Revisions to the Definition of Solid Waste

[Federal Register: March 26, 2007 (Volume 72, Number 57)]
[Proposed Rules]
[Page 14171-14218]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr26mr07-16]
[[Page 14172]]

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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 260 and 261
[EPA-HQ-RCRA-2002-0031-FRL-8289-9]
RIN 2050-AG31

AGENCY: Environmental Protection Agency.
ACTION: Supplemental Proposed Rule.

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SUMMARY: The Environmental Protection Agency (EPA) is today publishing
a supplemental proposal which would revise the definition of solid
waste to exclude certain hazardous secondary materials from regulation
under Subtitle C of the Resource Conservation and Recovery Act (RCRA).
We are also soliciting comments on regulatory factors to be used to
determine whether recycling of hazardous secondary materials is
legitimate. The Agency first proposed changes to the definition of
solid waste on October 28, 2003 (68 FR 61558). The purpose of this
proposal is to encourage safe, environmentally sound recycling and
resource conservation and to respond to several court decisions
concerning the definition of solid waste.

DATES: Comments must be received on or before May 25, 2007. Under the
Paperwork Reduction Act, comments on the information collection
provisions must be received by OMB on or before April 25, 2007.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ -
RCRA 2002-0031 by one of the following methods:
http://www.regulations.gov: Follow the on-line instructions for
submitting comments.
E-mail: Comments may be sent by electronic mail (e-mail) to
RCRA-docket@epa.gov, Attention Docket ID No. EPA-HQ-RCRA-2002-0031.
Fax: Fax comments to: 202-566-0270, Attention Docket ID No. EPA-HQ-
RCRA 2002-0031.
Mail: Send comments to: OSWER Docket, EPA Docket Center, Mail Code
5305T, Environmental Protection Agency, 1200 Pennsylvania Avenue, NW.,
Washington, DC 20460, Attention Docket ID No. EPA-HQ-RCRA-2002-0031. In
addition, please mail a copy of your comments on the information
collection provisions to the Office of Information and Regulatory
Affairs, Office of Management and Budget (OMB), Attn: Desk Officer for
EPA, 725 17th St., Washington, DC 20503.
Hand delivery: Deliver comments to: Environmental Protection
Agency, EPA Docket Center, Room B102, 1301 Constitution Avenue, NW.,
Washington, DC, Attention Docket ID No. EPA-HQ-RCRA-2002-0031. Such
deliveries are only accepted during the docket's normal hours of
operation, and special arrangements should be made for deliveries of
boxed information.
Instructions: Direct your comments to Docket ID Number EPA-HQ-RCRA-
2002-0031. EPA's policy is that all comments received will be included
in the public docket without change and may be made available online at
http://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through http://www.regulations.gov
or e-mail. The http://www.regulations.gov Web site
is an ``anonymous access'' system, which means EPA will not know your
identity or contact information unless you provide it in the body of
your comment. If you send an e-mail comment directly to EPA without
going through http://www.regulations.gov your e-mail address will be
automatically captured and included as part of the comment that is
placed in the public docket and made available on the Internet. If you
submit an electronic comment, EPA recommends that you include your name
and other contact information in the body of your comment and with any
disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses.
Docket: All documents in the docket are listed in the
http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, such as CBI or other information
whose disclosure is restricted by statute. Certain other material, such
as copyrighted material, will be publicly available only in hard copy.
Publicly available docket materials are available either electronically
in http://www.regulations.gov or in hard copy at the OSWER Docket, EPA/
DC, EPA West, Room B102, 1301 Constitution Ave., NW., Washington, DC.
The Public Reading Room is open from 8:30 a.m. to 4:30 p.m. Monday
through Friday, excluding legal holidays. The telephone number for the
Public Reading Room is (202) 566-1744, and the telephone number for the
OSWER Docket is 202-566-0270.

FOR FURTHER INFORMATION CONTACT: For more detailed information on
specific aspects of this rulemaking, contact Marilyn Goode, Office of
Solid Waste, Hazardous Waste Identification Division, MC 5304P,
Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC 20460 (703) 308-8800, (goode.marilyn@epa.gov) or Tracy
Atagi, Office of Solid Waste, Hazardous Waste Identification Division,
MC 5304P, Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC 20460, at (703) 308-8672 (atagi.tracy@epa.gov).

SUPPLEMENTARY INFORMATION:

A. Regulated Entities

Entities potentially affected by this action include about 4600
facilities in 530 industries in 17 economic sectors that generate or
recycle hazardous secondary materials which are currently regulated as
RCRA Subtitle C hazardous wastes (e.g., industrial co-products, by-
products, residues, unreacted feedstocks). About 80 percent of these
affected facilities are classified in NAICS code economic sectors 31,
32, and 33 (manufacturing), and the remainder are in NAICS code
economic sectors 21 (mining), 22 (utilities), 23 (construction), 42
(wholesale trade), 44 and 45 (retail trade), 48 and 49
(transportation), 51 (information), 54 (professional, scientific and
technical services), 56 (administrative support, waste management and
remediation), 61 (educational services), 62 (health care and social
assistance, and 81 (other services). About 0.65 million tons per year
of recyclable industrial materials handled by these entities may be
affected, of which the most common types are metal-bearing hazardous
secondary materials (e.g., sludges and spent catalysts) for commodity
metals recovery, and organic chemical liquids for recycling as
solvents. This proposed rule, if promulgated, is expected to result in
regulatory and materials recovery cost savings to these industries of
approximately $107 million per year. Taking into account impact
estimation uncertainty factors, this rule, if promulgated, could affect
between 0.3 to 1.7 million tons per year of industrial hazardous
secondary materials handled by 3600 to 5400 entities in 460 to 570
industries, resulting in $93 million to $205 million per year of net
cost savings. More detailed information on the potentially affected
entities, industries, and industrial materials, as well as the economic
impacts of this

[[Page 14173]]

rule (with impact uncertainty factors), is presented in section XVI.A
of this preamble and in the ``Economics Background Document'' available
in the docket for this rulemaking.

B. What To Consider When Preparing Comments for EPA

1. Submitting CBI. Do not submit this information to EPA through
http://www.regulations.gov or e-mail. Clearly mark part of all
information that you claim to be CBI. For CBI information in a disk or
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as
CBI and then identify electronically within the disk or CD-ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed, except in accordance with
procedures set forth in 40 CFR Part 2.
2. Tips for Preparing Your Comments. When submitting comments,
remember to:
? Identify the rulemaking by docket number and other identifying
information (subject heading, Federal Register date and page number).
? Follow directions. The Agency may ask for commenters to
respond to specific questions or organize comments by referencing a
Code of Federal Regulations (CFR) part or Section number.
? Explain why you agree or disagree; suggest alternatives
and substitute language for your requested changes.
? Describe any assumptions and provide any technical
information and/or data that you used.
? If estimating burden or costs, explain methods used to arrive at
the estimate in sufficient detail to allow for it to be reproduced.
? Provide specific examples to illustrate any concerns and
suggest alternatives.
? Make sure to submit comments by the comment period
deadline identified above.

Preamble Outline

I. Statutory Authority.
II. What Is the Scope of This Supplemental Proposal?
III. What Is the Intent of This Supplemental Proposal?
IV. How Does This Supplemental Proposal Relate to the October 2003 Proposal?
V. How Is Hazardous Waste Recycling Currently Regulated?
VI. What Is the History of Recent Court Decisions on the Definition
of Solid Waste?
VII. How Does the Concept of Discard Relate to These Proposed Exclusions?
VIII. Recycling Studies.
IX. Exclusion for Hazardous Secondary Materials That Are
Legitimately Reclaimed Under the Control of the Generator: Proposed
40 CFR 260.10, 261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23).
X. Conditional Exclusion for Hazardous Secondary Materials That Are
Transferred for the Purpose of Reclamation: Proposed 40 CFR
261.2(c)(3), 261.4(a)(24), 261.4(a)(25).
XI. Legitimacy: Proposed 40 CFR 261.2(g).
XII. Petitions for Non-waste Classification: Proposed 40 CFR
260.30(d), 260.30(e), 260.30(f), 260.34.
XIII. Effect of This Proposal on Other Programs.
XIV. Measurement of the Performance Outcomes of This Supplemental Proposal.
XV. How Would These Proposed Regulatory Changes Be Administered and
Enforced in the States?
XVI. How Has EPA Fulfilled the Administrative Requirements for This
Rulemaking?

I. Statutory Authority

These regulations are proposed under the authority of sections
2002, 3001, 3002, 3003, 3004, 3007, 3010, and 3017 of the Solid Waste
Disposal Act of 1970, as amended by the Resource Conservation and
Recovery Act of 1976 (RCRA), as amended by the Hazardous and Solid
Waste Amendments of 1984 (HSWA), 42 U.S.C. 6921, 6922, 6923, and 6924.

II. What Is the Scope of This Supplemental Proposal?

In today's notice, EPA is proposing to revise the definition of
solid waste in order to exclude from regulation under Subtitle C of
RCRA certain hazardous secondary materials sent for recycling. We are
also seeking comment on certain changes to the proposed regulatory
factors for determining whether recycling is legitimate. The Agency
first proposed changes to the definition of solid waste, as well as
regulatory criteria for legitimacy, on October 28, 2003 (68 FR 61581-61588).
The scope of the regulatory changes proposed today are as follows:

A. Exclusion for Materials That Are Legitimately Reclaimed Under the
Control of the Generator in Non-Land-Based Units

This provision, with regulatory language proposed in 40 CFR
261.2(a)(2)(ii), would exclude certain hazardous secondary materials
(i.e., spent materials, listed sludges, and listed byproducts) that are
generated and legitimately reclaimed\1\ within the United States or its
territories \2\ and are only handled in non-land-based units (e.g.,
tanks, containers, containment buildings). The exclusion would apply to
hazardous secondary material that is reclaimed under the control of the
generator, if the materials are not speculatively accumulated. In
addition, EPA is proposing to include in 40 CFR 260.42 a requirement
that the generator would be required to submit a one-time notification
to EPA or the authorized state. Hazardous secondary material would be
considered ``under the control of the generator'' under the following
circumstances:
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\1\ In this context, the terms ``recycling'' and ``reclamation''
are not necessarily synonymous. ``Recycling typically involves a
series of activities, including storage and other handling steps
that culminate in the production of a valuable end product of some
kind. Thus, if materials need to be reclaimed in order to produce a
valuable end product, the reclamation activity can be thought of as
one step in the overall recycling process. See proposed Sec.
261.4(g). Further explanation of the term ``reclamation'' can be
found in the preamble to the October 2003 proposal at 68 FR 61564.
\2\ EPA has proposed to limit this exclusion to hazardous
secondary materials reclaimed within the United States or its
territories because it does not have sufficient information related
to recycling activities outside of the United States or its
territories to make the same general finding that it has made for
materials legitimately recycled under the control of the generator.
However, as noted below, EPA requests comment on whether the Agency
should promulgate a conditional exclusion for exported hazardous
secondary material otherwise meeting the criteria for this rule.
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(1) It is generated and then reclaimed at the generating facility;
or
(2) It is generated and reclaimed by the same company, if the
generator certifies that it is under the same ownership as the
reclaimer and that the owner company has acknowledged responsibility
for safe management of the hazardous secondary materials; or
(3) It is generated and reclaimed pursuant to a written agreement
between a tolling contractor and batch manufacturer, if the tolling
contractor retains ownership of, and responsibility for, the hazardous
secondary materials that are generated during the course of the
manufacture.
This proposed exclusion would not include recycling practices that
involve discard of materials. These practices include recycling of
inherently waste-like materials (40 CFR 261.2(d)), recycling of
materials that are used in a manner constituting disposal or used to
produce products that are applied to or placed on the land (40 CFR
261.2(c)(1)), and burning of materials for energy recovery or used to
produce a fuel or otherwise contained in fuels (40 CFR 261.2(c)(2)).
This proposed exclusion is further described in section IX of this

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preamble. We note that the Agency is considering expanding its
regulations for comparable fuels in a separate rulemaking.

B. Exclusion for Materials That Are Legitimately Reclaimed Under the
Control of the Generator in Land-Based Units

This provision, with regulatory language proposed in 40 CFR
261.4(a)(23), would exclude certain hazardous secondary materials that
are generated and legitimately reclaimed within the United States or
its territories and handled in land-based units (e.g., surface
impoundments, waste piles). This provision requires that hazardous
secondary materials managed in land-based units must be contained in
such units.

C. Conditional Exclusion for Materials That Are Transferred for the
Purpose of Reclamation

This conditional exclusion, with regulatory language proposed in 40
CFR 261.4(a)(24), (hereinafter referred to as the ``transfer-based
exclusion'') would apply to hazardous secondary materials (i.e., spent
materials, listed sludges, and listed byproducts) that are generated
and subsequently transferred to a different person or company for the
purpose of reclamation. As long as the conditions to the exclusion are
satisfied, the hazardous secondary materials would not be subject to
Subtitle C regulation. The conditions are intended to ensure that such
materials are handled as commodities rather than wastes. They will also
help guarantee that protection of human health and the environment will
not be compromised in the absence of hazardous waste regulatory
requirements for these materials. It is important to note that when
hazardous secondary materials are generated and reclaimed within the
United States pursuant to a written agreement between a tolling
contractor and a batch manufacturer as defined in proposed 40 CFR
260.10, these materials would be subject to the requirements of
proposed 40 CFR 261.2(a)(ii) or 261.4(a)(23) rather than the more
extensive requirements of proposed 40 CFR 261.4(a)(24).
If any of the hazardous secondary materials under proposed 40 CFR
261.4(a)(24) are generated and then exported to another country for
reclamation, we are also proposing that the exporter notify the
receiving country of the export through EPA and obtain consent from
that country before shipment of the material. This requirement is
proposed to be codified in 40 CFR 261.4(a)(25). Like the previously
discussed exclusion for hazardous secondary materials recycled under
the control of the generator, this exclusion would not cover recycling
of inherently waste-like materials, recycling of materials that are
used in a manner constituting disposal, and burning of materials for
energy recovery. The proposed exclusion is described in more detail in
section X of this preamble.

D. Petition Process for Non-Waste Determinations

In addition to the exclusions discussed above, the Agency also is
proposing a petition process, with regulatory language found in
proposed 40 CFR 260.30(d), 260.30(e), 260.30(f), and 260.34, for
obtaining a case-specific non-waste determination for certain hazardous
secondary materials that are recycled. This process would allow a
petitioner to receive a formal determination from the Agency that its
hazardous secondary material is clearly not ``discarded'' and therefore
is not a solid waste. The procedure would allow EPA or the authorized
state to take into account the particular fact pattern of the recycling
and to determine that the hazardous secondary material in question is
not a solid waste without imposing additional requirements. The
determination would be available to petitioners who could demonstrate
that their hazardous secondary materials were recycled in a continuous
industrial process, or that the materials were indistinguishable in all
relevant aspects from a product or intermediate, or that the materials
were under the control of the generator via a tolling arrangement or
similar contractual arrangement. The petition process for the non-waste
determinations would be the same as that for the variances from the
definition of solid waste found in 40 CFR 261.31. This process and the
criteria for making these determinations, are described in section XII
of this preamble.

E. Legitimacy

On October 28, 2003 (68 FR 61581-61588), EPA extensively discussed
our position on the relevance of legitimacy to hazardous waste
recycling in general and to the redefinition of solid waste
specifically. We proposed to codify in the RCRA regulations four
general criteria to be used in determining whether recycling of
hazardous secondary materials is legitimate. In today's action, we are
proposing changes to the proposed legitimacy criteria and asking for
public comment on these revisions. The changes consist of a
restructuring of the proposed criteria, called factors in this
proposal, by making two of these factors mandatory and two non-
mandatory considerations, and providing further guidance and
clarification on how the economics of recycling should be considered in
making legitimacy determinations. The changes are described in section
XI of this preamble.

III. What Is the Intent of This Supplemental Proposal?

Today's supplemental proposal would revise and clarify the RCRA
definition of solid waste as it pertains to certain types of hazardous
secondary materials that would not be considered wastes subject to
regulation under RCRA Subtitle C. This notice builds on our October 28,
2003 proposal (68 FR 61558) which was initiated partially in response
to decisions by the United States Court of Appeals for the DC Circuit,
which, taken together, have provided the Agency with additional
direction in this area.
This proposal represents an important restructuring of the RCRA
regulations that distinguish wastes from non-waste materials for RCRA
purposes, and that ensure environmental protections over hazardous
secondary materials recycling practices. As such, it also is an
opportunity for the Agency to clarify in a regulatory context the
concept of ``legitimate recycling,'' which has been and is a key
component of RCRA's regulatory program for recycling, but which to date
has been implemented without regulatory criteria. Today's supplemental
proposal thus includes specific regulatory provisions for determining
when hazardous secondary materials are recycled legitimately.
Today's supplemental proposal is de-regulatory in nature because
certain recyclable materials that have heretofore been subject to the
hazardous waste regulations would no longer be regulated as hazardous
waste. The factors to consider for legitimate recycling codify existing
principles without increasing regulation. This proposal is not intended
to bring new wastes into the RCRA regulatory system.
By removing unnecessary hazardous waste regulatory controls over
certain recycling practices, and by providing more explicit criteria
for determining the legitimacy of recycling practices in general, EPA
expects that this proposal will encourage the safe, beneficial
recycling of hazardous secondary materials. This regulatory initiative
is thus consistent with the Agency's longstanding policy of encouraging
the recovery and reuse of valuable resources as an alternative to land
disposal, while at the same time maintaining protection of human health
and the environment.

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It also is consistent with one of the primary goals of the Congress in
enacting the RCRA statute (as evidenced by its name), and with the
Agency's vision of how the RCRA program could evolve over the longer
term to promote sustainability and more efficient use of resources.\3\
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\3\ The Agency's long-term ``vision'' of the future of the RCRA
program is discussed in the document ``Beyond RCRA: Prospects for
Waste and Materials Management in the Year 2020,'' which is
available on the Agency's Web site http://www.epa.gov/epaoswer/osw/vision.htm.

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IV. How Does This Supplemental Proposal Relate to the October 2003 Proposal?

On October 28, 2003 (68 FR 61558), the Agency proposed to exclude
from the definition of solid waste any material generated and reclaimed
in a continuous process within the same industry, provided the
reclamation was legitimate. ``Same industry'' was defined as industries
sharing the same 4-digit North American Industry Classification System
(NAICS) code. The basis for that exclusion was the holding in American
Mining Congress v. EPA (``AMC I''), 824 F.2d 1177 (DC Cir. 1987)) that
materials destined for beneficial reuse of recycling in a continuous
process by the generating industry are not discarded. In order to be
eligible for the exclusion, the hazardous secondary material could not
be speculatively accumulated under 261.1(c)(8). In addition, the
generator of such materials would be required to submit a one-time
notification to EPA or the authorized State with contact information,
the type of material that would be excluded, and the industry that
generated the material. In the October 2003 proposal, the Agency also
proposed to codify in the RCRA regulations four criteria to be used in
determining whether recycling of hazardous secondary material was
legitimate. We also solicited comment on a broader conditional
exclusion from RCRA regulation for essentially all hazardous secondary
materials that are legitimately recycled. For a discussion of public
comments received on our proposed exclusion, see section IX of this
preamble.
After evaluating comments received on the October 2003 proposal and
conducting an independent analysis, EPA decided to restructure its
approach. Following the decision of the DC Circuit Court in Association
of Battery Recyclers v. EPA (``ABR'')( 208 F.3d 1047 (DC Cir. 2000),
EPA has decided to examine the principles behind the court's holdings
on the definition of solid waste, rather than trying to fit materials
into specific fact patterns addressed by the court. EPA is therefore
proposing (1) an exclusion for hazardous secondary materials that are
generated and then reclaimed under the control of the generator; (2) a
conditional exclusion for hazardous secondary materials that are
generated and then transferred to another person for the purpose of
reclamation; and (3) a petition process for obtaining a case-specific
non-waste determination for certain hazardous secondary materials that
are recycled. Today's notice also proposes a restructuring of the
previously proposed legitimacy criteria and further clarification and
guidance on how the economics of the recycling transaction should be
considered in making legitimacy determinations. A detailed description
of today's proposed regulatory changes and the reasons for not
finalizing the October 2003 proposal are discussed in sections IX, X,
XI, and XII of this preamble.

V. How Is Hazardous Waste Recycling Currently Regulated?

The basic regulatory provisions for defining ``solid wastes'' and
``hazardous wastes'' under RCRA are found in part 261 of Title 40 of
the Code of Federal Regulations (CFR). To be subject to RCRA's
hazardous waste regulatory program, a material must be a solid waste
that is also a hazardous waste. A solid waste is a hazardous waste if
it is explicitly listed as such (in subpart D of part 261), or if it
exhibits one or more of the hazardous characteristics (as specified in
subpart C of part 261).
In general, hazardous wastes are subject to RCRA's full ``cradle to
grave'' regulatory system from the time they are generated to the time
that they are ultimately disposed. However, hazardous secondary
materials often can be recycled instead of being disposed, which can
change how those wastes are regulated. The ``definition of solid
waste'' regulations in part 261 in effect separate recyclable hazardous
secondary materials into two broad categories--those that are
classified as solid wastes when recycled, and are therefore subject to
regulation under Subtitle C of RCRA if they are listed or
characteristic hazardous wastes, and those that are not considered
solid wastes when they are recycled, and thus are not regulated. It
should be understood that the term ``hazardous secondary material'' as
it is used in today's rule and preamble therefore refers to both
categories of recyclable materials; that is, materials that are
regulated as hazardous wastes when recycled, and materials that are not
considered wastes when recycled.
Hazardous secondary materials that are currently not regulated as
wastes when they are recycled include, for example, those which are
used or reused directly as effective substitutes for commercial
products, and those which can be used as ingredients in an industrial
process, provided the materials are not being reclaimed. See 40 CFR
261.2(e). In essence, EPA considers these types of recycling practices
to be more akin to normal industrial production rather than waste
management.
In contrast, in some recycling practices, the hazardous secondary
material cannot be used as is and must be significantly processed
before it can be reused in a manner similar to products in commerce. In
these cases, EPA has found that the material may be more ``waste-like''
and the hazardous secondary materials therefore have been regulated as
hazardous wastes. One type of recycling that falls within this category
and that is especially relevant to this rule is reclamation of certain
types of hazardous secondary materials. Reclamation involves the
processing of hazardous secondary materials in some way in order so
that they can be used or reused. See 40 CFR 261.1(c)(4) and 40 CFR
261.2(c)(3). An example of reclamation is processing of a spent solvent
to restore its solvent properties before it is suitable for reuse as a
solvent. As explained elsewhere in today's preamble, this supplemental
proposal would reexamine the regulatory status of these hazardous
secondary materials and de-regulate a specific subset of these
materials that are recycled by being reclaimed.
In the existing Part 261 regulations, EPA identified other types of
recycling practices that are fully regulated because, we concluded,
they involve discard of materials. These practices include recycling of
``inherently waste-like'' materials (40 CFR 261.2(d)), recycling of
materials that are ``used in a manner constituting disposal,'' or
``used to produce products that are applied to or placed on the
land,''(40 CFR 261.2(c)(1)) and ``burning of materials for energy
recovery'' or ``used to produce a fuel or otherwise contained in
fuels'' (40 CFR 261.2(c)(2)). Today's supplemental proposal is not
intended to affect how these recycling practices are regulated.
The current regulations also provide certain specific exemptions
and exclusions from the definition of solid waste for particular
recycling practices. For example, pulping liquors from paper
manufacturing that are reclaimed in a pulping liquor recovery furnace
and then reused in the pulping process are

[[Page 14176]]

excluded from regulation under 40 CFR 261.4(a)(6). In some cases, these
exclusions specify certain conditions that must be met in order to
qualify for and maintain the excluded status of the recycled material.
An example of such a ``conditional exclusion'' is the one provided in
40 CFR 261.4(a)(9) for spent wood preserving solutions that are
reclaimed and reused. EPA is proposing that hazardous secondary
materials that are currently excluded with specific requirements or
conditions should be required to continue to meet those requirements
(e.g., the drip pad requirements for the wood preserving exclusion). In
addition, recycling of such materials at new facilities, or at existing
facilities that are not currently operating under the terms of an
existing exclusion, would also be subject to the existing applicable
regulatory exclusion, rather than today's proposed exclusions. For a
fuller discussion of this issue, see section XIII of this preamble. In
that section, we solicit comment on allowing regulated entities to
choose which exclusion they would be subject to in cases where more
than one exclusion could apply.

VI. What Is the History of Recent Court Decisions on the Definition of
Solid Waste?

A. Background

RCRA gives EPA the authority to regulate the disposal of ``solid
wastes'' under its non-hazardous waste program. See, e.g., RCRA
sections 1008(a), 4001 and 4004(a). RCRA also gives EPA authority to
regulate hazardous wastes. See, e.g., RCRA sections 3001-3004.
``Hazardous wastes'' are the subset of solid wastes that present
threats to human health and the environment. See section 1004(5). EPA
also may address solid and hazardous wastes under its endangerment
authorities in section 7003. (Similar authorities are available for
citizen suits under section 7002.) Materials that are not solid wastes
are generally not subject to regulation under RCRA Subtitle C. Thus,
the definition of ``solid waste'' plays a key role in defining the
scope of EPA's authorities under RCRA.
The statute defines ``solid waste'' as ``* * * any garbage, refuse,
sludge from a waste treatment plant, water supply treatment plant, or
air pollution control facility and other discarded material * * *
resulting from industrial, commercial, mining, and agricultural
operations, and from community activities * * *'' (RCRA Section 1004
(27) (emphasis added)). In its RCRA hazardous waste regulations, EPA
has historically defined certain hazardous secondary materials destined
for recycling as ``waste,'' while excluding others.
Since 1980, EPA has interpreted ``solid waste'' under its Subtitle
C regulations to encompass both materials that are destined for final,
permanent placement in disposal units, as well as some materials that
are destined for recycling. 45 FR 33090-95 (May 19, 1980); 50 FR 604-
656 (Jan. 4, 1985) (see especially pages 616-618). EPA has offered
three arguments in support of this approach:
? The 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).
? Hazardous secondary materials stored or transported prior
to recycling have the potential to present the same types of threats to
human health and the environment as hazardous wastes stored or
transported prior to disposal. In fact, EPA found that recycling
operations have accounted for a number of significant damage incidents.
For example, materials destined for recycling were involved in one-
third of the first 60 filings under RCRA's imminent and substantial
endangerment authority, and 20 of the initial sites listed under
CERCLA. (48 FR 14474, April 4, 1983.) Congress also cited some damage
cases which can be interpreted to involve recycling. (H.R. Rep. 94-
1491, 94th Cong., 2d Sess., at 17, 18, 22). More recent data (i.e.,
information on damages occurring after 1982) included in the rulemaking
docket for today's supplemental proposal corroborate the fact that
recycling operations can result in significant damage incidents. (See
section IV.B.2 of today's preamble.)
? Excluding all hazardous secondary materials destined for
recycling would allow materials to move in and out of the hazardous
waste management system depending on what any person handling the
material intended to do with it. This seems inconsistent with the
mandate to track hazardous wastes and control them from ``cradle to grave.''
EPA has interpreted the statute to confer jurisdiction over at
least certain hazardous secondary materials destined for recycling. The
Agency has therefore developed in Part 261 of 40 CFR a definition of
``solid waste'' for Subtitle C regulatory purposes. (Note: This
definition is narrower than the definition of ``solid waste'' for RCRA
endangerment and information-gathering authorities. See 40 CFR 261.1(b)
and Connecticut Coastal Fishermen's Association v. Remington Arms Co.,
989 F.2d 1305, 1315 (2d Cir. 1993), holding that EPA's use of a
narrower and more specific definition of solid waste for Subtitle C
purposes is a reasonable interpretation of the statute. See also
Military Toxics Project v. EPA, 146 F.3d 948 (DC Cir. 1998).)
Under its current Subtitle C regulations, EPA classifies as solid
wastes some--but not all--hazardous secondary materials that are
recycled by ``reclamation.'' The regulations define ``spent materials''
as being ``discarded'' if they are destined for reclamation. However,
``commercial chemical products'' are not defined as ``discarded'' when
reclaimed. In addition, byproducts and sludges are defined as
``discarded'' when reclaimed on a case-by-case basis. That is, EPA
considers these materials to be ``discarded'' when they are
specifically listed as a hazardous waste at 40 CFR 261 Subpart D. See
Table 1 to 40 CFR 261.2. EPA has also promulgated three exceptions from
the Subtitle C definition for materials destined for reclamation. See
260.31(b) and (c); 40 CFR 261.4(a)(8).
Finally, EPA has always asserted that materials are not excluded
from its jurisdiction simply because someone claims that they will be
recycled. EPA has consistently considered hazardous secondary materials
destined for ``sham recycling'' to be discarded and, hence, to be solid
wastes for Subtitle C purposes. See 45 FR 33093 (May 19, 1980), 50 FR
638-39 (Jan. 4, 1985). The U.S. Court of Appeals for the DC Circuit has
agreed that materials undergoing sham recycling are discarded and,
consequently, are solid wastes under RCRA. See American Petroleum
Institute v. EPA, 216 F.3d 50, 58-59 (DC Cir. 2000).

