraph (i) of
this section.
    (d) Insurance. (1) An owner or operator may satisfy the
requirements of this section by obtaining insurance which conforms to
the requirements of this paragraph and submitting a certificate of such
insurance to the Regional Administrator At a minimum, the insurer must
be licensed to transact the business of insurance, or eligible to
provide insurance as an excess or surplus lines insurer, in one or more
States.
    (2) The wording of the certificate of insurance must be identical
to the wording specified in Sec.  261.151(d).
    (3) The insurance policy must be issued for a face amount at least
equal to the current cost estimate, except as provided in paragraph (f)
of this section. The term ``face amount'' means the total amount the
insurer is obligated to pay under the policy. Actual payments by the
insurer will not change the face amount, although the insurer's future
liability will be lowered by the amount of the payments.
    (4) The insurance policy must guarantee that funds will be
available whenever needed to pay the cost of removal of all hazardous
secondary materials from the unit, to pay the cost of decontamination
of the unit, to pay the costs of the performance of activities required
under subpart G of 40 CFR parts 264 or 265, as applicable, for the
facilities covered by this policy. The policy must also guarantee that
once funds are needed, the insurer will be responsible for paying out
funds, up to an amount equal to the face amount of the policy, upon the
direction of the Regional Administrator, to such party or parties as
the Regional Administrator specifies.
    (5) After beginning partial or final closure under 40 CFR parts 264
or 265, as applicable, an owner or operator or any other authorized
person may request reimbursements for closure expenditures by
submitting itemized bills to the Regional Administrator. The owner or
operator may request reimbursements only if the remaining value of the
policy is sufficient to cover the maximum costs of closing the facility
over its remaining operating life. Within 60 days after receiving bills
for closure activities, the Regional Administrator will instruct the
insurer to make reimbursements in such amounts as the Regional
Administrator specifies in writing if the Regional Administrator
determines that the expenditures are in accordance with the approved
plan or otherwise justified. If the Regional Administrator has reason
to believe that the maximum cost over the remaining life of the
facility will be significantly greater than the face

[[Continued on page 64767]]
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