February 17, 2010

SUBJECT: Minutes from Meeting with the Soci ety of Chemical Manufacturers and a Number of Their Member Companies Regard ing the Definition of Solid Waste Final Rule and the Current CERCLA 108(b) Rulemaking Effort

FROM: Matt Straus, Advisor to Assist ant Administrator of OSWER

TO: DSW and CERCLA 108(b) Dockets

On February 12, staff from the Society of Chemical Manufacturers (SOCMA) and representatives of a num ber of their member companies ha d a conference call with Mathy Stanislaus, Assistant Administrator for the Office of Solid Waste and Emergency Response (OSWER) and Barry Breen and Lisa Fe ldt, Deputy Assistant Administrators to

OSWER to discuss the definition of solid waste (DSW) final rule (which was promulgated on October 30, 2008) and the curr ent rulemaking effort for determining financial responsibility requirements under the section 108(b) of the Comprehensive Emergency Response, Compensation, and Li ability Act (CERCLA). Also on the call were representatives for the Office of Resource Conservation and Recovery (ORCR) within OSWER, the Office of General C ounsel, and the Office of Enforcement and Compliance Assurance. This note briefl y describes what was discussed during the

conference call.

Initially, SOCMA described who they are and represent, and generally how their member companies operate. They noted th at they have approximately 300 member companies, of which about 70 percent are sma ll businesses, and thus, one of the themes of their discussions reflected upon the impa ct of these rulemaking efforts on small

businesses.

Definition of Solid Waste

• SOCMA indicated that they have worked closely with staff in ORCR, previously known as the Office of Solid Waste, sin ce the early 1990s in order that the DSW final rule would produce environmental be nefits from increased recycling, while

at the same time save costs to small busi nesses. As part of those discussions, SOCMA stated that it was their suggestion, in part, that tollin g arrangements be considered differently from third party transactions.

• SOCMA stated that environmental justice was a major focus at the public hearing that was held on June 30, 2009 on the definiti on of solid waste, and indicated that while environmental justice “deserves it due ,” they also said that holding up this reform effort is a significant issue for industry.

• At that point, Mathy Stanislaus indicate d that while he is a strong supporter of recycling and reuse, he also noted that the Agency needs to take a hard look atenvironmental justice in this rule, to ensu re that no unintended consequences will occur. He also asked SOCMA staff and their member companies whether they had any comments on the U.S. Environmental Protection Agency’s (EPA’s) recently released “Draft Environmental Justice Methodology for the Definition of Solid Waste Rule,” which is EPA’s dr aft plan for conducting a more robust analysis on the environmental justice impacts to the final rule.

• SOCMA and their members did not have any immediate reaction to the draft environmental justice methodology, but did indicate that they would like this analysis to be conducted/completed as qui ckly as possible, and that the Agency

reach resolution of Sierra Club’s administra tive petition to the DSW final rule in a relatively quick timeframe. Specifically, th ey indicated their view that as long as EPA was conducting this analysis and cons idering Sierra Club’s administrative petition, the states will likely not adopt the rule because of its uncertainty, and instead will wait to see if EPA will be making any changes to the DSW final rule. (Note: SOCMA stated that it recognizes that the DSW final rule is in effect and that the states can adopt the rule now, but expressed concern th at as long as this additional analysis is underway, that the States will be reluctant to adopt the rule.)

• One suggestion that SOCMA did make was fo r EPA to signal to the states that the part of the rule that deals with “under the control of the generato r,” that the states could go ahead with authorization with this portion of the final rule since there is less uncertainty with this aspect of the final rule. Specifically, it was noted in EPA’s May 27, 2009 Federal Register noti ce in which EPA announced the June 30, 2009 public meeting, that EPA is not likely to repeal the exclusion for hazardous secondary materials reclaimed under the control of the generator—see 74 FR 25202 where it states, “Because the fina l revisions to the definition of solid waste are closely tied to EPA’s interpre tation of the concep t of “discard,” EPA does not plan to repeal the rule in whol e or stay its implementation. Such an action could result in hazardous secondary materials that are not discarded from being regulated as hazardous waste. In pa rticular, EPA does not expect to repeal

either the exclusion for hazardous se condary materials reclaimed under the control of the generator or the non-wa ste determination petition process.”

• SOCMA stated that they believe this c ould be done without going through any rulemaking process, but could be done th rough outreach to the states to remind them that this portion of the fi nal rule is unlikely to change. 1

• Finally, it was noted to SOCMA and its member companies that the environmental justice analysis will be conducted for the entire rule, including those hazardous secondary materials that are reclaimed under the control of the generator. Thus, it was suggested that SOCMA may want to submit comments on the draft methodology, particularly if they thought that the analysis should be different for those hazardous secondary materials reclaimed under the control of the generator. SOCMA indicated that they will look at this, and will get

1 EPA notes that while the FR notice cited by SOCMA says that EPA does not expect to repeal the “generator-controlled exclusion,” this should not be in terpreted as saying that EPA will not make changes that may impact this exclusion. On the contrary, a number of the possible changes discussed in the FR notice (e.g., definition of “contained,” notification as a possible condition, and definition of “legitimacy” would affect the “generator-controlled exclusion.” See 74 FR 25202-25204.comments to the Agency before the end of the comment deadline of March 15,

2010.

CERCLA 108(b)

• SOCMA first discussed the letter they co -signed with the American Chemistry Council and other organizations, which wa s sent to EPA in the fall of 2009 and before EPA published its Advance Noti ce of Proposed Rulemaking regarding

additional classes of facilities that th e Agency will evaluate regarding the development of financial responsibilit y requirements under CERCLA 108(b).

• Among other things, SOCMA stated that the letter indi cated that CERCLA 108(b) looks at prospective ri sks and that past practices is not a reliable indicator of what will happen in the future—they stated that the world in the 1980’s and

before is much different from the world in the 1990’s and late r and that needs to be considered in determining whether financial responsibility requirements are appropriate. SOCMA also stated that since many of their members are small businesses, such a rule could have a significant impact on SOCMA’s members. (See attached letter for additional arguments made in the letter.)

• Then one of SOCMA’s member companie s—Rhodia, discussed their experience with their facilities, many of which they said they acquired through acquisition, in the State of New Jersey, that already has a rule requiring financ ial responsibility. They also stated that they used to have five facilities in the State of New Jersey, but no longer have any facilities.

• One of the primary arguments Rhodia made was that to be competitive in the world today, they need to make quality products, and that environmental costs come off the bottom line. Thus, Rhodia said that if all their facilities needed financial responsibility, it could make th em less competitive, particularly if in addition to putting aside funds for financial responsibility, they also needed to pay fees that the states may impose.

• In response to an EPA question on the types of financial responsibility mechanisms they used, Rhodia indicated th at if corporate guarantee was allowed, they thought that would be helpful, but they did indicate that with the one facility in New Jersey that they discussed, the facility did not qualify for a corporate guarantee, and thus, they needed to get a lett er of credit. They also indicated that if the facility already had financial res ponsibility requirements in place, that it would be helpful if that could be used and not have the CERCLA 108(b) requirement be in addition to thos e requirements already in place.

• At the end, Mathy Stanislaus indicated that he would like to set up a face-to face discussion on CERCLA 108(b) , at the appropriate time —probably, after the close of the comment period to the ANPRM, so that he can better understand the points raised by SOCMA and their member companies, such as why they view past history as not being a good indicator of future acti ons, and their views on the impact such a requirement would have on small businesses.