B. A Series of DC Circuit Court Decisions

Trade associations representing mining and oil refining interests
challenged EPA's 1985 regulatory definition of solid waste. In 1987,
the DC Circuit held that EPA exceeded its authority ``in seeking to
bring materials that are not discarded or otherwise disposed of within
the compass of `waste.' '' American Mining Congress v. EPA (``AMC I''),
824 F.2d 1177, 1178 (DC Cir. 1987). Although the Court clearly
articulated this concept, it did not specify which portions of the
rules exceeded EPA's authority. It more

[[Page 14177]]

generally ``granted the petition for review.''
The Court held that certain of the materials EPA was seeking to
regulate were not ``discarded materials'' under section 1004(27). After
reviewing numerous statutory provisions and portions of the legislative
history, the Court held that Congress used the term ``discarded'' in
its ordinary sense, to mean ``disposed of'' or ``abandoned 824 F.2d at
1188-89. The Court further held that the term ``discarded materials''
could not include materials * * * destined for beneficial reuse or
recycling in a continuous process by the generating industry itself
(because they) are not yet part of the waste disposal problem. 824 F.2d
at 1190. The Court held that Congress had directly spoken to this
issue, so that EPA's use of a conflicting definition was not entitled
to deference under Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837 (1984).
824 F.2d at 1183, 1189-90, 1193.
At the same time, the Court did not hold that no recycled materials
could be discarded. The Court mentioned at least two examples of
recycled materials that EPA properly considered within its statutory
jurisdiction, noting that used oil can be considered a solid waste. 824
F.3d at 1187 (fn 14). Also, the Court suggested that materials disposed
of and recycled as part of a waste management program are within EPA's
jurisdiction. 824 F.2d at 1179. Subsequent decisions by the DC Circuit
also indicate that some materials destined for recycling are
``discarded'' and therefore within EPA's jurisdiction. In particular,
the Court held that emission control dust from steelmaking operations
listed as hazardous waste ``K061'' is a solid waste, even when sent to
a metals reclamation facility, at least where that is the treatment
method required under EPA's land disposal restrictions program.
American Petroleum Institute v. EPA (``API I ''), 906 F.2d 729 (DC Cir.
1990). The Court held that it is reasonable for EPA to consider as
discarded (and solid wastes) listed wastes managed in units that are
part of wastewater treatment units, especially where it is not clear
that the industry actually reuses the materials. (``AMC II''), 907 F.2d
1179 (DC Cir. 1990). Also, the Court found that EPA potentially had
jurisdiction over oil-bearing wastewaters recycled at petroleum
refineries, although in the rule under review EPA failed to provide a
rational basis for asserting jurisdiction. American Petroleum Institute
v. EPA (``API II ''), 216 F.3d 50, 57-58 (DC Cir. 2000).
It also is worth noting that two other Circuits also have held that
EPA has authority over at least some materials destined for reclamation
rather than final discard. The U.S. Court of Appeals for the 11th
Circuit found that ``[i]t is unnecessary to read into the term
`discarded' a congressional intent that the waste in question must
finally and forever be discarded.'' U.S. v. ILCO, 996 F.2d 1126, 1132
(11th Cir. 1993) (finding that used lead batteries sent to a reclaimer
have been ``discarded once'' by the entity that sent the battery to the
reclaimer). The Fourth Circuit found that slag held on the ground
untouched for six months before sale for use as road bed could be a solid
waste. Owen Electric Steel Co. v. EPA, 37 F.3d 146, 150 (4th Cir. 1994).
Considering all of these decisions (except the API case decided in
2000), in 1998, EPA promulgated a rule in which EPA claimed Subtitle C
jurisdiction over hazardous secondary materials recycled by reclamation
within the mineral processing industry (the ``LDR Phase IV rule'') (63
FR 28556 (May 26, 1998)). In that rule, EPA promulgated a conditional
exclusion for all types of mineral processing hazardous secondary
materials destined for reclamation. EPA imposed a condition prohibiting
land-based storage prior to reclamation because it considered hazardous
secondary materials from the mineral processing industry that were
stored on the land to be part of the waste disposal problem (63 FR at
28581). The conditional exclusion decreased regulation over spent
materials stored prior to reclamation, but increased regulation over
by-products and sludges that exhibit a hazardous characteristic, and
that are stored prior to reclamation. EPA noted that the statute does
not authorize it to regulate ``materials that are destined for
immediate reuse in another phase of the industry's ongoing production
process.'' EPA, however, took the position that materials that are
removed from a production process for storage are not ``immediately
reused,'' and therefore are ``discarded'' (63 FR at 28580).
The mining industry challenged the rule, and the DC Circuit vacated
the provisions that expanded jurisdiction over characteristic by-
products and sludges destined for reclamation. Association of Battery
Recyclers v. EPA (``ABR''), 208 F.3d 1047 (DC Cir. 2000). The Court
held that it had already resolved the issue presented here in its
opinion in AMC I, where it found that ``* * * Congress unambiguously
expressed its intent that `solid waste' (and therefore EPA's regulatory
authority) be limited to materials that are `discarded' by virtue of
being disposed of, abandoned, or thrown away.'' 208 F.2d at 1051. It
repeated that materials reused within an ongoing industrial process are
neither disposed of nor abandoned. 208 F.3d at 1051-52. It explained
that the intervening API I and AMC II decisions had not narrowed the
holding in AMC I. 208 F.3d at 1054-1056.
At the same time, the Court did not hold that storage before
reclamation automatically makes materials ``discarded.'' Rather, it
held that ``* * * at least some of the secondary material EPA seeks to
regulate as solid waste (in the mineral processing rule) is destined
for reuse as part of a continuous industrial process and thus is not
abandoned or thrown away.'' 208 F.3d at 1056.
In its most recent opinion dealing with the definition of solid
waste, Safe Food and Fertilizer v. EPA, 350 F.3d 1263 (DC Cir. 2003),
the Court upheld an EPA rule that excludes from the definition of solid
waste hazardous secondary materials used to make zinc fertilizers, and
the fertilizers themselves, so long as the recycled materials meet
certain handling, storage and reporting conditions and the resulting
fertilizers have concentration levels for lead, arsenic, mercury,
cadmium, chromium, and dioxins that fall below specified thresholds.
Final Rule, ``Zinc Fertilizers Made From Recycled Hazardous Secondary
Materials'' (``Fertilizer Rule''), (67 FR 48393 (2002)). EPA determined
that if these conditions are met, the recycled materials have not been
discarded. The conditions apply to a number of recycled materials not
produced in the fertilizer production industry, including certain zinc-
bearing hazardous secondary materials such as brass foundry dusts.
EPA's reasoning was that market participants, consistent with the
EPA-required conditions in the rule, would treat the exempted materials
more like valuable products than like negatively-valued wastes and,
thus, would manage them in ways inconsistent with discard. In addition,
the fertilizers derived from these recycled feedstocks are chemically
indistinguishable from analogous commercial products made from raw
materials. 350 F.3d at 1269. The court upheld the rule based on EPA's
explanation that market participants manage materials in ways
inconsistent with discard, and the fact that the levels of contaminants
in the recycled fertilizers were ``identical'' to the fertilizers made
with raw materials. The court held that this interpretation of
``discard'' was reasonable and consistent with the statutory purpose.
The court

[[Page 14178]]

noted that the identity principle was defensible because the
differences in health and environmental risks between the two types of
fertilizers are so slight as to be substantively meaningless.
However, the Court specifically stated that it ``need not consider
whether a material could be classified as a non-discarded exclusively
on the basis of the market-participation theory.'' 350 F.3d at 1269.
The court only determined that the combination of market participants'
treatment of the materials, EPA required management standards and the
``identity principle'' are a reasonable set of tools to establish that
the recycled secondary materials and fertilizers are not discarded.

C. 2003 Proposed Revisions to the Definition of Solid Waste

As a result of the court decision in ABR to vacate the provisions
in the May 1998 final rule that increased regulation of characteristic
by-products and sludges from mineral processing, EPA promulgated a
final rule removing from the Code of Federal Regulations the byproduct
and sludge provisions (67 FR 11251 (Mar. 13, 2002)). Later, prompted by
concerns articulated in the various Court opinions up to the ABR
decision, EPA issued the October 2003 notice, which proposed that
material generated and reclaimed in a continuous process within the
same industry is not discarded for purposes of Subtitle C, provided
that the recycling process is legitimate. However, for the reasons
described elsewhere in today's notice, we are proposing different types
of exclusions from the definition of solid waste in this supplemental
proposal that we believe more directly consider whether particular
materials are not considered ``discarded'', and are not solid and
hazardous wastes subject to regulation under Subtitle C of RCRA. The
October 2003 proposal and how it relates to today's supplemental
proposal is further discussed elsewhere in today's preamble.

VII. How Does the Concept of Discard Relate to These Proposed Exclusions?

The concept of ``discard'' is the central organizing idea behind
today's supplemental proposal, which reflects the fundamental logic of
the RCRA statute. As stated in RCRA Section 1004(27), ``solid waste''
is defined as ``* * * any garbage, refuse, sludge from a waste
treatment plant, or air pollution control facility and other discarded
material * * * resulting from industrial, commercial, mining and
agricultural activities* * *'' Therefore, in the context of this
supplemental proposal, a key issue is the circumstances under which a
material that is recycled by reclamation is or is not discarded.
In the series of decisions discussed above relating to the RCRA
definition of solid waste, the Court of Appeals for the DC Circuit has
consistently cited a plain language definition of discard, as meaning
``disposing, abandoning or throwing away.'' EPA believes that this is a
workable and logical definition of the term, and the underlying logic
of today's proposed exclusions is consistent with this definition.
The basic rationale that EPA is applying in this case
differentiates between recycled hazardous secondary materials over
which the generator maintains control and recycled hazardous secondary
materials over which the generator relinquishes control. If the
generator maintains control over the recycled hazardous secondary
material and it is legitimately recycled under the standards
established in this proposal and the material is not speculatively
accumulated within the meaning of EPA's regulations, the hazardous
secondary material is not discarded. This is because the material is
being treated as a valuable commodity rather than as a waste. By
maintaining control over, and potential liability for, the recycling
process, the generator ensures that the materials are not discarded.
See ABR 208 F.3d at 1051 (``Rather than throwing these materials
[destined for recycling] away, the producers saves them; rather than
abandoning them, the producer reuses them.''). However, when the
hazardous secondary materials are managed in land-based units (e.g.,
waste piles, surface impoundments, etc), the hazardous secondary
materials must be contained, or they may be considered discarded, even
if they remain under the control of the generator. While placement on
the land would not in itself constitute discard, when hazardous
secondary materials are not being managed as a valuable product and, as
a result, a significant release occurs, such materials would be
considered discarded. Further discussion of these concepts appears in
section IX of this preamble.
In those cases, however, where generators of hazardous secondary
materials do not re-use or recycle the materials themselves, it often
may be a sound business decision to ship the material to be recycled to
a commercial facility or another manufacturer in order to avoid the
costs of disposing of the material. In such situations, the generator
has relinquished control of the hazardous secondary material and the
entity receiving such materials may not have the same incentives to
manage the hazardous secondary material as a useful product.
Accordingly, the Agency believes that conditions are needed for the
Agency to determine that this material is not discarded. However, if
the recycler legitimately recycles the hazardous secondary material, it
is not regulated as a solid waste, provided certain additional
conditions are met. Further discussion of the Agency's rationale for
this concept appears in section X.A. of this preamble.
This is the general logic we have used in developing the exclusions
in today's supplemental proposal. The proposed exclusion for hazardous
secondary materials that are recycled under the control of the
generator is based on the notion that as long as the generator has
control over the recycling process, has chosen to legitimately reclaim
it within the United States or its territories, retains liability in
the event that the hazardous secondary materials (be they the materials
that were generated, residuals from a reclamation process, or both) are
somehow released into the environment, these materials are not
discarded. In addition, if the materials are managed in a land-based
unit, the generator must ensure that the materials are contained. Of
course, if such hazardous secondary materials are released into the
environment and are not recovered in a timely manner, these materials
have been discarded and the generator is subject to all applicable
federal and state regulations, and applicable cleanup authorities. The
``broader'' exclusion for materials that are transferred by the
generator to another person or company for reclamation is based on the
idea subsequent activities are more likely to involve discard, given
that the generator has relinquished control of the hazardous secondary
material, and additional conditions are needed for the Agency to
determine that these materials are not discarded.

VIII. Recycling Studies

A. Purpose of Studies

In response to the October, 2003 proposal, a number of commenters
criticized the Agency specifically for not having conducted a thorough
study of the potential impact of the proposed regulatory changes. These
commenters expressed the general concern that deregulating hazardous
secondary materials that are reclaimed in the manner proposed could
result in mismanagement of these materials, and thus could create new
cases of environmental damage that would require remedial action under
federal or

[[Page 14179]]

state authorities. Some of the commenters further cited a number of
examples of environmental damage that were attributed to hazardous
material recycling, including a number of sites listed on the Superfund
National Priorities List (NPL).
However, a number of other commenters expressed the view that the
great majority of these cases of recycling-related environmental
problems occurred before RCRA, CERCLA or other environmental programs
were established in the early 1980s. These commenters further argued
that these environmental programs--most notably, RCRA's hazardous waste
regulations, and the liability provisions of CERCLA--have created
strong incentives for proper management of recyclable materials and
recycling residuals. Several commenters further noted that because of
these developments, industrial recycling practices have changed
substantially since the early 1980s, and present day generators and
recyclers are much better environmental stewards than in the pre-RCRA/
CERCLA era. Thus, they argued, cases of ``historical'' recycling-
related environmental damage are not particularly relevant or
instructive with regard to modifying the current RCRA hazardous waste
regulations for hazardous material recycling.
In light of these comments and in deliberating on how to proceed
with this rulemaking effort, the Agency decided that additional
information on hazardous material recycling would benefit the
regulatory decision-making process, and would provide stakeholders with
a clearer picture of the hazardous material recycling industry in this
country. Accordingly, the Agency examined three basic issues that we
believed were of particular importance to informing this rulemaking effort:
? How do responsible generators and recyclers of hazardous
secondary materials ensure that recycling is done in an environmentally
safe manner?
? To what extent have hazardous secondary material recycling
practices resulted in environmental problems in recent years, and why?
? Are there certain economic forces or incentives specific to hazardous
secondary material recycling that can explain why environmental problems
can sometimes originate from such recycling activities?
Reports documenting these studies are in the administrative record
for this rulemaking, under the following titles:
? ``An Assessment of Current Good Practices for Recycling of
Hazardous Secondary Materials''
? ``An Assessment of Environmental Problems Associated With
Recycling of Hazardous Secondary Materials''
? ``Potential Effects of Market Forces on the Management of
Hazardous Recyclable Materials''
The findings of these background studies have informed many of the
Agency's policy decisions in developing this regulatory proposal.
However, it should be understood that these three reports are not
definitive, peer-reviewed documents of a technical nature. We fully
acknowledge that in some respects they may not paint a complete
picture, or capture every detail of the subject matter that was
examined. However, we believe that the information in the studies
provides an important perspective on current recycling practices, and
that it supports our policy direction in developing today's
supplemental proposal. EPA solicits comment on the policy and
regulatory implications of the information in these studies.

B. Results

1. Successful Recycling Practices
One of the studies that EPA has completed is an examination of what
practices many generators and recyclers currently use to ensure that
their hazardous secondary materials are recycled safely and
responsibly. One purpose of this study was to provide the Agency and
the rulemaking record with another angle from which to view the
hazardous secondary material recycling industry. In addition, the
results of this study suggest what kinds of regulatory controls might
be appropriate for these hazardous secondary materials to determine
that they are handled as commodities rather than wastes. The practices
have helped the Agency develop elements of the supplemental proposal
presented today.
The Agency has long heard from various representatives of industry
and other stakeholders that management of hazardous secondary materials
has changed and improved since the inception of the RCRA hazardous
waste regulations in the early 1980s and that these hazardous secondary
materials are being managed much more carefully than they were
historically. The successful recycling study examines which improved
practices are used by many companies in the industry and the reasons
the practices are implemented.
To complete this study, EPA spoke with representatives from
multiple organizations that regularly manage hazardous secondary
materials, both for recycling and for treatment followed by disposal,
and examined literature and publicly available information on the
Internet focused on the subject of recycling of hazardous secondary
materials. The study uses these sources to assemble an overall picture
of the good practices that are currently in use by a number of
companies. The full study can be found in the docket for today's
supplemental proposal, available at http://www.regulations.gov.
The successful recycling study found two main drivers behind
companies adopting responsible recycling practices in the management of
their hazardous secondary materials. The first is concern of liability
under the Comprehensive Environmental Response, Compensation, and
Liability Act (CERCLA), also known as Superfund. Under CERCLA, a
company can be held liable as an arranger for disposal for
contamination caused by its materials sent for recycling at another
facility's site. Therefore, it is in that company's best interest to
ensure that the facility to which it sends its waste is not likely to
become a Superfund site or to fall under CERCLA in the future either
because of financial failure or because of bad materials management
practices. The threat of Superfund liability was cited by many of the
sources for the responsible recycling study as the main reason for the
development of their audit programs in this area.
The other reason for adoption of responsible recycling practices
cited falls into a broad category of concerns about corporate
responsibility and public relations. Many companies now have very
public environmental policies and have implemented environmental
management systems that are part of their programs for corporate
responsibility. Although the real effects of these corporate policies
are hard to gauge, EPA observed during this study that audit programs
that were developed in response to CERCLA, now are maintained as part
of a philosophy of corporate responsibility, which is part of the image
a corporation sells to its customers.
EPA found that responsible recycling practices used by generators
and recyclers to manage hazardous secondary materials fall into two
general categories. The first category includes the audit activities
and inquiries performed by a generator of a material to determine
whether the entity to which it is sending the hazardous secondary
material is equipped to responsibly manage those materials without the
risk of releases or other environmental damage. These recycling and
waste audits of other companies' facilities form a backbone of many of
the transactions in the hazardous secondary

[[Page 14180]]

materials market. The second category of responsible recycling
practices consists of the control practices that ensure responsible
management of any given shipment of hazardous secondary material, such
as the contracts under which the transaction takes place and the
tracking systems in place that can inform a generator that its
hazardous secondary material has been properly managed.
In this study, EPA found that certain generators of hazardous
secondary materials perform facility audits--a kind of environmental
due diligence--on the facilities to which they send their materials.
These audits can take many forms and can be of varying degrees of
complexity, depending on the secondary material or, in some cases, on
the size and sophistication of the generator. Although large companies
are more likely to perform in-depth facility audits, possibly because
they more frequently have environmental health and safety divisions
coordinating audits or because they may have greater amounts of
hazardous secondary materials they are sending off-site, some smaller
companies are also performing some kind of audit on the recycling
facility receiving the hazardous secondary material.
The exact nature of each generator's audit process will vary, but
there are some common elements. Often the audit has two parts: (1) A
remote screening audit during which the auditor examines the recycler's
compliance history and financial records and the recycler may fill out
a questionnaire about its operations and facility and (2) a visit to
the recycler's facility, which can take anywhere from several hours to
several days. Some common elements examined in both phases of an audit
include: (1) Site history; (2) history of compliance with environmental
requirements and permits; (3) general appearance and housekeeping at
the facility; (4) description of process design and capability; (5)
residuals management; (6) financial soundness of the recycler; and (7)
possession of adequate pollution liability and general insurance.
In addition to generators auditing recycling facilities, another
example of a practice that EPA believes helps to ensure responsible
management is the design of hazardous secondary materials recycling
contracts and tracking systems to manage information about the location
of a particular container and to document its eventual recycling.
Recycling contracts are normal business practice and minimize the
potential for recyclers to receive shipments of hazardous secondary
materials that they are not equipped to recycle. In these contracts,
the two parties can lay out specifications for the make-up of materials
being shipped to the recycler and describe the protocol for actions
taken if a material not meeting these specifications arrives at the
recycling facility. In some cases, the recycler can still handle the
material, but may charge the generator an additional fee for having to
alter the material to meet specifications. In other cases, the recycler
may not be able to accept the material at all. Through the contract
mechanism, both parties then agree on whether that hazardous secondary
material should be returned to the generator or sent to a different
recycler or waste disposal facility.
EPA also found that knowing whether materials conform to the
contract specifications necessitated sampling of the hazardous
secondary material arriving at a recycler. Several recyclers told EPA
that they sample each rail car, truck, and drum arriving at their
facilities before accepting them. Legitimate recycling practices
operate as a manufacturing process might and there is tight control
over the nature of the materials being recycled. Recyclers who are
seeking to make a salable product will make sure that the inputs meet
specifications.
Due to time and resource limitations, EPA's examination of
successful recycling practices was not exhaustive, as we were able to
gather information from a limited number of sources. We believe that
the practices and situations outlined in the study are representative
of industry practices performed by many companies, but ask today for
comments on the results of the study and for relevant information not
represented therein.
2. Environmental Problems Associated With Recycling of Hazardous
Secondary Materials
a. Scope and objectives of the study. The general goal of this
study was to identify and characterize environmental problems that have
been attributed to some type of hazardous secondary material recycling
activity, and that are relevant for the purpose of this rulemaking
effort. The Agency believes that discarding is more likely to occur if
environmental problems exist. Specifically, we sought to identify the
following types of cases:
? Cases where environmental damage clearly can be attributed
to some type of recycling activity. In conducting this study, we
limited our search to those environmental problems in which
environmental damages were clearly caused by some type of recycling-
related activity. In this context, ``recycling-related activities''
included--
? accumulation or storage of hazardous secondary materials
by the generator, the recycler or an intermediary;
? illegal disposal or abandonment of recyclable hazardous
secondary materials or recycling residuals;
? transportation of recyclable hazardous secondary materials;
? ``sham'' recycling operations (i.e., illegal disposal or
treatment disguised as recycling);
? production and/or use of contaminated products from
recycled hazardous secondary materials, reclamation and/or production
processes;
? management of residuals from reclamation or production processes, or
? other activities associated with the management of
recyclable hazardous secondary materials, recycling residuals, or the
products of recycling processes.
The study identified a number of cleanup sites at which a recycling
process had operated, but where other sources of contamination made it
extremely difficult to determine with any certainty that the recycling
activity contributed to the environmental problems at the site. These
cases were not included in this study.
? Relatively recent cases. Many of the environmental
problems that were examined in the course of this study occurred before
RCRA, CERCLA or other environmental programs were established in the
early 1980s. The Agency believes that, for the purpose of this
rulemaking effort, these ``historical'' recycling-related damage cases
are much less relevant and instructive than cases which have occurred
within the current regulatory and liability ``landscape.'' This belief
is based in large part on the findings of our companion study of
current good hazardous secondary material recycling practices, which
indicate that in today's era (though there are exceptions), most
generators and recyclers are aware of their environmental
responsibilities, and generally make considerable efforts to ensure
that materials are recycled and otherwise managed responsibly.
Therefore, all the cases included in the data for this study occurred
after 1982.
? Cases involving recycling of regulated hazardous secondary
materials that are specifically excluded from RCRA regulation. The
study was intended to identify environmental problems associated with
recycling of regulated hazardous secondary materials, as well as those
involving the recycling of hazardous secondary materials that are not
regulated because

[[Page 14181]]

they are subject to a specific regulatory exemption or exclusion (see,
for example, the exclusions in 40 CFR 261.4). The Agency was interested
in these types of problems because they may indicate the extent to
which environmental damages can occur even when recycling is conducted
under a stringent regulatory regime, and whether such environmental
problems may be more or less prevalent for materials that are not
regulated as hazardous wastes. The study was not designed to identify
cases involving recycling of non-hazardous materials such as paper,
glass, rubber, or plastics.
b. Methodology. The initial task of this study was to identify as
many recycling-related environmental problems that were relevant to the
scope and purpose of the study as possible (the preceding section of
this preamble describes the types of cases that were considered
relevant to the study). Potential cases were identified from a variety
of sources, including:
? Comments on the October 28, 2003, proposed rule
? The Superfund National Priorities List
? National EPA data bases maintained for the CERCLA, RCRA,
and enforcement programs
? Contacts with staff in state environmental agencies
? Contacts with staff in EPA Regional Offices
? State agency data bases maintained for state Superfund
programs and other environmental programs
? Internet searches
? News media reports
For those environmental problems found at recycling facilities or
resulting in the mismanagement of hazardous secondary materials to be
recycled that were relevant to the study, we gathered available
information to identify certain key facts relating to when the problem
occurred, the type of recycling practice involved, the types of
materials recycled, how and why the environmental damage occurred, and
other key data (these data are summarized in tabular form in Appendix 1
of the report entitled The Assessment of Environmental Problems
Associated With Recycling of Hazardous Secondary Materials). A written
description of each case was then prepared--these are in Appendix 2 of
the same report.
Many of the cases that were investigated, including many of the
Superfund sites, were well-documented, and we were able to assemble
relatively complete profiles for those cases. For many other cases,
however, much less complete information was available, while at some of
the sites, we were able to collect only very basic information.
In addition, because of time and resource limitations, the search
for potentially relevant cases was not exhaustive. For example, we did
not systematically survey all state environmental agencies for relevant
cases, nor did we search paper files in EPA Regional Offices. Because
of this relatively limited scope, we believe that the cases we have
identified and described in this report in effect represent those that
were relatively easy to find, and that there are likely to be
additional cases that we did not identify. However, we have no reason
to think that additional cases would substantially change the overall
picture. Nevertheless, the Agency requests information on relevant
cases of environmental problems that we did not identify, as well as
comments or supplemental information on those that were characterized
in the report. If you provide data on additional cases of environmental
problems from recycling, Appendix 2 of the study is a good resource for
the types of information most useful to the Agency, particularly when
the problem occurred; the type of recycling practice involved; whether
recycling occurred at an on-site or off-site recycling facility; the
types of hazardous secondary materials being recycled; and how and why
the problem occurred.
c. Summary of findings. The study identified 208 cases in which
environmental damages of some kind occurred from some type of recycling
activity and that fit the scope of the study. Such damages included
leaks, spills, dumps, or other types of releases that were serious
enough to require some type of cleanup action. They also included
instances where materials were abandoned (e.g., in warehouses) and
which required removal overseen by a government agency and expenditure
of public funds. However, the study did not include situations in which
environmental regulatory violations occurred, but did not result in
actual damage to the environment or human health.
With regard to the types of materials associated with the cases
that were documented in the study, most common were scrap metals,
solvents, used oil, non-ferrous metals, lead-acid batteries, and used
drums sent for cleaning and reconditioning. Less common were cases
involving mercury, precious metals, and hazardous foundry sands.
The types of environmental damage that occurred varied widely; many
were relatively small incidents involving contaminated soils and/or
residuals, such as battery casings, while a number were much more
substantial and expensive, with large-scale soil and ground water
contamination, and remediation costs in the tens of millions of
dollars. A surprising number of cases (sixty-nine) involved materials
that were abandoned in one way or another.
The study also tried to identify the cause of the environmental
problems for each case that was investigated. In large part, we were
able to identify, or at least infer, how the problems occurred,
although for four percent of the cases examined, we were unable to
determine the primary cause of damage. However, in only a few cases
were we able to identify with any certainty why they occurred. For
example, in approximately one-third of the cases, we were able to
conclude that mismanagement of recycling residuals was at least partly
the cause of contamination problems. We were unable, however, to
identify why the residuals were managed improperly.
Mismanagement of the hazardous secondary materials prior to their
reclamation or reuse caused contamination at forty percent of sites,
whereas mismanagement of recycling residuals was the primary cause at
thirty-four percent of the sites. Often, at the latter category of
sites, reclamation processes generated residuals in which the toxic
components of the recycled materials became concentrated, and these
wastes were then mismanaged. Examples of this include a number of drum
reconditioning facilities, where large numbers of used drums were
cleaned out to remove small amounts of remaining product such as
solvent, and these wastes were then improperly stored or disposed of.
As already noted, sixty-nine of the cases examined in the study
involved abandonment of recyclable hazardous secondary materials as the
primary cause of damage. In most of these cases, business failure
appears to have been the main reason the hazardous secondary materials
were abandoned. Seven of the cases that were examined appear to have
been outright ``sham'' recyclers. In most of these cases, companies
advertised themselves to local generators as recyclers and accumulated
considerable quantities of waste materials, but did not actually
recycle them. These sites were also then abandoned.
Since a considerable number of commenters to the October 2003
proposal supported the idea of a regulatory exclusion for on-site
recycling (i.e., at the generating facility), the study also
distinguished between environmental problems from recycling

[[Page 14182]]

that occurred at off-site, commercial recycling facilities, and those
from recycling on-site. Thirteen (6%) of the 208 cases were determined
to be from recycling that occurred on-site. This relatively small
proportion of cases may signify that on-site recycling is inherently
less likely to result in environmental problems, for various reasons.
However, it may also be that recycling conducted at facilities
generating hazardous secondary materials occurs at fewer facilities
than recycling by commercial facilities or that these types of
environmental problems are not as well documented, or for other reasons
are more difficult to identify, given the scope and methodology of the
study. The Agency solicits comment and additional data on the issue of
environmental problems from on-site recycling that occurred since 1982
and where the problems are clearly attributable to the recycling
activity. We are particularly seeking facts about any instances that
are not captured in the study, particularly answering the questions of
when the recycling took place, what type of recycling practices were
involved, what the environmental problem was, and what caused the problem.
The study also addressed whether or not instances of environmental
damage occurred at hazardous waste recycling facilities with RCRA
permits (Note: RCRA does not require Part B permits for the recycling
processes themselves; typically, permits are issued to such facilities
when hazardous secondary materials are stored prior to recycling.) RCRA
permitted hazardous waste management facilities are subject to
relatively stringent, facility-specific requirements, and in general
are given more oversight by regulatory agencies than facilities without
permits. For these reasons, these cases are of particular interest to
the Agency with regard to this rulemaking.
Twenty-four of the cases identified were, at one time or another,
operating under RCRA hazardous waste permits. However, only nine
clearly appear to have been operating under RCRA permits at the time
the damage occurred. Two of these cases involved fires and/or explosions.
The study also looked at some of the financial circumstances
regarding clean up of environmental problems. At thirteen of the
twenty-four hazardous waste permitted facilities, all or part of the
funds used to clean up environmental damages were contributed by the
owner/operator of the facility, either voluntarily or under some form
of consent agreement. In at least two of these cases, it appears that
cleanup funds became available by means of a RCRA-required financial
assurance mechanism, such as a surety bond. Thirteen of the facilities
appear to have been cited for serious permit violations, either before
or as a result of the damage incident. In four cases, the facility
permits were revoked because of compliance issues. Eleven of the
twenty-four facilities were found to be no longer in business, because
of bankruptcy or for other reasons.
Of the 208 cases that were documented in the study, fifty-one were
or are listed on the CERCLA National Priorities List (NPL). Fifty-five
additional cases were addressed under CERCLA authorities, but the sites
were not listed on the NPL. State cleanup authorities were used to
address sixty-five of the cases, while thirty were addressed using RCRA
corrective action authorities. For nineteen of the cases, we were
unable to identify what remedial program, if any, was used to clean up
the sites. (In some cases, there was more than one type of cleanup
action at a site).
For eighty-nine of the cases, we were able to identify the costs,
or at least cost estimates, associated with addressing the
environmental problems caused by recycling activities. Thirty-seven of
these cases required less than one million dollars to clean up; forty-
four cost between one and ten million dollars; and eight cost more than
ten million dollars to remediate.
It is possible that these cost data are incomplete and are not an
accurate representation of actual cleanup costs for the entire sample
of 208 cases. For one thing, cost data were much easier to find for
CERCLA-lead cleanups than cleanups done under other programs. Another
uncertainty with regard to these cost data is that in some cases, it
was not possible to distinguish between cleanup costs that were
incurred specifically to address recycling-related contamination, and
costs for other cleanup activities at the site. The Agency solicits
additional information from commenters regarding cleanup costs (actual
or estimated) incurred in remediating these recycling-related
environmental problems.

