[Federal Register Volume 72, Number 57 (Monday, March 26, 2007)]
[Proposed Rules]
[Pages 14172-14218]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-5159]



[[Page 14171]]

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Part II





Environmental Protection Agency





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40 CFR Parts 260 and 261



Revisions to the Definition of Solid Waste; Proposed Rule

Federal Register / Vol. 72, No. 57 / Monday, March 26, 2007 / 
Proposed Rules

[[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


Revisions to the Definition of Solid Waste

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 <a href="/cdn-cgi/l/email-protection#c99b8a9b88e4ada6aaa2acbd89acb9a8e7aea6bf"><span class="__cf_email__" data-cfemail="bdeffeeffc90d9d2ded6d8c9fdd8cddc93dad2cb">[email protected]</span></a>, 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, (<a href="/cdn-cgi/l/email-protection#23444c4c47460d4e42514a4f5a4d634653420d444c55"><span class="__cf_email__" data-cfemail="a4c3cbcbc0c18ac9c5d6cdc8ddcae4c1d4c58ac3cbd2">[email protected]</span></a>) 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 (<a href="/cdn-cgi/l/email-protection#1071647177793e6462717369507560713e777f66"><span class="__cf_email__" data-cfemail="7d1c091c1a1453090f1c1e043d180d1c531a120b">[email protected]</span></a>).

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:
    <bullet> Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
    <bullet> 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.
    <bullet> Explain why you agree or disagree; suggest alternatives 
and substitute language for your requested changes.
    <bullet> Describe any assumptions and provide any technical 
information and/or data that you used.
    <bullet> If estimating burden or costs, explain methods used to 
arrive at the estimate in sufficient detail to allow for it to be 
reproduced.
    <bullet> Provide specific examples to illustrate any concerns and 
suggest alternatives.
    <bullet> 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

[[Page 14174]]

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.

[[Page 14175]]

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:
    <bullet> 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).
    <bullet> 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.)
    <bullet> 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:
    <bullet> How do responsible generators and recyclers of hazardous 
secondary materials ensure that recycling is done in an environmentally 
safe manner?
    <bullet> To what extent have hazardous secondary material recycling 
practices resulted in environmental problems in recent years, and why?
    <bullet> 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:
    <bullet> ``An Assessment of Current Good Practices for Recycling of 
Hazardous Secondary Materials''
    <bullet> ``An Assessment of Environmental Problems Associated With 
Recycling of Hazardous Secondary Materials''
    <bullet> ``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:
    <bullet> 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--
    <bullet> accumulation or storage of hazardous secondary materials 
by the generator, the recycler or an intermediary;
    <bullet> illegal disposal or abandonment of recyclable hazardous 
secondary materials or recycling residuals;
    <bullet> transportation of recyclable hazardous secondary 
materials;
    <bullet> ``sham'' recycling operations (i.e., illegal disposal or 
treatment disguised as recycling);
    <bullet> production and/or use of contaminated products from 
recycled hazardous secondary materials, reclamation and/or production 
processes;
    <bullet> management of residuals from reclamation or production 
processes, or
    <bullet> 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.
    <bullet> 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.
    <bullet> 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:
    <bullet> Comments on the October 28, 2003, proposed rule
    <bullet> The Superfund National Priorities List
    <bullet> National EPA data bases maintained for the CERCLA, RCRA, 
and enforcement programs
    <bullet> Contacts with staff in state environmental agencies
    <bullet> Contacts with staff in EPA Regional Offices
    <bullet> State agency data bases maintained for state Superfund 
programs and other environmental programs
    <bullet> Internet searches
    <bullet> 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:
    <bullet> 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.
    <bullet> 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).
    <bullet> 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:
    <bullet> The hazardous secondary material to be recycled is managed 
as a valuable commodity;
    <bullet> The hazardous secondary material provides a useful 
contribution to the recycling process or to a product of the recycling 
process;
    <bullet> The recycling process yields a valuable product or 
intermediate;
    <bullet> 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 (65 FR 67249, 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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