C. Potential Effects of Market Forces on the Management of Recyclable
Hazardous Secondary Materials

EPA also has completed a study of how market forces can affect the
management of recyclable hazardous secondary materials. This study uses
economic theory to describe how various market incentives can influence
a firm's decision making process when the recycling of hazardous
secondary material is involved. Because the study is largely
theoretical, the results should be interpreted with caution, but it
does provide insights that can explain some of the possible fundamental
economic drivers of both the successful and unsuccessful recycling
practices, which in turn help us to design the exclusions that we are
proposing today.
The October 2003 proposal was based in part on the premise that
some types of recycling are more akin to manufacturing than waste
management and therefore are not appropriate for regulation as waste
management. [``In EPA's view, a recycler will value secondary materials
that provide an important contribution to his process or product and
will manage them in a manner consistent with a valuable feedstock
material (i.e., will manage them to minimize their loss)''; 68 FR 61583].
However, as pointed out by some commenters to the proposed rule,
the economic forces shaping the behavior of firms that recycle
hazardous secondary materials can be different from those at play in
manufacturing processes using virgin materials. For example, the
inherent value of hazardous secondary materials can be much lower than
virgin materials used in manufacturing, resulting in a different set of
economic incentives. Additionally, different economic incentives
between the recycling of hazardous secondary materials and
manufacturing may arise due to differences in these two business
models. As opposed to 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
materials recycling involve generating revenue primarily from receipt
of the hazardous secondary materials. Recyclers of hazardous secondary
materials in this situation may thus respond differently from
traditional manufacturers to economic forces and incentives.
An increased understanding of these aspects of hazardous secondary
material recycling can help to craft a rule that takes advantage of the
positive economic forces, and compensates for the negative ones, in
order to produce an optimal amount of recycling. An optimal amount of
recycling is one that maximizes the net benefits (private and social
benefits minus private and social costs). One sub-optimal outcome of
not providing a proper balance could be too little recycling, resulting
in inefficiencies. In this case, increasing the rate of recycling (for
example, via today's proposed changes) would realize additional net
benefits. However, sub-

[[Page 14183]]

optimal outcomes can also result from too much of an activity. For
hazardous secondary material recycling, this situation occurs when
firms accumulate more hazardous secondary material than can be recycled
in a reasonable timeframe, or operate their recycling process in a way
that imposes excessive costs on society (such as excess pollution or
mishandling of hazardous secondary material) and that can result in the
material being discarded.
The market incentive study uses economic theory to provide
information on how certain characteristics can influence three
different recycling models to encourage or discourage an optimal
outcome. The three recycling models examined are: (1) Commercial
recycling, where the primary business of the firms is recycling
hazardous secondary materials, which are accepted for recycling from
offsite industrial sources (which usually pay a fee); (2) industrial
intra-company recycling, where firms generate hazardous secondary
materials as byproducts of their main production processes and recycle
the hazardous secondary materials for sale or for their own reuse in
production; and (3) industrial inter-company recycling, where firms
whose primary business is not recycling, but use or recycle hazardous
secondary materials obtained from other firms with the objective of
reducing the cost of their production inputs.
For each of these recycling models, the report looks at how they
are potentially affected by three market characteristics: (1) Value of
the recycled product; (2) price stability of recycling output or
inputs; and (3) net worth of the firm.
For all three models of hazardous secondary material recycling, a
recycled product with a high value appears to contribute to an optimal
outcome for hazardous secondary material recycling. For commercial and
industrial inter-company firms, the value of the product can serve as a
strong incentive for the firm to recycle the product with care and
bring it to the market. Recycling by these firms would thus be driven
primarily by the potential revenues from the recycled product, and not
by other factors such as an acceptance fee. For industrial intra-
company recyclers, the value of the recycled product would contribute
to optimal recycling behavior even if the firm is reusing the product
in its own production process instead of selling it to outside firms.
Conversely, for all three models of hazardous secondary material
recycling, a recycled product with a low value could be a potential
indicator of sub-optimal recycling outcomes. For commercial firms in
particular, the acceptance fee is likely to be a much more prevalent
factor in the firm's revenue structure when the recycled product has a
low value. If the value of the recycled product is low, the firm may
have more of an incentive to focus on accepting hazardous secondary
material than properly recycling it and selling a low-value recycled
product.
Price stability is another potential indicator of hazardous
secondary material recycling markets that produce optimal outcomes,
particularly for commercial recyclers. When prices are stable, firms
can more easily adjust their production in response to the price
signals they receive from the market. They are thus less subject to
sudden upsets to their revenue streams or costs which could force them
to operate at a short or long-term loss. Unstable markets can
contribute to sub-optimal outcomes, due to an unexpected fall in
revenues or rise in costs, such that the firm is no longer able to
cover the costs incurred to make the product. This could encourage the
stockpiling of hazardous secondary material by the firm in order to
continue collecting the acceptance fee. A commercial firm's choice to
shut down can also contribute to sub-optimal recycling outcomes if this
involves the abandonment of hazardous secondary material that the firm
was stockpiling on-site. Since industrial intra- and inter-company
recyclers are also recycling to produce a marketable product, they are
subject to similar forces as commercial firms. They are less
constrained in their responses to these forces, however, since
recycling is not their primary business operation, and are able to
switch from recycling to disposal, or from using recycled materials to
raw materials, if market conditions shift.
For all three recycling models, firms that have a higher net worth
have more to lose from liability issues and thus have a greater
incentive to invest in safe hazardous secondary material management and
recycling practices. These firms would have more incentive to practice
recycling in an environmentally safe manner and also to insure against
possible liability risks that would jeopardize their investments. Firms
that have a relatively low worth and do not have an established history
in the market could be potentially more likely to face incentives that
could cause them to engage in recycling practices that impose few
controls or cut corners in order to boost revenues. While we recognize
that it should not be assumed that all low-value firms would engage in
such practices, this can be viewed as one potential indicator of risky
behavior.
As mentioned earlier, using economic theory to interpret recycling
behavior should be done with extreme caution. An individual firm's
decision-making process is based on many factors, and attempting to
extrapolate a firm's likely behavior from a few factors, particularly
based on theoretical considerations, could lead to erroneous
conclusions. However, when used in conjunction with other pieces of
information, the economic theory can be quite illuminating. For
example, because the industrial intra- and inter-company recyclers have
more flexibility (e.g., during price fluctuations, these companies can
more easily switch from recycling to disposal or from recycled inputs
to virgin inputs), they would be less likely to have environmental
problems from over-accumulated materials. This outcome appears to be
supported by the results of the assessment of environmental problems
study (see section VIII.B.2 of today's supplemental proposal).
On the other hand, certain specific types of commercial recycling,
where the product has low value, the prices are unstable, and/or the
firm has a low net worth, could indicate that it is more likely for
environmental problems to occur from over-accumulation of recycled
materials, compared to recycling by a well-capitalized firm that yields
a product with high value. Again, this outcome appears to be supported
by the results of the assessment of environmental problems study (see
section VIII.B.2 of today's supplemental proposal).
However, as shown by the study of successful recycling practices,
generators who might otherwise bear a large liability from poorly
managed recycling at other companies have addressed this issue by
carefully examining the recyclers to which they send their hazardous
secondary materials to ensure the recyclers are technically and
financially capable of performing the recycling (see section VIII.B.1
of today's supplemental proposal). In addition, we have seen that
successful recyclers (both commercial and industrial) have often taken
advantage of mechanisms such as tolling contracts to help stabilize
price fluctuations, allowing recyclers to plan their operations better.
For further discussion of this study, please see A Study of
Potential Effects of Market Forces on the Management of Hazardous
Secondary Materials in the docket for today's supplemental proposal.

[[Page 14184]]

IX. Exclusion for Hazardous Secondary Materials That Are Legitimately
Reclaimed Under the Control of the Generator: Proposed 40 CFR 260.0,
261.2(a)(1), 261.2(a)(2), 261.2(c)(3), 261.4(a)(23)

A. Purpose of the Exclusion

In the October 2003 proposal, EPA proposed to exclude from the
definition of solid waste hazardous secondary materials generated and
reclaimed in a continuous industrial process within the same industry.
``Same industry'' was defined as industries sharing the same four-digit
North American Industry Classification System (NAICS) code. We also co-
proposed a second option, under which such materials would not be
eligible for the exclusion if the reclamation took place at a facility
that also recycled regulated hazardous wastes generated in a different
industry. EPA chose the NAICS system as a way to define ``same
industry'' because the system is already widely used to classify
different industries. We recognized that the system was developed for
statistical rather than regulatory purposes. However, the NAICS scheme
employs a production-oriented concept, grouping together industries
that have similar or identical production processes. In addition, the
regulated community is generally familiar with the NAICS system. For
these reasons, the Agency proposed this system to define ``same industry''.
EPA chose the four-digit NAICS level (rather than the three or
five-digit level) because that level appeared to be an appropriate
compromise between being too broad or too restrictive. The Agency
evaluated the potential recycling opportunities available through
defining ``same industry'' at the three, four, and five-digit levels.
We performed the analysis for the chemical manufacturing sector, which
contains many RCRA hazardous waste generators and served as a surrogate
for other manufacturing sectors. In general, we found that
classification at the three-digit level led to grouping facilities that
did not have similar production processes. Classification at the five-
digit level, on the other hand, led to grouping similar processes, but
greatly reduced opportunities for recycling.
In the same notice, EPA also solicited comment on several different
alternatives to the proposed exclusion. The first alternative was
whether to exclude from the definition of solid waste those hazardous
secondary materials that are generated and reclaimed in a continuous
process on-site (as defined in 40 CFR 260.10), even if different
industries were involved. This option would also have required the same
notification and speculative accumulation provisions proposed for the
proposed option. This exclusion would be based on the premise that
materials recycled on-site in a continuous process are unlikely to be
discarded because they would be closely managed and monitored by a
single entity who is intimately familiar with both the generation and
reclamation of the material. In addition, no off-site transport of the
hazardous secondary material (with its attendant risks) would occur,
and there would be few questions about potential liability in the event
of mismanagement or mishap. An example of such recycling given in the
proposal was a facility that produces petrochemicals, as well as
pharmaceuticals. Under the four-digit NAICS-based proposal, such
reclamation would not have been excluded even if both establishments
were located at the same site and operated by the same company. Another
example might be a situation where a generator contracts with a
different company to reclaim material at the generator's facility,
possibly through a mobile treatment unit.
The second alternative was an exclusion for certain situations
within the chemical manufacturing industry that might present unique
recycling situations. Specifically, within the chemical manufacturing
industry, the first manufacturer will contract out production of
certain chemicals to another manufacturer (referred to as batch or
tolling operations). The second manufacturer may generate hazardous
secondary materials that could be returned to the larger chemical
manufacturer for reclamation. In the proposal, we inquired whether some
recycling could be precluded as a result of uncertain application of
the NAICS classification approach due to frequently changing product
slates, or different products being produced from the same equipment at
different times.
The third alternative would have provided a broader conditional
regulatory exclusion from RCRA regulation for essentially all hazardous
secondary materials that are legitimately recycled by reclamation. The
purpose of this broader exclusion would be to encourage recycling and
lower costs, while still protecting human health and the environment.
The Agency suggested that additional requirements or conditions might
be appropriate to protect human health and the environment for this
exclusion, compared to the same-industry exclusion that we proposed.
Examples of such additional conditions could include record-keeping and
reporting requirements, along with safeguards on storage or handling.
Although the Agency solicited comment on additional conditions, the
discussion in the preamble of this approach was brief and may not have
provided sufficient information to commenters. Like the other
exclusions discussed in the October 28, 2003 proposal, hazardous
secondary materials used in a manner constituting disposal, burned for
energy recovery, or materials that were inherently waste-like would not
be eligible. The Agency solicited comment on the increased recycling
and reuse that would result from broadening the rule in this way, as
well as comment on the potential effects to human health and the
environment.
EPA received many comments on the NAICS ``same industry'' scheme
from various stakeholders. Many commenters did not agree that NAICS was
an appropriate way to define ``same industry''; more importantly, most
commenters did not agree that excluding recycling within the same
industry was justified on legal or pragmatic grounds. These commenters
generally stated that EPA's proposed exclusion did not accurately
reflect Congressional intent or court mandates concerning EPA's
authority over legitimate recycling. They reiterated that EPA's RCRA
authority extends only to materials that are truly discarded (i.e.,
disposed of, thrown away, or abandoned) and that have not yet become
part of the waste disposal problem. Many of these commenters
interpreted the relevant court decisions to mean that any legitimately
reclaimed material (whether recycled within the same industry or
between industries) is not ``discarded'' and thus cannot be regulated
as a solid waste. Some of these commenters cited the ``Safe Foods''
decision (Safe Food and Fertilizer, et al., v. EPA, 350 F.3d 1263, DC
Cir. 2003) as support for their contention that materials recycled in
different industries were not discarded.
Other commenters said that they would not benefit from the proposed
exclusion because so many recycling opportunities occur among different
industries. These commenters included companies in the metals recycling
industry, mining and mineral processors, specialty batch chemical
manufacturers, some solvent recyclers, the paint and coatings industry,
spent pickle liquor generators, and small businesses.
Still other commenters argued that the Agency had read the court
decisions too broadly rather than too narrowly, but some of these
commenters also said that

[[Page 14185]]

EPA had failed to present a reasoned analysis of the indicia of
discard. One commenter stated that EPA did not analyze potential
environmental harm from the proposed rule.
Many commenters, on the other hand, responded positively to the
Agency's solicitation of comment about excluding on-site recycling from
the definition of solid waste. These commenters agreed with EPA's
suggestion that generators who recycle materials on-site (even if the
reclamation takes place in a different NAICS code) are likely to be
familiar with the material and more likely to maintain responsibility
for the materials. Some commenters wanted any exclusion confined to on-
site recycling, but other commenters suggested that EPA expand any on-
site exclusion to include recycling (including off-site recycling)
conducted within the same company. These commenters believed that the
principal reasoning applied to on-site recycling would also apply to
same-company recycling--i.e., that the same entity would be familiar
with the material and would remain responsible for it.
Concerning our solicitation of comments on tolling arrangements,
some stakeholders commented that the specialty batch chemical industry,
in particular, might present unique situations regarding appropriate
exclusions, principally due to the varying nature of production and
hence of potential hazardous secondary materials available for
recycling. Because of these circumstances, stakeholders believed that
exclusions targeted to the types of tolling arrangements common in this
industry would be easier to implement.
After evaluating the comments, the Agency has concluded that its
proposed approach to ``same industry recycling'' does not accurately
delineate EPA's RCRA jurisdiction over hazardous secondary materials.
We agree with the many commenters who said that whether materials are
recycled within the same NAICS code is not an appropriate indication of
whether they are discarded. NAICS designations are designed to be
consistent only with product lines, so that the effect of our October
2003 proposal would be that materials generated and reclaimed under the
control of the generator would not be excluded, even though the
generator has not abandoned the material and has every opportunity and
incentive to maintain oversight of, and responsibility for, the
material that is reclaimed (see ABR, 208 F.2d at 1051 (noting that
discard has not taken place where the producer saves and reuses
secondary materials)). Under these circumstances, we believe that
discard has generally not occurred. For example, of the 208 recycling
cases that caused environmental damage, only thirteen (approximately
six percent) occurred as a result of on-site recycling. We also agree
with those commenters who said that most of this rationale would apply
just as reasonably to reclamation taking place within the same company.
In the case of same-company recycling, both the generating facility and
the reclamation facility (if they are different) would be familiar with
the hazardous secondary materials and the parent company would be
ultimately liable for any mismanagement of the hazardous secondary
materials. Under these circumstances, the incentive to avoid such
mismanagement would be so strong that mismanagement also would be very
unlikely.
Concerning tolling arrangements, we also believe that the type of
tolling contract common in the specialty batch chemical industry does
not constitute discard as long as the recycling is legitimate and the
hazardous secondary material is not speculatively accumulated. Under a
typical type of arrangement, one company (the tolling contractor)
contracts with a second (often smaller) company (the batch
manufacturer) to produce a specialty chemical (sometimes because of a
temporary lack of capacity, or because the batch manufacturer has
specialized equipment or expertise). The batch manufacturer produces
the chemical and the production process generates a hazardous secondary
material (such as a solvent) which is routinely reclaimed at the
tolling contractor's facility through an exempt closed-loop recycling
process when it has the capacity to manufacture the chemical in
question at its own facility. However, if the batch manufacturer
transports the hazardous secondary material back to the tolling
contractor for reclamation, the tolling contractor would be deemed
under existing regulations to be reclaiming a spent material, and an
RCRA storage permit would generally be required. The typical contract
in the specialty batch chemical industry contains detailed
specifications about the product to be manufactured, including
management of any hazardous secondary materials that are produced and
returned to the tolling contractor for reclamation. Under this
scenario, the hazardous secondary material continues to be managed as a
valuable product, so discard has not occurred. Moreover, if hazardous
secondary materials are generated and reclaimed pursuant to a written
contract between a tolling contractor and a batch manufacturer, and if
the contract specifies that the tolling contractor retains ownership
of, and responsibility for, the hazardous secondary materials, there is
a strong incentive to avoid any mismanagement or release.
In today's supplemental notice, EPA has described three general
situations where we believe that discard has not taken place and where
the potential for environmental releases is therefore low. The three
situations involve circumstances under which hazardous secondary
materials are generated and reclaimed within the United States or its
territories. They are either generated and reclaimed at the generating
facility, at a different facility, but within the same company, or
through a tolling arrangement. Because the facility owner in these
situations still finds value in the hazardous secondary materials, has
retained control over them, and intends to use them, EPA is proposing
to exclude these materials from being a solid waste and thus from
regulation under Subtitle C of RCRA, if the recycling is legitimate
(see 40 CFR 261.4(g)), and if the hazardous secondary materials are not
speculatively accumulated. We are proposing slightly different
exclusions, depending on whether or not the excluded hazardous
secondary materials are stored in land-based units prior to reclamation
or as part of the reclamation process. The scope and applicability of
the exclusions are described below.

B. Scope and Applicability

1. Hazardous Secondary Materials Managed Under the Control of the
Generator in Non-Land-Based Units
As stated above, the Agency generally believes that discard has not
occurred if hazardous secondary materials are legitimately recycled
under the control of the generator, provided they are not speculatively
accumulated, and provided they are reclaimed within the United States
or its territories. We are therefore proposing an exclusion for these
hazardous secondary materials under Sec. 261.2(a)(2)(ii), except if
such materials are managed in a land-based unit prior to reclamation or
as part of the reclamation process. See section B.2 below for
discussion of management in land-based units. Examples of non-land-
based units include, but are not limited to, tanks, containers, and
containment buildings.
The definition of ``hazardous secondary material generated and
reclaimed under the control of the generator'' is proposed in 40 CFR
260.10 and consists of three parts. The first part

[[Page 14186]]

of the definition would apply to hazardous secondary materials
generated and reclaimed at the generating facility. This definition
would include situations where a generator contracts with a different
company to reclaim hazardous secondary materials at the generator's
facility, either temporarily or permanently. For purposes of this
exclusion, ``generating facility'' means all contiguous property owned
by the generator. We are proposing to exclude hazardous secondary
material that is reclaimed ``at the generating facility'' rather than
``on-site'' as defined in 40 CFR 260.10 (as we proposed in October
2003) because the latter definition may encompass facilities not under
the control of the generator. For example, an industrial park meets the
definition of ``on-site,'' even though facilities operating at an
industrial park may be completely separate and under separate
ownership. However, EPA solicits comment on whether facilities under
separate ownership, but located at the same site, should be included
within this proposed exclusion. Additionally, EPA solicits comment on
other definitions which might be equally compatible with generator
control as the definition proposed in today's notice.
The second part of the definition of hazardous secondary materials
generated and reclaimed under the control of the generator would apply
to hazardous secondary materials generated and reclaimed by the same
company (i.e., by the same ``person'' as defined in Sec. 260.10). The
generator must certify that the hazardous secondary materials will be
sent to a company under the same ownership as the generator, and that
the owner corporation has acknowledged full responsibility for the safe
management of the hazardous secondary materials. Because of existing
complexities in corporate ownership and liability, we are proposing to
require the generator to certify regarding ownership and responsibility
for the recyclable hazardous secondary materials. EPA solicits comment
on any other certification language that might accomplish the same end,
and we also seek comment on other definitions of ``same-company.''
The third part of the definition of hazardous secondary materials
generated and reclaimed under the control of the generator would apply
to hazardous secondary materials that are generated pursuant to a
written contract between a tolling contractor and batch manufacturer
and reclaimed by the tolling contractor. Under today's proposal, the
tolling contractor must retain ownership of, and responsibility for,
the hazardous secondary materials that are generated during the course
of the manufacture. For purposes of this exclusion, tolling contractor
means a person who arranges for the production of a product made from
raw materials through a written contract with the batch manufacturer.
Batch manufacturer means a person who produces a product made from raw
materials pursuant to a written contract with a tolling contractor. As
stated above, this type of contract appears to be common within the
specialty batch chemical manufacturing industry.
EPA notes that in order to be eligible for this exclusion, it is
not a requirement that the contractual arrangement in question refer
specifically to ``tolling'' or ``batch manufacturing,'' as long as the
person commissioning the manufacture of the product retains ownership
of, and responsibility for, the hazardous secondary materials that are
generated during the course of the manufacture. The Agency also
solicits comment on other types of contractual arrangements under which
discard is unlikely to happen and which could appropriately be covered
by an exclusion for ``generator-controlled'' hazardous secondary
material. For example, one company may enter into a contractual
arrangement for a second company to reclaim and reuse (or return for
reuse) the first company's hazardous secondary material. The first
company could create a contractual instrument that exhibits the same
degree of control over how the second company manages the hazardous
secondary material as is found in a tolling agreement. EPA solicits
comment on whether hazardous secondary materials recycled under such
contracts also should be included within the scope of the exclusion.
2. Hazardous Secondary Materials Managed Under the Control of the
Generator in Land-Based Units
As stated above in section B.1 of this preamble, the exclusion
proposed today at 40 CFR 261.2(a)(2)(ii) would apply to materials
generated and reclaimed within the United States or its territories
that are under the control of the generator and that are stored in non-
land-based units. However, some hazardous secondary materials that are
generated and reclaimed within the United States or its territories
under the control of the generator (i.e., at the generating facility,
within the same company, or through a tolling arrangement) are managed
in units that are land-based. For these materials, we are proposing a
slightly different exclusion at 40 CFR 261.4(a)(23).
The Agency is proposing to place this exclusion in 40 CFR
261.4(a)(23) because while we recognize that raw materials and
hazardous secondary materials can be and are stored in land-based units
(such as mineral processing residues or pulping liquors), we also
recognize that such management clearly presents a greater potential for
releases to the environment than management in non-land-based units.
Therefore, we are proposing an additional requirement which provides
that if hazardous secondary materials are managed in land-based units,
such materials must be contained in the units. We are not proposing
that the units meet any particular design requirement or that the
hazardous secondary materials in the unit be managed in a particular
way. Rather, we are only proposing that the hazardous secondary
material in the unit be ``contained'' and not released into the
environment. The definition of land-based unit is proposed in Sec.
260.10, and is taken from section 3004(k) of RCRA (i.e., landfill,
surface impoundment, waste pile, injection well, land treatment
facility, salt dome formation, salt bed formation, or underground mine
or cave). Examples of surface impoundments include ditches and sumps.
Whether the hazardous secondary material is ``contained'' in the
land-based unit will necessarily be determined on a case-by-case basis.
Generally, however, recyclable material is ``contained'' if it is
placed in a unit that controls the movement of the hazardous secondary
material out of the unit. Hazardous secondary material that remains
contained in a land-based unit that experiences a release would still
meet the terms of the exclusion in 261.4(a)(23), unless the hazardous
secondary material is not managed as a valuable product and as a
result, a significant release from the unit occurs. In this situation,
the hazardous secondary material in the land-based unit would be
considered discarded. In determining whether hazardous secondary
materials in a land-based unit are contained, a facility should
consider the circumstances under which the materials are stored. For
example, materials that are stored in direct contact with the soil in a
natural or man-made impoundment may be more likely to leak. However,
the local geological and meteorological conditions can greatly
influence whether such materials would be contained. These local
conditions, along with specific measures that a facility employs, such
as liners, leak detection

[[Page 14187]]

measures, inventory control and tracking, control of releases, or
monitoring and inspection during construction and operation of the
unit, may be used in determining whether the hazardous secondary
material is contained in the land-based unit.
3. Hazardous Secondary Materials Managed Under the Control of the
Generator: General Provisions
Hazardous secondary materials released from any storage unit,
whether land-based or non-land based, are discarded and if such
materials upon discard would be either a listed hazardous waste or
exhibit a hazardous waste characteristic, the hazardous secondary
materials would be part of the waste disposal problem and would be
subject to the hazardous waste regulations, unless they are immediately
cleaned up.
We also note that hazardous secondary materials excluded from the
definition of solid waste generally become wastes when they are
speculatively accumulated, because at that point they are considered to
be discarded. For this reason, all hazardous secondary materials
excluded under proposed 40 CFR 261.2(a)(2)(ii) or 261.4(a)(23) would be
subject to the speculative accumulation provisions of 40 CFR
261.1(c)(8). In addition, as with other excluded recycling operations,
residuals from the recycling process are considered to be newly
generated solid wastes, which can also be hazardous wastes if they
exhibit a hazardous characteristic under Subpart C of Part 261 or if
they are specifically listed under Subpart D of Part 261.
The Agency is soliciting comment on whether additional requirements
might be necessary to demonstrate absence of discard when hazardous
secondary materials are recycled under proposed 40 CFR 261.2(a)(2)(ii)
or 261.4(a)(23). Our analysis has led us to conclude that discard has
not occurred and releases are highly unlikely when hazardous secondary
materials are generated and reclaimed under these circumstances, except
possibly when such materials are managed in land-based units.
Nevertheless, we are requesting comment on other points of view. An
example of such conditions would be recordkeeping requirements, such as
those proposed today in 40 CFR 261.4(a)(24)). Another example would be
appropriate limitations on storage, such as performance-based standards
designed to address releases to the environment. The Agency solicits
comment on whether additional management requirements are appropriate
for hazardous secondary materials that are generated and reclaimed
under the control of the generator. If commenters believe such
additional requirements are 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.
We are also proposing that generators (and reclaimers, where the
generator and reclaimer are located at different facilities) of
hazardous secondary materials recycled under the control of the
generator, whether managed in a land-based or non-land based unit,
would be required to submit a one-time notice to the EPA Regional
Administrator or, in an authorized state, to the state Director. The
notice would need to identify the name, address, and EPA ID number (if
it has one) of the generator or reclaimer, the name and phone number of
a contact person, the type of hazardous secondary material that would
be managed according to the exclusion, and when the hazardous secondary
materials would begin to be managed in accordance with the exclusion. A
revised notice would be required to be submitted in the event of a
change to the name, address, or EPA ID number of the generator or
reclaimer or a change in the type of hazardous secondary material being
recycled.
The intent of this proposed notification requirement is to provide
basic information to regulatory agencies about who will be managing
hazardous secondary materials under the exclusion, and the types of
hazardous secondary materials that would be recycled. For hazardous
secondary materials that would be excluded under 40 CFR
261.2(a)(2)(ii), this proposed notification requirement would be
specified in 40 CFR 260.42 (i.e., separate from 40 CFR 261.2). For
hazardous secondary materials that would be excluded under 40 CFR
261.4(a)(23), this proposed notification requirement is included in the
exclusion. We note that in both cases, the requirement to provide this
notification would not be a condition of the exclusion. Thus, failure
to comply with the requirement would constitute a violation of RCRA,
but would not affect the excluded status of the waste.
We believe our authority to request such information is inherent in
our authority to determine whether a material is discarded, and we
consider this to be the minimum information needed to enable credible
evaluation of the status of a hazardous secondary material under
section 3007 of RCRA. EPA further believes that RCRA section 3007
allows it to gather information with regard to any material when the
Agency has reason to believe that the material may be a solid waste and
possibly a hazardous waste within the meaning of RCRA section 1004(5).
Section 2002 also gives EPA authority to issue regulations necessary to
carry out the purposes of RCRA.
We also note that after EPA promulgates regulations listing a
material as a hazardous waste or identifying it by its characteristics,
section 3010 of RCRA requires generators of such materials to submit a
notification to EPA within 90 days. Since the changes proposed today
could substantially affect this universe of facilities in the Subtitle
C system, we believe the notifications are appropriate and useful.
EPA notes that the information discussed above can be difficult for
regulatory authorities to retrieve and use if it is not placed into a
data management system. Similarly, using different notification
procedures and data management systems for different regulated
materials can be confusing and time-consuming for the regulated
community. For these reasons, the Agency requests comment on whether
the Subtitle C Site Identification Form (EPA Form 8700-12) or the
comparable state form should be used to provide the information
required in this supplemental proposal. This form is used to enter data
into the RCRAInfo data management system managed by the states and EPA.
To implement use of this form for the notification requirements
proposed today, we would revise the form to include a section for
materials covered by this exclusion, with spaces for the appropriate
data elements.
In addition, we are considering including additional information in
the notification in order to measure the impact of the proposed
rulemaking. More data would assist EPA in targeting future resources
and activities to further increase recycling and to report to the
public the impacts of the proposed rulemaking. The additional data
elements for which we are requesting comment are discussed in section
XIV of today's notice.
We note that this exclusion applies only to hazardous secondary
materials generated and reclaimed within the United States or its
territories, because most of our information about recycling comes from
these geographical areas. We do not have sufficient information about
most recycling activities outside of the United States to decide
whether discard is likely or unlikely. However, we are soliciting
comment on whether

[[Page 14188]]

EPA should promulgate a conditional exclusion for exported material
otherwise meeting the criteria for this exclusion.

C. Enforcement

Under today's proposal, hazardous secondary materials generated and
reclaimed within the United States under the control of the generator
would be excluded from RCRA Subtitle C regulation, but would be subject
to certain restrictions, principally speculative accumulation. Persons
that handle these hazardous secondary materials would be responsible
for maintaining the exclusion by ensuring that these restrictions are
met. If the hazardous secondary materials were not managed pursuant to
these restrictions, they would not be excluded. They would then be
considered solid and hazardous wastes if they were listed or they
exhibited a hazardous waste characteristic for Subtitle C purposes from
the time they were generated. Persons operating under the exclusion
would also be required to notify EPA or the authorized state.
Persons taking advantage of today's proposed exclusion that fail to
meet the requirements may be subject to enforcement action and the
materials could be considered hazardous waste from the point of their
generation. EPA could choose to bring an enforcement action under RCRA
section 3008(a) for all violations of the hazardous waste requirements
occurring from the time they are generated through the time they are
ultimately disposed or reclaimed. The Agency believes that this
approach provides generators with an incentive to handle (or in the
case of tolling or other contractual arrangements, ensure that their
contractors handle) the hazardous secondary materials pursuant to the
requirements. It also encourages each person to take appropriate steps
to ensure that such materials are safely handled and legitimately
recycled by others in the management chain. If there is a release of
the hazardous secondary materials into the environment, they are considered
discarded and subject to all applicable hazardous waste regulations.

X. Conditional Exclusion for Hazardous Secondary Materials That Are
Transferred for the Purpose of Reclamation: Proposed 40 CFR
261.2(c)(3), 261.4(a)(24), 261.4(a)(25)

EPA is today proposing an exclusion from the definition of solid
waste for hazardous secondary materials that are generated and
subsequently transferred to another company or person for the purpose
of reclamation, provided that certain conditions are met. Recycling
that conforms to these conditions would not involve discard and
therefore the recyclable materials would not be regulated as solid
waste. Such excluded hazardous secondary materials would also need to
be recycled legitimately, as determined according to the provisions of
40 CFR 261.2(g), which also are being proposed today, and could not be
speculatively accumulated, as defined in 40 CFR 261.1(c)(8).
The conditions that EPA is proposing today are based on our
understanding of how successful third-party recycling currently
operates (and, conversely, how unsuccessful recycling practices can
result in recyclable hazardous secondary materials being discarded),
and are supported by the information included in the recycling studies
that are described in section VIII of this preamble. For example, the
study of current good recycling practices indicates that many
generators examine the recycler's technical capabilities, business
viability, environmental track record, and other relevant questions
before sending hazardous secondary materials for recycling. These
recycler audits, which can be thought of as a form of environmental
``due diligence,'' are in essence a precaution to minimize the prospect
of incurring CERCLA liability in the event that the recycling, or lack
thereof, results in discard of the material. The fact that these
companies are willing to incur the expense of auditing recyclers as a
business practice is of itself a marketplace affirmation that sending
hazardous secondary materials to other companies for recycling involves
some degree of risk. Although these risks may be small when the
recycler is a well established, successful enterprise with a good
record of environmental stewardship, it also is apparent that not all
recyclers fit this profile, as evidenced in the study of environmental
problems associated with hazardous secondary material recycling. Thus,
we believe that there is sufficient reason for the Agency to place
certain conditions on this proposed exclusion for the generator to
determine that the material is not discarded, particularly since we
expect that this rulemaking, if implemented, could encourage some
number of companies that may be unfamiliar with recycling to enter the
hazardous secondary material recycling business.

A. What Is the Intent of Today's Proposed Conditional Exclusion?

In proposing this conditional exclusion, EPA's objectives are to
encourage recycling of hazardous secondary materials, and reduce
unnecessary regulatory compliance costs to industry, while maintaining
protection of human health and the environment. We believe that this
proposed conditional exclusion is a workable, common sense approach to
meeting these objectives, is well supported by the record for this
rulemaking, including the recent recycling studies that EPA has
conducted, and in important ways reflects current good industry
practices that are used by certain generators for recycling of
hazardous secondary materials.

B. Scope and Applicability

The conditional exclusion for transferred materials would
potentially apply to materials that are currently regulated as
hazardous wastes because their recycling involves reclamation--
specifically, spent materials, and listed sludges and listed by-products.
This is the same universe of materials that would have potentially
been eligible for the exclusion proposed in October, 2003, except that
that proposed exclusion would have applied only to these types of
hazardous secondary materials that were recycled within the ``same
industry.'' It would not be available for recycled materials that are
regulated as hazardous wastes for other reasons, such as ``inherently
waste-like materials,'' materials that are ``used in a manner
constituting disposal,'' or ``materials burned for energy recovery.''
The exclusion proposed today also would not address materials that
are currently excluded from the definition of solid waste according to
other, existing provisions of 40 CFR part 261. For example, the wood
preserving exclusion in 40 CFR 261.4(a)(9) includes conditions for
managing materials on drip pads. Today's proposed exclusion, if
finalized, would not supersede or otherwise affect this conditional
exclusion; such hazardous secondary materials would need to continue
being managed in accordance with that existing exclusion.
Today's proposed exclusion specifies three restrictions, in
addition to conditions for both generators and the reclaimers to whom
excluded materials would be transferred. One restriction is that
materials that are speculatively accumulated would not be eligible for
the exclusion. Restrictions on speculative accumulation (see 40 CFR
261.1(c)(8)) have been an important element of the RCRA recycling
regulations since they were promulgated on January 4, 1985. According
to this regulatory provision, a hazardous secondary material is
accumulated speculatively if the person accumulating it cannot show
that the material is

[[Page 14189]]

potentially recyclable; further, the person accumulating the hazardous
secondary material must show that during a calendar year (beginning
January 1) the amount of such material that is recycled, or transferred
to a different site for recycling, must equal at least 75% by weight or
volume of the amount of that material at the beginning of the period.
This provision already applies to hazardous secondary materials that
are not otherwise considered to be wastes when recycled, such as
materials used as ingredients or commercial product substitutes,
materials that are recycled in a closed-loop production process, or
unlisted sludges and byproducts being reclaimed.
A second restriction or pre-condition specified in the proposed
exclusion is that excluded hazardous secondary materials would need to
be transferred directly from the generator to the reclaimer, and not be
handled by anyone else other than a transporter. Thus, a generator who
wished to maintain the excluded status of his hazardous secondary
materials would not be able to ship those materials to a ``middleman,''
such as a broker. This restriction is consistent with a premise
underlying this proposed exclusion--that is, in order to ensure that
unregulated materials will not be discarded, generators should have a
reasonable understanding of who will be reclaiming the materials and
how they will be managed and reclaimed, and a reasonable assurance that
the recycling practice is safe and legitimate (see the following
discussion of the proposed condition for ``reasonable efforts''). A
generator who ships materials to a middleman such as a broker typically
does not know who will ultimately manage and reclaim them, or how they
will be reclaimed. Thus, we believe that this restriction helps ensure
that materials that become unregulated under the terms of this
conditional exclusion will not be discarded by the generator. The
Agency requests comment on this aspect of the proposed exclusion.
The Agency recognizes that, in some cases, recycling of an excluded
hazardous secondary material may involve more than one reclamation
step. For example, a recyclable hazardous secondary material such as an
electroplating waste might have a relatively high moisture content, and
a somewhat variable chemical composition. Such materials might thus
need to be dried and blended to a suitable, consistent specification
before they are amenable to a ``final'' reclamation process (e.g.,
metals smelting). In this example, the two different reclamation
processes might be conducted by different companies and/or at different
facilities. The Agency sees no reason to discourage this kind of
recycling, and we are thus proposing that today's transfer-based
exclusion would be available for materials that are recycled by means
of one or more reclamation processes. Note, however, that the condition
for generators to make ``reasonable efforts'' under the terms of this
exclusion would apply in the same way, regardless of how many
reclamation steps were involved with recycling of an excluded material.
In other words, if the excluded hazardous secondary material were
reclaimed by more than one facility or company, the generator of such
material would need to make ``reasonable efforts'' to examine each
facility or company in order to ensure that the hazardous secondary
materials will be safely and legitimately recycled. We believe that
this is a consistent application of the idea of requiring ``reasonable
efforts'' as a condition of this proposed exclusion; where recycling of
a hazardous secondary material involves more than one reclamation step
at more than one facility, generators should nevertheless be well
informed as to how the materials will be reclaimed, and by whom,
throughout the recycling process.
The third specified pre-condition is that, for all hazardous
secondary materials that would be excluded under 40 CFR 261.4(a)(24),
generators and reclaimers that are currently subject to the hazardous
waste regulations would need to submit a one-time notice to EPA or the
authorized state. The notice would need to identify the name, address,
and EPA ID number (if applicable) of the generator or reclaimer, the
name and phone number of a contact person, the type of hazardous
secondary material that would be managed according to the exclusion,
and when the hazardous secondary materials would begin to be managed in
accordance with the exclusion. A revised notice would be required to be
submitted in the event of a change to the name, address, or EPA ID
number of the generator or reclaimer or a change in the type of
material recycled.
The intent of this proposed notification requirement is to provide
basic information to regulatory agencies about who would be managing
hazardous secondary materials under the exclusion, and the types of
materials that would be recycled. We believe our authority to request
such information is inherent in our authority to determine whether a
material is discarded, and we consider this to be the minimum
information needed to enable credible evaluation of the status of a
material under section 3007 of RCRA. We also note after EPA promulgates
regulations listing a material as a hazardous waste or identifying it
by its characteristics, section 3010 of RCRA requires generators of
such materials to submit a notification to EPA within 90 days. Since
the changes proposed today could substantially affect this universe of
facilities in the Subtitle C system, we believe the notifications are
appropriate and useful.
The Agency requests comment on alternative notification
requirements for this exclusion. One such alternative would be to
require that more detailed information be provided in the notice, such
as identification of the reclamation facility to which it will be
shipped, how it will be stored at the generator's facility, and/or a
detailed characterization of the hazardous secondary material and of
the recycling process.
Another option being considered with regard to notification would
be a requirement that it be signed by an authorized representative. In
addition, we are considering the option of requiring persons using this
exclusion to submit periodic (e.g., annual) reports detailing their
recycling activities, to provide information on the types of volumes of
hazardous secondary materials recycled, to whom the materials were sent
for reclamation, the types of products that were produced from the
reclamation processes, or other relevant information. We are also
considering (and soliciting comment on) the option of requiring the
information to be submitted in a particular format, or submitted
electronically, and whether, in lieu of sending it to the implementing
agency, it should be maintained at the facility.
EPA notes that the information discussed above can be difficult for
regulatory authorities to retrieve and use if it is not placed into a
data management system. Similarly, using different notification
procedures and data management systems for different regulated
materials can be confusing and time-consuming for the regulated
community. For these reasons, the Agency requests comment on whether
the Subtitle C Site Identification Form (EPA Form 8700-12) or the
comparable state form should be used to provide the information
required in this supplemental proposal. This form is used to enter data
into the RCRAInfo data management system managed by the states and EPA.
To implement use of this form for the notification

[[Page 14190]]

requirements proposed today, we would revise the form to include a
section for materials covered by this exclusion, with spaces for the
appropriate data elements.

C. Conditions

Today's proposed conditional exclusion for transferred materials
specifies conditions for generators, as well as the reclaimers to whom
generators transfer their hazardous secondary materials.
1. Conditions for Generators
In addition to the three pre-conditions described above, EPA is
proposing that generators who wish to avail themselves of the exclusion
for transferred materials must satisfy two basic conditions: record
keeping, which includes export notification, and ``reasonable
efforts,'' which in effect would require the generator to make an
assessment of the reclaimer so as to ensure that the hazardous
secondary materials he or she generates will be recycled legitimately
and would allow the Agency to determine that the materials are not
discarded.
Recordkeeping. In order to allow for adequate oversight of
generators who manage hazardous secondary materials in accordance with
this exclusion, we are proposing that such generators maintain for a
period of three years certain records that document shipments (i.e.,
transfers) of excluded hazardous secondary materials to reclamation
facilities. Specifically, the generator would need to maintain, for
each shipment of excluded material, documentation of when the shipment
occurred, who the transporter was, the name and address of the
destination reclamation facility, and the type and quantity of the
hazardous secondary material in the shipment. We are not proposing to
prescribe any specific template for these records, or require that they
be maintained in a particular format (e.g., paper vs. electronic records).
It is our understanding, supported by the information in the study
of current good recycling practices, that generators who are concerned
about potential environmental liability maintain these types of records
as a routine business matter. Thus, we expect that this record-keeping
condition will impose a minimal additional paperwork burden for those
facilities. We also believe that this recordkeeping condition will help
to clarify what ``appropriate documentation'' the generator would need
to provide in the event of some type of RCRA enforcement action (see 40
CFR 261.2(f)). This proposed condition is also very similar to the
recordkeeping condition that currently applies to excluded hazardous
secondary materials used to make zinc fertilizer (see 40 CFR
261.4(a)(20)(ii)(D)). We are also requesting comment on whether to
require the generator to maintain a copy of a confirmation of the
receipt of the hazardous secondary material by the reclaimer. Based on
our conversations with commercial recycling facilities, they routinely
issue receipt confirmations or ``recycling certificates'' as a way of
helping the generator verify that the hazardous secondary material
reached its intended destination. The Agency solicits comment on this
proposed condition for recordkeeping, including whether retention of
confirmation of receipt is a normal business practice.
We considered additional record keeping conditions for generators
who would operate under this proposed exclusion, but are not proposing
them today, primarily because we are committed to limiting such
conditions to those we believe are essential to allowing proper
oversight of hazardous secondary materials that are managed outside of
the existing RCRA hazardous waste regulatory system. Examples of such
additional conditions would include more thorough characterization of
the materials that are transferred for reclamation, the types of units
in which they were accumulated at the generating facility, how they
were transported (e.g., by truck), whether or not the hazardous
secondary materials were transported as a DOT hazardous material, the
date the hazardous secondary materials were generated, the quantity of
hazardous secondary materials generated, and other similar conditions.
We request comment on whether such additional record keeping conditions
or others not mentioned here are warranted for generators who would
manage materials under this proposed exclusion.
Similarly, under today's supplemental proposal, exporters of
hazardous secondary materials that are excluded under 40 CFR
261.4(a)(24) would be required to notify the receiving country through
EPA and obtain consent from that country before shipment of the
hazardous secondary materials could take place (see 40 CFR
261.4(a)(25)). This requirement would serve as a notification to the
receiving country so that it can ensure that the hazardous secondary
materials are recycled rather than disposed. As an additional benefit,
the receiving country has the opportunity to consent or not based on
its analysis of whether the recycling facility can properly recycle the
hazardous secondary materials and manage process residuals in an
environmentally sound manner within its borders. EPA believes that
sections 2002, 3002, 3007, and 3017 of RCRA provide authority to impose
this condition because such notice and consent help determine that the
materials are not discarded.
Under today's supplemental proposal, hazardous secondary materials
that are exported from the United States and recycled at a reclamation
facility located in a foreign country are not solid wastes, provided
that the exporter complies with the requirements of 40 CFR
261.4(a)(24)(i)-(iv) and notifies EPA and obtains a subsequent written
consent forwarded by EPA from the receiving country. The provisions
that we are proposing today in 40 CFR 261.4(a)(25) require exporters to
notify EPA of an intended export 60 days before the initial shipment is
intended to be shipped off-site. The notification may cover export
activities extending over a 12 month or shorter period. The
notification must include contact information about the exporter and
the recycler, including any alternate recycler. The notification must
include a description of the manner in which the hazardous secondary
materials will be recycled. It must also include the frequency and rate
at which they will be exported, the period of time over which they will
be exported, the means of transport, the estimated total quantity of
hazardous secondary materials to be exported, and information about
transit countries through which such materials will pass. Notifications
must be sent to EPA's Office of Enforcement and Compliance Assurance,
which will notify the receiving country and any transit countries. When
the receiving country consents in writing to the receipt of the
hazardous secondary materials, EPA will forward the written consent to
the exporter. The exporter may proceed with shipment only after it has
received a copy of the written consent from EPA. If the receiving
country does not consent to receipt of the hazardous secondary
materials or withdraws a prior consent, EPA will notify the exporter in
writing. EPA also will notify the exporter of any responses from
transit countries. Exporters must keep copies of notifications and
consents for a period of three years following receipt of the consent.
These procedures are similar to those required for exports of hazardous
waste under 40 CFR Subpart E, except for the use of the hazardous waste
manifest.
Reasonable Efforts. Today's supplemental proposal would require
generators to make ``reasonable efforts'' to ensure that their
materials are safely

[[Page 14191]]

and legitimately recycled, before shipping or otherwise transferring
them to a reclamation facility. In effect, this would require the
generator to perform a type of ``environmental due diligence'' of the
reclaimer in advance of transferring the hazardous secondary materials.
We believe that today's proposed condition for reasonable efforts
reflects, and would perhaps reinforce, the methods, such as audits,
that many generators of hazardous secondary materials now use to
maintain their commitment to sound environmental stewardship, and to
minimize their potential regulatory and liability exposures.
Some generators, particularly those who generate relatively large
volumes of hazardous secondary materials, audit recyclers before
shipping such materials to them. EPA's study of good practices for
recycling quotes one large recycling and disposal vendor as stating
that of its new customers, sixty percent of the large customers and
thirty to fifty percent of the smaller customers now perform audits on
them. Under current practices, such audits can involve a site visit to
the recycling facility, and an examination of the company's finances,
technical capability, environmental compliance record, and housekeeping
practices. (Note: Audits that are currently conducted may or may not
cover all of these areas.) According to those interviewed as part of
our recycling study, auditing a recycler typically costs the generator
from two to five thousand dollars, and in some cases more, depending on
how thorough the audit is, and whether it is conducted by the
generator's own personnel, or by an outside consultant. The study also
identified at least one organization which conducts audits at several
hundred recycling and other waste handling facilities per year. This
organization audits overseas facilities, as well as domestic recyclers,
and re-audits facilities on a more or less ongoing basis. Membership in
this and similar organizations, by spreading the expense of conducting
audits among a number of companies, gives a generator a means of
reducing the cost of this type of ``environmental due diligence'' even
further. Such auditing ``consortiums'' also reduce costs for the
facilities that are audited, since fewer audits need to be conducted by
individual generators. Note, however, that third-party auditors do not
generally draw any conclusions based on their audits or provide a
``certification'' with respect to reclaimer operations, so the generator
would still be expected to decide if the reclaimer is acceptable.
Today's proposed condition that addresses ``reasonable efforts'' is
intended to reflect and capture in a regulatory context how many
generators currently inquire and make decisions about whom they should
do business with, and how they manage their potential liability and
regulatory non-compliance risks.
Currently, under 40 CFR 262, a generator must make a hazardous
waste determination and thus, already has an obligation to determine
whether the waste is subject to regulation. EPA believes that to make a
parallel determination that hazardous secondary materials are not solid
wastes because they are destined for reclamation and are not discarded,
the generator must make a reasonable effort to ensure that the
reclaimer intends to legitimately recycle the material pursuant to 40
CFR 261.2(g) and not discard it, and that the reclaimer will manage the
material in a manner that is protective of human health and the
environment.
EPA is also proposing that the generator can use any credible
evidence available in making his reasonable efforts, including
information gathered by the generator, provided by the reclaimer, and/
or provided by a third party, in lieu of personally performing an
environmental audit. (In fact, in some cases, the generator may not be
an expert in different aspects of recycling, and reliable third-party
information or judgment would play an important part in the generator's
conclusion.) For example, the generator might hire an independent
auditor to review the operations of a recycler. Also, the generator
might rely on third-party certifying bodies to provide a reasonable
level of confidence that a recycler would safely manage his materials.
Trade associations might make available to their members information on
specific facilities that could be used to determine that the facility
is safely and legitimately recycling the hazardous secondary material.
Likewise, a parent corporation might perform an environmental audit of
a recycler, and the audit could then be used by several of the
company's facilities. In fact, EPA believes that many reputable third
party auditors, and trade associations that might make available to
their members information on specific facilities, already assemble the
types of information that would be needed for a generator to determine,
based on credible evidence, that the hazardous secondary material is
being legitimately recycled. EPA would encourage this type of pooling
of information in order to reduce the burden and take advantage of
specialized technical expertise.
This proposed provision requiring reasonable efforts by generators
would only apply to generators who send hazardous secondary materials
to recyclers that are not operating under RCRA Part B permits or
interim status standards. RCRA permitted facilities and interim status
facilities are already subject to stringent design and operating
standards, must demonstrate financial assurance, are subject to
corrective action requirements in the event of environmental problems,
and are typically given more thorough oversight than facilities without
RCRA Part B permits. Thus, the Agency believes that permitted and
interim status recycling facilities provide generators with
environmental assurances that would ensure the hazardous secondary
materials sent to such a facility are not discarded. Not requiring
reasonable efforts for generators who ship hazardous secondary
materials to RCRA permitted or interim status recycling facilities
would likely be of particular benefit to relatively smaller volume
generators who may not have the resources required to undertake
``reasonable efforts.''
EPA requests comment on whether to require generators to maintain
at the generating facility documentation showing the reasonable efforts
made before transferring the hazardous secondary materials to the
reclamation facility. Such records would presumably include copies of
audit reports, and/or other relevant information that was used as the
basis for the generator's determination that the reclamation facilities
to which the hazardous secondary materials were sent would legitimately
recycle the hazardous secondary material in a protective manner.
Requiring specific documentation would help EPA or the authorized state
to determine whether the generator did make reasonable efforts to
ensure that his hazardous secondary material was not discarded.
In addition, EPA requests comment on whether, as part of the
documentation, the generator should also be required to maintain at the
generating facility a certification statement, signed and dated by an
authorized representative of the generator company, that for each
reclamation facility to which the generator transferred excluded
hazardous secondary materials, that the generator made reasonable
efforts that the hazardous secondary material was legitimately
recycled. Such certification statement could, for example, be worded as
follows:

[[Page 14192]]

``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 of reclamation facility],
reasonable efforts were made 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.''

Today's proposed condition for reasonable efforts is in effect a
general standard; we are not proposing specific questions that
generators would need to assess in satisfying this condition of the
exclusion. However, we acknowledge that specifying in more explicit
terms the questions that should be examined in making such reasonable
efforts could provide more certainty to generators, as well as
overseeing agencies. On the other hand, more explicit provisions for
defining reasonable efforts in this context could also limit a
generator's flexibility. The Agency requests comment on whether more
specific provisions to define reasonable efforts for the purpose of
this exclusion should be specified in the final rule.
If EPA were to specify in more explicit terms how generators should
perform reasonable efforts with respect to this regulatory exclusion,
one approach could be to identify specific questions that generators
would need to address in satisfying this condition. Such questions
would be focused on ensuring that the hazardous secondary material will
not be discarded. The following are examples of possible questions that
EPA could specify in the final regulatory condition for determining
reasonable efforts, with an explanation of how each question could
potentially assist in determining that the hazardous secondary material
is not discarded. EPA then outlines two options for how to determine
``reasonable efforts;'' the first option would use the broader list of
questions (A through F) and the second option would use a subset of
questions (A and F) that some believe have a more bright-line nature.
EPA requests comment on whether any or all of these questions should be
included in the regulation (including the advantages and disadvantages
of the various questions, as well as of the two options outlined
below), and if there are other questions that should be also be considered.
(A) Has the reclaimer notified the appropriate authorities pursuant
to Sec. 261.4(a)(24)(iii) and does he have financial assurance as
required under Sec. 261.4(a)(24)(v)(D)?
(B) Does the reclamation facility have the equipment and trained
personnel to safely recycle the hazardous secondary material?
(C) Are there any unresolved significant violations of
environmental regulations at the reclamation facility, or any formal
enforcement actions taken against the facility in the previous three
years for violations of environmental regulations? If yes, then the
generator must have credible evidence that the reclaimer will manage
the materials safely.
(D) Does the material being recycled provide a useful component
that will be reused in the product of the recycling process or aid in
the recycling process itself?
(E) Is the product (or intermediate) of recycling at the
reclamation facility a generally traded commodity meeting applicable
specifications? If not, is there other available information, such as
sales records or long-term contracts, demonstrating that there is a
reliable market for the product (or intermediate)? If not, then the
generator must have credible evidence that the recycling at the
reclamation facility will produce a valuable product or intermediate.
(F) Does the reclamation facility have the permits required (if
any) to manage the residuals (if any) generated from reclamation of the
excluded hazardous secondary material? If not, does the reclaimer have
a contract with an appropriately permitted facility to dispose of the
residuals (if any) generated from the reclamation of the excluded
hazardous secondary material? If not, then the generator must have
credible evidence that the residuals generated from the recycling of
the excluded secondary hazardous material will be managed in a manner
that is protective of human health and the environment.
The first possible question (A) focuses on whether the recycler has
met two of the requirements he must fulfill before accepting excluded
hazardous secondary materials for reclamation: notification of the
appropriate regulatory authority that he plans to reclaim excluded
hazardous secondary material (see Section X.B of today's proposal), and
establishment of financial assurance to cover the costs of managing any
hazardous secondary materials that remain if the facility closes (see
Section X.C.2 of today's proposal). If a recycler were found to have
failed to meet these requirements then he will have also failed to show
a good faith effort towards demonstrating that he intends to recycle
the material and not discard it, and will manage the material in a
manner that is not protective of human health and the environment.
The second possible question (B) focuses on the technical
capability of the recycler, the most basic of requirements for ensuring
safe recycling of hazardous secondary material. If a reclamation
facility were found to not have adequate equipment or trained
personnel, it raises serious questions as to whether the facility would
be engaged in safe recycling.
The third set of possible questions (C) focuses on the compliance
history of the recycler. Although compliance data are an imperfect tool
for determining whether a recycler would safely manage the hazardous
secondary material, EPA believes that they are a reasonable starting
point. Facility-specific enforcement data on unresolved alleged
significant violations and on formal enforcement actions (by both EPA
and states) and specific case information for the formal enforcement
actions are readily available on EPA's public Web site at
http://www.epa.gov/echo/. While the presence of a violation does not
automatically mean that the facility would not recycle the hazardous
secondary material safely, it would raise questions and would likely
require additional information from the facility. If the generator
provides reasonable documentation that the enforcement data are
unrelated to the facility's commitment to manage the hazardous
secondary material safely or that the violation has been corrected and
the facility is back in compliance, then that would satisfy this aspect
of the reasonable efforts determination.
The fourth possible question (D) focuses on the usefulness of the
secondary material to the recycling process. EPA's study of the
potential effect of market forces on the recycling of hazardous
secondary materials shows that there is a particular incentive for
materials to be recycled when it can be done at a lower cost than
disposing of the material. In some cases, however, a hazardous
secondary material with little value can be put into a ``recycling''
process, but not add anything of value either to the end product or to
the process itself. In such cases, the hazardous secondary material is
effectively being discarded rather than recycled. A material being
legitimately recycled can contribute value to the process in two ways.
The recycled material can contain a constituent that is being reused
and which also appears in the final product. Alternatively, the material
being recycled can aid in the process itself, such as by replacing a raw
material that would otherwise be needed. For example, a hazardous

[[Page 14193]]

secondary material may act as an important catalyst or a carrier in a
process, but not end up in the final product. To ensure that its
hazardous secondary material is being properly recycled, a generator
would need to ensure that his material contributes to the process in
one of these ways.
The fifth set of possible questions (E) focuses on the products of
recycling. According to EPA's study of the potential effect of market
forces on the management of recyclable hazardous secondary materials,
there is a relationship between the value of the product from recycling
and the likelihood of successful recycling. Products with little or no
value can result in recyclable materials being over-accumulated and
mismanaged. Mismanagement of recyclable materials was a major cause of
environmental damage in forty percent of the cases that EPA has
studied. To provide assurance that the products created from the
hazardous secondary materials are in fact valuable, the generator would
need to determine if the products are general commodities that meet
applicable standards, or that there is a reliable market based on sales
records or long-term contracts.
For most recycled products, this determination would be
straightforward and the product specifications are well known. Metals
reclamation and solvents, for example, results in the production of
valuable products that are readily traded on the open market. Other
products, however, may be unique or recycled in a different manner and
may require a closer look to determine if they meet minimum standards.
For example, in one of the damage cases, the reclamation facility used
spent plastic blast media to make certain construction materials, which
are a generally traded commodity with rigorous standards. However, in
this case, the ``recycling'' process resulted in cinder blocks that
would crumble on contact, and concrete slabs that would not support the
weight of a person. In some cases, there may be no formal standard for
a product, but a commonsense informal standard would still apply,
particularly in regards to toxic constituents. For example, in another
of the damage cases, children's play sand was made from foundry sands
highly contaminated with lead, which, in this situation would not meet
such a commonsense standard. There are also other instances in the
damage cases of recyclers marketing their product as appropriate for
``fill'' despite high levels of toxic constituents. In one case, a
battery recycler distributed material from old battery casings to a
community to be used as fill and driveway paving material, resulting in
elevated levels of lead at 96 of the 109 properties. In order to
determine whether a reclamation facility is legitimately recycling, the
generator will need to check to make sure that the recycling results in
a valuable product or intermediate.
Although a typical audit of a recycling facility would include an
examination of the facility's finances, EPA does not have information
on whether this financial evaluation would include an investigation as
to whether the recycling process results in a valuable product. EPA
requests comment on how including such a question might affect the
scope of a typical audit.
The sixth set of possible questions (F) focuses on another major
cause of environmental problems from hazardous secondary material
recycling: the management of the residuals. Roughly one-third of the
damage cases that EPA documented were caused by mismanagement of the
residuals from recycling. Because the residuals from recycling can
contain the hazardous constituents that originated with the hazardous
secondary materials, it is important that the generator understands how
those residuals will be disposed. These residuals may or may not be
regulated hazardous wastes, but in either case, the generator would
need to determine that they are managed in units that have the
necessary permits (either solid waste permits or hazardous waste
permits) or otherwise comply with applicable environmental standards
(whether federal or state), such that the material is being managed in
a manner that is protective of human health and the environment.
In drafting these possible questions to establish reasonable
efforts, we have attempted to write them in as an objective a manner as
possible, but we recognize that answering these questions still
requires a certain amount of judgment. We understand that generators
might prefer more definitive criteria. Therefore, we ask for
suggestions on how the possible reasonable efforts questions (if they
are included in the regulation) could be more objective, yet provide
the necessary information, or any other information that should be
required for making a reasonable efforts determination.
In particular, as noted at the beginning of this discussion, EPA
requests comment on the alternative option of focusing ``reasonable
efforts'' only on questions A and F above. This second of the two
options would limit the generator's reasonable efforts requirement to
determining whether the reclaimer has notified EPA or the authorized
state that he is engaged in recycling excluded hazardous secondary
material; whether the recycler complies with the financial requirements
of this part; and whether the reclaimer has obtained the appropriate
permits for managing residuals onsite or, alternatively, ships the
material offsite under a contract with an appropriately permitted
facility. These requirements would assure the generator that the
reclaimer's operations are known to the regulatory authority and
therefore can be inspected for compliance, that residuals would be
properly managed (thus addressing the second most common environmental
problem in the recycling case studies EPA has analyzed), and that
financial assurance would cover the cost of facility closure and other
potential environmental liabilities. While this list would not be as
comprehensive, this option of focusing on a set of criteria that some
believe is of a more bright-line nature could make it easier for the
generator to determine whether the criteria have been met and thereby
make, in good faith, a certification that would demonstrate
``reasonable efforts.''
In addition, EPA requests comment on how difficult it would be for
a generator to address and certify in good faith the responses to
questions B through E. In this regard, EPA requests comment on whether
generators already possess, or would be able to acquire through
reasonable efforts, the information and ability necessary to evaluate
the relevant aspects of the recycling industry, especially in
situations where the generator does not work in that industry or
otherwise have a reason to be familiar with it. For example, under
question (B), to what extent do generators already posses, or would be
able to acquire readily, the information and ability needed to evaluate
the adequacy of ``the equipment and trained personnel'' in a different
industry than the one in which the generator operates? Similarly, under
question (E), to what extent do generators already possess, or would be
able to acquire readily, the required knowledge of markets (in which
they might not participate) for purposes of determining whether
something constitutes a ``valuable product or intermediate''?
EPA also requests comment on whether, if the final regulation does
include specific questions for the generator to consider when making
reasonable efforts, (1) should all generators be required to answer
those questions and document their responses to each of them--that is, this

[[Page 14194]]

documentation would be a condition of the exclusion, or (2) should
generators have the option of choosing to answer and document their
response to these sets of questions or not. Under the latter approach,
if a generator chooses to meet his burden of an objectively reasonable
belief that his materials would not be discarded and would be managed
in a manner that is protective of human health and the environment by
answering these sets of questions, then the generator would have met
his obligation under the regulations. Alternatively, the generator
under the latter approach could meet his burden of proof based on other
considerations, but without any assurance that a court, if the Agency
were to undertake an enforcement action, would not later decide that
the information he relied on did not support an objectively reasonable
belief that his materials would not be discarded or would be managed in
a manner that is protective of human health and the environment.
However, under both approaches, if a generator meets the burden of
proof that his decision to send his materials to a reclaimer was based
on an objectively reasonable belief that the hazardous secondary
materials would not be discarded and would be managed in a manner that
is protective of human health and the environment, then the Agency
would consider that the generator met his obligation under the regulations.
Note that codifying ``reasonable efforts'' standards that the
generator would certify have been met would have the effect of placing
on the generator the responsibility of assessing the recycler and
ensuring that the hazardous secondary materials would not be discarded.
EPA is seeking comment on this aspect of the proposal. Further, the
Agency seeks comment on whether any or all of the questions are
appropriate for the generator to answer in making reasonable efforts to
ensure that the reclaimer intends to legitimately recycle the material
and will not discard it pursuant to the criteria in 261.2(g), and that
the reclaimer will manage the material in a manner that is protective
of human health and the environment.
Of course, regardless of the type of information/questions EPA may
include in the final rule, if any, the generator could choose to seek
additional information or ask additional questions, and as shown in
EPA's study of good recycling practices, many generators already do so.
EPA anticipates generators may seek additional information in
determining that their hazardous secondary materials will not be
discarded due to concerns about CERCLA liability (which is unaffected
by today's proposal, see Section XIII.D. of today's proposal).
EPA also requests comment on the relationship between the
reasonable efforts questions and legitimacy (discussed in more detail
in section XI of today's preamble). Two of the questions identified
above, questions D and E, are related to the two factors that EPA is
proposing today to be the ``core'' considerations for determining
whether a recycling operation is legitimate, rather than sham recycling
(i.e., whether the hazardous secondary material makes a useful
contribution, and whether the recycling process results in a valuable
product). EPA believes that it is appropriate to include these concepts
in ``reasonable efforts,'' thus allowing the generator to make only one
determination before sending hazardous secondary material for
recycling. In other words, if these reasonable efforts questions are
codified in the regulations, EPA is proposing that by satisfying
reasonable efforts, the generator would have also satisfied the
obligation to determine his hazardous secondary material would be
legitimately recycled per proposed 40 CFR 261.2(g). However, because
EPA is also requesting comment on recordkeeping and certification
requirements related to reasonable efforts, incorporating questions D
and E could alter the implementation of the legitimacy determination
for materials excluded under this provision. EPA requests comment on
whether to keep the legitimacy determination an independent requirement
for generators who would claim today's proposed exclusion and not
directly link it to ``reasonable efforts.''
Finally, EPA also solicits comment on whether the frequency of
periodic updates of the ``reasonable efforts'' should be identified in
the regulations, or whether that question should be left to individual
situations applying an objectively reasonable belief standard.
Information on industry standards for facility audits of off-site
activities, including how frequently they are conducted, would be
especially helpful.
Storage conditions. As with the proposed exclusion for hazardous
secondary materials reclaimed under the control of the generator, if
the generator manages the hazardous secondary material in a land-based
unit under the transfer-based exclusion, the material must be
contained. For further discussion of how to determine if a material in
a land-based unit is contained, see section IX of today's preamble.
However, the Agency is also considering several other conditions
for generators under this exclusion. One option would be a condition
addressing storage of accumulated recyclable hazardous secondary
materials by the generator prior to shipping them to a reclamation
facility. For example, we are proposing today a condition that
specifies a general performance standard for storage of excluded
hazardous secondary materials at reclamation facilities. Arguably, the
same or a similar standard could be required for generators who take
advantage of the exclusion. The Agency requests comment as to whether a
storage condition (beyond the requirement that material in land-based
units be contained) should be imposed on generators as part of this
exclusion, and if so, what type of condition(s) it should be.
2. Conditions for Reclaimers
EPA is proposing that reclaimers of conditionally excluded
materials will have to satisfy four general conditions, which pertain
to record keeping, storage of recyclable hazardous secondary materials,
management of the residuals from reclamation processes, and financial
assurance.
Recordkeeping. Today's supplemental proposal would require
reclaimers who operate under this conditional exclusion for transferred
materials to maintain certain records, similar to the records we are
proposing to require for generators. Specifically, such reclaimers
would need to maintain for at least three years records of each
shipment of materials received at the reclamation facility that were
excluded from regulation under the terms of this exclusion. Such
records would need to document the name and address of the generator of
the hazardous secondary materials, the name of the transporter and the
date such materials were received, and the type and quantity of
hazardous secondary materials received. The Agency believes that this
information is the minimum needed to enable effective oversight of
recycling activities that would no longer be subject to the existing
hazardous waste regulations.
In addition to these proposed record keeping provisions, the Agency
is considering additional records that would more thoroughly document
excluded recycling activities by reclaimers. Examples of such
additional records would include more thorough characterization of the
hazardous secondary materials that are received for reclamation, the
types of units in which they were stored at the reclamation

[[Page 14195]]

facility, how they were transported (e.g., by truck), whether or not
the hazardous secondary material was transported as a DOT hazardous
material, and other similar conditions. We request comment on whether
such additional record keeping conditions are warranted for reclaimers.
Storage of Recyclable Hazardous Secondary Materials. We are
proposing today a general performance standard for storage of excluded
hazardous secondary materials at reclamation facilities that operate
under this proposed exclusion. Specifically, the hazardous secondary
materials must be managed in a manner that is at least as protective as
that employed for analogous raw materials. 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. A raw
material that has significantly different physical or chemical
properties would not be considered analogous even if it serves the same
function. For example, a metal-bearing ore might serve the same
function as a metal-bearing air pollution control dust, but because the
physical properties of the dust would make it more susceptible to wind
dispersal, the two would not be considered analogous. Similarly, a
hazardous secondary material with high levels of toxic volatile
chemicals would not be considered analogous to a raw material without
these volatile chemicals. Where there is no analogous raw material, or
if the hazardous secondary material is managed in a land-based unit,
the material must be contained. For example, in the case of the metal-
bearing air pollution control dust, dust suppression measures would
likely be needed to contain the hazardous secondary materials. For the
hazardous secondary material with high levels of toxic volatile
chemicals, a closed tank or container would probably be needed to
contain the volatile chemicals. For further discussion of how to
determine if a material is contained, see section IX of today's preamble.
Storage conditions for reclamation facilities that operate under
today's proposed exclusion would allow the Agency to determine that the
recyclable materials are not discarded. The great majority of damages
documented in the study of recent recycling-related damage incidents
occurred at commercial reclamation facilities, and mismanagement of
hazardous secondary materials was found to be a cause of environmental
problems in 35% of the incidents. Accordingly, EPA believes that this
proposed condition for storage, or some similar condition, is necessary
and appropriate for reclamation facilities that take advantage of this
exclusion, and will establish an expectation for the owner/operators of
such facilities; i.e., that they must manage hazardous secondary
materials in at least as protective a manner as they would an analogous
raw material, and in such a way that materials would not be released
into the environment.
The Agency considered a number of alternatives to this proposed
storage condition, including specifying a much more rigorous set of
conditions equivalent to current Subtitle C regulatory requirements for
storage (see, for example, the requirements for tanks and containers,
which are specified in subparts I and J of 40 CFR Part 264), or to a
similar, but less stringent set of storage conditions (e.g., requiring
the hazardous secondary material to be stored in an engineered unit).
However, we do not believe that an elaborate set of conditions for
storage are necessary for the purpose of this exclusion. For one thing,
we are proposing today that generators who wish to take advantage of
this exclusion must make ``reasonable efforts'' to evaluate the
reclamation facilities they ship materials to, to ensure that the
hazardous secondary materials will be legitimately and safely recycled.
In making such reasonable efforts, we expect that generators will make
an assessment of the reclamation facilities' material storage practices
and equipment. Thus, we believe generators will themselves evaluate the
storage and handling practices of hazardous secondary materials at the
reclamation facilities they do business with. We request comment on
whether or not the condition should be written in more specific terms,
that is, in a way that would provide greater clarity with regard to how
storage units should be designed and operated.
Management of recycling residuals. We are today proposing a
condition pertaining to management of residuals that are generated from
reclamation of hazardous secondary materials excluded from regulation
under this proposal. The proposed condition specifies that ``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 themselves are listed hazardous wastes, they are
hazardous wastes (if discarded) and must be managed according to the
applicable requirements of 40 CFR parts 260 through 272.''
The purpose of this condition is primarily to clarify the
regulatory status of these waste materials, and to emphasize in
explicit terms that recycling residuals must be managed properly. The
study of recent (i.e., post-CERCLA, post-RCRA) recycling-related
environmental problems revealed that mismanagement of residuals was the
cause of such problems in one third of the incidents that were
documented. Some common examples of these mismanaged residuals were
acids and casings from processing of lead-acid batteries, solvents and
other liquids generated from cleaning drums at drum reconditioning
facilities, and PCBs and other oils generated from disassembled
transformers. In many of these damage incidents, the residuals were
simply disposed in on-site landfills or piles, with little apparent
regard for the environmental consequences of such mismanagement, or
possible CERCLA liabilities associated with cleanup of these releases.
One issue that the Agency considered with respect to this proposed
condition was the regulatory status of wastes generated from the
reclamation of hazardous secondary materials that would be listed
hazardous wastes if they were not recycled. One argument could be that
these residuals should be regulated as listed hazardous wastes, since
they were derived from materials that were physically and chemically
identical to listed hazardous wastes, and could contain hazardous
constituents that might pose significant threats to human health and
the environment if the residuals were mismanaged. A different argument
would be that such a regulatory construct is unwarranted, since the
recycled hazardous secondary materials are not wastes, provided they
meet the conditions of the exclusion, and therefore the ``derived
from'' concept as articulated in Sec. 261.3(c)(2) should not be
applied to these wastes. Further, such waste residuals from reclamation
processes often do not resemble the hazardous secondary materials that
were reclaimed, and thus, the argument goes, it should not be assumed
that they would always need to be managed as hazardous wastes.
The Agency does not believe it is necessary to apply the ``derived-
from'' principle to the residuals generated from the reclamation of
excluded hazardous secondary materials. If the residuals exhibited a
hazardous characteristic, or they themselves were a listed hazardous
waste, they would be considered hazardous wastes, and would have to be
managed accordingly. If they did not exhibit a hazardous
characteristic, or were not themselves a

[[Page 14196]]

listed hazardous waste, they would need to be managed in accordance
with applicable state or federal requirements for non-hazardous wastes.
Thus, they would be subject to the same regulatory system that applies
to wastes that are not hazardous wastes. The Agency does not see a
compelling reason to establish as part of this rulemaking a different
regulatory system based on the ``derived-from'' principle for
reclamation residuals. We solicit comment on this aspect of today's
supplemental proposal.
Financial Assurance. EPA is proposing today the condition that
owner/operators of reclamation facilities that would operate under the
terms of this exclusion for transferred materials demonstrate financial
assurance, in accordance with the current requirements of Subpart H of
40 CFR Part 265. Under Part 265 Subpart H, owners and operators must
demonstrate that resources will be available to pay for closure, and
post-closure care at their facilities. They also must meet liability
coverage requirements for sudden and accidental occurrences at their
facilities. The requirements found in Subpart H of 40 CFR 265 also
outline how owners and operators should determine cost estimates,
provide the acceptable mechanisms for demonstrating financial
assurance, and set the minimum amounts of liability coverage required.
We believe that requiring financial assurance for these reclamation
facilities is necessary for the Agency to determine that the materials
managed at these facilities are not discarded, and is supported by the
findings of the recycling studies we conducted as part of this
rulemaking effort.
For example, the study of current good recycling practices
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 can
become a ``responsible party'' obligated to help pay 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 their 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 materials to them has become a
standard business precaution for many generators. Today's proposed
condition for financial assurance thus can be seen as a regulatory
precaution against the same concern, ensuring that the reclamation
facility owner/operators who would operate under the terms of this
proposed exclusion are financially sound.
The need for some type of financial assurance for recyclers in this
context also is supported by the study of recycling-related
environmental problems. The study indicates that business failure is a
primary causative factor associated with these damage incidents. For
example, of the 208 damage incidents that were documented, at least 138
of the recyclers are no longer in business. While there may not be a
clear cause-and-effect relationship in all of these cases, we believe
that this clearly suggests a correlation between the financial health
of recycling companies and the probability that their recycling
activities will result in some form of environmental damage. In our
view, this further supports the need for some type of financial
assurance condition for this exclusion.
As proposed, reclaimers of excluded hazardous secondary materials
would need to have financial assurance in accordance with the
applicable financial assurance requirements for hazardous waste
treatment storage and disposal facilities (cited above). We believe
that these financial assurance requirements are appropriate for
reclamation facilities that would be managing excluded hazardous
secondary materials, since such management will typically involve some
type of storage, and reclamation, which is defined as ``treatment''
under the existing RCRA regulations. If a reclamation facility were to
manage excluded materials in land-based units (e.g., piles), it would
be subject to the additional Subpart H financial assurance requirements
for land disposal facilities.
The Agency currently has underway a review of the Subpart H
financial assurance regulations now in effect for hazardous waste
treatment, storage and disposal facilities. The Agency does not intend
to address general issues related to the financial assurance mechanisms
as a part of today's rulemaking, since these issues are being addressed
in the broader review. However, in the context of this rulemaking, the
Agency is interested in receiving comments as to whether or not the
existing Subpart H requirements need to be modified in some way
specifically for reclamation facility owner/operators that would be
affected by today's proposed exclusion. EPA also solicits comment on
whether we should adopt the financial assurance requirements that were
promulgated as part of the standardized permit rule (see 70 FR 53419,
September 8, 2005), which are EPA's most recently issued RCRA financial
assurance requirements.
We are also interested in options that would involve tailoring the
costing requirements associated with Subpart H requirements for today's
rulemaking. For example, the Subpart H financial obligations are tied
in large part to the estimated future cost of closing the hazardous
waste facility. Closure costs can be difficult to estimate, or subject
to disagreement, and failure to close might not be the problem at a
given facility. For example, closure cost estimates might not address
the kind of releases identified in the recycling study. Thus, a simpler
alternative might be to set a standard, fixed amount of financial
assurance that would need to be demonstrated. For example, EPA's study
of environmental problems associated with hazardous material recycling
was able to identify actual or estimated cleanup costs associated with
89 of the damage cases that were documented. Of these cases, 71 (80%)
involved cleanup costs of $5 million or less, while 81 cases (91%) cost
$10 million or less. It should be noted that there are important
uncertainties associated with these cost data, as explained in our
study report. With these uncertainties in mind, these findings might be
used as the basis for identifying a specific, minimum amount of
financial assurance that reclamation facility owner/operators would
need to demonstrate. Such funds would thus be available for any
environmental damage associated with the reclamation operations at such
facilities.
This type of approach to establishing financial assurance
requirements for reclamation facilities would be less flexible than the
current regulations, but it would have the virtue of simplicity and
transparency. Similarly, the regulatory language of individual
financial assurance mechanisms might need to be modified slightly, to
make it clear that funds would be available for environmental damages
beyond closure. The Agency solicits comment on such alternative
approaches to financial assurance requirements for reclamation
facilities that would operate under today's proposed exclusion.
Finally, the Agency anticipates that, when and if today's proposed
exclusion for transferred materials is promulgated and becomes
effective, there are likely to be some generators of recyclable
hazardous wastes that will choose not to use the exclusion, and thus
will continue to manage their wastes under the current hazardous waste
regulatory

[[Page 14197]]

system. These generators may nevertheless wish to ship their hazardous
waste to a reclamation facility that is operating under this exclusion.
In such situations, it is possible that questions could arise as to the
regulatory status of the hazardous waste materials that are sent to
such reclamation facilities. Today's proposed exclusion includes a
provision (Sec. 261.4(a)(24)(vi)) that is intended to clarify that the
reclamation facilities may still claim the exclusion in these types of
situations. The Agency requests comment on this provision.

D. Enforcement

Under today's proposal, hazardous secondary materials transferred
for the purpose of reclamation would be excluded from RCRA subtitle C
regulation, but would be subject to certain conditions and
restrictions. If a generator fails to meet any of the above-described
conditions or restrictions on the management of hazardous secondary
materials that are applicable to the generator, then the materials
would be considered discarded by the generator and would be subject to
RCRA subtitle C regulations from the point at which the material was
used and could not be reused without reclamation. If a reclaimer were
to fail to meet any of the above-described pre-conditions or
restrictions on the management of hazardous secondary materials that
are applicable to the reclaimer, then the materials would be considered
discarded by the reclaimer and would be subject to RCRA subtitle C
regulation from the point at which the reclaimer failed to meet a
condition or restriction, thereby discarding the material.
Please note that the failure of the reclaimer to meet conditions or
restrictions does not mean the material was considered waste when
handled by the generator, as long as the generator can adequately
demonstrate that he has met his obligations, including the obligation
under proposed 40 CFR 261.4(a)(24)(iv)(A) to make reasonable efforts to
ensure that the material will be recycled legitimately and otherwise
managed in a manner that is protective of human health and the
environment. A generator who met his reasonable efforts obligations
could in good faith ship his excluded materials to a reclamation
facility where, due to circumstances beyond his control, they were
released and caused environmental problems at that facility. In such
situations, and where the generator's decision to ship to that
reclaimer is based on an objectively reasonable belief that the
hazardous secondary materials would be recycled legitimately and
otherwise managed in a manner consistent with this regulation, the
generator would not have violated the terms of the exclusion.

XI. Legitimacy: Proposed 40 CFR 261.2(g)

A. What Is the Purpose of Distinguishing Legitimate Recycling From Sham
Recycling?

Under 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. However, since there can be significant
economic incentive to manage hazardous secondary materials outside the
RCRA regulatory system, there is a clear potential for some handlers to
claim that they are recycling, when in fact they are conducting waste
treatment and/or disposal in the guise of recycling. To guard against
this, EPA has long articulated the need to distinguish between
``legitimate'' (i.e., true) recycling and ``sham'' recycling, beginning
with the preamble to the 1985 regulations that established the
definition of solid waste (50 FR 638, January 4, 1985) and continuing
with the 2003 proposed codification of criteria for identifying
legitimate recycling.
On October 28, 2003 (68 FR 61581-61588), EPA extensively discussed
our position on the relevance of legitimate recycling to hazardous
secondary materials recycling in general and to the redefinition of
solid waste specifically. We proposed to codify in the RCRA hazardous
waste regulations four general criteria to be used in determining
whether recycling of hazardous secondary materials is legitimate. In
today's action, we are proposing two changes to the proposed legitimacy
criteria and asking for public comment on those changes. The changes
are (1) a restructuring of the proposed criteria, called factors in
this proposal, to make two of them mandatory, while leaving the rest as
factors to be considered, and (2) additional guidance on how the
economics of the recycling activity should be considered in a
legitimate recycling determination.
As we explained in the 2003 proposal, it is the Agency's
longstanding policy that, for activities to qualify as recycling of
hazardous secondary materials, they must be legitimate. This principle
applies to both recycling of excluded hazardous secondary materials and
recycling of regulated hazardous secondary materials. The definition of
legitimate recycling is intended to apply to all recycling of hazardous
secondary materials, including:
? Recyclable hazardous secondary materials that would be
excluded from Subtitle C regulation as wastes under today's proposed
exclusion from the definition of solid waste.
? Hazardous secondary materials that, because they are
recycled, are excluded or exempted from Subtitle C regulation under
other regulatory provisions (e.g., see the exclusions in 40 CFR
261.2(e) and 261.4).
? Recyclable hazardous wastes that are regulated under
Subtitle C prior to recycling.
Apart from the definition of solid waste implications, the concept
of legitimate recycling also is used to determine if a recycling unit
is exempt from RCRA Subtitle C permitting (except for certain air
emission standards) or a regulated waste treatment or disposal unit,
subject to full RCRA Subtitle C permitting.
The concept of legitimate recycling is designed to be used in
addition to and in concert with more specific criteria or requirements
when they have been established in the regulations for specific
recycling activities or recycled hazardous secondary materials.
Affected parties should look to those regulatory provisions, in
addition to the definition of legitimate recycling, to ensure
compliance. For example, for a zinc micronutrient fertilizer
manufacturer who uses hazardous secondary materials as a feedstock, the
consideration of hazardous constituents in the final product would
involve an analysis of whether the operation is legitimate recycling
and an analysis of whether the fertilizer meets the contaminant limits
specified in 40 CFR 261.4(a)(21).
By ensuring that use of hazardous secondary materials in an
industrial process is legitimate recycling, the Agency seeks to ensure
that when a facility claims that it is recycling, the hazardous
secondary material is in fact being recycled and is contributing to a
valuable product and is not being treated or disposed of in the guise
of recycling.

B. Definition of Legitimate Recycling in the 2003 Proposal

In the 2003 proposed rule (68 FR 61581-61588), EPA proposed
codifying specific regulatory provisions for determining when hazardous
secondary materials are recycled legitimately. Previously, the criteria
considered in

[[Page 14198]]

evaluating legitimate recycling have been discussed extensively in
preambles to definition of solid waste rulemakings and, notably, in a
1989 memorandum that laid out a single list of criteria to be
considered in evaluating legitimacy (the ``Lowrance Memo''; OSWER
directive 9441.1989(19), dated April 26, 1989).
The 2003 proposal consolidated the criteria in that memorandum into
four criteria. EPA was clear in its expectation that most, if not all,
legitimate recycling would conform with all four of the criteria, but
stated that the application of those criteria would require some
subjective evaluation of the criteria in each specific situation to
which they are being applied. In those cases where a legitimate
recycling operation does not meet all four criteria, the structure of
the definition of legitimacy was designed to be flexible enough to
allow those situations to be deemed legitimate.
In general, the proposed regulatory language stated that legitimacy
determinations must be made by considering whether:
? The hazardous secondary material to be recycled is managed
as a valuable commodity;
? The hazardous secondary material provides a useful contribution to
the recycling process or to a product of the recycling process;
? The recycling process yields a valuable product or intermediate;
? The product of the recycling process does not contain
significant amounts of hazardous constituents that are not found in the
analogous products or exhibit a hazardous characteristic not exhibited
by the analogous product.
The full proposed regulatory text can be found in the proposed rule
(68 FR 61596).
It is the Agency's opinion that the concept of legitimate recycling
proposed in the October 2003 proposal and in today's supplemental
proposal is not substantively different than our longstanding policy,
as expressed in earlier preamble and guidance statements. As part of
proposing regulatory provisions on the legitimacy of recycling, we are
simply reorganizing, streamlining, and clarifying the existing
legitimacy principles. We believe that the regulatory definition of
legitimate recycling, when applied to specific recycling scenarios,
will result in determinations that are consistent with the earlier
policy. Therefore, we generally do not see the need for the regulated
community or overseeing agencies to revisit previous determinations and
expect any written determinations from these agencies to, in effect, be
grandfathered. For a more detailed analysis on how the definition of
legitimacy has evolved from earlier preamble and guidance statements,
see the October 28, 2003 proposal (68 FR 61581-61588), where we
provided a thorough explanation of how the proposed criteria related to
existing guidance. The Agency does not intend to reiterate that
analysis in today's supplemental proposed rule, but will explain below
the changes we are proposing to make from the 2003 proposal.
The 2003 proposal did result in comments on the Agency's proposal
to codify legitimacy and we are requesting further comment on this
issue. The Agency believes that there are many benefits to codifying
the legitimacy factors, as discussed in the 2003 proposal. Many
commenters, particularly the state regulatory agencies, but some
members of industry as well, agreed with EPA's rationale for codifying
the legitimacy in part 261. However, some commenters urged EPA to
retain the existing legitimacy guidance instead of codifying it in the
regulations. These commenters stated that the existing guidance
provides a more flexible way to assess whether an activity constitutes
legitimate recycling and raised several concerns with the codification
of legitimacy. The commenters expressed concern that codification could
alter the application of legitimacy. Although EPA intends to preserve
current interpretations of legitimacy, the commenters raised the
concern that putting legitimacy in the regulations could eliminate the
flexibility in the existing guidance for subjective evaluation and
balancing of the factors when making a determination. EPA is requesting
comment on this issue.
In addition, the commenters raised the concern that codification of
legitimacy would place too much burden on the regulated entity to make
a showing that it is engaged in legitimate recycling. The Agency
believes that it has always been the responsibility of the regulated
entity to ensure, and if requested, to show that its recycling is
legitimate. EPA expects that regulated entities have evaluated and will
continue to evaluate their recycling operations using these factors and
will reach their conclusions about legitimacy without prior approval by
an overseeing agency. However, EPA is requesting comment on whether
codifying the factors in today's proposal would place increased burden
on the regulated entity and, if so, what the reasons are for such
increased burden. Finally, the concern has been expressed that
codification would fix into place a specific formulation of EPA's
legitimacy factors, and therefore would limit future evolution of them.
Future changes to the factors could become more difficult if they have
been codified. The Agency believes there are many benefits to codifying
the legitimacy factors, as discussed in the 2003 proposal, but is
requesting comment on this issue.
EPA is interested in comments about the benefits and drawbacks of
codifying legitimacy. In particular, EPA solicits comments on current
practices for assessing legitimacy, on any problems with current
practices that may be alleviated by codifying the factors, and on
alternative means of addressing any such problems.

C. Changes Proposed in This Action

1. New Structure of Legitimacy Factors
a. Design of the new structure. For the reasons discussed below,
EPA is proposing a new structure for the definition of legitimate
recycling. The proposed design of the definition has two basic parts.
The first part is considered the core of legitimacy, which includes a
requirement that the hazardous secondary material being recycled
provides 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 is valuable. These two factors are fundamental to
the definition of legitimacy and, therefore, an industrial process that
does not conform to them would be considered sham recycling (i.e.,
treatment or disposal in lieu of recycling).
The second part of the proposed structure for legitimacy is a list
of two factors that must be considered, but not necessarily met, when a
recycler is making a legitimacy determination. EPA believes that these
factors are important in determining legitimacy, but has not proposed
to make them mandatory because the Agency believes that there may be
some situations in which a legitimate recycling process does not
conform to one of these factors. Therefore, EPA is proposing that the
management of the hazardous secondary material and the presence of
hazardous constituents in the product of the recycling activity be
factors that must be considered in the overall legitimacy
determination, but not mandatory requirements that must be met as part
of a definition of legitimacy. The full proposed regulatory text for
the legitimacy portion of this supplemental proposal is found in 40 CFR
261.2(g).
b. Why EPA is proposing this change. In the 2003 proposed rule, the
regulatory text for legitimacy was made

[[Page 14199]]

up of paragraph (g) of proposed section 261.2, which stated that
hazardous secondary materials that are not legitimately recycled are
discarded and, therefore, solid wastes. Paragraphs (1) through (4) then
listed the four proposed legitimacy criteria after a statement that
legitimacy determinations must be made by considering them. Proposed
criteria 1 and 2 focused on the hazardous secondary material being
recycled and criteria 3 and 4 focused on the product of the recycling
process.
In the 2003 proposed rule, the application of the four criteria to
a recycling process was proposed to require some evaluation and
balancing. That is, although the Agency expected that most legitimate
recycling practices would conform to all the pieces of legitimacy, it
was aware that there would be some cases in which legitimate recycling
may not conform to one or more of the criteria. As in the Lowrance
Memo, the structure of legitimacy allowed circumstances in which
certain criteria weighed more heavily than others in the final
legitimacy determination.
Analysis of public comment on the 2003 proposal shows that there
was general agreement from industry, states, and other commenters that
recycling cannot be legitimate if the hazardous secondary 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 more information on how it defines the terms used in
the regulation and there was some disagreement with the specifics laid
out in the preamble. Some commenters, particularly several states, felt
that all four criteria should be mandatory requirements. However,
almost all commenters agreed that proposed criteria 2 and 3 should be
met in order for recycling to be considered legitimate.
EPA agrees with the importance of criteria 2 and 3 and, for this
proposal, has decided that these two concepts are, in fact, at the very
core of what it means to recycle legitimately. Therefore, today's
proposed regulatory language states in 40 CFR 261.2(g)(2) that
``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 and the recycling process must produce a
valuable product or intermediate.'' This statement is followed by
paragraphs (i) and (ii) to give more details on how the Agency defines
these critical concepts.
EPA has determined that the other criteria in the 2003 proposal,
criterion 1 and criterion 4, are still important concepts in making
legitimacy determinations, but should not be mandatory. Instead,
today's proposed regulations state these two factors need to be
considered in making a determination as to the overall legitimacy,
which are found in 261.2(g)(3). In stating these factors need to be
considered, EPA expects that anyone making a legitimacy determination
will look carefully at how their hazardous secondary materials are
managed as compared to analogous raw materials and at the hazardous
constituents in their products.
However, these two factors would not be mandatory because EPA and
commenters were able to identify situations in which a recycling
scenario appears to be legitimate, but one of these factors was not met
in the way EPA described because that factor is not applicable or
relevant to the materials being recycled or to the particulars of the
recycling process. For example, it is possible that a solid, powdery
hazardous secondary material could be shipped to a recycling facility
in flexible, woven ``supersack'' containers, where the supersacks are
then stored at the facility in a well-designed, designated indoor
containment area and then legitimately recycled. If, however, an
analogous raw material (i.e., with similar physical and chemical
characteristics) was typically received and stored at the same facility
in sealed steel drums, one could conclude that the hazardous secondary
material was not managed ``in a manner consistent with the analogous
raw material.'' In this case, therefore, a strict finding could be made
that this factor was not met, even though the differences in storage
practices do not affect protectiveness. In evaluating the legitimacy of
a recycling process in situations like this, EPA does not believe that
such a strict finding should necessarily be the determining factor. We
are proposing that this factor not be mandatory in making legitimacy
determinations in order to allow flexibility for these types of situations.
For similar reasons, the Agency is also proposing that the factor
which addresses ``toxics along for the ride'' be a consideration in
making legitimacy determinations, rather than a mandatory requirement.
One illustration as to why some flexibility may be needed in assessing
this proposed factor could be a hypothetical situation in which a
pharmaceutical manufacturer uses a ``virgin'' solvent (``Solvent X'')
as a process ingredient, and generates a spent solvent that is
identical to the virgin solvent, except that it has become contaminated
with a relatively small amount of a different solvent (``Solvent Y'').
Solvents X and Y are assumed to have essentially the same toxicity and
solvent properties, and both chemicals would be considered ``hazardous
constituents'' under RCRA for waste identification purposes. In this
example, the spent material (i.e., the mixture of solvents ``X'' and
``Y'') is no longer useful to the generator in making pharmaceuticals.
It would potentially be useful, however, to a manufacturer of oil-based
paints, as a substitute for virgin Solvent X. If the spent material was
used in this manner by the paint manufacturer, the resulting paint
products could contain significant concentrations of a hazardous
constituent (i.e., ``Solvent Y'') not found in analogous products made
from virgin Solvent X. Thus, this recycling practice could be
determined as not meeting today's proposed legitimacy factor that
addresses ``toxics along for the ride.''
Given that the paint products made from spent (i.e., secondary)
materials would essentially have the same solvent properties and
potential environmental hazards as paint made from virgin solvents, it
might be reasonable to determine that the overall recycling practice
was legitimate. Again, because of situations like this, we believe that
this factor is best expressed as a consideration in making legitimacy
determinations, rather than as a mandatory requirement.
At the same time, it should be noted that ``toxics along for the
ride'' is an important consideration when the toxic constituents affect
either the performance of the product or cause adverse environmental or
health effects. For example, elevated levels of lead in foundry sand
would not be a problem when the sand is re-used in the foundry molds,
but it has been a significant problem when the sand was sold as
children's play sand.\4\ In such a case, the high levels of lead would
disqualify this use from being considered legitimate recycling.
---------------------------------------------------------------------------

\4\ One of the profiles in the docket for today's proposal shows
that from 1997-1998, a horticultural nursery purchased approximately
375 tons of foundry sand which contained lead above the regulatory
limits, that was then bagged and sold as play sand to approximately
40 different retailers. (U.S. EPA, An Assessment of Environmental
Problems Associated with Recycling of Hazardous Secondary Materials,
Appendix 2).
---------------------------------------------------------------------------

Under this proposed structure, if a facility making a legitimacy
determination decides that one of these

[[Page 14200]]

two factors to be considered is, in fact, not applicable to the
recycling process, we recommend that the facility document why the
recycling process is legitimate, even though it may not meet one or
more of the factors to be considered.
EPA believes that the new structure for the definition of
legitimacy will clarify what the Agency believes are the most important
elements of legitimacy and requests comment on this structure for
making legitimacy determinations related to hazardous secondary
material recycling.
2. Consideration of Economics in Legitimate Recycling
EPA also notes that the economics of the recycling activity may be
relevant to legitimate recycling determinations. Consideration of
economics has long been a part of the Agency's concept of legitimacy,
as evident in the Lowrance Memo and earlier preamble text (50 FR 638,
January 4, 1985 and 53 FR 522, January 8, 1988) [see also American
Petroleum Institute v. EPA (``API II''), 216 F.3d 50, 57-58 (DC Cir.
2000)]. In addition, in our October 2003 proposal, EPA proposed that
consideration of economics be part of the second legitimacy criterion
(i.e., whether the hazardous secondary material provides a useful
contribution). In their comments to the October 2003 proposal, states
and some other stakeholders supported including a consideration of
economics when making legitimacy determinations, although they also
expressed a need for clarification of how economics should inform
legitimacy determinations. Today's proposal, unlike the October 2003
proposal, does not codify specific regulatory language on economics,
but offers further guidance and clarification on how economics may be
considered in making legitimacy determinations. The Agency believes
that we are clarifying how economics has traditionally been implemented
via the Lowrance Memo guidance, and therefore, does not believe the
consideration of economics as explained below impacts existing
legitimacy determinations.\5\
---------------------------------------------------------------------------

\5\ Today's supplemental proposal would make the ``useful
contribution'' factor a central, or mandatory, part of the
definition of legitimacy (along with the ``valuable product''
factor). However, we do not believe that consideration of economics
should also be considered a mandatory factor. Nevertheless, the
economics of a recycling activity is a consideration because it can
assist in informing the useful contribution and valuable product
factors of the definition of legitimate recycling.
---------------------------------------------------------------------------

Specifically, EPA believes that consideration of the economics of a
recycling activity can be used to inform and help determine whether the
recycling operation is legitimate. Positive economic factors would be a
strong indication of legitimate recycling, whereas negative economic
factors would be an indication that a further look at the recycling
operation may be warranted in assessing its legitimacy. While not
specifically addressed in the proposed regulations, consideration of
economics could be a factor in informing whether the hazardous
secondary material input provides a useful contribution and whether the
product of the recycling operation is of value.
Consideration of the economics of a particular recycling operation
can greatly assist in making legitimacy determinations. Appropriate
information for this consideration could include an understanding of
the major costs, revenues, and economic flows for a recycling
operation. Information that may be useful could include (1) the amount
paid or revenue generated by the recycler for recycling hazardous
secondary materials; (2) the revenue generated from the sale of
recycled products; (3) the future cost of processing existing
inventories of hazardous secondary materials and (4) other costs and
revenues associated with the recycling operation. The economics of the
recycling transaction may be more of an issue when hazardous secondary
materials are sent to a third-party recycler, although where the
hazardous secondary material being recycled is under the control of the
generator, the generator must still be able to show that the hazardous
secondary material is, at a minimum, providing a useful contribution
and producing a valuable product.
The basic economic flows can suggest whether the recycling
operation will process inputs, including hazardous secondary materials,
and produce products over a reasonable period of time, recognizing that
there will be lean and slow times.\6\ Thus, processing inputs that
produce legitimate products is a threshold for legitimate recycling. A
general accounting of the major costs, revenues, and economic flows for
a recycling operation over a reasonable period of time \7\ can provide
information to consider whether recycling is likely to continue at a
reasonable rate, compared to the rate at which inputs are received, or
whether it is likely that significant amounts of unrecycled material
are likely to be accumulated and then abandoned when the facility
closes.\8\ Any bona fide sources of revenues would be included in this
consideration, such as payments by generators to recyclers for
accepting hazardous secondary materials and subsidies supporting
recycling. However, in order to have some level of confidence that
beneficial products are or will be produced; we believe that at least
some portion of the revenues should be from product sales (or savings
due to avoided purchases of products if the hazardous secondary
materials are used directly by the recycler), consistent with the
hazardous secondary material being recycled to make a useful product.
---------------------------------------------------------------------------

\6\ As an example, metal prices fluctuate and at times are below
the cost of processing. However, recovery of metals is usually
legitimate recycling.
\7\ Where the hazardous secondary material being reclaimed is
under the control of the generator, the recycling operation is
generally part of an overall manufacturing operation, which would be
part of the evaluation.
\8\ In general, overaccumulation of hazardous secondary
materials is subject to the speculative accumulation provisions, as
defined in 40 CFR 261.1(c) (8).
---------------------------------------------------------------------------

Two examples illustrate this concept. A recycling operation that
generates revenues from sales of recycled products that greatly exceed
the costs of the operation is likely to quickly process the hazardous
secondary materials it receives into useful products. A very different
example is an operation that has, relative to its revenues, large
inventories of unsold product and large future liabilities in terms of
stocks of unprocessed hazardous secondary material. This operation
would draw closer attention to determine whether it is engaged, in
essence, in treatment and/or abandonment in the guise of recycling.
When the economics of a recycling operation is similar to that of
manufacturing using raw materials, the Agency believes that such an
operation is likely to be legitimate. That is, the recycler pays for
hazardous secondary materials as a manufacturer would pay for raw
materials, the recycler sells products from the recycling process as a
manufacturer would sell products of manufacturing, and revenues equal
or exceed costs. In this scenario, hazardous secondary materials are
valuable (i.e., the recycler is willing to pay for them) and make a
useful contribution to a valuable recycled product (otherwise the
recycler would not be willing to pay for them). In addition, the sale
of the products of recycling demonstrates their value.
However, we also recognize that the economics of many legitimate
recycling operations that utilize hazardous secondary materials differs
from the economics of more traditional manufacturing operations. An
understanding of the economics of these

[[Page 14201]]

operations can be useful in evaluating the legitimacy of a recycling
operation. For example, many recyclers are paid by generators to accept
hazardous secondary materials. Generators may be willing to pay
recyclers because they can save money if the recycling is less
expensive than disposing of the hazardous secondary materials in
landfills or incinerators. Another example is a scenario where
recyclers receive subsidies which may be designed to develop recycling
infrastructure and markets, remove problematic materials from disposal,
or achieve other benefits of recycling. For example, the recycling of
electronic materials can be legitimate even though the recycler is
often subsidized for processing the material. Both of these examples
involve situations that are different from manufacturing using raw
materials, but as long as they are appropriately considered, an
analysis of the economics of these operations can assist in determining
the legitimacy of the recycling.
Any analysis of the economics of a recycling operation should
recognize that a recycler may be able to charge generators and still be
a legitimate recycling operation properly excluded from regulation. In
short, because these hazardous secondary materials are hazardous wastes
if disposed of, typically the generators' other alternative management
option already carries a cost that is based on the existing market for
hazardous waste transportation and disposal. Hence, unless there is
strong competition in recycling markets or the hazardous secondary
materials are extremely valuable, a recycler may be able to charge
generators simply because alternative disposal options cost more. While
the generator's objective may be finding the least cost alternative for
getting rid of the hazardous secondary material, the recycling may well
be a legitimate recycling operation.
Recognizing that such a dynamic exists can assist those making
determinations in evaluating legitimacy of the recycling operation. For
example, if a recycler is charging generators fees (or receiving
subsidies from elsewhere) for taking hazardous secondary material and
receives a far greater proportion of its revenue from acceptance fees
than from the sale of its products, both the useful contribution and
the valuable product factors may warrant further review, unless other
information would indicate that such recycling is legitimate. Fees and
subsidies could indicate that the economic situation allows the
recycler to charge high fees, regardless of the contribution provided
by the inputs, including hazardous secondary materials. In this
situation, recyclers may also have an increased economic incentive to
over-accumulate or overuse hazardous secondary materials, or to manage
them less carefully than one might manage more valuable inputs.
Additionally, if there is little competition in the recycling market,
and/or if acceptance fees seem to be set largely to compete with the
relative costs of alternative disposal options rather than to reflect
the quality or usefulness of the input to the recycling operation, this
may also suggest a closer look at ``useful contribution.''
A relatively low proportion of revenues coming from sales of
recycled products compared to payments by generators may suggest the
need for more consideration of the ``valuable product'' criterion. It
is possible that it is appropriate for product sales revenues to be
dwarfed by acceptance fee revenues because markets for the particular
products are highly competitive or because high alternative disposal
costs allow for high acceptance fees. However, relatively low sales
revenues could also point to a review of product sales prices to see
whether they are lower than other comparable products, products are
being stockpiled rather than sold, or very little product is being
produced relative to the amount of inputs to the recycling operation.
These could be possible indicators that the recycled product may not be
valuable and, thus, sham recycling may be occurring.
A consideration of the future cost of processing or alternatively
managing existing inventories of hazardous secondary material inputs
also can inform the legitimacy determination. When hazardous secondary
materials make a significant useful contribution to the recycling
activity, a recycler will have an economic incentive to process input
materials relatively quickly or efficiently, rather than to maintain
large inventories. While recyclers often need to acquire a sufficient
amount of a hazardous secondary material to make it economically
feasible to recycle, there should be little economic incentive to over-
accumulate such materials that make a useful contribution. Overly large
accumulations of input materials may indicate that the input materials
are not providing a useful contribution or that the recycler is
increasing its future costs of either processing or disposing of the
material, and hence may be faced with an unsound recycling operation in
the future. Again, it is important to weigh this factor against other
considerations. For example, it is possible that the recycler has
acquired a large stock of hazardous secondary material because the
price was unusually low or perhaps the material is generated
episodically and the recycler has few opportunities to collect it.
When recycling is conducted under the control of the generator, the
recycler may not account formally for some of the costs and savings of
the operation. Still, when deciding whether to undertake or continue
the recycling operation or to utilize alternative outside recycling or
disposal options, the recycler will evaluate basic economic factors as
a part of doing business. Also, the recycler would be likely to account
for the costs of virgin materials avoided by using hazardous secondary
materials. Similarly, sales of recycled products under the control of
the generator that are sold to an external market may be used to
evaluate the valuable product criterion. Thus, the recycler should have
available the basic information necessary to consider the economics of
an on-site or internal recycling operation for purposes of making a
legitimacy determination. We recognize, however, that an evaluation of
the economic structure of a recycling operation under the control of
the generator is likely to be less rigorous than that of a typical
offsite commercial recycling operation.
We request comment on how the economics of the recycling activity
should be considered in making overall legitimate recycling
determinations consistent with prior legitimacy determinations under
the Lowrance Memo. We are specifically interested in whether economics
should simply be a consideration that informs legitimacy overall or
whether the economics of recycling should be a separate factor,
including regulatory language, to consider. In addition, we are
interested in hearing from both the regulated community and the States
about other ways in which consideration of economics can inform and
support determinations of legitimate recycling for both on-site and
offsite recycling.

XII. Petitions for Non-Waste Classification: Proposed 40 CFR 260.30(d),
260.30(e), 260.30(f), 260.34

A. What Is the Intent of This Provision?

The intent of the non-waste determination petition process is to
provide petitioners with an administrative procedure for receiving a
formal determination that their recycled hazardous secondary material
is not discarded. This process would be available in addition to the
solid waste exclusions proposed today. Once a non-

[[Page 14202]]

waste determination has been granted, the hazardous secondary material
would not be subject to the restrictions and conditions that the
exclusions discussed elsewhere in today's supplemental proposal would
include (e.g., prohibition on speculative accumulation, or, for the
transfer-based exclusion, recordkeeping, reasonable efforts, financial
assurance, storage standard and export notice and consent).
The petition process would be voluntary. Facilities may choose to
continue to self-implement any applicable waste exclusions and, for the
vast majority of cases, where the regulatory status of the material is
evident, self-implementation will still be the most appropriate
approach. In addition, facilities may continue to contact EPA or the
authorized state asking for informal assistance in making these types
of waste determinations. However, for cases where there is ambiguity
about whether a hazardous secondary material is a solid waste, the
formal petition process will provide regulatory certainty for both the
facility and the implementing Agency
EPA anticipates that most generators who recycle their hazardous
secondary materials would use either the self-implementing exclusions
proposed today or existing exclusions. We request comment on how
frequently the non-waste determination process is likely to be used and
how best to minimize the burden to the authorized states and to the
regulated community.
The Agency is proposing three types of non-waste determinations:
(1) For hazardous secondary materials recycled in a continuous
industrial process, (2) for hazardous secondary materials
indistinguishable in all relevant aspects from a product or
intermediate, (3) for hazardous secondary materials that is recycled
under the control of the generator, such as through contracts similar
to the tolling arrangements proposed in section IX of today's preamble.

B. Non-Waste Determination for Hazardous Secondary Material Recycled in
a Continuous Industrial Process

As discussed earlier in today's supplemental proposal, court
decisions have made it clear that hazardous secondary material that is
recycled in a continuous industrial process is not discarded and
therefore, not a solid waste. The October 2003 proposed rule attempted
to parse the language of some of those decisions in order to identify
when material destined for recycling is clearly not a solid waste. As
explained earlier, we are not finalizing that approach. Instead, the
Agency has decided to link the rulemaking more explicitly to the
concept of ``discard'' which underlie those decisions. EPA believes
that today's supplemental proposal excludes from the definition of
solid waste hazardous secondary materials recycled in a continuous
industrial process by virtue of the determination that such materials
that are legitimately recycled under the control of the generating
facility and not speculatively accumulated are not discarded and
therefore not solid waste.
However, production processes can vary widely from industry to
industry. In the October 2003 proposal, we attempted to define
``recycled in a continuous industrial process'' using the NAICS codes.
Based on the comments we received, we determined that identifying which
hazardous secondary materials are recycled within a continuous
industrial process presents difficulties as courts have, at least
implicitly, acknowledged.\9\ Even if EPA had more specific information
on some hazardous secondary materials, it still would be impossible to
know if the Agency has addressed every possibility. Thus to determine
whether an individual hazardous secondary material is recycled in a
continuous industrial process, and therefore not a solid waste, EPA may
need to evaluate case-specific fact patterns, which is best done
through a case-by-case procedure. We are titling this procedure a
``non-waste determination'' to acknowledge that this procedure
constitutes an administrative process for formally recognizing that a
specific hazardous secondary material is not a solid waste.
---------------------------------------------------------------------------

\9\ See, for example the ABR decision, where the Court
acknowledged that the term, ``discard,'' could be ``ambiguous as
applied to some situations, but not as applied to others,'' and
particularly cited the difficulty in examining the details of the
many processes in the mineral processing industry. 208 F.3d at 1056.
While the court overturned EPA's regulations for casting too wide a
net over continuous industrial processes, it acknowledged that there
are large number of processes, some of which may be continuous and
some of which may not. Determining what is a continuous process in
the mineral processing industry, according to the Court, would
require examination of the details of the processes and does not
lend itself, well, to broad abstraction. Specifically, the court
stated: Some mineral processing secondary materials covered under
the Phase IV Rule may not proceed directly to an ongoing recycling
process and may be analogous to the sludge in AMC II. The parties
have presented this aspect of the case in broad abstraction,
providing little detail about the many processes throughout the
industry that generate residual material of the sort EPA is
attempting to regulate under RCRA, 208 F.3d at 1056.
In the case of today's supplemental proposal, which applies
across industries, there are far larger and more diverse processes.
While the Agency believes it is proposing a reasonable set of
principles, they must still be applied to the details of the
industrial processes in question.
---------------------------------------------------------------------------

EPA is proposing four criteria for making this ``non-waste
determination'' that a specific hazardous secondary material is
reclaimed in a continuous industrial process. The first is the extent
that the management of the hazardous secondary material is part of the
continuous production process. At one end of the spectrum, if the
material is handled in a manner identical to virgin feedstock, then it
is fully integrated into the production process. At the other end of
the spectrum, materials indisputably discarded prior to being reclaimed
are not a part of the continuous primary production process. (``AMC
II''), 907 F. 2d 1179 (DC Cir. 1990) (listed wastes managed in units
that are part of wastewater treatment units are discarded materials
(and solid wastes), especially where it is not clear that the industry
actually reuses the materials). For cases that lie within the spectrum,
the petitioner would need to provide sufficient information about the
production process to demonstrate that the management of the hazardous
secondary material is an integral part of the production process and is
not waste treatment.
The second criterion for making this non-waste determination is the
capacity of the production process to use the hazardous secondary
material in a reasonable timeframe and ensure that it will not be
abandoned (for example, based on past practices, market factors, the
nature of the material, and any contractual arrangements). Abandonment
of stockpiled recyclable hazardous secondary materials is one way that
discard can occur at recycling operations and is one of the major
causes of environmental problems. As indicated in the recycling
studies, 69 of the 208 incidents of environmental damage involve
abandonment of the hazardous secondary material as the primary cause of
damage. For today's proposed exclusions for hazardous secondary
materials recycled under the control of the generating facility and
hazardous secondary materials transferred to another facility for
recycling, EPA is proposing speculative accumulation (as defined in 40
CFR 261.1(a)(8)) as the method for determining when a material is
unlikely to be recycled and therefore may end up being discarded via
abandonment. For the non-waste determination, the petitioner would not
necessarily need to demonstrate that the material would not be
accumulated speculatively per 40 CFR 261.1(a)(8), but he must provide
sufficient information about the material and the process to
demonstrate that the

[[Page 14203]]

hazardous secondary material will in fact be reclaimed in a reasonable
timeframe and will not be abandoned. EPA is not proposing an explicit
definition of ``reasonable timeframe'' because such a timeframe would
vary according to the material and industry involved, and therefore
determining this timeframe should be made on a case-specific basis.
However, an applicant may still choose to use the speculative
accumulation timeframe as a default if it wishes.
The third criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary material are recycled
rather than released to the air, land or water at significantly higher
concentrations from either a statistical or from a health and
environmental risk perspective than would otherwise be released by the
primary production process. To the extent that the hazardous
constituents are a continuation of the original hazardous secondary
material, their release to the environment is an indicator of discard.
The Agency recognizes that normal production processes also result in a
certain level of releases and, in evaluating this criteria, would not
deny a petition if the increase in releases is not significantly
different from either a statistical or risk perspective. However, when
unacceptably high levels of the constituents that make the hazardous
secondary material of regulatory concern are released to the
environment rather than recycled, then that material (or at least the
portion of the material that is of most concern) is not in fact being
``reused within an ongoing industrial process.''
The fourth and final criterion for this non-waste determination
includes any other relevant factors that demonstrate the hazardous
secondary material is not discarded. This ``catch-all'' criterion is
intended to allow the applicant to provide any case-specific
information it deems important in making the case that its material is
not discarded and therefore not a solid waste.
EPA requests comment on these criteria, as well as any other
criteria that may be relevant for making this non-waste determination.

C. Non-Waste Determination for Hazardous Secondary Material
Indistinguishable in All Relevant Aspects From a Product or Intermediate

Although the courts have made clear that hazardous secondary
materials recycled within a continuous industrial process are not
discarded and therefore not solid waste, they have also said that
hazardous secondary materials destined for recycling in another
industry are not automatically discarded. In the Safe Foods case, the
Court stated ``Nobody questions that virgin * * * feedstocks are
products rather than wastes. Once one accepts that premise, it seems
eminently reasonable to treat [recycled] materials that are
indistinguishable in the relevant respects as products as well.'' 350
F.3d at 1269. In most cases, hazardous secondary materials that are
indistinguishable from products are unambiguously excluded from solid
waste regulation under 40 CFR 261.2(e). However, there may be some
instances which would benefit from a non-waste determination similar to
that proposed today for hazardous secondary materials reclaimed in a
continuous industrial process. EPA is proposing four criteria for
making a non-waste determination for hazardous secondary materials
indistinguishable in all relevant aspects from a product or intermediate.
The first criterion for this non-waste determination is
consideration of likely markets for the hazardous secondary material
(for example, based on the current positive value of the material,
stability of demand, and any contractual arrangements). This evaluation
of market participation is a key element for determining whether
companies view and handle these hazardous secondary materials like
products rather than like negatively-valued wastes. EPA's report on how
market incentives affect the management of hazardous secondary
materials indicates that both high value and stable markets are strong
incentives to refrain from over-accumulating recyclable materials, thus
maximizing the likelihood that the hazardous secondary materials will
be recycled and not abandoned.
The second criterion for this non-waste determination is the
chemical and physical identity of the hazardous secondary material and
whether it is comparable to commercial products or intermediates. This
``identity principle'' is a second key factor that the Court in Safe
Food found useful in determining whether a material is
indistinguishable from a product. It is important to note that the
identity of a material can be ``comparable'' to a product without being
identical. However, to qualify for a non-waste determination, any
differences between the hazardous secondary material in question and
commercial products or intermediates must be insignificant from either
a statistical or from a health and environmental risk perspective.
The third criterion for this non-waste determination is whether the
hazardous constituents in the hazardous secondary materials are
recycled rather than released to the air, land or water at
significantly higher concentrations from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process. The Agency believes that to the
extent that the hazardous constituents are a continuation of the
original hazardous secondary material, their release to the environment
is a possible indicator of discard. The Agency recognizes that normal
production processes also result in a certain level of releases and, in
evaluating this criteria, would not deny a petition if the increase in
releases is not significant from either a statistical or a health and
environmental risk perspective. However, when high concentrations of
the constituents that make the hazardous secondary material of
regulatory concern are released to the environment rather than
reclaimed, then that material (or at least the portion of the material
that is of most concern) is not being handled as a commercial product
or intermediate.
As with the non-waste determination for hazardous secondary
materials reclaimed in a continuous industrial process, the fourth and
final criterion for this non-waste determination includes any other
relevant factors that demonstrate the material is not discarded. This
``catch-all'' criterion is intended to allow the applicant to provide
any case-specific information it deems important in making the case
that its material is not discarded.
EPA requests comment on these criteria, as well as any other
criteria that may be relevant for making this non-waste determination.

D. Non-Waste Determination for Hazardous Secondary Material Reclaimed
Under the Control of the Generator Via a Tolling Arrangement or Similar
Contractual Arrangement

As discussed earlier in today's preamble, EPA is proposing that
hazardous secondary materials recycled via a specific type of tolling
(or contractual) arrangement are not discarded and therefore are not
solid waste, and is requesting comment if other types of tolling
arrangements would also not involve discard. Because the generator
maintains control over the recycled hazardous secondary material and it
is legitimately recycled, the hazardous secondary material would not be
considered discarded. By maintaining control over, and potential
liability for, the recycling process, the generator ensures that the
materials are not discarded. See ABR 208 F.3d at 1051 (``Rather than
throwing these materials [destined for recycling] away,

[[Page 14204]]

the producers saves them; rather than abandoning them, the producer
reuses them.'').
However, the large variety of contractual arrangements may preclude
EPA from identifying all possible arrangements that clearly do not
involve discard. For this reason, the Agency also is proposing that
generators may seek a non-waste determination for tolling or other
contractual arrangements not covered by the proposed exclusion
discussed in section IX of today's preamble.
The first criterion for this non-waste determination would be
whether the generator retains ownership and responsibility via a
contract or other mechanism for the hazardous secondary materials and
the residuals that result from their recycling. Assumption of
responsibility of both the hazardous secondary materials and the
residuals that would result from their recycling is a key indication
that the generator is not abandoning the hazardous constituents that
would have caused the hazardous secondary materials to have been
hazardous waste had they been discarded.
The second criterion for this non-waste determination is whether
the hazardous constituents in the hazardous secondary materials are
recycled rather than released to the air, land or water at
significantly higher concentrations from either a statistical or from a
health and environmental risk perspective than would otherwise be
released by the production process. The Agency believes that to the
extent that the hazardous constituents are a continuation of the
original hazardous secondary material, their release to the environment
is a possible indicator of discard. The Agency recognizes that normal
production processes also result in a certain level of releases and, in
evaluating this criteria, would not deny a petition if the increase in
releases is not significant from either a statistical or a health and
environmental risk perspective. However, when high concentrations of
the constituents that make the hazardous secondary material of
regulatory concern are released to the environment rather than
reclaimed, then that material (or at least the portion of the material
that is of most concern) is not being recycled under the control of the
generator.
As with the other types of non-waste determinations, the final
criterion for this non-waste determination includes any other relevant
factors that demonstrate the material is not discarded. This ``catch-
all'' criterion is intended to allow the applicant to provide any case-
specific information it deems important in making the case that its
material is not discarded.
EPA requests comment on these criteria, as well as any other
criteria that may be relevant for making this non-waste determination.

E. Scope and Eligibility

As with any solid waste determination that involves recycling,
hazardous secondary materials presented for a non-waste determination
must be legitimately recycled. In other words, the hazardous secondary
material must provide 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. For further discussion of
legitimacy and the factors to be considered, see section XI of today's
preamble.
In addition, non-waste determinations are limited to reclamation
activities and would not apply to recycling of ``inherently waste-
like'' materials (40 CFR 261.2(d)), recycling of materials that are
``used in a manner constituting disposal,'' or ``used to produce
products that are applied to or placed on the land,'' (40 CFR
261.2(c)(1)) and ``burning of materials for energy recovery'' or ``used
to produce a fuel or otherwise contained in fuels'' (40 CFR
261.2(c)(2)). Today's supplemental proposal is not intended to affect
how these recycling practices are regulated. However, we request
comment on whether such practices should be eligible for the case-
specific non-waste determinations.

F. Petition Process

The petition process for the non-waste determination would be the
same as that for the solid waste variances found in 40 CFR 260.31. In
order to obtain a non-waste determination, a facility that manages a
hazardous secondary material that would otherwise be regulated under 40
CFR 261 as either a solid waste, or as a conditionally excluded waste,
must apply to the Administrator or the authorized state per the
procedures described in 40 CFR 260.33. EPA proposes to amend section
260.33 to apply to non-waste determinations also. The application must
address the relevant criteria (discussed in further detail above). The
Administrator would evaluate the petition and issue a draft notice
tentatively granting or denying the application. Notification of this
tentative decision will be provided by newspaper advertisement or radio
broadcast in the locality where the facility is located. The
Administrator would accept comment on the tentative decision for 30
days, and also may hold a public hearing. The Administrator would issue
a final decision after receipt of comments and after the hearing (if
any). If the application is denied, the facility may still pursue a
solid waste variance or exclusion (for example, one of the solid waste
variances under 40 CFR 260.31 or solid waste exclusions under 40 CFR
261.4). EPA also may choose to specify the Regional Administrator as
the appropriate level of review for this process.
As discussed in more detail in section XV of today's supplemental
proposal, under section 3006 of RCRA, EPA would authorize states to
administer the non-waste determinations as part of their base RCRA
program. Because states are not required to implement Federal
requirements that are less stringent or narrower in scope than current
requirements, authorized states are not required to adopt the non-waste
determination process, and ordinarily the proposed provision could not
go into effect in an authorized state until it does choose to adopt it.
However, because the non-waste determination process is a formalization
of determinations that states may already perform on an ad hoc basis,
EPA is proposing to allow states that have not yet formally adopted the
proposed regulation in 40 CFR 260.34 to participate in non-waste
determinations if the following conditions are met: (1) The state
determines that the hazardous secondary material meets the criteria in
either paragraph (b), (c) or (d) of proposed section 40 CFR 260.34; (2)
the state requests EPA to review its determination; and (3) EPA
approves the state determination.

G. Enforcement

If a regulatory authority determines that a hazardous secondary
material is not a solid waste via the proposed petition process, the
material is not subject to Subtitle C hazardous waste regulations.
However, as part of this process, the applicant has an obligation to
submit, to the best of its ability, complete and accurate information.
If the information in the application is found to be incomplete or
inaccurate and, as a result, the hazardous secondary material does not
meet the criteria for a non-waste determination, then the material may
be subject to RCRA Subtitle C regulation and EPA or the authorized
state could choose to bring an enforcement action under RCRA section
3008(a). Moreover, if the petitioner is found to have knowingly
submitted false information, then it also may be subject to criminal
penalties under RCRA section 3008(d).

[[Page 14205]]

A special situation occurs when a material meets all the criteria
at the time the determination is made, but, as circumstances change,
ceases to meet the criteria. In particular, proposed criteria 40 CFR
260.34(b)(2) and 40 CFR 260.34(c)(1) depend at least in part on market
conditions, which can change over time. EPA requests comments on
whether there should be as part of the petition process an obligation
for the petitioner to inform the Agency when circumstances change, and
whether there should be a formal mechanism for the Agency to revoke a
determination if the change in circumstances results in the hazardous
secondary material no longer meeting the criteria for a non-waste
determination.

XIII. Effect of This Proposal on Other Programs

A. Other Exclusions

In the October 2003 proposal, EPA proposed a number of specific
``conforming changes'' to existing exclusions (68 FR 61578-61580). The
purpose of these conforming changes was to simplify and clarify the
regulations. EPA did not intend to make any substantive changes as to
how currently excluded materials would need to be managed or regulated.
However, comments to the proposed changes were overwhelming in favor of
retaining the existing exclusions. These existing exclusions are
familiar to both the States and the regulated community, and making
wholesale adjustments appears to have had unintended consequences in
many cases.
Thus in today's supplemental proposal, EPA is proposing to retain
the existing exclusions (for example, the scrap metal exclusion in 40
CFR 261.4(a)(13)) exactly as written. However, we request comment on
whether any specific regulatory exclusion would need revision in order
to avoid confusion or contradictions. EPA also is proposing that
hazardous secondary materials that are currently excluded with specific
requirements or conditions should be required to continue to meet those
requirements (e.g., the drip pad requirements for the wood preserving
exclusion in 40 CFR 261.4(a) (9)). In addition, recycling of such
materials at new facilities, or at existing facilities that are not
currently operating under the terms of an existing exclusion, would
also be subject to the existing applicable regulatory exclusion, rather
than today's proposed exclusions.
We request comment on the option of allowing a regulated entity to
choose which exclusion the person is subject to in those cases where
more than one exclusion could apply and, if so, whether that entity
should be required to document the choice made.

B. Permitted Facilities

Facilities that currently have RCRA permits or interim status, and
are managing hazardous wastes that would become excluded under this
rule, could be affected by today's supplemental proposal in a number of
ways. Under one scenario, a facility that manages a variety of
hazardous waste materials, including some hazardous secondary materials
that would become excluded under this rule, would be affected only to
the extent that certain units or processes at the facility would no
longer be subject to hazardous waste regulations. A somewhat different
scenario could involve a facility whose hazardous secondary materials
would all become excluded from regulation when this rule takes effect
(i.e., the facility is no longer a hazardous waste management facility).
For permitted facilities that would be managing hazardous secondary
materials excluded under this rule in addition to regulated hazardous
wastes, changes to the facility's permit would be necessary. These
facilities would need to maintain their permits, but the units used
solely to manage hazardous secondary materials would no longer be
regulated solid waste management units subject to permit requirements.
(Of course, to the extent that the exclusion were conditional, the
owner/operator of the facility would need to comply with the applicable
conditions to maintain the exclusion.) In such cases, the facility
owner/operator could seek a permit modification from EPA or more
typically the authorized state agency to remove the formerly subject
unit(s) from the permit.
The Agency believes that owners and operators modifying their
permits to remove units managing only wastes excluded by this rule
should comply with the requirements of section 270.42(a) for Class 1
permit modifications, with prior Agency approval. Under this approach,
owners and operators would be required to submit notification of the
permit modification to the implementing agency, along with
documentation demonstrating that the operations at the unit meet the
conditions of the exclusion, and that the unit is used solely to manage
excluded hazardous secondary materials. In addition, the owner or
operator would be required to comply with the requirements of section
270.42(a)(ii) for public notification. Under section 270.42(a)(2), the
permit modification would not become effective until the owner or
operator received written approval by the implementing agency. The
implementing agency would approve the permit modification so long as
the owner or operator complied with the procedural requirements of
section 270.42(a), that the operations met the conditions of the
exclusion, and adequately demonstrated that the unit did not manage
non-excluded hazardous wastes. EPA believes that Class 1 permit
modifications with approval are appropriate in this case even though
the proposal would establish a self-implementing exclusion, which does
not require a regulatory agency's approval. In this case, the unit in
question has been through a formal permit process, and the Agency
believes it appropriate that the regulatory agency have the opportunity
for a brief review before the permit conditions it imposed are removed.
For example, the unit might be intimately tied into other waste
management operations at the facility, or perhaps the regulatory agency
imposed special provisions under the omnibus provision, which it would
want to consider. EPA seeks comment on this approach.
A permitted facility that would no longer be considered a hazardous
waste management facility under the exclusion (e.g., a facility
managing only hazardous secondary materials that become excluded under
today's supplemental proposal) would no longer need a hazardous waste
operating permit nor need to comply with the existing hazardous waste
regulations governing permitted facilities. (Again, to the extent that
the exclusion is conditional, the owner/operator of the facility would
need to comply with the applicable conditions to maintain the
exclusion.) Owners or operators of such facilities could, therefore,
apply to the overseeing agency to terminate the permit by modifying the
permit term. The Agency believes that owners or operators seeking to
terminate the facility's permit by modifying the permit term should
comply with the requirements of section 270.42(a) for Class 1
modifications with prior Agency approval, as described above. To
support a request for permit termination by modifying the permit term,
the owner or operator would have to demonstrate that the operations
meet the conditions of the exclusion, and that the facility does not
manage non-excluded hazardous wastes. Further, as discussed below, the
owner or operator would have to demonstrate that corrective action
obligations at the facility have been addressed, or, where

[[Page 14206]]

corrective action obligations remain, that continuation of the permit
is not necessary to assure that they will be addressed (e.g., where the
facilities cleanup obligations will be addressed under an alternative
federal or state enforcement mechanism, or other federal or state
cleanup authority). The Agency seeks comment on this approach.
As was explained in the October 2003 proposal (68 FR 61580), where
a permitted facility has not yet completed facility-wide corrective
action, but manages only hazardous secondary materials that would
become excluded under this proposed rule (see 40 CFR 264.101), the
obligation to address facility-wide corrective action would remain in
effect.
At some facilities, corrective action obligations will likely
continue to be addressed through the corrective action provisions of
the permit. In these cases, maintenance of the permit would ensure that
facility-wide corrective action will be addressed. Thus, in these
cases, the permit would not be terminated by modifying the permit term,
but would be modified to remove the provisions that applied to the now-
excluded hazardous secondary material. The facility's permit would,
thereafter, only address corrective action.
In other cases, however, EPA or an authorized state may have
available an alternative federal or state enforcement mechanism, or
other federal or state cleanup authority, through which it could choose
to address the facility's cleanup obligations, rather than continue to
pursue corrective action under a permit. In these cases, where the
alternate authority would ensure that facility-wide corrective action
will be addressed, maintenance of the permit would not be necessary.
A facility that is operating under interim status would be affected
by promulgation of today's supplemental proposal in much the same way
as would a permitted facility, and the issue of corrective action would
be addressed in a similar manner. At an interim status facility
managing only hazardous secondary materials that become excluded under
today's supplemental proposal, the Part 265 interim status standards
that applied to the hazardous waste management units at the facility,
as well as the general facility standards in Part 265, would no longer
apply. At the same time, the owner or operator would retain
responsibility for unaddressed corrective action obligations at the
solid waste management units.
Owners and operators of permitted and interim status facilities
with corrective action obligations should refer to the Agency's
February 25, 2003 guidance entitled ``Final Guidance on Completion of
Corrective Action Activities at RCRA Facilities,'' (68 FR 8757) for a
detailed discussion of corrective action completion.
In addition to the above described issues relating to permits and
corrective action, today's supplemental proposal also may have
implications with regard to closure of hazardous waste storage units at
affected facilities. In cases where hazardous waste storage units would
only be managing excluded hazardous secondary material pursuant to
today's supplemental proposal, the current regulations could be read as
triggering the closure requirements for those units, since owners/
operators of non-land-based hazardous waste units (e.g., tanks,
containers, containment buildings) must begin closure within 90 days of
receiving a unit's final volume of hazardous wastes. See 40 CFR
264.113(a) and 265.113(a).
In the October, 2003 proposal (68 FR 61580-61581), EPA expressed
the view that requiring closure of units in these situations would
serve little environmental purpose, since after closure the unit would
be immediately reopened and used to store the same (now excluded)
hazardous secondary material. In that notice, the Agency proposed that
closure of storage units would not be required when the wastes in such
units were excluded under the proposal.
In response to that proposal, several commenters stated that one of
the main purposes of the RCRA subtitle C closure requirements is to
identify and remediate any releases originating from the units. The
Agency notes that releases from these units are discarded and solid and
hazardous wastes, and agrees with commenter's concern that such
releases should be addressed. The Agency does not agree, however, that
the specific subtitle C closure requirements are most appropriate to
address cleanup of releases from these units, if any have occurred.
Rather, the Agency believes that a better approach would be to address
potential releases from these units as part of corrective action for
all releases at the facility. This approach 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.
When considering the issue of addressing releases from these units,
the question arises about what happens to the funds that provide
financial assurance for closure. The requirements in Part 264 and 265
Subpart H, which apply at these units prior to the exclusion taking
effect, provide for release of financial assurance upon certification
by the owner or operator that closure has been completed in accordance
with the approved closure plan, and Agency verification of that
certification (see 264.143(i) and 265.143(h)). Similar provisions at
sections 264.145(i) and 265.145(h) provide for release of financial
assurance for post-closure care.
Under the approach to closure discussed above, owners and operators
of units that manage only wastes that would be excluded under this
supplemental proposal would not be subject to closure requirements and,
therefore, would not submit a certification of closure, and thus would
not trigger release of financial assurance. As discussed in section
X.C.2 of today's preamble, reclaimers who receive hazardous secondary
materials that have been excluded under the proposed 40 CFR
261.4(a)(24) would still be required to meet Subpart H financial
assurance requirements as a condition of the exclusion. In this case,
the financial assurance provided for closure would satisfy that
requirement (perhaps with some modification).
However, persons who recycle materials under the proposed
exclusions for materials recycled under the control of the generator
(40 CFR 261.2(a)(2)(ii) and 40 CFR 261.4(a)(23)) would not be required
to meet Subpart H financial assurance requirements as a condition of
the exclusion. The Agency believes that those owners and operators
should be released from financial assurance requirements upon
demonstrating that no releases from the unit remain to be addressed. In
complex facilities, that demonstration might be difficult, or it might
be inconsistent with broader corrective action strategy (for example,
if historical releases from the unit were mingled with other general
facility contamination). Where such a situation exists, the Agency
believes that financial assurances obtained for closure and/or post-
closure should be redirected to address the corrective action needs at
the unit. (In general, however, EPA believes that these situations will
be the exception rather than the rule, since the overwhelming majority
of units in question would have upgraded to current subtitle C
standards, e.g., secondary containment for tanks, etc.). The Agency
requests comment on modifying the regulations to allow financial
assurances obtained for closure and/or post-closure to be redirected to
address the corrective action needs at units that manage only

[[Page 14207]]

wastes that would be excluded by this proposal.

C. Imports and Exports

The proposed exclusion for hazardous secondary materials recycled
under the control of the generating facility is limited to recycling
performed in the United States or its territories. However, the
transfer-based recycling exclusion and non-waste determinations
included in today's supplemental proposal do not place any geographic
restrictions on movements of such hazardous secondary materials,
provided they meet the description of the exclusion. 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. Under today's supplemental proposal, the exclusion would be
effective while the hazardous secondary material is within the United
States or its territories. However, such excluded hazardous secondary
materials may be subject to regulation as hazardous wastes in the
receiving country, even if they are excluded from the definition of
solid waste domestically (i.e., under RCRA). If this is the case, the
U.S. exporter of the hazardous secondary material will need to comply
with any applicable requirements of the importing country. (For further
discussion, see section X.C.1 of today's preamble regarding specific
export/import conditions for hazardous secondary materials excluded
under this proposal.)

D. Superfund

A primary purpose of today's supplemental proposal is to encourage
the safe, beneficial recycling of hazardous secondary materials. In
1999, Congress enacted the Superfund Recycling Equity Act (SREA),
explicitly defining those hazardous substance recycling activities that
potentially may be exempted from liability under the Comprehensive
Environmental Response, Compensation and Liability Act (CERCLA). CERCLA
section 127. Today's supplemental proposal does not change the universe
of recycling activities that could be exempted from CERCLA liability
pursuant to CERCLA section 127. Today's supplemental proposal only
changes the definition of solid waste for purposes of RCRA subtitle C
requirements. The supplemental proposal 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.

E. National Partnership for Environmental Priorities

If today's proposed changes to the RCRA definition of solid waste
are promulgated, the Agency expects that affected companies will take
advantage of this new regulatory framework by exploring new
opportunities to recycle their hazardous secondary materials. We
believe that these regulatory changes are consistent with EPA's efforts
to encourage and promote sustainable methods and practices by
manufacturers and other businesses. In this context, ``sustainability''
is defined as economic development that meets the needs of the present
without compromising the ability of future generations to meet their
own needs.
The National Partnership for Environmental Priorities (NPEP) is a
voluntary program administered by EPA that fosters the establishment of
a new corporate/federal partnership in which both work collaboratively
towards voluntary reductions in the use of certain chemicals. Recycling
is one means of achieving such reductions in chemical use. The NPEP can
provide technical assistance and expertise to assist companies in
successfully achieving these goals, while at the same time saving money
or increasing production. NPEP members' successes are voluntarily
reported to EPA, and members are publicly recognized and rewarded for
their accomplishments. For further information on the NPEP program,
visit the NPEP Web site at
http://www.epa.gov/epaoswer/hazwaste/minimize/partnership.htm.

XIV. Measurement of the Performance Outcomes of This Supplemental Proposal

A. Need for Performance Measurement

Since today's supplemental proposal, if finalized, would make
important changes to the Agency's current RCRA regulatory framework for
industrial recycling of hazardous secondary materials, and is designed
to encourage industrial recycling of such materials, the Agency has a
strong interest in being able to measure the performance outcomes that
these regulatory changes may have on the regulated community. In
general, it is important for the Agency to be able to quantify,
monitor, and report to the public the actual performance outcomes of
this supplemental proposal. In general, performance measurement of
federal programs is expected of by Congress according to the 1993
Government Performance and Results Act (http://www.whitehouse.gov/
omb/mgmt-gpra) and the 2005 Government Reorganization and Program
Performance Improvement Act (http://www.whitehouse.gov/omb/legislative/
grppi_act_2005.pdf), as well as by the 2002 President's Management
Agenda (http://www.whitehouse.gov/omb/budget/fy2002/mgmt.pdf), and by
the Office of Management and Budget according to the annual Program
Assessment Rating Tool (http://www.whitehouse.gov/omb/part) initiated
in 2003. In particular, measurement of the performance outcomes for
this supplemental proposal will enable EPA to evaluate the actual
effectiveness with regard to encouraging industrial recycling,
affecting future industrial recycling trends, and targeting possible
future regulatory and non-regulatory initiatives directed at furthering
safe and beneficial industrial recycling practices. As discussed
elsewhere in today's preamble, we expect that the regulatory changes
being proposed will have the effect of reducing regulatory
disincentives to industrial recycling, thereby encouraging new
recycling initiatives by the regulated community.
To measure performance outcomes, the Agency is interested in being
able to measure the numbers of existing and new industrial facilities
that actually take advantage of these regulatory changes, as well as
the quantities and types of hazardous secondary materials that are
affected, and the specific types of industries that are affected. We
also are interested in measuring the extent to which industrial
recycling that is affected by today's supplemental proposal occurs
onsite or offsite, and the extent to which small quantity and large
quantity hazardous waste generators (i.e., SQGs and LQGs) are able to
take advantage of an exclusion. Such information on the actual outcomes
of these regulatory changes could enable the Agency to measure, rather
than estimate, the actual cost savings benefits to industries affected
by the regulatory changes, as well as to measure environmental benefits
(e.g., annual quantities of specific materials conserved, avoided raw
material inputs, reduced pressure on landfill capacity, water and
energy conserved).

B. Approaches to Performance Measurement

1. Use of the Proposed Notification Requirements
Today's supplemental proposal includes a requirement that
facilities (both generators and recyclers) taking advantage of an
exclusion provide regulatory authorities with certain basic items of
information through a one-time

[[Page 14208]]

notification. This information would allow EPA to track the number of
facilities and the types of hazardous secondary materials affected by
the proposed rulemaking, but would not allow us to estimate the amount
of material affected. We request comment on whether additional data
elements could be added that would help inform EPA and the public about
the effect of the proposed exclusions without imposing a significant
additional burden on the regulated community.
2. Use of Existing EPA Data Systems
There are two existing data systems which may be of limited utility
to EPA for measuring the performance outcomes of this supplemental
proposal.
(a) RCRA Biennial Report. Under 40 CFR 262.41, large quantity
hazardous waste generators and hazardous waste treatment, storage,
recycling and disposal facilities (TSDRFs) are required to prepare and
submit Biennial Reports to RCRA-authorized states on the types and
quantities of hazardous wastes generated and managed during the
reporting year (http://www.epa.gov/epaoswer/hazwaste/
data/biennialreport). In the past, the Agency has used data from the
Biennial Report (BR) for analytic purposes such as establishing
baselines for estimating the potential economic impacts on industries
and facilities potentially affected by RCRA rulemaking initiatives.
While the BR has provided the Agency with considerable valuable data
regarding the types and quantities of hazardous wastes that are
generated, and where and how they are treated, stored or disposed, this
system has a number of limitations, particularly with regard to: (i)
How small quantity generators are not required to report to the BR and
(ii) how generation and management of hazardous secondary materials
that are not regulated as hazardous wastes are not covered in the BR.
Under today's supplemental proposal, these limitations may be
exacerbated, since current RCRA-regulated hazardous wastes subject to
BR reporting will become excluded as recycled hazardous secondary
materials. As a result, in the future we expect the BR will provide
less data relevant to measuring hazardous secondary materials recycling
trends, and thus will be inadequate for measuring the future outcomes
and success of this supplemental proposal. Therefore, we request
comment on modifying the BRS to require or continue to require that
such information be submitted to EPA.
(b) Toxic Release Inventory. Compared to the BR, the Toxic Release
Inventory (TRI) may provide greater utility for the purpose of
measuring future performance outcomes of today's supplemental proposal,
because the TRI is not limited to hazardous waste and not limited to
LQGs, but includes annual reporting on industrial materials
manufactured, imported, processed, otherwise used, transferred offsite,
treated or disposed as waste, or recycled by certain industries.
Consequently, by its design and relatively broader scope, the TRI (Form
R; http://www.epa.gov/tri) contains limited information on RCRA
hazardous wastes (as well as more information about other types of
industrial materials such as secondary by-products) and it is probably
more on-point for the Agency to attempt to use for measuring future
outcomes of today's supplemental proposal.
In combination, both the BR and TRI data systems may provide a
skeletal but complementary framework for measuring future performance
outcomes.
3. Surveys
Another option, either as a stand-alone option or used in
combination with the BR/TRI option above, could be to conduct a mail or
phone survey of affected facilities. The main advantage of a survey
would be the ability to collect data on targeted performance measures
that would not be available through either the BR or TRI. Moreover, a
survey mechanism could potentially serve a dual purpose as a form of
communications outreach to industrial facilities that are not recycling
or are unaware of today's supplemental proposal, which would assist EPA
in better understanding why some generators are unable or unwilling to
recycle their hazardous secondary materials. Such a survey could be
voluntary or mandatory, and could involve a statistically-valid sample
of industrial facilities, or could focus on particular industries or
affected materials. It could be conducted as a one-time effort or
periodically (e.g., once every four years) to capture recycling trends
over time. To minimize burden, it could also be conducted
electronically over the internet. It should be noted, however, that
with some exceptions (e.g., surveys of fewer than 10 respondents),
conducting a survey of this nature would need OMB approval in
accordance with the provisions of the Paperwork Reduction Act.
4. Voluntary Partnerships With Affected Industries
Measuring the impact of today's supplemental proposal might also be
done with the voluntary assistance of stakeholder industry and trade
associations, many of which also may have a vested interest in
assessing their success, or lack thereof. We are aware that some trade
associations may maintain data on the recycling activities of their
member companies; such associations might be willing to share some of
that existing information with the Agency. Another option could be to
partner with certain trade associations that may be willing on a
voluntary basis to gather relevant information from their members.
5. NPEP Voluntary Program
As discussed in the preceding section of this preamble, EPA's
National Partnership for Environmental Priorities (NPEP) is a voluntary
program that encourages companies and federal facilities to reduce
priority chemicals through waste minimization, reuse, recycling, and
reclamation, and to report achievements in reductions. Companies that
choose to change their materials management practices from disposal to
recycling as a result of today's supplemental proposal could be
eligible for membership in NPEP. Companies that join NPEP could
identify voluntary goal(s) to initiate new recycling or to increase
current recycling at their facility of priority chemicals. Upon
completion of their goal(s), the partners can submit a success story of
their accomplishments. In turn, these partners will receive EPA support
and assistance for reducing priority chemicals and award recognition
for their success. Thus, information from NPEP partners might also be
of assistance to EPA in evaluating the impacts of today's proposed rule.

C. Request for Comment on Performance Measurement Approaches

The Agency requests comment on the alternative performance
measurement approaches described above for enabling the Agency to
measure the actual performance outcomes of today's supplemental
proposal. In addition to satisfying federal performance measurement
requirements, we are also interested in stakeholder views as to the
potential utility of measuring the effectiveness of today's proposed
exclusions in achieving their intended induced new recycling and
industry cost-savings objectives, and how such information might
benefit stakeholders and the regulated community. Finally, we also
solicit comment on other performance measurement approaches than those
described above, that may be more effective in enabling EPA to

[[Page 14209]]

measure the actual future outcomes of today's supplemental proposal.

XV. How Would These Proposed 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 also 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 proposed rule would eliminate specific requirements that
apply to materials currently managed as hazardous waste, and is being
proposed, at least in part, in response to recent court decisions on
the definition of solid waste. Specifically, in several decisions,
courts have held that EPA's current definition of solid waste at 40 CFR
261.2 is overly broad and would lead to the regulation of some
hazardous secondary materials that are not discarded and, therefore,
are not solid wastes. In this rulemaking, the exclusion for materials
reclaimed under the control of the generator (proposed 40 CFR
261.2(a)(2)(ii)) identifies those hazardous secondary materials that
are not discarded and, therefore, are not solid wastes under RCRA. EPA
also recognizes that there may be some hazardous secondary materials
that are not recycled under the control of the generator, but are not
solid wastes because they are reclaimed in a continuous industrial
process. Because it was not possible to identify all of the continuous
industrial process recycling fact patterns, EPA has proposed a petition
process for non-waste determinations at proposed 40 CFR 260.30 (see
Section VII above).
EPA believes that the proposed rule describes the appropriate scope
of the federal program under RCRA. Thus, reclamation under the control
of the generator and recycling in a continuous process, as described
herein, are not activities associated with discarded materials and
would not be subject to RCRA. In addition, today's proposal also
conditionally excludes from the definition of solid waste reclaimed
materials that are not under the control of the generator and are not
recycled in a continuous industrial process. EPA believes that these
exclusions will encourage recycling and that they are consistent with
RCRA's statutory objective of conserving valuable material and energy
resources.
EPA would strongly encourage states to adopt the regulations being
proposed 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 271, ensures national
consistency and minimum standards, while providing flexibility to
states in implementing 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 would eliminate
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, when and if today's rule is finalized.
However, 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 proposal, or a state may choose to adopt only
part of today's proposal. 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 proposal, when and if finalized, would 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 proposed revisions. We note that if states choose
not to adopt the provisions of today's proposal concerning exports, the
provisions of 40 CFR 262 Subparts E or H would apply to hazardous
secondary materials that are exported.

C. Interstate Transport

Because some states may choose not to seek authorization for
today's supplemental proposal, there will probably be cases where the
hazardous secondary materials in question will be transported through
states with different regulations governing them.
First, a hazardous secondary material which is subject to an
exclusion from the definition of solid waste regulations may be sent to
a state, or through a state, where it is subject to the hazardous waste
regulations. In this scenario, for the portion of the trip through the
originating state, and any other states where the hazardous secondary
material is excluded, neither a hazardous waste transporter with an EPA
identification number per 40 CFR 263.11 nor a manifest would be
required. However, for the portion of the trip through the receiving
state, and any other states that do not consider the hazardous
secondary material to be excluded, the transporter must have a
manifest, and must move the hazardous secondary material in compliance
with 40 CFR part 263. In order for the final transporter and the
receiving facility to fulfill the requirements concerning the

[[Page 14210]]

manifest (40 CFR 263.20, 263.21, 263.22, 264.71, 264.72, 264.76 or
265.71, 265.72, and 265.76), the initiating facility should complete a
manifest and forward it to the first transporter to travel in a state
where the hazardous secondary material is not excluded. The receiving
facility must then sign the manifest and send a copy to the initiating
facility.
Second, a hazardous secondary material generated in a state that
does not provide an exclusion for the hazardous secondary material may
be sent to a state where it is excluded. In this scenario, the
hazardous secondary material must be moved by a hazardous waste
transporter while the hazardous secondary material is in the
generator's state or any other states where it is not excluded. The
initiating facility would complete a manifest and give copies to the
transporter as required under 40 CFR 262.23(a). Transportation within
the receiving state and any other states that exclude the hazardous
secondary material would not require a manifest and need not be
transported by a hazardous waste transporter. However, it is the
initiating facility's responsibility to ensure that the manifest is
forwarded to the receiving facility by any non-hazardous waste
transporter and sent back to the initiating facility by the receiving
facility (see 40 CFR 262.23 and 262.42).
One final point is that RCRA-regulated hazardous wastes, when
transported, require an EPA hazardous waste manifest, and are
incorporated by reference in Department of Transportation (DOT)
regulations in the DOT definition of hazardous material (49 CFR 171.8).
Under today's supplemental proposal, a hazardous secondary material
that is not a solid waste would no longer need an EPA manifest when
transported off-site for recycling, and therefore would not
automatically be considered a DOT hazardous material (hazmat). However,
if the material contains a chemical or falls into a class of substances
that DOT has determined to pose an unacceptable hazard during
transportation, it would still be regulated as a DOT hazardous material
(a table at 49 CFR 172.101 lists materials considered ``hazardous'' by
DOT, according to 23 DOT hazard classes). If it does not, then it would
not be so regulated by DOT. EPA believes this is appropriate, since
when sent to recycling rather than disposal, these hazardous secondary
materials pose no greater risk than similar types of non-waste
materials already in transportation for commerce under non-hazmat DOT
status. Moreover, regardless of a hazardous secondary material's EPA
manifest and DOT hazmat status, EPA believes that today's supplemental
proposal is likely to result in a net reduction in annual
transportation accident risks during transport of affected materials,
due to the expected net reduction in annual miles transported, as a
result of the companies which would choose to switch from current
offsite hazardous waste management to recycling at either on-site or
closer facilities to the generating facility.\10\
---------------------------------------------------------------------------

\10\ As explained in the ``Economics Background Document,'' in
the docket for today's rule, EPA expects that as a result of this
rule, transportation distances for hazardous secondary materials
that are affected by today's rule are expected to be reduced from
averages of about 340 miles for disposal at hazardous waste
landfills and between 400 to 520 miles for offsite hazardous waste
recycling to 0 miles for on-site recycling (for about 9% of the
affected facilities) and an average of about 50 miles for non-
hazardous waste recycling (for about 91% of the affected
facilities). Because, on an annual nationwide basis, 91% of RCRA
hazardous waste is transported by truck, transportation risk is
predominantly roadway crash risks involving property damage crashes,
personal injury crashes, or fatal crashes. Because of the fact that
transportation accident risks positively correlate with travel
distances, EPA expects a minimum 85% to 90% reduction in baseline
annual transport accident risk for affected materials, as a rough
estimate, regardless of DOT regulatory status (i.e., 340 to 520
miles average transport distance baseline, compared to 0 to 50 miles
hypothetical average post-promulgation distance).
---------------------------------------------------------------------------

XVI. How Has EPA Fulfilled the 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 an ``economically significant
regulatory action'' because the annual effect on the economy of this
proposed action is expected to be greater than $100 million, and the
proposed action contains novel policy issues. Accordingly, 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
recommendations have been documented in the docket for this action.
EPA prepared an analysis of the potential national economic costs
and benefits associated with this proposed action. The analysis is
contained in our ``Economics Background Document: Regulatory Impact
Analysis (RIA) for EPA's 2007 Supplemental Proposed Revisions to the
Industrial Recycling Exclusions of the RCRA Definition of Solid Waste''
(January 22, 2007, 284 pages) which is available for public review and
comment in the EPA Docket (http://www.regulations.gov) and is briefly
summarized below. If the exclusions are promulgated as proposed today,
(i.e., the two generator controlled exclusions involving land- and non-
land based units, plus the offsite transfer exclusion, plus the case-
by-case petition process) and are adopted by all state governments, EPA
expects this action to result in a net effect of $107 million in
average annual net cost savings to about 4,600 facilities in 530
industries, and is expected to remove from RCRA regulation 0.65 million
tons per year of hazardous secondary materials currently managed as
RCRA hazardous waste. These materials consist of 0.59 million tons
(91%) that are currently recycled as RCRA hazardous waste, and 0.06
million tons (9%) of hazardous waste that is currently disposed (i.e.,
landfilled, or incinerated), which EPA expects may switch from disposal
to recycling as a result of this action, if promulgated. With respect
to each of the proposed exclusions, the $107 million per year best
estimate net cost savings effect consists of additive components: (a)
$87 million per year for hazardous secondary materials recycled under
the control of the generating facility in either land or non-land based
units (which includes the onsite, within same-company, and tolling
arrangement exclusions), plus (b) $19 million cost savings for
conditional exclusion of other offsite transfers, plus (c) $1 million
per year cost savings for case-by-case non-waste determinations.
These impact estimates are EPA's best estimates within the economic
impact estimation uncertainty range of $93 million to $205 million in
annual materials management cost savings, and 0.33 to 1.70 million tons
per year in affected hazardous secondary materials, respectively, for
the net effect of the proposed regulatory exclusions. The purpose of
these impact ranges is to reveal two major sources of uncertainty at
the launch of our RIA prior to the final draft of this proposal: (1)
Our RIA assigned eight implementation conditions to the best estimate
impact for the proposed exclusions from a list of 18 possible
conditions formulated at the launch of the RIA. In comparison, today's
notice proposes nine conditions which differ by five conditions and
standards (i.e., recycling legitimacy criteria, reasonable effort by
generators, onsite recordkeeping, land placement, and offsite shipment
tracking); the impact uncertainty range lower and upper bounds reflect
inclusion of two conditions and of 17 conditions, respectively; and (2)
the main underlying data in the RIA is the RCRA Biennial Report
database about RCRA

[[Page 14211]]

hazardous waste activity, which includes numerical outliers; to address
these statistical outliers, the impact uncertainty ranges reflect
inclusion of 99% and 100% of the data, respectively, whereas our best
estimate includes 99.5% of the data (i.e., 0.5% of the largest
hazardous waste streams removed from the impact estimate).
In addition to these uncertainty factors which the RIA attempted to
address directly in the impact computations, there are five other
sources of impact uncertainty that our RIA describes as sensitivity
analyses and provides estimates of potential overall magnitude: (1)
Based on extrapolating the adverse comments by some state governments
on exclusion options described in the October 2003 proposal, the
economic impacts could be 4% to 46% less than estimated in the RIA from
state non-adoption of this rule if promulgated; (2) the RIA is based on
a single year 2003 snapshot of RCRA hazardous waste data, but recent
(1997-2003) trend data show -17% to +38% fluctuation about mean in
annual waste tonnages recycled and disposed, and -54% to +54%
fluctuation in annual count of hazardous waste facilities;
consequently, future annual impacts could fluctuate rather widely
relative to the average annual impact estimates of our RIA based on
2003 data; (3) our RIA is based on hazardous waste tonnages reported as
managed in 2003 rather than reported as generated; however, recent
trend (1997-2003) data show -34% to +39% annual fluctuations between
management and generation quantities; (4) to a large degree macro
economic conditions determine the quantity of hazardous waste and
secondary industrial materials generated and managed in any given year;
for example, although our RIA is built upon a single year 2003
snapshot, one of the top-5 industries generating such materials is
NAICS 3241 petroleum refining which is expected to grow almost 6%
annually through 2010, which could increase future impacts; and (5) our
RIA is founded on the ``large quantity generator'' (LQG) and the
``treatment, storage, disposal, recycler facility'' (TSDRF) data from
the RCRA Biennial Report, and therefore to some degree if not double-
counted in the TSDRF data, excludes from the impact estimates the RCRA
regulatory class of ``small quantity generators'' (SQGs), which may
represent a 2% to 3% impact underestimation.
Furthermore, our RIA estimate of potential new induced recycling as
a result of this proposal if promulgated, does not include an
evaluation of whether the U.S. or global markets for recycled
industrial secondary materials are large enough to absorb a potential
increase in supply of recycled materials. Market conditions for
recycled 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, high petroleum prices encourage solvent recycling. Similarly,
high metals prices obviously favor the recycling of metal-bearing
secondary materials. In addition, there are four physical factors that
suggest U.S. industries may be near their current technical and
economic limits for recycling RCRA hazardous wastes: (1) The recent
hazardous waste generation trend shows a 25% decline between 1999 and
2003; (2) the recent hazardous waste recycling trend shows a 73%
increase in baseline recycling between 1999 and 2003 accounting in
aggregate for metals recycling plus solvents recycling plus other
materials recycling (e.g., acid regeneration, non-solvent liquid
recycling); (3) recycling of RCRA hazardous wastes and secondary
industrial materials is technically difficult in some cases because of
numerous chemical co-contaminates in the materials; for example, based
on a national survey of large RCRA hazardous waste TSDRFs, 90% of
facilities reported between 10 and 60 hazardous chemical constituents
in wastes, with 287 constituents reported for a single wastestream, and
a total of 724 different chemical constituents reported in surveyed
wastes; this survey suggests that most LQGs must address a relatively
high number of hazardous chemical constituents in evaluating the
feasibility of their waste management options such as recycling; and
(4) some RCRA hazardous wastes have relatively low (e.g., less than 1%)
assay values for constituents with market value.
EPA requests comment on the regulatory impact analysis, including
both the estimates of additional recycling and the cost savings that
may result from this proposed rule, and welcomes data from the public
about the possible impacts of the uncertainty factors. For example, EPA
is seeking comments about whether the codification of the legitimacy
criteria, while not intended to impose any additional requirements as
compared to the current practice, may result in additional costs or
benefits that are not included in the RIA, and, if so, what those
additional costs or benefits would be.
In addition to estimating the potential impact of this proposal,
EPA's economic analysis also examined three other alternative
approaches for recycling exclusions: On-site-only exclusion, intra-
industry offsite exclusion, and broad inter-industry transfer exclusion
with few conditions, as discussed in EPA's October 2003 proposed rule.
Our best estimates of the potential net cost savings for these three
other approaches are $63 million, $72 million, and $129 million per
year, associated with 0.35 million tons, 0.38 million tons, and 0.67
million tons per year secondary materials potentially affected,
respectively. Accounting for estimation uncertainty factors, net cost
savings and potentially affected materials for these three options
could range between $45 million to $147 million per year and 0.24
million to 0.91 million tons per year for the on-site option, between
$56 million to $156 million per year and 0.27 million to 0.98 million
tons per year for the intra-industry option, and between $114 million
to $206 million per year and 0.46 million to 1.57 million tons per year
for the broad inter-industry transfer option. In comparison to these
three options, and taking account of impact uncertainty factors, the
proposed approach is expected to result in approximately the same range
in annual cost savings as the highest impact broad inter-industry
transfer option of these three alternatives, because it consists of
four components: a broad transfer option with certain conditions plus
the two generator controlled options plus the case-by-case petition
option, but is expected to affect slightly more waste quantities
annually from addition of the case-by-case exclusion.
In selecting the options for today's proposal, EPA considered both
the cost and benefits of the different options and the potential for
each option to result in materials being discarded and then resulting
in remediation or environmental damages. The proposed combination
option of excluding materials recycled under the control of the
generator, hazardous secondary materials transferred for recycling with
certain conditions, and a case-by-case non-waste determination results
in the second highest estimated cost savings, number of entities
affected and amount of material expected to be induced to new
recycling. EPA chose not to pursue the option with the highest
estimated annual cost savings ($129 million versus $107 million per
year for today's proposed approach) because the lack of conditions for
materials transferred to a third-party recycler may result in material
being discarded and increase the likelihood of new cleanup sites that
would need to be funded by public

[[Page 14212]]

funds. See our ``Economics Background Document,'' which is in the
docket for today's supplemental proposal, for a more detailed
discussion regarding the estimated impacts of the proposed approach, as
well as the impact uncertainties, and exclusion option alternatives
that we evaluated.

B. Paperwork Reduction Act (ICR)

The information collection requirements in this supplemental
proposal have been submitted for approval to the Office of Management
and Budget (OMB) under the Paperwork Reduction Act, 44 U.S.C. 3501 et
seq. An Information Collection Request (ICR) document prepared by EPA
has been assigned EPA ICR number 1189.19.
The information requirements established for this action, and
identified in the ICR supporting today's supplemental proposal, are
largely self-implementing, except for notice and consent requirements
for hazardous secondary materials exported for recycling. This process
will ensure that (1) Regulated entities are held accountable to the
applicable requirements; (2) state inspectors can verify compliance
when needed; and (3) hazardous secondary materials exported for
recycling are actually handled as commodities abroad.
EPA has carefully considered the burden that would be imposed upon
the regulated community by the regulations. EPA is confident that those
activities required of respondents are necessary, and, to the extent
possible, has attempted to minimize the burden imposed. EPA believes
that if the minimum requirements specified under the proposed
requirements are not met, neither the facilities nor EPA can ensure
that hazardous secondary materials sent for recycling are being managed
in a manner protective of human health and the environment.
For the recordkeeping and reporting requirements applicable to
hazardous secondary materials sent for recycling, 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 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 means the total time, effort, or financial resources
expended by persons to generate, maintain, retain, or disclose or
provide information to or for a Federal agency. This includes the time
needed to review instructions; develop, acquire, install, and utilize
technology and systems for the purposes of collecting, validating, and
verifying information, processing and maintaining information, and
disclosing and providing information; adjust existing systems to comply
with any previously applicable instructions and requirements; train
personnel to be able to respond to a collection of information; search
data sources; complete and review the collection of information; and
transmit or otherwise disclose the information.
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 are listed in 40 CFR Part 9.
To comment on the Agency's need for this information, the accuracy
of the provided burden estimates, and any suggested methods for
minimizing respondent burden, including the use of automated collection
techniques, EPA has established a public docket for this rule, which
includes this ICR, under Docket ID No. EPA-HQ-RCRA-2002-0031. Submit
any comments related to the ICR for this proposed rule to EPA and OMB.
See the ADDRESSES section at the beginning of this notice for where to
submit comments to EPA. Send comments to OMB at the Office of
Information and Regulatory Affairs, Office of Management and Budget,
Attn: Desk Officer for EPA, 725 17th Street, NW., Washington, DC 20503.

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. Because this action is designed
to lower the cost of waste management for industries subject to the
supplemental proposal, this proposal will not result in an adverse
economic impact effect on affected small entities. Consequently, I
hereby certify that this supplemental proposal 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 proposed rule on small entities (5 U.S.C.
Sections 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 small entities subject to the rule. For
more information regarding the economic impact of this supplemental
proposal, please refer to the ``Economics Background Document''
available from the EPA Docket (http://www.regulations.gov).
EPA therefore concludes that today's supplemental proposal will
relieve regulatory burden for all size entities, including small
entities. The Agency continues to be interested in the potential
impacts of the proposed rule on small entities and welcomes comments on
issues related to such impacts.

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
must prepare a written analysis, 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 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

[[Page 14213]]

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 under section 203 of the UMRA a
small government agency plan. The plan must provide for notifying
potentially affected small governments, enabling officials to have
meaningful and timely input in the development of regulatory proposals,
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 supplemental proposal
imposes no enforceable duty on any State, local, or tribal governments.
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
supplemental proposal 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 a
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 supplemental proposal 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
supplemental proposal. In addition, because this rule is less stringent
than the current federal program, states are not required to adopt it.
In the spirit of Executive Order 13132, and consistent with EPA
policy to promote communications between EPA and State and local
governments, EPA specifically solicits comment on this supplemental
proposal from State and local officials.

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 supplemental proposal 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 supplemental
proposal.

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

The Executive Order 13045, entitled Protection of Children from
Environmental Health Risks and Safety Risks (62 FR 19885, April 23,
1997) applies to any rule that EPA determines (1) is economically
significant as defined under Executive Order 12866, and (2) the
environmental health or safety risk addressed by the rule has a
disproportionate effect on children. If the regulatory action meets
both criteria, the Agency must evaluate the environmental health or
safety effects of the planned rule on children; and explain why the
planned regulation is preferable to other potentially effective and
reasonably feasible alternatives considered by the Agency.
This supplemental proposal is not subject to the Executive Order
because the Agency does not have reason to believe the environmental
health or safety risks addressed by this proposed rule present a
disproportionate risk to children.

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

This supplemental proposal 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
supplemental proposal reduces regulatory burden and as explained in our
Economics Background Document, may possibly induce fuel efficiency and
energy savings from voluntary shifting of some types of secondary
industrial materials, where cost-effective for firms to do so, from
current landfill and incineration disposal, to industrial recycling. 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 (ANTTAA), Public Law 104-113, section 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. The NTTAA directs EPA
to provide Congress, through OMB, explanations when the Agency decides
not to use available and applicable voluntary consensus standards.
Today's supplemental proposal does not contain technical standards and
therefore the NTTAA is not applicable.

J. Executive Order 12898: Environmental Justice

Executive Order 12898, Federal Actions to Address Environmental
Justice in Minority Populations and Low-Income Populations (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

[[Page 14214]]

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
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 supplemental proposal would streamline hazardous waste
management requirements for certain hazardous secondary materials sent
for recycling. Facilities that would be affected by today's proposal
include those generating hazardous secondary materials, as well as
facilities which recycle such materials. Disposal facilities would not
be affected by this proposal. The wide distribution of affected
facilities throughout the United States does not suggest any
distributional pattern around communities of concern. Specific impacts
on low income or minority communities, therefore, are undetermined.
Overall, no disproportionate impacts to minorities or low income
communities are expected.

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.

Dated: March 15, 2007.
Stephen L. Johnson,
Administrator.
For the reasons stated in the preamble, title 40, Chapter I of the
Code of Federal Regulations is proposed to be amended 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 adding in alphabetical order the
definitions of ``Land-based unit'' and ``Hazardous secondary materials
generated and reclaimed under the control of the generator'' to read as
follows:

Sec. 260.10 Definitions.

* * * * *
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 paragraph, generating facility means all
contiguous property owned by the generator); or
(2) That such material is generated and reclaimed by the same
``person'' as defined in Sec. 260.10, if the generator certifies 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 recyclable
material,'' or
(3) That such material is generated pursuant to a written contract
between a tolling contractor and a batch manufacturer and are reclaimed
by the tolling contractor, if the tolling contractor retains ownership
of, and responsibility for, the recyclable material that is generated
during the course of the production of the product. For purposes of
this paragraph, tolling contractor means a person who arranges for the
production of a product made from raw materials through a written
contract with a batch manufacturer. Batch manufacturer means a person
who produces a product made from raw materials pursuant to a written
contract with a tolling contractor.
* * * * *
Land-based unit means a landfill, surface impoundment, waste pile,
injection well, land treatment facility, salt dome formation, salt bed
formation, or underground mine or cave.
* * * * *

Subpart C--[Amended]

3. Section 260.30 is amended as follows:
a. By revising the section heading.
b. By revising paragraph (b).
c. By adding paragraphs (d), (e), and (f).

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

* * * * *
(b) Materials that are reclaimed and then reused within the
original production process in which they were generated;
* * * * *
(d) Materials that are reclaimed in a continuous industrial process;
(e) Materials that are indistinguishable in all relevant aspects
from a product or intermediate; and
(f) Materials that are reclaimed under the control of the generator,
including control through contracts, such as tolling arrangements.
4. Section 260.33 is amended by revising the section heading, the
introductory text, and paragraph (a) 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.
* * * * *
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 material is clearly not discarded and therefore
not a solid waste. The determinations will be based on the criteria
contained in paragraphs (b), (c), or (d) of this section as applicable.
If an application is denied, the material might still be eligible for a
solid waste variance or exclusion (for example, one of the solid waste
variances under Sec. 260.31 or solid waste exclusions under Sec.
261.4). 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 material meets the criteria in
paragraphs (b), (c), or (d) of this section;
(2) The State requests that EPA review its determination; and

[[Page 14215]]

(3) EPA approves the State determination.
(b) The Administrator may grant a non-waste determination for
material which is reclaimed in a continuous industrial process if the
applicant demonstrates that the material is a part of the production
process and is not discarded. The determination will be based on the
following criteria:
(1) The extent that the management of the 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
material in a reasonable timeframe and ensure that the material will
not be abandoned (for example, based on past practices, market factors,
the nature of the material, and any contractual arrangements);
(3) Whether the hazardous constituents in the secondary material
are reclaimed rather than discarded 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 primary production process; and
(4) Other relevant factors that demonstrate the material is not
discarded.
(c) The Administrator may grant a non-waste determination for
material which is indistinguishable in all relevant aspects from a
product or intermediate if the applicant demonstrates that the material
is comparable to a product or intermediate and is not discarded. The
determination will be based on the following criteria:
(1) Whether market participants treat the material as a product
rather than a waste (for example, based on the current positive value
of the material, stability of demand, and any contractual arrangements);
(2) Whether the chemical and physical identity of the material is
comparable to commercial products or intermediates;
(3) Whether the hazardous constituents in the material are
reclaimed rather than discarded 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.
(4) Other relevant factors that demonstrate the material is not
discarded.
(d) The Administrator may grant a non-waste determination for
material which is reclaimed under the control of the generator,
including control through contracts such as tolling arrangements, if
the applicant demonstrates that the generator retains control of the
production and the residuals, and that the material is not discarded.
The determination will be based on the following criteria:
(1) Whether the generator retains ownership and liability via a
contract or other mechanism for the material and the residuals
resulting from its recycling.
(2) Whether the hazardous constituents in the material are
reclaimed rather than discarded 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
a production process.
(3) Other relevant factors that demonstrate the material is not
discarded.
6. Section 260.42 is added to Subpart C read as follows:

Sec. 260.42 Notification requirement for generators of hazardous
secondary materials generated and reclaimed under the control of the
generator.

Generators of hazardous secondary material that has previously been
subject to regulation as hazardous wastes, but which will be excluded
from regulation under Sec. 261.2(a)(2)(ii) must send a one-time
notification to the Regional Administrator. Such notices must identify
the name, address, and EPA ID number of the generator (if applicable);
the name and phone number of a contact person; the type of material
that will be managed according to this exclusion; and when the material
will begin to be managed in accordance with this exclusion. A revised
notice must be sent to the Regional Administrator in the event of a
change to the name, address or EPA ID number of the generator, or a
change in the type of material generated. If reclamation takes place at
a facility other than the generating facility, the reclaimer must also
send a one-time notification to the Regional Administrator. Such
notices must identify the name, address, and EPA ID number of the
reclamation facility (if applicable); the name and phone number of a
contact person; the type of material that will be managed according to
the exclusion; and when the material will begin to be managed in
accordance with this conditional exclusion. A revised notice must be
sent to the Regional Administrator in the event of a change to the
name, address or EPA ID number of the reclamation facility, or a change
in the type of material reclaimed.

PART 261--IDENTIFICATION AND LISTING OF HAZARDOUS WASTE

7. 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]

8. Section 261.2 is amended as follows:
a. By revising paragraph (a)(1).
b. By revising paragraph (a)(2).
c. By revising paragraph (c)(3).
d. By revising Table 1 in paragraph (c)(4).
e. By adding paragraph (g).

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 40 CFR 266.202.
(ii) A hazardous secondary material is not discarded if it is
generated and reclaimed within the United States or its territories,
provided that the material is only handled in non-land-based units, it
is a hazardous secondary material generated and reclaimed under the
control of the generator as defined in Sec. 260.10, and it is not
speculatively accumulated as defined in Sec. 261.1(c)(8). (See also
Sec. 260.42)
* * * * *
(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) and 261.4(a)(25).
* * * * *
(4) * * *

[[Page 14216]]

Table 1
----------------------------------------------------------------------------------------------------------------
Reclamation
(261.2(c)(3)),
except as
Use provided in Speculative
constituting Energy recovery/ Sec. Sec. accumulation
disposal (Sec. fuel (Sec. 261.4(a)(17), (Sec.
261.2(c)(1)) 261.2(c)(2)) 261.4(a)(23) or 261.2(c)(4))
261.4(a)(24),
and
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 261.1.

* * * * *
(g) Legitimate Recycling.
(1) Hazardous secondary material that is not legitimately recycled
is discarded material and is a solid waste. Persons who recycle such
material, as well as persons claiming to be excluded from hazardous
waste regulation under Sec. 260.31, Sec. 260.34, Sec. 261.2 or Sec.
261.4 because they are engaged in recycling, must be able to
demonstrate that the recycling is legitimate. Moreover, hazardous
secondary material must be legitimately recycled to qualify for special
management standards under Sec. 261.6 and 40 CFR Part 266.
(2) 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, and the recycling process
must produce a valuable product or intermediate.
(i) The hazardous secondary material provides a useful contribution
if it:
(A) Contributes valuable ingredients to a product or intermediate;
or
(B) Replaces a catalyst or carrier in the recycling process; or
(C) Is the source of a valuable constituent recovered in the
recycling process; or
(D) Is recovered or regenerated by the recycling process; or
(E) Is used as an effective substitute for a commercial product.
(ii) The product or intermediate is valuable if it is:
(A) Sold to a third party; or
(B) 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.
(3) The following factors need to be considered in making a
determination as to the overall legitimacy of a specific recycling
activity. If these factors are not met, then this fact may be an
indication that the material is not legitimately recycled:
(i) How the hazardous secondary material to be recycled is managed.
The generator and the recycler should manage such 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. Materials that are released to the environment and are
not recovered in a timely manner are discarded. If the material is not
managed as a valuable commodity, that fact may be an indication that
the material is not legitimately recycled.
(ii) Whether the product of the recycling process:
(A) Contains significant concentrations of any Appendix VIII of
Part 261 hazardous constituents that are not found in analogous products; or
(B) Contains concentrations of any Appendix VIII of Part 261
hazardous constituents at levels that are significantly elevated from
those found in analogous products; or
(C) Exhibits a hazardous characteristic (as defined in Part 261
subpart C) that analogous products do not exhibit. If a product
contains any of these concentrations or exhibits a hazardous
characteristic, that fact may be an indication that the material is not
legitimately recycled.
9. 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 is not a solid waste provided that:
(i) If it is managed in a land-based unit as defined in Sec.
260.10, the material must be contained; and
(ii) It is a hazardous secondary material generated and reclaimed
under the control of the generator as defined in Sec. 260.10; and
(iii) It is not speculatively accumulated, as defined in Sec.
261.1(c)(8); and
(iv) Generators of hazardous secondary material that has previously
been subject to regulation as hazardous wastes, but which will be
excluded from regulation under this paragraph (a)(23) must send a one-
time notification to the Regional Administrator. Such notices must
identify the name, address, and EPA ID number of the generator (if
applicable); the name and phone number of a contact person; the type of
material that will be managed according to this exclusion, and when the
material will begin to be managed in accordance with this exclusion. A
revised notice must be sent to the Regional Administrator in the event
of a change to the name, address or EPA ID number of the generator, or
a change in the type of material generated. If reclamation takes place
at a facility other than the generating facility, the reclaimer must
send a one-time notification to the Regional Administrator. Such
notices must identify the name, address, and EPA ID number of the
reclamation facility (if applicable); the name and phone number of a
contact person; the type of material that will be managed according to
the exclusion, and when the material will begin to be managed in
accordance with this conditional exclusion. A revised notice must be
sent to the Regional Administrator in the event of a change to the
name, address

[[Page 14217]]

or EPA ID number of the reclamation facility, or a change in the type
of material reclaimed.
(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); and
(ii) The material is not handled by any person or facility other
than the generator, the transporter, or a reclaimer; and
(iii) The generator and each reclaimer of hazardous secondary
material that has previously been subject to regulation as hazardous
wastes, but which will be excluded from regulation under this
paragraph, must send a one-time notification to the Regional
Administrator. Such notices must identify the name, address, and EPA ID
number of the generator or reclaimer (if applicable); the name and
phone number of a contact person; the type of material that will be
managed according to the exclusion, and when the materials will begin
to be managed in accordance with this conditional exclusion. A revised
notice must be sent to the Regional Administrator in the event of a
change to the name, address or EPA ID number of the generator, or a
change in the type of material generated, and
(iv) Generators of hazardous secondary materials that are eligible
for this exclusion must satisfy the following conditions:
(A) Prior to arranging for transport of excluded material to a
reclamation facility that is not operating under a RCRA Part B permit
or interim status standards, the generator must make reasonable efforts
to ensure that the reclaimer intends to legitimately recycle the
material and not discard it pursuant to the criteria in Sec. 261.2(g),
and that the reclaimer will manage the material in a manner that is
protective of human health and the environment. In making these
reasonable efforts, the generator may use any credible evidence
available, including information gathered by the generator, provided by
the reclaimer, and/or provided by a third party.
(B) The generator must maintain at the generating facility for no
less than three years records of all off-site shipments of excluded
material. 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 reclamation facility to which it was
sent, and
(3) The type and quantity of excluded material in the shipment.
(C) If it is managed in a land-based unit as defined in Sec.
260.10, the material must be contained.
(v) Reclaimers of hazardous secondary material excluded from
regulation under this exclusion must satisfy the following conditions:
(A) The reclaimer must maintain at the reclamation facility for no
less than three years records of all shipments of excluded material
that were received at the facility. For each shipment, these records
must at a minimum contain the following information:
(1) Name of the transporter and date the shipment was received;
(2) Name and address of the generating facility from which it was
sent; and
(3) The type and quantity of excluded material in the shipment.
(B) The reclaimer must manage the hazardous secondary material in a
manner that is at least as protective as that employed for analogous
raw material or is otherwise 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. Where there is
no analogous raw material, or if the secondary hazardous material is
managed in a land-based unit as defined in defined in Sec. 260.10, the
material must be contained.
(C) 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 according to the applicable
requirements of 40 CFR parts 260 through 272.
(D) The reclaimer must comply with the financial requirements of 40
CFR part 264, subpart H.
(vi) A reclamation facility at which hazardous secondary materials
are managed in accordance with the provisions of this exclusion may
also accept and manage fully regulated hazardous wastes from generators
who do not use this exclusion. Such materials are not solid wastes, and
the RCRA regulatory status of the reclamation facility will not be
affected, provided that the reclamation facility complies with the
requirements specified in Sec. 261.4(a)(24)(i), (ii), (iii) and (v).
(25) Exports. Hazardous secondary material that is exported from
the United States and recycled at a reclamation facility located in a
foreign country, provided that the exporter complies with the
requirements of Sec. 261.4(a)(24)(i)-(iv) and also 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
exporter, and include the following information:
(A) Name, mailing address, telephone number and EPA ID number (if
applicable) of the exporter.
(B) The estimated frequency or rate at which the materials is to be
exported and the period of time over which it is to be exported.
(C) The estimated total quantity of material specified in kilograms.
(D) All points of entry to and departure from each foreign country
through which the material will pass.
(E) A description of the means by which each shipment of the
material will be transported (e.g., mode of transportation vehicle
(air, highway, rail, water, etc.), type(s) of container (drums, boxes,
tanks, etc.)).
(F) The name and address of the reclaimer and any alternate reclaimer.
(G) A description of the manner in which the material will be
recycled in the foreign country that will be receiving it.
(H) The name of any transit country through which the material will
be sent and a description of the approximate length of time it will
remain in such country and the nature of its handling while there.
(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 sent to: Office of Enforcement and Compliance
Assurance, Office of Federal Activities, International Compliance
Assurance Division, (Mail Code 2254A), Environmental Protection Agency,
Ariel Rios Bldg., Room 6144, 1200

[[Page 14218]]

Pennsylvania Ave., NW., Washington, DC. In both cases, the following
shall be prominently displayed on the front of the envelope:
``Attention: Notification of Intent to Export.''
(iii) Upon request by EPA, the exporter shall furnish to EPA any
additional information which a receiving country requests in order to
respond to a notification.
(iv) 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) (5) (i) of this section. Where a claim of
confidentiality is asserted with respect to any notification
information required by paragraph (a)(5)(i) of this section, EPA may
find the notification not complete until any such claim is resolved in
accordance with 40 CFR 260.2.
(v) The export of hazardous secondary material under this paragraph
is prohibited unless the receiving country consents to the intended
export. When the receiving country consents in writing to the receipt
of the material, EPA will forward an Acknowledgment of Consent to the
exporter. Where the receiving country objects to receipt of the
material or withdraws a prior consent, EPA will notify the exporter in
writing. EPA will also notify the exporter of any responses from
transit countries.
(vi) When the conditions specified on the original notification
change, the exporter must provide EPA with a written renotification of
the change, except for changes to the telephone number in paragraph
(a)(5)(i)(A) of this section and decreases in the quantity indicated
pursuant to paragraph (a)(5)(i)(C) of this section. The shipment cannot
take place until consent of the receiving country to the changes has
been obtained (except for changes to information about points of entry
and departure and transit countries pursuant to paragraphs (a)(5)(i)(D)
and (a)(5)(i)(H) of this section) and the exporter receives from EPA a
copy of the Acknowledgment of Consent to Export reflecting the
receiving country's consent to the changes.
(vii) A copy of the Acknowledgment of Consent to Export must
accompany the shipment. The shipment must conform to the terms of the
Acknowledgment.
(viii) If a shipment cannot be delivered for any reason to the
recycler or the alternate recycler, the exporter must renotify EPA of a
change in the conditions of the original notification to allow shipment
to a new recycler in accordance with paragraph (a)(5)(vi) of this
section and obtain another Acknowledgment of Consent to Export.
(ix) Exporters must keep copies of notifications and
Acknowledgments of Consent to Export for a period of three years
following receipt of the Acknowledgment.

[FR Doc. E7-5159 Filed 3-23-07; 8:45 am]
BILLING CODE 6560-50-P

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